This Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements which are not historical facts made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not promises or guarantees and investors are cautioned that all forward-looking statements involve risks and uncertainties, including but not limited to the impact of competitive products and pricing, product demand and market acceptance, new product development, the regulatory environment, including without limitation, reliance on key strategic alliances, availability of raw materials, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. These statements are based on management's current expectations and are naturally subject to uncertainty and changes in circumstances. We caution you not to place undue reliance upon any such forward-looking statements which speak only as of the date made. Hi-Tech is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED OCTOBER 31, 2012 AND 2011

Revenue



                                   October 31, 2012         October 31, 2011           Change          % Change
Hi-Tech Generics                  $       47,286,000       $       48,667,000       $ (1,381,000 )            (3 )%
Health Care Products                       4,658,000                4,697,000            (39,000 )            (1 )%
ECR Pharmaceuticals                        5,593,000                3,511,000          2,082,000              59 %


Total                             $       57,537,000       $       56,875,000       $    662,000               1 %

Net sales of Hi-Tech generic pharmaceutical products decreased primarily due to lower sales of Fluticasone Propionate nasal spray which decreased to $21,500,000 from $23,000,000 in the comparable quarter as the Company sold more units at a lower average price. In January 2012, a fourth competitor entered the generic Fluticasone Propionate nasal spray market which may lead to additional price reductions for this product. The Company also experienced lower volumes and prices on Dorzolamide products during the quarter ended October 31, 2012. Partially offsetting these declines were sales of new products such as Nystatin oral suspension, launched in February 2012, Lidocaine 5% ointment, launched in March 2012 , Levetiracetam oral concentrate, launched in May 2012 and Paregoric, launched in August 2012.

Net sales of the Health Care Products division, which markets the Company's branded OTC products, decreased due to end customer discounts and promotional pricing on Nasal Ease®. Sales of Diabetic Tussin ® and Diabetiderm® declined as well. These declines were partially offset by sales of our new product Sinus Buster®, acquired in March 2012.

Sales of the Hi-Tech generic division and the Health Care Products division were both adversely affected by superstorm Sandy. Hi-Tech Pharmacal's facilities in Amityville, NY were without power from October 29, 2012 through November 1, 2012; therefore, the Company was unable to produce and ship products during this period. The Company anticipates that sales lost during this week will be made up in the quarter ending January 2013.

Net sales of ECR Pharmaceuticals, which sells branded prescription products, increased due to higher sales of Bupap® and Dexpak® and sales from Tussicaps® and Orbivan®, acquired in fiscal year 2012. Bupap® sales increased ahead of an announced price increase, as some customers purchased larger than typical quantities.

Cost of Goods Sold

The increase in cost of goods sold as a percentage of net sales is primarily due to pricing declines for both Fluticasone Propionate nasal spray and Dorzolamide ophthalmic products. The Company anticipates that the cost to manufacture Fluticasone Propionate nasal spray will decline in the second half of the fiscal year due to lower input costs and new manufacturing equipment which will enable productivity improvements.

Additionally, consumer discounts related to an in-store promotion of Nasal Ease® lowered margins in the HCP division.

Pricing increases in the current year and inventory and pricing reserves in the prior year lead to increased gross margins in the ECR subsidiary.

Expense Items



                                  October 31, 2012          October 31, 2011            Change         % Change
Selling, general and
administrative expense           $       11,706,000        $       10,459,000        $  1,247,000             12 %
Amortization expense             $        1,761,000        $        1,400,000        $    361,000             26 %
Research and product
development costs                $        3,343,000        $        2,468,000        $    875,000             35 %
Royalty income                   $         (400,000 )      $         (829,000 )      $    429,000            (52 )%
Contract research income         $           (2,000 )      $           (1,000 )      $     (1,000 )          100 %
Interest expense                 $          147,000        $           31,000        $    116,000            374 %
Interest income and other        $          (77,000 )      $         (282,000 )      $    205,000            (73 )%
Provision for income tax
expense                          $        4,187,000        $        6,367,000        $ (2,180,000 )          (34 )%

The increase in selling, general and administrative expenses was partially due to increased freight-out expense across all divisions. Advertising expense increased to $2,211,000 in the quarter ended October 31, 2012 from $1,946,000 in the quarter ended October 31, 2011 primarily in the HCP division to support the re-launch of Nasal Ease©.

Amortization expense increased due to intangible asset purchases over the last year including Tussicaps®, purchased in August 2011 and Sinus Buster®, purchased in March 2012.

The increase in Research and Development expenditures is due to increased spending on internal projects for the generic division, which include four projects that require clinical trials. Three of these projects requiring clinical trials were undertaken in partnership with other companies. Spending included licensing fees and expenses paid to third parties for the new project requiring clinical trials. Additionally, the Company paid a one time fee of $209,000 to the FDA for new Generic Drug User Fee Act ("GDUFA") fees relating to ANDAs currently awaiting FDA approval in the quarter ended October 31, 2012.

Royalty income decreased as royalties on sales of certain products divested by its previously owned Midlothian division came to an end in June 2012.

The effective tax rate declined to approximately 32% from 34% as the Company recorded a higher benefit from the exercise of stock options in the current period.

Income Analysis



                                  October 31, 2012         October 31, 2011           Change         % Change
Net income                       $        8,924,000       $       13,783,000       $ (4,859,000 )          (35 )%
Basic earnings per share         $             0.67       $             1.08       $      (0.41 )          (38 )%
Diluted earnings per share       $             0.66       $             1.04       $      (0.38 )          (37 )%
Weighted average common
shares outstanding, basic                13,238,000               12,761,000            477,000              4 %
Effect of potential common
shares                                      346,000                  543,000           (197,000 )          (36 )%
Weighted average common
shares outstanding, diluted              13,584,000               13,304,000            280,000              2 %

Shares outstanding increased due to the exercise of options.

RESULTS OF OPERATIONS FOR SIX MONTHS ENDED OCTOBER 31, 2012 AND 2011

Revenue

                                  October 31, 2012         October 31, 2011           Change          % Change
Hi-Tech Generics                 $       93,208,000       $       97,637,000       $ (4,429,000 )            (5 )%
Health Care Products                      7,684,000                8,232,000           (548,000 )            (7 )%
ECR Pharmaceuticals                       8,688,000                7,217,000          1,471,000              20 %

Total                            $      109,580,000       $      113,086,000       $ (3,506,000 )            (3 )%

Net sales of Hi-Tech generic pharmaceutical products decreased primarily due to lower sales of Fluticasone Propionate nasal spray which decreased to $43,500,000 from $49,200,000 in the comparable period as the Company sold more units at a lower average price. In January 2012, a fourth competitor entered the generic Fluticasone Propionate nasal spray market which may lead to additional price reductions for this product. The Company also experienced lower volumes and prices on Dorzolamide products during the six months

ended October 31, 2012. Partially offsetting these declines were sales of new products such as Lidocaine sterile jelly, launched in September 2011, Nystatin oral suspension, launched in February 2012, Lidocaine 5% ointment, launched in March 2012, Levetiracetam oral concentrate, launched in May 2012 and Paregoric, launched in August 2012.

Net sales of the Health Care Products division, which markets the Company's branded OTC products, decreased due to end customer discounts and promotional pricing on Nasal Ease ®. Sales of Multibetic®, Diabetiderm®, and Diabetic Tussin® declined as well. These declines were partially offset by sales of our new product Sinus Buster ®, acquired in March 2012.

Sales of the Hi-Tech generic division and the Health Care Products division were both adversely affected by superstorm Sandy. Hi-Tech Pharmacal's facilities in Amityville, NY were without power from October 29, 2012 through November 1, 2012; therefore, the Company was unable to produce and ship products during this period. The Company anticipates that sales lost during this week will be made up in the quarter ending January 2013.

Net sales of ECR Pharmaceuticals, which sells branded prescription products, increased due to higher sales of Bupap ® and Dexpak® and sales from Tussicaps® and Orbivan®, acquired in fiscal year 2012. Bupap® sales increased ahead of an announced price increase, as some customers purchased larger than typical quantities. The discontinuation of Lodrane ® extended release antihistamines partially offset the increase in sales for the period. ECR Pharmaceuticals stopped shipping the Lodrane® products as of August 31, 2011. Sales of the discontinued Lodrane ® products amounted to approximately $2,800,000 for the six months ended October 31, 2011.

Cost of Goods Sold

The increase in cost of goods sold as a percentage of net sales is primarily due to pricing declines for both Fluticasone Propionate nasal spray and Dorzolamide ophthalmic products. The Company anticipates that the cost to manufacture Fluticasone Propionate nasal spray will decline in the second half of the fiscal year due to lower input costs and new manufacturing equipment which will enable productivity improvements.

Additionally, consumer discounts lowered margins in the HCP division. Pricing increases in the current year and inventory and pricing reserves in the prior year lead to increased gross margins in the ECR subsidiary.

Expense Items



                                  October 31, 2012          October 31, 2011            Change         % Change
Selling, general and
administrative expense           $       22,337,000        $       19,255,000        $  3,082,000             16 %
Amortization expense             $        3,518,000        $        2,175,000        $  1,343,000             62 %
Research and product
development costs                $        7,815,000        $        5,867,000        $  1,948,000             33 %
Royalty income                   $       (1,035,000 )      $       (1,395,000 )      $    360,000            (26 )%
Contract research income         $           (2,000 )      $          (28,000 )      $     26,000            (93 )%
Interest expense                 $          303,000        $           46,000        $    257,000            559 %
Interest income and other        $         (123,000 )      $         (306,000 )      $    183,000            (60 )%
Provision for income tax
expense                          $        7,169,000        $       13,462,000        $ (6,293,000 )          (47 )%

The increase in selling, general and administrative expenses was partially due to 30 contract sales representatives hired in October 2011 in the ECR subsidiary to expand its sales force to new areas of the country. These 30 representatives were terminated at the end of July 2012. Advertising expense increased to $4,072,000 in the six months ended October 31, 2012 from $3,285,000 in the six months ended October 31, 2011 primarily in the HCP division to support the re-launch of Nasal Ease©. Increases in freight-out expense also contributed to the increase in SG&A.

Amortization expense increased due to intangible asset purchases over the last year including Tussicaps®, purchased in August 2011 and Sinus Buster®, purchased in March 2012.

The increase in Research and Development expenditures is due to increased spending on internal projects for the generic division, which include four projects that require clinical trials. Three of these projects requiring clinical trials were undertaken in partnership with other companies. Spending included licensing fees and expenses paid to third parties for the new project requiring clinical trials. Additionally, the Company paid a one time fee of $209,000 to the FDA for new GDUFA fees relating to ANDAs currently awaiting FDA approval in the quarter ended October 31, 2012.

Royalty income decreased as royalties on sales of certain products divested by its previously owned Midlothian division came to an end in June 2012.

The effective tax rate declined to approximately 32% from 34% as the Company recorded a higher benefit from the exercise of stock options in the current period.

Income Analysis



                                   October 31, 2012         October 31, 2011           Change          % Change
Net income                        $       14,928,000       $       27,556,000       $ (12,628,000 )          (46 )%
Basic earnings per share          $             1.13       $             2.16       $       (1.03 )          (48 )%
Diluted earnings per share        $             1.10       $             2.08       $       (0.98 )          (47 )%
Weighted average common
shares outstanding, basic                 13,154,000               12,744,000             410,000              3 %
Effect of potential common
shares                                       419,000                  483,000             (64,000 )          (13 )%
Weighted average common
shares outstanding, diluted               13,573,000               13,227,000             346,000              3 %

Shares outstanding increased due to the exercise of options.

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations are historically financed principally by cash flow from operations. At October 31, 2012 and April 30, 2012, working capital was approximately $191,391,000 and $167,565,000, respectively, an increase of $23,826,000 during the six months ended October 31, 2012.

Cash flows provided by operating activities were approximately $14,479,000 which is primarily due to net income in the period, which was partially offset by an increase in accounts receivable. Accounts payable decreased by $6,851,000 due to the timing of payments for raw materials.

Cash flows used in investing activities were $3,770,000 and were mostly for capital expenditures primarily related to capacity expansion at the Company's Amityville and Copiague facilities.

Cash flows provided by financing activities of $5,835,00 related primarily to the proceeds from exercise of stock options and the related tax benefits.

The Company believes that its financial resources consisting of current working capital and anticipated future operating revenue will be sufficient to enable it to meet its working capital requirements for at least the next 12 months. Additionally, the Company has a $10,000,000 revolving line of credit with JPMorgan Chase which remains undrawn, and an additional $3,579,000 of the equipment financing line from JPMorgan Chase. The revolving line of credit agreement expires May 27, 2013, while borrowings under the equipment line mature October 6, 2016.

REVOLVING CREDIT FACILITY

The Company entered into a Revolving Credit Agreement, effective as of June 1, 2010, with JPMorgan Chase (the "Revolving Credit Agreement"). The Revolving Credit Agreement permits the Company to borrow up to $10,000,000 pursuant to a revolving credit note ("Revolving Credit Note") for, among other things within certain sublimits, general corporate purposes, acquisitions, research and development projects and future stock repurchase programs. Loans shall bear interest at a rate equal to, at the Company's option, in the case of a CB Floating Rate Loan, as defined in the Revolving Credit Agreement, the Prime Rate, as defined in the Revolving Credit Agreement; provided that, the CB Floating Rate shall never be less than the Adjusted One Month LIBOR, or for a LIBOR Loan, at a rate equal to the Adjusted LIBOR plus the Applicable Margin, as such terms are defined in the Revolving Credit Agreement. The Revolving Credit Agreement contains covenants customary for agreements of this type, including covenants relating to a liquidity ratio, a debt service coverage ratio and a minimum consolidated net income. Borrowings under the Revolving Credit Agreement mature on May 27, 2013.

If an event of default under the Revolving Credit Agreement shall occur and be continuing, the commitments under the Revolving Credit Agreement may be terminated and the principal amount outstanding under the Revolving Credit Agreement, together with all accrued unpaid interest and other amounts owing under the Revolving Credit Agreement and related loan documents, may be declared immediately due and payable.

The Company also entered into a $5,000,000 equipment financing agreement with JPMorgan Chase on June 1, 2010. This agreement has similar interest rates. On June 15, 2010 the Company drew down $621,000 of the equipment financing line to fund a down payment for new filling and packaging equipment. On October 13, 2011, the Company borrowed an additional $1,155,000 to finance the remaining payments for the equipment. Total borrowings under the equipment financing agreement amount to $1,421,000 as of October 31, 2012. Borrowings under the equipment financing agreement are payable in monthly installments of approximately $30,000 through October 6, 2016.

The original credit agreement did not allow the Company to declare or pay dividends or distributions, other than dividends payable solely in capital stock, so long as the Revolving Credit Note remained unpaid. However, the Company and JP Morgan Chase amended the agreement to allow the Company to pay a onetime special dividend of $1.50 on December 28, 2012.

RECENT ACCOUNTING PRONOUNCEMENTS:

In July 2012, the FASB issued accounting guidance to simplify the testing for a drop in value of indefinite-lived intangible assets. Under the updated guidance, an entity has the option of first performing a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired before proceeding to the quantitative impairment test under which it would calculate the asset's fair value. When performing the qualitative assessment, the entity must evaluate events and circumstances that may affect the significant inputs used to determine the fair value of the indefinite-lived intangible asset. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's results of operations, cash flows or financial position.

SEASONALITY

The Company's largest selling product is Fluticasone Propionate nasal spray, an allergy medication. Sales of Fluticasone Propionate nasal spray vary from quarter to quarter due to the stronger demand for the product during the spring and fall allergy seasons. The Company also sells cough, cold and flu products which have historically experienced stronger net sales in September through March. The cough, cold and flu season in the late 2011 and early 2012 period was particularly mild. Allergy seasons and cough, cold and flu seasons vary from year to year and because of these changes in product mix and product seasonality, period-to-period comparisons within the same fiscal year are not necessarily meaningful and should not be relied on as indicative of future results.

CRITICAL ACCOUNTING POLICIES

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, we are required to make estimates and assumptions that affect reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses for the reporting period covered thereby. As a result, these estimates are subject to an inherent degree of uncertainty. We base our estimates and judgments on our historical experience, the terms of existing contracts, our observance of trends in the industry, information that we obtain from our customers and outside sources, and on various assumptions that we believe to be reasonable and appropriate under the circumstances, the results of which form the basis for making judgments which impact our reported operating results and the carrying values of assets and liabilities. These assumptions include but are not limited to the percentage of new products which may have chargebacks and the percentage of items which will be subject to price decreases. Actual results may differ from these estimates.

Revenue recognition and accounts receivable, adjustments for returns and price adjustments, allowance for doubtful accounts and carrying value of inventory represent significant estimates made by management.

Revenue Recognition and Accounts Receivable: Revenue is recognized for product sales upon shipment and when title and risk of loss is passed to the customer and when estimates of discounts, rebates, promotional adjustments, price adjustments, returns, chargebacks, and other potential adjustments are reasonably determinable, collection is reasonably assured and the Company has no further performance obligations. These estimates are presented in the financial statements as reductions to net revenues and accounts receivable. Estimated sales returns, allowances and discounts are provided for in determining net sales. Contract research income is recognized as work is completed and billable costs are incurred. In certain cases, contract research income is based on attainment of designated milestones.

Royalty income is related to the sale or use of our products under license agreements with third parties. For those agreements where royalties are reasonably estimable, the Company recognizes revenue based on estimates of royalties earned during the applicable period.

Adjustments for Returns and Price Adjustments: Our product revenues are typically subject to agreements with customers allowing chargebacks, rebates, returns, pricing adjustments and other allowances. Based on our agreements and contracts with our customers, we calculate adjustments for these items when we recognize revenue and we book the adjustments against accounts receivable and revenue. Chargebacks, primarily from wholesalers, are the most significant of these items. Chargebacks result from arrangements we have with contract customers establishing prices for products for which the contract customer independently selects a wholesaler from which to purchase. A chargeback represents the difference between our invoice price to the wholesaler, which is typically stated at wholesale acquisition cost, and the contract customer's contract price, which is lower. We credit the wholesaler for purchases by contract customers at the lower price. Therefore, we record these chargebacks at the time we recognize revenue in connection with our sales to wholesalers.

The reserve for chargebacks is computed in the following manner. The Company obtains wholesaler inventory data for the wholesalers which represent approximately 95% of our chargeback activity. This inventory is multiplied by the historical percentage of units that are charged back and by the price adjustment per unit to arrive at the chargeback accrual. This calculation is performed by product for each customer.

The calculated amount of chargebacks could be affected by other factors such as:

• A change in retail customer mix

• A change in negotiated terms with retailers

• Product sales mix at the wholesaler

• Retail inventory levels

• Changes in Wholesale Acquisition Cost (WAC)

The Company continually monitors the chargeback activity and adjusts the provisions for chargebacks when we believe that the actual chargebacks will differ from our original provisions.

Consistent with industry practice, the Company maintains a return policy that allows our customers to return product within a specified period. The Company's estimate for returns is based upon its historical experience with actual returns. While such experience has allowed for reasonable estimation in the past, history may not always be an accurate indicator of future returns. The Company continually monitors its estimates for returns and makes adjustments when it believes that actual product returns may differ from the established accruals.

Included in the adjustment for sales allowances and returns is a reserve for credits taken by our customers for rebates, return authorizations and other.

Sales discounts are granted for prompt payment. The reserve for sales discounts is based on invoices outstanding and assumes that 100% of available discounts will be taken.

Price adjustments, including shelf stock adjustments, are credits issued from time to time to reflect decreases in the selling prices of our products which . . .