Edgar Filing: ELITE PHARMACEUTICALS INC /DE/

PRELIMINARY COPY - SUBJECT TO COMPLETION - DATED
OCTOBER 7, 2002

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
(Amendment No.)

Filed by the Registrant [X]

Filed by a party other than the Registrant [ ]

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[X] Preliminary Proxy Statement

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

[ ] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.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]

Dear Fellow Stockholder:

Attached to this letter is the Notice of Annual Meeting of Stockholders
of Elite Pharmaceuticals, Inc. and our Proxy Statement describing the formal
business to be transacted at the 2002 Annual Meeting.

You may have received, or will be receiving, a separate proxy
solicitation from the "Elite Value Committee", a group of Elite stockholders who
are not affiliated with Elite other than through its members' ownership of some
of Elite's securities, but are affiliated with Harris Freedman and/or Sharon
Will (collectively the "Freedman Group"). Having been defeated in its own costly
and unprovoked consent solicitation to seize control of Elite by removing all of
Elite's independent board members and installing its hand-picked slate (Harris
Freedman, Sharon Will and Michel H. Freedman), the Freedman Group has now
initiated a proxy contest for control of your Board of Directors and to have
themselves elected to the Board in place of all of Elite's independent
directors. We believe that the motives and objectives of the Freedman Group are
questionable and self-serving and are not in the best interests of the Company
and its other stockholders.

Your current Board of Directors and management are committed to
enhancing stockholder value for all stockholders. We continue to implement the
Company's strategic plan and have been taking steps to continue to improve the
Company's performance.

For all of the reasons discussed in the materials included with this
letter, we strongly urge you to REJECT the solicitation made by the Freedman
Group and NOT sign any WHITE proxy card they send you. Each member of the Board
of Directors who is a stockholder of the Company is voting their shares of our
stock in favor of the recommendations of the Board of Directors and are
returning BLUE proxy cards.

In order to elect your Board's nominees for director and reject the
Freedman Group's proposals, the Board unanimously recommends that you sign,
date, and mail the enclosed BLUE proxy card today. Please do not return any
proxy card you may receive from the Freedman Group.

If you have already signed and returned a proxy card sent to you by the
Freedman Group, you may REVOKE IT by simply returning the enclosed BLUE proxy
card, with a later date, in the enclosed envelope.

Also enclosed for your information is a copy of our Annual Report for
the fiscal year ended March 31, 2002.

It is important that your shares of Elite common stock be represented
and voted at the Annual Meeting. Accordingly, regardless of whether you plan to
attend the Annual Meeting in person, please complete, date, sign and return the
enclosed BLUE proxy card in the envelope provided, which requires no postage if
mailed in the United States. Even if you return a signed BLUE proxy card, you
may still attend the Annual Meeting and vote your shares in person. Every
stockholder's vote is important, whether you own a few shares or many.

Thank you for your continued interest and support in your company.

Very truly yours,

Atul M. Mehta, Ph.D

President and Chief Executive Officer for
The Board of Directors

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
ELITE PHARMACEUTICALS, INC.

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Elite
Pharmaceuticals, Inc. (the "Company", "Elite", "us" or "we") will be held at
[______________], on December 12, 2002 at [______________], to consider and act
upon the following:

1. The election of seven directors to serve for a period of one year and
thereafter until their successors shall have been duly elected and shall have
qualified. The Board of Directors recommends a vote FOR the election of the
nominees proposed for election by the Board, and AGAINST the election of any
nominees for director proposed by the Freedman Group.

2. The ratification of the appointment of Miller, Ellin & Co., LLP as the
Company's independent public accountants for the fiscal year ending March 31,
2003.

3. The transaction of such other business as may properly come before the
meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on November 1, 2002 as
the date for determining the stockholders of record entitled to receive notice
of, and to vote at, the Annual Meeting.

By Order of the Board of Directors

/s/ Mark I. Gittelman

Mark I. Gittelman
Secretary
Northvale, New Jersey
[______________], 2002

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. WHETHER
OR NOT YOU EXPECT TO BE PRESENT, PLEASE FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED BLUE PROXY CARD IN THE ACCOMPANYING ADDRESSED, POSTAGE-PREPAID
ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON.

YOUR BOARD OF DIRECTORS ALSO URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY
THE FREEDMAN GROUP. EVEN IF YOU HAVE PREVIOUSLY SIGNED A PROXY CARD SENT TO YOU
BY THE FREEDMAN GROUP, YOU CAN REVOKE THAT EARLIER PROXY BY SIGNING, DATING, AND
MAILING THE ENCLOSED BLUE PROXY CARD IN THE ENCLOSED ENVELOPE.

Elite Pharmaceuticals, Inc.

165 Ludlow Avenue

Northvale, New Jersey 07647

PROXY STATEMENT
Annual Meeting of Stockholders
[______________], 2002

INTRODUCTION

This proxy statement is being furnished to stockholders of Elite
Pharmaceuticals, Inc. (the "Company", "Elite", "us" or "we") on or about
[______________], 2002, in connection with a solicitation by the Board of
Directors of the Company of proxies to be voted at the Annual Meeting of
Stockholders to be held at [____] on December 12, 2002, at [______________]. At
the meeting, the Board of Directors will propose that the Company's stockholders
(1) elect seven nominees to the Board of Directors of the Company to serve until
the 2003 annual meeting of stockholders and until their successors are elected
and qualified and (2) ratify the appointment of Miller, Ellin & Co., LLP as the
Company's independent public accountants for the fiscal year ending March 31,
2003.

The Freedman Group has filed its own proxy materials in order to nominate its
own slate of directors and to solicit proxies in support of it.

During the third quarter of 2002, the Freedman Group commenced an unsuccessful
consent solicitation of Elite's stockholders in which they sought to remove
three of the current members of your Board, all of the independent directors,
without cause, and replace them with their own hand-picked nominees -
themselves.

Your current Board of Directors and management believed that the Freedman
Group's costly and unprovoked consent solicitation was not in the best interests
of all of Elite's stockholders. Having been defeated in its efforts to unseat
your duly elected independent directors, the Freedman Group is now running the
very same slate of nominees for election at the Annual Meeting, even though such
nominees failed to garner the support of a majority of the stockholders and was
rejected by Institutional Shareholder Services, Inc., recognized as the nation's
leading independent proxy advisory firm (see "Institutional Shareholder
Services, Inc. Recommendation"). As in the case of the consent solicitation, the
Board of Directors believes that election of the Freedman Group's nominees is
not in the best interests of our stockholders because we believe that:

o the Freedman Group is self-interested.

o Elite is at a critical juncture and any change in our management could
substantially jeopardize our future growth and success.

o the Freedman Group did not communicate any strategic plan for improving the
performance or prospects of your company in its few proposals for change.

o the Freedman Group has no relevant past business experience in the
pharmaceutical industry or our core business of developing oral controlled
release pharmaceutical products.

o the Company's current Board, whom you elected, and management are in the
best position to evaluate the strategic alternatives available to Elite and
to decide on the courses of action that are in the best interests of all of
the Company's stockholders.

o the Freedman Group does not have the necessary integrity to lead the
Company based on publicly available information obtained by Elite.

Your Board of Directors refuses to be pressured by the Freedman Group's tactics
into taking any action that would not be in the best interests of all of the
Company's stockholders. Your current Board of Directors and management are
continuing to implement a strategic plan to improve the Company's profitability,
which yielded positive results in the fiscal year ended March 31, 2002. We are
continuing to evaluate the strategic alternatives available to Elite in order to
enhance value for all of the Company's stockholders.

The Board of Directors is soliciting votes FOR the Company's slate of nominees
for election to the Board of Directors. A BLUE proxy card is enclosed for your
use. THE BOARD OF DIRECTORS URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE
BLUE PROXY CARD IN THE ACCOMPANYING ENVELOPE, which is postage-paid if mailed in
the United States.

This Proxy Statement and the enclosed BLUE Proxy Card are first being mailed to
stockholders beginning on or about [______________], 2002.

The Company has retained Georgeson Shareholder Communications, Inc.
("Georgeson") to assist in communicating with stockholders in connection with
the proxy solicitation and to assist in our efforts to obtain proxies. If you
have any questions about how to complete or submit your BLUE proxy card or any
other questions, Georgeson will be pleased to assist you.

If you have any questions or need further assistance in voting your shares,
please call:

Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
Stockholders call toll free: 866-297-1267
Banks & Brokers call: 212-440-9800
Fax number: 212-440-9009

THE BOARD OF DIRECTORS URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY THE
FREEDMAN GROUP. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PREVIOUSLY
SIGNED PROXY BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED BLUE
PROXY CARD IN THE ENCLOSED ENVELOPE.

REMEMBER, IT WILL NOT HELP YOUR BOARD OF DIRECTORS TO RETURN ANY PROXY CARD SENT
TO YOU BY THE FREEDMAN GROUP BY VOTING TO "ABSTAIN." WE URGE YOU NOT TO RETURN
ANY CARD SENT TO YOU BY THE FREEDMAN GROUP. THE ONLY WAY TO SUPPORT YOUR BOARD
OF DIRECTORS' NOMINEES IS TO VOTE "FOR" THOSE NOMINEES ON THE ENCLOSED BLUE
PROXY CARD.

Stockholders Entitled to Vote

Only holders of record of the Company's common stock, par value $.01 per share
(the "Common Stock"), at the close of business on November 1, 2002 (the record
date fixed by the Board of Directors) will be entitled to receive notice of, and
to vote at, the Annual Meeting. At the close of business on the record date,
there were [_____________] shares of Common Stock outstanding and entitled to
vote at the Annual Meeting (including voting rights attributable to the shares
of an Elite subsidiary which are convertible into shares of Elite's Common
Stock). Each such share is entitled to one vote.

Voting; Revocation of Proxy; Quorum and Vote Required

A form of proxy is enclosed for use at the Annual Meeting if a stockholder is
unable to attend in person. Each proxy may be revoked at any time before it is
exercised by giving written notice to the Secretary of the Annual Meeting or by
submitting a duly executed, later-dated proxy. All shares represented by valid
proxies pursuant to this solicitation (and not revoked before they are
exercised) will be voted as specified in the form of proxy. If the proxy is
signed but

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no specification is given, the shares will be voted FOR the Board's nominees for
election to the Board of Directors and to ratify the appointment of Miller,
Ellin & Co., LLP as the Company's independent public accountants for the fiscal
year ending March 31, 2003.

A majority of the shares outstanding on the record date will constitute a quorum
for purposes of the Annual Meeting. Assuming that a quorum is present, the
election of directors will be effected by a plurality vote and the ratification
of auditors will require the affirmative vote of a majority of the votes cast
with respect to such proposal. For purposes of determining the votes cast with
respect to any matter presented for consideration at the Annual Meeting, only
those votes cast "for" or "against" are included. Abstentions and broker
non-votes are counted only for the purpose of determining whether a quorum is
present at the Annual Meeting.

Costs and Method of Solicitation

Solicitation of proxies may be made by directors and officers of the Company by
mail, telephone, facsimile transmission or other electronic media and in person.
We will not solicit proxies via the Internet, such as Internet chat rooms and/or
posting on websites. Solicitation of proxies may be made by directors, officers
and regular employees of Elite for which they will receive no additional
compensation, as well as by employees of Georgeson. The entire cost of
soliciting proxies, including, without limitation, costs, if any, relating to
advertising, printing, fees of attorneys, financial advisors, proxy solicitors,
accountants, public relations, transportation, litigation and related expenses
and filing fees, will be borne by the Company. Elite estimates that total
expenditures relating to the Elite Board's solicitation of the proxies will be
approximately $[________]. Such costs do not include the amount represented by
salaries and wages of regular employees and officers. The portion of such costs
allocable solely to the solicitation of proxies is not readily determinable. To
date, approximately $[_____] has been paid by Elite in connection with its
solicitation of proxies.

Upon request, the Company 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.

The company has retained Georgeson to assist it in the solicitation of proxies
for the Annual Meeting. Georgeson will receive a fee of $[_____] for its
services and will receive an additional fee of $[_______] if we are successful
in our solicitation, plus reimbursement for reasonable out-of-pocket expenses.
Elite has also agreed to indemnify Georgeson for certain liabilities in
connection with this solicitation. Approximately 35 persons will be employed by
Georgeson to solicit stockholders.

For information concerning the directors and officers of Elite who may solicit
proxies, see "Participants in the Solicitation".

Elite has designated IVS Associates, Inc. ("IVS") to act as inspector with
respect to the tabulation of proxies in connection with the Annual Meeting. The
Company has agreed to pay IVS a fee of approximately $[_______] for its
services, plus reimbursement for reasonable out-of-pocket expenses.

Principal Stockholders

Based upon information available to the Company, the only stockholders known by
the Company to beneficially own more than 5% of the outstanding Common Stock as
of October 1, 2002 are (i) Atul M. Mehta, (ii) Jerome Belson, (iii) John de
Neufville and Mely Rahn, Trustees Margaret de Neufville Revocable Trusts, (iv)
Bakul and Dilip Mehta, (v) the Freedman Group comprised of Bridge Ventures,
Inc., SMACS Holding Corp., Bridge Ventures, Inc. Employee Pension Plan, Saggi
Capital Corp., Saggi Capital Corp. Money Purchase Plan, Saggi Capital Corp.
Profit Sharing Plan, Harris Freedman, Sharon Will and Michael H. Freedman, and
(vi) Shelly Bay Holdings, Inc., Shelly Bay holdings, Ltd. and John Moore. For
information concerning the holdings of these stockholders, see "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS."

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PROPOSAL 1
ELECTION OF DIRECTORS

Board of Directors' Nominees

The holders of Elite's Common Stock will elect seven directors at the Annual
Meeting, each of whom will be elected for a one year term. Unless a stockholder
either indicates "withhold authority" on his BLUE proxy card or indicates on his
proxy 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 to serve until the expiration of their terms and
thereafter until their successors shall have been duly elected and shall have
qualified. Discretionary authority is also solicited to vote for the election of
a substitute for any of said nominees who, for any reason presently unknown,
cannot be a candidate for election.

The Company's by-laws provide that the Board of Directors will consist of not
less than three nor more than ten members, the actual number to be determined by
the Board from time to time. The Board currently consists of four members, but
the Board of Directors has determined that it is in the best interests of Elite
and all of its stockholders to expand the board to seven directors. Elite
believes that the three proposed new directors will further enhance its board of
directors and bring added experience to it.

The table below sets forth the names and ages (as of October 1, 2002) of each of
the nominees, the other positions and offices presently held by each such person
within the Company, and the period during which each such person has served on
the Board of Directors of the Company.

Positions with Director
Name Age the Company Since
---- --- ----------- -----

Dr. Atul M. Mehta (53) Chief Executive Officer, 1997
President and Director

Donald S. Pearson (66) Director 1999

Harmon Aronson (59) Director 1999

Eric L. Sichel (43) Director 2001

John P. deNeufville (62) None N/A

John A. Moore (37) None N/A

Richard A. Brown (54) None N/A

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.

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markets. He received his B.S. degree in Pharmacy with honors from Shivaii
University, Kolhapur, India, and a BS, MS, and a Doctorate of Philosophy in
Pharmaceutics from the University of Maryland in 1981. Dr. Mehta is also a
director of Elite Research, Ltd. Other than ELI and Elite Research, Ltd., no
company with which Dr. Mehta was affiliated in the past was a parent, subsidiary
or other affiliate of the Company.

Donald S. Pearson, a director since 1999, has been employed since 1997 as the
President of Pearson & Associates, Inc., a company that provides consulting
services to the pharmaceutical industry. Prior to starting Pearson & Associates,
Mr. Pearson served for five years as the Director of Licensing at Elan
Pharmaceuticals, and prior to that he was employed by Warner-Lambert for thirty
years in various marketing, business development and licensing capacities. Mr.
Pearson holds a B.S. in Chemistry from the University of Arkansas and studied
steroid chemistry at St. John's University. He has served on the informal
advisory board of ELI for several years; other than ELI, no company with which
Dr. Pearson was affiliated in the past was a parent, subsidiary or other
affiliate of the Company.

Harmon Aronson, Ph.D., a director since 1999, has been employed since 1997 as
the President of Aronson Kaufman Associates, Inc., a New Jersey-based consulting
firm that provides manufacturing, FDA regulatory and compliance services to the
pharmaceutical and biotechnology companies. Its clients include United States
and international firms manufacturing bulk drugs and finished pharmaceutical
dosage products who are seeking FDA approval for their products for the US
Market. Prior to 1997, Dr. Aronson was employed by Biocraft Laboratories, a
leading generic drug manufacturer, most recently in the position of Vice
President of Quality Management; prior to that he held the position of Vice
President of Non-Antibiotic Operations, where he was responsible for the
manufacturing of all the firm's non-antibiotic products. Dr. Aronson holds a
Ph.D. in Physics from the University of Chicago. Mr. Aronson is also a director
of Elite Research, Ltd. Other than ELI and Elite Research Ltd., no company with
which Dr. Aronson was affiliated in the past was a parent, subsidiary or other
affiliate of the Company.

Eric L. Sichel, M.D., a director since August 2, 2001, is President of Sichel
Medical Ventures, Inc., Englewood, NJ, which company provides biotechnology
company assessments and investment banking services. Dr. Sichel has been the
owner and President of Sichel Medical Ventures, Inc. since 1997. From 1995
through 1996, Dr. Sichel was a senior analyst in the biotechnology field for
Alex, Brown & Sons, Inc. of New York, NY. Prior to that, Dr. Sichel was
affiliated with Sandoz Pharmaceuticals Corp. of East Hanover, NJ, in various
capacities, including associate director of transplantation/immunology. Dr.
Sichel is licensed to practice medicine by the State of New York.

John P. de Neufville has since 1986 been the Chief Executive Officer and
President of Voltaix, Inc., P.O. Box 5357 North Branch, NJ 08876, which company
is engaged in developing, manufacturing, selling and distributing electronic
chemicals to industrial gas and semiconductor manufacturing customers
world-wide. Mr. de Neufville has been a member of Elite's board of advisors
since 1997. He holds a Ph.D in applied physics and an M.S in geology from
Harvard University and a B.S. in geology from Yale University.

John A. Moore has been Chief Executive Officer and President of Edson Moore
Healthcare Ventures since July 2002. Edson Moore has an address at 101
Brookmeadow Road, Wilmington DE 19807 and is an investment entity that has
interests in 11 public and private biotechnology companies. Since 1994, Mr.
Moore has been Chief Executive Officer and President of Optimer, Inc., a a
research based polymer development company located in Wilmington, DE. Mr. Moore
spent 7 years working in the investment banking field including for Lehman
Brothers and Hambrecht & Quist.

Richard A. Brown, has been the Chief Executive Officer and President of Niadyne,
Inc. since 1997. Niadyne has an address at P.O. Box 54, New York, NY 10028 and
is a privately held specialty pharmaceutical company which manufactures products
in the dermatology and cholesterol control areas. From 1986 to the present, Mr.
Brown has been senior managing director of Eagle Ventures, a healthcare venture
capital and investment banking company. Mr. Brown also worked in the securities
field for 12 years for Tucker Anthony, in investment banking and securities
sales.

There are no arrangements between any director and any other person, pursuant to
which the director is to be selected as such. There is no family relationship
between the directors or persons nominated or chosen by the Company to become
directors.

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THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE SEVEN
NOMINEES OF THE BOARD OF DIRECTORS DESCRIBED ABOVE AND NOT VOTE IN FAVOR OF ANY
NOMINEES OF THE FREEDMAN GROUP AS DESCRIBED BELOW.

YOUR BOARD OF DIRECTORS REQUESTS THAT YOU SIGN, DATE AND RETURN THE ENCLOSED
BLUE PROXY CARD, WHETHER OR NOT YOU HAVE PREVIOUSLY SIGNED AND RETURNED THE
WHITE PROXY CARD SOLICITED BY THE FREEDMAN GROUP.

OUR REASONS FOR OPPOSING THE FREEDMAN GROUP'S NOMINEES AGAIN
AND RECOMMENDING THAT YOU ALSO OPPOSE THEM AGAIN

Having been defeated in its efforts to unseat your duly elected independent
directors through its costly and unprovided consent solicitation, the Freedman
Group is now running the very same slate of nominees for election at the Annual
Meeting through a proxy contest, even though such nominees failed to garner the
support of a majority of the stockholders and was rejected by Institutional
Shareholder Services, Inc., recognized as the nation's leading independent proxy
advisory firm (see "Institutional Shareholder Services, Inc. Recommendation").

The Freedman Group's Proposal is designed to enable the Freedman Group to take
control of your Company. We believe that the Freedman Group's proxy solicitation
is a self-interested attempt to extend the expiration of Elite's Class A
Warrants that expire on November 30, 2002 and to take control of Elite without
presenting any strategic plan for increasing stockholder value or improving
Elite's performance. According to the Freedman Group's solicitation materials,
the Freedman Group holds 285,250 of the warrants which will expire on November
30, 2002. Elite has had discussions with certain of its stockholders about
extending the term of the warrants, but no arrangement for extending the
warrants has been reached and there can be no assurance that any arrangement
will be reached before their expiration.

Elite's Board of Directors strongly believes that the arguments set forth by the
Freedman Group in its proxy materials are seriously flawed and misinformed. The
Members of the Board of Directors who are stockholders of the Company have
advised the Company that they intend to vote as recommended by the Board of
Directors and in opposition to the Freedman Group's proposal. The Board of
Directors of the Company unanimously believes that the Freedman Group's proposal
is not in the best interests of the Company's stockholders and urges
stockholders to reject it.

Your Board of Directors is, and has always been, committed to increasing
stockholder value for all stockholders. We have implemented several long-term,
strategic initiatives to enhance stockholder value. See "THE COMPANY". For
example, we:

o expanded our product portfolio to include over 15 branded and generic oral
drug delivery products, some of which are being developed with our
partners.

o focused greater attention and resources on branded delivery products.

o interviewed individuals to assist the Company with business development
opportunities to augment the assistance provided on a regular basis by the
Members of the Board of Directors in this area.

As your duly elected Board of Directors, it is our duty to identify for you our
deep and serious concerns about the Freedman Group. We will describe these
concerns in greater detail later in this document; however, we have highlighted
a number of these below:

o One of the stated principal purposes of the Freedman Group for soliciting
proxies to support its slate of nominees is to extend the expiration date
of Elite's Class A Warrants that expire on November 30, 2002. According to
the Freedman Group's 13D/A filed with the SEC on August 26, 2002, the
Freedman Group holds 285,250 of the warrants which will expire on November
30, 2002, or more than 18% of the warrants that will expire on that date,
in addition to 574,220 shares of our common stock ([__]% of the total
outstanding shares of stock on [______________], 2002). We estimate, after
speaking with our

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accountants, that the Company would be required to incur a significant
compensation expense in fiscal year 2003 if the warrants were extended as
proposed by the Freedman Group without any benefit to the Company from the
extension. The Freedman Group seeks to justify the extension by claiming
that the Company would obtain additional capital when the warrants are
exercised. However, the exercise price of the warrants exceeds the trading
price of our common stock, making the exercise of the warrants unlikely. In
addition the Company believes it has adequate cash to meet its current and
anticipated needs. We believe that if additional capital is needed that the
Company could raise it from the capital markets without incurring the
additional compensation expense.

o To our knowledge, Harris Freedman, Sharon Will and Michael H. Freedman have
no relevant experience in Elite's core businesses of developing oral
controlled release pharmaceutical products or in negotiating the terms of
licenses or collaborations in the pharmaceutical industry. The Freedman
Group's solicitation materials make no reference to any of their nominees
having any experience in the pharmaceutical industry.

o Harris Freedman has previously violated the Federal securities laws in his
dealings with other public companies.

o The Freedman Group has no strategic plan for improving stockholder value or
improving the Company's performance. Instead, it makes general statements
about the need to hire a CFO and COO, to retain an investment bank, to
enter into more license and joint venture arrangements and to extend the
term of the warrants. These proposals are general and unrelated to the
Company's core business of developing oral controlled release
pharmaceutical products and we believe do not provide any specific business
or operations suggestions for improving Elite's performance because none of
their proposals addresses the Company's operations or manner in which the
Company is operated.

In addition, the Freedman Group's Proposals could end up costing you money for
the following reasons:

The extension of the term of the Class A Warrants as desired by the Freedman
Group would require the Company to incur significant compensation expense in
fiscal year 2003.

The Freedman Group wants to hire at direct expense to the Company a full-time
Chief Financial Officer and a Chief Operating Officer of the Company, yet they
articulate no rationale for those hires other than public companies should have
those officers. In fact, the Company already has a Chief Financial Officer (Mark
I. Gittelman, who serves in that capacity on a part-time basis) and Dr. Mehta
oversees our operations, both of whom fully meet all of the Company's needs with
regard to finances and operations given the Company's current level of
operations. The Company's auditors have never commented to the Company's
management that the Company's finance personnel are not capable of meeting all
of the Company's accounting and control needs. In the event that the Company
concludes that it requires a full time chief financial officer or other
operations personnel, it will seek to add those additional personnel to its
management team. In addition to relying on its existing personnel, the Company
relies on the members of its Board of Directors for strategic and operational
assistance. The members of the Board of Directors frequently participate in the
negotiation of transactions on the Company's behalf and bring with them many
years of experience in licensing and marketing pharmaceutical products, FDA
regulatory and compliance experience, and investment banking experience for
bio-tech companies. According to the Freedman Group's filings, the Freedman
Group's nominees for director do not have any similar experience.

If the Freedman Group is successful, their solicitation materials indicate that
they will seek to have the Company reimburse them for their solicitation
expenses, which their materials estimate will be $[______].

The one current Elite director who the Freedman Group is not seeking to replace,
Dr. Atul M. Mehta, has not consented to serving on a Board of Directors
comprised of the Freedman Group's nominees. The Company's future success is
substantially dependent on Dr. Mehta's remaining an officer and director of the
Company. At this time, Dr. Mehta has not yet decided whether he will continue
with the Company if the Freedman Group is successful in its proxy solicitation.

The Company's chief executive officer, Dr. Atul M. Mehta, has a change in
control provision in his employment agreement with the Company as discussed
under the heading "Employment Agreement". The Board of Directors

-7-

believed it was important to enter into this arrangement to provide security for
Dr. Mehta so that he could focus on the various strategic initiatives to improve
the Company's profitability and enhance stockholder value, instead of worrying
about the consequences of a potential change in control of the Company. Pursuant
to the change in control arrangement, if the Freedman Group is successful in its
solicitation, a "change in control" of the Company will have occurred, and Dr.
Mehta will be entitled to terminate his employment and to receive "all accrued
salary, incentive commissions, benefits, and any deferred compensation and all
salary and commissions payable under Paragraph 4(b) through a period ending upon
the later of (i) May 22, 2006 or (ii) the third anniversary of such
termination." The salary portion of these payments will be due to Dr. Mehta in a
lump sum. Paragraph 4(b) entitles Dr. Mehta to a bonus each year of 5% of the
Company's net profit. As discussed below under "Employment Agreement", Dr. Mehta
will have the right to terminate his employment if the Freedman Group is
successful in its proxy solicitation.

THE FREEDMAN GROUP'S NOMINEES

The Freedman Group's nominees for the Board are Harris Freedman, Sharon Will and
Michael H. Freedman (the son of Harris Freedman). Their lack of knowledge about
Elite's core businesses is apparent.

According to information contained in the Freedman Group's proxy statement:

o Harris Freedman is a business consultant, but the Freedman Group did not
disclose the businesses or industries to which he has consulted.

o Sharon Will is involved in investor relations services, but the Freedman Group
did not disclose the businesses or industries to which she provides services or
how those services qualify her to be a director of the Company.

o Michael H. Freedman is a corporate lawyer with no relevant industry experience
and is the son of Harris Freedman.

The information provided by the Freedman Group makes no reference to any of
Harris Freedman, Sharon Will or Michael H. Freedman having served on a board of
directors of a public company nor having any experience in developing,
licensing, manufacturing or marketing pharmaceutical products or obtaining FDA
approval with regard to any of such products.

None of the Freedman Group's nominees are currently affiliated with Elite and
none of them to our knowledge has had any relevant experience in Elite's core
business of developing oral controlled release pharmaceutical products. While
companies affiliated with Harris Freedman and Sharon Will performed consulting
services for the Company in the past, those services related to marketing and
management consulting in the case of Harris Freedman and investor relations in
the case of Sharon Will. Neither Mr. Freedman nor Ms. Will has been involved in
any way with the actual operations of the Company. We believe that as a small
company in the pharmaceutical industry we need a board of directors who have
broad pharmaceutical industry experience and who are well regarded in that
industry in order to demonstrate the Company's expertise and to have access to
strategic partners and customers.

The consulting services performed by the entities affiliated with Harris
Freedman and Sharon Will were discontinued in December 2001 and June 2002,
respectively, by the Company because of unprofessional, and ineffective
assistance and poor performance, and a belief by the Company that Mr. Freedman
and Ms. Will were more concerned about the performance of the Company's stock
than the growth and development of the Company business.

The Company retained the entities affiliated with Harris Freedman and Sharon
Will to provide the respective consulting services at a time when the Company
was first beginning its operations. Harris Freedman was the controlling
stockholder of the public shell into which the Company merged and Sharon Will
was his business partner. They were eager to help the Company with its growth.
Even though these entities did not have experience with pharmaceutical
companies, we did not believe that the experience was a pre-requisite, provided
the services were performed in a professional, effective manner.

-8-

When you compare the qualifications of the current independent directors who are
nominated for re-election to those of the Freedman Group's hand-picked slate, we
believe that stockholders should conclude that your existing Board of Directors
is better qualified to lead the Company at this time. Based on publicly
available information and additional information obtained by Elite, we have set
forth below the background and qualifications of the current independent
directors and the members of the Freedman Group's slate::

-------------------------------------------------------------------------------
Current Independent Director Freedman Group Nominee
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Harmon Aronson, Ph.D. Harris Freedman

> since 1997 President of Aronson > since 1978 has provided
Kaufman Associates, Inc., a general business consulting
consulting firm that provides services.
manufacturing, FDA regulatory and
compliance services to > during the 1970s, worked,
pharmaceutical and biotechnology among other things, as a
companies. Its clients include salesman for a lawn chemical
United States and international treatment company.
firms manufacturing bulk drugs and
finished pharmaceutical dosage > prior thereto sold life
products who are seeking FDA insurance products.
approval for their products for the
US market. > was a stockbroker in the 1960s
before being barred from the
> prior to 1997, was employed by industry by the SEC and being
Biocraft Laboratories, a leading convicted for securities
generic drug manufacturer, most fraud.
recently in the position of Vice
President of Quality Management; > never graduated from college.
prior to that he held the position
of Vice President of Non-Antibiotic
Operations, where he was
responsible for the manufacturing
of all of the firm's non-antibiotic
products.

> holds a Ph.D. in Physics from the
University of Chicago.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Donald S. Pearson Sharon Will

> since 1997 President of Pearson & > since 1994 has provided
Associates, Inc., a company that investor relations services.
provides consulting services to the
pharmaceutical industry. > from 1992 to 1994 worked as a
stockbroker.
> from 1992-1997 served as the
Director of Licensing at Elan > from 1988 to 1992 served as a
Pharmaceuticals. manufacturing sales
representative.
> prior to 1992 for thirty years was
employed by Warner-Lambert Company, > from 1982 to 1988, sold
a pharmaceutical company, in textile products and office
various marketing, business equipment.
development and licensing
capacities. > never graduated from college.

> received a B.S. in Chemistry from
the University of Arkansas and
studied steroid chemistry at St.
John's University.

-9-

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Eric L. Sichel, M.D. Michael H. Freedman

> since 1997 President of Sichel > since 1990 has been a
Medical Ventures, Inc. which securities lawyer in private
company provides biotechnology practice with several law
company assessments and investment firms.
banking services.
> received undergraduate degree
> from 1995 through 1996, was a from Hofstra University.
senior analyst in the biotechnology
field for Alex, Brown & Sons, Inc. > received a law degree from St.
of New York, NY. John's University.

> prior thereto was affiliated with
Sandoz Pharmaceuticals Corp. in
various capacities, including
associate director of
transplantation/immunology.

> Dr. Sichel is licensed to practice
medicine by the State of New York.

> Holds an M.B.A. from Columbia
University and an M.D. from
UMDNJ--New Jersey Medical School.
--------------------------------------------------------------------------------

Our current board members actively participate in the strategic management of
the Company. A loss of these board members will mean losing valuable
pharmaceutical industry experience and hands-on involvement. In addition, the
one current Elite director who the Freedman Group is not seeking to replace, Dr.
Atul M. Mehta, has not consented to serving on a Board of Directors comprised of
the Freedman Group's nominees. The Company is highly dependent on Dr. Mehta's
research and formulation abilities as well as his ability to develop products
attractive to the market. Elite's success depends a great deal on Dr. Mehta's
ability to interact with the Board of Directors. At this time, Dr. Mehta has not
yet decided whether he will continue with the Company if the Freedman Group is
successful in its proxy solicitation. Pursuant to his employment agreement, if
the Freedman Group is successful in its solicitation, a "change in control" of
the Company will have occurred, and Dr. Mehta will be entitled to terminate his
employment. See "Employment Agreement".

Institutional Shareholder Services, Inc. Recommendation

In connection with the Freedman Group's consent solicitation to replace all of
your elected independent members of your Board of Directors, Institutional
Shareholder Services, Inc. ("ISS"), a leading independent proxy advisory firm,
issued a report recommending that stockholders revoke or withhold consents
solicited by the Freedman Group in support of its proposals. We anticipate that
ISS will now recommend that stockholders vote to re-elect your existing Board of
Directors because the Freedman Group has nominated the same slate and failed to
set forth in its proxy statement any new strategy for improving Elite.

ISS is widely recognized as the nation's leading independent proxy advisory
firm. Its recommendations are relied upon by hundreds of major institutional
investment firms, mutual funds, and other fiduciaries throughout the country. We
believe that ISS's recommendations carry great weight and should be considered
carefully by stockholders, since the ISS Report was prepared by an independent
third-party advisor that made its recommendation only after careful
consideration of the positions of your Company and the Freedman Group.

In its report released by ISS on September 20, 2002, ISS states:

"Nowhere in the [Freedman Group's] written material does the [Freedman
Group] outline a specific strategy with respect to how the company can
expand its product line, improve its product development process, or
enter into new collaborative agreements with other drug companies.
Ultimately, the [Freedman Group's] plan is insufficient for the purpose
of controlling the board. Management, on the other hand, has
communicated a revised strategy that focuses on branded products,
expanded research and development activities, and alliances with other
drug companies."

"The [Freedman Group's] slate does not appear to have the relevant
industry and FDA regulatory expertise. The company is at a critical
stage in its development.... As such, a board that is well equipped
with relevant industry and FDA regulatory experience is vital to the

-10-

company's success. Two of management's independent nominees have
expertise in the pharmaceutical industry as well as experience in
manufacturing drug products and FDA regulatory matters. Management's
other independent nominee has experience in investment banking
services."

The ISS Report concludes as follows:

"[T]he company is at a critical stage in its development. Electing the
[Freedman Group's] slate poses a significant risk to the company and
its shareholders for the following reasons. First, the [Freedman
Group's] slate does not appear to have any relevant FDA expertise or
expertise in the areas of developing and/or manufacturing drug delivery
products. Second, the [Freedman Group's] plan to improve shareholder
value is simply too vague and insufficient for assuming control of the
board. Management, on the other hand, has implemented a business plan
which: (1) addresses the FDA regulatory issues and the manufacturing
and development needs of the company's drug delivery products; and (2)
positions the company for accelerated growth as indicated by expanded
research and development activities and alliances with big
pharmaceutical companies. Moreover, management's nominees have relevant
industry and FDA regulatory experience to execute the company's goals.
ISS concludes that there is no compelling evidence to suggest that a
change in control of the board is warranted. The current board should
be given an opportunity to grow the company in hopes of maximizing
shareholder value."

We agree completely with ISS' findings, and strongly urge all stockholders to
vote against the Freedman Group's proposal and to support your existing Board of
Directors. Do not return any WHITE Proxy Card sent to you by the Freedman Group,
even to vote against them. Throw it away. If you have previously sent in a WHITE
Proxy Card there is still time to change your vote. Please sign, date & return
your BLUE Proxy Card today.

THE COMPANY

Business Strategy

In an effort to increase value to the Company and its stockholders, we are now
focusing on the development of branded delivery products (which require new drug
applications ("NDA")). Our initial strategy was primarily to develop generic
drug delivery products (which require abbreviated new drug applications
("ANDA")). The reasons for implementing this refined strategy are as follows:

o the period of exclusivity for branded products is 3 years versus 6 months
for generic drugs.

o branded development allows us to enter into collaborations with other
pharmaceutical companies thereby allowing us to share the cost of the
development of new products with our partners and to share the burden of
providing resources with our partners in order to better bring the products
to market.

o branded development presents an opportunity to license products to drug
companies earlier, which could result in cash flow before the eventual
filing with the Food and Drug Administration ("FDA") and approval of
products.

o the competition in the generic drug industry continues to increase.

o increased litigation with large branded drug marketers is delaying the
release of some generic drug products.

We intend to license the marketing rights of our generic products to larger
generic companies for sales, distribution and marketing, while retaining
manufacturing rights and royalties and/or profit sharing for those products. We
plan to license our branded products at an early stage, while retaining the
manufacturing rights. This strategy will allow us to pursue NDA filings, which
requires larger resources. We intend to continue to collaborate in the
development

-11-

of five products with our current partners. We also plan to seek additional
collaborations to develop more products and have had discussions with a number
of potential parties in this area.

Our revised business strategy enables us to reduce our risk by

o diversifying our product portfolio to include both branded and generic
products in various therapeutic categories.

o building collaborations and establishing licensing agreements with
companies with greater resources thereby allowing us to share costs of
development and to improve cash-flow.

In addition to retargeting our goals and reviewing how our resources are
expended, we have taken the following steps to better position the Company for
success:

o we are interviewing candidates to join the Company's management as the head
of business development.

o we are in the initial stages of negotiating the acquisition of a
pharmaceutical plant, that would entail the manufacture by Elite of several
existing products with established cash flow. The negotiations for this
acquisition are in the initial stages and there can be no assurance that
the Company will be able to reach acceptable terms to complete this
acquisition.

Manufacturing

On September 13, 2002 Elite entered into a manufacturing agreement with
Ethypharm S.A. for the manufacture of a new prescription drug product. Elite
will receive an upfront manufacturing fee for the first phase of the technology
transfer and is entitled to receive fees in advance for each phase of the
manufacturing. In addition, upon FDA approval and if requested by Ethypharm,
Elite will manufacture commercial batches of the product on terms to be agreed.
In its proxy statement, the Freedman Group attacks this arrangement because the
proprietary products of the Company are not being licensed. Elite questions the
Freedman Group's wisdom in criticizing this arrangement as well as its
understanding of Elite's business because the relationship with Ethypharm
generates cash-flow for Elite. Increased cash-flow allows Elite to continue
developing its own products. In addition, we believe that having a relationship
with Ethypharm creates the possibility of Elite collaborating with Ethypharm on
other products. Apparently the Freedman Group would prefer that Elite pass on
profitable business if its proprietary products are not involved. Elite believes
that this approach is wrong for Elite and is evidence that the Freedman Group
should not be controlling Elite.

Collaborations

Our joint development and operating agreement with Elan Pharmaceuticals was
recently terminated. Under the termination agreement, Elite acquired all
proprietary, commercial and development rights to products developed by the
joint venture. In exchange for this assignment, Elite Research, Ltd. (now our
wholly owned subsidiary) agreed to pay Elan a royalty on certain revenues that
may be realized from the once-a-day Oxycodone product developed by the joint
venture. Elan and its transferees also retained Elite securities that were
issued in connection with the joint venture, and those securities have been
converted to Elite common stock at an exchange rate favorable to Elite. The
joint venture had completed the initial Phase I study for its first product, a
once-a-day Oxycodone formulation. The study compared the once a day formulation
against the twice-daily reference product that is currently marketed. The data
showed comparable bioequivalency. The market for twice-a-day Oxycodone products
exceeds $1 billion. Currently there is no once-a-day formulation for this
compound. Accordingly, the product is proceeding to the next stage of
development.

The joint venture had also performed work on a second, related product in the
CNS therapeutic area that is ready for initial clinical testing, and initial
formulation work on a third product combining Oxycodone with a narcotic
antagonist has been performed. Elite is excited to have obtained the world-wide
commercialization rights for these products, and anticipates commencing
full-scale studies on the first product in the very near future. As a result of
the termination of the joint venture with Elan, Elite regained control over the
products, and is now in a position to make the strategic decisions that will
most efficiently move the products toward commercialization. We have

-12-

received revenue from the products being developed by Elite Research, Ltd. and
believe that additional revenue will be realized from these products.

Intellectual Property

To date, we have been issued three patents in the United States in connection
with a controlled-release formulation of nifedipine, controlled released
nifedipine formulations and for pulsed-released delivery systems for
methylphenidate, the compound sold under the Ritalin(C) brand. The patents for
nifedipine demonstrate our ability to develop patentable products in the $1
billion control release market and have helped improve our credibility in this
area. The methylphenidate patent demonstrated our ability to develop a pulse
release formulation for a major product. The patent for pulsed-released delivery
systems for methylphenidate was assigned to Celgene Corporation and was
subsequently licensed to Novartis. We received a development fee from Celgene in
connection with this patent and obtained a license to use this patent for
applications other than methylphenidate and continue to develop other
applications based on this technology. As with our patents for nifedipine, this
technology further demonstrates our ability to develop marketable products and
has helped us in beginning discussions with other potential strategic partners.

We have filed two more patent applications and the Company intends to file
additional patent applications in the future; however, there can be no assurance
that any of these or any future patents will be granted. Controlled drug
delivery of a pharmaceutical compound offers a safer and more effective means of
administering drugs through releasing a drug into the bloodstream or delivering
it to a certain site in the body at predetermined rates or predetermined times.
Its goal is to provide more effective drug therapy while reducing or eliminating
many of the side effects associated with conventional drug therapy and/or to
reduce the frequency of administration.

Financial Performance

Our revenues for the year ended March 31, 2002 were $1.2 million, compared to
$0.1 million for the fiscal year ended March 31, 2001. The increase in revenue
resulted primarily from product development fees from collaborations with a US
pharmaceutical company to develop two products as well as from the development
of products for our joint venture with Elan. Our cash position of approximately
$6.5 million continues to be strong. Our net cash used in operating activities
in the fiscal year ended March 31, 2002 was approximately $1.5 million. We
believe that our existing cash-on-hand will provide us with sufficient resources
to allow us to implement our business strategy, although no assurances can be
given that we will have sufficient resources to complete our business plan
without needing additional capital. Our audited financial statements for the
fiscal year ended March 31, 2002 are included in our Annual Report on Form 10-K
which is available without charge to each person solicited, upon the written
request of any such person. Such request should be directed to Mark I.
Gittelman, Elite Pharmaceuticals, Inc., 165 Ludlow Avenue, Northvale, New Jersey
07647.

The Outlook for Elite

Our policy has been to refrain from making public announcements of preliminary
results or contemplated agreements. The strategy has also been to avoid large
cash transactions that entail sacrifices in Elite's long-term interests.

With our broad technology pipeline, expanded research and development
activities, FDA and DEA registered facility, and alliances with other
pharmaceutical companies, we believe the Company is strategically positioned for
accelerated growth. In preparation for this growth, we have expanded our staff
to allow for greater resources to be devoted to research and development
activities.

THE FREEDMAN GROUP

The Freedman Group's Self-Interested Agenda

On July 14, 1998 and September 20, 1999, the Company issued Class A Warrants
covering 250,000 shares of common stock in the aggregate to Bridge Ventures,
Inc. ("Bridge"), an entity controlled by Harris Freedman, and on December 17,
1998 and September 20, 1999, the Company issued Class A Warrants covering
100,000 shares of common stock in

-13-

the aggregate to Saggi Capital Corp. ("Saggi"), an entity controlled by Sharon
Will. The exercise price of the Class A Warrants issued to each of Bridge and
Saggi is $6.00 per share. The warrants were issued in connection with consulting
services performed for the Company by Bridge and Saggi, entities controlled by
Harris Freedman and Sharon Will, respectively. The Class A Warrants issued to
Bridge and Saggi expire on November 30, 2002.

Beginning in or about June 2002, Harris Freedman and Sharon Will, on behalf of
Bridge and Saggi, began urging Dr. Atul M. Mehta, Elite's President and Chairman
of the Board, to extend the term of the Class A Warrants, which were due to
expire in November 2002. Freedman and Will pressured the Company to extend the
warrants immediately, and made statements to the effect that the Company's stock
price would be greatly depressed by unspecified actions that the Freedman Group
would take if the warrants were not extended. However, the Company was not
certain what actions the Freedman Group intended to take.

Elite investigated whether extending the term of the warrants would have any
adverse effect on the Company. The Company's independent accountants, Miller,
Ellin & Co., LLP, reviewed with the Company the calculation of the compensation
expense which would be incurred in fiscal year 2003 if the expiration of the
warrants were extended as requested by the Freedman Group. The Company solicited
a second opinion from KPMG, which concurred with the Company's calculation of
the charge. The Board also consulted with its counsel, James, McElroy & Diehl,
P.A., about the Freedman Group's demand and the Company's obligation, if any, to
extend the term of the warrants. The Board of Directors considered the
information received from its accountants and other advisors and concluded on
July 18, 2002 that it was not in the best interests of the Company or its
stockholders to extend the expiration date of the Class A Warrants.

While the Board considered Freedman and Wills' request to extend the term of the
warrants, they began exerting greater pressure on the Company. On the day of the
July 18 Board meeting, Freedman filed a Schedule 13-D with the SEC, stating that
as a result of the Company's "recent performance" he intended to take
unspecified actions to "enhance shareholder value". Freedman sent copies of the
filing to the Board of Directors by fax prior to the meeting.

The Board took into consideration the following factors after speaking with its
accountants and attorneys:

o The warrantholders had no expectation when they acquired the Class A
Warrants that they would be extended.

o The Class A Warrants are registered, and they were in the money for many
months. As such, the holders had adequate time to exercise or trade out of
their position.

o The Company would incur significant compensation expense in fiscal year
2003. The Board believed that the added expense would have a negative
impact on the trading value of the Company's stock, thereby harming the
other stockholders, notwithstanding that the expense would not involve an
outlay of funds.

o The extension would benefit the warrantholders by increasing the value of
the warrants without any guarantee that the warrants would ever be
exercised.

o The extension of the Class A Warrants would not guarantee that the issue of
the expiration date would not arise again when a new expiration date
approached.

o the Board believed that the Company had no obligation to extend the term of
the warrants and that the extension might be inconsistent with the
fiduciary duties of the Board of Directors.

o The possible capital inflow that may arise from the exercise of the Class A
Warrants is not guaranteed and would almost certainly be at the end of the
extended term, if at all. Further, the Company had (and has) adequate cash
to meet its current and anticipated needs and believes that it could raise
additional capital from the capital markets if the need arises.

On July 24, 2002, Elite filed a Current Report on Form 8-K confirming that it
was not extending the expiration date of the Class A Warrants.

Following the Board's decision not to extend the expiration date of the Class A
Warrants, the Freedman Group initiated its costly and unprovoked consent
solicitation to remove all of your elected independent directors with
themselves. Their consent solicitation caused Elite to incur significant costs
and expenses without benefit to the Company. The

-14-

Freedman Group's consent solicitation also interfered with the implementation of
Elite's business plan because management needed to devote time opposing it.

The Freedman Group Does Not Understand Elite or Its Business

The Freedman Group criticizes the Company for not filing any Treatment IND, ANDA
or NDA with the FDA since 1997. That criticism reveals their unfamiliarity with
the pharmaceutical industry. Some of the products the Company is developing do
not require investigative new drug applications before initiating Phase I
studies. Moreover, the lack of filings bears no relationship to the development
of new products, and the Company intends to file directly or through
partners/licensees/collaborators the necessary applications for its products.

While it is easy for the Freedman Group to criticize that which it does not know
or understand, the cost of acting without the requisite knowledge can be severe.
We believe that without having management and a Board that is familiar with FDA
requirements, has sound knowledge of the pharmaceutical industry and possesses
solid reputations in the industry, the Company will be at a significant
competitive disadvantage.

The Freedman Group Has No Real Plans For The Company

The Freedman Group is asking you to support their slate of nominees for the
Board of Directors without having offered you a comprehensive, industry-specific
business plan. They are asking for your support without telling you how they
plan to increase stockholder value. Their attempt at a business plan appears to
call for hiring two new executives, retaining an investment banker and extending
the term of the Class A Warrants. Nowhere do they explain how they would operate
the Company differently or improve the Company's performance or develop new or
different products. It is possible that they are not providing any of this
detail because they have not yet undertaken this analysis, or because they
cannot undertake the analysis since they do not know or understand our industry
or our Company.

Our business strategies include tangible, ongoing changes and initiatives that
have been explained to stockholders over the last year and are beginning to bear
positive results. You can see the successful results of our business plan by the
performance of the Company. We believe that evidence of our improved performance
can be seen from:

o the increase in our revenues by $1.1 million from the fiscal year ended
March 31, 2001 to the fiscal year ended March 31, 2002. The increase
resulted primarily from product development fees and our joint venture with
Elan.

o two new patents have been granted to the Company which improved our
visibility within our industry and our reputation. We also filed two
additional patent applications.

o our product portfolio has expanded from 9 to 15 products.

We believe that our strategic, industry-specific business plan has begun to
yield positive results, while the Freedman Group has yet to show you any real
plan at all.

Elite's Stock and Warrant Price

One of the accusations made by the Freedman Group is that the current Board of
Directors has caused the decline in the stock price of Elite. The price of Elite
stock has declined over the past months along with the vast majority of publicly
traded stocks over that period. The bio-tech industry has been particularly hard
hit. Yet, Elite has performed better than the Nasdaq Composite Index and the
Nasdaq Biotech Index and roughly equivalent to the Amex Biotech Index. For
comparison purposes, in the two years ending September 16, 2002, the Nasdaq
Composite Index declined by nearly 70%, the Nasdaq Biotech Index declined by
more than 64%, and the Amex Biotech Index declined by approximately 55% while
the Company's stock price also declined by only approximately 55% in this
period. We believe that a comparison of the performance of our stock to these
indices for the past 2 years gives a fair comparison because the Company has
only been listed on the American Stock Exchange since February 2000.

-15-

The Freedman Group also draws attention to the fact that the price of the Class
A Warrants has declined, making the inference that this decline is also due to
mismanagement of the Company. At the time the Class A Warrants at issue in this
solicitation were issued, they had an expiration date of November 30, 2002. This
has not changed. Under the Black-Scholes option pricing model, the fair market
value of a warrant declines as its expiration date approaches. The warrants will
have no value upon their expiration.

What the Freedman Group Didn't Tell You

According to publicly available information obtained by the Company,

o in 1967 Harris Freedman pleaded guilty to criminal charges that he
conspired to violate the anti-fraud provisions of the Securities Act of
1933, as amended (the "Securities Act"), and that he directly violated the
anti-fraud provisions of the Securities Act by intentionally misleading
investors.

o the Securities and Exchange Commission barred Harris Freedman from
associating with a registered broker-dealer for willfully violating the
anti-fraud provisions of the Securities Act and the Securities Exchange Act
of 1934, as amended, and revoked the registration of a brokerage firm of
which Mr. Freedman was president as a result of its finding that Mr.
Freedman intentionally misled investors.

o Finally, in 1999, Harris Freedman and Ms. Will, who is a member of Mr.
Freedman's group, were named as defendants in a lawsuit filed in the United
States District Court for the District of New Jersey alleging, among other
things, that Mr. Freedman and Ms. Will manipulated the trading price of a
public company for their own benefit. This lawsuit was settled with the
payment to the plaintiffs of $750,000 and the issuance to the plaintiffs of
324,486 shares of Amplidyne Inc. stock. The publicly announced terms of the
settlement do not indicate which defendants paid the settlement amounts and
do not contain admissions of any wrong-doing.

THE ROUTE THE FREEDMAN GROUP CHOSE TO ATTEMPT TO TAKE
CONTROL OF YOUR BOARD OF DIRECTORS WILL NOT RESULT
IN THE PAYMENT TO YOU OF ANY CONTROL PREMIUM

People who seek control of a company usually either make a proposal to the board
of directors to buy the company, or, if the board refuses their proposal, they
commence a tender offer for the outstanding shares. In either case, a person
trying to obtain control of a company this way usually offers a control or sales
premium to the stockholders, that is, they pay more than market value for the
shares. That excess price is called a control premium.

In contrast, control premiums generally are not paid when a change in management
has occurred as a result of a proxy solicitation. By undertaking a proxy contest
to take control of Elite's Board of Directors, the Freedman Group has chosen to
attempt to gain control of the Company using a method that, although legal, does
not include the payment of a control premium (or anything at all) to
stockholders.

Each of the Freedman Group's Proposal is designed to enable it to take control
of the Board that YOU elected and which contains the independent directors by
replacing a majority of the Board with their own hand-picked nominees -
themselves. We believe that their proxy solicitation is an attempt to pressure
you without giving you the opportunity to consider all of Elite's strategic
alternatives. We believe that this undue pressure created by the Freedman Group
is not in the Company's or your best interests.

For the reasons discussed above, we have determined that the Freedman Group's
proposal are not in the best interests of you or Elite. The above discussion of
reasons and factors considered by us is not intended to be exhaustive, but does
reflect the material information and factors we considered in our review and
analysis of the Freedman Group's proposal. In view of the variety of factors and
the amount of information considered, we did not find it practicable to provide
specific assessments of, quantify or otherwise assign any relative weights to,
the specific factors considered in determining to recommend that you reject the
Freedman Group's proposal. Our determination was made after we considered all
the factors taken as a whole. In addition, some of the members of our Board of
Directors may have given differing weights to different factors. Throughout our
deliberations regarding the Freedman Group's proposal, we received advice from
our counsel James, McElroy & Diehl, P.A. in connection

-16-

with the Freedman Group's proposal and the obligation of the Company, if any, to
extend the term of the warrants and related matters, and from James, McElroy and
Diehl, P.A. and Lowenstein Sandler PC with regard to the Freedman Group's
solicitation and the Company's solicitation. We also discussed with our
accountants Miller, Ellin & Co. LLP about the potential accounting consequences
to the Company of extending the term of the warrants.

WE UNANIMOUSLY OPPOSE THE FREEDMAN GROUP'S SOLICITATION AND URGE YOU NOT TO SIGN
THE WHITE PROXY CARD THAT THEY SEND TO YOU.

Even if you previously signed and returned the WHITE proxy card, you have every
right to change your vote. We urge you to sign, date and mail the enclosed BLUE
Proxy Card in the postage-paid envelope provided. Your prompt action is very
important. Please return the BLUE Proxy Card today.

If your shares are registered in your name, please sign, date and mail the
enclosed BLUE Proxy Card to Georgeson Shareholder Communications Inc. in the
postage-prepaid envelope provided today.

If you have any questions about giving your proxy or revoking a proxy previously
provided to the Freedman Group or require assistance, please call Georgeson, the
firm assisting the Company in this proxy solicitation, at:

Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
Stockholders call toll free: 866-297-1267
Banks & Brokers call: 212-440-9800
Fax number: 212-440-9009

PENDING LITIGATION

On August 27, 2002 in connection with the Freedman Group's consent solicitation,
we commenced an action in the United States District Court for the District of
New Jersey (the "Action") against (i) the individual members of the Freedman
Group, (ii) additional individuals whose identities, we contend, the Freedman
Group was required to disclose but who were not listed in any of the Freedman
Group's SEC filings and (iii) other unnamed defendants who are acting in concert
with the disclosed and undisclosed members of the Freedman Group (collectively,
the "Defendants"). The complaint seeks injunctive relief against the Defendants
on the basis that the Defendants violated the federal securities laws and the
rules promulgated by the SEC thereunder by, among other things, filing a
Schedule 13D more than ten days after the Defendants formed a "group" for
purposes of Section 13(d) of the Securities Exchange Act of 1934 (the "Act"), by
failing to disclose all persons acting in concert with the Freedman Group and by
acquiring additional shares of our stock during a period that is prohibited by
the Act.

We also allege that the Defendants violated Section 14(a) of the Act by filing a
false and misleading proxy solicitation which failed to identify all the
participants of the Freedman Group's consent solicitation. The complaint also
alleges that the Defendants are violating the SEC's proxy rules in conducting
their consent solicitation by representing to Elite stockholders the outcome of
the consent solicitation process. Elite contends that the Freedman Group has
violated these stockholder-protection provisions of the federal securities laws
in order to advance its efforts to take control of the Company.

On August 27, 2002, we applied to the Court for a temporary restraining order
barring Defendants from any further contacts with Elite's stockholders, barring
Defendants from any further violation of the federal securities laws, and
compelling corrective disclosures to remedy the Section 13(d) and Section 14(a)
violations. On September 6, 2002, the Court denied our application for a
temporary restraining order and granted our motion for expedited discovery. On
October 1, 2002, the Court denied our request for a preliminary restraining
order.

OUTSTANDING ELITE STOCK

As of [______________], 2002, there were [______________] shares of Elite common
stock outstanding.

-17-

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To the knowledge of the Company, there was no person who, at any time during the
fiscal year ended March 31, 2002, was a director, officer, beneficial owner of
more than 10% of any class of equity securities of the Company 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 during the most recent fiscal year.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company is a party to an agreement whereby fees are paid to Gittelman & Co.,
P.C., a company wholly owned by Mark I. Gittelman, the Company's Chief Financial
Officer, Secretary and Treasurer, in consideration for services rendered by Mr.
Gittelman in his capacity as Chief Financial Officer and Treasurer. For the
fiscal years ended March 31, 2002 and 2001, the fees paid to that company were
$91,260 and $82,639, respectively.

COMMITTEES

The Company has an Audit Committee of the Board of Directors. The Company has no
other standing committees of the Board of Directors.

AUDIT COMMITTEE

The Audit Committee had one meeting during the fiscal year ended March 31, 2002.
The Company's Board of Directors has adopted a written charter for the Audit
Committee, a copy of which was included as an appendix to the Company's proxy
statement sent to stockholders in connection with the annual meeting of
stockholders held October 11, 2001.

The Company deems the members of its Audit Committee to be independent as
independence is defined in Section 121(A) of the American Stock Exchange Listing
Standards.

AUDIT COMMITTEE REPORT

The Audit Committee reviewed and discussed the audited financial statements with
management. The Audit Committee discussed with the independent auditors of the
Company the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU 380), as modified or supplemented. The
Audit Committee received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees), as modified or supplemented. The Audit Committee discussed
with the independent accountant the independent accountant's independence. Based
upon the foregoing review and discussions, the Audit Committee recommended to
the Board of Directors of the Company that the audited financial statements of
the Company be included in the Company's Annual Report on Form 10-K for the last
fiscal year ended March 31, 2002 as filed with the Securities and Exchange
Commission.

The foregoing report of the Audit Committee is made by members of the Audit
Committee of the Company: Donald S. Pearson, Harmon Aronson and Eric L. Sichel.

BOARD MEETINGS

The Board of Directors of the Company had three meetings held during the fiscal
year ended March 31, 2002. No incumbent director attended fewer than 75% of the
aggregate of the meetings of the Board and its Audit Committee during that year.

COMPENSATION OF DIRECTORS

Each non-affiliated director receives $2,000 as compensation for each meeting of
the Board of Directors attended.

-18-

EXECUTIVE COMPENSATION

The following table provides information on the compensation of Dr. Atul M.
Mehta, the chief executive officer of the Company for the last three fiscal
years. No other executive officer of the Company received salary and bonus
exceeding $100,000 during those periods.

Summary Compensation Table

Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Fiscal Salary Bonus Other Restricted Securities LTIP All other
principal Year ------ ----- Annual stock Underlying payouts compen-
position ---- Compen- awards options sation
-------- sation ----- ------- ------- ------
------

Atul M. 2001-02 $272,855 $30,000 $83,896 -- 50,000 -- --
Mehta 2000-01 $248,050 $45,000 $3,040 -- 425,000(1)(2) -- --
President 1999-00 $227,030 $25,000 $3,040 -- 500,000 -- --
and Chief
Executive Officer

(1) On December 15, 2000, Dr. Mehta surrendered options for 425,000
shares of the Company's common stock (exercisable at $7.00 per share) and in
return received options for 425,000 shares of the Company's common stock
exercisable on January 2, 2001 and expiring January 1, 2006. The exercise price
is 110% of the opening price of the Company's common stock on January 2, 2001
adjusted upward to the nearest half dollar of $7.00. On January 2, 2001, the
stock of the Company opened at $6.25 per share, therefore the exercise price for
the stock subject to these options is $7.00 per share.

(2) By action on February 21, 2002, the Board corrected a clerical
error in options for 425,000 shares of common stock of the Company previously
granted to Dr. Mehta. This correction did not result in any additional shares
being subject to options held by Dr. Mehta, any change in the exercise price or
a change in any other material terms.

The Company's fiscal year begins April 1 and ends March 31. The information is
provided for each fiscal year beginning April 1.

Other Annual Compensation represents use of a company car and premiums paid by
the Company for life insurance on Dr. Mehta's life for the benefit of his wife.

Reported below in this report is the purchase by the Company of options from Dr.
Mehta. The purchase price for those options of $80,896 is included above in
"Other Annual Compensation."

Option Grants in Last Fiscal Year

During the fiscal year ended March 31, 2002, the Board of the Company authorized
issuance to Dr. Mehta of options to acquire 50,000 shares of the common stock of
the Company, vesting over a period of five years at the rate of 10,000 shares
per year beginning February 21, 2003, exercisable at a price equal to 110% of
the closing price of the stock on February 21, 2002 ($8.25 per share).

By action on January 25, 2001, the Board purchased options held by Dr. Mehta for
20,214 shares of the common stock of the Company at a price of $4.00 per share.
The options carried an exercise price of $2.00 per share. The then current
market price for the stock was in excess of $7.50. Dr. Mehta had intended to
exercise the option for these shares and then sell the shares. The purchase
price for the option arrived at by the Board took into account the amount which
would be necessary to purchase the options and cover taxes payable by Dr. Mehta
on the transaction.

-19-

Option/SAR Grants Table in Last Fiscal Year

(a) (b) (c) (d) (e)
Number of % of Total Options Exercise or
Name Securities Granted to Employees Base Price Expiration date
---- Underlying Options in Fiscal Year ($/sh) ---------------
Granted -------------- ------
-------

Atul M. Mehta 50,000 2.8% $8.25 2-20-07

Options for 500,000 shares which were granted to Dr. Mehta during the fiscal
year ended March 31, 2000 vest at the rate of 100,000 shares per year on each
December 31 beginning December 31, 2001. The options expire on the earlier of
(a) one year after Dr. Mehta ceases to be employed by the Company or to serve as
an officer or director of the Company or (b) March 31, 2010. Notwithstanding,
the options shall become fully vested and exercisable if Dr. Mehta's employment
agreement or his position as an officer and director is terminated by the
Company for any reason or if it expires as a result of the Company giving notice
of nonrenewal. If the board of directors of the Company votes to approve the
acquisition of more than 50% of the stock of the Company by any person or
entity, the Company may require Dr. Mehta to exercise or sell the options. In
addition to the above stated options, by Board action on September 22, 2000, Dr.
Mehta was granted a preemptive right to acquire shares of the Company in a
sufficient number to maintain his percentage ownership of the shares
outstanding. Under this preemptive right, upon issuance by the Company of shares
of common stock for any reason, or of securities convertible into common stock
upon demand, Dr. Mehta shall be permitted to purchase shares of common stock of
the Company sufficient to maintain the greater of his percentage ownership of
outstanding common stock of the Company determined on an absolute basis and upon
a fully diluted basis as existed prior to the stock issuance. The price which
Dr. Mehta shall pay for such stock shall be the lower of (x) the then current
market price (discounted 15% if the shares are not registered) or (y) the price
to be paid by the party in the transaction triggering the preemptive right. The
right shall be exercised and the price shall be paid within 120 days of the
issuance of the stock triggering the preemptive right.

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option Value
Table

a b c d e
No. of Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at FY-End at FY-End
Name Shares Acquired Value Exercisable/ Exercisable/
---- on Exercise Realized Unexercisable Unexercisable
----------- -------- ------------- -------------

Dr. Atul M. Mehta None $0 1,025,000/450,000 $975,000/0

These options and the shares underlying them are unregistered, and their market
value is unknown and incalculable. However, the registered common stock of the
Company was trading for $3.04 per share as of the close of business on October
3, 2002. It is on this hypothetical value that the figures in column (e) are
calculated. These figures may have no relation to the actual value of the
unexercised options.

EMPLOYMENT AGREEMENT

The only employment agreement which the Company has with an executive officer is
the Amended and Restated Employment Agreement entered into March 31, 2000 and
amended on July 18, 2002, between the Company and Dr. Atul M. Mehta (the
"Agreement"). The Agreement provides:

o that the Company will employ Dr. Mehta for a period of five years ending
December 31, 2005 (unless sooner terminated pursuant to provisions of the
Agreement). At the end of the five years, the Agreement will be
automatically renewed for an additional five year term with an annual
salary to be agreed to, unless either party gives written notice of
nonrenewal by December 31, 2004. The Agreement is automatically

-20-

extended for periods of one year after December 31, 2010 unless either
party gives notice of nonrenewal at least one year prior to the date of
expiration.

o for an annual salary of $242,000, which amount is to be increased by the
board of directors not less than 10% annually beginning January 1, 2001.

o that Dr. Mehta will receive 5% of the net profit of the Company each fiscal
year.

o for an annual bonus in an amount determined by the Board.

o that Dr. Mehta will receive options to purchase Elite common stock at a
price of $10.00 per share in a total amount of 500,000 shares, exercisable
in increments of 100,000 shares annually beginning December 31, 2000. The
options shall be exercisable from the date of vesting until one year after
Dr. Mehta ceases to be employed by the Company or to serve as an officer
and director of the Company or March 31, 2010, whichever is earlier.

o that the options are exercisable by Dr. Mehta if the Agreement or Dr.
Mehta's position as an officer and director is terminated by the Company
for any reason or if the Agreement is not renewed by the Company.

o that the Agreement will terminate upon (a) Dr. Mehta's death, (b) election
of either party if Dr. Mehta is unable to perform his duties on account of
disability for a total period of 120 days or more during any consecutive
period of twelve months, (c) by the Company upon "severe cause" and (d) by
Dr. Mehta upon the occurrence of certain events.

o that if the Agreement is terminated due to Dr. Mehta's death, his surviving
spouse, or his estate if his spouse does not survive, shall receive Dr.
Mehta's salary, incentive commissions, benefits and any deferred
compensation accrued through the last day of the third calendar month
following the month in which termination occurred; in addition, one-half of
his salary would be paid for an additional period of three years.

o that if the Agreement is terminated by the Company because of Dr. Mehta's
disability or upon "severe cause", Dr. Mehta will receive his salary,
incentive commissions, benefits and any deferred compensation through the
last day of the calendar month in which the termination occurs.

o that if the Agreement is terminated by Dr. Mehta upon the occurrence of one
of the events specified, including a "change in control" as defined, Dr.
Mehta will receive all accrued salary, incentive commissions, benefits and
any deferred compensation through the later of May 22, 2006 or the third
anniversary of such termination. If the Freedman Group is successful in its
solicitation, a change-in-control as defined in Dr. Mehta's employment
agreement will have occurred and Dr. Mehta will have the right to terminate
his employment with the Company and to receive "all accrued salary,
incentive commissions, benefits, and any deferred compensation and all
salary and commissions payable under Paragraph 4(b) through a period ending
upon the later of (i) May 22, 2006 or (ii) the third anniversary of such
termination." The salary portion of these payments will be due to Dr. Mehta
in a lump sum. Paragraph 4(b) entitles Dr. Mehta to a bonus each year of 5%
of the Company's net profit.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

Shown in the table below is any person (including any "group") known to the
Company to be the beneficial owner of more than five percent (5%) of any class
of the Company's voting securities as of October 1, 2002.

Title of Class Name and Address of Amount and Nature of Percent
-------------- Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------

Common Dr. Atul M. Mehta, Director/Officer 2,962,701(1) 26.4%
165 Ludlow Avenue Direct and
Northvale New Jersey 07647 Indirect

-21-

Common Jerome Belson 928,000(2) 9.2%
495 Broadway Direct and
New York, NY 10012 Indirect

Common John de Neufville and Mely Rahn, Trustees 766,100(3) 7.6%
Margaret de Neufville Revocable Trusts Direct and
197 Meister Avenue Indirect
North Branch, NJ 08876

Common Bakul and Dilip Mehta 630,000 6.5%
P. O. Box 438 Direct
Muscat, Sultanate of Oman

Common Bridge Ventures, Inc. 859,470(4) 8.6%
1241 Gulf of Mexico Drive Direct and
Longboat Key, FL 24228 Indirect

SMACS Holding Corp.
1241 Gulf of Mexico Drive
Longboat Key, FL 24228

Bridge Ventures, Inc. Employee
Pension Plan
1241 Gulf of Mexico Drive
Longboat Key, FL 24228

Saggi Capital Corp.
9 Prospect Hill Road Ext.
Pine Plains, NY 12567

Saggi Capital Corp. Money Purchase Plan
9 Prospect Hill Road Ext.
Pine Plains, NY 12567

Saggi Capital Corp. Profit Sharing Plan
9 Prospect Hill Road Ext.
Pine Plains, NY 12567

Harris Freedman
1241 Gulf of Mexico Drive
Longboat Key, FL 24228

Sharon Will
9 Prospect Hill Road Ext.
Pine Plains, NY 12567

Michael H. Freedman
200 East 89th Street, Suite 17A
New York, NY 10128

Common Shelly Bay Holdings, Inc. 849,291(5) 8.0%
101 Brookmeadow Road Direct and
Wilmington, Delaware 19807 Indirect

-22-

Shelly Bay holdings, Ltd.
c/o Consolidated Limited
Par La Ville Place
14 Par-La-Ville Road
Hamilton HM JX, Bermuda

John Moore
101 Brookmeadow Road
Wilmington, Delaware 19807

(1) Includes (i) 6,300 shares held by the Amar Mehta Trust; (ii) 6,300 shares
held by Mrs. Mehta as custodian for Anand Mehta; (iii) 200,000 shares held by
Mehta Partners, LP; and (iv) options to purchase 1,475,000 shares of common
stock held by Dr. Mehta (including options for 400,000 shares which do not begin
vesting until December 31, 2002 and then vest 100,000 shares on that date and
100,000 shares annually thereafter for three years and options for 50,000 shares
which begin vesting on December 31, 2002 and then vest 10,000 shares on that
date and 10,000 shares annually thereafter for four years).

(2) Includes (i) 35,000 shares held by Maxine Belson, wife of Jerome Belson;
(ii) 50,000 shares by the Jerome Belson Foundation; and (iii) 28,000 shares
owned by the Grandchildren of Jerome Belson; and (iv) warrants for 256,000
shares.

(3) Represents (i) 331,000 shares held in trust for the benefit of John P. de
Neufville; (ii) 410,000 shares held in trust for David T. de Neufville; and
(iii) options personally held by John P. de Neufville to purchase 25,000 shares.

(4) Based on information contained in a Schedule 13D, as amended, filed by the
foregoing persons on August 26, 2002 who have formed a group within the meaning
of Section 13(d) of the Securities Exchange Act of 1934. Consists of (a) 2,000
shares of common stock owned by Harris Freedman, (b) 369,970 shares of common
stock owned by Bridge Ventures, Inc. (including 85,250 shares of common stock
issuable upon exercise of warrants owned by Bridge Ventures, Inc.), (c) 121,000
shares of common stock owned by SMACS Holding Corp. (including 75,000 shares of
common stock issuable upon exercise of warrants owned by SMACS Holding Corp.),
(d) 102,200 shares of common stock owned by Bridge Ventures, Inc. Employee
Pension Plan (including 10,000 shares of common stock issuable upon exercise of
warrants owned by Bridge Ventures, Inc. Employee Pension Plan), (e) 7,500 shares
of common stock owned by Sharon Will, (f) 217,500 shares of common stock owned
by Saggi Capital Corp. (including 110,000 shares of common stock issuable upon
exercise of warrants owned by Saggi Capital Corp.), (g) 7,450 shares of common
stock owned by Saggi Capital Corp. Money Purchase Plan, (h) 8,350 shares of
common stock owned by Saggi Capital Corp. Profit Sharing Plan, and (i) 23,500
shares of common stock owned by Michael H. Freedman (including 5,000 shares of
common stock issuable upon exercise of warrants owned by Michael H. Freedman).

(5) Based on information contained in a Schedule 13G filed by Shelly Bay
Holdings, Inc., Shelly Bay Holdings, Ltd. and John Moore on August 27, 2002, the
849,291 shares of common stock beneficially owned by John Moore include the
849,291 shares of common stock beneficially owned by Shelly Bay Holdings, Inc.
and the 849,291 shares of common stock beneficially owned by Shelly Bay
Holdings, Ltd. These shares of common stock are comprised of (i) 667,500 shares
of common stock issuable upon the exchange of 13,487 shares of the Series A
Preferred Stock, par value $1.00 per share, of ELI, the wholly-owned subsidiary
of the Company, (ii) 81,791 shares issuable upon the payment and exchange of
in-kind dividends on the Series A Preferred Stock of ELI accrued through and as
of June 29, 2002, and (iii) the exercise of a warrant to purchase 100,000 shares
of common stock (exercisable through October 17, 2005) at an exercise price of
$18.00 per share. The Series A Preferred Stock of ELI will become exchangeable
by the reporting persons into shares of common stock of the Company in October
2002.

The Company is informed and believes that as of [__________], 2002, Cede & Co.
held [_____________] shares of the Company's common stock and [_____________]
Class A Warrants for shares of the common stock of the Company as nominee for
Depository Trust Company, 55 Water Street, New York, New York 10004. It is the
Company's

-23-

understanding that Cede & Co. and Depository Trust Company both disclaim any
beneficial ownership therein and that such shares are held for the account of
numerous other persons, no one of whom is believed to beneficially own five
percent or more of the common stock of the Company.

SECURITY OWNERSHIP OF MANAGEMENT

Shown below, as of October 1, 2002, are the shares of the Company beneficially
owned by all directors and nominees, by the executive officers and by the
directors and executive officers of the Company as a group.

Title of Class Name and Address of Amount and Nature of Percent
-------------- Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------

Common Dr. Atul M. Mehta, Director/Officer 2,962,700(1) 26.4%
165 Ludlow Avenue Direct and
Northvale NJ 07647 Indirect

Common Donald S. Pearson, Director 78,750(2) 0.8%
1305 Peabody Avenue Direct
Memphis, TN 38104

Common Harmon Aronson, Director 60,000(3) 0.6%
26 Monterey Drive Direct
Wayne, NJ 07470

Common Eric L. Sichel, Director 30,000(4) 0.3%
411 Highview Road Direct
Englewood, NJ 07631

Common Mark I. Gittelman, Chief Financial Officer, 10,000(5) 0.1%
Treasurer and Secretary Direct
300 Colfax Avenue
Clifton, NJ 07013

Common Officers and Directors as a Group 3,141,450 27.7%
Direct and
Indirect

Nominees

Common John P. de Neufville 766,100(6) 7.6%
197 Meister Avenue Direct and
North Branch, NJ 08876 Indirect

Common John Moore 849,291(7) 8.0%
101 Brookmeadow Road Direct and
Wilmington, Delaware 19807 Indirect

Common Richard A. Brown 361,500(8) [__]%
P.O. Box 54
New York, NY 10028

-24-

options for 50,000 shares which do begin vesting until December 31, 2002 and
then vest 10,000 shares on that date and 10,000 shares annually thereafter for
four years).

(2) Includes options to purchase 60,000 shares. Options for 40,000 shares are
vested. The remaining options vest in increments of 10,000 shares each on
September 1, 2002 and January 2, 2003.

(3) Comprised of options to purchase 60,000 shares. Options for 40,000 shares
are vested. The remaining options vest in increments of 10,000 shares each on
September 1, 2002 and January 2, 2003.

(4) Comprised of options to purchase 30,000 shares. Options for 10,000 shares
are vested. Options for the remaining shares vest in increments of 10,000 each
on August 2, 2003 and August 2, 2004.

(5) Comprised of options to purchase 10,000 shares.

(6) Comprised of (i) 331,100 shares held in trust for the benefit of John P. de
Neufville; (ii) 410,000 shares held in trust for David T. de Neufville; and
(iii) options personally held by John P. de Neufville to purchase 25,000 shares.

(7) Comprised of (i) 667,500 shares of common stock issuable upon the exchange
of 13,487 shares of the Series A Preferred Stock, par value $1.00 per share, of
ELI, the wholly-owned subsidiary of the Company, beneficially owned by John
Moore, Shelly Bay Holdings, Inc. and Shelly Bay Holdings, Ltd., (ii) 81,791
shares issuable upon the payment and exchange of in-kind dividends on the Series
A Preferred Stock of ELI accrued through and as of June 29, 2002 beneficially
owned by John Moore, Shelly Bay Holdings, Inc. and Shelly Bay Holdings, Ltd.,
and (iii) the exercise of a warrant to purchase 100,000 shares of common stock
(exercisable through October 17, 2005) at an exercise price of $18.00 per share,
beneficially owned by John Moore, Shelly Bay Holdings, Inc. and Shelly Bay
Holdings, Ltd. The Series A Preferred Stock of ELI will become exchangeable by
the reporting persons into shares of common stock of the Company in October
2002.

(8) Comprised of (i) 125,000 Class A Warrants, (ii) 261,500 shares of common
stock, (iii) 50,000 shares of common stock held by the Alexander Brown Trust and
(iv) 50,000 Class A Warrants held by the Alexander Brown Trust.

Information on the stock ownership of these persons was provided to the Company
by the persons.

COMPARATIVE STOCKHOLDER RETURN

The graph which follows compares the yearly percentage change in the Company's
cumulative total stockholder return on its common stock with the cumulative
total stockholder return of (1) all United States companies traded on the
American Stock Exchange (where the Company's common stock is now traded) and (2)
51 companies traded on the American Stock Exchange which carry the Standard
Industrial Classification (SIC) code 283 (Pharmaceuticals). The graph was
prepared by the Center for Research in Security Prices at the University of
Chicago Graduate School of Business, Chicago, IL.

The stock of the Company was traded on the NASDAQ over-the-counter bulletin
board from July 23, 1998 until February 24, 2000. The stock of the Company began
trading on the American Stock Exchange on February 24, 2000. The period covered
by the comparison begins September 1998 because no trading data was available
for the period from July 23, 1998 through August 31, 1998. The Company's fiscal
year ends on March 31.

-25-

Comparison of Five-Year Cumulative Total Returns
Performance Graph for
Elite Pharmaceuticals, Inc.

Produced on 05/29/2002 including data to 03/28/2002

[THE FOLLOWING DATA APPEARED AS A LINE CHART IN THE PRINTED MATERIAL]

AMEX
Elite AMEX Stocks
Pharmaceuticals, Stock Market (SIC 2830-2839
Inc. (US Companies) US Companies) Drugs

09/03/1998 100.0 100.0 100.0
03/31/1999 158.4 117.5 136.2
03/31/2000 1780.0 166.6 267.8
03/30/2001 880.0 132.9 156.3
03/28/2002 1238.4 135.0 110.1

--------------------------------------------------------------------------------
Legend

Symbol CRSP Total Returns Index for: 09/1998 03/1999 03/2000 03/2001 03/2002

[Box] Elite Pharmaceuticals, Inc. 100.0 158.4 1780.0 880.0 1238.4
[Star] AMEX Stock Market (US Companies) 100.0 117.5 166.6 132.9 135.0
[Triangle] AMEX Stocks (SIC 2830-2839
US Companies) Drugs 100.0 136.2 267.8 156.3 110.1

Notes:

A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 09/30/1998.
E. Data for Elite Pharmaceuticals, Inc. from 09/1996 to 01/2000 was provided
by the client.
--------------------------------------------------------------------------------
Prepared by CRSP (www.crsp.uchicago.edu), Center for Research in Security
Prices, Graduate School of Business, The University of Chicago. Used with
permission.
All rights reserved.
11442/81204067 (C) Copyright 2002

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INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors selects the independent public accounting firm for the
Company each year at its annual meeting following the annual meeting of
stockholders. Miller, Ellin & Co., LLP New York, New York, is the independent
public accounting firm for the Company.

AUDIT FEES

The aggregate fees billed for professional services rendered by Miller, Ellin &
Co., LLP, the principal accountants of the Company for the most recent fiscal
year ended March 31, 2002, for the audit of the Company's annual financial
statements for the most recent fiscal year ended March 31, 2002 and the reviews
of the financial statements included in the Company's Forms 10-Q filed during
that fiscal year were approximately $43,000.

ALL OTHER FEES

No fees were billed for services rendered to the Company by Miller, Ellin & Co.,
LLP for the most recent fiscal year ended March 31, 2002 other than those
services specified in the immediately preceding section.

PRINCIPAL OFFICE

The Company's principal offices are located at 165 Ludlow Avenue, Northvale, New
Jersey 07647, and its telephone number is (201) 750-2646.

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ABSENCE OF APPRAISAL RIGHTS

Under Delaware law, you do not have appraisal rights in connection with our
solicitation of proxies.

PARTICIPANTS IN THE SOLICITATION

Under applicable regulations of the SEC, each member of the Elite Board and each
executive officer of Elite may be deemed to be a "participant" in Elite's
solicitation of proxies. In the event each of these persons is deemed a
"participant", and without acknowledging that any such person is a
"participant", we furnish the following information. The name of each director
and executive officer is listed below. Except as set forth below, the principal
business addresses of each director and executive officer are 165 Ludlow Avenue,
Northvale, New Jersey 07647. The principal occupation of each director and
executive officer is set forth below. Information about the present ownership by
directors and executive officers and any of their respective "associates" of
Elite common stock is set forth under the section entitled "Security Ownership
of Management." Information about transactions by each director and executive
officer in Elite's common stock during the past two years can be found in such
director's or executive officer's filings under Section 16 of the Securities
Exchange Act of 1934, as amended, during that period. Information about related
party transactions involving directors and executive officers can be found under
the sections entitled "Certain Relationships and Related Transactions" and
"Employment Agreement". Except as otherwise set forth in this Proxy Statement,
none of the directors or executive officers or any of their respective
"associates" has any arrangement or understanding with any person with respect
to future employment or future transactions with Elite.

The current directors and the executive officers of the Company are:

Name Position
---- --------

Dr. Atul M. Mehta President, Chief Executive Officer and Director
Donald S. Pearson Director
Harmon Aronson Director
Eric L. Sichel Director
Mark I. Gittelman Chief Financial Officer, Secretary and Treasurer

There are no arrangements between any director or executive officer and any
other person, pursuant to which the director or officer is to be selected as
such. There is no family relationship between the directors, executive officers,
or persons nominated or chosen by the Company to become directors or executive
officers.

Atul M. Mehta, Ph.D., the founder of Elite Laboratories, Inc. ("ELI"), has been
a director of ELI since its inception in 1990 and a director of the Company
since 1997. He has been employed as the President of ELI since 1990 and
President of the Company since 1997. Prior to that, he was Vice President at
Nortec Development Associates, a company specializing in the development of
food, pharmaceutical and chemical specialty products, from 1984 to 1989. From
1981 to 1984, he was associated with Ayerst Laboratories, a division of American
Home Products Corporation in the solids formulation section as Group Leader. His
responsibilities included development of formulations of ethical drugs for
conventional and controlled-release dosage forms for both USA and international
markets. He received his B.S. degree in Pharmacy with honors from Shivaii
University, Kolhapur, India, and a BS, MS, and a Doctorate of Philosophy in
Pharmaceutics from the University of Maryland in 1981. Dr. Mehta is also a
director of Elite Research, Ltd.. Other than ELI and Elite Research, Ltd., no
company with which Dr. Mehta was affiliated in the past was a parent, subsidiary
or other affiliate of the Company.

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Mark I. Gittelman, CPA, the Chief Financial Officer, Secretary and Treasurer of
the Company, is the President of Gittelman & Co., P.C., an accounting firm in
Clifton, NJ. 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 Farleigh 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"), the
Securities and Exchange Practice Section of the AICPA, and the New Jersey State
and New York States Societies of CPAs. Other than ELI, no company with which Mr.
Gittelman was affiliated in the past was a parent, subsidiary or other affiliate
of the Company.

Each director holds office (subject to the Company's By-Laws) until the next
annual meeting of stockholders and until such director's successor has been
elected and qualified. All executive officers of the Company are serving until
the next annual meeting of directors and until their successors have been duly
elected and qualified. There are no family relationships between any of the
directors and executive officers of the Company.

PROPOSAL 2
RATIFICATION OF AUDITORS

The Board of Directors has appointed Miller, Ellin & Co., LLP as the Company's
independent public accountants for the fiscal year ending March 31, 2003.
Miller, Ellin & Co., LLP served as the Company's independent public accountants
for the fiscal year ended March 31, 2002. Although the appointment of
independent public accountant is not required to be approved by stockholders,
the Board of Directors believes stockholders should participate in the selection
of the Company's independent public accountants. Accordingly, the stockholders
will be asked at the meeting to ratify the Board's appointment of Miller, Ellin
& Co., LLP as the Company's independent public accountants for the fiscal year
ended March 31, 2003. Representatives of Miller, Ellin & Co., LLP will be
present at the Annual Meeting. They will have an opportunity to make a statement
if they so desire and will be available to respond to appropriate questions of
the stockholders.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2 DESCRIBED ABOVE.

OTHER MATTERS

We are not aware of any matters to be presented at the Annual Meeting other than
those described in this proxy statement. However, if other matters should come
before the annual meeting, it is intended that the holders of proxies solicited
hereby will vote on such matters in their discretion.

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STOCKHOLDER PROPOSALS

Any proposal intended to be presented by a stockholder at the next Annual
Meeting of Stockholders must be received by the Company at the address specified
below no later than the close of business on [______________], 2003 in order for
such proposal to be eligible for inclusion in the Company's proxy statement and
form of proxy for the 2003 Annual Meeting. 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.

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WHERE YOU CAN FIND MORE INFORMATION

The Company files 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, 450 Fifth Street, N.W., Room
1024, 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
locations of the SEC:

Public Reference Room
450 Fifth Street, N.W.
Washington, D.C. 20549

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.

CAUTION ABOUT FORWARD LOOKING STATEMENTS

This Proxy Statement contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that are based on the beliefs of
the Company's management and Board of Directors, as well as assumptions made by
and information currently available to the Company's management and Board of
Directors. Such statements reflect the current views of the Company or the Board
of Directors with respect to future events based on currently available
information and are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated in such forward-looking
statements.

Factors that could cause actual results to differ materially from the Company's
expectations include, but are not limited to, the following: the ability of the
Company to execute and manage the Company's growth strategy, the results of the
Company's investment spending, the ability to develop new products, the ability
to obtain governmental approval of its products, improved financial results, the
entrance of new competitors into the marketplace, the ability to attract and
retain key customers, the ability to positively modify its revenue mix,
variations in quarterly results and the sufficiency of the Company's working
capital, and other factors which are described from time to time in the
Company's public filings with the Securities and Exchange Commission, news
releases and other communications. Also, when Elite uses the words "believes,"
"expects," "anticipates," "estimates," "plans," "intends," "objectives,"
"goals," "aims," "projects" or similar words or expressions, Elite is making
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof. The
Company does not undertake any obligation to release publicly any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.

[______________], 2002 By Order of the Board of Directors

Mark I. Gittelman, Secretary

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IMPORTANT

1. Be sure to vote on the BLUE proxy card. We urge you not to sign any proxy
card which is sent to you by the Freedman Group.

2. If any of your shares are held in the name of a bank, broker or other
nominee, please contact the person responsible for your account and direct him
or her to vote on the BLUE proxy "FOR" the Board of Directors' nominees and in
favor of the appointment of Miller, Ellin & Co., LLP as the Company's
independent auditors for the fiscal year ended March 31, 2003.

3. If you have any questions or need assistance in voting your shares, please
call toll free:

Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
Stockholders call toll free: 866-297-1267
Banks & Brokers call: 212-440-9800
Fax number: 212-440-9009

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ELITE PHARMACEUTICALS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS.

[______________], 2002

The undersigned acknowledges receipt of the Company's proxy materials and
revokes any prior proxy and hereby appoints Atul M. Mehta and Mark I. Gittelman,
and each of them, attorneys and proxies, with power of substitution in each of
them, to vote for and on behalf of the undersigned at the annual meeting of the
stockholders of the Company to be held on December 12, 2002, and at any
adjournment thereof, upon matters properly coming before the meeting, as set
forth in the related Notice of Meeting and Proxy Statement, both of which have
been received by the undersigned. Without otherwise limiting the general
authorization given hereby, said attorneys and proxies are instructed to vote as
follows:

The Board of Directors recommends a vote "FOR" the Board's nominees for
Director.

1. Election of the Board's nominees for Director.

/ / FOR ALL NOMINEES LISTED BELOW / /| WITHHOLD AUTHORITY TO VOTE FOR ALL
NOMINEES LISTED BELOW

Nominees: Atul M. Mehta, Harmon Aronson, Donald S. Pearson, Eric L. Sichel,
John P. de Neufville, John A. Moore and Richard A. Brown.

Discretionary authority is also granted to vote for the election of a substitute
for any of said nominees who, for any reason presently unknown, cannot be a
candidate for election.

INSTRUCTION: To withhold authority to vote for any individual nominee listed
above, write the nominee's name in the space provided below.

2. Proposal to ratify the appointment of Miller, Ellin & Co., LLP as the
Company's independent public accountants for the fiscal year ending March 31,
2003.

FOR / / AGAINST / / ABSTAIN / /

3. Upon all such other matters as may properly come before the meeting and/or
any adjournment or adjournments thereof, as they in their discretion may
determine. The Board of Directors is not aware of any such other matters.

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UNLESS OTHERWISE SPECIFIED IN THE SQUARES OR SPACE PROVIDED IN THIS PROXY, THIS
PROXY WILL BE VOTED FOR EACH OF THE BOARD'S NOMINEES AND TO RATIFY THE RETENTION
OF MILLER, ELLIN & CO., LLP AS THE COMPANY'S AUDITORS.

Dated: [_________________], 2002

Signed:

Please sign this proxy and return it promptly whether or not you expect to
attend the meeting. You may nevertheless vote in person if you attend.

Please sign exactly as your name appears hereon. Give full title if an Attorney,
Executor, Administrator, Trustee, Guardian, etc.

For an account in the name of two or more persons, each should sign, or if one
signs, he should attach evidence of his authority.

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