CUMBERLAND PHARMACEUTICALS INC 10-Q

Item 1. Financial Statements (Unaudited) CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (Unaudited) June 30, 2026 December 31, 2025 ASSETS Current assets: Cash and cash equivalents $ 3,862,402 $ 11,444,693 Accounts receivable, net 13,419,594 16,944,780 Inventories, net 29,935 29,935 Prepaid and other current assets 675,993 654,166 Current assets held for sale/related to discontinued operations 15,653,221 7,986,693 Total current assets 33,641,145 37,060,267 Non-current inventories 40,879 40,879 Property and equipment, net 248,808 264,724 Intangible assets, net 43,804 53,621 Operating lease right-of-use assets 7,281,280 5,781,728 Other assets 3,171,623 2,973,378 Assets held for sale/related to discontinued operations 18,452,155 30,649,395 Total assets $ 62,879,694 $ 76,823,992 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 19,554,251 $ 18,567,546 Operating lease current liabilities 503,016 467,774 Pre-close accrued liabilities 7,518,645 7,774,143 Other current liabilities 2,242,122 2,855,952 Current liabilities held for sale/related to discontinued operations 5,375,104 7,079,504 Total current liabilities 35,193,138 36,744,919 Revolving line of credit - long term — 5,240,733 Operating lease non-current liabilities 4,211,168 4,471,965 Other long-term liabilities 3,981,224 3,626,875 Liabilities held for sale/related to discontinued operations 2,387,716 2,195,278 Total liabilities 45,773,246 52,279,770 Equity: Shareholders’ equity: Common stock— no par value; 100,000,000 shares authorized; 14,983,107 and 14,956,627 shares issued and outstanding as of June 30, 2026, and December 31, 2025, respectively 51,808,088 51,684,381 Accumulated deficit ( 34,370,075 ) ( 26,804,059 ) Total shareholders’ equity 17,438,013 24,880,322 Noncontrolling interests ( 331,565 ) ( 336,100 ) Total equity 17,106,448 24,544,222 Total liabilities and equity $ 62,879,694 $ 76,823,992 See accompanying Notes to Condensed Consolidated Financial Statements. 1 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (Unaudited) Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Net revenues from continuing operations $ 166,458 $ 380,797 $ 330,308 $ 547,425 Costs and expenses: Research and development 772,162 837,401 1,538,007 1,522,188 General and administrative 2,547,606 2,657,146 4,870,980 4,855,889 Amortization 7,151 5,769 14,152 11,844 Total costs and expenses 3,326,919 3,500,316 6,423,139 6,389,921 Operating loss ( 3,160,461 ) ( 3,119,519 ) ( 6,092,831 ) ( 5,842,496 ) Interest income 60,884 127,489 138,915 253,198 Interest expense ( 724 ) ( 471 ) ( 790 ) ( 4,863 ) Loss before income taxes ( 3,100,301 ) ( 2,992,501 ) ( 5,954,706 ) ( 5,594,161 ) Income tax expense ( 3,870 ) ( 5,671 ) ( 7,741 ) ( 11,341 ) Net loss from continuing operations ( 3,104,171 ) ( 2,998,172 ) ( 5,962,447 ) ( 5,605,502 ) Net income (loss) from discontinued operations ( 1,170,259 ) 2,262,965 ( 1,599,034 ) 6,118,479 Net income (loss) ( 4,274,430 ) ( 735,207 ) ( 7,561,481 ) 512,977 Net income (loss) at subsidiary attributable to noncontrolling interests ( 1,947 ) ( 5,533 ) ( 4,535 ) 3,351 Net income (loss) attributable to common shareholders $ ( 4,276,377 ) $ ( 740,740 ) $ ( 7,566,016 ) $ 516,328 Income (loss) per share attributable to common shareholders - Continuing operations - basic $ ( 0.21 ) $ ( 0.20 ) $ ( 0.40 ) $ ( 0.37 ) - Discontinued operations - basic ( 0.08 ) 0.15 ( 0.11 ) 0.41 $ ( 0.29 ) $ ( 0.05 ) $ ( 0.51 ) $ 0.03 - Continuing operations - diluted $ ( 0.21 ) $ ( 0.20 ) $ ( 0.40 ) $ ( 0.37 ) - Discontinued operations - diluted ( 0.08 ) 0.15 ( 0.11 ) 0.41 $ ( 0.29 ) $ ( 0.05 ) $ ( 0.51 ) $ 0.03 Weighted-average shares outstanding - basic 14,981,607 14,960,596 14,970,968 14,951,609 - diluted 14,981,607 14,960,596 14,970,968 14,951,609 See accompanying Notes to Condensed Consolidated Financial Statements. 2 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (Unaudited) Six months ended June 30, 2026 2025 Cash flows from operating activities: Net income (loss) $ ( 7,561,481 ) $ 512,977 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization expense 71,619 77,769 Amortization of operating lease right-of-use asset 481,323 481,323 Share-based compensation 184,708 154,898 Increase in cash surrender value of life insurance policies over premiums paid ( 166,262 ) ( 40,507 ) Net changes in assets and liabilities affecting operating activities: Accounts receivable 3,525,186 1,384,555 Inventories, net — 101,653 Other current assets and other assets ( 42,941 ) ( 259,885 ) Operating lease liabilities ( 452,202 ) ( 440,442 ) Accounts payable and other current liabilities 108,230 ( 2,621,548 ) Other long-term liabilities 354,349 ( 50,763 ) Net cash provided by (used in) operating activities from continuing operations ( 3,497,471 ) ( 699,970 ) Discontinued operations 4,053,236 5,442,288 Net cash provided by operating activities 555,765 4,742,318 Cash flows from investing activities: Additions to property and equipment ( 38,283 ) ( 74,116 ) Investment in cash surrender value of life insurance policies ( 42,018 ) — Net (increase) decrease of investment in manufacturing ( 1,754,228 ) — Additions to intangible assets ( 7,603 ) ( 10,526 ) Net cash used in investing activities from continuing operations ( 1,842,132 ) ( 84,642 ) Discontinued operations ( 145,459 ) ( 857,680 ) Net cash used in investing activities ( 1,987,591 ) ( 942,322 ) Cash flows from financing activities: Proceeds from ATM offering, net — 5,266,334 Payments on line of credit ( 5,240,733 ) ( 10,035,437 ) Payments made in connection with repurchase of common shares ( 61,001 ) ( 253,039 ) Net cash used in financing activities from continuing operations ( 5,301,734 ) ( 5,022,142 ) Discontinued operations ( 848,731 ) ( 654,757 ) Net cash used in financing activities ( 6,150,465 ) ( 5,676,899 ) Net decrease in cash and cash equivalents ( 7,582,291 ) ( 1,876,903 ) Cash and cash equivalents at beginning of period $ 11,444,693 $ 17,964,184 Cash and cash equivalents at end of period $ 3,862,402 $ 16,087,281 See accompanying Notes to Condensed Consolidated Financial Statements. 3 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Condensed Consolidated Statements of Equity (Unaudited) Common stock Accumulated deficit Noncontrolling interests Total equity Shares Amount Balance, December 31, 2024 13,952,624 $ 46,821,425 $ ( 23,967,931 ) $ ( 307,517 ) $ 22,545,977 Share issuances 1,000,000 4,715,950 — — 4,715,950 Share-based compensation 62,350 74,213 — — 74,213 Repurchase of common shares ( 53,837 ) ( 243,705 ) — — ( 243,705 ) Net income (loss) — — 1,257,068 ( 8,884 ) 1,248,184 Balance, March 31, 2025 14,961,137 $ 51,367,883 $ ( 22,710,863 ) $ ( 316,401 ) $ 28,340,619 Balance, March 31, 2025 14,961,137 $ 51,367,883 $ ( 22,710,863 ) $ ( 316,401 ) $ 28,340,619 Share issuances — — — — — Share-based compensation 600 80,685 — — 80,685 Repurchase of common shares ( 1,800 ) ( 7,170 ) — — ( 7,170 ) Net income (loss) — — ( 740,740 ) 5,533 ( 735,207 ) Balance, June 30, 2025 14,959,937 $ 51,441,398 $ ( 23,451,603 ) $ ( 310,868 ) $ 27,678,927 Common stock Accumulated deficit Noncontrolling interests Total equity Shares Amount Balance, December 31, 2025 14,956,627 $ 51,684,381 $ ( 26,804,059 ) $ ( 336,100 ) $ 24,544,222 Share-based compensation 46,725 106,842 — — 106,842 Repurchase of common shares ( 20,245 ) ( 61,001 ) — — ( 61,001 ) Net income (loss) — — ( 3,289,639 ) 2,588 ( 3,287,051 ) Balance, March 31, 2026 14,983,107 $ 51,730,222 $ ( 30,093,698 ) $ ( 333,512 ) $ 21,303,012 Balance, March 31, 2026 14,983,107 $ 51,730,222 $ ( 30,093,698 ) $ ( 333,512 ) $ 21,303,012 Share-based compensation — 77,866 — — 77,866 Net income (loss) — — ( 4,276,377 ) 1,947 ( 4,274,430 ) Balance, June 30, 2026 14,983,107 51,808,088 ( 34,370,075 ) ( 331,565 ) 17,106,448 See accompanying Notes to Condensed Consolidated Financial Statements 4 CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (Unaudited) (1) ORGANIZATION AND BASIS OF PRESENTATION Cumberland Pharmaceuticals Inc. ("Cumberland," the "Company," or as used in the context of "we," "us," or "our"), is an innovation-focused biopharmaceutical company developing new product candidates for rare diseases and other serious conditions. Following the completion of a Strategic Transaction to integrate our commercial brands and organization with Apotex, Cumberland has increased its focus on advancing its proprietary pipeline addressing poorly met medical needs with large potential market opportunities. Cumberland's growth strategy is centered on creating long-term shareholder value by advancing its proprietary line of differentiated product candidates, leveraging our existing partnerships, while maintaining financial discipline. In the opinion of management, the accompanying unaudited condensed consolidated financial statements of the Company have been prepared on a basis consistent with the December 31, 2025, audited consolidated financial statements and include all adjustments, consisting of only normal recurring adjustments, necessary to fairly present the information set forth herein. All significant intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements have been prepared in accordance with the regulations of the Securities and Exchange Commission (the " SEC " ), and certain information and disclosures have been condensed or omitted as permitted by the SEC for interim period presentation. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the " 2025 Annual Report on Form 10-K " ). The results of operations for the three and six months ended June 30, 2026, are not necessarily indicative of the results to be expected for the entire fiscal year or any future period. Discontinued Operations On April 22, 2026, the Company entered into an Asset Purchase Agreement (the "Apotex Agreement") with Apotex Inc. and certain affiliates ("Apotex"). Under the Apotex Agreement, the Apotex affiliates will integrate the specified assets relating to the Company’s FDA-approved products and certain product-related equity interests for cash consideration of $ 100,000,000 at closing, together with up to $ 9,000,000 for inventory reimbursement and approximately $ 2,000,000 for transaction services over the 12 months following closing. On July 1, 2026, t he Company completed the closing of the strategic transaction ("Strategic Transaction") with Apotex, pursuant to the Apotex Agreement. Cumberland has retained its robust portfolio of innovative product candidates and its majority ownership position in Cumberland Emerging Technologies Inc. Following the closing, Cumberland will focus its resources on developing ifetroban, a potent thromboxane antagonist currently being studied across clinical programs targeting serious rare and progressive diseases. In accordance with ASC 205-20, Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. In the period in which the component meets held-for-sale or discontinued operations criteria the major current assets, non-current assets, current liabilities, and non-current liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations and disclosed in the notes to financial statements. At the same time, the results of all discontinued operations, less applicable income taxes, shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations. For additional information, see Note 13, Discontinued Operations. Recent Accounting Guidance Recent Accounting Pronouncements 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. 5 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 the year ended December 31, 2025 on a prospective basis, with no material impact on the Company’s consolidated financial statements. 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 ("ASU 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. ASU 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, but do not expect the adoption of Update 2024-03 to result in a change in recognition or measurement of expenses within our consolidated financial statements. Use of Estimates The preparation of the condensed 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 condensed 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 and (3) valuation of contingent consideration liabilities associated with business combinations. Operating Segments The Company operates its business as one operating segment focused on innovation and development of new product candidates. Operating segments are identified as components of an enterprise about which separate discrete financial information is evaluated by the chief operating decision maker ("CODM"), or decision-making group, in making decisions regarding resource allocation and assessing performance. The Company has concluded that our new product candidates have similar approval processes with the FDA and similar circumstances. Following the closing of the Strategic Transaction, the Company does not generate product-related revenues. The CODM utilizes consolidated net income (loss) as the primary measure of segment profit and loss to evaluate performance and allocate capital. Because the Company operates in a single operating segment, the segment metrics, significant segment expenses, and total segment assets are consistent with the consolidated financial statements and are further detailed in Part II - Results of Operations . Non-operating investment income generated from the proceeds of the commercial divestiture is managed centrally at the corporate level and is excluded from the CODM’s evaluation of core portfolio performance. 6 Trade and Note Receivables Policy Management evaluates the application of Current Expected Credit Losses (CECL) to all of its financial instruments including trade and note receivables. CECL is applicable to all financial instruments measured at amortized cost. Therefore for the Company, this principally relates to trade receivables and two notes receivable. CECL also 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: a. Internal or external credit score/rating b. Risk ratings or classification c. Financial asset type d. Size e. Effective interest rate f. Term g. Geographical location h. Historical or expected credit loss patterns i. 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 continues to display similar risk characteristics. With over 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. 7 (2) EARNINGS (LOSS) PER SHARE The following table reconciles the numerator and denominator used to calculate basic and diluted earnings (loss) per share for the three and six months ended June 30, 2026 and 2025: Three months ended June 30, 2026 2025 Numerator: Net income (loss) attributable to common shareholders $ ( 4,276,377 ) $ ( 740,740 ) Denominator: Weighted-average shares outstanding – basic 14,981,607 14,960,596 Dilutive effect of other securities — — Weighted-average shares outstanding – diluted 14,981,607 14,960,596 Six months ended June 30, 2026 2025 Numerator: Net income (loss) attributable to common shareholders $ ( 7,566,016 ) $ 516,328 Denominator: Weighted-average shares outstanding – basic 14,970,968 14,951,609 Dilutive effect of other securities — — Weighted-average shares outstanding – diluted 14,970,968 14,951,609 As of June 30, 2026 and 2025, restricted stock awards and options to purchase 666,906 and 753,089 shares of common stock, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effect would be antidilutive. 8 (3) REVENUES Product Revenues The Company accounts for revenues from contracts with customers under ASC 606. The Company’s net revenues consisted of the following for the three and six months ended June 30, 2026 and 2025: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Products: Talicia $ 2,349,890 $ — $ 4,266,370 $ — Sancuso 1,816,737 3,119,112 4,745,372 4,079,920 Vibativ 1,738,887 2,701,854 3,857,183 6,238,609 Kristalose 1,061,442 2,754,299 2,042,926 5,375,405 Caldolor 1,474,288 1,588,293 2,439,852 2,895,733 Acetadote 136,661 193,544 188,643 345,195 Vaprisol — ( 14,621 ) 518 ( 15,221 ) Omeclamox-Pak — ( 752 ) — ( 6,139 ) RediTrex 1,802 3,244 1,311 2,897 Other revenue 221,534 492,390 390,384 3,634,019 Total revenue 8,801,241 $ 10,837,363 17,932,559 22,550,418 Less discontinued operations ( 8,634,783 ) $ ( 10,456,566 ) $ ( 17,602,251 ) $ ( 22,002,993 ) Revenue from continuing operations $ 166,458 $ 380,797 $ 330,308 $ 547,425 On July 1, 2026, t he Company completed the closing of the Strategic Transaction with Apotex selling these branded products. We are classifying the revenues from these branded products as discontinued operations. For the three and six months ended June 30, 2026 and 2025, the amounts noted with regard to Vaprisol, Omeclamox-Pak and RediTrex, resulted from routine sales deduction adjustments of these products which had no sales for the periods represented. Other Revenues In early 2025, Cumberland received a $ 3.0 million milestone payment from our distribution partner in China associated with the approval of Vibativ for that market. 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. 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. Other revenues also include lease income generated by CET’s Life Sciences Center, which 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 5 - Leases, was approximately $ 0.2 million for the three months ended June 30, 2026 and 2025, and $ 0.3 million for the six months ended June 30, 2026 and 2025. 9 (4) INVENTORIES The Company works closely with third parties to manufacture and package finished goods for sale. Based on the arrangements with the manufacturer or packager, the Company will either take title to the finished goods at the time of shipment or at the time of arrival at the Company’s warehouses. The Company then holds such goods in inventory until distribution and sale. These finished goods 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 inventory for potential losses due to excess, obsolete or slow-moving goods by comparing sales history and projections to the inventory on hand. When evidence indicates that the carrying value may not be recoverable, a charge is taken to reduce the inventory to its current net realizable value. At June 30, 2026 and December 31, 2025, there were no cumulative net realizable value charges for potential obsolescence and discontinuance losses necessary. The Company purchases the active pharmaceutical ingredient ("API") for Kristalose and Sancuso 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 these APIs are consumed in the manufacture of our products, the value of the API involved is transferred from raw materials to finished goods. Consigned inventory represents Authorized Generic inventory stored with our partner until shipment to their customers. As of June 30, 2026, all inventories were classified as current due to the Strategic Transaction with Apotex closing on July 1, 2026. All branded product related inventory is included in discontinued operations with only the ifetroban study drug representing the current inventory on hand. At June 30, 2026 and December 31, 2025, the Company's net inventories consisted of the following: June 30, 2026 December 31, 2025 Raw materials and work in progress $ 9,679,198 $ 9,832,293 Finished goods 4,932,630 5,646,315 Total 14,611,828 15,478,608 Non-current inventory ( 40,879 ) ( 40,879 ) Total Inventory 14,570,949 15,437,729 Discontinued operations ( 14,541,014 ) ( 15,407,794 ) Net inventory from continuing operations $ 29,935 $ 29,935 At June 30, 2026 and December 31, 2025, the Company's non-current inventories consisted of the following: June 30, 2026 December 31, 2025 Ifetroban raw materials 40,879 40,879 Total non-current inventories classified as continuing operations $ 40,879 $ 40,879 10 (5) LEASES On November 15, 2021, Cumberland entered into a lease (the "Broadwest Lease"), pursuant to which the Company leases approximately 16,903 rentable square feet of space (the "Leased Premise") at the Broadwest office campus located in Nashville, Tennessee with 1600 West End Avenue Partners, LLC (the "Landlord"). The Leased Premise serves as the Company's 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 5 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 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 provided for a tenant improvement allowance which was used to build out the space. On October 24, 2022, CET provided the notice of exercise to extend the lease with The Gateway to Nashville, LLC (the "Gateway 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. Also included within the right-of-use assets are start up expenditures related to new supply agreements with Nephron Pharmaceuticals Corporation ("Nephron") for our Vaprisol product, Kindos Pharmaceuticals Co., Ltd. ("Kindos") for our Vibativ and Acetadote products and Recipharm Pharmaservices Pvt. Ltd ("Recipharm") for our ifetroban study drug. These expenditures are classified as embedded leases resulting in right-of-use assets with the carrying value being reduced straight-line over the life of the contracts. As of June 30, 2026, the right-of-use assets for Nephron and Kindos were $ 0.5 million and $ 1.9 million. These assets relate to manufacturing for Vaprisol, Acetadote and Vibativ and are classified as discontinued operations. In addition, the right-of-use assets for Recipharm were $ 2.8 million. These assets relate to ifetroban manufacturing and are classified in continuing operations. 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 the commencement date of each lease. 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 Lease and Gateway Lease is 8.5 years and 8.9 years at June 30, 2026 and December 31, 2025, respectively. The weighted-average incremental borrowing rate used to discount the present value of the remaining lease payments for both leases is 9.34 % and 9.36 % at June 30, 2026 and December 31, 2025, respectively. 11 Lease Position At June 30, 2026 and December 31, 2025, the Company's lease assets and liabilities were as follows: Right-of-Use Assets June 30, 2026 December 31, 2025 Operating lease right-of-use assets $ 7,281,280 $ 5,781,728 Lease Liabilities June 30, 2026 December 31, 2025 Operating lease current liabilities $ 503,016 $ 467,774 Operating lease non-current liabilities 4,211,168 4,471,965 Total $ 4,714,184 $ 4,939,739 As of June 30, 2026, 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 Lease Liabilities at June 30, 2026 Operating Leases 2026 $ 457,707 2027 934,181 2028 740,791 2029 650,766 2030 667,049 After 2030 3,529,586 6,980,080 Less: Interest 2,265,896 Present value of lease liabilities $ 4,714,184 Rent expense is recognized over the expected term of the lease, including renewal option periods, if applicable, on a straight-line basis as a component of general and administrative expense. Rent expense and sublease income were as follows: Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Rent expense $ 358,961 $ 363,583 $ 703,126 $ 718,335 Sublease income $ 166,458 $ 162,797 $ 330,308 $ 321,426 12 (6) SHAREHOLDERS’ EQUITY AND DEBT Share repurchases Cumberland currently has a share repurchase program available to repurchase its common stock pursuant to Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In January 2019, the Company's Board of Directors established the current $ 10 million repurchase program to replace the prior authorizations. During the six months ended June 30, 2026 and June 30, 2025, the Company repurchased 20,245 and 55,637 shares of common stock for approximately $ 0.1 million and $ 0.3 million, respectively. At June 30, 2026, there remains approximately $ 2.1 million available under the current repurchase program for common share repurchases. Share Sales The Company filed an updated Form S-3 with the SEC in December 2023, which was declared effective 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 At the Market ("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. On February 5, 2025, the Company issued 1,000,000 shares under an ATM for an aggregate amount of $ 5.5 million. As a result of this transaction, deferred offering costs of $ 0.6 million related to the ATM were reclassified as a reduction of paid-in-capital. On February 14, 2025, the Company filed a prospectus supplement to amend the previous prospectus supplement to increase the maximum gross sales price from $ 5.8 million to $ 10 million. The Company intends to continue an ATM feature through H.C. Wainwright, that would allow the Company to additionally issue shares of its common stock. Restricted Share Grants and Incentive Stock Options During the six months ended June 30, 2026 and June 30, 2025, the Company issued 37,250 shares and 35,110 shares of restricted stock, respectively, to advisors and directors. Restricted stock issued to advisors generally cliff-vests on the fourth anniversary of the date of grant and for directors on the one-year anniversary of the date of grant. During the six months ended June 30, 2026 and June 30, 2025, the Company also issued 173,000 and 179,500 incentive stock options, respectively, to employees that cliff-vest on the fourth anniversary of the date of grant, and are largely set to expire in 2036 and 2035, respectively. Stock compensation expense is presented as a component of general and administrative expense in the condensed consolidated statements of operations as it relates to these restricted share grants and options. For the six months ended June 30, 2026 and 2025, stock compensation expense was $ 0.2 million for each period. For the six months ended June 30, 2026 and 2025, we recorded a credit of $ 19,600 and $ 5,973 , respectively, to stock compensation expense related to the forfeiture of unvested incentive stock options. 13 Debt Agreement On September 5, 2023, the Company entered into a new Revolving Credit Loan Agreement (the "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 $ 20 million, with the ability for Cumberland to increase the amount to $ 25 million, under certain conditions. It had a 3-year term expiring on October 1, 2026. The interest rate is based on Benchmark (Term SOFR) plus 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 $ 20 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 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. On June 29, 2026, in connection with the closing of the Strategic Transaction with Apotex, Cumberland terminated and repaid in full all outstanding obligations, approximately $ 5.2 million, due under the Loan Agreement dated as of September 5, 2023. In connection with the termination and repayment in full of all outstanding obligations under the Loan Agreement, all related liens and security interests were terminated, discharged and released. As of December 31, 2025, the Company had $ 5.2 million in borrowings outstanding under its revolving credit facility. (7) INCOME TAXES As of June 30, 2026, the Company had approximately $ 52.6 million in federal net operating loss carryforwards including approximately $ 44.1 million of net operating loss carryforwards resulting from the exercise of nonqualified stock options. These have historically been used to significantly offset income tax obligations. For the tax year 2026, the Company expects to utilize these net operating loss carryforwards to offset the tax liability associated with the taxable gain resulting from closing the Strategic Transaction with Apotex. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. T he Company adopted the tax provisions in the current period. (8) COLLABORATIVE AGREEMENTS Cumberland 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 SBIR/STTR programs and other grant awards. The Company has determined that these collaborative agreements, with the exception of the collaborative payment discussed in Note 10, related to 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 condensed consolidated statements of operations. (9) COMMITMENTS AND CONTINGENCIES The Company is involved in litigation arising in the normal course of business. The Company does not believe that the disposition or ultimate resolution of existing claims or lawsuits will have a material adverse effect on the business or financial condition of the Company. 14 (10) PRODUCT ACQUISITIONS AND RETURN OF PRODUCT RIGHTS 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 an annual $ 3 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 quarterly. Balance at December 31, 2025 $ 3,630,598 Cash payment of royalty during the period ( 554,410 ) Change in fair value of contingent consideration included in operating expenses ( 259,315 ) Contingent consideration earned and accrued in operating expenses 565,583 Balance at June 30, 2026 $ 3,382,456 The contingent consideration liability of $ 3.4 million was accounted for as $ 1.4 million of other current liabilities and $ 2.0 million of other long-term liabilities on the condensed consolidated balance sheet as of June 30, 2026. As these liabilities pertain to Vibativ, they are classified as discontinued operations. 15 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 United States – 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 this 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 called 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 $ 2.0 million in milestones are tied to achievement of certain annual sales levels for the product. In addition, Cumberland has agreed to initially pay a royalty of 10 % of on-going net sales of Sancuso. That royalty rate was subsequently reduced to 5 % in early 2025. 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 following table presents the changes in the fair value of the contingent consideration liability that is remeasured on a recurring basis. Balance at December 31, 2025 $ 1,273,000 Cash payment of milestones and royalty during the period ( 294,321 ) Change in fair value of contingent consideration included in operating expenses ( 188,908 ) Contingent consideration earned and accrued in operating expenses 237,269 Balance at June 30, 2026 $ 1,027,040 The contingent consideration liability earned and accrued in operating expenses is paid to Kyowa Kirin quarterly. The contingent consideration liability of $ 1.0 million was accounted for as $ 0.6 million of current liabilities and $ 0.4 million of other long-term liabilities on the condensed consolidated balance sheet as of June 30, 2026. As these liabilities pertain to Sancuso, they are classified as discontinued operations. RediTrex On July 12, 2022, Cumberland entered into an amendment to an agreement with Nordic Group B.V.("Nordic") returning all the U.S. rights to RediTrex back to Nordic including the trademark and market authorization effective June 30, 2023. The companies have cooperated on the transition and Cumberland will receive a long-term royalty on any Nordic sales of the product. 16 (11) SEGMENT REPORTING The Company has one reportable segment. Following the closing of the Strategic Transaction, the Company's continuing operations consist of the development of its proprietary product candidates and the early-stage development activities. 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 three and six months ended June 30, 2026 and 2025 . Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Net revenues from continuing operations $ 166,458 $ 380,797 $ 330,308 $ 547,425 Costs and expenses: Research and development 772,162 837,401 1,538,007 1,522,188 General and administrative 2,547,606 2,657,146 4,870,980 4,855,889 Amortization 7,151 5,769 14,152 11,844 Total costs and expenses 3,326,919 3,500,316 6,423,139 6,389,921 Operating loss ( 3,160,461 ) ( 3,119,519 ) ( 6,092,831 ) ( 5,842,496 ) Interest income 60,884 127,489 138,915 253,198 Interest expense ( 724 ) ( 471 ) ( 790 ) ( 4,863 ) Loss before income taxes ( 3,100,301 ) ( 2,992,501 ) ( 5,954,706 ) ( 5,594,161 ) Income tax expense ( 3,870 ) ( 5,671 ) ( 7,741 ) ( 11,341 ) Net loss from continuing operations ( 3,104,171 ) ( 2,998,172 ) ( 5,962,447 ) ( 5,605,502 ) Net income (loss) from discontinued operations ( 1,170,259 ) 2,262,965 ( 1,599,034 ) 6,118,479 Net income (loss) ( 4,274,430 ) ( 735,207 ) ( 7,561,481 ) 512,977 (12) SUBSEQUENT EVENT On July 1, 2026, the Company announced the completion of the Strategic Transaction with Apotex, pursuant to the Apotex Agreement. Apotex acquired the Company's branded pharmaceutical products for cash consideration of $ 100 million, subject to customary post-closing adjustments. Cumberland has retained its portfolio of innovative product candidates and its majority ownership position in Cumberland Emerging Technologies Inc. Following the closing, Cumberland will focus its resources on developing ifetroban, a potent thromboxane antagonist currently being studied across clinical programs targeting serious rare and progressive diseases. On July 13, 2026, the Company's Board of Directors authorized and declared a special cash dividend of $ 1.50 per share of common stock payable in cash to the Company’s shareholders of record as of July 23, 2026. The dividend was paid on July 31, 2026 in the amount of $ 22.5 million. In addition to the special dividend, the Board authorized an open-market share repurchase program of up to $ 5 million in Cumberland shares of common stock over time. This replaces the previous share repurchase program established in January 2019 that allowed $ 10 million of share repurchases, of which $ 2.1 million remained available. The timing and actual number of shares repurchased pursuant the Company’s repurchase program will be determined by management depending on a variety of factors, including stock price, trading volume, market conditions, and other general business considerations. Several Board members will also be establishing new share purchase plans to increase their holdings in the Company. 17 (13) DISCONTINUED OPERATIONS On July 1, 2026, the previously announced Strategic Transaction with an affiliate of Apotex was completed. The Strategic Transaction was effected through the Apotex Agreement, dated as of April 22, 2026. Under the terms of the agreement, Apotex acquired Cumberland’s portfolio of FDA-approved brands for $ 100 million in cash consideration. This Strategic Transaction is designed to unlock value and sharpen Cumberland’s focus on advancing its pipeline of differentiated product candidates designed to address unmet medical needs. The integration of Cumberland’s products will create more critical mass to support patient care and expand product distribution. Following the closing of the transaction, Cumberland retained its development programs, as well as its majority ownership in Cumberland Emerging Technologies. This positions Cumberland to operate with the profile of an innovative, development-stage biopharmaceutical organization devoted to new medicines for the future. Management concluded that the disposition of the commercial branded pharmaceutical products business represents a strategic shift that has a major effect on the Company's operations and financial results. Accordingly, the commercial products business has been presented as a discontinued operation in accordance with ASC 205-20, Presentation of Financial Statements—Discontinued Operations. The held-for-sale and discontinued operations criteria of ASC 205-20-45-1E were met on April 22, 2026, upon execution of the Apotex Agreement. Accordingly, the assets and liabilities of the commercial branded pharmaceutical products business have been presented separately in the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, and the results of that business have been presented as discontinued operations for all periods presented. These reclassifications had no effect on previously reported total assets, total liabilities, net income (loss) or total equity. Consistent with ASC 205-20-45-10 , the assets and liabilities presented separately as of December 31, 2025 were not remeasured as though they had been held for sale as of that date. The disposal group comprised the inventories, intangible assets, goodwill, right-of-use assets and product-related equity interests associated with the commercial branded pharmaceutical products business, together with the related contingent consideration liabilities. Trade accounts receivable, trade accounts payable and cash of that business were retained by the Company and, accordingly, remain classified within continuing operations in the condensed consolidated balance sheets. General corporate overhead has not been allocated to discontinued operations. The Company measured the disposal group at the lower of its carrying amount or fair value less costs to sell in accordance with ASC 360-10-35-43. Because fair value less costs to sell, determined by reference to the $ 100 million of cash consideration under the Apotex Agreement, exceeded the carrying amount of the net assets of the disposal group, no impairment loss was recognized upon classification as held for sale or as of June 30, 2026. The Company expects to recognize a material pre-tax gain on the sale within discontinued operations in the third quarter of 2026. The amount of the gain remains subject to finalization of customary post-closing adjustments and of the inventory reimbursement of up to $ 9.0 million payable over the twelve months following closing. Discontinued operations are presented separately in the Consolidated Balance Sheet, Statement of Operations and Statement of Cash Flows for all periods presented. The assets and liabilities of the discontinued operation are presented separately in the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, and the results of the discontinued operation are presented separately in the condensed consolidated statements of operations for all periods presented. 18 Assets and Liabilities of Discontinued Operations June 30, 2026 December 31, 2025 ASSETS Inventories, net $ 14,541,014 $ 6,195,583 Prepaid and other current assets 1,112,207 1,791,110 Current assets held for sale/related to discontinued operations $ 15,653,221 $ 7,986,693 Non-current inventories $ — $ 9,212,211 Intangible assets, net 11,485,505 13,974,300 Goodwill (1) 914,000 914,000 Operating lease right-of-use assets 2,372,678 2,562,104 Other investment (2) 3,679,972 3,986,780 Assets held for sale/related to discontinued operations $ 18,452,155 $ 30,649,395 LIABILITIES Other investment liabilities (2) $ 3,650,104 $ 5,074,504 Other current liabilities 1,725,000 2,005,000 Current liabilities held for sale/related to discontinued operations $ 5,375,104 $ 7,079,504 Other long-term liabilities $ 2,387,716 $ 2,195,278 Liabilities held for sale/related to discontinued operations $ 2,387,716 $ 2,195,278 (1) Goodwill relates to Vibativ and Sancuso products. (2) Liabilities that relate to the Company's equity investment in Talicia Holdings, Inc. 19 Income (Loss) from Discontinued Operations Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Net revenues $ 8,634,783 $ 10,456,566 $ 17,602,251 $ 22,002,993 Costs and expenses: Cost of products sold 2,016,852 2,011,389 3,950,741 3,437,103 Selling and marketing 5,372,804 4,223,647 10,444,710 8,455,628 Research and development 647,124 630,998 1,339,715 1,241,287 General and administrative 194,949 217,776 419,020 482,040 Amortization 1,293,049 1,000,715 2,534,982 1,999,970 Interest expense 119,536 109,076 205,309 268,486 Other expense 160,728 — 306,808 — Total costs and expenses 9,805,042 8,193,601 19,201,285 15,884,514 Net income (loss) from discontinued operations $ ( 1,170,259 ) $ 2,262,965 $ ( 1,599,034 ) $ 6,118,479 Cash Flows from Discontinued Operations Six months ended June 30, 2026 2025 Cash flows from operating activities: Net changes in assets and liabilities: Intangible assets, net $ 2,488,795 $ 1,987,733 Inventories, net 866,780 777,123 Prepaid and other current assets 678,903 899,907 Other assets 681,989 1,039,190 Other current liabilities ( 855,669 ) 686,201 Other long-term liabilities 192,438 52,134 Net cash provided by operating activities from discontinued operations $ 4,053,236 $ 5,442,288 Cash flows from investing activities: Increase of investment in manufacturing $ ( 145,459 ) $ ( 857,680 ) Cash flows from financing activities: Cash settlement of contingent consideration $ ( 848,731 ) $ ( 654,757 ) 20