CUMBERLAND PHARMACEUTICALS INC 10-K

Item 9A. Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer, with the participation of other members of management, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of December 31, 2025. Based on such evaluations, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective (at the reasonable assurance level) to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management’s report on internal control over financial reporting is included on page F-1 of this annual report on Form 10-K, and incorporated herein by reference. During our fourth quarter of 2025, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 80 Item 9B. Other Information. (a) Recent Developments Form 8-K, Item 5.02(e). Compensatory Arrangements of Certain Officers On March 4, 2026, the Company entered into new employment agreements with each of A.J. Kazimi, our Chief Executive Officer (the “ Kazimi Employment Agreement ”), Jim Herman, our Vice President Trade and Distribution (the “ Herman Employment Agreement ”), Todd Anthony, our Vice President Organizational Development (the “Anthony Employment Agreement”), Chris T. Bitterman, Vice President Sales and Marketing (the “Bitterman Employment Agreement”) and John M. Hamm, our Vice President, Chief Financial Officer (the “Hamm Employment Agreement ”), and together with the Kazimi Employment Agreement, the Herman Employment Agreement, the Anthony Employment Agreement, the Bitterman Employment Agreement and the Hamm Employment Agreement, (the “ Employment Agreements ”). The Employment Agreements were effective as of January 1, 2025. Employment Agreements Each Employment Agreement provides for a salary for services performed, a potential annual bonus and a grant of restricted incentive stock options pursuant to a restricted stock agreement. Under the terms of each Employment Agreement, employment is at-will and may be terminated by the Company at any time, with or without notice and with or without cause. Similarly, each of Mr. Kazimi, Mr. Herman, Mr. Anthony, Mr. Bitterman, and Mr. Hamm may terminate his respective employment with us at any time, with or without notice. The Employment Agreements do not provide for any severance payments in the event employment is terminated for cause nor any severance benefits in the event employment is terminated as a result of death or permanent disability. The Employment Agreements include non-competition, non-solicitation and non-disclosure covenants on the part of employees. The Employment Agreements impose obligations regarding confidential information and state that any discoveries or improvements conceived, developed or otherwise made by the employees, or with others, are deemed our sole property. The Employment Agreements do not contain any termination or change in control provisions. Kazimi Employment Agreement Pursuant to the Kazimi Employment Agreement, Mr. Kazimi will serve as the Company’s Chief Executive Officer and will receive a base salary of $765,000. The foregoing description of the Kazimi Employment Agreement is qualified in its entirety by reference to the Kazimi Employment Agreement, which is included as Exhibit 10.11 to this Annual Report on Form 10-K and is incorporated by reference into this Item. The foregoing description of the Kazimi Employment Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit. Herman Employment Agreement Pursuant to the Herman Employment Agreement, Mr. Herman will serve as the Company’s Vice President Trade and Distribution and will receive a base salary of $207,000. The foregoing description of the Herman Employment Agreement is qualified in its entirety by reference to the Herman Employment Agreement, which is included as Exhibit 10.12 to this Annual Report on Form 10-K and is incorporated by reference into this Item. The foregoing description of the Herman Employment Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit. 81 Anthony Employment Agreement Pursuant to the Anthony Employment Agreement, Mr. Anthony will serve as the Company’s Vice President Organizational Development and will receive a base salary of $311,000. The foregoing description of the Anthony Employment Agreement is qualified in its entirety by reference to the Anthony Employment Agreement, which is included as Exhibit 10.13 to this Annual Report on Form 10-K and is incorporated by reference into this Item. The foregoing description of the Anthony Employment Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit. Bitterman Employment Agreement Pursuant to the Bitterman Employment Agreement, Mr. Bitterman will serve as the Company’s Vice President Sales and Marketing and will receive a base salary of $280,000. The foregoing description of the Bitterman Employment Agreement is qualified in its entirety by reference to the Bitterman Employment Agreement, which is included as Exhibit 10.14 to this Annual Report on Form 10-K and is incorporated by reference into this Item. The foregoing description of the Bitterman Employment Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit. Hamm Employment Agreement Pursuant to the Hamm Employment Agreement, Mr. Hamm will serve as the Company’s Vice President, Chief Financial Officer and will receive a base salary of $267,600. The foregoing description of the Hamm Employment Agreement is qualified in its entirety by reference to the Hamm Employment Agreement, which is included as Exhibit 10.15 to this Annual Report on Form 10-K and is incorporated by reference into this Item. The foregoing description of the Hamm Employment Agreement does not purport to be complete and is qualified in its entirety by reference to such exhibit. (b) Insider Trading Arrangements and Policies During the three months ended December 31, 2025, no “director” or “officer” (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. PART III The information called for by Part III of Form 10-K (Item 10 – Directors, Executive Officers and Corporate Governance, Item 11 – Executive Compensation, Item 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, Item 13 – Certain Relationships and Related Transactions, and Director Independence, Item 14 – Principal Accountant Fees and Services), is incorporated by reference from our proxy statement related to our 2026 annual meeting of shareholders, which is expected to be filed with the SEC on or around March 9, 2026. 82 PART IV Item 15. Exhibits, Financial Statement Schedules. a. Documents filed as part of this report: (1) Financial Statements Page Number Management’s Report on Internal Control over Financial Reporting F- 1 Report of Independent Registered Public Accounting Firm - Consolidated Financial Statements - Carr, Riggs & Ingram; Nashville, TN; PCAOB ID: 213 Consolidated Balance Sheets F- 4 Consolidated Statements of Operations F- 5 Consolidated Statements of Cash Flows F- 6 Consolidated Statements of Equity F- 8 Notes to Consolidated Financial Statements F- 9 (2) Financial Statement Schedule Valuation and Qualifying Accounts F- 39 b. Exhibits Exhibit Number Description 2.1 Asset Purchase Agreement, dated December 31, 2021, by and between Cumberland Pharmaceuticals Inc. and Kyowa Kirin, Inc., incorporated herein by reference to the corresponding exhibit 2.1 of the Registrant’s Form 8-K (File No. 001- 001-33637) as filed with the SEC on January 6, 2022 3.1 Fourth Amended and Restated Charter of Cumberland Pharmaceuticals Inc., incorporated herein by reference to the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 7, 2025 3.2 Second Amended and Restated Bylaws of Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit to Amendment No. 19 of the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on July 17, 2009 4.1 Specimen Common Stock Certificate of Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit to Amendment No. 5 of the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on August 6, 2007 4.2 Preferred Stock Terms, Rights, and Provisions, incorporated herein by reference to the corresponding exhibit to Registrant's Registration Statement Form S-3 (File No. 333-221402) as filed with the SEC on December 19, 2017 4.3 Form of Senior Indenture, incorporated herein by reference to the corresponding exhibit to Registrant's Registration Statement Form S-3 (File No. 333-221402) as filed with the SEC on November 7, 2017 83 4.4 Form of Subordinated Indenture, incorporated herein by reference to the corresponding exhibit to Registrant's Registration Statement Form S-3 (File No. 333-221402) as filed with the SEC on November 7, 2017 4.5# Form of Option Agreement under 1999 Stock Option Plan of Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on May 1, 2007 4.6.1# Form of Incentive Stock Option Agreement under the Amended and Restated 2007 Long-Term Incentive Compensation Plan of Cumberland Pharmaceuticals Inc. incorporated herein by reference to the corresponding exhibit to the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 12, 2013 4.6.2# Form of Non-Statutory Stock Option Agreement under the Amended and Restated 2007 Long-Term Incentive Compensation Plan of Cumberland Pharmaceuticals Inc. incorporated herein by reference to the corresponding exhibit to the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 12, 2013 4.7# Form of Non-Statutory Stock Option Agreement under the Amended and Restated 2007 Directors’ Compensation Plan of Cumberland Pharmaceuticals Inc. incorporated herein by reference to the corresponding exhibit to the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 12, 2013 4.9 Form of Senior Indenture, incorporated herein by reference to the corresponding exhibit to Registrant's Registration Statement Form S-3 (File No. 333-184091) as filed with the SEC on September 25, 2012. 4.10 Form of Subordinated Indenture, incorporated herein by reference to the corresponding exhibit to Registrant's Registration Statement Form S-3 (File No. 333-184091) as filed with the SEC on September 25, 2012 4.11 Description of Cumberland Pharmaceutical's Common Stock, incorporated herein by reference to the corresponding exhibit to the Registrant's Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 13, 2024. 10.7† Exclusive Distribution Agreement, effective as of July 1, 2010, by and between Cardinal Health 105, Inc. and Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit of the Registrant’s Current Report on Form 8-K (File No. 001-33637) as filed with the SEC on August 13, 2010 10.7.1† First Amendment to Exclusive Distribution Agreement, dated March 31, 2013, by and between Cardinal Health 105, Inc. and Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit of the Registrant's Current Report on Form 8-K (File No. 001-33637) as filed with the SEC on June 3, 2013 10.10† License Agreement, dated May 28, 1999, by and between Vanderbilt University and Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit to Amendment No. 3 of the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on July 11, 2007 10.11# Employment Agreement dated March 4, 202 6 , effective as of January 1, 202 6 , by and between A.J. Kazimi and Cumberland Pharmaceuticals Inc. 10.12# Employment Agreement dated March 4, 202 6 , effective as of January 1, 202 6 , by and between Jim Herman and Cumberland Pharmaceuticals Inc. 10.13# Employment Agreement dated March 4, 202 6 , effective as of January 1, 202 6 , by and between Todd Anthony and Cumberland Pharmaceuticals Inc. 10.14# Employment Agreement dated March 4, 202 6 , effective as of January 1, 202 6 , by and between Chris Bitterman and Cumberland Pharmaceuticals Inc. 84 10.15# Employment Agreement dated March 4, 202 6 , effective as of January 1, 202 6 , by and between John M. Hamm and Cumberland Pharmaceuticals Inc. 10.17# 1999 Stock Option Plan of Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on May 1, 2007 10.18# Amended and Restated 2007 Long-Term Incentive Compensation Plan of Cumberland Pharmaceuticals Inc., incorporated herein by reference to Appendix A of the Registrant’s Schedule 14A as filed with the SEC on March 12, 2012 and approved by the Registrant's shareholders on April 17, 2012 10.19# Amended and Restated 2007 Directors’ Incentive Plan of Cumberland Pharmaceuticals Inc., incorporated herein by reference to Appendix B of the Registrant's Schedule 14A as filed with the SEC on March 12, 2012 and approved by the Registrant's shareholders on April 17, 2012 10.20 Form of Indemnification Agreement between Cumberland Pharmaceuticals Inc. and all members of its Board of Directors, incorporated herein by reference to the corresponding exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on May 1, 2007 10.23† Amended and Restated Lease Agreement, dated November 11, 2004, by and between The Gateway to Nashville LLC and Cumberland Emerging Technologies, Inc., incorporated herein by reference to the corresponding exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on May 1, 2007 10.24 First Amendment to Amended and Restated Lease Agreement, dated August 23, 2005, by and between The Gateway to Nashville LLC and Cumberland Emerging Technologies, Inc., incorporated herein by reference to the corresponding exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on May 1, 2007 10.24.1 Second Amendment to Amended and Restated Lease Agreement, dated January 9, 2006, by and between The Gateway to Nashville LLC and Cumberland Emerging Technologies, Inc., incorporated herein by reference to the corresponding exhibit to Amendment No. 10 of the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on May 21, 2008 10.24.2† Third Amendment to Amended and Restated Lease Agreement, dated July 3, 2012, by and between The Gateway to Nashville LLC and Cumberland Emerging Technologies, Inc., incorporated herein by reference to the corresponding exhibit to the Registrant's Quarterly Report on Form 10-Q (File No. 001-33637) as filed with the SEC on August 9, 2012 10.28† Asset Purchase and Royalty Agreement for Kristalose dated November 15, 2011 by and between Mylan Inc. and Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit of the Registrant’s Current Report on Form 8-K (File No. 001-33637) as filed with the SEC on November 22, 2011 10.30# Supplemental Executive Retirement and Savings Plan, incorporated herein by reference to the corresponding exhibit to the Registrant's Current Report on Form 8-K (File No. 001-33637) as filed with the SEC on May 24, 2012 10.31† Settlement Agreement, dated November 9, 2012, by and between Cumberland Pharmaceuticals Inc., Paddock Laboratories, LLC and Perrigo Company incorporated herein by reference to the corresponding exhibit to the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 12, 2013 10.32† License and Supply Agreement, dated November 9, 2012, by and between Cumberland Pharmaceuticals Inc., Paddock Laboratories, LLC and Perrigo Company incorporated herein by reference to the corresponding exhibit to the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 12, 2013 85 10.38# Amendment Number 2 to the Amended and Restated 2007 Long-Term Incentive Plan, incorporated herein by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33637) as filed with the SEC on August 14, 2020 10.39# Amendment Number 2 to the Amended and Restated 2007 Directors’ Incentive Compensation Plan, incorporated herein by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33637) as filed with the SEC on August 14, 2020 10.44 Lease Agreement, dated November 15, 2021, by and between Cumberland Pharmaceuticals Inc. and 1600 West End Avenue Partners, LLC., incorporated herein by reference to the corresponding exhibit of the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 11, 2022 10.48 Amendment Number 3 to the Amended and Restated 2007 Long-Term Incentive Compensation Plan, incorporated herein by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q (File No.: 001-33637) as filed with the SEC on August 11, 2023 10.49 Sales Agreement, dated March 20, 2024, by and between Cumberland Pharmaceuticals Inc. and H.C. Wainwright & Co., LLC, incorporated herein by reference to Exhibit 1.1 of the Company’s Form 8-K (File No:001-33637) as filed with the SEC on March 20, 2024 10.50 Revolving Credit Loan Agreement, dated as of September 5, 2023, by and between Cumberland Pharmaceuticals Inc. and Pinnacle Bank, incorporated herein by reference to Exhibit 10.1 of the Company’s Form 8-K (File No.: 001-33637) as filed with the SEC on September 6, 2023 10.51 First Amendment to Amended and Restated Revolving Credit Loan Agreement, dated March 31, 2024, by and between Cumberland Pharmaceuticals Inc. and Pinnacle Bank, incorporated herein by reference to Exhibit 10.6 of the Company's Quarterly Report on Form 10-Q (File No. 001-33637)) as filed with the SEC on May 10, 2024 10.52 First Amendment to Amended and Restated Revolving Credit Note and Second Amendment to Amended and Restated Revolving Credit Loan Agreement, dated as of November 12, 2025, by and between Cumberland Pharmaceuticals Inc. and Pinnacle Bank, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form 8-K (File No. 001-33637) as filed with the SEC on November 24, 2025 19.1 Insider Trading Policy, incorporated herein by reference to the corresponding exhibit to the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 7, 2025 21.1 Subsidiaries of Cumberland Pharmaceuticals Inc., incorporated herein by reference to the corresponding exhibit to the Registrant’s Registration Statement on Form S-1 (File No. 333-142535) as filed with the SEC on May 1, 2007 23.1 Consent of Carr, Riggs & Ingram, LLC 31.1 Certification of Chief Executive Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Financial Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certification of Chief Financial Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 97.1 Policy for the Recovery of Previously Awarded Incentive Compensation, incorporated herein by reference to the corresponding exhibit of the Registrant’s Annual Report on Form 10-K (File No. 001-33637) as filed with the SEC on March 13, 2024 86 101.INS INLINE XBRL INSTANCE DOCUMENT - THE INSTANCE DOCUMENT DOES NOT APPEAR IN THE INTERACTIVE DATA FILE BECAUSE ITS XBRL TAGS ARE EMBEDDED WITHIN THE INLINE XBRL DOCUMENT. 101.SCH INLINE XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT 101.CAL INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT 101.DEF INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT 101.LAB INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT 101.PRE INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). # Indicates a management contract or compensatory plan. † Confidential treatment has been granted for portions of this exhibit. These portions have been omitted from the Registration Statement and submitted separately to the Securities and Exchange Commission. †† Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from the Registration Statement and submitted separately to the Securities and Exchange Commission. * Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the U.S. Securities and Exchange Commission upon request, provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended for any document so furnished. ** Furnished herewith. Item 16. Form 10-K Summary Registrants may voluntarily include a summary of information required by Form 10-K under this Item 16. The Company has elected not to include such summary information. 87 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 6, 2026. Cumberland Pharmaceuticals, Inc. /s/ A. J. Kazimi By: A. J. Kazimi Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ A. J. Kazimi Chairman and CEO March 6, 2026 A. J. Kazimi (Principal Executive Officer and Director) /s/ John M. Hamm Vice President, Chief Financial Officer March 6, 2026 John M. Hamm (Principal Financial and Accounting Officer /s/ Gordon R. Bernard Director March 6, 2026 Gordon R. Bernard /s/ James R. Jones Director March 6, 2026 James R. Jones /s/ Caroline R. Young Director March 6, 2026 Caroline R. Young /s/ Kenneth J. Krogulski Director March 6, 2026 Kenneth J. Krogulski /s/ Joseph C. Galante Director March 6, 2026 Joseph C. Galante /s/ Martin S. Brown, Jr. Director March 6, 2026 Martin S. Brown, Jr. 88 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of Cumberland Pharmaceuticals Inc. and its subsidiaries (the "Company") is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013) . Based on its assessment, management has concluded that, as of December 31, 2025, the Company’s internal control over financial reporting was effective based on those criteria. /s/ A. J. Kazimi A. J. Kazimi Chief Executive Officer March 6, 2026 /s/ John M. Hamm John M. Hamm Chief Financial Officer March 6, 2026 F-1 Report of Independent Registered Public Accounting Firm To the Shareholders, Board of Directors, and Audit Committee of Cumberland Pharmaceuticals Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Cumberland Pharmaceuticals Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, equity, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes and schedule (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2025 , in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Customer Allowances for Chargebacks, Discounts and Damaged Goods, and Accruals for Rebates, Coupons, Product Returns, and Certain Fees As described in Note 2 to the consolidated financial statements, the allowances against accounts receivable and accrued liabilities for chargebacks, discounts, service fees and expired product returns are determined on a product-by-product basis and established by management as the Company’s best estimate at the time of sale based on each product’s historical experience adjusted to reflect known changes in the factors that impact such allowances. These allowances are established based on the contractual terms with direct and indirect customers and analyses of historical levels of chargebacks, discounts and returns of expired product. F-2 As of December 31, 2025, allowances in accounts receivable for chargebacks, cash discounts, and damaged goods were $1.2 million and the estimated liability for rebates, coupons, product returns, and certain fees were $7.8 million. These provisions are recognized concurrently with the sales of products. Provisions for chargebacks involve estimates of usage by retailers and other indirect buyers with varying contract prices for multiple wholesalers. The provision for chargebacks varies in relation to changes in sales volume, product mix, pricing, and the level of inventory at the wholesalers. Provisions are calculated using historical chargeback experience, and/or expected chargeback levels for new products and anticipated pricing changes. Provisions for rebates are recognized based on contractual obligations in place at the time of sales with consideration given to relevant factors that may affect the payment, as well as historical experience for estimated market activity. Provisions for product returns are calculated based on the expiration dates of products sold, the window where customers are permitted to return products, and the history of returns for individual products in relation to the sales volume for each product. We identified the customer allowances for chargebacks, discounts, and damaged goods and accruals for rebates, coupons, product returns, and certain fees as a critical audit matter. The principal consideration for our determination was the significant measurement uncertainty involved in developing the reserves. Management exercises judgment in computing the amount of sales subject to the allowances and tracks the amount of allowances taken over time. All of this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions, which includes the assumption that historical activity is a good predictor of future allowance activity and modifications made to calculations based on more recent history. The primary procedures we performed to address this critical audit matter included: • Tested management’s process for calculating certain allowances and developed an independent expectation of the reserve balance for the remaining allowances. • Performed a look back analysis of prior year reserves compared to actual experience in the current year. • Tested the completeness and accuracy of underlying data used to estimate the accrual by evaluating a service organization from which data was obtained, agreeing sales data used in the calculations to reports that were reconciled to the consolidated financial statements, reconciling various allowance percentages to signed customer contracts, and tracing allowance amounts used by various customers during the year to supporting documentation. • Evaluated the reasonableness of significant assumptions used by management in the computation of selected allowances, including comparison to historical results and considering recent changes in factors that could influence claims, such as changes in the shelf life of the products. • Tested the clerical accuracy of individual customer allowances computed by management and agreeing the total of all estimated allowances to the respective accounts on the consolidated financial statements. • Compared actual activity for chargebacks, discounts, and damaged goods and rebates, coupons, product returns, and certain fees reported after December 31, 2025, to estimated reserves and accruals on the December 31, 2025, consolidated balance sheet. /s/ Carr, Riggs & Ingram, LLC We have served as the Company’s auditor since 2023. Nashville, Tennessee March 6, 2026 F-3 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2025 and 2024 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 11,444,693 $ 17,964,184 Accounts receivable, net 16,944,780 11,701,466 Inventories, net 6,225,518 3,999,995 Prepaid and other current assets 2,445,276 2,786,513 Total current assets 37,060,267 36,452,158 Non-current inventories 9,253,090 11,005,499 Property and equipment, net 264,724 277,365 Intangible assets, net 14,027,921 17,973,449 Goodwill 914,000 914,000 Operating lease right-of-use assets 8,343,832 6,176,923 Investment in co-commercialization 3,986,780 — Other assets 2,973,378 2,784,016 Total assets $ 76,823,992 $ 75,583,410 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 18,567,546 $ 13,914,266 Operating lease current liabilities 467,774 356,508 Revolving line of credit - current — 5,100,000 Other investment liabilities 5,074,504 — Other current liabilities 12,635,095 12,250,955 Total current liabilities 36,744,919 31,621,729 Revolving line of credit - long term 5,240,733 10,176,170 Operating lease non-current liabilities 4,471,965 4,939,739 Other long-term liabilities 5,822,153 6,299,795 Total liabilities 52,279,770 53,037,433 Equity: Shareholders’ equity: Common stock – no par value; 100,000,000 shares authorized; 14,956,627 and 13,952,624 shares issued and outstanding as of December 31, 2025 and 2024, respectively 51,684,381 46,821,425 Accumulated deficit ( 26,804,059 ) ( 23,967,931 ) Total shareholders’ equity 24,880,322 22,853,494 Noncontrolling interests ( 336,100 ) ( 307,517 ) Total equity 24,544,222 22,545,977 Total liabilities and equity $ 76,823,992 $ 75,583,410 See accompanying notes to consolidated financial statements. F-4 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Consolidated Statements of Operations Years ended December 31, 2025 and 2024 2025 2024 Revenues: Net product revenue $ 40,396,278 $ 36,537,704 Other revenue 4,125,153 1,330,241 Net revenues 44,521,431 37,867,945 Costs and expenses: Cost of products sold 6,667,207 6,585,972 Selling and marketing 19,098,153 17,023,023 Research and development 5,566,498 4,816,206 General and administrative 11,946,909 11,126,901 Amortization and impairment 4,034,657 4,748,252 Total costs and expenses 47,313,424 44,300,354 Operating loss ( 2,791,993 ) ( 6,432,409 ) Interest income 476,748 334,444 Other income - gain on insurance proceeds — 237,089 Interest expense ( 495,990 ) ( 605,508 ) Loss before income taxes ( 2,811,235 ) ( 6,466,384 ) Income tax (expense) benefit ( 40,256 ) 22,669 Equity in loss of investee ( 13,220 ) — Net loss ( 2,864,711 ) ( 6,443,715 ) Net (income) loss at subsidiary attributable to noncontrolling interests 28,583 ( 36,055 ) Net loss attributable to common shareholders $ ( 2,836,128 ) $ ( 6,479,770 ) Loss per share attributable to common shareholders: Basic $ ( 0.19 ) $ ( 0.46 ) Diluted $ ( 0.19 ) $ ( 0.46 ) Weighted-average common shares outstanding: Basic 14,854,619 14,060,272 Diluted 14,854,619 14,060,272 See accompanying notes to consolidated financial statements. F-5 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2025 and 2024 2025 2024 Cash flows from operating activities: Net loss $ ( 2,864,711 ) $ ( 6,443,715 ) Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities: Depreciation and amortization expense 4,145,201 4,902,560 Amortization of operating lease right-of-use asset 1,140,738 1,140,738 Loss on co-commercialization investment 13,220 — Disposal of assets — 2,691 Stock-based compensation 408,320 301,895 Increase (decrease) in non-cash contingent consideration 46,569 ( 1,460,804 ) Increase in cash surrender value of life insurance policies over premiums paid ( 142,927 ) ( 139,953 ) Noncash interest expense 23,185 28,313 Life insurance proceeds — ( 237,089 ) Net changes in assets and liabilities affecting operating activities: Accounts receivable ( 5,243,314 ) ( 1,943,290 ) Inventories, net 2,242,616 2,408,397 Other current assets and other assets ( 231,829 ) 189,112 Operating lease liabilities ( 836,100 ) 1,784,089 Accounts payable and other current liabilities 6,709,196 ( 991,359 ) Other long-term liabilities ( 477,642 ) ( 153,771 ) Net cash provided by (used in) operating activities 4,932,522 ( 612,186 ) Cash flows from investing activities: Additions to property and equipment ( 97,903 ) ( 66,461 ) Additions to intangible assets ( 84,402 ) ( 113,253 ) Net investment in manufacturing ( 2,477,192 ) — Other investment ( 2,000,000 ) — Increase in cash surrender value of life insurance policies ( 47,000 ) — Life insurance policy proceeds received — 237,556 Net cash provided by (used in) investing activities ( 4,706,497 ) 57,842 Cash flows from financing activities: Borrowings on line of credit — 38,488,920 Payments on line of credit ( 10,035,437 ) ( 35,996,894 ) Proceeds from ATM offering, net 5,266,334 — Payments made in connection with repurchase of common shares ( 263,478 ) ( 579,049 ) Cash settlement of contingent consideration ( 1,712,935 ) ( 1,716,073 ) Net cash provided by (used in) financing activities ( 6,745,516 ) 196,904 Net decrease in cash and cash equivalents ( 6,519,491 ) ( 357,440 ) Cash and cash equivalents, beginning of year 17,964,184 18,321,624 Cash and cash equivalents, end of year $ 11,444,693 $ 17,964,184 F-6 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2025 and 2024 2025 2024 Supplemental disclosure of cash flow information: Net cash paid during the year for: Interest $ 441,677 $ 569,230 State income taxes ( 3,525 ) 15,000 Total cash paid included in measurement of lease liability 836,100 863,320 Noncash investing and financing activities: Change in unpaid invoices for intangible asset additions 4,727 530 Change in unpaid invoices for offering costs 62 ( 69,701 ) Lease liability obtained from right-of-use assets 438,311 128,039 Other investment liability 2,000,000 — See accompanying notes to consolidated financial statements F-7 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Consolidated Statements of Equity Years ended December 31, 2025 and 2024 Cumberland Pharmaceuticals Inc. Shareholders Common stock Accumulated deficit Non-controlling interest Total equity Shares Amount Balance, December 31, 2023 14,121,833 $ 47,091,602 $ ( 17,488,161 ) $ ( 343,572 ) $ 29,259,869 Net loss — — ( 6,479,770 ) 36,055 ( 6,443,715 ) Share-based compensation 169,991 301,895 — — 301,895 Repurchase of common shares ( 339,200 ) ( 572,072 ) — — ( 572,072 ) Balance, December 31, 2024 13,952,624 $ 46,821,425 $ ( 23,967,931 ) $ ( 307,517 ) $ 22,545,977 Net loss — — ( 2,836,128 ) ( 28,583 ) ( 2,864,711 ) Proceeds from the sale of common stock, net of offering costs 1,000,000 4,715,950 — — 4,715,950 Share-based compensation 62,950 408,320 — — 408,320 Repurchase of common shares ( 58,947 ) ( 261,314 ) — — ( 261,314 ) Balance, December 31, 2025 14,956,627 $ 51,684,381 $ ( 26,804,059 ) $ ( 336,100 ) $ 24,544,222 See accompanying notes to consolidated financial statements F-8 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (1) Organization Cumberland Pharmaceuticals Inc. (“Cumberland,” the “Company,” or as used in the context of “we,” “us,” or “our”) is a specialty pharmaceutical company focused on the acquisition, development and commercialization of branded prescription products. The Company’s primary target markets are hospital acute care, gastroenterology and oncology. These medical specialties are characterized by relatively concentrated prescriber bases that the Company believes can be penetrated effectively by small, targeted sales forces. Cumberland is dedicated to providing innovative products that improve quality of care for patients and address unmet or poorly met medical needs. The Company promotes its approved products through its hospital, field and oncology sales forces in the United States and is establishing a network of international partners to bring its medicines to patients in their countries. Cumberland focuses its resources on maximizing the commercial potential of its products, as well as developing new product candidates, and has both internal development and commercial capabilities. The Company’s products are manufactured by third parties, which are overseen by Cumberland’s quality and manufacturing professionals. The Company works closely with its third-party distribution partners to make its products available in the United States. In order to build a pipeline of early-stage product candidates, the Company formed a subsidiary, Cumberland Emerging Technologies, Inc. ("CET"), which teams with universities and other research organizations to help advance scientific discoveries from the laboratory to the marketplace. In April, 2019, CET entered into an agreement with HongKong WinHealth Pharma Group Co. Limited ("WinHealth") whereby WinHealth made a $ 1.0 million investment through the purchase of shares of CET stock. As part of the agreement, WinHealth obtained a board position at CET and the first opportunity to license CET products for the Chinese market. In connection with WinHealth's investment in CET, Cumberland also made an additional $ 1.0 million investment in CET. The Company’s ownership in CET is now 85 % while the remaining interest is owned by WinHealth, Vanderbilt University and the Tennessee Technology Development Corporation. The operating results of CET allocated to noncontrolling interests in the consolidated statements of operations was loss of $ 28,583 for the year ended December 31, 2025, and a income of $ 36,055 for the year ended December 31, 2024. Effective January 1, 2007, the Company formed a wholly-owned subsidiary, Cumberland Pharma Sales Corp. ("CPSC"). CPSC is the subsidiary that employs the Company's hospital, field and oncology sales force personnel. In December 2017, the Company formed the Cumberland Pharma Foundation (the "Foundation") to serve as a vehicle to facilitate the ongoing philanthropic endeavors of Cumberland Pharmaceuticals Inc. The Foundation was formed as a nonprofit corporation designed to qualify as a tax-exempt organization pursuant to Section 501(a) of the Internal Revenue Code. The Foundation’s Board of Directors is comprised of Cumberland executives who are responsible for overseeing the Foundation’s ongoing activities including charitable contributions. In 2018, Cumberland provided a grant of 50,000 shares of the Company’s common stock to the Foundation. The shares will address the ongoing financial needs of the Foundation. The organization also plans to hold a portion of the shares for long-term appreciation. The Foundation maintains separate financial statements and its ongoing operations do not impact the financial statements of Cumberland. Initial annual grants by the Foundation have been and are expected to remain consistent with the historic level of contributions made by Cumberland. Since 2019, Cumberland has made annual cash contributions to the Foundation except in the year 2024 where there was no contribution made. In 2025, the Company made a cash contribution of $ 40,000 . F-9 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (2) Significant Accounting Policies Principles of Consolidation The consolidated financial statements of the Company are stated in U.S. dollars and are prepared using U.S. generally accepted accounting principles. These financial statements include the accounts of the Company and its wholly and majority-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates under different assumptions and conditions. The Company’s most significant estimates include: (1) its allowances for chargebacks and accruals for rebates and product returns, (2) the allowances for obsolescent or unmarketable inventory, (3) valuation of contingent consideration liability associated with business combinations and (4) evaluation of continuing utility of intangible assets. Segment Reporting The Company has one operating segment which is specialty pharmaceutical products. Management has chosen to organize the Company based on the type of products sold. Operating segments are identified as components of an enterprise about which separate discrete financial information is evaluated by the chief operating decision maker, or decision-making group, in making decisions regarding resource allocation and assessing performance. The Company, which uses consolidated financial information in determining how to allocate resources and assess performance, evaluated that our specialty pharmaceutical products compete in similar economic markets and similar circumstances. Substantially all of the Company’s assets are located in the United States. Total revenues are primarily attributable to U.S. customers. Net revenues from customers outside the United States were approximately $ 4.9 million and $ 2.7 million for the years ended December 31, 2025 and 2024, respectively. Country 2025 2024 China $ 2,975,000 $ — South Korea 1,322,070 1,485,390 Russia 429,191 465,543 Mexico 120,000 8,683 Australia 31,459 54,000 Saudi Arabia 12,998 650,000 $ 4,890,718 $ 2,663,616 F-10 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Fair Value of Financial Instruments Fair value of financial assets and liabilities is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. The Company’s fair value measurements follow the appropriate rules as well as the fair value hierarchy that prioritizes the information used to develop the measurements. It applies whenever other guidance requires (or permits) assets or liabilities to be measured at fair value and gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). A summary of the fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels is described below: Level 1 - Quoted prices for identical instruments in active markets. Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable by correlation or other means. Level 3 - Significant inputs to the valuation model are unobservable. We maintain policies and procedures to value instruments using the best and most relevant data available. The following section describes the valuation methodologies we use to measure different financial instruments at fair value on a recurring basis. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, contingent consideration liability and a revolving line of credit. The carrying values for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their short-term nature. The revolving line of credit has a variable interest rate, which approximates the current market rate. The Company’s contingent consideration liability is a Level 3 fair value measurement that is updated on a recurring basis at each reporting period using a valuation model. Consistent with Level 3 fair value measurements, there are significant inputs to the valuation model that are unobservable. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with original maturities of three months or less. As of December 31, 2025 and 2024, cash equivalents consist primarily of money market funds. The Company monitors concentration of credit risk with the financial institutions in which it conducts business. The Company has cash deposits which fluctuate in excess of federally insured limits throughout the year. F-11 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Accounts Receivable Trade accounts receivable are recorded at the invoiced amount. The Company records allowances for amounts that could become uncollectible in the future based on historical experience, as well as amounts related to chargebacks and cash discounts. The Company reviews each customer balance to assess collection status. The majority of the Company’s products are distributed through independent pharmaceutical wholesalers. The allowances against accounts receivable for chargebacks and discounts are determined on a product-by-product basis, and established by management as the Company’s best estimate at the time of sale based on each product’s historical experience adjusted to reflect known changes in the factors that impact such allowances. These allowances are established based on the contractual terms with direct and indirect customers and analyses of historical levels of chargebacks and discounts. The allowances in accounts receivable for chargebacks and cash discounts were $ 0.9 million and $ 1.1 million at December 31, 2025 and 2024, respectively. Other organizations, such as managed care providers, pharmacy benefit management companies and government agencies, may receive rebates from the Company based on either negotiated contracts to carry the Company’s products or reimbursements for filled prescriptions. In conjunction with recognizing a sale to a wholesaler, revenues are reduced and accrued liabilities are increased by the Company’s estimate of the rebate that may be claimed. Cash discounts are reductions to invoiced amounts offered to customers for payment within a specified period of time from the date of the invoice. Inventories The Company works closely with third parties to manufacture and package finished goods for sale. Based on the customer relationship with the manufacturer or packager, the Company will either take title to finished goods at the time of shipment or at the time of arrival from the manufacturer. The Company then warehouses such goods until distribution and sale at third party facilities located in the U.S. and international locations. Periodic inventory counts are made by the warehouse teams and by the Company on a regular basis. In addition, the Company re-tests API inventory prior to use to confirm product expiration. Inventories are stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. The Company continually evaluates inventories for potential losses due to expired, short-dated or slow-moving inventory by comparing sales history and sales projections to the inventory on hand. When evidence indicates the carrying value of a product may not be recoverable, a charge is recorded to reduce the inventory to its current net realizable value. Non-current inventories consist of APIs which typically have an extended life and selected finished good products with an extended life longer than one year. F-12 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Prepaid and Other Current Assets Prepaid and other current assets consist of deferred offering costs, prepaid insurance premiums, prepaid consulting services, deposits and annual fees paid to the U.S. Food and Drug Administration ("FDA"). The Company expenses all prepaid and other current asset amounts as used or over the period of benefit primarily on a straight-line basis, as applicable. In November 2017, the Company filed its Shelf Registration on Form S-3 with the SEC associated with the sale of up to $ 100 million in corporate securities. The Shelf Registration was declared effective in January 2018. It also included an At the Market ("ATM") feature that allows the Company to sell common shares at market prices. The Company filed an updated Form S-3 with the SEC in December 2020 (the “Prior Registration Statement”), which was declared effective in January 2021. The Company filed an updated Form S-3 with the SEC on December 14, 2023, which was declared effective on December 26, 2023 (the “Current Registration Statement”). The Company entered into an agreement with H.C. Wainwright & Co., LLC (“H.C. Wainwright”) to establish a new ATM program under the Current Registration Statement. On March 20, 2024, the Company filed a related prospectus supplement in connection with the sale and issuance of shares having an aggregate gross sales price of up to $ 5.8 million. The Company has recorded deferred offering costs for payments directly related to the current Shelf Registration on Form S-3 that was completed during December 2021 and December 2023. These costs consist of legal and accounting fees that the Company has capitalized. Deferred costs associated with the Shelf Registration will be reclassified to additional paid in capital on a pro-rata basis as the Company completes sales of shares under the Shelf Registration. On February 5, 2025, the Company utilized the Sales Agreement with H. C. Wainwright and sold 1,000,000 shares of Cumberland’s common shares under the ATM program. These shares sold at a volume weighted average price of $ 5.4688 per share for aggregate gross proceeds of $ 5,468,800 with offering costs of $ 550,384 and placement fees of $ 202,466 resulting in a net $ 4,715,950 . On February 14, 2025, the Company increased the maximum aggregate offering amount of the shares of the Company’s common stock issuable in the ATM program under the Sales Agreement with H.C. Wainwright for to up to $ 10 million and filed a prospectus supplement under the Sales Agreement for that aggregate offering amount. Property and Equipment Property and equipment, including leasehold improvements, are stated at cost. Depreciation is recognized using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the initial lease term plus renewal options, if reasonably assured, or the remaining useful life of the asset. Upon retirement or disposal of assets, any gain or loss is reflected as a component of operating loss in the consolidated statement of operations. Improvements that extend an asset’s useful life are capitalized. Repairs and maintenance costs are expensed as incurred. Intangible Assets and Goodwill The Company’s intangible assets and goodwill consist of capitalized costs related to product and license rights, patents, trademarks and goodwill obtained in the Vibativ and Sancuso acquisitions. Goodwill is not amortized for financial reporting purposes, but is subject to impairment analysis at least annually. The cost of acquiring product and license rights are capitalized at fair value at the date of acquisition for products that are approved by the FDA for commercial use. These costs are amortized ratably over the estimated economic life of the product. The economic life is estimated based upon several factors. This includes the term of the license agreement, the patent life or market exclusivity of the product as well as management’s expectations of continued involvement with the product and the assessment of future sales, the future periods under which the product will be sold and the profitability of the product. This estimate is evaluated on a regular basis during the amortization period and adjusted if appropriate. If there are any changes made to the useful life of the product and license rights, the costs associated with such a change, if any, will be capitalized and amortized over the revised useful life. F-13 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Capitalized patent costs consist of outside legal costs associated with obtaining and protecting patents on products that have been approved for marketing by the FDA. If it becomes probable that a patent will not be issued or a patent has been declared invalid, related costs associated with the patent application are expensed at the time such determination is made. All costs associated with obtaining patents for products that have not been approved for marketing by the FDA are expensed as incurred. Amortization expense is recognized ratably over the following periods: Product rights Estimated economic life License rights Term of license agreement Patents Life of patent Trade and Note Receivables Current Expected Credit Losses (“CECL”) is applicable to all financial assets measured at amortized cost. All financial instruments are evaluated, which principally relates to trade receivables and two notes receivable. CECL requires the measurement of expected credit losses on a collective (pool) basis when similar risk characteristics exist. This may include, either individually or in combination, some of the following characteristics of Accounting Standards Codification ("ASC") 326-20-55-5: • Internal or external credit score/rating • Risk ratings or classification • Financial asset type • Size • Effective interest rate • Term • Geographical location • Historical or expected credit loss patterns • Reasonable and supportable forecast periods The standard requires entities to pool financial assets but allows them to choose which risk characteristics to use. Under the requirements of the guidance, the Company reassesses at the end of each reporting period whether the pool of assets continue to display similar risk characteristics. With twenty years of experience, Cumberland has experienced virtually no write downs of receivables as most of our receivables are due from large successful pharmaceutical, healthcare or government customers, consistently making payments on account. Although the payment behaviors of all of our customers are consistently reliable, for the sake of transparency, we have separated our customer base into seven separate pools. The Company performs a monthly analysis of aged accounts receivable to determine how much, if any, of the accounts receivable balance should be reserved as potential bad debt. The Company reviews all balances over 90 days past due for a possible reserve and considers any specific factors or information for balances aged under 90 days if there are indicators that the balance should be reserved, such as other aged balances with the customer or bankruptcy as well as any economic issues with a customer, industry or region. Impairment of Long-Lived Assets Long-lived assets, such as property and equipment, operating lease right-of-use assets and intangible assets subject to depreciation and amortization, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If events or circumstances arise that require a long-lived asset to be tested for potential impairment, the Company first compares undiscounted cash flows expected to be generated by the asset to its carrying value. If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying value exceeds the fair value. Fair value is determined through various valuation techniques including quoted market prices, third-party independent appraisals and discounted cash flow models. F-14 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Goodwill and other indefinite lived intangible assets that are not subject to amortization are tested at least annually for impairment. The impairment analysis for goodwill requires a comparison of fair value to the carrying value of the reporting unit. The Company’s goodwill was acquired in November 2018 with the Vibativ acquisition and in January 2022 with the Sancuso acquisition. As a result, the Vibativ and Sancuso components of the Company are the reporting units evaluated for goodwill impairment. Cumberland determined the fair value of the reporting units through current and future estimated revenue and profitability of the product. In 2024, the Company recorded a non-cash write down of $ 0.4 million related to patent defense cost of our Acetadote product, which is included in amortization expense in the statement of operations. Revolving Line of Credit The Company’s policy is to classify a debt obligation as current that otherwise meets the conditions of noncurrent classification when both of the following conditions are met: 1. The Company either a) has the ability and intent to repay the obligation within one year after the balance sheet date, or b) repays the obligation after the balance sheet date but before the financial statements are issued. 2. The repayment of the debt is made with assets that were classified as current as of the balance sheet date. Joint Venture Agreement In August 2020, Cumberland entered into an agreement with WinHealth Investment (Singapore) Ltd creating WHC Biopharmaceuticals, Pte. Ltd. The joint venture, as a limited liability company, focuses on acquiring, developing, registering, and commercializing development stage and commercial stage biopharmaceuticals for China, Hong Kong and other Asian markets. The agreement provided for initial investment from WinHealth in the form of a $ 0.2 million equity contribution and an initial investment from Cumberland in the form of $ 0.2 million convertible note. The joint venture will seek additional future capital from additional investors and has entered into exclusive option agreements to license intellectual property from both Cumberland Pharmaceuticals Inc. and Cumberland Emerging Technologies. Net Product Revenue Revenues from product sales are recognized in the amount that reflects the consideration that we expect to receive for these goods. Depending upon the shipping terms of the transaction, the revenue is recognized at the point where the customer obtains control of the goods and we satisfy our performance obligation. This occurs upon either shipment of the product or arrival at its ship to destination. Payment terms typically range from 30 to 60 days from date of shipment. The Company’s net product revenue reflects the reduction from gross product revenue for estimated allowances for chargebacks, discounts and damaged goods, and reflects sales related accruals for rebates, coupons, product returns, and certain administrative and service fees. Significant judgments must be made in determining the transaction price for our sales of products related to these adjustments. Sales Rebates and Discounts The allowances against accounts receivable and accrued liabilities for chargebacks, discounts, service fees and expired product returns are determined on a product-by-product basis, and established by management as the Company’s best estimate at the time of sale based on each product’s historical experience adjusted to reflect known changes in the factors that impact such allowances. These allowances are established based on the contractual terms with direct and indirect customers and analyses of historical levels of chargebacks, discounts and returns of expired product. Other organizations, such as managed care providers, pharmacy benefit management companies and government agencies, may receive rebates from the Company based on either negotiated contracts to carry the Company’s products or reimbursements for filled prescriptions. In conjunction with recognizing a sale to a wholesaler, sales revenues are reduced and accrued liabilities are increased by the Company’s estimate of the rebate that may be claimed. F-15 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Sales Returns Consistent with industry practice, the Company maintains a return policy that allows customers to return product within a specified period prior to and subsequent to the expiration date. The Company’s estimate of the provision for returns is based upon historical experience, expiration date by product as well as any other factor expected to impact future returns. Any changes in the assumptions used to estimate the provision for returns are recognized in the period those assumptions are changed. Other Revenues Other revenues primarily consist of income from non-refundable upfront payments and milestone payments under licensing agreements, contract services, grant funding programs and rental income. Revenue related to grants is recognized when all conditions related to such grants have been met. All other revenue is recognized when earned. Cost of Products Sold Cost of products sold consists principally of the cost to acquire each unit of product sold, including in-bound freight expense as well as any adjustment in the net realizable value of inventory acquired in acquisitions. Cost of products sold also includes expenses associated with the reduction in the net realizable value of slow-moving or expired product. Selling and Marketing Expense Selling and marketing expense consists primarily of expenses relating to the advertising, promotion, distribution and sale of products, including royalty expense, salaries and related costs. Distribution Costs Distribution costs are expensed as incurred and are included as a component of selling and marketing expenses in the consolidated statements of operations. Distribution costs were as follows for the years ended December 31: 2025 2024 Distribution costs $ 912,557 $ 863,529 Advertising Costs Advertising costs are expensed as incurred and are included as a component of selling and marketing expenses in the consolidated statements of operations. Advertising costs were as follows for the years ended December 31: 2025 2024 Advertising costs $ 2,732,231 $ 2,987,575 Research and Development Research and development costs are expensed in the period incurred. Research and development costs are comprised mainly of clinical trial and regulatory expenses, salaries, wages, fees paid to government regulators and other related costs such as materials and supplies. Research and development expense includes activities performed by third-party providers participating in the Company’s clinical studies. The Company accounts for these costs based on estimates of work performed, patients enrolled or fixed fees for services over the period of time the clinical trials are performed. F-16 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Income Taxes The Company provides for deferred taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to operating loss and tax credit carryforwards, as well as differences between the carrying amounts of existing assets and liabilities and their respective tax bases. The Company’s principal differences are related to the timing of deductibility of certain items, such as inventory, depreciation, amortization and share-based compensation. Deferred tax assets and liabilities are measured using enacted statutory tax rates that are expected to apply to taxable income in the years such temporary differences are anticipated to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period of enactment. The Company only recognizes income tax benefits associated with an income tax position in which it is “more likely than not” that the position would be sustained upon examination by the taxing authorities. In assessing the realizability of deferred tax assets, management considers whether some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of existing temporary differences, projected future taxable income and tax planning strategies in making this assessment. The Company’s accounting policy with respect to interest and penalties arising from income tax settlements is to recognize them as part of the provision for income taxes. Loss per Share Basic loss per share is calculated by dividing net loss attributable to common shareholders by the weighted-average number of shares outstanding. Except where the result would be antidilutive, diluted loss per share is calculated by assuming the vesting of unvested restricted stock and the exercise of stock options and warrants and unrecognized compensation costs. Share-Based Payments The Company recognizes compensation cost for all share-based payments issued, modified, repurchased or canceled. Depending on the nature of the vesting provisions, restricted stock awards are measured using either the fair value on the grant date or the fair value of common stock on the date the vesting provisions lapse. Prior to the lapse for those equity grants not valued on the grant date, the fair value is measured on the last day of the reporting period. F-17 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Co-Commercialization, Stock Agreements and Collaborative Arrangement On October 20, 2025, Cumberland announced strategic arrangements with RedHill Biopharma Ltd. (“RedHill”), a specialty biopharmaceutical company, to jointly commercialize Talicia ® . Based on the terms of the Co-Commercialization Agreement (“Co-Agreement”), Cumberland will assume responsibility for the product’s distribution in the U. S. market and record the product sales. Cumberland will provide an annual investment of up to $ 2 million for certain distribution, marketing and sales costs. At the same time, RedHill formed a new company- Talicia Holdings Inc. (“THI”). RedHill contributed all its Talicia assets to THI, including the product’s growing international licenses with associated revenues. Also executed was a Stockholders Agreement (“Stock Agreement”) with Cumberland and RedHill, enabling Cumberland to acquire 30 % equity interest in THI in return for $ 4 million investment capital - $ 2 million at execution and $ 2 million payable on the one year anniversary of the Stock Agreement. The investment will be accounted for based on the equity method of accounting, recording Cumberland’s share of THI’s profit and loss to other income (loss). At year-end, Cumberland’s statement of operations recognized a loss on the investment of $ 13,220 . Cumberland classifies cash distributions received from equity‑method investees using the cumulative earnings approach in accordance with ASC 230‑10‑45‑21D. Under this policy, distributions up to the Cumberland’s share of the investee’s cumulative earnings are presented as operating cash flows, and distributions in excess of that amount are presented as investing cash flows. Based on the terms of ASC 808-10-50, the Co-Commercialization and Stock Agreements with THI constitute a Collaborative Arrangement. As noted above, Cumberland is responsible for product distribution and records product sales. THI is responsible for product manufacturing, maintaining the product’s NDA, medical affairs and other regulatory responsibilities. Following is summarized financial information related to the collaboration with THI for the year ended: December 31, 2025 Net sales of Talicia recorded by Cumberland $ 3,311,235 Cost of product sold 909,000 General and administrative 1,139,583 Following is summarized financial information of amounts due to and due from Cumberland for the year ended: Red Hill THI 12/31/2025 Other accrued liabilities $ 8,928 $ — $ 8,928 Accounts payable 817,882 1,330,856 2,148,738 Other investment liabilities — 5,074,504 5,074,504 Amounts due to THI for inventory and royalties $ 7,232,170 Accounts receivable $ 624,702 $ 624,702 Other accrued liabilities (54,610) ( 54,610 ) Amounts due from THI $ 570,092 F-18 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Collaborative Agreements The Company is a party to several collaborative arrangements with research institutions to identify and pursue promising pharmaceutical product candidates. The funding for these programs is primarily provided through Federal Small Business Administration (SBIR/STTR) and other grant awards. The Company has determined that these collaborative agreements, with the exception of the collaborative payment discussed in Note 3, related to the Vibativ and Sancuso contingent consideration payments, do not meet the criteria for accounting under ASC Topic 808, Collaborative Agreements . The agreements do not specifically designate each party’s rights and obligations to each other under the collaborative arrangements. Except for patent defense costs, expenses incurred by one party are not required to be reimbursed by the other party. Expenses incurred under these collaborative agreements are included in research and development expenses and funding received from grants are recorded as net revenues in the consolidated statements of operations. F-19 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Related Party Transactions In July 2023, Cumberland named Martin S. Brown Jr. to our Board of Directors. Mr. Brown is an attorney with over 30 years of corporate law experience who brings significant legal, public company, health care and civic experience to our board. The Company relies on several law firms for legal advice, including the firm with which Mr. Brown is affiliated. In 2025 and 2024, the Company paid Mr. Brown’s law firm $ 0.09 million and $ 0.05 million, respectively. Recent Accounting Guidance Recent Accounting Pronouncements Adopted In November 2023, the Financial Accounting Standards Board ("FASB") issued final guidance in Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve transparency of segment disclosures, primarily through expanded disclosures for significant segment expenses. The guidance is effective for annual periods beginning in 2024 and interim periods beginning in 2025. With the Company having only one segment, the adoption, effective January 1, 2024, did not have a material impact on the Company’s consolidated financial statements. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("Update 2023-09"), which expands income tax disclosure requirements to include additional information related to the rate reconciliation of our effective tax rates to statutory rates as well as additional disaggregation of taxes paid. The amendments in Update 2023-09 also remove disclosures related to certain unrecognized tax benefits and deferred taxes. Update 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted Update 2023-09 effective for this annual report for the year ended December 31, 2025 on a prospective basis. Recently Issued Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("Update 2024-03"), which requires companies to disclose additional information for certain relevant expense categories in the Statements of Operations and within the notes to the financial statements. Update 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted and can be applied either prospectively to financial statements issued for reporting periods after the effective date, or retrospectively to prior periods which are presented in the financial statements. We are currently assessing the impact of the requirements on our consolidated financial statements and disclosures. In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ("Update 2025-05"), which allows public business entities to elect a practical expedient for current accounts receivables and contract assets to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. Update 2025-05 is effective for fiscal years beginning after December 15, 2025, with early adoption permitted, and is required to be applied on a prospective basis. We plan to elect the practical expedient in the period required but do not expect it to have a material impact on the recognition or measurement of our credit losses within our consolidated financial statements. F-20 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (3) Vibativ ® and Sancuso ® Products Vibativ During November 2018, the Company executed an agreement with Theravance Biopharma ("Theravance") to acquire the assets and global rights to Vibativ including responsibility for the marketing, distribution, manufacturing and regulatory activities associated with the brand. Vibativ is a patented, FDA approved injectable anti-infective for the treatment of certain serious bacterial infections including hospital-acquired and ventilator-associated bacterial pneumonia and complicated skin and skin structure infections. It addresses a range of Gram-positive bacterial pathogens, including those that are considered difficult-to-treat and multidrug-resistant. Cumberland accounted for the transaction as a business combination in accordance with ASC 805 and the product sales are included in the results of operations subsequent to the acquisition date. The Company made an upfront payment of $ 20 million at the closing of the transaction and a $ 5 million milestone payment in early April 2019. In addition, Cumberland has agreed to pay royalties of up to 20 % of on-going net sales of the product in the U.S. after a $ 2.5 million threshold is met. The future royalty payments were recognized at their acquisition-date fair value as a contingent consideration liability, as part of the contingent consideration transferred in the business combination. Cumberland prepared the valuations of the contingent consideration liability utilizing significant unobservable inputs. As a result, the valuation is classified as Level 3 fair value measurement. The following table presents the changes in the fair value of the contingent consideration liability that is remeasured on a recurring basis. The contingent consideration earned and accrued in operating expenses is paid to Theravance annually. Contingent Consideration Liability Balance at December 31, 2023 $ 4,033,373 Cash payment of royalty during the period ( 817,387 ) Change in fair value ( 668,976 ) Contingent consideration earned and accrued 695,989 Balance at December 31, 2024 $ 3,242,999 Cash payment of royalty during the period ( 1,023,203 ) Change in fair value 106,217 Contingent consideration earned and accrued 1,304,585 Balance at December 31, 2025 $ 3,630,598 The current portion of the contingent consideration liability is $ 1.9 million and the non-current portion is $ 1.7 million, as of December 31, 2025. F-21 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Sancuso On January 3, 2022, Cumberland acquired the U.S. rights to the FDA-approved oncology-supportive care medicine Sancuso from Kyowa Kirin, Inc. ("Kyowa Kirin"), the U.S. affiliate of Japan-based Kyowa Kirin Co., Ltd. Sancuso is the first and only FDA-approved prescription patch for the prevention of nausea and vomiting in patients receiving certain types of chemotherapy treatment. The active drug in Sancuso, granisetron, slowly dissolves in the thin layer of adhesive that sticks to the patient’s skin and is released into their bloodstream over several days, working continuously to prevent chemotherapy-induced nausea and vomiting (“CINV”). It is applied 24 to 48 hours before receiving chemotherapy and can prevent CINV for up to five consecutive days. Alternative oral treatments must be taken several times (day and night) to deliver the same therapeutic doses. Cumberland acquired U.S. rights to Sancuso and assumed full commercial responsibility for the product in the U.S. – including its marketing, promotion, distribution, manufacturing and medical support activities. The product’s FDA registration was subsequently transferred from Kyowa Kirin to Cumberland in August 2023. Cumberland has accounted for the transaction as a business combination in accordance with ASC 805 and the product sales are included in the results of operations subsequent to the acquisition date. The Company made an upfront payment of $ 13.5 million at the closing of the transaction. The Agreement calls for milestone payments of up to $ 3.5 million based on the attainment of various approvals and sales performance. In January 2023, Cumberland made a $ 1.0 million milestone payment to Kyowa Kirin based on the FDA approval of a manufacturing site for the product. In October 2023, Cumberland made a $ 0.5 million milestone payment based on the successful transfer of the product’s FDA registration from Kyowa Kirin to Cumberland. The remaining $ 2 million in milestone payments are tied to achievement of certain annual sales levels for the product. In addition, Cumberland has agreed to pay a royalty of up to 10 % of on-going net sales of the product. The future royalty payments were required to be recognized at their acquisition-date fair value as a contingent consideration liability, as part of the contingent consideration transferred in the business combination. Cumberland has prepared a valuation of the contingent consideration liability utilizing significant unobservable inputs. As a result, the valuation is classified as Level 3 fair value measurement. The acquisition was funded by cash and the Company's revolving credit facility. The fair value for the assets and liabilities assumed using Level 3 fair value inputs were as follows: prepaid expenses of $ 1.8 million, inventory $ 2.6 million, goodwill $ 0.03 million, intangible assets $ 14.1 million, milestone payable $ 1.7 million and contingent liability $ 3.4 million. The following table presents the changes in the fair value of the contingent consideration liability that is remeasured on a recurring basis. Contingent Consideration Liability Balance at December 31, 2023 $ 2,306,000 Cash payment of royalty during the period ( 898,686 ) Change in fair value ( 791,828 ) Contingent consideration earned and accrued 900,514 Balance at December 31, 2024 $ 1,516,000 Cash payment of royalty during the period ( 689,732 ) Change in fair value ( 152,786 ) Contingent consideration earned and accrued 599,518 Balance at December 31, 2025 $ 1,273,000 The current portion of the contingent consideration liability is $ 0.8 million and the non-current portion is $ 0.5 million, as of December 31, 2025. F-22 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (4) Revenues Product Revenue The Company’s net product revenues consisted of the following for the years ended December 31: 2025 2024 Products: Sancuso 11,907,141 9,005,129 Kristalose 10,542,793 15,315,259 Vibativ 9,484,874 7,160,125 Caldolor 4,659,457 4,959,385 Talicia 3,311,235 — Acetadote 508,169 185,182 Vaprisol ( 18,346 ) ( 174,538 ) RediTrex 11,391 90,237 Omeclamox ( 10,436 ) ( 3,075 ) Other 4,125,153 1,330,241 Total net revenues $ 44,521,431 $ 37,867,945 Other Revenues The Company has agreements with international partners for commercialization of the Company’s products with associated payments included in other revenues. Those agreements provide that each of the partners is responsible for seeking regulatory approvals for the product, and following approval, each partner will be responsible for the ongoing distribution and sales in the respective international territories. The Company provides a dossier for product registration and maintains responsibility for the relevant intellectual property. Cumberland is typically entitled to receive a non-refundable, up-front payment at the time each agreement is executed as consideration for the product dossier and for the rights to the distinct intellectual property rights in the respective international territory. These agreements also typically provide for additional payments upon a partner’s achievement of a defined regulatory approval and sales milestones. The Company may also be entitled to receive royalties on future sales of the products and a transfer price on supplies. The contractual payments associated with the partner’s achievement of regulatory approvals, sales milestones and royalties on future sales are recognized as revenue upon occurrence, or at such time that the Company has a high degree of confidence that the revenue would not be reversed in a subsequent period. In the first and third quarters of 2025, the Company received $ 3.1 million relating to milestone payments received from our international partners which is included in other revenues. Other revenues includes funding from federal grant programs including those secured from the FDA and from those secured by CET through the Small Business Administration. Grant revenue from these federal grant programs totaled approximately $ 0.4 million for the years ended December 31, 2024. There was no grant revenue for the year ended December 31, 2025. Other revenues also includes lease income generated by CET’s Life Sciences Center. It is a research facility that provides scientists with access to flexible lab space and other resources to develop biomedical products. This lease income, as noted in Footnote 15 - Leases, was approximately $ 0.7 million and $ 0.6 million and for the years ended December 31, 2025 and 2024, respectively. F-23 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (5) Inventories, Net The Company's net inventories consisted of the following as of December 31: 2025 2024 Raw materials $ 9,832,293 $ 11,982,045 Consigned inventory — 126,090 Finished goods, net of reserve 5,646,315 2,897,359 Total inventories 15,478,608 15,005,494 less non-current inventories ( 9,253,090 ) ( 11,005,499 ) Total inventories classified as current $ 6,225,518 $ 3,999,995 The Company's non-current inventories consisted of the following as of December 31: 2025 2024 Vibativ raw materials $ 4,883,895 $ 6,180,347 Vibativ finished goods 16,429 183,057 Kristalose raw materials 2,261,500 2,672,720 Kristalose finished goods 85,204 — Vaprisol raw materials 1,171,603 1,172,849 Caldolor finished goods 112,761 77,382 Sancuso raw materials 656,667 458,684 Acetadote raw materials 24,152 23,915 Omeclamox — 69,622 Study drug raw materials 40,879 166,923 Total non-current inventory $ 9,253,090 $ 11,005,499 The Company purchases the active pharmaceutical ingredient (“API”) for Kristalose and maintains the inventory of that raw material. API for the Company's Vaprisol and Vibativ brands were included in the assets associated with the acquisition of those brands and are also included in the raw materials inventory. As part of the Vibativ acquisition, the Company acquired API and work in process inventories of $ 15.6 million that were all initially classified as non-current inventories at the date of acquisition. Consigned inventory represents Authorized Generic inventory stored with Padagis until shipment. At December 31, 2025 and 2024, there were no cumulative obsolescence or discontinuance losses necessary to recognize. F-24 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (6) Property and Equipment Property and equipment consisted of the following at December 31: Range of useful lives 2025 2024 Computer equipment 3 – 5 years $ 577,715 $ 514,174 Office equipment 3 – 15 years 804,608 792,903 Furniture and fixtures 5 – 15 years 543,125 537,057 Leasehold improvements 3 – 15 years, or remaining lease term 841,663 825,074 Total property and equipment, gross 2,767,111 2,669,208 Less: accumulated depreciation and amortization ( 2,502,387 ) ( 2,391,843 ) Total property and equipment, net $ 264,724 $ 277,365 Depreciation expense, including amortization expense related to leasehold improvements, is included in general and administrative expense in the consolidated statements of operations. Depreciation expense was as follows for the years ended December 31: 2025 2024 Depreciation expense $ 110,543 $ 154,308 (7) Intangible Assets and Goodwill Intangible assets and Goodwill consisted of the following at December 31, 2025 and 2024. 2025 2024 Product and license rights $ 43,250,341 $ 43,250,341 Less: accumulated amortization ( 29,846,042 ) ( 26,300,793 ) Total product and license rights 13,404,299 16,949,548 Patents 10,880,571 10,808,476 Less: accumulated amortization ( 10,392,266 ) ( 9,965,779 ) Total patents 488,305 842,697 Trademarks 450,431 433,397 Less: accumulated amortization ( 315,114 ) ( 252,193 ) Total trademarks 135,317 181,204 Total intangible assets $ 14,027,921 $ 17,973,449 Goodwill $ 914,000 $ 914,000 Product and license rights include assets associated with the Company’s acquired products, including those discussed in Note 3, Vibativ and Sancuso. F-25 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) During 2025 and 2024, the Company recorded an additional $ 0.1 million for each year in intangible assets for patents, trademarks and capitalized patent costs, including amounts incurred in the protection of the Company's intellectual property. Amortization expense related to product and license rights, trademarks and patents were as follows for the years ended December 31: 2025 2024 Amortization and impairment expense $ 4,034,657 $ 4,748,252 The expected amortization expense for the Company's current balance of intangible assets are as follows: Year ending December 31: 2026 $ 3,808,905 2027 3,399,705 2028 2,561,458 2029 1,425,401 2030 and thereafter 2,832,452 $ 14,027,921 (8) Other Current and Other Long-term Liabilities Other current liabilities consisted of the following at December 31: 2025 2024 Rebates, product returns, administrative and service fees $ 7,774,143 $ 7,834,210 Employee wages and benefits 1,478,957 1,200,790 Current portion of Vibativ accrued contingent consideration 1,400,000 830,000 Current portion of Sancuso accrued contingent consideration 605,000 540,556 Studies accrual 493,750 429,825 Sancuso related liabilities — 289,928 Accrued audit fees 286,600 273,000 Current deferred charges 25,000 207,059 Other 571,645 645,587 Total accrued liabilities $ 12,635,095 $ 12,250,955 Other long-term liabilities consisted of the following at December 31: 2025 2024 Noncurrent portion of accrued contingent consideration $ 2,195,278 $ 2,877,312 Deferred compensation 3,376,875 3,172,483 Other 250,000 250,000 Total other long-term liabilities $ 5,822,153 $ 6,299,795 F-26 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (9) Debt On September 5, 2023, the Company entered into a new Revolving Credit Loan Agreement with Pinnacle Bank. This facility provides for an aggregate principal funding amount of up to $ 25 million. The initial revolving line of credit was up to $ 15 million, with the ability for Cumberland to increase the amount to $ 25 million, under certain conditions. It had a three year term expiring on October 1, 2026. The interest rate is based on a benchmark (Term SOFR) plus a spread of 2.75 %. Cumberland was initially subject to one financial covenant, the maintenance of a Funded Debt Ratio, determined on a quarterly basis. Borrowings under the line of credit are collateralized by substantially all of our assets. On May 6, 2024, the Company entered into a First Amendment to the Loan Agreement which provides an alternative to the financial covenant by delivering to the lender a borrowing base certificate and complying with certain borrowing base requirements which set forth a maximum revolver amount equal to the lessor of (a) up to $ 15 million or (b) the sum of the Company's cash balances and eligible accounts receivable. On November 18, 2025, the Company entered into the First Amendment to the Revolving Credit Note and Second Amendment to the Credit Loan Agreement. The Amendment provides for a principal available for borrowing of up to $ 15 million. The Company has the right to request an increase of up to an additional $ 10 million. The aggregate principal funding amount remains unchanged of up to $ 25 million. The Company is subject to a financial covenant, maintenance of a Minimum Fixed Charge Coverage Ratio determined on a quarterly basis, along with Borrowing Base Requirements, as defined. The Amendment extends the maturity date to October 1, 2027. As of December 31, 2025 and December 31, 2024, the Company had $ 5.2 million and $ 15.3 million, respectively, in borrowings outstanding under its revolving credit facility. The applicable interest rate under the Pinnacle Agreement was 6.625 % and 7.25 % at December 31, 2025 and December 31, 2024, respectively. (10) Shareholders’ Equity (a) Initial Public Offering and Shares Issued On August 10, 2009 , the Company completed its initial public offering of 5,000,000 shares of common stock at a price of $ 17.00 per share, raising gross proceeds of $ 85.0 million. After deducting underwriting discounts of approximately $ 6.0 million and offering costs incurred of approximately $ 4.2 million, the net proceeds to the Company were approximately $ 74.8 million. On February 05, 2025, the Company issued 1,000,000 shares of common stock under an At The Market program for an aggregate amount of $ 5.5 million. (b) Preferred Stock The Company is authorized to issue 20,000,000 shares of preferred stock. The Board of Directors is authorized to divide these shares into classes or series, and to fix and determine the relative rights, preferences, qualifications and limitations of the shares of any class or series so established. At December 31, 2025 and 2024, there was no preferred stock outstanding. (c) Common Stock During 2025 and 2024, the Company issued 62,350 shares and 169,991 shares of common stock, respectively, as a result of restricted shares vesting as well as other common share issuances. In 2025, 600 options were exercised. There were no option exercise transactions during 2024. F-27 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (d) Share Repurchases The Company currently has a share repurchase program available to repurchase up to $ 10 million of its common stock pursuant to Rule 10b-18 of the Securities Exchange Act of 1934. The Company repurchased 58,947 shares and 339,200 shares of common stock for approximately $ 0.3 million and $ 0.6 million during the years ended December 31, 2025 and 2024, respectively. There remains approximately $ 2.2 million available under the current repurchase program available for share repurchases at December 31, 2025. (11) Loss Per Share The following table shows the computation of the numerator and the denominator used to calculate diluted loss per share for the years ended December 31: 2025 2024 Numerator: Net loss $ ( 2,864,711 ) $ ( 6,443,715 ) Net (income) loss at subsidiary attributable to noncontrolling interests 28,583 ( 36,055 ) Net loss attributable to common shareholders $ ( 2,836,128 ) $ ( 6,479,770 ) Denominator: Weighted-average shares outstanding – basic 14,854,619 14,060,272 Weighted-average shares outstanding – diluted 14,854,619 14,060,272 The Company's anti-dilutive restricted shares and stock options outstanding were as follows for the years ended December 31: 2025 2024 Anti-dilutive shares and options 891,381 611,353 F-28 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (12) Income Taxes I n December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("Update 2023-09"), which expands income tax disclosure requirements to include additional information related to the rate reconciliation of our effective tax rates to statutory rates as well as additional disaggregation of taxes paid. The amendments in Update 2023-09 also remove disclosures related to certain unrecognized tax benefits and deferred taxes. Update 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We adopted Update 2023-09 effective for this annual report for the year ended December 31, 2025 The components of the Company's net deferred tax assets at December 31 are as follows (in millions): 2025 2024 Deferred Tax Assets Net operating loss and tax credits $ 14.60 $ 14.31 Property and equipment and intangibles 0.08 0.08 Right-of-use liability 1.03 1.21 Intangible assets 1.87 1.74 Contingent royalty liabilities 0.95 1.02 Section 174 expenses 2.89 2.59 Allowance for accounts receivable 0.31 0.31 Reserve for expired product 0.68 0.65 Inventory 0.34 0.27 Business interest expense limitation — 0.05 Deferred charges 1.06 1.03 Cumulative compensation costs incurred on deductible equity awards 0.10 0.08 Total deferred tax assets $ 23.91 $ 23.33 Deferred Tax Liabilities Right-of-use asset $ ( 1.83 ) $ ( 1.39 ) Net deferred tax assets, before valuation allowance 22.08 21.95 Less: deferred tax asset valuation allowance ( 22.08 ) ( 21.95 ) Net deferred taxes $ — $ — The following table summarizes the amount and year of expiration of the Company's federal and state net operating loss carryforwards as of December 31, 2025 (in millions): Years of expiration Federal State 2025 $ — $ 0.30 2026-2042 45.53 29.25 Indefinite Period 8.99 0.90 Total federal and state net operating loss carryforwards $ 54.52 $ 30.45 F-29 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Income tax expense (benefit) includes the following components for the years ended December 31 (in millions): 2025 2024 Current: Federal $ — $ — State and other 0.04 ( 0.02 ) Total current income tax expense (benefit) 0.04 ( 0.02 ) Deferred: Federal — — State — — Total deferred income tax expense — — Total income tax expense (benefit) $ 0.04 $ ( 0.02 ) As noted above, we adopted ASU 2023-09 on a prospective basis effective January 1, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025 (in millions, except percentages): Amount Percent U.S. federal statutory tax rate $ ( 0.59 ) 21.00 % State and local income taxes, net of federal income tax effect (a) 0.03 ( 1.13 ) % Tax Credits Research and development tax credit ( 0.05 ) 1.73 % Expiring tax credits 0.03 ( 0.90 ) % Other adjustments Change in valuation allowance 0.59 ( 20.95 ) % Permanent differences 0.03 ( 1.18 ) % Net loss tax expense 0.04 ( 1.43 ) % (a) State and local taxes in Pennsylvania and Texas made up the majority (greater than 50%) of the tax effect in this category. The Company’s effective income tax rate for 2024 reconciles with the federal statutory tax rate as follows: 2024 Income tax expense computed at federal statutory tax rate 21.00 % State taxes net of federal benefit 0.11 % Tax credits generated 3.31 % Change in valuation allowance ( 23.61 ) % Permanent differences ( 1.86 ) % Expiring tax credits ( 0.28 ) % Deferred True-ups 1.67 % Net loss tax benefit 0.34 % F-30 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) The Company believes that it is not more likely than not that its net deferred tax assets will be realized. As such, the net deferred tax assets are fully offset with a valuation allowance as of the periods ended December 31, 2025 and 2024. As of December 31, 2025, the Company has general business credit carryforwards of $ 1.6 million. These credit carryforwards will expire in years 2027 through 2044 (in millions). Years of expiration Federal 2026 0.06 2027-2044 1.51 Total federal and state credit carryforwards 1.57 The Company expects it will continue to pay minimal taxes in future periods through the continued utilization of net operating loss carryforwards, as it is able to achieve taxable income through its operations. The Company is no longer subject to U.S. federal tax examinations for tax years before 2021, and with few exceptions, the Company is not subject to examination by state tax authorities for tax years which ended before 2021. Loss carryforwards and credit carryforwards generated or utilized in years earlier than 2021 remain subject to examination and adjustment. During 2012, the 2009 federal tax return was examined by the Internal Revenue Service with no significant findings or adjustments. During 2025, the 2022 federal tax return was selected for examination, again with no significant findings or adjustments. The Company has no unrecognized tax benefits in 2025 and 2024. We adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025 and have included the following table as a result of our adoption, which presents income taxes paid (net of refunds received) for the year ended December 31, 2025 (in millions): 2025 Federal $ — Pennsylvania 0.01 Texas 0.02 Other States 0.01 Foreign — Income taxes, net of amounts refunded $ 0.04 F-31 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (13) Stock-Based Compensation Plans The Company has grants outstanding under two equity compensation plans. The 2007 Long-Term Incentive Compensation Plan (the "2007 Plan") and the 2007 Directors’ Incentive Plan (the "Directors’ Plan"), which were approved by shareholders, superseded the 1999 Stock Option Plan. Both plans are available for future grants of equity compensation awards to employees, consultants and directors. The 2007 Plan and the Directors’ Plan provide for the issuance of stock options, stock appreciation rights and restricted stock. Vesting is determined on a grant-by-grant basis in accordance with the terms of the plans and the related grant agreements. The Company has reserved 3,150,000 shares of common stock for issuance under the 2007 Plan and 250,000 shares for issuance under the Directors’ Plan. As of December 31, 2025, the Company had 602,994 shares available for future grants under the 2007 Plan and 105,007 shares available under the Directors’ Plan. The exercise price of stock options is generally 100 % of the fair market value of the underlying common stock on the grant date, except for incentive stock options granted to 10 % shareholders, which the exercise price is no less than 110 % of the fair market value. The maximum contractual term of stock options is ten years from the grant date, except for incentive stock options granted to 10 % shareholders, which is no more than five years . During 2011, the Company began issuing shares of restricted stock with no exercise price to employees and directors. Restricted stock issued to employees generally cliff-vests on the fourth anniversary of the grant date. Beginning in 2021, the Company began issuing incentive stock options to employees with the same fourth anniversary cliff-vest. Restricted stock continues to be issued to directors and vests on the one year anniversary of the grant date. Restricted stock issued to advisors generally cliff-vests on the fourth anniversary of the grant date. Stock compensation expense is presented as a component of general and administrative expense in the consolidated statements of operations. Stock compensation expense was $ 0.4 million and $ 0.3 million for the years ended December 31, 2025 and 2024, respectively. At December 31, 2025, there was approximately $ 0.7 million of unrecognized compensation cost related to share-based payments, which is expected to be recognized over a weighted-average period of 2 years. Stock Options Stock options activity was as follows: Number of option shares Weighted- average exercise price Weighted-average remaining contractual term Outstanding, December 31, 2023 487,250 $ 1.80 5.59 Granted 190,450 2.06 Exercised — — Forfeited/canceled ( 36,100 ) 2.55 Outstanding, December 31, 2024 641,600 2.42 5.00 Granted 182,150 5.42 Exercised ( 600 ) 3.22 Forfeited/canceled ( 25,150 ) 2.73 Expired ( 1,500 ) 3.22 Outstanding, December 31, 2025 796,500 $ 3.09 5.39 The weighted-average grant-date fair value of options granted during the years 2025 and 2024 was $ 3.61 and $ 1.05 , respectively. There were 134,050 options that were vested and exercisable at December 31, 2025. The aggregate intrinsic value of options outstanding was $ 1.0 million. . F-32 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) The fair value of stock options is calculated using the Black-Scholes (“Black-Scholes-Merton”, or “BSM”) option-pricing model on the grant date. Since 2012, the Company had been issuing Restricted Share Awards where the grant date Fair Value (“FV”) equaled the closing share price. The assumptions used in the Black-Scholes valuation to determine the FV of stock options were as follows at December 31: 2025 2024 Expected term (in years) 5.63 5.69 Expected volatility 84.37 % 67.89 % Risk free interest rate 4.14 % 4.24 % Expected dividend yield — — • Expected Term - The Company has estimated the expected life of its stock options using the simplified method, whereby the expected life equals the average of the vesting term and the original contractual term of the option. • Expected volatility - Based on the Company’s historical stock price volatility. • Risk Free rate - The Company bases the risk-free interest rate assumption for equity awards on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. • Expected dividend yield - The Company’s expected dividend yield assumption is zero as it has never paid dividends and has no present intention to do so in the future. Restricted Stock Awards Restricted stock activity was as follows: Number of shares Weighted-average grant-date fair value Nonvested, December 31, 2023 260,566 2.34 Granted 50,500 1.71 Vested/released ( 169,991 ) 3.37 Forfeited/canceled ( 1,250 ) 3.56 Nonvested, December 31, 2024 139,825 2.34 Granted 35,110 5.17 Vested/released ( 62,350 ) 2.57 Forfeited/canceled — — Nonvested, December 31, 2025 112,585 3.10 The fair value of restricted stock granted was based on the closing market price of the Company’s common stock on the grant date. The fair value of restricted stock awards that vested during the years 2025 and 2024 was $ 0.3 million for each year. At December 31, 2025, there was approximately $ 0.2 million of unrecognized compensation costs related to restricted stock awards, which is expected to be recognized over a weighted-average period of less than a year. The restricted stock grants are included in the diluted weighted shares outstanding computation until they cliff-vest. Once vested they are included in the basic weighted shares outstanding computation. F-33 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (14) Employee Benefit Plans The Company sponsors an employee benefit plan that was established on January 1, 2006, the Cumberland Pharmaceuticals 401(k) Plan (the "Plan"), under Section 401(k) of the Internal Revenue Code of 1986, as amended, for the benefit of all employees over the age of 21 , having been employed by the Company for at least six months . The Plan provides that participants may contribute up to the maximum amount of their compensation as set forth by the Internal Revenue Service each year. Employee contributions are invested in various investment funds based upon elections made by the employees. During 2025 and 2024, the Company contributed approximately $ 0.08 million in each year to the Plan as an employer match of participant contributions. In 2012 and 2013, the Company established non-qualified unfunded deferred compensation plans that allow participants to defer receipt of a portion of their compensation. The liability under the plans, reflected in other long term liabilities in the consolidated balance sheets, was $ 3.4 million and $ 3.2 million as of December 31, 2025 and 2024, respectively. The Company had assets consisting of company-owned life insurance contracts generally designated to pay benefits of the deferred compensation plans reflected in other assets in the consolidated balance sheet of $ 2.5 million and $ 2.3 million as of December 31, 2025 and 2024, respectively. (15) Leases On November 15, 2021, Cumberland entered into a lease, pursuant to which the Company leases approximately 16,903 rentable square feet of space at the new development Broadwest located in Nashville, Tennessee with 1600 West End Avenue Partners, LLC (“Landlord”). The leased premise serves as the Company's new corporate headquarters. The initial term of the lease is one hundred fifty-seven ( 157 ) months, with two consecutive options to renew for a period of five years each, with the commencement date of October 25, 2022. This lease currently expires in November 2035. The Company is responsible for paying rent to the Landlord under the lease beginning three months after the commencement date. The Company pays a base rent of $ 33.06 per square foot of rentable space with a gradual rental rate increase of 2.5 % for each year period thereafter of the prior year's base rental. In addition to the monthly base rent, the Company is responsible for its percentage share of the operating expenses of the building. The lease also provides for a tenant improvement allowance for the space. On October 24, 2022, the CET lease with The Gateway to Nashville, LLC provided the notice of exercise to extend the lease for five years . The lease is for approximately 14,200 square feet of wet laboratory and office space in Nashville, Tennessee where CET operates the CET Life Sciences Center. The wet laboratory and office space is leased through April 2028. The Company also subleases a portion of the space under this lease. Included within the right-of-use assets are startup expenditures related to a new supply agreement with Nephron Pharmaceuticals Corporation (“Nephron”). These expenditures are classified as an embedded lease resulting in a right-of-use asset to be amortized over the life of the Nephron contract. As of December 31, 2025 and 2024, the carrying value of this asset was $ 0.6 million and $ 0.8 million, respectively. Also included within the right-of-use assets are startup expenditures related to a new master services agreement and project agreement with Kindos Pharmaceuticals Co. Ltd. signed in 2025. These expenditures are also classified as an embedded lease resulting in a right-of-use asset to be amortized over the life of the Kindos contract. As of December 31, 2025, the carrying value of the asset was $ 3.0 million. Rent expense is recognized over the expected term of the lease on a straight-line basis as a component of general and administrative expense. Rent expense and sublease income were as follows for the years ended December 31: 2025 2024 Rent expense $ 1,580,113 $ 1,384,083 Sublease income $ 667,814 $ 554,069 F-34 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) In March 2016, the FASB issued ASU 2016-02. ASU 2016-02’s core principle is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information. The primary effect of adopting ASU 2016-02 to the Company was to record right-of-use assets and obligations for the leases previously classified as operating leases. Operating lease liabilities were recorded as the present value of remaining lease payments not yet paid for the lease term discounted using the incremental borrowing rate associated with each lease. Operating lease right-of-use assets represent operating lease liabilities adjusted for lease incentives and initial direct costs. As the Company’s leases do not contain implicit borrowing rates, the incremental borrowing rates were calculated based on information available at October 25, 2022 and May 1, 2023. Incremental borrowing rates reflect the Company’s estimated interest rates for collateralized borrowings over similar lease terms. The weighted-average remaining lease term for the Broadwest and Gateway leases is 8.86 years and 10.42 years for the year ended December 31, 2025 and 2024, respectively. The weighted-average incremental borrowing rate used to discount the present value of the remaining lease payments of both leases is 9.36 % and 9.40 % for the years ended December 31, 2025 and 2024, respectively. Lease Position At December 31, 2025 and 2024, the Company recorded the following on the Consolidated Balance Sheet: Right-of-Use Assets December 31, 2025 December 31, 2024 Operating lease right-of-use assets $ 8,343,832 $ 6,176,923 Lease Liabilities December 31, 2025 December 31, 2024 Operating lease current liabilities $ 467,774 $ 356,508 Operating lease non-current liabilities 4,471,965 4,939,739 Total $ 4,939,739 $ 5,296,247 As of December 31, 2025, cumulative future minimum sublease income under non-cancelable operating subleases totals approximately $ 0.1 million which includes the 90-day notice required for lease termination. Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) are as follows: Maturity of Leases Liabilities at December 31, 2025 Operating Leases 2026 $ 909,911 2027 934,180 2028 740,791 2029 650,766 2030 667,049 After 2030 3,529,586 Total minimum lease payments 7,432,283 Less: Interest ( 2,492,543 ) Present value of lease liabilities $ 4,939,739 F-35 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (16) Market Concentrations The Company’s principal financial instruments subject to potential concentration of credit risk are accounts receivable, which are unsecured, and cash equivalents. The Company’s cash equivalents consist primarily of money market funds. Certain bank deposits may be in excess of the insurance limits provided by the Federal Deposit Insurance Corporation. The Company’s primary customers are wholesale pharmaceutical distributors in the U.S. Total revenues by customer for each customer representing 10% or more of consolidated revenues are summarized below for the years ended December 31: 2025 2024 Customer 1 27 % 26 % Customer 2 25 % 29 % Customer 3 22 % 21 % The Company’s accounts receivable, net of allowances, due from the customers representing 10% or more of consolidated revenue was 63.7 % and 63.7 % at December 31, 2025 and 2024, respectively. (17) Manufacturing and Supply Agreements The Company utilizes one or two primary suppliers to manufacture each of its products and product candidates. Although there are a limited number of manufacturers of pharmaceutical products, the Company believes it could utilize other suppliers to manufacture its prescription products on comparable terms. A change in suppliers, problems with its third-party manufacturing operations or related production capacity, or contract disputes with suppliers could cause a delay in manufacturing or shipment of finished goods and possible loss of sales, which could adversely affect operating results. (18) Employment Agreements The Company has entered into employment agreements with all its full-time employees. Each employment agreement provides for a salary for services performed, a potential annual bonus and, if applicable, a grant of restricted common shares pursuant to a restricted stock and incentive stock option agreement. (19) Commitments and Contingencies Commitments In connection with its licensing agreements for Caldolor, the Company is required to pay royalties based on net sales over the life of the product. Royalty expense is recognized as a component of selling and marketing expense in the period that revenue is recognized. In connection with the acquisition of Vibativ, the Company is required to pay royalties based on net sales of the product. At the purchase date, Cumberland recorded the fair value of this liability and will continue to evaluate the liability each period and the royalty expense is recognized as a component of selling and marketing expense in the period that the change in fair value is recognized. In connection with the acquisition of Sancuso, the Company is required to pay up to $ 3.5 million in milestones and tiered royalties ranging from 10 % to 5 % on U.S. net product sales for ten years . F-36 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) Legal Matters Cumberland has a number of patents issued through the United States Patent and Trademark Office (the “USPTO”) including U.S. Patent number 8,148,356 (the “356 Acetadote Patent”) which is assigned to the Company. The claims of the 356 Acetadote Patent encompass the new Acetadote formulation and include composition of matter claims. Following its issuance, the 356 Acetadote Patent was listed in the FDA Orange Book. The 356 Acetadote Patent is scheduled to expire in May 2026, which time period includes a 270-day patent term adjustment granted by the USPTO. Since 2012, Cumberland has continued to vigorously defend and protect its Acetadote product and related intellectual property rights including the use of all its legal options. (20) Quarterly Financial Information (Unaudited) The following table sets forth the unaudited operating results for each fiscal quarter of 2025 and 2024: First Quarter Second Quarter Third Quarter Fourth Quarter Total 2025: Net revenues $ 11,713,055 $ 10,837,363 $ 8,292,362 $ 13,678,651 $ 44,521,431 Operating income/loss 1,291,947 ( 747,478 ) ( 1,965,260 ) ( 1,371,202 ) ( 2,791,993 ) Net income (loss) 1,248,184 ( 735,207 ) ( 1,949,046 ) ( 1,428,642 ) ( 2,864,711 ) Net income (loss) attributable to common shareholders 1,257,068 ( 740,740 ) ( 1,940,764 ) ( 1,411,692 ) ( 2,836,128 ) Earnings (loss) per share attributable to common shareholders (1) Basic $ 0.08 $ ( 0.05 ) $ ( 0.13 ) $ ( 0.09 ) $ ( 0.19 ) Diluted $ 0.08 $ ( 0.05 ) $ ( 0.13 ) $ ( 0.09 ) $ ( 0.19 ) 2024: Net revenues $ 8,497,701 $ 9,848,849 $ 9,085,826 $ 10,435,569 $ 37,867,945 Operating income (loss) ( 1,869,250 ) ( 1,026,688 ) ( 1,694,432 ) ( 1,842,039 ) ( 6,432,409 ) Net income (loss) ( 1,902,472 ) ( 1,102,637 ) ( 1,536,969 ) ( 1,901,637 ) ( 6,443,715 ) Net income (loss) attributable to common shareholders ( 1,946,263 ) ( 1,085,612 ) ( 1,544,081 ) ( 1,903,814 ) ( 6,479,770 ) Earnings (loss) per share attributable to common shareholders (1) Continuing operations - basic $ ( 0.14 ) $ ( 0.08 ) $ ( 0.11 ) $ ( 0.14 ) $ ( 0.46 ) Continuing operations - diluted $ ( 0.14 ) $ ( 0.08 ) $ ( 0.11 ) $ ( 0.14 ) $ ( 0.46 ) (1) Due to the nature of interim earnings per share calculations, the sum of the quarterly earnings (loss) per share amounts may not equal the reported earnings (loss) per share for the full year. F-37 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Continued) (21) Segment Reporting The Company has one reportable segment which is specialty pharmaceutical products. The Company's chief operating decision maker (“CODM”) is its chief executive officer. The CODM uses consolidated, single segment financial information for purposes of evaluating performance, planning and forecasting future period financial results, and allocating resources. The CODM assesses performance for the single segment and decides how to allocate resources based on net income or loss that also is reported on the consolidated statement of operations as net income or loss. The measure of segment assets is reported on the consolidated balance sheet as total assets. The following table summarizes selected financial information of the Company’s single operating segment for the years ended December 31: 2025 2024 Net revenues $ 44,521,431 $ 37,867,945 Costs and expenses: Cost of products sold 6,667,207 6,585,972 Selling and marketing 19,098,153 17,023,023 Research and development 5,566,498 4,816,206 General and administrative 11,946,909 11,126,901 Amortization and impairment 4,034,657 4,748,252 Total costs and expenses 47,313,424 44,300,354 Operating loss ( 2,791,993 ) ( 6,432,409 ) Interest income 476,748 334,444 Other income - gain on insurance proceeds — 237,089 Interest expense ( 495,990 ) ( 605,508 ) Loss before income taxes ( 2,811,235 ) ( 6,466,384 ) Income tax (expense) benefit ( 40,256 ) 22,669 Equity in loss of investee ( 13,220 ) — Net loss ( 2,864,711 ) ( 6,443,715 ) Net (income) loss at subsidiary attributable to noncontrolling interests 28,583 ( 36,055 ) Net loss attributable to common shareholders $ ( 2,836,128 ) $ ( 6,479,770 ) F-38 Schedule II CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Valuation and Qualifying Accounts Years ended December 31, 2025 and 2024. Description Balance at beginning of period Charged to costs and expenses Charged to other accounts Deductions Balance at end of period Allowance for uncollectible amounts, cash discounts, chargebacks, and credits issued for damaged products: For the years ended December 31: 2024 579,562 5,734,792 104,000 ( 5,381,391 ) 1,036,963 2025 1,036,963 6,081,022 10,600 ( 5,938,517 ) 1,190,068 Valuation allowance for deferred tax assets: For the years ended December 31: 2024 21,869,328 80,010 21,949,338 2025 21,949,338 128,879 — — 22,078,217 (1) Composed of actual returns and credits for chargebacks and cash discounts. F-39