Cumberland Pharmaceuticals : Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

About this update from Cumberland Pharmaceuticals Inc.

Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial position and results of operations should be read together with our audited consolidated financial statements and related notes appearing elsewhere in this Form 10-K. This discussion and analysis may contain forward-looking statements that involve risks and uncertainties - please refer to the section entitled, "Special Note Regarding Forward-Looking Statements," contained in Part I, Item 1A, "Risk Factors," of this Form 10-K. You should review the "Risk Factors" section of this Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis. EXECUTIVE SUMMARY We are a specialty pharmaceutical company focused on the acquisition, development and commercialization of branded prescription pharmaceutical products. We are dedicated to our mission of working together to provide unique products that improve the quality of patient care. Our commercial portfolio includes seven branded products approved for marketing by the FDA. In addition to these commercial brands, we have Phase II clinical programs underway evaluating our ifetroban product candidate for patients with 1) Systemic Sclerosis or scleroderma, a debilitating autoimmune disorder characterized by fibrosis of the skin and internal organs and 2) Idiopathic Pulmonary Fibrosis, the most common form of progressive fibrosing interstitial lung disease. Additionally, we recently completed a Phase II study in patients with cardiomyopathy associated with Duchenne muscular dystrophy, a rare, fatal, genetic neuromuscular disease that results in deterioration of the skeletal, heart and lung muscles. Next steps include meeting with the FDA to determine next steps associated with the product's development and commercialization. Our primary target markets are hospital acute care, gastroenterology and oncology. These medical specialties are characterized by relatively concentrated prescriber bases that we believe can be served effectively by small, targeted sales forces. We promote our approved products through our hospital, field and oncology sales divisions in the United States and are building a network of international partners to register and provide our medicines to patients in their countries. We have established the capabilities needed to acquire, develop and commercialize branded pharmaceuticals in the U.S. We believe we can leverage this existing infrastructure to support new products and our expected growth. Our management team consists of pharmaceutical industry veterans with significant experience in their areas of responsibility. Our business development team identifies, evaluates and negotiates product acquisition, licensing and co-promotion agreements. Our product development team creates proprietary formulations, manages our clinical studies, prepares our FDA submissions and staffs our medical call center. Our quality and manufacturing professionals oversee the manufacturing, release and shipment of our products. Our marketing and sales organization is responsible for our commercial activities, and we work closely with our distribution partners to ensure the availability of our brands. 2025 Highlights Listed below are our Company's 2025 highlights. For more information, please see Part I, Item 1, Business of this Form 10-K. • Progressed our clinical development programs for ifetroban announcing breakthrough top-line study results from our Duchenne muscular dystrophy (DMD) study and presented them at two national DMD conferences. • Expanded our commercial portfolio adding Talicia ® , an FDA-approved therapy for the treatment of Helicobacter pylori infection, strengthening our gastroenterology franchise and further diversifying our base of marketed products. • Announced the publication of a peer-reviewed manuscript evaluating Caldolor ® (ibuprofen) injection in older adult patients, demonstrating that Caldolor provided effective pain control with a favorable safety profile and was associated with reduced opioid use in the post-operative setting. The findings further support Caldolor's role as a non-opioid option for pain management. • Achieved an important reimbursement milestone for Caldolor ® , with a CMS issued J-code associated with an established reimbursement price, strengthening its billing pathway and supporting broader hospital adoption. • Continued to advance and expand Vibativ ® internationally, receiving regulatory approval in China and launching the product in Saudi Arabia, extending access to this important antibiotic in global markets. • Received regulatory approval for our ibuprofen product in Mexico, further expanding the product's international footprint and supporting access to treatment for patients in Latin America. • Expanded U.S. market access for Vibativ ® through new national group purchasing agreements, including contracts with Premier, Inc. and Vizient, improving availability across hospital systems and strengthening the product's commercial positioning in acute care settings. CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES Accounting Estimates and Judgments The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. We base our estimates on past experience and on other factors we deem reasonable given the circumstances. Past results help form the basis of our judgments about the carrying value of assets and liabilities that cannot be determined from other sources. Actual results could differ from these estimates. 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 liabilities associated with business combinations and (4) valuation of continuing utility of intangible assets. Revenue Recognition We recognize revenue in accordance with the Accounting Standards Codification (ASC) Topic 606. Effective January 1, 2018, we adopted the Financial Accounting Standards Board's ("FASB") amended guidance in the form of Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers," (ASC 606). Our revenue is derived primarily from the product sales of our FDA approved pharmaceutical brands. Revenue from sales of products is recognized at the point where the customer obtains control of the goods and we satisfy our performance obligation, which occurs upon either shipment of the product or arrival at its destination, depending upon the shipping terms of the transaction. Payment terms typically range from 30 to 60 days from date of shipment. Our net product revenue reflects the reduction from gross product revenue for estimated allowances for chargebacks, and discounts 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. Other revenue, which is a component of net revenues, includes non-refundable upfront payments and milestone payments under licensing agreements, contract services, grant funding programs and rental income. Other revenue was approximately 9.3% of net revenues in 2025 and 3.5% in 2024. Our financial statements reflect accounts receivable allowances of $0.9 million and $1.1 million at December 31, 2025 and 2024, respectively, for chargebacks and early pay discounts for products. The following table reflects our sales-related accrual activity for the periods indicated below: 2025 2024 Balance, January 1 $ 7,834,211 $ 7,579,783 Current provision 17,917,675 20,235,610 Actual product returns and credits issued (17,977,807) (19,981,182) Balance, December 31 $ 7,774,079 $ 7,834,211 The allowances for chargebacks and discounts and sales related accruals for rebates, fee for service and product returns are determined on a product-by-product basis. We establish them using our 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; • The contractual terms with direct and indirect customers; • Analyses of historical levels of chargebacks, discounts and returns of product; • Communications with customers; • Purchased information about the rate of prescriptions being written and the level of inventory remaining in the distribution channel, if known; and • Expectations about the market for each product, including any anticipated introduction of competitive products. Other organizations, such as managed care providers, pharmacy benefit management companies and government agencies, may receive rebates from us based on either negotiated contracts to carry our products or reimbursements for filled prescriptions. These entities are considered our indirect customers. When recognizing a sale to a wholesaler, sales revenues are reduced and accrued liabilities are increased by our estimate of the rebate that may be claimed. The allowances for chargebacks and accruals for rebates and product returns are the most significant estimates used in the recognition of our revenue from product sales. Of the accounts receivable allowances and our sales related accruals, our accrual for product returns and rebates represents the majority of the balance. Sales related accrued liabilities for rebates, product returns, service fees, and administrative fees totaled $7.8 million each as of December 31, 2025 and 2024. Of these amounts, our estimated liability for fee for services represented $1.8 million and $1.5 million, respectively, while our accrual for product returns totaled $3.0 million and $2.7 million, respectively. If the actual amount of cash discounts, chargebacks, rebates, and product returns differs from the amounts estimated by management, material differences may result from the amount of our revenue recognized from product sales. A change in our rebate estimate of one percentage point would have impacted net sales by approximately $0.6 million for the years ended December 31, 2025 and 2024. A change in our product return estimate of one percentage point would have impacted net sales by $0.4 million for the years ended December 31, 2025 and 2024. Inventories We record amounts for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the net realizable value based upon assumptions about remaining shelf life, future demand and market conditions. The estimated inventory obsolescence amounts are calculated based upon specific review of the inventory expiration dates and the quantity on-hand at December 31, 2025, in comparison to our expected inventory usage. The amount of actual inventory obsolescence and unmarketable inventory could differ (either higher or lower) in the near term from the estimated amounts. Changes in our estimates would be recorded in our statement of operations in the period of the change. Non-current inventories consist of active pharmaceutical ingredients which typically have an extended life and selected finished good products with an extended life longer than one year. Income Taxes We provide for deferred taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss and tax credit carry-forwards and differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Our principal differences are related to the timing of deductibility of certain items such as depreciation, amortization and expense for options issued to non-employees. Deferred tax assets and liabilities are measured using management's estimate of tax rates expected to apply to taxable income in the years in which management believes those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in our results of operations in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that 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 deferred tax liabilities, 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. Share-Based Payments We recognize compensation expense for all share-based payments based on the fair value of the award on the date of grant. In addition, incremental compensation expense is recognized upon the modification of equity awards. We issue restricted stock and incentive stock option awards to employees, directors and consultants. Compensation expense for restricted equity awards granted to employees and directors is generally equal to the fair market value of the underlying common stock on the date of grant. If a sufficient disincentive for nonperformance does not exist at the date of grant, the compensation cost is remeasured at each reporting date at the then-current fair market value of the underlying common stock until the award vests. Research and Development We accrue for and expense research and development costs based on estimates of work performed, patient enrollment or fixed-fee-for-services. As work is performed and/or invoices are received, we adjust our estimates and accruals. To date, our accruals have not differed materially from our estimates. Total research and development costs are a function of studies being conducted and will increase or decrease based on the level of activity in any particular year. Intangible Assets and Goodwill Intangible assets include product rights, license agreements, other identifiable intangible assets and goodwill associated with the Vibativ acquisition. We assess the impairment of goodwill at least annually. We assess the impairment of identifiable intangible assets subject to amortization whenever events or changes in circumstances indicate the carrying value may not be recoverable. In determining the recoverability of our intangible assets, we make assumptions regarding estimated future cash flows and other factors. If the estimated undiscounted future cash flows do not exceed the carrying value of the intangible assets, we must determine the fair value of the intangible assets. If the fair value of the intangible assets is less than the carrying value, an impairment loss will be recognized in an amount equal to the difference. Fair value is determined through various valuation techniques including quoted market prices, third-party independent appraisals and discounted cash flow models, as considered necessary. RESULTS OF OPERATIONS Year ended December 31, 2025 compared to year ended December 31, 2024 The following table presents the statements of operations for the years ended December 31, 2025 and 2024: Years ended December 31, 2025 2024 Change Net revenues $ 44,521,431 $ 37,867,945 $ 6,653,486 Costs and expenses: Cost of products sold 6,667,207 6,585,972 81,235 Selling and marketing 19,098,153 17,023,023 2,075,130 Research and development 5,566,498 4,816,206 750,292 General and administrative 11,946,909 11,126,901 820,008 Amortization and impairment 4,034,657 4,748,252 (713,595) Total costs and expenses 47,313,424 44,300,354 3,013,070 Operating loss (2,791,993) (6,432,409) 3,640,416 Interest income 476,748 334,444 142,304 Other income - gain on insurance proceeds - 237,089 (237,089) Interest expense (495,990) (605,508) 109,518 Loss before income taxes (2,811,235) (6,466,384) 3,655,149 Income tax (expense) benefit (40,256) 22,669 (62,925) Equity in loss of investee (13,220) - (13,220) Net loss $ (2,864,711) $ (6,443,715) $ 3,579,004 The following table summarizes net revenues for the years presented: Years ended December 31, 2025 2024 Change Products: Sancuso $ 11,907,141 $ 9,005,129 $ 2,902,012 Kristalose 10,542,793 15,315,259 (4,772,466) Vibativ 9,484,874 7,160,125 2,324,749 Caldolor 4,659,457 4,959,385 (299,928) Talicia 3,311,235 - 3,311,235 Acetadote 508,169 185,182 322,987 Vaprisol (18,346) (174,538) 156,192 RediTrex 11,391 90,237 (78,846) Omeclamox (10,436) (3,075) (7,361) Other 4,125,153 1,330,241 2,794,912 Total net revenues $ 44,521,431 $ 37,867,945 $ 6,653,486 Net revenues. Net revenues for the year ended December 31, 2025, were approximately $44.5 million compared to $37.9 million for the year ended December 31, 2024. As detailed in the table above, the increase in net revenues was due to the growth in sales during 2025 for four marketed products: Sancuso, Vibativ, Talicia and Acetadote. Sancuso revenue was $11.9 million compared to $9.0 million in the prior year, an increase of $2.9 million or 32.2% for the year ended December 31, 2025. This increase in net revenue was primarily impacted by increased shipments, as well as improvement in product returns in 2025. Vibativ revenue increased to $9.5 million for the year ended December 31, 2025, compared to $7.2 million in the same prior year period. The increase was the result of increased shipments of the product, including the product's new 4-Pak presentation. Talicia revenue was $3.3 million for the year ended December 31, 2025. Talicia is a new product added in the fourth quarter of 2025 resulting from our co-commercialization agreement associated with the product. Kristalose revenue was $10.5 million for the year ended December 31, 2025, compared to $15.3 million for the year ended December 31, 2024, primarily as a result of decreased shipments of the product associated with increased generic substitution. In fourth quarter of 2025, we introduced our crystalline lactulose Authorized Generic product with initial distribution. Caldolor revenue was $4.7 million during the year ended December 31, 2025, compared to $5.0 million in the same period last year. This decrease in Caldolor revenue for the year ended December 31, 2025, w as impacted by a delay in fulfilling an international order. There was no Vaprisol revenue for the year ended December 31, 2025, as Cumberland is currently out of commercial inventory of the product. Net revenue was negatively impacted by various sales deduction adjustments. Acetadote revenue included net sales of our branded product and our share of net sales from our Authorized Generic. For the year ended December 31, 2025, the Acetadote net revenue was $0.5 million, as compared to $0.2 million from the prior year period. This increase resulted primarily higher sales for our Authorized Generic. We discontinued the product Omeclamox-Pak in 2025. Net revenue was positively impacted by various sales deduction adjustments. Other Revenue. Other revenue was $4.1 million for the year ended December 31, 2025, an increase of $2.8 million compared to the year ended December 31, 2024, primarily due to milestone payments recorded of $3.1 million in payments from our international partners. Cost of products sold . Cost of products sold for the year ended December 31, 2025 and 2024, was $6.7 million and $6.6 million remaining consistent year over year. The gross margin for the years ended December 31, 2025 and 2024, were 85.0% and 82.6%, respectively. Selling and marketing . Selling and marketing expense for the year ended December 31, 2025, was $19.1 million compared to $17.0 million in the prior year, which was an increase of $2.1 million. This increase was primarily a result of an increase in royalty expenses and other costs associated with the increase in product sales. Research and development . Research and development costs for the year ended December 31, 2025, were $5.6 million, compared to $4.8 million in the prior year, representing an increase of $0.8 million due primarily to increased FDA fees and manufacturing costs. A portion of our research and development costs is variable based on the number of trials, study sites, number of patients and the cost per patient in each of our clinical programs. We continue to fund our ongoing clinical initiatives associated with our pipeline products. The following table shows the primary components of our research and development expenses for the years ended December 31: 2025 2024 External research and development expenses Clinical development $ 1,782,600 $ 1,454,584 Regulatory expenses 1,523,868 1,092,691 Other external 62,419 53,037 Total external expenses 3,368,887 2,600,312 Internal research and development expenses Personnel costs 1,997,309 2,014,389 Other internal 200,302 201,505 Total internal expenses 2,197,611 2,215,894 Total research and development expenses $ 5,566,498 $ 4,816,206 General and administrative . General and administrative expenses for the year ended December 31, 2025, were $11.9 million compared to $11.1 million in the prior year. The increase was due to higher compensation expenses. Amortization. Amortization expense represent the ratable use of our capitalized intangible assets including product and license rights, patents, trademarks and patent defense costs. Amortization for 2025 totaled approximately $4.0 million which is a decrease of $0.7 million compared to the same prior year period primarily attributable to an additional amortization expense in 2024 related to the reduction in the valuation of the Acetadote assets. Income taxes . Income taxes expense was $40,256 for the year ended December 31, 2025, compared to a $22,669 tax benefit for the year ended December 31, 2024. Other income (loss). For the year ended December 31, 2025, we recorded a slight loss on the investment related to THI based on the operating results of that company and our 30% ownership position. For the year ended December 31, 2024, we recognized a gain of $0.2 million for a payout earned on a company owned insurance policy. The components of the statements of operations discussed above reflect the following impacts from Vibativ: Financial Impact of Vibativ Years ended December 31, 2025 2024 Net revenue (1) $ 12,474,564 $ 7,161,413 Cost of products sold (2) 1,557,617 1,829,824 Royalty and operating expenses 3,333,416 1,754,411 Vibativ contribution $ 7,583,531 $ 3,577,178 (1) 2025 net revenue includes a $2,975,000 milestone payment and $14,690 for other product related revenue. (2) The Vibativ inventory included in the costs of product sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2018. The components of the statements of operations discussed above reflect the following impacts from Sancuso: Financial Impact of Sancuso Years ended December 31, 2025 2024 Net revenue $ 11,907,141 $ 9,005,132 Cost of products sold (1) 600,663 856,608 Royalty and operating expenses 4,080,157 3,777,160 Sancuso contribution $ 7,226,321 $ 4,371,364 (1) The Sancuso inventory included in the costs of product sold was acquired and paid for by Cumberland as part of the acquisition of the brand during 2022. LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are cash flows provided by our operations, the amounts borrowed and available under our line of credit and the cash proceeds from our initial public offering of common stock that was completed in August 2009 and the cash proceeds from utilizing our ATM program in February 2025. We believe that our internally generated cash flows, existing working capital and our line of credit will be adequate to finance internal growth, finance business development initiatives, and fund capital expenditures for the foreseeable future. At December 31, 2025 and December 31, 2024, all our investments had original maturities of less than ninety days and as a result were classified as cash equivalents. The following table summarizes our liquidity and working capital as of the years ended December 31: 2025 2024 Cash and cash equivalents $ 11,444,693 $ 17,964,184 Total cash and cash equivalents $ 11,444,693 $ 17,964,184 Working capital (current assets less current liabilities) $ 315,348 $ 4,830,429 Current ratio (multiple of current assets to current liabilities) 1.0 1.2 Revolving line of credit availability $ 9,759,267 $ 4,723,830 The following table summarizes our net changes in cash and cash equivalents for the years ended December 31: 2025 2024 Cash provided by (used in): Operating activities $ 4,932,522 $ (612,186) Investing activities (4,706,497) 57,842 Financing activities (6,745,516) 196,904 Net decrease in cash and cash equivalents $ (6,519,491) $ (357,440) The net $6.5 million decrease in cash and cash equivalents for the year ended December 31, 2025, was attributable to cash used in financing and investing activities offset by cash provided by operating activities. Cash used in investing activities of $4.7 million is primarily due to the $2.0 million investment in Talicia and the $2.5 million payments related to the Kindos project. Cash used in financing activities of $6.7 million was primarily due to $10.0 million payments on our line of credit, payments of $1.7 million of contingent consideration for Vibativ and Sancuso, $0.3 million in cash used to repurchase shares of our common stock, partially offset by $5.3 million proceeds from the ATM offering. Cash provided by operating activities of $4.9 million was primarily driven by a $6.7 million increase in accounts payable and other current liabilities, a $0.5 million increase in other long-term liabilities, and a $1.1 million non-cash add-back adjustment to net loss. These major sources of cash inflow were partially offset by a $5.2 million increase in accounts receivable and a $0.2 million increase in other current assets and other assets. As noted above, we continue to repurchase shares of our common stock, as discussed in Part II, Item 5, "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities", of this Form 10-K. With the ATM offering in February 2025, the repurchase of our common stock ceased in January 2025. The net $0.4 million decrease in cash and cash equivalents for the year ended December 31, 2024, was attributable to cash used in operating activities offset by cash provided by financing and investing activities. Cash used in operating activities of $0.6 million is primarily due to an increase in accounts receivable of $1.9 million, a decrease in non-cash contingent consideration of $1.5 million, an increase in CSV of life insurance policies over premiums paid of $0.1 million, the gain on insurance proceeds of $0.2 million and a $1.0 million decrease in operating lease liabilities, partially offset by an increase in inventory of $2.4 million and an increase in accounts payable and other accrued liabilities. Cash provided by investing activities less than $0.1 million was the result of more life insurance proceeds received offset by additions of intangibles and property. Cash provided by financing activities of $0.2 million was primarily due to a $2.5 million net borrowing, partially offset by payments of $1.7 million of contingent consideration for Vibativ and Sancuso, and $0.6 million in cash used to repurchase shares of our common stock. Shelf Registration On December 14, 2023, the Company filed a Shelf Registration on Form S-3 with the SEC associated with the sale of up to $100 million in corporate securities which also was declared effective on December 26, 2023. The Company entered into a Sales Agreement (the "Sales Agreement") with H.C. Wainwright & Co., LLC ("H.C. Wainwright") on March 20, 2024, in order to allow the Company to sell shares at market prices. 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. 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. Debt Agreement 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 $20 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 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 the First Amendment to the Loan Agreement which provided 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 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. Minimum Product Purchase Requirements Our manufacturing and supply agreements do not require minimum annual purchase obligations. Contractual cash obligations The following table summarizes our contractual cash obligations as of December 31, 2025: Payments Due by Year Contractual obligations (1) Total 2026 2027 2028 2029 2030 and after Line of credit (2) $ 5,240,733 $ - $ 5,240,733 $ - $ - $ - Estimated interest on debt (2) 607,597 347,198 260,399 - - - Vibativ contingent consideration liability payments (3) 3,630,598 774,215 550,857 520,534 517,591 1,267,401 Sancuso contingent consideration liability payments (4) 1,273,000 413,181 336,415 206,788 189,214 127,402 Other investment liability (5) 2,000,000 2,000,000 - - - - Talicia co-commercialization (6) 10,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Operating leases (7) 7,432,282 909,910 934,180 740,791 650,766 4,196,635 Total (1) $ 30,184,210 $ 6,444,504 $ 9,322,584 $ 3,468,113 $ 3,357,571 $ 7,591,438 1. The sum of the individual amounts may not agree due to rounding. 2. The line of credit payments represent the estimated unused line of credit payments and the amount due at maturity. The estimated interest on debt represents the interest on the principal outstanding on the line of credit. These amounts are based on the $5.2 million line of credit assuming the current $5.2 million balance outstanding on December 31, 2025 is consistently outstanding through maturity of October 2027. Interest and unused line of credit payments are due and payable quarterly in arrears. 3. The contingent consideration liability represents the fair value of the royalty payments of up to 5% of future net sales as part of the Vibativ acquisition. 4. The contingent consideration liability represents the fair value of the royalty payments of up to 10% of future net sales as part of the Sancuso acquisition. 5. The other investment liability represents the remaining amount due to THI. 6. Talicia co-commercialization represents the obligation of up to $2 million for distributing, marketing and sales related costs. 7. The Broadwest contractual cash obligation began upon commencement in October 2022 and CET began May 2023. OFF-BALANCE SHEET ARRANGEMENTS During 2025 and 2024 we did not engage in any off-balance sheet arrangements. RECENT ACCOUNTING PRONOUNCEMENTS 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. 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.

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