CUMBERLAND PHARMACEUTICALS: Administration Dialogue and Evaluation of Monetary Situation and Outcomes of Operations (Kind 10-Q)

Disclosure relating to forward-looking statements
The next dialogue incorporates sure forward-looking statements which
replicate administration's present views of future occasions and operations. These
statements contain sure dangers and uncertainties, and precise outcomes might
differ materially from them. Ahead-looking statements are made pursuant to the
secure harbor provisions of the Non-public Securities Litigation Reform Act of 1995.
Precise outcomes might differ considerably from the outcomes mentioned in these
forward-looking statements. Some necessary elements which can trigger outcomes to
differ from expectations embody: availability of further debt and fairness
capital; market circumstances on the time further capital is required; our
skill to proceed to accumulate branded merchandise; product gross sales; administration of
our development and integration of our acquisitions and impacts on our enterprise as
nicely as nationwide and worldwide markets and economies ensuing from the
COVID-19 pandemic. Whereas forward-looking statements replicate our beliefs and greatest
judgment primarily based upon present info, they don't seem to be ensures of future
efficiency. Different necessary elements that will trigger precise outcomes to vary
materially from forward-looking statements are mentioned within the sections
entitled "Danger Elements" and "Particular Observe Relating to Ahead-Wanting Statements"
of our Annual Report on Kind 10-Okay for the yr ended December 31, 2020, and our
different filings with the SEC. We don't undertake to publicly replace or revise any
of our forward-looking statements, even within the occasion that have or future
modifications point out that the anticipated outcomes won't be realized. The
following presentation of administration's dialogue and evaluation of economic
situation and outcomes of operations must be learn together with our
unaudited condensed consolidated monetary statements and associated notes included
on this report on Kind 10-Q.

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PREVIEW

Our Enterprise
Cumberland Prescription drugs Inc. ("Cumberland," the "Firm," or as used within the
context of "we," "us," or "our"), is a specialty pharmaceutical firm targeted
on the acquisition, improvement and commercialization of branded prescription
merchandise. We're devoted to offering modern merchandise that enhance the
high quality of look after sufferers and handle poorly met medical wants.
Our major goal markets are hospital acute care, gastroenterology and
rheumatology. These medical specialties are characterised by comparatively
concentrated prescriber bases that we imagine could be served successfully by
small, focused gross sales forces. We promote our accepted merchandise by our
hospital and subject gross sales forces in the USA and are establishing a
community of worldwide companions to register and supply our medicines to
sufferers of their nations.
Our portfolio of FDA accepted manufacturers embody:
•Acetadote® (acetylcysteine) Injection, for the therapy of acetaminophen
poisoning;
•Caldolor® (ibuprofen) Injection, for the therapy of ache and fever;
•Kristalose® (lactulose) for Oral Answer, a prescription laxative, for the
therapy of persistent and acute constipation;
•Omeclamox®-Pak, (omeprazole, clarithromycin, and amoxicillin) for the therapy
of Helicobacter pylori (H. pylori) an infection and associated duodenal ulcer illness;
•RediTrex® (methotrexate) Injection, for the therapy of lively rheumatoid,
juvenile idiopathic and extreme psoriatic arthritis, in addition to disabling
psoriasis;
•Vaprisol® (conivaptan) Injection, to boost serum sodium ranges in hospitalized
sufferers with euvolemic and hypervolemic hyponatremia; and
•Vibativ® (telavancin) Injection, for the therapy of sure severe bacterial
infections together with hospital-acquired and ventilator-associated bacterial
pneumonia, in addition to difficult pores and skin and pores and skin construction infections.
Along with these business manufacturers, we've got Section II medical packages
underway evaluating our ifetroban product candidates being utilized by sufferers with
cardiomyopathy related to Duchenne Muscular Dystrophy ("DMD"), a
degenerative illness, Systemic Sclerosis ("SSc"), a lethal autoimmune situation,
and Aspirin-Exacerbated Respiratory Illness ("AERD"), a extreme type of bronchial asthma.
Cumberland has constructed core competencies in each the event and
commercialization of pharmaceutical merchandise. We have now established the
capabilities wanted to accumulate, develop and commercialize branded
prescribed drugs within the U.S. and imagine we will leverage this present
infrastructure to assist our anticipated development. Our administration staff consists of
pharmaceutical trade veterans skilled in enterprise improvement, product
improvement, regulatory, manufacturing, gross sales, advertising and marketing and finance.
Our enterprise improvement staff identifies, evaluates, and negotiates product
acquisition, licensing and co-promotion agreements. Our product improvement staff
creates proprietary product formulations, manages our medical research, prepares
all regulatory submissions and staffs our medical name middle. Our high quality and
manufacturing professionals oversee the manufacturing, launch and cargo of
our merchandise. Our advertising and marketing and gross sales staff is liable for our business
actions, and we work intently with our distribution companions to make sure
availability and supply of our merchandise.





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Development Technique
Cumberland's development technique includes maximizing the potential of our present
manufacturers whereas persevering with to construct a portfolio of differentiated merchandise. We
at the moment characteristic seven FDA merchandise accepted on the market in the USA.
Via our worldwide companions, we're working to carry our medicines to
sufferers of their nations. We additionally search for alternatives to develop our
merchandise into further affected person populations by medical trials, new
displays and our assist for choose, investigator-initiated research. We
actively pursue alternatives to accumulate further marketed merchandise, as nicely
as late-stage improvement product candidates in our goal medical specialties.
Our medical staff is growing a pipeline of recent product candidates largely to
handle poorly met medical wants.
We're supplementing these actions with the sooner stage drug improvement at
Cumberland Rising Applied sciences ("CET"), our majority-owned subsidiary. CET
companions with tutorial analysis establishments to determine and assist the
progress of promising new product candidates, which Cumberland has the
alternative to additional develop and commercialize.
Particularly, we're in search of long-term sustainable development by:
Supporting and increasing the usage of our marketed merchandise - We proceed to
consider our merchandise following their FDA approval to find out if further
medical information might develop their market and use. We are going to proceed to discover
alternatives for label growth to carry our merchandise to new affected person
populations. As examples, we've got secured pediatric approval, increasing the
labeling for each our Acetadote and Caldolor manufacturers.
Selectively including complementary manufacturers - Along with our product improvement
actions, we're additionally in search of to accumulate merchandise or late-stage improvement
product candidates to proceed constructing a portfolio of complementary manufacturers. We
deal with under-promoted, FDA-approved medication in addition to late-stage improvement
merchandise that handle poorly met medical wants. We are going to proceed to focus on
product acquisition candidates which can be competitively differentiated, have
worthwhile mental property or different protecting options, and permit us to
leverage our present infrastructure. Our acquisition of Vibativ is an instance
of this technique.
Progressing our medical pipeline and incubating future product alternatives at
CET - We imagine you will need to construct a pipeline of modern new product
alternatives, corresponding to we're doing by our ifetroban Section II improvement
packages. We're additionally supplementing our acquisition and late-stage improvement
actions with early-stage drug improvement actions at CET. CET companions
with universities and different analysis organizations to develop promising,
early-stage product candidates, which Cumberland has the chance to additional
develop and commercialize.
Leveraging our infrastructure by co-promotion partnerships - We imagine
that our business infrastructure will help drive prescription quantity and
product gross sales. We search for strategic companions that may complement our
capabilities and improve alternatives for our manufacturers. For instance, our
co-promotion partnership with Poly Prescription drugs, Inc. and Foxland
Prescription drugs, Inc. has allowed us to develop assist for Kristalose throughout the
United States.
Constructing a global market - We have now established our personal business
capabilities, together with two gross sales divisions, to cowl the U.S. marketplace for our
merchandise. We're additionally constructing a community of choose worldwide companions to
register our merchandise and make them out there to sufferers of their nations. We
will proceed to develop and develop our community of worldwide companions whereas
supporting our companions' registration and commercialization efforts of their
respective territories. The acquisition of Vibativ resulted in a number of new
worldwide companions and market alternatives.
Managing our operations with monetary self-discipline - We regularly work to
handle our bills in keeping with our revenues with the intention to ship constructive money
circulate from operations. We stay in a powerful monetary place, with favorable
gross margins and a powerful steadiness sheet.
We have been integrated in 1999 and have been headquartered in Nashville, Tennessee
since inception. Throughout 2009, we accomplished an preliminary public providing of our
frequent shares and itemizing on the Nasdaq inventory change. Our web site handle is
www.cumberlandpharma.com.
We make out there by our web site our Annual Experiences on Kind 10-Okay, Quarterly
Experiences on Kind 10-Q, Present Experiences on Kind 8-Okay and all materials press
releases and different experiences as quickly as moderately practicable after their submitting
with the U.S. Securities and Change Fee, ("SEC"). These filings are
additionally out there to the general public at www.sec.gov.

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RECENT DEVELOPMENTS
COVID-19 Pandemic
In March 2020, the U.S. declared a well being care emergency following the outbreak
of SARS-CoV-2, a novel pressure of coronavirus that causes COVID-19, a respiratory
sickness. The Firm has managed by the COVID-19 pandemic, persevering with to
function our enterprise - preserving amenities open and our group intact. We
additionally maintained our ongoing compliance with the numerous legal guidelines and laws that
apply to us as a publicly traded pharmaceutical firm.
All through the pandemic, Cumberland confronted the identical challenges affecting different
firms that depend on hospital admissions and affected person visits to drive income.
Our enterprise and our medical research have been impacted, as fewer sufferers sought
elective surgical procedures and our entry to medical amenities was considerably
restricted. All through the pandemic, we rigorously monitored our provide chain,
together with the circulate of uncooked supplies into the crops that manufacture our
merchandise, in addition to the batches of completed merchandise rising from these
amenities.
A number of of our manufacturers have been negatively impacted by the lockdowns and postponement
of doctor workplace visits and elective procedures. Nonetheless, we're lucky to
have a diversified product portfolio that features different manufacturers, corresponding to
Vaprisol, that delivered a powerful efficiency in the course of the pandemic.
We have now responded to the pandemic with a quick and coordinated strategy to make sure
the well being and security of our staff. We have been additionally in a position to proceed the supply of
our merchandise, whereas addressing the pursuits of our shareholders, workers,
companions and neighborhood.
ESG Report
In July 2021, we launched our second annual Sustainability Report ("ESG
Report"), which particulars Cumberland's actions pertaining to environmental,
social and governance ("ESG") issues. After issuing our inaugural ESG report
final yr, we stay dedicated to sustainability and to sustaining transparency
of our company operations. As the biggest biopharmaceutical firm based
and headquartered within the Mid-South, we maintain ourselves to the very best requirements
of moral practices and perceive the significance of recognizing and addressing
our influence on our constituents, the neighborhood and the surroundings.
The ESG Report notes that in 2020 we supplied practically 2.5 million affected person doses
of our merchandise, safely disposed of over 4,000 kilos of expired and broken
merchandise and had no product remembers. We additionally had no Firm manufacturers that have been
listed on the FDA's MedWatch Security Alerts for Human Medical Merchandise, no
Firm product points that have been recognized by FDA from their Hostile Occasion
Reporting System and no medical trials that have been terminated resulting from failure to
follow good medical requirements.
The ESG Report additionally highlights a number of initiatives we carried out as a part of our
dedication to delivering high-quality pharmaceutical merchandise to enhance affected person
care. For instance, we continued a program to serialize all business merchandise
bought in the USA, permitting us to trace each unit distributed, which
helps to stop counterfeit medication from coming into the market underneath the Cumberland
model. As well as, by our coupon program, Cumberland covers as much as 90% of
affected person prescription prices for our gastrointestinal merchandise.
The ESG Report additionally highlights our funding in our workers by our
persevering with teaching programs, worker improvement initiatives and worker
recognition awards. Cumberland's workforce is 46% girls - and 18% of our
workers are minorities.








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New Chief Monetary Officer Appointment
On Might 17, 2021, Cumberland appointed John Hamm as the brand new Senior Director
Finance & Accounting and Chief Monetary Officer. On this function, he'll handle
all the Firm's finance and accounting actions whereas persevering with to
oversee company improvement and authorized issues.
Mr. Hamm has greater than 25 years of finance and accounting expertise, together with
20 years in well being care. He beforehand held the positions of Chief Working
Officer and Chief Monetary Officer, Pharmacy at HealthSpring, Inc., a managed
care group now working as Cigna-HealthSpring.
He was additionally the Vice President Finance at Emdeon Enterprise Providers. Emdeon Inc.,
a healthcare know-how agency now operates as Change Healthcare Inc., a NASDAQ
listed firm with over $3 billion in annual income.
Mr. Hamm holds a Bachelor of Science in Enterprise Administration with a minor in
Accounting from Wheeling College. He earned his Grasp's in Enterprise
Administration with an emphasis in Accounting from West Virginia College. He
is a Licensed Administration Accountant (CMA) and Licensed Monetary Supervisor
(CFM).
Previous to this new appointment, Mr. Hamm served as Cumberland's Director
Company Improvement.
Paycheck Safety Program
On April 20, 2020, Cumberland obtained the funding of a mortgage from Pinnacle Financial institution
within the mixture quantity of $2,187,140 pursuant to the Paycheck Safety
Program (the "PPP") underneath the Federal Coronavirus Help, Aid and Financial
Safety Act ("CARES Act"), which was enacted March 27, 2020. The PPP is
administered by the U.S. Small Enterprise Administration ("SBA").
Pursuant to the PPP necessities, mortgage funds have been used to take care of payroll,
proceed group well being care advantages, and pay for lease and utilities in the course of the
pandemic. We utilized for this mortgage after rigorously contemplating, with our financial institution,
the eligibility standards to take part on this program, and figuring out that
Cumberland met these standards. We evaluated and supplied info on our
payroll and different qualifying bills to find out the quantity of PPP funds to
apply for.
Beneath the phrases of the PPP, sure quantities of the mortgage could also be forgiven in the event that they
are used for qualifying bills as described within the CARES Act. Cumberland used
the PPP mortgage funds for such qualifying bills. On account of help from our PPP
mortgage, the Firm didn't lay off or furlough any workers because of the
COVID-19 pandemic.
In October 2020, Cumberland submitted a request for the mortgage's forgiveness. On
June 11, 2021, the Firm obtained a proper discover from the SBA that the complete
quantity of the mortgage was forgiven.
RediTrex Launch
Throughout late 2018, we accomplished the submission of and filed with the U.S. Meals
and Drug Administration ("FDA") a New Drug Software for RediTrex, our
methotrexate merchandise. RediTrex is a brand new line of pre-filled syringes
particularly designed for ease of dealing with and dosing accuracy for the
subcutaneous administration of methotrexate in sufferers with arthritis and
psoriasis.
In December 2019, we obtained FDA approval for RediTrex and commenced planning for
the launch of the product line. We supplied preliminary shipments of RediTrex to
choose accounts in November 2020 and we're planning to launch the product line
nationally in late September 2021.
Ifetroban Section II Research
We have now been evaluating our ifetroban product candidate in a collection of medical
research. We're sponsoring Section II medical packages to guage our ifetroban
product candidates in 1) sufferers with cardiomyopathy related to Duchenne
Muscular Dystrophy, a uncommon, deadly, genetic neuromuscular illness that leads to
deterioration of the skeletal, coronary heart and lung muscle mass, 2) Systemic Sclerosis or
scleroderma, a debilitating autoimmune dysfunction characterised by diffuse
fibrosis of the pores and skin and inside organs and three) Aspirin-Exacerbated Respiratory
Illness, a extreme type of bronchial asthma.
As well as, we've got accomplished two pilot Section II research involving 1) sufferers
affected by Hepatorenal Syndrome, a life-threatening situation involving
liver and kidney failure and a pair of) sufferers with Portal Hypertension that's
related to persistent liver illness.
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Extra pilot preclinical and medical research of ifetroban are underway,
together with a number of investigator-initiated trials.
Enrollment in our medical research was interrupted as a result of COVID-19 pandemic.
Whereas enrollment of recent sufferers has been restricted, lots of our medical research
websites have reopened and resumed screening of sufferers for potential enrollment
into our research. We're awaiting outcomes from the research underway earlier than
deciding on the most effective improvement path for the registration of ifetroban, our
first new chemical entity.
New Hospital Product Candidate
Cumberland was liable for the formulation, improvement and FDA approval of
each Acetadote and Caldolor. Our Medical Advisory Board has helped us determine
further alternatives that handle unmet or poorly met medical wants. As a
end result, Cumberland has efficiently designed, formulated and accomplished the
preclinical research for a cholesterol-reducing agent to be used within the hospital
setting.
We accomplished a Section I research which outlined the pharmacokinetic properties and
supplied a positive security profile for this new product candidate. The research
outcomes and a proposed medical improvement plan have been mentioned with the FDA.
We additionally accomplished a Section II research to additional consider administration, dosing
and pharmacokinetics of the product. We are actually evaluating the following steps for
this product improvement program.
Omeclamox-Pak Provide Replace
Cumberland has partnered with a choose group of FDA-approved amenities to
manufacture its line of branded pharmaceutical merchandise and has been rigorously
monitoring its provide chain in the course of the pandemic. The packager for our
Omeclamox-Pak product encountered monetary difficulties, and their operations
are at the moment suspended. We're awaiting the resumption of these operations,
whereas additionally exploring different alternate options to restart the product's packaging.
In the meantime, we knowledgeable the FDA of a scarcity of the Omeclamox-Pak efficient
October 14, 2020 and haven't supplied a date for the provision of recent
stock.
Generic IV Acetaminophen
4 generic firms have launched acetaminophen for injection merchandise that
present a substitute for our Caldolor product for the therapy of acute
surgical ache.
Abstract
Regardless of the challenges of working throughout a pandemic, Cumberland stays
dedicated to our mission of offering modern merchandise that enhance the
high quality of look after sufferers and handle poorly met medical wants. We're
working to satisfy this mission by constructing a portfolio of modern and
differentiated merchandise by a multifaceted technique that features
improvement of recent candidates and acquisition of established manufacturers. Our
ensuing, diversified product line has enabled us to climate exterior
challenges, whereas our staff has remained aware of the evolving medical
market. We're ready for and look ahead to future alternatives to hold
out our mission.




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CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES
Please see a dialogue of our vital accounting insurance policies and vital
judgments and estimates in Observe 1 to the Firm's Condensed Consolidated
Monetary Statements accompanying this report and the part entitled
"Administration's Dialogue and Evaluation of Monetary Situation and Outcomes of
Operations" in our 2020 Annual Report on Kind 10-Okay.
Accounting Estimates and Judgments
The preparation of condensed consolidated monetary statements in conformity
with U.S. typically accepted accounting ideas requires administration to make
estimates, judgments and assumptions that have an effect on the reported quantities of belongings
and liabilities and disclosure of contingent liabilities on the date of the
monetary statements and the reported quantities of revenues and bills throughout
the interval. We base our estimates on previous expertise and on different elements we
deem affordable given the circumstances. Previous outcomes assist type the idea of our
judgments in regards to the carrying worth of belongings and liabilities that can not be
decided from different sources. Precise outcomes might differ from these estimates.
These estimates, judgments and assumptions are most important with respect to our
accounting for income recognition, inventories, truthful worth of contingent
consideration legal responsibility related to a enterprise mixture, share-based
compensation and intangible belongings.
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RESULTS OF OPERATIONS
Three months ended June 30, 2021 in comparison with the three months ended June 30,
2020
The next desk presents the unaudited interim statements of operations for
persevering with operations for the three months ended June 30, 2021 and 2020:
                                                               Three months ended June 30,
                                                    2021                  2020                 Change
Internet revenues                                   $  9,055,483$  9,598,177$   (542,694)
Prices and bills:
Price of merchandise bought                             1,740,649             2,609,982              (869,333)
Promoting and advertising and marketing                             4,121,817             3,865,406               256,411
Analysis and improvement                          1,360,398             1,421,502               (61,104)
Common and administrative                        2,097,130             2,190,764               (93,634)
Amortization                                      1,171,218             1,091,485                79,733
Whole prices and bills                         10,491,212            11,179,139              (687,927)
Working revenue (loss)                          (1,435,729)           (1,580,962)              145,233
Curiosity revenue                                       6,591                28,661               (22,070)
Different revenue                                      2,187,140                     -             2,187,140
Curiosity expense                                    (25,859)             (119,455)               93,596
Earnings (loss) from persevering with operations
earlier than revenue taxes                                 732,143            (1,671,756)            2,403,899
Earnings tax (expense) profit                         (7,459)               (7,455)                   (4)

Internet revenue (loss) from persevering with operations $ 724,684$ (1,679,211)$ 2,403,895


The next desk summarizes internet revenues by product for the durations
introduced:
                               Three months ended June 30,
                         2021             2020            Change
Merchandise:
Kristalose           $ 5,275,065$ 3,477,471$ 1,797,594
Vibativ                1,844,936        3,299,507       (1,454,571)
Caldolor                 938,328        1,166,569         (228,241)
Vaprisol                 399,952          174,159          225,793
Acetadote                152,781          595,310         (442,529)
Omeclamox-Pak            (24,109)          10,948          (35,057)
RediTrex                   7,382                -            7,382
Different income            461,148          874,213         (413,065)

Whole internet revenue $ 9,055,483$ 9,598,177$ (542,694)


Internet revenues. Internet revenues for the three months ended June 30, 2021, have been $9.1
million in comparison with $9.6 million for the three months ended June 30, 2020. As
detailed within the desk above, internet income elevated for 2 of our marketed
merchandise: Kristalose and Vaprisol in the course of the quarter.
Kristalose income elevated by 51.7% in the course of the second quarter of 2021 to $5.3
million, when in comparison with the prior yr interval. The rise was primarily the
results of development in shipments of the product to our wholesale prospects.
Vaprisol income was $0.4 million for the second quarter of 2021, a rise of
$0.2 million. This enhance of internet gross sales in comparison with the second quarter of 2020
is primarily resulting from elevated utilization in supporting sufferers impacted by
COVID-19 infections.
Caldolor income was $0.9 million for the second quarter of 2021, a lower of
$0.2 million in comparison with the identical interval final yr. The lower was the end result
of decrease worldwide shipments of the product, resulting from order timing.
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Vibativ income was $1.8 million for the three months ended June 30, 2021,
in comparison with $3.3 million the identical interval final yr. The lower was a results of
decreased home and worldwide gross sales volumes in the course of the interval resulting from
order timing.
Omeclamox-Pak had no gross sales for the second quarter of 2021, as Cumberland is
at the moment out of business stock of this product. The packager for our
Omeclamox-Pak product encountered monetary difficulties, and at the moment is underneath
new administration and a reorganization. We're in discussions in regards to the resumption
of packaging the product. Internet income for the second quarter of 2021 was
negatively impacted by product returns in the course of the interval.
Acetadote income consists of internet gross sales of our Acetadote model and our share of internet
gross sales from our Licensed Generic. Throughout the quarter, there was a lower of
$0.4 million within the product's income when in comparison with the prior yr interval as
a results of decrease gross sales volumes in the course of the interval, impacted by generic
competitors.
Price of merchandise bought. Price of merchandise bought for the second quarter of 2021 and
2020 have been $1.7 million and $2.6 million, respectively. Price of merchandise bought, as
a share of internet revenues, have been 19.2% in the course of the three months ended June 30,
2021, in comparison with 27.2% in the course of the three months ended June 30, 2020. This alteration
in prices of merchandise bought as a share of income was attributable to a
change within the product gross sales combine, notably the lower in gross sales of Vibativ.
The Vibativ stock bought in the course of the interval was acquired and paid for by
Cumberland as a part of the acquisition of the model throughout 2018.
Promoting and advertising and marketing. Promoting and advertising and marketing expense for the second quarter of
2021 elevated $0.3 million in comparison with the prior yr interval. This enhance is
primarily attributable to a rise in advertising and marketing spending for RediTrex and
Vibativ. Decrease royalty prices have been partially offset by a rise in direct
promotional spending, assembly prices and journey bills in the course of the second
quarter of 2021.
Analysis and improvement. Analysis and improvement prices have been $1.4 million for
the second quarter of 2021 and roughly the identical as for a similar interval
final yr. A portion of our analysis and improvement prices is variable primarily based on
the variety of trials, research websites, variety of sufferers and the associated fee per affected person
in every of our medical packages. We proceed to fund our ongoing medical
initiatives related to our pipeline merchandise.
Common and administrative. Common and administrative expense for the second
quarter of 2021 have been $2.1 million, according to the second quarter of 2020.
There have been will increase in skilled, authorized and insurance coverage prices which have been
offset by decreases in non-cash inventory primarily based compensation in the course of the second
quarter of 2021.
The elements of the statements of operations mentioned above replicate the
following impacts from Vibativ:
Monetary Impression of Vibativ               Three months ended June 30,
                                             2021                 2020
Internet income                         $     1,844,936$ 3,299,507
Price of merchandise bought (1)                   678,146             1,220,054
Royalty and working bills              767,813               834,395
Vibativ contribution                $       398,977$ 1,245,058


(1) The Vibativ stock included within the prices of product bought in the course of the
interval was acquired and paid for by Cumberland as a part of the acquisition of the
model throughout 2018.
Amortization. Amortization expense is the ratable use of our capitalized
intangible belongings together with product and license rights, patents, emblems and
patent protection prices. Amortization for the three months ended June 30, 2021, and
three months ended June 30, 2020, totaled roughly $1.2 million and $1.1
million, respectively.
Earnings taxes. Earnings tax expense for the three months ended June 30, 2021, was
corresponding to the revenue tax expense for the three months ended June 30, 2020.
As of June 30, 2021, we had roughly $44 million of internet working loss
carryforwards ensuing from the train of nonqualified inventory choices that
have traditionally been used to considerably offset revenue tax obligations. We
anticipate to proceed to pay minimal revenue taxes throughout 2021 and past, by
the continued utilization of those internet working loss carryforwards, on any
taxable revenue generated from our operations.





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RESULTS OF OPERATIONS
Six months ended June 30, 2021 in comparison with the six months ended June 30, 2020
The next desk presents the unaudited interim statements of operations for
persevering with operations for the six months ended June 30, 2021 and 2020:
                                                                  Six months ended June 30,
                                                   2021                  2020                 Change
Internet revenues                                  $ 19,592,642$ 17,928,911$  1,663,731
Prices and bills:
Price of merchandise bought                            4,157,978             4,244,163               (86,185)
Promoting and advertising and marketing                            7,909,157             7,573,082               336,075
Analysis and improvement                         2,617,765             3,144,057              (526,292)
Common and administrative                       4,327,639             4,227,048               100,591
Amortization                                     2,340,132             2,167,524               172,608
Whole prices and bills                        21,352,671            21,355,874                (3,203)
Working revenue (loss)                         (1,760,029)           (3,426,963)            1,666,934
Curiosity revenue                                     12,017                58,549               (46,532)
Different revenue                                     2,187,140                     -             2,187,140
Curiosity expense                                   (50,276)             (152,520)              102,244
Earnings (loss) from persevering with operations
earlier than revenue taxes                                388,852            (3,520,934)            3,909,786
Earnings tax (expense) profit                       (14,917)              (41,695)               26,778

Internet revenue (loss) from persevering with operations $ 373,935$ (3,562,629)$ 3,936,564


The next desk summarizes internet revenues by product for the durations
introduced:
                                 Six months ended June 30,
                          2021              2020            Change
Merchandise:
Kristalose           $  8,269,443$  6,771,433$ 1,498,010
Vibativ                 6,897,179         5,721,708        1,175,471
Caldolor                2,477,824         2,261,286          216,538
Vaprisol                1,534,216           382,016        1,152,200
Acetadote                 269,972         1,308,711       (1,038,739)
Omeclamox-Pak            (474,371)          124,371         (598,742)
RediTrex                  (24,870)                -          (24,870)
Different income             643,249         1,359,386         (716,137)

Whole internet revenue $ 19,592,642$ 17,928,911$ 1,663,731


Internet revenues. Internet revenues for the six months ended June 30, 2021, have been $19.6
million in comparison with $17.9 million for the six months ended June 30, 2020. As
detailed within the desk above, internet income elevated for our marketed merchandise:
Kristalose, Vibativ, Caldolor and Vaprisol in the course of the first six months of 2021
leading to an general 9.3% income enhance.
Kristalose income was $8.3 million in the course of the first six months of 2021, an
enhance of $1.5 million when put next with the prior yr interval. Income
elevated resulting from continued robust gross sales quantity from our Foxland distributor and
different wholesalers.
Vibativ income was $6.9 million for the six months ended June 30, 2021, an
enhance of $1.2 million over the identical interval final yr. The 20.5% enhance in
internet income was a results of improved gross sales quantity for the product in the course of the
first quarter 2021.
Vaprisol income was $1.5 million for the primary six months of 2021, which is an
enhance of internet gross sales of $1.2 million in comparison with the primary six months of 2020
primarily resulting from elevated gross sales volumes which is the results of elevated
utilization in supporting sufferers impacted by COVID-19 infections.

                                       24
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Omeclamox-Pak had no gross sales for the six months ended June 30, 2021, as Cumberland
is at the moment out of business stock of this product. The packager for our
Omeclamox-Pak product encountered monetary difficulties and at the moment is underneath
new administration and a reorganization. We're in discussions in regards to the resumption
of packaging the product. Internet income for the primary two quarters of 2021 was
negatively impacted by product returns in the course of the interval.
Acetadote income consists of internet gross sales of our Acetadote model and our share of internet
gross sales from our Licensed Generic. There was a lower of $1.0 million within the
product's yr up to now income for the six months ended June 30, 2021, when
in comparison with the prior yr interval because of decrease gross sales volumes for our
Licensed Generic.
Caldolor income was $2.5 million for the primary two quarters of 2021, an
enhance of $0.2 million in comparison with the identical interval final yr. Home
shipments of the product elevated within the second quarter of 2021.
Price of merchandise bought. Price of merchandise bought for the primary six months of 2021
and 2020 have been each $4.2 million remaining constant.
Promoting and advertising and marketing. Promoting and advertising and marketing expense for the six months ended
June 30, 2021, elevated $0.3 million in comparison with the prior yr interval. This
enhance is primarily attributable to will increase in royalty prices in addition to an
enhance in salaries and allotting charges. These will increase have been partially offset
by decreases in direct gross sales promotion prices and journey bills.
Analysis and improvement. Analysis and improvement prices have been $2.6 million for
the primary six months of 2021 in comparison with $3.1 million for a similar interval final
yr. A portion of our analysis and improvement prices is variable primarily based on the
variety of trials, research websites, value of the per affected person research protocol and
sufferers concerned within the improvement of our new product candidates. We proceed
to fund our ongoing medical initiatives related to our pipeline merchandise.
We skilled a lower in research exercise and salaries offset by a rise
in our consulting charges.
Common and administrative. Common and administrative expense for the six
months ended June 30, 2021, remained according to $4.3 million from $4.2
million in the course of the six months ended June 30, 2020. Though we skilled
will increase in advisory, authorized {and professional} charges, we additionally had a discount in
non-cash inventory primarily based compensation and different advantages in the course of the interval.
The elements of the statements of operations mentioned above replicate the
following impacts from Vibativ:
Monetary Impression of Vibativ             Six months ended June 30,
                                          2021              2020
Internet income                         $    6,897,179$ 5,721,708
Price of merchandise bought (1)                2,134,962        1,820,745
Royalty and working bills           1,170,165          753,177
Vibativ contribution                $    3,592,052$ 3,147,786


(1) The Vibativ stock included within the prices of product bought in the course of the
interval was acquired and paid for by Cumberland as a part of the acquisition of the
model throughout 2018.
Amortization. Amortization expense is the ratable use of our capitalized
intangible belongings together with product and license rights, patents, emblems and
patent protection prices. Amortization for the six months ended June 30, 2021, and
six months ended June 30, 2020, totaled roughly $2.3 million and $2.2
million, respectively.
Earnings taxes. Earnings tax expense (profit) for the six months ended June 30,
2021, as a share of revenue (loss) from persevering with operations earlier than revenue
taxes, was (3.8)% in comparison with (1.2)% for the six months ended June 30, 2020.









                                       25
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LIQUIDITY AND CAPITAL RESOURCES
Working Capital
Our major sources of liquidity are money equivalents, money flows from
operations and the quantities borrowed and out there underneath our line of credit score. We
imagine that our internally generated money flows, present working capital and
our line of credit score will probably be enough to finance inside development, finance enterprise
improvement initiatives, and fund capital expenditures for the foreseeable
future.
The next desk summarizes our liquidity and dealing capital as of June 30,
2021 and December 31, 2020:
                                                          June 30, 2021            December 31, 2020

Money and money equivalents                               $    25,670,462$       24,753,796

Working capital (present belongings much less present
liabilities)                                            $    28,033,715

$ 24,302,146
Present ratio (a number of of present belongings over present liabilities)

                                                        2.5                         1.9

Revolving line of credit score availability                   $     1,000,000          $                -


The next desk summarizes our internet modifications in money and money equivalents for the half-year ended. June 30, 2021 and June 30, 2020:

                                                             Six months ended June 30,
                                                               2021              2020

Internet money supplied by (utilized in):
Working actions                                     $    4,484,770$ 3,704,071
Investing actions                                           (366,854)        (773,014)
Financing actions                                         (3,201,250)      (3,769,955)

Internet enhance (lower) in money and money equivalents $ 916,666

$ (838 898)


The web $0.9 million enhance in money and money equivalents for the six months
ended June 30, 2021, was primarily attributable to money supplied by working
actions, partially offset by money utilized in investing and financing actions.
Money supplied by working actions of $4.5 million was positively impacted by
decreases in stock of $2.3 million and accounts receivable of $3.2 million,
in addition to the add again of non-cash bills of depreciation, amortization and
share-based compensation expense totaling $2.8 million. Working actions
have been additionally offset by the lower in accounts payable of $3.0 million and the
forgiveness of our PPP Mortgage of $2.2 million. Money utilized in investing actions
was the results of additions to intangibles of $0.1 million and the cost of
$0.2 million to the WHC JV. Our financing actions included the $0.8 million
in money used to repurchase shares of our frequent inventory in addition to the $1.4
million used for the cost of royalties to Theravance for gross sales of Vibativ.
The web $0.8 million lower in money and money equivalents for the six months
ended June 30, 2020, was primarily attributable to money utilized in investing and
financing actions. Money supplied by working actions of $3.7 million was
positively impacted by decreases in stock of $1.2 million, in addition to the
add again of non-cash bills of depreciation, amortization and share-based
compensation expense totaling $2.9 million. Money utilized in investing actions
was the results of additions to intangibles of $0.7 million and tools of $0.1
million. Our financing actions included the web reimbursement of $1.5 million on
our revolving line of credit score, the $1.2 million in money used to repurchase shares
of our frequent inventory in addition to the $0.8 million used for the repurchase of
subsidiary shares.






                                       26
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Debt Settlement
On October 7, 2020, we entered right into a Fourth Modification ("Fourth Modification") to
the Revolving Credit score Mortgage Settlement, dated July 28, 2017, with Pinnacle Financial institution
(the "Pinnacle Settlement"). The Fourth Modification extends the maturity date of
the Pinnacle Settlement by October 1, 2022 and gives for a principal
out there for borrowing of as much as $15 million. We even have the flexibility to
request a rise of as much as a further $5 million, upon the satisfaction of
sure circumstances and approval by Pinnacle Financial institution. If totally expanded, the Fourth
Modification would offer a most principal out there for borrowing of as much as $20
million. On Might 10, 2019, we entered into a 3rd modification ("Third Modification")
to the Pinnacle Settlement. The Third Modification prolonged the time period of the Pinnacle
Settlement by July 31, 2021, in addition to modified sure definitions and
phrases of the present monetary covenants. For a abstract of the fabric phrases
of the Pinnacle Settlement, as amended, see Observe 6 to the accompanying unaudited
condensed consolidated monetary statements.
Beneath the Pinnacle Settlement, we have been initially topic to at least one monetary
covenant, the upkeep of a Funded Debt Ratio. On August 14, 2018, we amended
the Pinnacle Settlement ("First Modification") to exchange the only monetary
covenant with the upkeep of both the Funded Debt Ratio or a Tangible
Capital Ratio, as outlined within the First Modification. The Third Modification modified
the definition of the Funded Debt Ratio and the compliance goal of the
Tangible Capital Ratio. Each Third Modification modifications have been associated to the
Vibativ transaction. We have been in compliance with the Tangible Capital Ratio
monetary covenant as of June 30, 2021. We anticipate to take care of compliance with
the Tangible Capital Ratio monetary covenant in future durations.
Paycheck Safety Program Mortgage
On April 20, 2020, Cumberland obtained the funding of a mortgage from Pinnacle Financial institution
within the mixture quantity of $2,187,140 pursuant to the Paycheck Safety
Program (the "PPP") underneath the Federal Coronavirus Help, Aid, and Financial
Safety Act ("CARES Act"), which was enacted March 27, 2020. For a abstract of
the fabric phrases of the Paycheck Safety Program mortgage, see Observe 6 to the
accompanying unaudited condensed consolidated monetary statements.
Beneath the phrases of the PPP, sure quantities of the mortgage could also be forgiven in the event that they
are used for qualifying bills as described within the CARES Act, together with
qualifying payroll prices, coated lease funds, and coated utilities.
Cumberland used the PPP mortgage funds for such qualifying bills. On account of
help from our PPP mortgage, the Firm didn't lay off or furlough any
workers because of the COVID-19 pandemic.
In October 2020, Cumberland submitted a request for the mortgage's forgiveness. On
June 11, 2021, the Firm obtained a proper discover from the SBA that the complete
quantity of the mortgage was forgiven.

                                       27
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OFF-BALANCE SHEET ARRANGEMENTS
Throughout the six months ended June 30, 2021 and 2020, we didn't have interaction in any
off-balance sheet preparations.
Merchandise 3. Quantitative and Qualitative Disclosures about Market Danger
Curiosity Fee Danger
We're uncovered to market threat associated to modifications in rates of interest on our money
on deposit in highly-liquid cash market accounts and our revolving credit score
facility. We don't make the most of by-product monetary devices or different market
risk-sensitive devices to handle publicity to rate of interest modifications. The principle
goal of our money funding actions is to protect principal whereas
maximizing curiosity revenue by low-risk investments.
We imagine that our rate of interest threat associated to our money and money equivalents
is just not materials. The danger associated to rates of interest for these accounts would
produce much less revenue than anticipated if market rates of interest fall. Primarily based on
present rates of interest, we don't imagine we're uncovered to vital draw back
threat associated to a change in curiosity on our cash market accounts at June 30,
2021.
The rate of interest threat associated to borrowings underneath our line of credit score relies
on LIBOR plus an rate of interest unfold. The pricing underneath the Fourth Modification of
the Pinnacle Settlement gives for an rate of interest unfold of 1.75% to 2.75%
above LIBOR with a minimal LIBOR of 0.90%. The relevant rate of interest underneath
the Pinnacle Settlement was 3.65% at June 30, 2021. As of June 30, 2021, we had
$14.0 million in borrowings excellent underneath our revolving credit score facility.
Change Fee Danger
Whereas we function primarily in the USA, we're uncovered to international
forex threat. Presently, we don't make the most of monetary devices to hedge
publicity to international forex fluctuations. We imagine our publicity to international
forex fluctuation is minimal as our purchases in international forex have a
most publicity of 90 days primarily based on bill phrases with a portion of the
publicity being restricted to 30 days primarily based on the due date of the bill. Overseas
forex change good points and losses have been immaterial for the six months ended June
30, 2021 and 2020. Neither a 5 p.c enhance nor lower from present
change charges would have a cloth impact on our working outcomes or
monetary situation.
Merchandise 4. Controls and Procedures
The Firm's administration, with the participation of the Firm's Chief
Govt Officer and Chief Monetary Officer, has evaluated the effectiveness
of the Firm's disclosure controls and procedures (as such time period is outlined in
Guidelines 13a-15(e) and 15d-15(e) underneath the Securities Change Act of 1934, as
amended (the "Change Act"), as of the tip of the interval coated by this
Quarterly Report on Kind 10-Q. Primarily based on such analysis, the Firm's Chief
Govt Officer and Chief Monetary Officer have concluded that, as of the tip
of such interval, the Firm's disclosure controls and procedures have been efficient
to supply affordable assurance that info required to be disclosed by the
Firm within the experiences that it recordsdata or submits underneath the Change Act is
recorded, processed, summarized and reported, inside the time durations specified
within the SEC's guidelines and varieties and is accrued and communicated to the
Firm's administration, together with its Chief Govt Officer and Chief Monetary
Officer, as applicable to permit well timed selections relating to required disclosure.
Throughout the three months ended June 30, 2021, there has not been any change in
our inside management over monetary reporting that has materially affected, or
within reason prone to materially have an effect on, our inside management over monetary
reporting.
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