CUMBERLAND PHARMACEUTICALS INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

Disclosure Regarding Forward-Looking Statements

The following discussion contains certain forward-looking statements which
reflect management's current views of future events and operations. These
statements involve certain risks and uncertainties, and actual results may
differ materially from them. Forward-looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Actual results may differ significantly from the results discussed in these
forward-looking statements. Some important factors which may cause results to
differ from expectations include: availability of additional debt and equity
capital; market conditions at the time additional capital is required; our
ability to continue to acquire branded products; product sales; management of
our growth and integration of our acquisitions and impacts on our business as
well as national and international markets and economies resulting from the
COVID-19 pandemic. While forward-looking statements reflect our beliefs and best
judgment based upon current information, they are not guarantees of future
performance. Other important factors that may cause actual results to differ
materially from forward-looking statements are discussed in the sections
entitled "Risk Factors" and "Special Note Regarding Forward-Looking Statements"
of our Annual Report on Form 10-K for the year ended December 31, 2021, and our
other filings with the SEC. We do not undertake to publicly update or revise any
of our forward-looking statements, even in the event that experience or future
changes indicate that the anticipated results will not be realized. The
following presentation of management's discussion and analysis of financial
condition and results of operations should be read in conjunction with our
unaudited condensed consolidated financial statements and related notes included
in this report on Form 10-Q.

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OVERVIEW

Our Business

Cumberland Pharmaceuticals Inc. ("Cumberland," the "Company," or as used in the
context of "we," "us," or "our"), is a specialty pharmaceutical company focused
on the acquisition, development and commercialization of branded prescription
pharmaceutical products. We are dedicated to providing innovative products that
improve the quality of care for patients and address poorly met medical needs.

Our primary target sectors are hospital acute care, oncology, gastroenterology
and rheumatology. 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, oncology and field sales forces in the United States. We have also
established partnerships in Puerto Rico and the Middle East for our Vibativ®
product and are continuing to build a network of international partners to
register and provide our medicines to patients in their countries.

Our portfolio of FDA-approved brands includes:

•Injection of Acetadote® (acetylcysteine), for the treatment of paracetamol poisoning;

• Injection of Caldolor® (ibuprofen), for the treatment of pain and fever;

•Oral Kristalose® (lactulose), a prescription laxative, for the treatment of constipation;

•Omeclamox®-Pak, (omeprazole, clarithromycin, amoxicillin) oral, for the treatment of Helicobacter pylori (H. pylori) infection and associated duodenal ulcer;

•RediTrex® (methotrexate) injection, for the treatment of active, juvenile idiopathic and severe psoriatic rheumatoid arthritis, as well as debilitating psoriasis;

•Sancuso® (granisetron) transdermal, for the prevention of nausea and vomiting in patients receiving certain types of chemotherapy treatment;

• Injection of Vaprisol® (conivaptan), to increase serum sodium in hospitalized patients suffering from euvolemic and hypervolemic hyponatremia; and

• Injection of Vibativ® (telavancin), for the treatment of certain serious bacterial infections, including hospital-acquired and ventilator-associated bacterial pneumonias, as well as complicated infections of the skin and skin structures.

In addition to these commercial brands, we have Phase II clinical programs
underway evaluating our ifetroban product candidates for patients with
cardiomyopathy associated with 1) Duchenne Muscular Dystrophy ("DMD"), a fatal,
genetic neuromuscular disease; 2) Systemic Sclerosis ("SSc") or scleroderma, a
debilitating autoimmune disorder characterized by fibrosis of the skin and
internal organs; and 3) Aspirin-Exacerbated Respiratory Disease ("AERD"), a
severe form of asthma.

Cumberland has built core competencies in the acquisition, development and
commercialization of pharmaceutical products in the U.S. - and we believe we can
leverage this existing infrastructure to support our continued growth both
domestically and internationally. Our management team consists of pharmaceutical
industry veterans with experience in business development, product development,
regulatory, manufacturing, sales, marketing and finance.

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 and delivery of our products.





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GROWTH STRATEGY

Cumberland's growth strategy involves maximizing the success of our existing
brands while continuing to build a portfolio of differentiated products. We
currently feature eight FDA products approved for sale in the United States. We
are also continuing to explore international partnerships to bring our medicines
to patients in other countries. Additionally, we look for opportunities to
expand our products into additional patient populations through clinical trials,
new presentations and our support of select, investigator-initiated studies. We
actively pursue opportunities to acquire additional marketed products, as well
as late-stage development product candidates in our target medical specialties.
Our clinical team is developing a pipeline of new product candidates largely to
address poorly met medical needs.

We are supplementing these activities with the earlier-stage drug development at
Cumberland Emerging Technologies ("CET"), our majority-owned subsidiary. CET
partners with academic research institutions to identify and support the
progress of promising new product candidates, which Cumberland could further
develop and commercialize.

Specifically, we seek long-term sustainable growth by:

•Supporting and expanding the use of our marketed products. We continue to
evaluate our products following their FDA approval to determine if additional
clinical data could expand their market and use. For example, we have secured
pediatric approval of Acetadote and Caldolor and are expanding the labeling for
both brands accordingly. We also recently further expanded the labeling for
Caldolor to allow its use prior to surgery. We will continue to explore such
opportunities to bring our products to new patient populations.

•Selectively adding complementary brands. In addition to our product development
activities, we are also seeking to acquire products or late-stage development
product candidates to continue to build a portfolio of complementary brands. We
focus on under-promoted, FDA-approved drugs as well as late-stage development
products that address poorly met medical needs. We will continue to target
product acquisition candidates that are competitively differentiated, have
valuable intellectual property or other protective features, and allow us to
leverage our existing infrastructure. Our acquisition of Vibativ and Sancuso are
examples of this strategy.

•Progressing our clinical pipeline and incubating future product opportunities
at CET. We believe it is important to build a pipeline of innovative new product
opportunities, as we are doing though our ifetroban Phase II development
programs. We are also supplementing our acquisitions and late-stage development
activities with early-stage drug development activities with CET.

•Leveraging our infrastructure through co-promotion partnerships. We believe
that our commercial infrastructure can help drive prescription volume and
product sales. We look for strategic partners that can complement our
capabilities and enhance opportunities for our brands. For example, our
co-promotion partnerships have allowed us to expand the support for Kristalose
and Sancuso across the U.S.

•Building an international contribution to our business. We have established our
own commercial capabilities, including three sales divisions, to cover the U.S.
market for our products. We are also building a network of select international
partners to register our products and make them available to patients in their
countries. We will continue to develop and expand our network of international
partners while supporting our partners' registration and commercialization
efforts in their respective territories. The acquisition of Vibativ resulted in
several new international partners and market opportunities.

•Manage our operations with financial discipline. We continually strive to manage our expenses relative to our revenues in order to generate operating cash flow. We remain in a solid financial position, with favorable gross margins and a strong balance sheet.

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RECENT DEVELOPMENTS

Acquired Sancuso

In January 2022Cumberland acquired the WE rights to FDA-approved oncology supportive care drug Sancuso from Kyowa Kirin, Inc.the WE
affiliate of Japanbased in Kyowa Kirin Co., Ltd.

Sancuso is the first and only FDA-approved prescription patch for the prevention
of nausea and vomiting in patients receiving certain types of chemotherapy
treatment. The active drug in Sancuso, granisetron, slowly dissolves in the thin
layer of adhesive that sticks to the patient's skin and is released into their
bloodstream over several days, working continuously to prevent
chemotherapy-induced nausea and vomiting ("CINV"). It is applied 24 to 48 hours
before receiving chemotherapy and can prevent CINV for up to five consecutive
days. Alternative oral treatments must be taken several times (day and night) to
deliver the same therapeutic doses.

Cumberland acquired U.S. rights to Sancuso and assumed full commercial
responsibility for the product in the U.S. - including its marketing, promotion,
distribution, manufacturing and medical support activities. We largely completed
the transition of these responsibilities from Kyowa Kirin to Cumberland during
the second quarter of 2022.

Sancuso Promotion

In April 2022we have reached an agreement with Verity Pharmaceuticals International Limited (“Verity”) for Sancuso’s national co-promotion. Verity is a specialty pharmaceutical company that will use its commercial oncology organization and customer network to co-promote Sancuso through United States.

Verity will cover a majority of the U.S. market for an initial three-year term,
with an option to extend for an additional two years. Verity and Cumberland will
share in the incremental contribution margin resulting from Verity's efforts.

In July 2022Verity launched its nationwide co-promotional efforts in support of Sancuso.

Ifetroban Clinical Studies

We have evaluated our product candidate ifetroban, a selective thromboxane-prostanoid receptor (“TPr”) antagonist, in a series of clinical studies. It has been administered to nearly 1,400 subjects and has been shown to be safe and well tolerated in healthy volunteers and various patient populations.

Cumberland is currently sponsoring three Phase II clinical programs to evaluate
ifetroban in 1) Aspirin-Exacerbated Respiratory Disease, ("AERD") a severe form
of asthma; 2) Systemic Sclerosis or scleroderma, a debilitating autoimmune
disorder characterized by diffuse fibrosis of the skin and internal organs; and
3) patients with cardiomyopathy associated with Duchenne Muscular Dystrophy, a
genetic neuromuscular disease that results in deterioration of the skeletal,
heart and lung muscles.

We await the results of ongoing studies before deciding on the best development path for the registration of ifetroban.

We are also designing a fourth Phase II program to evaluate the use of ifetroban
to treat patients with Progressive Fibrosing Interstitial Lung Diseases and we
are currently preparing an application to the FDA to support the new program.

In addition to our Company-sponsored studies, Harvard clinical investigators
have led a Phase II trial in patients with AERD. Their study is designed to
understand the mechanism of ifetroban in those patients and therefore
complements the work we have underway. Their work has been supported by a $5
million grant from the NIH. Patient enrollment in the study is now closed, and
the data analysis is underway. We look forward to sharing the results of the
study once we receive the study report from them in the coming months.


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New release Ifetroban

In June 2022, the American Journal of Respiratory and Critical Care Medicine
published preclinical studies that support the use of ifetroban as a promising
therapeutic for patients with pulmonary fibrosis associated with lung disease.

Specifically, the researchers reported that ifetroban was used to block
thromboxane receptor signaling in three preclinical models of lung fibrosis:
bleomycin-induced lung fibrosis, Hermansky-Pudlak Syndrome mice and
radiation-induced lung fibrosis. Ifetroban reduced pro-fibrotic signaling in the
lungs and prevented lung fibrosis due to multiple causes (bleomycin, genetic,
radiation).

Modification of revolving credit loan agreement

On June 30, 2022, Cumberland entered into the eighth amendment to our revolving
credit loan agreement with Pinnacle Bank permitting the Funded Debt Ratio to be
calculated on a rolling four-quarter basis to be no more than 3.00 to 1.00 for
the second and third quarters of 2022 and 2.50 to 1.00 for each quarter
thereafter.

Nordic pharmaceutical arrangements

On July 12, 2022, we entered into an amendment to our agreement with Nordic
Pharma ("Nordic") that addresses the responsibilities and financial arrangements
regarding our license to Nordic's methotrexate line of products for the U.S.
(the "License"). Our line of prefilled methotrexate syringes, marketed under the
brand name RediTrex® in the U.S., is covered by the License.

Based on the amendment, we are providing Nordic with the opportunity to assume
responsibility for commercializing the methotrexate products in the U.S. after
March 31, 2023. We will continue to distribute and support the RediTrex product
line during a transition period until then. Following the return of the License,
Nordic will provide us with a royalty on their future sales of the product
through April 2035. The companies will continue to collaborate on any transition
and ongoing commercialization of the product line.

Cumberland will transfer marketing authorization associated with the RediTrex product line to Nordic.

Nordic will return the 180,000 shares we issued to them associated with the
License and refund the $1 million we paid to them following the brand's approval
in the U.S. Nordic will also issue a credit note in favor of Cumberland in the
amount of $1 million for the unpaid milestone payment due from us for our launch
of the product line.

New Board Member

In July 2022, we were honored to welcome Martin Brown Jr. to Cumberland's Board
of Directors. His experience includes 10 years on the board of directors of
Brown-Forman Corporation, a large American spirits and wine company whose shares
are listed on the New York Stock Exchange. Additionally, he has served since
2018 on the board of directors of the parent company of Aegis Sciences
Corporation, a federally certified health care laboratory headquartered in
Nashville.

Mr. Brown is an attorney at Adams and Reese LLP. He has nearly 30 years of legal
experience representing privately held businesses, counseling owners in complex
business transactions, intellectual property licensing, international commerce,
mergers and acquisitions, and estate planning. He has been listed since 2009 in
the corporate law category of Best Lawyers®.

He has been an active board member for many community organizations, including
the Land Trust for Tennessee, Nashville Public Radio, Montgomery Bell Academy,
Nashville Public Television, Centerstone Mental Health Center, Cheekwood Estate
and Gardens, and Tennessee chapter of the Nature Conservancy.

Mr. Brown brings significant legal, public company, healthcare and civic experience to our board. We expect his contributions to be invaluable in our efforts to acquire, develop and deliver innovative products to improve the quality of patient care.

Board Special Committee

The Board has formed a Special Committee (the "Committee") as an ad hoc
committee of the Board of Directors to facilitate certain corporate development
activities, including the review and evaluation of potential mergers,
acquisitions, joint ventures, significant investments or divestitures of
material assets. The Committee is composed solely of directors who meet the
independence requirements of the NASDAQ Global Select Market. The Committee was
activated so that the Company may properly consider and evaluate any corporate
development opportunities that might arise as a result of the recent volatility
in the financial markets associated with the biopharmaceutical industry.


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Sustainability Report

In early August 2022, we announced the results of our 2021 Sustainability
Report, outlining our activities pertaining to environmental, social and
governance matters. As the largest biopharmaceutical company founded and
headquartered in the Mid-South, we hold ourselves to the highest standards of
ethical practices and understand the importance of recognizing and addressing
our impact on our constituents, the community and the environment.

Highlights of the report include:

•We provided 2.43 million doses of our products for patients in 2021.
•We also safely disposed of over 6,200 pounds of expired or damaged products
during the year.
•We had no products recalled, no Company marketed brands listed on the FDA's
MedWatch Safety Alerts for Human Medical Products, no marketed Company product
issues identified by FDA from their Adverse Event Reporting System and no
clinical trials terminated due to failure to practice good clinical standards.

The 2021 Sustainability Report also highlights our investment in our employees
through our continuing education programs, employee development initiatives and
employee recognition awards. Cumberland's workforce is 44% women, and 15% of our
employees are minorities.

State of Tennessee and grants from the Tennessee Valley Authority

The State of Tennessee and the Tennessee Valley Authority awarded Cumberland a total of $250,000 in subsidies to support the construction of new offices in 1600 West End Ave. and the relocation of the Company to this new head office. This new headquarters keeps Cumberland close to the
Vanderbilt University Medical Center to enable our continued collaboration.

With our portfolio of FDA-approved drug brands, and a deep pipeline of new drugs
under development, Cumberland is poised to attain significant milestones in the
coming years. We believe this well-located, state-of-the-art new headquarters
will play an important role in the Company's future success.

Omeclamox-Pak Supply Update

The packager for our Omeclamox-Pak product has been unable to provide us with
supplies of the product, having encountered difficulties and therefore
suspending operations during the pandemic. We are currently awaiting the
facility's packaging to resume, while also exploring other alternatives to
restart the product's packaging before we build new inventory and resupply the
market.

Vaprisol Supply Update

We are transitioning to a new manufacturer for our Vaprisol product. During
2021, we shipped all remaining inventory of the product and notified the FDA
that supplies of the product were then not currently available. We have
transferred manufacturing to a new facility and await the submission and FDA
approval for that plant before resuming shipments. During the second quarter of
2022, the new manufacturer was issued an FDA Form 483 following an inspection of
their facility. The FDA notified us that our application to manufacture Vaprisol
at the new facility would need to be resubmitted once those 483 issues are
satisfactorily resolved. Our new manufacturing partner is working with the FDA
to address those issues on a timely basis. Meanwhile, the Company plans to
provide an interim supply of compounded product to the market while awaiting the
needed facility approval.

Summary

Cumberland remains committed to our mission of providing innovative products
that improve the quality of care for patients and address poorly met medical
needs. We are working to fulfill this mission by building a portfolio of
innovative and differentiated products through a multifaceted strategy that
includes the development of new candidates as well as the acquisition of
established brands. Our resulting, diversified product line has enabled us to
weather external challenges while our team remains responsive to the evolving
medical market. We are prepared for and look forward to future opportunities to
carry out our mission throughout the remainder of the year.
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CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

Please see a discussion of our critical accounting policies and significant judgments and estimates in Note 1 to the company’s condensed consolidated financial statements accompanying this report and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. of our 2021 Annual Report on Form 10-K.

Accounting estimates and judgments

The preparation of condensed 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 and (3) valuation of contingent
consideration liabilities associated with business combinations.
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RESULTS OF OPERATIONS

Three months completed June 30, 2022 compared to the three months ended June 30, 2021

The following table presents the unaudited interim income statements of continuing operations for the three months ended June 30, 2022 and 2021:

                                                               Three months ended June 30,
                                                    2022                  2021                 Change
Net revenues                                   $ 10,299,152          $  9,055,483          $  1,243,669
Costs and expenses:
Cost of products sold                             2,031,884             1,740,649               291,235
Selling and marketing                             4,556,685             4,121,817               434,868
Research and development                          1,823,693             1,360,398               463,295
General and administrative                        2,203,975             2,097,130               106,845
Amortization                                      1,529,453             1,171,218               358,235
Total costs and expenses                         12,145,690            10,491,212             1,654,478
Operating income (loss)                          (1,846,538)           (1,435,729)             (410,809)
Interest income                                      15,066                 6,591                 8,475
Other income                                              -             2,187,140            (2,187,140)
Other income - gain on insurance proceeds           611,330                     -               611,330
Interest expense                                   (137,624)              (25,859)             (111,765)
Income (loss) from continuing operations
before income taxes                              (1,357,766)              732,143            (2,089,909)
Income tax (expense) benefit                         (6,900)               (7,459)                  559

Net income (loss) from continuing operations $(1,364,666) $724,684 $(2,089,350)


The following table summarizes net revenues by product for the periods
presented:
                                Three months ended June 30,
                          2022             2021             Change
Products:
Kristalose           $  3,570,272      $ 5,275,065      $ (1,704,793)
Sancuso                 3,398,548                -         3,398,548
Vibativ                 1,596,821        1,844,936          (248,115)
Caldolor                1,193,916          938,328           255,588
Vaprisol                 (134,621)         399,952          (534,573)
Acetadote                 126,789          152,781           (25,992)
Omeclamox-Pak             (26,412)         (24,109)           (2,303)
RediTrex                   93,676            7,382            86,294
Other revenue             480,163          461,148            19,015

Total net income $10,299,152 $9,055,483 $1,243,669


Net revenues. Net revenues for the three months ended June 30, 2022, were $10.3
million compared to $9.1 million for the three months ended June 30, 2021. As
detailed in the table above, net revenue increased for two of our marketed
products: Caldolor and RediTrex during the quarter. We also continued
significant shipments of Sancuso which we launched earlier in the year.

Kristalose revenue of $3.6 million for the second quarter of 2022, represented a
decrease of $1.7 million when compared to the prior year period. The decrease
was primarily the result of timing of shipments to one of our co-promotion
partners.

Acetadote revenues include net sales of our Acetadote brand and our share of net sales of our licensed generic. During the quarter, there was a slight decline in branded product revenue compared to the prior year period.

Vaprisol revenue was $(0.1) million for the second quarter of 2022, a decrease
of $0.5 million compared to the same period last year. This decrease is
primarily due to the lack of inventory of the product, as we await FDA approval
on a new manufacturer.
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Caldolor revenue was $1.2 million for the second quarter of 2022, an increase of
$0.3 million, or 27.2%, compared to the second quarter of 2021. The increase was
the result of higher international shipments of the product.

Vibativ revenue was $1.6 million for the three months ended June 30, 2022,
compared to $1.8 million for the same period last year. The decline was a result
of increased purchases in 2021 associated in part with wholesaler stocking of
our new packaged product.

Sancuso revenue was $3.4 million for the second quarter of 2022, which was $0.3
million higher than the second quarter of 2021 U.S. results reported by Kyowa
Kirin, from whom Cumberland acquired the U.S. rights to Sancuso on January 3,
2022.

Omeclamox-Pak had no sales for the second quarter of 2022, as Cumberland is
currently out of commercial inventory of this product. The packager for our
Omeclamox-Pak product encountered financial difficulties, and currently is under
new management and a reorganization. We are in discussions about the resumption
of packaging the product. Net revenue for the three months ended June 30, 2022,
was negatively impacted by various revenue adjustments.

Cost of products sold. Cost of products sold for the second quarter of 2022 and
2021 were $2.0 million and $1.7 million, respectively. Cost of products sold, as
a percentage of net revenues, were 19.7% during the three months ended June 30,
2022, similar to 19.2% during the three months ended June 30, 2021.

Selling and marketing. Selling and marketing expense for the second quarter of
2022 increased $0.4 million compared to the same period last year. This increase
is primarily attributable to an increase in marketing expenses associated with
the Sancuso acquisition, including royalty costs, promotional spending and the
costs associated with our new oncology sales division.

Research and development. Research and development costs for the second quarter
of 2022 and 2021 were $1.8 million and $1.4 million, respectively. 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.

General and administrative. General and administrative expense increased to $2.2
million for the second quarter of 2022, compared to $2.1 million for the second
quarter of 2021, an increase of $0.1 million . The increase was primarily
attributable to increases in compensation expenses.


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The components of the income statements discussed above reflect the following impacts of Vibativ: Financial impact of Vibativ

               Three months ended June 30,
                                             2022                 2021
Net revenue                         $     1,596,821           $ 1,844,936
Cost of products sold (1)                   402,320               678,146
Royalty and operating expenses              (17,957)              767,813
Vibativ contribution                $     1,212,458           $   398,977


(1)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 income statements discussed above reflect the following impacts of Sancuso:

Financial Impact of Sancuso                   Three months ended June 30,
                                                    2022                      2021
Net revenue (1)                     $            3,648,548                   $  -
Cost of products sold (2)                          360,572                      -
Royalty and operating expenses                     992,922                      -
Sancuso contribution                $            2,295,054                   $  -

(1) 2022 revenue includes a $250,000 payment to Cumberland required under new license agreement.

(2) Sancuso inventory included in cost of goods sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during the year 2022.

Amortization. Amortization expense is the ratable use of our capitalized
intangible assets including product and license rights, patents, trademarks and
patent defense costs. Amortization for the three months ended June 30, 2022 and
2021, totaled approximately $1.5 million and $1.2 million, respectively. The
increase in amortization expense is due to the acquisition of Sancuso.

Income taxes. Income tax expense for the three months ended June 30, 2022was comparable to the income tax expense for the three months ended June 30, 2021.

As of June 30, 2022, we had approximately $56.6 million in federal net operating
loss carryforwards including approximately $44 million of net operating loss
carryforwards resulting from the exercise of nonqualified stock options that
have historically been used to significantly offset income tax obligations. We
expect to continue to pay minimal income taxes during 2022 and beyond, through
the continued utilization of these net operating loss carryforwards, on any
taxable income generated from our operations.

Other income. In the second quarter of 2022, we recorded a gain on insurance proceeds from $0.6 million.



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RESULTS OF OPERATIONS

Six months ended June 30, 2022 compared to the half-year ended June 30, 2021

The following table presents the unaudited interim income statements of continuing operations for the six months ended June 30, 2022 and 2021:

                                                                  Six months ended June 30,
                                                   2022                  2021                 Change
Net revenues                                  $ 21,474,197          $ 19,592,642          $  1,881,555
Costs and expenses:
Cost of products sold                            4,243,769             4,157,978                85,791
Selling and marketing                            9,171,114             7,909,157             1,261,957
Research and development                         3,568,829             2,617,765               951,064
General and administrative                       4,506,324             4,327,639               178,685
Amortization                                     3,122,698             2,340,132               782,566
Total costs and expenses                        24,612,734            21,352,671             3,260,063
Operating income (loss)                         (3,138,537)           (1,760,029)           (1,378,508)
Interest income                                     31,107                12,017                19,090
Other income                                             -             2,187,140            (2,187,140)
Other income - gain on insurance proceeds          611,330                     -               611,330
Interest expense                                  (257,199)              (50,276)             (206,923)
Income (loss) from continuing operations
before income taxes                             (2,753,299)              388,852            (3,142,151)
Income tax (expense) benefit                       (13,800)              (14,917)                1,117

Net income (loss) from continuing operations $(2,767,099) $373,935 $(3,141,034)


The following table summarizes net revenues by product for the periods
presented:
                                 Six months ended June 30,
                          2022              2021            Change
Products:
Kristalose           $  7,515,368      $  8,269,443      $  (754,075)
Sancuso                 6,795,758                 -        6,795,758
Vibativ                 4,098,255         6,897,179       (2,798,924)
Caldolor                2,153,546         2,477,824         (324,278)
Vaprisol                 (251,623)        1,534,216       (1,785,839)
Acetadote                 237,884           269,972          (32,088)
Omeclamox-Pak              (3,676)         (474,371)         470,695
RediTrex                  152,904           (24,870)         177,774
Other revenue             775,781           643,249          132,532

Total net income $21,474,197 $19,592,642 $1,881,555


Net revenues. Net revenues for the six months ended June 30, 2022, were $21.5
million compared to $19.6 million for the six months ended June 30, 2021, an
increase of $1.9 million. The addition of our newest product Sancuso contributed
to an overall 9.6% revenue increase.

Kristalose’s turnover was $7.5 million during the first half of 2022, a decrease of $0.8 million compared to the period of the previous year. Revenue decreased due to slightly lower sales volume associated with one of our co-promotion partners in 2022.

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Vibativ revenue was $4.1 million for the six months ended June 30, 2022,
compared to $6.9 million for the same period last year. The decrease in net
revenue was a result of improved sales volume for the product during the six
months ended June 30, 2021. The decline was a result of increased purchases in
2021 associated in part with wholesaler stocking of our new packaged product.

Vaprisol’s sales were ($0.3) million for the first six months of 2022 as Cumberland is currently out of commercial stock of the product. Net sales were negatively impacted by various sales adjustments.

Omeclamox-Pak had no sales for the six months ended June 30, 2022, as Cumberland
is currently out of commercial inventory of this product. The packager for our
Omeclamox-Pak product encountered financial difficulties and currently is under
new management and a reorganization. We are in discussions about the resumption
of packaging the product. Net revenue for the six months ended June 30, 2022,
was negatively impacted by product returns during the period.

Acetadote revenue includes net sales of our Acetadote brand and our share of net
sales from our Authorized Generic. There was a slight decrease in the product's
year to date revenue for the six months ended June 30, 2022, when compared to
the prior year period as a result of an increase in expired product returns in
2022.

Caldolor revenue was $2.2 million for the first two quarters of 2022, a decrease
of $0.3 million compared to the same period last year. International shipments
decreased in 2022.

Cost of goods sold. Cost of goods sold for the first six months of 2022 and 2021 was constant at $4.2 million for each period.

Selling and marketing. Selling and marketing expense for the six months ended
June 30, 2022, increased $1.3 million compared to the prior year period. This
increase is primarily attributable to an increase in marketing expenses
associated with the Sancuso acquisition including royalty costs, promotional
spending and the costs associated with our new oncology sales division.

Research and development. Research and development costs were $3.6 million for
the first six months of 2022 compared to $2.6 million for the same period last
year. A portion of our research and development costs is variable based on the
number of trials, study sites, cost of the per patient study protocol and
patients involved in the development of our new product candidates. We continue
to fund our ongoing clinical initiatives associated with our pipeline products.

General and administrative. General and administrative expense for the six
months ended June 30, 2022, remained consistent with $4.5 million compared to
$4.3 million during the six months ended June 30, 2021. In 2022, we experienced
a slight increase in compensation expense.

The components of the income statements discussed above reflect the following impacts of Vibativ: Financial impact of Vibativ

             Six months ended June 30,
                                          2022              2021
Net revenue (1)                     $    4,248,255      $ 6,897,179
Cost of products sold (2)                1,329,480        2,134,962
Royalty and operating expenses             663,360        1,170,165
Vibativ contribution                $    2,255,415      $ 3,592,052


(1) 2022 revenue includes a $150,000 payment to Cumberland required under new license agreement.

(2) Vibativ inventory included in cost of goods sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2018.

Financial impact of Vibativ since acquisition Net sales (1)

                     $       40,369,278
Cost of products sold (2)                   13,518,736
Royalty and operating expenses               7,117,405
Vibativ contribution                $       19,733,137


(1) Revenue includes a $150,000 payment to Cumberland required under new license agreement.

(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.
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The components of the statements of operations discussed above reflect the
following impacts from Sancuso:
Financial Impact of Sancuso                  Six months ended June 30,
                                                  2022                    2021
Net revenue (1)                     $          7,045,758                 $  -
Cost of products sold (2)                        748,836                    -
Royalty and operating expenses                 1,903,022                    -
Sancuso contribution                $          4,393,900                 $  -

(1) 2022 revenue includes a $250,000 payment to Cumberland required under new license agreement.

(2) Sancuso inventory included in cost of goods sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during the year 2022.

Amortization. Amortization expense is the ratable use of our capitalized
intangible assets including product and license rights, patents, trademarks and
patent defense costs. Amortization for the six months ended June 30, 2022, and
six months ended June 30, 2021, totaled approximately $3.1 million and $2.3
million, respectively. The increase was attributable to the Sancuso acquisition.

Income taxes. Income tax expense (benefit) for the six months ended June 30,
2022, as a percentage of income (loss) from continuing operations before income
taxes, was 0.5% compared to 3.8% for the six months ended June 30, 2021.

Other income. In the second quarter of 2022, we recorded a gain on insurance proceeds from $0.6 million.



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CASH AND CAPITAL RESOURCES

Working capital

Our primary sources of liquidity are cash equivalents, cash flows from
operations and the amounts borrowed under our line of credit. 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.

The following table summarizes our liquidity and working capital as of June 30,
2022 and December 31, 2021:
                                                          June 30, 2022            December 31, 2021

Cash and cash equivalents                               $    18,216,565          $       27,040,816

Working capital (current assets less current
liabilities)                                            $    19,496,529     

$26,409,053
Current ratio (multiple of current assets over current liabilities)

                                                        1.8                         2.4

Revolving line of credit availability                   $     1,000,000     

$5,000,000

The following table summarizes our net changes in cash and cash equivalents for the six months ended June 30, 2022 and June 30, 2021:

                                                             Six months ended June 30,
                                                               2022              2021

Net cash provided by (used in):
Operating activities                                     $    2,180,038      $ 4,484,770
Investing activities                                        (13,714,489)        (366,854)
Financing activities                                          2,710,200       (3,201,250)

Net increase (decrease) in cash and cash equivalents ($8,824,251)

$916,666


The net $8.8 million decrease in cash and cash equivalents for the six months
ended June 30, 2022, was primarily attributable to cash used in investing and
partially offset by cash provided by operating and financing activities. Cash
provided by operating activities of $2.2 million was primarily the result of a
decreases in inventory of $2.9 million, decrease in other assets of $1.2 million
and increases in accounts payable and other liabilities of $4.7 million, as well
as the add back of non-cash expenses of depreciation, amortization and
share-based compensation expense totaling $3.4 million. This was partially
offset by accounts receivable increasing by $5.5 million, mainly from the
addition of Sancuso sales and the decrease in long-term liabilities of $1.7
million. Cash used in investing activities was the result of the acquisition of
Sancuso. Our financing activities included the increase in our line of credit of
$4.0 million partially offset by the $0.8 million in cash used to repurchase
shares of our common stock as well as the $0.5 million used for the payment of
royalties for sales of Vibativ.

The net $0.9 million increase in cash and cash equivalents for the six months
ended June 30, 2021, was primarily attributable to cash provided by operating
activities, partially offset by cash used in investing and financing activities.
Cash provided by operating activities of $4.5 million was positively impacted by
decreases in inventory of $2.3 million and accounts receivable of $3.2 million,
as well as the add back of non-cash expenses of depreciation, amortization and
share-based compensation expense totaling $2.8 million. Operating activities
were also offset by the decrease in accounts payable of $3.0 million and the
forgiveness of our PPP Loan of $2.2 million. Cash used in investing activities
was the result of additions to intangibles of $0.1 million and the payment of
$0.2 million to the WHC JV. Our financing activities included the $0.8 million
in cash used to repurchase shares of our common stock as well as the $1.4
million used for the payment of royalties to Theravance for sales of Vibativ.
                                       29
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debt agreement

On June 30, 2022, the Company entered into the Eighth Amendment to the Revolving
Credit Loan Agreement with Pinnacle Bank (the "Pinnacle Agreement") permitting
the Maximum Funded Debt Ratio to be calculated on a rolling four-quarter basis
to be no more than 3.00 to 1.00 for the second and third quarters of 2022 and
2.50 to 1.00 for each quarter thereafter. For the quarter ended June 30, 2022,
we slightly exceeded the Maximum Funded Debt Ratio, but we relied on our
provision in the latest amendment to address it.

On March 31, 2022, the Company and Pinnacle Bank entered into a Seventh
Amendment to the Revolving Credit Loan Agreement to revise and update the
Maximum Funded Debt Ratio financial covenant and to delete from the Pinnacle
Agreement the Funded Debt to Tangible Capital Ratio financial covenant. These
changes were made to more appropriately reflect the impact from the Sancuso
acquisition.

On December 31, 2021, the Company and Pinnacle Bank entered into the Fifth
Amendment to the Revolving Credit Note and the Sixth Amendment to the Revolving
Credit Loan Agreement in order to increase the principal amount of the Note from
$15 million to $20 million.

On October 28, 2021the Company and Pinnacle Bank have entered into a Fourth Amendment to the Revolving Credit Note and a Fifth Amendment (“Fifth Amendment”) to the Revolving Credit Loan Agreement to renew the Revolving Credit Loan.

The original Pinnacle Agreement was dated July 2017. Beginning on August 14,
2018, and continuing until October 7, 2020, the Company and Pinnacle Bank
entered into a series of amendments to extend and update the Revolving Credit
Note and Revolving Credit Agreement. The Fifth Amendment extends the maturity
date three years through October 1, 2024.

The interest rate on the Pinnacle Agreement is based on LIBOR plus an interest
rate spread. The current pricing under the Pinnacle Agreement provides for an
interest rate spread of 1.75% to 2.75% above LIBOR with a minimum LIBOR of
0.90%. The applicable interest rate under the Pinnacle Agreement was 3.87% at
June 30, 2022. In addition, a fee of 0.25% per year is charged on the unused
line of credit. Interest and the unused line fee are payable quarterly. The
parties have agreed on a process to determine a new interest rate benchmark at
the point the LIBOR rate is expected to be discontinued over the next 12 to 24
months.

From June 30, 2022 and December 31, 2021the company had $19.0 million and
$15.0 millionrespectively, in outstanding borrowings under its revolving credit facility.

Paycheck Protection Program Loan

On April 20, 2020Cumberland has received loan funding from Pinnacle Bank in the aggregate amount of $2,187,140 pursuant to the Paycheck Protection Program (the “PPP”) under the Federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which was enacted March 27, 2020.

Under the terms of the PPP, certain loan amounts may be forgiven if used for eligible expenses as described in the CARES Act, including eligible payroll costs, covered rent payments and covered utilities. Cumberland used funds from the PPP loan for these qualifying expenses. With the help of our PPP loan, the company has not laid off or furloughed any employees as a result of the COVID-19 pandemic.

In October 2020, Cumberland submitted a request for the loan's forgiveness. On
June 11, 2021, the Company received a formal notice from the SBA that the full
amount of the loan was forgiven.


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OFF-BALANCE SHEET ARRANGEMENTS

In the six months ended June 30, 2022 and 2021, we have not entered into any off-balance sheet arrangements.

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