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<SEC-DOCUMENT>0000950123-10-105751.txt : 20101115
<SEC-HEADER>0000950123-10-105751.hdr.sgml : 20101115
<ACCEPTANCE-DATETIME>20101115163941
ACCESSION NUMBER:		0000950123-10-105751
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20100930
FILED AS OF DATE:		20101115
DATE AS OF CHANGE:		20101115

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CUMBERLAND PHARMACEUTICALS INC
		CENTRAL INDEX KEY:			0001087294
		STANDARD INDUSTRIAL CLASSIFICATION:	PHARMACEUTICAL PREPARATIONS [2834]
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-33637
		FILM NUMBER:		101193094

	BUSINESS ADDRESS:	
		STREET 1:		2525 WEST END AVENUE
		STREET 2:		SUITE 950
		CITY:			NASHVILLE,
		STATE:			TN
		ZIP:			37203
		BUSINESS PHONE:		615-255-0068

	MAIL ADDRESS:	
		STREET 1:		2525 WEST END AVENUE
		STREET 2:		SUITE 950
		CITY:			NASHVILLE
		STATE:			TN
		ZIP:			37203
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>c08393e10vq.htm
<DESCRIPTION>FORM 10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>Form 10-Q</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">

<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 10pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 10pt"><B>FORM 10-Q</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(Mark One)
</DIV>


<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 0pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT style="font-family: Wingdings">&#254;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<!-- xbrl,dc -->
<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the quarterly period ended September&nbsp;30, 2010</B></DIV>
<!-- /xbrl,dc -->

<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>or</B></DIV>


<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 10pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT style="font-family: Wingdings">&#111;</FONT> </TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>.</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>
Commission File Number: 001-33637</B>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 10pt"><B>Cumberland Pharmaceuticals Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">
(Exact name of registrant as specified in its charter)</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Tennessee</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>62-1765329</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer Identification No.)</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">of incorporation or organization)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top" nowrap><B>2525 West End Avenue, Suite&nbsp;950, Nashville, Tennessee</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>37203</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zipcode)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>(615)&nbsp;255-0068</B><BR>
(Registrant&#146;s telephone number, including area code)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the Registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. Yes <FONT style="font-family: Wingdings">&#254;</FONT> No <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the registrant has submitted electronically and posted on its Web
site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule&nbsp;405
of Regulation&nbsp;S-T (&#167;232.405 of this chapter) during the preceding 12&nbsp;months (or for such shorter
period that the registrant was required to submit and post such files.) Yes <FONT style="font-family: Wingdings">&#111;</FONT> No <FONT style="font-family: Wingdings">&#111;</FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of &#147;large accelerated
filer,&#148; &#147;accelerated filer&#148; and &#147;smaller reporting company&#148; in Rule&nbsp;12b-2 of the Exchange Act.
(Check one):
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><FONT style="white-space: nowrap">Large accelerated filer <FONT style="font-family: Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="white-space: nowrap">Accelerated filer <FONT style="font-family: Wingdings">&#111;</FONT></FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="white-space: nowrap">Non-accelerated filer <FONT style="font-family: Wingdings">&#254;</FONT></FONT>
<FONT style="white-space: nowrap">(Do not check if a smaller reporting company)</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT style="white-space: nowrap">Smaller reporting company <FONT style="font-family: Wingdings">&#111;</FONT></FONT></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate by check mark whether registrant is a shell company (as defined in Rule&nbsp;12b-2 of the
Exchange Act). <font style="white-space: nowrap">Yes <FONT style="font-family: Wingdings">&#111;</FONT> No <FONT style="font-family: Wingdings">&#254;</FONT></font>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Indicate the number of shares outstanding of each of the issuer&#146;s classes of common stock, as of
the latest practicable date.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top">Class
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Outstanding at November&nbsp;8, 2010</TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">Common stock, no par value
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">20,310,328</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>CUMBERLAND PHARMACEUTICALS INC.<BR>
INDEX</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">PART I &#151; FINANCIAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#102">Item&nbsp;1: Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#103">Condensed Consolidated Balance Sheets</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#104">Condensed Consolidated Statements of Income</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#105">Condensed Consolidated Statements of Cash Flows</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><A href="#106">Condensed Consolidated Statements of Equity and Comprehensive Income</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#107">Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">Item&nbsp;3: Quantitative and Qualitative Disclosure about Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#109">Item&nbsp;4: Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">PART II &#151; OTHER FINANCIAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#111">Item&nbsp;1a: Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">Item&nbsp;2: Unregistered Sales of Equity Securities and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#113">Item&nbsp;6: Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#114">SIGNATURES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c08393exv10w18.htm">Exhibit 10.18</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c08393exv31w1.htm">Exhibit 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c08393exv31w2.htm">Exhibit 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c08393exv32w1.htm">Exhibit 32.1</A></FONT></TD></TR>
</TABLE>
</DIV>
<DIV align="left">
<!-- /TOC -->
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">



<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PART I &#151; FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;1: Financial Statements</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>
<!-- xbrl,bs -->
<DIV align="center" style="font-size: 10pt"><B>Condensed Consolidated Balance Sheets</B><br>
<!-- xbrl,body -->
<B>(Unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65,518,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">78,701,682</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable, net of allowances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,791,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,176,585</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventories</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,646,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,822,873</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,940,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,472,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,897,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,173,595</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,139,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">918,412</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,580,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,956,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,292,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,676,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">89,909,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">103,724,320</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,666,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,061,973</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of other long-term obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,828</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,416,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,632,796</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,817,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,784,777</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,912,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,624,374</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revolving line of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,825,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,825,951</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term debt, excluding current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,333,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,938,027</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other long-term obligations, excluding current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">211,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">184,632</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,283,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,572,984</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Redeemable common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,930,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Shareholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Common stock &#151; no par value; 100,000,000 shares authorized;
20,353,849 and 20,180,486<SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP> shares issued and outstanding
as of September&nbsp;30, 2010 and December&nbsp;31, 2009, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,521,470</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,711,746</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,161,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,542,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:75px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,682,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,253,872</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Noncontrolling interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56,791</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(32,536</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,625,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,221,336</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Total liabilities and equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">89,909,866</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">103,724,320</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<!-- /xbrl,bs -->




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Number of shares issued and outstanding represent total shares of common stock regardless of
classification on the consolidated balance sheet. The number of shares of redeemable common stock
at December&nbsp;31, 2009 was 142,016.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">See accompanying notes to unaudited condensed consolidated financial statements.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->1<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">




<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>
<!-- xbrl,in -->
<DIV align="center" style="font-size: 10pt"><B>Condensed Consolidated Statements of Income</B><br>
<!-- xbrl,body -->
<B>(Unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Three months ended September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Nine months ended September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,190,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,597,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,061,457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">32,822,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Costs and expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost of products sold</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">909,434</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,761,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,632,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,271,363</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,692,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,087,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,147,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,611,796</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Research and development</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,138,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,947,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,041,719</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,806,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,537,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,471,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,218,925</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of product
license right</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">171,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">515,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">515,178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,791</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,747,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,225,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,797,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,739,772</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,443,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,372,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,264,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,083,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,041</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(547,795</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(248,272</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,299,703</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(430,207</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,944,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,138,072</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,124,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,695,034</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(943,141</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(855,660</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,529,339</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,919,356</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,001,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,282,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,594,871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,775,678</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net loss at subsidiary attributable to
noncontrolling interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income attributable to
common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,008,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,288,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,619,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,802,098</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings per share attributable to
common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted-average shares outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,327,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,745,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,335,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,197,876</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">- diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,803,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,183,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,135,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,143,348</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">See accompanying notes to unaudited condensed consolidated financial statements.
</DIV>
<!-- /xbrl,in -->

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">




<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="105"></A>
</DIV>
<!-- xbrl,cf -->
<DIV align="center" style="font-size: 10pt"><B>Condensed Consolidated Statements of Cash Flows</B><br>
<!-- xbrl,body -->
<B>(Unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Nine Months Ended September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,594,871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,775,678</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Adjustments to reconcile net income to net cash flows from
operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Depreciation and amortization expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">723,687</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">605,514</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-employee equity compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,046,192</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Stock-based compensation &#151; employee stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">503,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">455,502</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Excess tax benefit derived from exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,256,913</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,842,825</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-cash interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">328,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net changes in assets and liabilities affecting
operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,384,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,054,710</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,823,355</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,185</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other current assets and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,461,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">936,286</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Accounts payable and other accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(840,429</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,299,235</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Other long-term obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(105,668</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(455,723</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,033,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,923,754</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from investing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additions to property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(311,301</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(199,312</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additions to patents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(132,047</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(71,358</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash used in investment activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(443,348</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(270,670</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash flows from financing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from initial public offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Costs of initial public offering</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,385,124</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from borrowings on long-term debt</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,000,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Principal payments on note payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,000,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,000,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Costs of financing for long-term debt and credit facility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(82,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(189,660</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,182,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,275</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Excess tax benefit derived from exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,256,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,842,825</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of common shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,129,648</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(27,273,677</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net cash (used in) provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,773,096</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,058,639</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net (decrease)&nbsp;increase in cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,183,342</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,711,723</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,701,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,829,551</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65,518,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">79,541,274</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Supplemental disclosure of cash flow information:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-cash investing and financing activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred financing costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">335,075</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common shares repurchased during period but not paid
as of the end of the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">See accompanying notes to unaudited condensed consolidated financial statements.
</DIV>
<!-- /xbrl,cf -->

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">




<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES</B>
</DIV>

<DIV align="left">
<A name="106"></A>
</DIV>
<!-- xbrl,se -->
<DIV align="center" style="font-size: 10pt"><B>Condensed Consolidated Statements of Equity and Comprehensive Income</B><br>
<!-- xbrl,body -->
<B>(Unaudited)</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Common stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Retained</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>controlling</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>earnings</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>interests</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>equity</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance, December&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,180,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">67,711,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,542,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(32,536</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,221,336</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock-based compensation &#151;
nonemployees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89,081</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of options and
related tax benefit, net
of mature shares
redeemed for the
exercise price</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">672,794</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,439,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,439,052</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock-based compensation &#151;
employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">503,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">503,446</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase of shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(505,067</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,151,855</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,151,855</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reclass of redeemable
common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,930,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,930,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net and
comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,619,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,255</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,594,871</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance, September&nbsp;30, 2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,353,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,521,470</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,161,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(56,791</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">74,625,931</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">See accompanying notes to unaudited condensed consolidated financial statements.
</DIV>
<!-- /xbrl,se -->

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->4<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<!-- xbrl,ns -->

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES<BR>
Notes to condensed consolidated financial statements<BR>
(unaudited)</B>
</DIV>


<!-- xbrl,n -->
<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left"><B>(1)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>BASIS OF PRESENTATION</B></TD>
</TR>

</TABLE>
</DIV>
<!-- xbrl,body -->

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In the opinion of management, the accompanying unaudited condensed consolidated financial
statements (&#147;condensed consolidated financial statements&#148;) of Cumberland Pharmaceuticals Inc. and
its subsidiaries (collectively, the &#147;Company&#148; or &#147;Cumberland&#148;) have been prepared on a basis
consistent with the December&nbsp;31, 2009 audited consolidated financial statements and include all
adjustments, consisting of only normal recurring adjustments, necessary to fairly present the
information set forth herein. All significant intercompany accounts and transactions have been
eliminated in consolidation. The condensed consolidated financial statements have been prepared in
accordance with the regulations of the Securities and Exchange Commission, or SEC, and omit certain
information and footnote disclosure necessary to present the statements in accordance with U.S.
generally accepted accounting principles. These condensed consolidated financial statements should
be read in conjunction with the audited consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended December&nbsp;31, 2009. The results of
operations for the three and nine months ended September&nbsp;30, 2010 are not necessarily indicative of
the results to be expected for the entire fiscal year or any future period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We operate in one segment, specialty pharmaceutical products. Management has chosen to organize the
Company based on the type of products sold. All of the Company&#146;s assets are located in the United
States.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Total comprehensive income was comprised solely of net income for the three and nine months ended
September&nbsp;30, 2010 and 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Accounting Policies:</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In preparing the condensed consolidated financial statements in conformity with U.S. generally
accepted accounting principles, management must make decisions that impact the reported amounts and
the related disclosures. Such decisions include the selection of the appropriate accounting
principles to be applied and the assumptions on which to base accounting estimates. In reaching
such decisions, management applies judgments based on its understanding and analysis of the
relevant circumstances, historical experience, and other available information. Actual amounts
could differ from those estimated at the time the condensed consolidated financial statements are
prepared.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company has evaluated events occurring subsequent to September&nbsp;30, 2010 for accounting and
disclosure implications.
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(2)&nbsp;EARNINGS PER SHARE</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following tables reconcile the numerator and denominator used to calculate diluted earnings per
share for the three and nine months ended September&nbsp;30, 2010 and 2009:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Three Months Ended September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Numerator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income attributable to common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,008,244</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,288,137</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted-average shares outstanding &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,327,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,745,069</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Convertible preferred stock shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">714,505</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dilutive effect of other securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">475,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,724,032</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted-average shares outstanding &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,803,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,183,606</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->5<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES<BR>
Notes to condensed consolidated financial statements &#151; continued<BR>
(unaudited)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Nine Months Ended September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Numerator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income attributable to common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,619,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,802,098</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted-average shares outstanding &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,335,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,197,876</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Convertible preferred stock shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,320,717</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Dilutive effect of other securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">799,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,624,755</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Weighted-average shares outstanding &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,135,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,143,348</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As of September&nbsp;30, 2010 and 2009, options to purchase 1,200,017 and 231,185 shares of common
stock, respectively, were outstanding but were not included in the computation of diluted EPS
because the effect would be antidilutive.
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(3)&nbsp;REVENUES</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company had sales to non-U.S. customers of $0.1&nbsp;million and $0 during the three months ended
September&nbsp;30, 2010 and 2009, respectively. The Company had sales of approximately $0.1&nbsp;million to
non-U.S. customers during the nine months ended September&nbsp;30, 2010 and $0.7&nbsp;million during the nine
months ended September&nbsp;30, 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company&#146;s net revenues consisted of the following for the three and nine months ended September
30, 2010 and 2009:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Three Months Ended September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Nine Months Ended September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Products:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Acetadote</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,600,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,686,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,632,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,059,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Kristalose</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,506,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,476,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,088,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,223,744</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Caldolor</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,246,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,246,370</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">261,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">293,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,190,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,597,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,061,457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">32,822,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<!-- xbrl,n -->



<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(4)&nbsp;DEBT</B>
</DIV>
<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On September&nbsp;29, 2010, the Company entered into an amendment of its loan agreement with Bank of
America, N.A. (the &#147;Agreement&#148;). The amendment provided for an increase in the availability under
the existing line of credit from $4.0&nbsp;million to $6.0&nbsp;million, with interest payable monthly at
LIBOR plus an Applicable Margin, as defined in the Agreement (5.76% at September&nbsp;30, 2010). In
addition, the term debt was reduced to $6.0&nbsp;million, with quarterly payments under the term debt
reduced from $1.5&nbsp;million to $666,667, plus interest at the same rate as the line of credit,
beginning December&nbsp;31, 2010. The Company reduced its commitment fee from three-quarters of one
percent (0.75%) to one-half of one percent (0.50%) per annum on the unused line of credit. The
borrowings are collateralized by a first priority lien on all of the Company&#146;s assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Agreement&#146;s covenants include a Leverage Ratio, as defined in the Agreement, of 2.00 to 1.00
for the quarter ended December&nbsp;31, 2010, 1.75 to 1.00 for each of the three quarters ended March
31, 2011, June&nbsp;30, 2011 and September&nbsp;30, 2011 and 1.25 to 1.00 for quarter ending December&nbsp;31,
2011 and thereafter, as well as a Fixed Charge Coverage Ratio, as defined in the Agreement, of at
least 1.25 to 1.00 at each quarter-annual reporting period. In addition, the Company must maintain
deposits with Bank of America, N.A. at amounts equal to at least the sum of (a)&nbsp;the maximum amount
of the line of credit plus (b)&nbsp;the aggregate principal amount then outstanding under the term debt.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">




<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CUMBERLAND PHARMACEUTICALS INC. AND SUBSIDIARIES<BR>
Notes to condensed consolidated financial statements &#151; continued<BR>
(unaudited)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company is subject to additional loan fees if certain performance metrics measured at March&nbsp;31,
2011 and September&nbsp;30, 2011 are not met. If required, the additional loan fee amounts of $102,000
each
are due within 45&nbsp;days of the end of the respective period. As of September&nbsp;30, 2010, the Company
has not recognized any additional loan fees.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Concurrent with the amendment of the Agreement, the Company elected to prepay approximately $5.9
million of its term debt, incurring a prepayment penalty of approximately $0.2&nbsp;million. The
prepayment penalty is included as a component of interest expense for the three and nine months
ended September&nbsp;30, 2010.
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(5)&nbsp;SHAREHOLDERS&#146; EQUITY</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In February and April&nbsp;2010, the Company repurchased 163,022 shares of common stock totaling
approximately $1.9&nbsp;million for the settlement of tax liabilities associated with the exercise of
certain options in 2009. As of December&nbsp;31, 2009, this amount was included in redeemable common
stock in the condensed consolidated balance sheet. The repurchase amount was based on the
fair-market value of common stock on the date of settlement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In May&nbsp;2010, the Company announced a share repurchase program to repurchase up to $10.0&nbsp;million of
its outstanding common shares. Pursuant to the plan, the Company repurchased 342,045 shares for
approximately $2.2&nbsp;million through September&nbsp;30, 2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During 2010, options to purchase 690,740 shares of common stock were exercised. In connection with
these exercises, 17,946 shares of mature stock were tendered as consideration for the exercise
price and minimum statutory tax withholding requirements. The exercise of these options created a
tax deduction of approximately $5.0&nbsp;million, of which approximately $2.6&nbsp;million was used to offset
the estimated tax liability arising from the results of operations for the nine months ended
September&nbsp;30, 2010. As of September&nbsp;30, 2010, the Company has unrecognized tax deductions of
approximately $67.9&nbsp;million that will be recognized when the deduction reduces income taxes
payable.
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(6)&nbsp;COLLABORATIVE AGREEMENTS</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company is a party to several collaborative arrangements with certain research institutions to
identify and pursue promising pre-clinical pharmaceutical product candidates. The Company has
determined these collaborative agreements do not meet the criteria for accounting under Accounting
Standards Codification 808, Collaborative Agreements. The agreements do not specifically designate
each party&#146;s rights and obligations to each other under the collaborative arrangements. Except for
patent defense costs, expenses incurred by one party are not required to be reimbursed by the other
party. The funding for these programs is generally provided through private sector investments or
federal Small Business (SBIR/STTR) grant programs. Expenses incurred under these collaborative
agreements are included in research and development expenses in the condensed consolidated
statements of income. Funding received from private sector investments and grants are recorded as
net revenues in the condensed consolidated statements of income.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(7)&nbsp;SUBSEQUENT EVENTS</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Pursuant to our share repurchase plan announced in May&nbsp;2010, the Company repurchased an additional
50,921 shares for approximately $0.3&nbsp;million for the period from October&nbsp;1, 2010 to November&nbsp;8,
2010. The weighted-average repurchase price was $6.43 per share.
</DIV>

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<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following discussion contains certain forward-looking statements which reflect management&#146;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. We caution you that our actual results may differ significantly from the results we discuss
in these forward looking statements. Some important factors which may cause results to differ from
expectations include: availability of additional debt and equity capital required to finance the
business model; market conditions at the time additional capital is required; our ability to
continue to acquire branded products; product sales; and management of our growth and integration
of potential acquisitions. Other important factors that may cause actual results to differ
materially from forward-looking statements are discussed in &#147;Risk Factors&#148; on pages 20 through 32
and &#147;Special note regarding forward-looking statements&#148; on page 32 of our Annual Report on Form
10-K for the year ended December&nbsp;31, 2009. The Company does not undertake to publicly update or
revise any of its 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&#146;s discussion and analysis of financial condition and results of operations should be
read in conjunction with the Company&#146;s unaudited condensed consolidated financial statements and
related notes thereto included in this Form 10-Q.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>OVERVIEW</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Our Business</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are a profitable and growing specialty pharmaceutical company focused on the acquisition,
development and commercialization of branded prescription products. Our primary target markets are
hospital acute care and gastroenterology, which are characterized by concentrated physician bases
that we believe can be penetrated effectively by relatively small, targeted sales forces.
Cumberland is dedicated to providing innovative products which improve quality of care for
patients.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our product portfolio includes Acetadote<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> (<I>acetylcysteine</I>) Injection for the treatment
of acetaminophen poisoning, Caldolor<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> (<I>ibuprofen</I>) Injection, the first injectable
treatment for pain and fever approved in the United States, and Kristalose<SUP style="FONT-size: 85%; vertical-align: text-top">&#174;</SUP> (<I>lactulose</I>)
for Oral Solution, a prescription laxative. We market and sell our products through our hospital
and field sales forces in the United States and are working with partners to reach international
markets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We have both product development and commercialization capabilities, and believe we can leverage
our existing infrastructure to support our projected growth. Our management team consists of
pharmaceutical industry veterans experienced in business development, product development, sales
and marketing and finance and accounting. Our internal product development and regulatory
executives develop proprietary product formulations, design and manage our clinical trials, prepare
all regulatory submissions and manage our medical call center. Cumberland&#146;s operations and quality
affairs professionals play an active role in the manufacture of our products through our
manufacturing partners. All aspects of commercialization are handled by our sales and marketing
professionals, and we work closely with our distribution partner to make our products available
across the United States.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We became profitable in 2004, and since then have generated sufficient cash flows to fund our
development and marketing programs. In 2009, we completed an initial public offering of our common
stock to help facilitate further growth.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Growth Strategy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our growth strategy involves maximizing the potential of our existing products and continuing to
build a portfolio of new, differentiated products. Specifically, we expect to grow by executing the
following plans:
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We market our products in the United States through a comprehensive marketing and
promotional effort, and we are working to bring our products to select international
markets &#151; with our first international launch occurring in the third quarter of 2010.</TD>
</TR>

</TABLE>
</DIV><P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">


<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We look for opportunities to expand into additional patient populations with new product
indications, whether through our own development work or by supporting promising
investigator-initiated studies at research institutions.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We actively pursue opportunities to acquire additional late-stage development product
candidates as well as marketed products in our target medical specialties.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We are supplementing the aforementioned growth tactics with the early-stage drug
development activities of Cumberland Emerging Technologies, Inc. (CET), our majority-owned
subsidiary. CET partners with university research centers to identify and cost-effectively
develop promising early-stage product candidates, which Cumberland Pharmaceuticals has the
opportunity to commercialize.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We were incorporated in 1999 and have been headquartered in Nashville, Tennessee since inception.
Our website address is www.cumberlandpharma.com. We make available through our website our annual
reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any
amendments, as well as other documents, as soon as reasonably practicable after their filing with
the SEC. These filings are also available to the public through the Internet by the SEC at
www.sec.gov.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Recent Developments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Submission of Application for New Formulation of Acetadote</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In October&nbsp;2010, we submitted an application to the U.S. Food and Drug Administration (FDA)&nbsp;for
approval of a new formulation of Acetadote. The new formulation is designed to replace the
currently marketed product and is the result of our commitment to further developing our products,
whether to expand into new patient populations or to improve upon our products. We believe the
testing and manufacturing work we undertook with this new formulation of Acetadote demonstrates
that it offers improvements over the currently marketed product and, upon potential approval by the
FDA, plan to introduce it to the hospital community.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We expect to receive a response from the FDA in January&nbsp;2011 and, if the new formulation is
approved, would commence with the new product launch immediately. We have also filed a patent
application with the U.S. Patent and Trademark Office to protect the proprietary new formulation.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Supplemental New Drug Applications for Acetadote</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In March&nbsp;2010, we submitted a supplemental new drug application (sNDA) to the FDA for the use of
Acetadote in patients with non-acetaminophen acute liver failure. The sNDA includes data from a
clinical trial led by investigators at the University of Texas Southwestern Medical Center
indicating that acute liver failure patients treated with Acetadote have a significantly improved
chance of survival without a transplant. The study showed that these patients can also survive a
significant number of days longer without transplant, which would provide patients requiring
transplant increased time for a donor organ to become available.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Acute liver failure is associated with a high mortality rate and frequent need for liver
transplantation. Approximately half of acute liver failure cases are caused by acetaminophen
poisoning while the other half result from a variety of causes including hepatitis and alcohol.
Currently, transplantation of the liver is the only treatment for patients with liver failure not
caused by acetaminophen overdose.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In May&nbsp;2010, the FDA officially accepted the sNDA and granted a priority review with a response
expected in September&nbsp;2010. In August&nbsp;2010, we announced that the FDA extended its review of the
sNDA by three months, resulting in a new Prescription Drug User Fee Act (PDUFA)&nbsp;goal date in
December&nbsp;2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In addition to expanded labeling for Acetadote, we have requested additional exclusivity for the
product. As discussed in our Annual Report on Form 10-K for the year ended December&nbsp;31, 2009, our
original market exclusivity continues until January&nbsp;2011.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Launch of Acetadote in Australia</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In April&nbsp;2010, the Therapeutic Goods Administration granted approval to our partner Phebra Pty
Ltd., an Australian-based specialty pharmaceutical company, for the commercialization of Acetadote
in Australia. In October&nbsp;2010, Phebra commenced with the Australian launch of Acetadote and began
reaching out to hospitals to promote wide distribution of the product. This introduction of
Acetadote in Australia marked Cumberland&#146;s entry into international markets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In addition to Australia, Phebra has exclusive marketing rights to Acetadote for New Zealand and
has obtained marketing approval in that country. Phebra is also our marketing partner for Acetadote
in certain Asia Pacific markets, and continues to work toward obtaining approval for the product in
those areas.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Under our agreement, Phebra is responsible for ongoing regulatory requirements, marketing,
distribution and sales of Acetadote while we maintain responsibility for product formulation,
development and manufacturing. In exchange for the product license, we receive upfront and
milestone payments, a transfer price and royalties on future sales.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Transfer of License Rights</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">As previously reported, CET entered into an agreement with Vanderbilt University to license a new
product candidate. In the third quarter of 2010, Cumberland Pharmaceuticals entered into an
agreement with CET to assume the rights and responsibilities associated with the product candidate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>RECENT LEGISLATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On March&nbsp;23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act,
or PPACA. On March&nbsp;30, 2010, the Health Care and Education Reconciliation Act of 2010, or HCERA,
was enacted into law, which modified the revenue provisions of the PPACA. The PPACA as amended by
the HCERA constitutes the healthcare reform legislation. The following highlights certain
provisions of the legislation that may affect us in the future.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Pharmaceutical Industry Fee</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Beginning in calendar-year 2011, an annual fee will be imposed on pharmaceutical manufacturers and
importers that sell branded prescription drugs to specified government programs (e.g., Medicare
Part&nbsp;D, Medicare Part&nbsp;B, Medicaid, Department of Veterans Affairs programs, Department of Defense
programs and TRICARE). The annual fee will be allocated to companies based on their previous
calendar-year market share using sales data that the government agencies that purchase the
pharmaceuticals will provide to the Treasury Department. Although we participate in governmental
programs that would subject us to this fee, our sales volume in such programs is less than $10
million, with the first $5&nbsp;million of sales being exempt from the fee. We do not anticipate this
fee will have a material impact on our results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Medicaid Rebate Rate</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We currently provide rebates for Kristalose sold to Medicaid beneficiaries. Effective January&nbsp;1,
2010, the rebate increased from eleven percent to thirteen percent of the average manufacturer
price. Our sales of Kristalose under the Medicaid program have been increasing. We expect the
increased rebate percentage will impact our net revenue for Kristalose by less than $0.1&nbsp;million
for the year ended December&nbsp;31, 2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Therapeutic Discovery Project Credit</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The legislation established a fifty-percent nonrefundable investment tax credit or grant for
qualified investments in qualifying therapeutic discovery projects. The provision allocates $1
billion during the two-year period (2009-2010) for the program. The credit is available only to
companies with 250 or fewer employees. The qualified investment for any tax year is the aggregate
amount of the costs paid or incurred in that year for expenses necessary for and directly related
to the conduct of the qualifying therapeutic discovery project. We submitted applications for four
of our research projects prior to the
deadline of July&nbsp;21, 2010. In November&nbsp;2010, we received a response from the Internal Revenue
Service indicating that all four projects were approved. We have the ability to receive grants of
up to approximately $860,000 based on actual 2009 and 2010 expenditures. We anticipate receiving
these funds in late 2010 or early 2011.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Please see a discussion of our critical accounting policies and significant judgments and estimates
on pages 39 through 42 in &#147;Management&#146;s discussion and analysis&#148; of our Annual Report on Form 10-K
for the year ended December&nbsp;31, 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Accounting Estimates and Judgments</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The preparation of consolidated financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates, judgments and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the period. We
base our estimates on past experience and on other factors we deem reasonable given the
circumstances. Past results help form the basis of our judgments about the carrying value of assets
and liabilities that are not determined from other sources. Actual results could differ from these
estimates. These estimates, judgments and assumptions are most critical with respect to our
accounting for revenue recognition, provision for income taxes, stock-based compensation, research
and development accounting and intangible assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>RECENTLY ISSUED ACCOUNTING STANDARDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In March&nbsp;2010, the Financial Accounting Standards Board, or FASB, issued guidance providing for the
recognition of revenue using the milestone method. Under this new guidance, an entity can
recognize revenue associated with milestones if the milestones are substantive and there is
substantive uncertainty about whether the milestone will be achieved. To meet the definition of a
substantive milestone, the consideration earned by achieving the milestone (1)&nbsp;would have to be
commensurate with either the level of effort required to achieve the milestone or the enhancement
in the value of the item delivered, (2)&nbsp;would have to relate solely to past performance and (3)
should be reasonable relative to all deliverables and payment terms in the arrangement. The new
guidance is effective for our third quarter ended September&nbsp;30, 2010. The adoption of this
guidance did not have a material impact on our consolidated financial position or results of
operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In October&nbsp;2009, the FASB issued guidance setting forth requirements that must be met for an entity
to recognize revenue from the sale of a delivered item that is part of a multiple-element
arrangement when other items have not yet been delivered. The overall arrangement fee will be
allocated to each element based on their relative selling prices. If an entity does not have a
selling price for an element, then management must estimate the selling price. This guidance is
effective for us for all revenue arrangements entered into or materially modified after January&nbsp;1,
2011. Early adoption is permitted. The future impact of adopting this standard will depend on the
nature and extent of transactions covered by this standard.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>RESULTS OF OPERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Three months ended September&nbsp;30, 2010 compared to the three months ended September&nbsp;30, 2009</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Net revenues. </I>Net revenues for the three months ended September&nbsp;30, 2010 totaled approximately
$12.2&nbsp;million, representing a decrease of approximately $1.4&nbsp;million, or 10%, over the same period
in 2009. With the initial launch of Caldolor in the third quarter of 2009, which represented
approximately $3.2&nbsp;million of net revenue, we achieved our goal of national distribution of
Caldolor with our wholesalers in preparation of the launch. Acetadote revenue for the three months
ended September&nbsp;30, 2010 increased $1.9&nbsp;million as compared to the same period in 2009 and
Kristalose revenue remained consistent between the periods. Also impacting net revenue was an
increase in our gross-to-net revenue
adjustments associated with expired products, rebates for state and managed-care activity and fee
for service arrangements.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During the second quarter of 2009, we expanded our hospital sales force in connection with the
commercial launch of Caldolor. In addition to the expansion of our hospital sales force, we
realigned our field sales force to enable them to also promote Caldolor in the surgery-center
market. The sales forces have been working diligently in the continued promotion of Caldolor while
maintaining a consistent level of focus on Acetadote and Kristalose, which is evidenced by the
sales performance of these two products.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Cost of products sold</I>. Cost of products sold as a percentage of net revenues decreased from 13.0%
for the three months ended September&nbsp;30, 2009 to 7.5% for the same period in 2010. The decrease in
cost of products sold as a percentage of net revenues was primarily due to the sales mix in the
periods.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Research and development. </I>Research and development expense for the three months ended September
30, 2010 totaled approximately $1.1&nbsp;million, representing an increase of approximately $0.5
million, or 78%, over the same period in 2009. The increase was primarily due to additional costs
incurred in 2010 related to annual FDA product and establishment fees and increased costs related
to development efforts for our products and product candidates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>General and administrative. </I>General and administrative expense for the three months ended September
30, 2010 totaled approximately $1.8&nbsp;million, representing a decrease of approximately $0.7&nbsp;million,
or 29%, over the same period in 2009. The decrease is primarily due to the inclusion in 2009 of
approximately $1.0&nbsp;million of payroll tax associated with the exercise of nonqualified stock
options by an employee, offset by increased expenses of being an SEC registrant, including legal,
accounting and insurance costs. In addition, we incurred additional foreign currency expense
associated with our products bought from overseas suppliers in 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Interest expense. </I>Interest expense for the three months ended September&nbsp;30, 2010 totaled
approximately $0.5&nbsp;million, representing an increase of approximately $0.3&nbsp;million as compared to
the same period in 2009. The increase is primarily attributable to the inclusion in 2010 of
approximately $0.1&nbsp;million of deferred financing costs and approximately $0.2&nbsp;million of prepayment
fees associated with the early extinguishment and modification of our term debt facility in
September&nbsp;2010. As noted in footnote 4 to the condensed consolidated financial statements included
herein, we amended our debt facility with Bank of America, N.A. in September&nbsp;2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Income tax expense</I>. Income tax expense for the three months ended September&nbsp;30, 2010 totaled
approximately $0.9&nbsp;million, representing an increase of $0.1&nbsp;million over the same period in 2009.
As a percentage of income before income taxes, income tax expense increased from 40.0% for the
three months ended September&nbsp;30, 2009 to 48.5% for the three months ended September&nbsp;30, 2010. The
increase in the percentage was due to an increase in our projected tax rate for 2010 as a result of
an increase in our permanent differences, primarily option expense for incentive stock options,
relative to our income before income taxes.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During 2009 and 2010, significant stock options were exercised that resulted in an excess tax
benefit to the Company. As of September&nbsp;30, 2010, we have approximately $67.9&nbsp;million of these tax
deductions available to us that will be used to offset future income tax liabilities. In
accordance with current accounting pronouncements, these deductions have not been recognized in the
condensed consolidated balance sheet as of September&nbsp;30, 2010. We will recognize the tax benefits
in future periods when they are used to offset taxes payable. We expect our cash outflow related
to income tax payments to be minimal during 2010 and 2011.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Nine months ended September&nbsp;30, 2010 compared to the nine months ended September&nbsp;30, 2009</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Net revenues. </I>Net revenues for the nine months ended September&nbsp;30, 2010 totaled approximately $33.1
million, representing an increase of approximately $0.2&nbsp;million, or 1%, over the same period in
2009. Net revenue increased $3.6&nbsp;million for Acetadote and decreased $0.1&nbsp;million and $3.2&nbsp;million
for Kristalose and Caldolor, respectively. During the third quarter of 2009, we achieved our goal
of national distribution of Caldolor with our wholesalers in preparation of the launch. The
increase in Acetadote revenue was positively impacted by a 5% increase in volume and an increase in
the average selling price, offset by an
increase in fee-for-service deductions due to additional arrangements with our wholesalers. While
Kristalose gross revenue increased, net revenue was impacted by an increase in the gross-to-net
revenue deductions primarily associated with rebates and expired product returns. Additionally, in
the third quarter of 2009, we completed the commercial launch of Caldolor, and recognized $3.2
million of net revenue in 2009. Our sales forces continue to maintain a consistent level of focus
on Acetadote and Kristalose while they progress the promotion of Caldolor.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">




<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Cost of products sold</I>. Cost of products sold as a percentage of net revenues decreased from 10.0%
for the nine months ended September&nbsp;30, 2009 to 8.0% for the same period in 2010. This decrease was
primarily due to the sales mix in the periods.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Selling and marketing</I>. Selling and marketing expense for the nine months ended September&nbsp;30, 2010
totaled approximately $17.1&nbsp;million, representing an increase of approximately $2.5&nbsp;million, or
17%, over the same period in 2009. The increase was primarily due to the expansion of our hospital
sales force during the third quarter of 2009, and the resulting increases in payroll and related
taxes, travel, meals and promotional activities. These increases were offset by a decrease in
market research, advertising, hiring and meeting expenses related to Caldolor in 2010 as compared
to the significant investment made in 2009 related to the Caldolor launch.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Research and development. </I>Research and development expense for the nine months ended September&nbsp;30,
2010 totaled approximately $2.9&nbsp;million, representing a decrease of approximately $1.1&nbsp;million, or
27%, over the same period in 2009. The decrease was primarily due to the inclusion in 2009 of
approximately $2.0&nbsp;million of milestone expenses incurred upon the FDA approval of Caldolor in June
2009. This decrease was offset by additional costs incurred in 2010 related to annual FDA product
and establishment fees, increased salary and related expenses resulting from an increase in
personnel and increased costs related to furthering our development efforts for our products and
product candidates.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>General and administrative. </I>General and administrative expense for the nine months ended September
30, 2010 totaled approximately $5.5&nbsp;million, representing an increase of approximately $0.3
million, or 5%, over the same period in 2009. The increase is primarily due to additional expenses
associated with being an SEC registrant, including legal, accounting and insurance costs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Interest income. </I>Interest income for the nine months ended September&nbsp;30, 2010 totaled
approximately $0.2&nbsp;million, representing an increase of approximately $0.1&nbsp;million, or 280%, over
the same period in 2009. The increase was primarily due to the higher cash balances maintained in
2010 as a result of the proceeds received from the initial public offering in the third quarter of
2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Interest expense. </I>Interest expense for the nine months ended September&nbsp;30, 2010 totaled
approximately $1.3&nbsp;million, representing an increase of approximately $0.9&nbsp;million as compared to
the same period in 2009. The increase is primarily attributable to (1)&nbsp;an average higher
outstanding debt balance in 2010 as compared to 2009 and (2)&nbsp;the inclusion of approximately $0.1
million of deferred financing costs and approximately $0.2&nbsp;million of prepayment fees associated
with the early extinguishment and amendment of our term debt facility in September&nbsp;2010. As noted
in footnote 4 to the condensed consolidated financial statements included herein, we amended our
debt facility with Bank of America, N.A. in September&nbsp;2010.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Income tax expense</I>. Income tax expense for the nine months ended September&nbsp;30, 2010 totaled
approximately $1.5&nbsp;million, representing a decrease of approximately $0.4&nbsp;million, over the same
period in 2009. As a percentage of income before income taxes, income tax expense increased from
40.9% for the nine months ended September&nbsp;30, 2009 to 49.0% for the nine months ended September&nbsp;30,
2010. The increase in the percentage was due to an increase in our projected tax rate for 2010 as a
result of an increase in our permanent differences, primarily option expense for incentive stock
options, relative to our income before income taxes.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">




<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>LIQUIDITY AND CAPITAL RESOURCES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Working Capital</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Our primary sources of liquidity are cash flows provided by our operations, our borrowings and the
cash proceeds from our initial public offering of common stock that was completed in August&nbsp;2009.
We believe that our internally generated cash flows, amounts available under our credit facilities
and cash on hand will be adequate to service existing debt, finance internal growth and fund
capital expenditures. As of September&nbsp;30, 2010 and December&nbsp;31, 2009, cash and cash equivalents was
$65.5&nbsp;million and $78.7&nbsp;million, respectively, working capital (current assets minus current
liabilities) was $70.0&nbsp;million and $74.5&nbsp;million, respectively, and our current ratio (current
assets to current liabilities) was 8.1x and 5.0x, respectively. As of September&nbsp;30, 2010, we had an
additional $4.2&nbsp;million available to us under our line of credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The information included in footnote 4 to the condensed consolidated financial statements included
herein is hereby incorporated by reference into this Item.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following table summarizes our net changes in cash and cash equivalents for the nine months
ended September&nbsp;30, 2010 and 2009:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Nine Months Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">(in thousands)</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,924</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(443</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(271</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,773</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,059</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net (decrease)&nbsp;increase in cash and cash equivalents <SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(13,183</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">67,712</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left"><DIV style="FONT-size: 3pt; margin-top: 13pt; width: 18%; border-bottom: 1px solid #000000">&nbsp;</DIV></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The sum of the individual amounts may not agree due to rounding.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The net decrease in cash and cash equivalents of $13.2&nbsp;million for the nine months ended September
30, 2010 was primarily due to cash used in financing activities, which included (1)&nbsp;principal
payments on our term debt of $12.0&nbsp;million, (2)&nbsp;the repurchase of common stock of approximately
$4.1&nbsp;million. These expenditures were offset by proceeds from the exercise of stock options of
approximately $1.2&nbsp;million and the excess tax benefit derived from the exercise of nonqualified
options of approximately $1.3&nbsp;million. Cash provided by operating activities for the nine months
ended September&nbsp;30, 2010 was primarily due to net income for the period and the collection of the
receivables associated with these sales.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The net increase in cash and cash equivalents of $67.7&nbsp;million for the nine months ended September
30, 2009 was primarily due to the net cash proceeds from our initial public offering in August&nbsp;2009
offset by the repurchase of common shares associated with the tendering of shares to settle the
minimum statutory tax withholding requirement resulting from the exercise of nonqualified options
by an employee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The share repurchase program discussed in Part&nbsp;II, Item&nbsp;2, is incorporated by reference into this
Item.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>OFF-BALANCE SHEET ARRANGEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During the nine months ended September&nbsp;30, 2010, the Company did not engage in any off-balance
sheet arrangements.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">



<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;3: Quantitative and Qualitative Disclosure about Market Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Interest Rate Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We are exposed to market risk related to changes in interest rates on our revolving credit facility
and our term note payable. We do not utilize derivative financial instruments or other market
risk-sensitive instruments to manage exposure to interest rate changes. The main objective of our
cash investment activities is to preserve principal while maximizing interest income through
low-risk investments.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The interest rate related to borrowings under our revolving credit facility and term debt is a
variable rate of LIBOR plus an Applicable Margin, as defined in the debt agreement (5.76% at
September&nbsp;30, 2010). As of September&nbsp;30, 2010, we had outstanding borrowings of approximately
$7.8&nbsp;million under our revolving credit facility and term debt combined. If interest rates
increased by 1.0%, our annual interest expense on our borrowings would increase by approximately
$0.1&nbsp;million.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Exchange Rate Risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">While we operate primarily in the U.S., we are exposed to foreign currency risk. Acetadote is
manufactured by a supplier that denominates supply prices in Canadian dollars. One of our supply
agreements for Caldolor is denominated in Australian dollars. Additionally, some of our research
and development is performed abroad. As of September&nbsp;30, 2010, our outstanding payables denominated
in a foreign currency totaled $0.1&nbsp;million.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Currently, we do not utilize financial instruments to hedge exposure to foreign currency
fluctuations. We believe our exposure to foreign currency fluctuation is minimal as our purchases
in foreign currency have a maximum exposure of 90&nbsp;days based on invoice terms, with much of the
exposure being limited to 30&nbsp;days based on the due date of the invoice. Foreign currency exchange
gains and losses were not significant for the nine months ended September&nbsp;30, 2010. Neither a 10%
increase nor decrease from current exchange rates would have a significant effect on our operating
results or financial condition.
</DIV>

<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;4: Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Company&#146;s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness
of the design and operation of the Company&#146;s disclosure controls and procedures as of September&nbsp;30,
2010. Based on that evaluation, they have concluded that the Company&#146;s disclosure controls and
procedures are effective to ensure that material information relating to the Company and the
Company&#146;s consolidated subsidiaries is made known to officers within these entities in order to
allow for timely decisions regarding required disclosure.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">During the Company&#146;s third quarter of 2010, there have been no changes in the Company&#146;s internal
controls over financial reporting (as defined in Rule&nbsp;13a-15(f) or 15d-15(f)).
</DIV>

<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PART II &#151; OTHER FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;1a: Risk Factors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Information regarding risk factors appears on pages 20 through 32 in our Annual Report on Form 10-K
for the year ended December&nbsp;31, 2009 under the sections titled &#147;Risk Factors.&#148; There have been no
material changes from the risk factors previously discussed therein.
</DIV>

<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;2: Unregistered Sales of Equity Securities and Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">On August&nbsp;10, 2009, our Registration Statement on Form S-1 (File No.&nbsp;333-142535) for 5,000,000
shares of common stock was declared effective for the Company&#146;s initial public offering. As of
September&nbsp;30, 2010, we have used approximately $4.2&nbsp;million of the net proceeds to pay off existing
term debt with Bank of America and approximately $13.3&nbsp;million for the launch of Caldolor,
including $7.0&nbsp;million for marketing and commercialization and approximately $6.3&nbsp;million for the
expansion of our sales force, and
approximately $1.6&nbsp;million for ongoing clinical work, product development and other costs related
to Caldolor. The remaining proceeds have been invested in money market accounts. There have been
no material changes in the planned expected use of the net proceeds from the offering.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">




<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Purchases of Equity Securities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following table summarizes the purchase of equity securities by the Company during the three
months ended September&nbsp;30, 2010:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Maximum Number</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(or Approximate</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Dollar Value) of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares (or Units)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares (or Units)</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Purchased as Part</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>that May Yet Be</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares (or</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price Paid</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of Publicly</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Purchased Under</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Units)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>per Share</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Announced Plans</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>the Plan or</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Purchased</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(or Unit)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>or Programs</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Programs</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July 1 &#150; July 31</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,819</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">301,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">8,007,858</TD>
    <TD nowrap><SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August 1 &#150; August 31</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September 1 &#150; September 30</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">342,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,784,699</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>On May&nbsp;13, 2010, we announced a share repurchase program to purchase up to $10&nbsp;million of
our common stock pursuant to Rule&nbsp;10b-18 of the Securities Act.</TD>
</TR>

</TABLE>

<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Item&nbsp;6: Exhibits</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="86%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>No.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.18</TD>
    <TD nowrap valign="top">#</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2007 Long-Term Incentive Compensation Plan of Cumberland Pharmaceuticals Inc., as amended on
November&nbsp;4, 2010</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Executive Officer Pursuant to Rule&nbsp;13-14(a) of the Securities Exchange
Act of 1934 as Adopted Pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Financial Officer Pursuant to Rule&nbsp;13-14(a) of the Securities Exchange
Act of 1934 as Adopted Pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">32.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.
Section&nbsp;1350, as Adopted Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left"><DIV style="FONT-size: 3pt; margin-top: 13pt; width: 18%; border-bottom: 1px solid #000000">&nbsp;</DIV></DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">#</TD>
    <TD>&nbsp;</TD>
    <TD>Indicates a management contract or compensatory plan.</TD>
</TR>

</TABLE>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">





<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
</DIV>


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Cumberland Pharmaceuticals Inc.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated: November 15, 2010&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left"><I>/s/ A. J. Kazimi</I>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">A. J. Kazimi&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">Dated:      November 15, 2010&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left"><I>/s/ David L. Lowrance</I>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">David L. Lowrance&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" nowrap>Vice President and
Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>2
<FILENAME>c08393exv10w18.htm
<DESCRIPTION>EXHIBIT 10.18
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 10.18</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;10.18</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><IMG src="c08393c0839301.gif" alt="(CUMBERLAND LOGO)">
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>2007 LONG-TERM INCENTIVE COMPENSATION PLAN,<BR>
AS AMENDED ON NOVEMBER 4, 2010</B>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>CUMBERLAND PHARMACEUTICALS INC.</B></U><BR>
<U><B>2007 LONG-TERM INCENTIVE COMPENSATION PLAN, </B></U><BR>
<U><B>AS AMENDED ON NOVEMBER 4, 2010</B></U>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Table of Contents</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>1. Definitions</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2. Incentives</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>3. Administration</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>4. Eligibility/Forfeiture in the Event of Termination for Cause</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>5. Qualified Performance-Based Incentives</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>6. Shares Available for Incentives and Limits on Incentives</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>7. Effect of Employment Termination on Options and SARs</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>8. Options</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>9. Stock Appreciation Rights (&#147;SARs&#148;)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>10. Restricted Stock</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>11. Acquisition and Change of Control Events</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>12. Discontinuance or Amendment of the Plan</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>13. Nontransferability</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>14. No Right of Employment</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>15. Taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>16. Governing Law</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>17. &#147;Lockup&#148; Agreement</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>18. Limitation of Liability</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>19. Unfunded Status of Incentives</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>20. Nonexclusivity of the Plan</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>21. Successors and Assigns</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>22. Severability</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>23. Miscellaneous</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->i<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><U><B>CUMBERLAND PHARMACEUTICALS INC.</B></U><BR>
<U><B>2007 LONG-TERM INCENTIVE COMPENSATION PLAN, </B></U><BR>
<U><B>AS AMENDED ON NOVEMBER 4, 2010</B></U>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This Cumberland Pharmaceuticals Inc. 2007 Long-Term Incentive Compensation Plan, as amended on
November&nbsp;4, 2010 (the &#147;Plan&#148;), effective November&nbsp;4, 2010, is established primarily to encourage
employees and Consultants of Cumberland Pharmaceuticals Inc. (the &#147;Company&#148;), its Affiliates, and
its joint ventures to acquire Stock and other equity-based interests in the Company. It is believed
that the Plan will stimulate employees&#146; and Consultants&#146; efforts on the Company&#146;s behalf, will tend
to maintain and strengthen their desire to remain with the Company, will be in the interest of the
Company and its shareholders, and will encourage such employees and Consultants to have greater
personal financial investment in the Company through ownership of its Stock. The Plan supersedes
and replaces the Cumberland Pharmaceuticals Inc. 1999 Stock Option Plan (the &#147;Original Incentive
Plan&#148;) but does not impair the vesting or exercise of any option granted under the Original
Incentive Plan prior to the date that this Plan became effective.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>1. Definitions</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Affiliate&#148; shall have the meaning assigned to the term pursuant to Rule&nbsp;12b-2 as promulgated
under the Exchange Act.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Blackout Period&#148; means any period self-imposed by the Company or required under applicable
law that restricts the purchase and sale of the Stock by designated persons for a period of time.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The &#147;Board&#148; means the Board of Directors of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Cause&#148; shall mean: (a)&nbsp;theft of property belonging to the Company or one of its Affiliates
(including but not limited to trade secrets and confidential information); (b)&nbsp;fraud on the Company
or one of its Affiliates; (c)&nbsp;conviction of, or pleading &#147;no contest&#148; to, a felony committed while
employed by or consulting for the Company or one of its Affiliates; (d)&nbsp;breach of fiduciary duty to
the Company or one of its Affiliates; or (e)&nbsp;deliberate, willful or gross misconduct related to the
Company or an Affiliate.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The &#147;Code&#148; means the Internal Revenue Code of 1986, as amended, or any successor code thereto.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The &#147;Committee&#148; means the Compensation Committee of the Board of Directors of the Company.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The &#147;Company&#148; means Cumberland Pharmaceuticals Inc.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Consultant&#148; means a person engaged to provide consulting or advisory services (other than as
an Employee or a member of the Board) to the Company or one of its
Affiliates or joint ventures, provided that the identity of such person, the nature of such
services or the Person to which such services are provided would not preclude the Company from
offering or selling securities to such person pursuant to the Plan in reliance on registration on a
Form S-8 Registration Statement under the Securities Act.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Covered Employee&#148; means an employee, as described in Section 162(m) of the Code and the
associated Treasury regulations, who, on the last day of the Company&#146;s taxable year, is either the
Company&#146;s Chief Executive Officer or among the four highest compensated employees of the Company or
one of its Affiliates.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Division&#148; means a section of the Company or an Affiliate.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Eligible Employee&#148; means a regular full-time or part-time employee of one of the Related
Entities, including officers, whether or not under direction of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Employment Termination&#148; means termination of the employment of an individual who is employed
by one of the Related Entities, provided that termination of an individual from a Related Entity
for the purpose of immediately transferring such individual to another Related Entity shall not
constitute &#147;Employment Termination&#148; for purposes of this Plan.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Exchange Act&#148; shall mean the Securities Exchange Act of 1934, as amended.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Fair Market Value&#148; means (i)&nbsp;if the Stock or other security is listed on an established stock
exchange or any automated quotation system that provides sale quotations, the closing sale price
for a share thereof on such exchange or quotation system on the applicable date, and if shares are
not traded on such day, on the next preceding trading date, (ii)&nbsp;if the Stock or other security is
not listed on any exchange or quotation system, but bid and asked prices are quoted and published,
the mean between the quoted bid and asked prices on the applicable date, and if bid and asked
prices are not available on such day, on the next preceding day on which such prices were
available, and (iii)&nbsp;if the Stock or other security is not regularly quoted, the fair market value
of a share thereof on the applicable date as established by the Committee in good faith. For
purposes of awards effective as of the effective date of the Company&#146;s initial public offering,
Fair Market Value of Stock shall be the price at which the Stock is offered to the public in its
initial public offering.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Incentive Option&#148; means an Option that by its terms is to be treated as an &#147;incentive stock
option&#148; within the meaning of Section&nbsp;422 of the Code.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Incentives&#148; means awards made under this Plan of any of the following, or any combination of
the following: (a)&nbsp;Options (including both Incentive Options and Nonstatutory Stock Options); (b)
Stock Appreciation Rights; and (c)&nbsp;Restricted Stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Nonstatutory Stock Option&#148; means any Option that is not an Incentive Option.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Option&#148; means an option to purchase one or more shares of the Company&#146;s Stock.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Participant&#148; means any holder of an Incentive awarded under the Plan.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Performance Criteria&#148; means the criteria that the Committee selects for purposes of
establishing the Performance Goal or Performance Goals for a Covered Employee for a Performance
Period. The Performance Criteria used to establish Performance Goals include but are not limited
to: pre- or after-tax net earnings, sales growth, operating earnings, operating cash flow, return
on net assets, return on shareholders&#146; equity, return on assets, return on capital, stock price
growth, shareholder returns, gross or net profit margin, earnings per share, price per share of
stock, and market share, any of which may be measured either in absolute terms or as compared to
any incremental increase or as compared to results of a peer group. The Committee will, within the
time prescribed by Section 162(m) of the Code, objectively define the manner of calculating the
Performance Criteria it selects to use for such Performance Period for Covered Employees who
received Qualified Performance-Based Incentives.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Performance Goals&#148; means, for a Performance Period, the written goals established by the
Committee for the Performance Period based upon the Performance Criteria. Depending on the
Performance Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of an Affiliate or Division or
a joint venture of which the Company or an Affiliate is a member.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Performance Period&#148; means the one or more periods of time, which may be of varying and
overlapping durations, selected by the Committee, over which the attainment of one or more
Performance Goals will be measured for purposes of determining a Covered Employee&#146;s right to, and
the payment of, a Qualified Performance-Based Incentive.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Plan&#148; shall refer to the Cumberland Pharmaceuticals Inc. 2007 Long-Term Incentive
Compensation Plan, as amended on November&nbsp;4, 2010 described in this document.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Qualified Performance-Based Incentives&#148; means awards of Incentives intended to qualify as
&#147;performance-based compensation&#148; under Section 162(m) of the Code.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Related Entities&#148; shall refer to the Company and its Affiliates and to joint ventures in
which the Company or one of its Affiliates is a member.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Restricted Stock&#148; means shares of Stock granted to a Participant subject to a Risk of
Forfeiture.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Restriction Period&#148; means the period of time, established by the Committee in connection with
an award of Restricted Stock, during which the shares of Restricted Stock are subject to a Risk of
Forfeiture described in the applicable award agreement.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Risk of Forfeiture&#148; means a limitation on the right of the Participant to retain Restricted
Stock, including a right in the Company to reacquire shares of Restricted Stock at less than their
then Fair Market Value, arising because of the occurrence or non-occurrence of specified events or
conditions.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;SARs&#148; shall refer to Stock Appreciation Rights.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Securities Act&#148; shall mean the Securities Act of 1933, as amended.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Stock&#148; shall refer to one or more shares of the Company&#146;s Stock.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Terminated Employee&#148; means an individual who meets the following criteria:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;the individual is granted Incentives under this Plan at a time when he or she is employed
by one of the Related Entities; and
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;the individual is thereafter terminated from a Related Entity due to: (i)&nbsp;such person&#146;s
voluntary resignation, retirement, death, or extended absence from work as a consequence of
disability; (ii)&nbsp;a reduction in force; (iii)&nbsp;a termination without Cause; or (iv)&nbsp;any other reason
not covered by subsection 4(b) below, provided that an individual who is terminated merely for
purposes of transferring such individual from one Related Entity to another shall not constitute a
&#147;Terminated Employee&#148; for purposes of this definition.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">&#147;Stock Appreciation Right&#148; means a right to receive any excess in the Fair Market Value of
shares of Stock over a specified exercise price.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>2. Incentives</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Incentives under the Plan may be granted to Eligible Employees in any one or a combination of:
(a)&nbsp;Incentive Options (or other statutory stock option); (b)&nbsp;Nonstatutory Stock Options; (c)&nbsp;SARs;
and (d)&nbsp;Restricted Stock. Incentives under the Plan may be granted to Consultants in any one or a
combination of: (a)&nbsp;Nonstatutory Stock Options, (b)&nbsp;SARs, and (c)&nbsp;Restricted Stock. All Incentives
shall be subject to the terms and conditions set forth herein and to such other terms and
conditions as may be established by the Committee, except that the provisions of this Plan shall
not apply retroactively to any Incentive issued before the effective date of this Plan.
Determinations by the Committee under the Plan (including, without limitation, determinations as to
the Eligible Employees; the form, amount and timing of Incentives; and the terms and provisions of
agreements evidencing Incentives) need not be uniform and may be made selectively among Eligible
Employees and Consultants who receive, or are eligible to receive,
Incentives, whether or not such Eligible Employees and Consultants are similarly situated.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>3. Administration</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;<I>Committee</I>. The Plan shall be administered by the Committee. No person who makes or
participates in making an award under this Plan, whether as a member of the Committee, a delegate
of the Committee, or in any other capacity, shall make or participate in making an award to
himself or herself. No member of the Board or person acting pursuant to the authority delegated
by the Committee shall be liable for any action or determination relating to or under the Plan
made in good faith.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;<I>Powers of Committee</I>. The Committee will have full discretionary power to administer the
Plan in all of its details, subject to applicable requirements of law. For this purpose, in
addition to all other powers provided by this Plan, the Committee&#146;s discretionary powers will
include, but will not be limited to, the following discretionary powers:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;To make and enforce such rules and regulations as it deems necessary or proper for the
efficient administration of the Plan;
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">(ii)&nbsp;To interpret the Plan;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iii)&nbsp;To decide all questions concerning the Plan and the eligibility of any person to
participate in the Plan, and the determination of whether a worker is an Eligible Employee shall be
made in the sole and exclusive discretion of the Committee;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iv)&nbsp;To appoint such agents, counsel, accountants, consultants and other persons as may be
required to assist in administering the Plan;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(v)&nbsp;To the extent allowed by law, to delegate some or all of its power and authority to the
Company&#146;s Chief Executive Officer, other senior members of management, or committee or
subcommittee, as the Committee deems appropriate. However, the Committee may not delegate its
authority with regard to any matter or action affecting an officer subject to the Exchange Act;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(vi)&nbsp;To impose such restrictions and limitations on any awards granted under the Plan as it
may deem advisable, including, but not limited to share ownership or holding period requirements
and requirements to enter into or to comply with confidentiality agreements and, to the extent
allowed by law, non-competition and other restrictive or similar covenants.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(vii)&nbsp;To correct any defect, supply any omission or reconcile any inconsistency in the Plan
or any award made under the Plan in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the sole and
final judge of such expediency; and
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Any determination by the Committee or its delegate(s) shall be final, binding and conclusive on all
persons, in the absence of clear and convincing evidence that the Committee or its delegates(s)
acted arbitrarily and capriciously.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;<I>Vesting Period</I>. If applicable, the Committee shall determine the vesting period for
Incentives granted under this Plan and shall specify such vesting period in writing in making an
award of an Incentive under this Plan. However, should the Committee award Options or SARs under
this Plan without specifying a vesting period, (i)&nbsp;any SAR awarded in tandem with any underlying
Option shall vest on the date that its underlying Option vests, and (ii)&nbsp;Options and SARs awarded
without an underlying Option shall vest on a graduated basis over a five-year period, with 20% of
the Options (or, if applicable, the SARs) vesting on each anniversary of the date of grant until
all Options (or, if applicable, SARs) covered by the grant are vested.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(d)&nbsp;<I>Compliance with Code Section&nbsp;409A. </I>It is intended that the Incentives granted under this
Plan shall be exempt from, or in compliance with, Code Section&nbsp;409A. This Plan is intended to
comply with Code Section&nbsp;409A only if and to the extent applicable. In this respect, any ambiguous
provision will be construed in a manner that is compliant with or exempt from the application of
Code Section&nbsp;409A. To the extent applicable, the Plan and granting documents prepared in connection
with the Plan shall be interpreted in accordance with &#167;409A of the Code. To the extent that an
Incentive, issuance and/or payment is subject to Section&nbsp;409A, it shall be awarded, issued and paid
in a manner that will comply with Section&nbsp;409A, as determined by the Committee. If any provision
of this Plan (or of any Incentive) would cause a Participant to incur any additional tax or
interest under Code Section&nbsp;409A and accompanying Treasury regulations and other authoritative
guidance thereunder, the Company shall, after consulting with the Participant, reform such
provision to comply with Code Section&nbsp;409A to the extent permitted under Code Section&nbsp;409A;
provided, however, the Company agrees to maintain, to the maximum extent practicable, the original
intent and economic benefit to the Participant of the applicable provision without violating the
provisions of Code Section&nbsp;409A. Furthermore, to the extent that the Board determines that any
Incentive granted under the Plan is subject to &#167;409A of the Code, the granting document evidencing
such Incentive shall incorporate the terms and conditions required by &#167;409A of the Code. To the
extent applicable, the Plan and granting documents prepared in connection with the Plan shall be
interpreted in accordance with &#167;409A of the Code. Notwithstanding any provision of the Plan to the
contrary, in the event that, following the effective date of this Plan, the Board determines that
any Incentive may be subject to &#167;409A of the Code, the Board may adopt such amendments to the Plan
and the applicable granting document or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions that the Board
determines are necessary or appropriate to (1)&nbsp;exempt the Incentive from &#167;409A of the
Code and/or preserve the intended tax treatment of the benefits provided with respect to the
Incentive or (2)&nbsp;comply with the requirements of &#167;409A of the Code.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(e)&nbsp;<I>Documentation of Award of Incentive</I>. Each Incentive awarded under this Plan shall be
evidenced in such written form as the Committee shall determine. Each award may contain terms and
conditions in addition to those set forth in the Plan.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(f)&nbsp;<I>Participants Outside the United States</I>. The Committee may modify the terms of any
Incentive granted under the Plan to a Participant who is, at the time of grant or during the term
of the Incentive, resident or primarily employed outside of the United States. Such modification,
which may be made in any manner deemed by the Committee to be necessary or appropriate, shall only
be made in order that the Incentive shall conform to laws, regulations, and customs of the country
in which the Participant is then resident or primarily employed, or so that the value and other
benefits of the Incentive to the Participant, as affected by foreign tax laws and other
restrictions applicable as a result of the Participant&#146;s residence or employment abroad, shall be
comparable to the value of such an Incentive to a Participant who is resident or primarily employed
in the United States. The Committee may establish supplements to, or amendments, restatements, or
alternative versions of, the Plan for the purpose of granting and administrating any such modified
Incentive. No such modification, supplement, amendment, restatement or alternative version may
increase the share limits set forth in this Plan or violate any applicable law of the United
States.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>4. Eligibility/Forfeiture in the Event of Termination for Cause</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;<I>Eligibility</I>. Eligible Employees may receive Incentives under this Plan. Those members of
the Board who are not Eligible Employees are not eligible to receive Incentives under this Plan.
Consultants are eligible to receive Incentives to the extent specified in Section&nbsp;2 above.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;<I>Forfeiture</I>. If the Company or one of its Affiliates or joint ventures terminates an
Eligible Employee for Cause or cancels the engagement of a Consultant for Cause or discovers facts
that would have entitled it to cancel the engagement of such Consultant if such engagement were
still ongoing, the Board, by written resolution, may, to the fullest extent allowed by law, cancel
and/or cause the forfeiture of any unvested and/or unexercised Option, unvested or unexercised SAR,
or Restricted Stock awarded to such Eligible Employee or Consultant.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>5. Qualified Performance-Based Incentives</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;<I>Applicability</I>. This section will apply only to Covered Employees, or to those persons
whom the Committee determines are reasonably likely to become Covered Employees in the period
covered by an Incentive. The Committee may, in its discretion, select particular Covered Employees
to receive Qualified Performance-Based Incentives. The Committee may, in its discretion, grant
Incentives (other than Qualified
Performance-Based Incentives) to Covered Employees that do not satisfy the requirements of
this section.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;<I>Purpose</I>. As to any Covered Employee or person likely to become a Covered Employee during
the period covered by an Incentive, the Committee shall have the ability to qualify any of the
Incentives as &#147;performance-based compensation&#148; under Section 162(m) of the Code. If the Committee,
in its discretion, decides to grant an Incentive as a Qualified Performance-Based Incentive, the
provisions of this section will control over any contrary provision contained in the Plan. In the
course of granting any Incentive, the Committee may specifically designate the Incentive as
intended to qualify as a Qualified Performance-Based Incentive. However, no Incentive shall be
considered to have failed to qualify as a Qualified Performance-Based Incentive solely because the
Incentive is not expressly designated as a Qualified Performance-Based Incentive, if the Incentive
otherwise satisfies the provisions of this section and the requirements of Section 162(m) of the
Code and the regulations thereunder applicable to &#147;performance-based compensation.&#148;
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;<I>Authority</I>. All grants of Incentives intended to qualify as Qualified Performance-Based
Incentives shall be made by the Committee or, if all of the members thereof do not qualify as
&#147;outside directors&#148; within the meaning of applicable IRS regulations under Section&nbsp;162 of the Code,
by a subcommittee of the Committee consisting of such of the members of the Committee who do so
qualify. Any action by such a subcommittee shall be considered the action of the Committee for
purposes of the Plan. The Committee (or subcommittee, if necessary) shall also determine the terms
applicable to Qualified Performance-Based Incentives.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(d)&nbsp;<I>Discretion of Committee</I>. Options may be granted as Qualified Performance-Based
Incentives. The exercise price of any Option intended to qualify as a Qualified Performance-Based
Incentive shall in no event be less that the Fair Market Value on the date of the grant of the
Stock covered by the Option. With regard to other Incentives intended to qualify as Qualified
Performance-Based Incentives, the Committee will have full discretion to select the length of any
applicable Restriction Period or Performance Period. Additionally, the Committee shall have full
discretion to establish the Performance Criteria, the kind and/or level of the applicable
Performance Goal, and whether the Performance Goal is to apply to the Company, Affiliate or
Division. Any Performance Goal or Goals applicable to Qualified Performance-Based Incentives shall
be objective, shall be established not later than ninety (90)&nbsp;days after the beginning of any
applicable Performance Period (or at such other date as may be required or permitted for
&#147;performance-based compensation&#148; under Section 162(m) of the Code), and shall otherwise meet the
requirements of Section 162(m) of the Code, including the requirement that the outcome of the
Performance Goal or Goals be substantially uncertain (as defined in the regulations under Section
162(m) of the Code) at the time established.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(e)&nbsp;<I>Payment of Qualified Performance-Based Incentives</I>. A Covered Employee will be eligible to
receive payment under a Qualified Performance-Based Incentive that is subject to achievement of a
Performance Goal or Goals only if the
applicable Performance Goal or Goals are achieved within the applicable Performance Period, as
determined by the Committee. In determining the actual size of an individual Qualified
Performance-Based Incentive, the Committee may reduce or eliminate the amount of the Qualified
Performance-Based Incentive earned for the Performance Period, if, in its sole and absolute
discretion, such reduction or elimination is appropriate.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(f)&nbsp;<I>Limitation of Adjustments for Certain Events</I>. No adjustment of any Qualified
Performance-Based Incentive shall be made except on such basis, if any, as will not cause such
Incentive to provide other than &#147;performance-based compensation&#148; within the meaning of Section
162(m) of the Code.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>6. Shares Available for Incentives and Limits on Incentives</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;<I>Maximum Shares</I>. Subject to adjustment as provided in this Section&nbsp;6, there is hereby
reserved for issuance under the Plan up to 1,200,000 shares of Stock of the Company.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;<I>Limit on an Individual&#146;s Incentives</I>. In any given year, no Eligible Employee or
Consultant may receive Incentives covering more than 20% of the aggregate number of shares that may
be issued pursuant to the Plan. Except as may otherwise be permitted by the Code, Incentive Options
granted to an employee of the Company or its parent or subsidiary during one calendar year shall be
limited as follows: at the time the Incentive Options are granted, the Fair Market Value of the
Stock covered by Incentive Options first exercisable by such employee in any calendar year may not,
in the aggregate, exceed $100,000. The maximum Qualified Performance-Based Incentive payment to any
one Participant under the Plan for a Performance Period is 20% of the aggregate number of shares
that may be issued pursuant to the Plan, or if the Qualified Performance-Based Incentive is paid in
cash, that number of shares multiplied by the Fair Market Value of the Stock as of the date the
Qualified Performance-Based Incentive is granted.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;<I>Source of Shares</I>. Shares under this Plan may be delivered by the Company from its
authorized but unissued shares of Stock or from Stock held in the Company treasury. To the extent
that shares of Stock subject to an outstanding award under the Plan are not issued by reason of
forfeiture, termination, surrender, cancellation, or expiration while unexercised; by reason of the
tendering or withholding of shares to pay all or a portion of the exercise price or to satisfy all
or a portion of the tax withholding obligations relating to the award; by reason of being settled
in cash in lieu of shares or settled in a manner that some or all of the shares covered by the
award are not issued to the Participant; or being exchanged for a grant under the Plan that does
not involve Stock, then such shares shall immediately again be available for issuance under the
Plan, unless such availability would cause the Plan to fail to comply with Rule&nbsp;16b-3 under
Exchange Act, or any other applicable law or regulation.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(d)&nbsp;<I>Recapitalization Adjustment</I>. In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation,
rights offering, or any other change in the corporate structure or shares of the Company, the
Committee shall make appropriate adjustments in the number and kind of shares authorized by the
Plan; in the number and kind of shares covered by Incentives granted; in the price of Options; and
in the Fair Market Value of SARs. No adjustment under this section or any other part of this Plan
shall be made if: (1)&nbsp;it would cause an Incentive granted under this Plan as a Qualified
Performance-Based Incentive to fail under Code 162(m), (2)&nbsp;it would cause an Incentive Option
granted under this Plan to fail to meet the criteria for an Incentive Option, or (3)&nbsp;it would
violate any applicable law or regulation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>7. Effect of Employment Termination on Options and SARs</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(a)&nbsp;As to a &#147;Terminated Employee&#148;:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;Any unvested Options and unvested SARs held by such individual on the date of his or her
Employment Termination shall lapse and be automatically cancelled and of no further force and
effect as of midnight on the date of such individual&#146;s Employment Termination.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;Any vested but unexercised Options held by such individual as of the date of his or her
Employment Termination shall expire and be of no further force and effect unless either exercised
or surrendered under a SAR within the <U>earlier</U> of: (a)&nbsp;90&nbsp;days after the date of such
individual&#146;s Employment Termination, or (b)&nbsp;the expiration date of the Option. However, in the
event that such an individual is subject to a Blackout Period during the entire 90&nbsp;days after such
individual&#146;s Employment Termination, then such individual shall have until 10 business days after
the expiration of the Blackout Period applicable to him or her to exercise Options that were vested
but unexercised as of his or her Termination Date, unless such Option expires by its own terms
prior to the end of the Blackout Period.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iii)&nbsp;Any vested but unexercised SARs held by such individual as of the date of his or her
Employment Termination shall expire and be of no further force and effect unless either exercised
within the <U>earlier</U> of: (a)&nbsp;90&nbsp;days after the date of such individual&#146;s Employment
Termination, or (b)&nbsp;the expiration date of the SAR. However, in the event that such an individual
is subject to a Blackout Period during the entire 90&nbsp;days after such individual&#146;s Employment
Termination, then such individual shall have until 10 business days after the expiration of the
Blackout Period applicable to him or her to exercise SARs that were vested but unexercised as of
his or her Termination Date, unless such SARs expire by their own terms prior to the end of the
Blackout Period.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;In a situation in which an individual is terminated from a Related Entity for Cause, his
or her unvested Options and SARs shall lapse and be automatically cancelled in accordance with
subsection 4(b) above; however, if for any reason such individual&#146;s unvested Options and SARs have
not either lapsed and been automatically cancelled under subsection 4(b) by midnight on the date
that his or her employment is terminated by the Related Entity for Cause, then such individual&#146;s
unvested Options and
unvested SARs shall lapse, be cancelled, and/or expire at midnight on the date that he or she
is terminated by the Related Entity for Cause.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;In a situation in which an individual is terminated by a Related Entity for Cause, his or
her Options and SARs that are vested but unexercised as of the date that his or her employment is
terminated for Cause shall be forfeited and automatically cancelled in accordance with subsection
4(b) above; however, if for any reason such individual&#146;s vested and unexercised Options and SARs
have not either been forfeited and automatically cancelled under subsection 4(b) above or otherwise
expired within seven (7)&nbsp;days following the date of his or her termination for Cause, then such
individual&#146;s vested but unexercised Options and SARs shall lapse, be cancelled, and/or expire if
they have not been exercised within such seven (7)&nbsp;day period.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>8. Options</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Committee may grant options qualifying as Incentive Options under the Code, other
statutory options under the Code, and Nonstatutory Options. However, in accordance with Code &#167;
422(b), no one may be granted an Incentive Option under this Plan unless such person, as of the
date of grant, is an employee of the Company or an employee of the Company&#146;s parent company or a
Company subsidiary. All Options granted under this Plan shall be subject to the following terms and
conditions and such other terms and conditions as the Committee may prescribe:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;<I>Option Price</I>. The option price per share with respect to each Option shall be determined
by the Committee, but shall not be less than one hundred percent (100%) of the Fair Market Value of
the Company&#146;s Stock on the date the Option is granted; provided, however, that in the case of an
Incentive Option granted to an Eligible Employee who, immediately prior to such grant, owns
(directly or indirectly) stock (either common or preferred) possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company or a subsidiary of the
Company, the option price shall not be less than one hundred ten percent (110%) of the Fair Market
Value on the date of grant.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;<I>Vesting. </I>Options granted under this Plan shall vest in accordance with subsection 3(c)
above unless the granting document for such Options specifies a different vesting schedule.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;<I>Expiration Date for Option</I>. The expiration date for each Option shall be fixed by the
Committee in the granting document but shall not exceed ten (10)&nbsp;years. If an Incentive Option is
granted to an Eligible Employee of the Company or its parent company or one of its affiliates who
owns shares possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company as of the date the Incentive Option is granted, then the Incentive
Option will expire five (5)&nbsp;years from the date it is granted, unless it is earlier terminated
under one of the other provisions of this Plan.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(d)&nbsp;<I>Payment for Option Exercise</I>. At the time an Option is exercised, the holder must tender
of the full purchase price for the applicable shares, which may be paid or satisfied by: (i)&nbsp;cash;
(ii)&nbsp;check; (iii)&nbsp;delivery of shares of Stock, which shares shall be valued for this purpose at the
Fair Market Value on the business day immediately preceding the date such Option is exercised and,
unless otherwise determined by the Committee, shall have been held by the optionee for at least six
months; or (iv)&nbsp;in such other manner as may be authorized from time to time by the Committee. All
such payments shall be made or denominated in United States dollars. No shares shall be issued
until full payment for such shares has been made. A grantee of an Option shall have none of the
rights of a shareholder until the shares are issued.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(e)&nbsp;<I>Exercise of Option</I>. An Option may be exercised only by giving written notice, specifying
the number of shares of Stock to be purchased. Additional procedures for exercise of each Option
awarded under this Plan will be set forth in the granting document for such Option. The Committee
may, from time to time, amend the exercise procedures, in which case Participants will be notified
of such revised procedures. If an Option grantee is awarded the Option while he or she is employed
by the Company or one of its Affiliates or joint ventures, then so long as such Option grantee
remains employed by the Company or one of its Affiliates or joint ventures, the shares covered by
an Option may be purchased in such installments and on such exercise dates as the Committee or its
delegate may determine and as set forth in the document awarding the Option. In no event shall any
Option be exercisable after its specified expiration period. If a Consultant is awarded an Option,
the shares covered by such Option may be purchased in such installments and on such exercise dates
and conditions as set forth in the document awarding the Option. A Participant, and those claiming
through a Participant, may not exercise Options during a Blackout Period applicable to that
Participant.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(f) <I>Handling of Options When Employment Ends.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;A Terminated Employee&#146;s Options that are unvested on the date of his or her Employment
Termination shall be handled in accordance with subsection 7(a)(i) above.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;A Terminated Employee&#146;s Options that are vested but unexercised on the date of his or her
Employment Termination shall be handled in accordance with subsection 7(a)(ii) above.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iii)&nbsp;In a situation in which an employee of a Related Entity is terminated for Cause,
subsection 4(b) above shall apply to such individual&#146;s: (x)&nbsp;unvested Options and (y)&nbsp;vested but
unexercised Options. If, for any reason such individual&#146;s unvested Options have not either lapsed
and been automatically cancelled under subsection 4(b) by midnight on the date that his or her
employment is terminated by the Related Entity for Cause, then such person&#146;s unvested Options shall
lapse, be cancelled, and/or expire in accordance with subsection 7(b) above. If, for any reason.
within seven (7)&nbsp;days following the date of his or her termination for Cause, such individual&#146;s
vested
and unexercised Options have not been forfeited and/or automatically cancelled under
subsection 4(b) above or otherwise expired, then such individual&#146;s vested but unexercised Options
shall lapse, be cancelled, and/or expire if they have not been exercised within seven (7)&nbsp;days
after the date such individual&#146;s employment is terminated by the Related Entity for Cause.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(g)&nbsp;<I>Divorce</I>. Incentive Options transferred incident to divorce will cease to be statutory
stock options on transfer.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(h)&nbsp;<I>Cancellation of Options with No Value</I>. Any person who receives a grant of Options under
this Plan may be required, at the time the Options are awarded, to sign a consent allowing the
Board, in its discretion, to cancel the Options if the Fair Market Value of the Stock decreases
such that the exercise price of the Options is significantly above the Fair Market Value of the
Stock.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>9. Stock Appreciation Rights (&#147;SARs&#148;)</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Committee may, in its discretion, grant SARs to Eligible Employees and to Consultants.
SARs may be granted either singly or in combination with an underlying Option granted hereunder.
Such SARs shall be subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;<I>Vesting and Exercise Period of SAR</I>. If a SAR is granted with respect to an underlying
Option, it may be granted at the time of the Option or at any time thereafter but prior to the
expiration of the Option. In no event shall the exercise period for a SAR exceed the exercise
period for its underlying Option, if any. If the Committee fails to set the vesting period in the
granting document for a SAR, then the vesting period for such SAR shall be as stated in Subsection
3(c) above. Unless otherwise specified in the granting document for a SAR, the exercise period for
the SAR shall be five (5)&nbsp;years from the date of vesting unless such exercise period is earlier
terminated under subsections 4(b) or 9(d) of this Plan. If an Option is granted with respect to an
underlying Option, then upon exercise of the Option the SAR will be cancelled.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;<I>Value of SAR</I>. If a SAR is granted with respect to an underlying Option, the grantee will
be entitled to surrender the Option that is then exercisable and receive in exchange an amount
equal to the excess of the Fair Market Value of the Stock on the date the election to surrender is
received by the Company over the Option price multiplied by the number of shares covered by the
Options that are surrendered. If a SAR is granted without an underlying Option, the grantee will
receive upon exercise of the SAR an amount equal to the Fair Market Value of the Stock on the date
the election to surrender such SAR is received by the Company over the Fair Market Value of the
Stock on the date of grant multiplied by the number of shares covered by the SARs being exercised.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;<I>Payment of SAR</I>. When a SAR is exercised, payment for the SAR shall be in the form of
shares of Stock, cash, or any combination of Stock and cash.
</DIV>
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<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(d) <I>Handling of SAR When Employment Ends.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;A Terminated Employee&#146;s SARs that are unvested on the date of his or her Employment
Termination shall be handled in accordance with subsection 7(a)(i) above.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;A Terminated Employee&#146;s SARs that are vested but unexercised on the date of his or her
Employment Termination shall be handled in accordance with subsection 7(a)(iii) above.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(iii)&nbsp;In a situation in which an Eligible Employee is terminated for Cause, subsection 4(b)
above shall apply to such individual&#146;s: (x)&nbsp;unvested SARs and (y)&nbsp;vested but unexercised SARs. If,
for any reason, such individual&#146;s unvested SARs have not lapsed and been automatically cancelled
under subsection 4(b) by midnight on the date that his or her employment is terminated by the
Related Entity for Cause, then such individual&#146;s unvested SARs shall lapse, be cancelled, and/or
expire in accordance with subsection 7(b) above. If, for any reason, within seven (7)&nbsp;days
following the date of his or her termination for Cause, such individual&#146;s vested and unexercised
SARs have not been forfeited and/or automatically cancelled under subsection 4(b) above or
otherwise expired, then such individual&#146;s vested but unexercised SARs shall lapse, be cancelled,
and/or expire if they have not been exercised within seven (7)&nbsp;days after the date such
individual&#146;s employment is terminated by the Related Entity for Cause.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>10. Restricted Stock</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Committee may award Restricted Stock to a grantee. All shares of Restricted Stock granted
shall be subject to a Risk of Forfeiture as determined by the Committee, including but not limited
to the following terms and conditions and such other terms and conditions as the Committee may
prescribe:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(a)&nbsp;<I>Restriction Period. </I>Each grant of Restricted Stock made under this Plan shall specify a
Restriction Period. If the grant fails to specify a Restriction Period, then the Restriction
Period shall be as follows:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">20% of the Restricted Stock awarded under the grant will be subject to a
one-year Restriction Period ending on the first anniversary of the date of
grant;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">20% of the Restricted Stock awarded under the grant will be subject to a
two-year Restriction Period ending on the second anniversary of the date of
grant;</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">20% of the Restricted Stock awarded under the grant will be subject to a
three-year Restriction Period ending on the third anniversary of the date of
grant;</DIV></TD>
</TR>

</TABLE>
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<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">20% of the Restricted Stock awarded under the grant will be subject to a
four-year Restriction Period ending on the fourth anniversary of the date of
grant; and</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><DIV style="text-align: justify">20% of the Restricted Stock awarded under the grant will be subject to a
five-year Restriction Period ending on the fifth anniversary of the date of
grant.</DIV></TD>
</TR>

</TABLE>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(b)&nbsp;<I>Effect of Employment Termination on Restricted Stock</I>. If a grantee is awarded Restricted
Stock while he or she is employed by one of the Related Entities, then, as a condition of the
grant, the grantee must remain employed by one of the Related Entities during the applicable
Restriction Period in order to retain the shares of Restricted Stock. If the grantee leaves the
employment of one of the Related Entities prior to the end of the Restriction Period, the
Restricted Shares still subject to a Restriction Period shall revert to the Company and any rights
of the grantee in such Restricted Shares shall automatically terminate and such shares shall be
returned immediately to the Company. This subsection shall apply without regard to whether the
reason for termination of the grantee&#146;s employment is voluntary termination, involuntary
termination, retirement, extended absence due to disability, or death. However, this subsection
shall not apply if the grantee is terminated from one Related Entity and immediately transferred to
another Related Entity. If a grantee of Restricted Stock is terminated for Cause, the Board shall
have discretion to apply subsection 4(b) to such grantee&#146;s Restricted Stock. However, if the Board
fails to apply 4(b), then the Restricted Stock of a grantee terminated for Cause shall revert to
the Company under this subsection 10(b).
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(c)&nbsp;<I>Restrictions on Transfer and Legend on Stock Certificates</I>. During the Restriction Period,
the grantee may not sell, assign, transfer, pledge, or otherwise dispose of the shares of Stock
except as expressly permitted in this Plan. Each certificate for shares of Restricted Stock
granted hereunder shall contain a legend giving appropriate notice of the restrictions in the
grant.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(d)&nbsp;<I>Escrow Agreement</I>. The Committee may require the grantee to enter into an escrow agreement
providing that the certificates representing the Restricted Stock award will remain in the physical
custody of an escrow holder until all restrictions are removed or expire.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">(e)&nbsp;<I>Lapse of Restrictions</I>. All restrictions imposed on the Restricted Stock shall lapse upon
the expiration of the Restriction Period if the conditions of the grant have been met. The grantee
shall then be entitled to have the legend removed from the certificates.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>11. Acquisition and Change of Control Events</B>
</DIV>



<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(a) <I>Definitions.</I>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Acquisition Event&#148; shall mean:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;Any merger or consolidation of the Company with or into another entity as a result of
which the Company&#146;s Stock is converted into or exchanged for the right to receive cash, securities
of the other entity, or other property; or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;Any exchange of shares of the Company for cash, securities of another entity or other
property pursuant to a statutory share exchange transaction.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">&#147;Change of Control Event&#148; shall mean:
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;any merger or consolidation that results in the voting securities of the Company
outstanding immediately prior thereto representing (either by remaining outstanding or by being
converted into voting securities of the surviving or acquiring entity) less than 50% of the
combined voting power of the voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation; or
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;the acquisition by an individual, entity or group (within the meaning of Section&nbsp;13(d)(3)
or 14(d)(2) of the Exchange Act) (a &#147;Person&#148;) of beneficial ownership of any capital stock of the
Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule&nbsp;13d-3
promulgated under the Exchange Act) 51% or more of either (A)&nbsp;the then-outstanding shares of Stock
of the Company (the &#147;Outstanding Company Stock&#148;), or (B)&nbsp;the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in the election of
directors (the &#147;Outstanding Company Voting Securities&#148;). However, for purposes of this subsection
(ii), the following acquisitions shall not give rise to a Change of Control event: (A)&nbsp;any
acquisition directly from the Company, (B)&nbsp;any acquisition by the Company, (C)&nbsp;any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the Company or an
Affiliate, or (D)&nbsp;any acquisition by any Person pursuant to a transaction that results in all or
substantially all of the individuals and entities who were the beneficial owners of 50% or more of
the Outstanding Company Stock and Outstanding Company Voting Securities immediately prior to such
transaction beneficially owning, directly or indirectly, more than 50% of the then-outstanding
shares of Stock and the combined voting power of the then-outstanding voting securities entitled to
vote generally in the election of directors, respectively, of the resulting or acquiring Person in
such transaction (which shall include, without limitation, a Person that as a result of such
transaction owns the Company or substantially all of the Company&#146;s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such transaction, of the Outstanding Company Stock and Outstanding Company
Voting Securities, respectively;
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">(iii)&nbsp;any sale of all or substantially all of the assets of the Company; or
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%">(iv)&nbsp;the complete liquidation of the Company.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(b) <I>Effect on Options.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;<I>Acquisition Event</I>. Upon the occurrence of an Acquisition Event (regardless of whether such
event also constitutes a Change in Control Event), or the execution by the Company of any agreement
with respect to an Acquisition Event (regardless of whether such event will result in a Change in
Control Event), the Board shall provide that all outstanding Options shall be assumed, or
equivalent options shall be substituted, by the acquiring or succeeding Person (or an Affiliate
thereof). However, if such Acquisition Event also constitutes a Change in Control Event, except to
the extent specifically provided to the contrary in the instrument evidencing any Option or any
other agreement between the Option holder and the Company, such assumed or substituted options
shall be immediately exercisable in full upon the occurrence of such Acquisition Event. For
purposes of this section, an Option shall be considered to be assumed if, following consummation of
the Acquisition Event, the Option confers the right to purchase, for each share of Stock subject to
the Option immediately prior to the consummation of the Acquisition Event, the consideration
(whether cash, securities or other property) received as a result of the Acquisition Event by
holders of Stock for each share of Stock held immediately prior to the consummation of the
Acquisition Event (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares of Stock). However, if the
consideration received as a result of the Acquisition Event is not solely Stock of the acquiring or
succeeding Person (or an Affiliate thereof), the Company may, with the consent of the acquiring or
succeeding Person, provide for the consideration to be received upon the exercise of Options to
consist solely of Stock of the acquiring or succeeding Person (or an Affiliate thereof) equivalent
in Fair Market Value to the per share consideration received by holders of outstanding shares of
Stock as a result of the Acquisition Event. Notwithstanding the foregoing, if the acquiring or
succeeding Person (or an Affiliate thereof), does not agree to assume such Options, or substitute
equivalent options for such Options, then the Board shall, upon written notice to the Option
holders, provide that all then unexercised Options will become exercisable in full as of a
specified time prior to the Acquisition Event and will terminate immediately prior to the
consummation of such Acquisition Event, except to the extent exercised by the Option holders before
the consummation of such Acquisition Event. However, in the event of an Acquisition Event under
the terms of which holders of Stock will receive upon consummation thereof a cash payment for each
share of Stock surrendered pursuant to such Acquisition Event (the &#147;Acquisition Price&#148;), then the
Board may instead provide that all outstanding Options shall terminate upon consummation of such
Acquisition Event and that each Option holder shall receive, in exchange therefor, a cash payment
equal to the amount (if any) by which (A)&nbsp;the Acquisition Price multiplied by the number of shares
of Stock subject to such outstanding Options (whether or not then exercisable), exceeds (B)&nbsp;the
aggregate exercise price of such Options.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;<I>Change in Control Event that is not an Acquisition Event</I>. Upon the occurrence of a
Change in Control Event that does not also constitute an Acquisition Event, except to the extent
specifically provided to the contrary in the instrument evidencing any Option or any other
agreement between a Participant and the Company, all Options then outstanding shall automatically
become immediately vested and exercisable in full.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(c) <I>Effect on Restricted Stock.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;<I>Acquisition Event that is not a Change in Control Event</I>. Upon the occurrence of an
Acquisition Event that is not a Change in Control Event, the repurchase and other rights of the
Company under each outstanding grant of Restricted Stock shall inure to the benefit of the
Company&#146;s successor and shall apply to the cash, securities or other property into which the Stock
was converted or for which it was exchanged pursuant to such Acquisition Event in the same manner
and to the same extent as such rights applied to the Stock subject to such Restricted Stock award.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;<I>Change in Control Event</I>. Upon the occurrence of a Change in Control Event (regardless of
whether such event also constitutes an Acquisition Event), except to the extent specifically
provided to the contrary in the instrument evidencing any Restricted Stock award or any other
agreement between a holder of a Restricted Stock award and the Company, all restrictions and
conditions on all Restricted Stock awards then outstanding shall automatically be deemed terminated
or satisfied.
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">(d) <I>Effect on Other Awards.</I>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(i)&nbsp;<I>Acquisition Event that is not a Change in Control Event</I>. In the documents granting such
Incentive, the Board may specify the effect of an Acquisition Event that is not a Change in Control
Event on any Incentive other than Options and Restricted Stock. If the Board does not specify the
effect of any Acquisition Event on such Incentives, the Acquisition Event shall impact such
Incentives in accordance with applicable law.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">(ii)&nbsp;<I>Change in Control Event</I>. Upon the occurrence of a Change in Control Event (regardless of
whether such event also constitutes an Acquisition Event), except to the extent specifically
provided to the contrary in the instrument granting such Incentive or any other agreement between
an Incentive holder and the Company, all Incentives within the scope of the foregoing 12(d)(i)
shall become exercisable, realizable and/or vested in full, or shall be free of all conditions or
restrictions, as applicable to each such Incentive. However, the immediately preceding sentence
shall not apply to performance-based awards. Upon the occurrence of a Change in Control Event
(regardless of whether such event also constitutes an Acquisition Event), all performance-based
award shall be immediately payable based upon the extent, as determined by the Committee, to which
the Performance Goals for the Performance Period then in progress
have been met up through the date of the Change of Control Event or based on 100% of the value
on the date of grant of the performance-based award, if such amount is higher.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 8%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>12. Discontinuance or Amendment of the Plan</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Board may discontinue the Plan at any time and may from time to time amend or revise the
terms of the Plan as permitted by applicable statutes, except that it may not revoke or alter, in a
manner unfavorable to the grantees of any Incentives hereunder, any Incentives then outstanding,
nor may the Board amend the Plan without shareholder approval where the absence of such approval
would cause the Plan to fail to comply with the Exchange Act or any other applicable law or
regulation. No Incentive shall be granted under the Plan after April&nbsp;18, 2017, but Incentives
granted prior to such date may extend beyond such date.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>13. Nontransferability</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Incentive Options granted under the Plan shall not be transferable except by will or the
laws of descent and distribution. To the extent allowed by law, Nonstatutory Options may be
transferable to certain family members or foundations for no value or other consideration.
Additionally, other Incentives granted under the Plan may be transferable subject to the terms
and conditions as may be established by the Committee in accordance with regulations promulgated
under the Exchange Act and any other applicable law or regulation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>14.&nbsp;No Right of Employment</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Plan and the Incentives granted hereunder shall not confer upon any Eligible Employee the
right to continued employment with the Company, its Affiliates, or its joint ventures, or affect in
any way the right of such entities to terminate the employment of an Eligible Employee at any time
and for any reason. Neither shall the Plan and the Incentives granted hereunder confer on a
Consultant the right to continuation of his or her consulting agreement or a right to become an
Eligible Employee.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>15. Taxes</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company shall be entitled, at the time the Company deems appropriate under the law then in
effect, to withhold the amount of any tax attributed to any Incentive granted under the Plan.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->19<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>16.&nbsp;Governing Law</B>
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The provisions of this Plan and all awards made under this Plan shall be governed by and
interpreted in accordance with the law of the State of Tennessee, without regard to applicable
conflicts of law principles.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>17. &#147;Lockup&#148; Agreement</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Committee may in its discretion require that upon request of the Company or the
underwriters managing any underwritten offering of the Company&#146;s securities, the Participant shall
agree in writing that for a period of time (not to exceed 180&nbsp;days) from the effective date of any
registration of securities of the Company, the Participant will not sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any shares of Stock issued or
issuable pursuant to the exercise of such Incentive, without the prior written consent of the
Company or such underwriters, as the case may be.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>18. Limitation of Liability</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Each member of the Committee shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any officer or other employee of the Company or any
Affiliate, the Company&#146;s independent certified public accountants, or other professional retained
by the Company to assist in the administration of the Plan. No member of the Committee, nor any
officer, director or employee of the Company acting on behalf of the Committee, shall be personally
liable for any action, determination, or interpretation taken or made in good faith with respect to
the Plan, and all members of the Committee and any officer, director or employee of the Company
acting on behalf of the Committee shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination, or interpretation.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>19. Unfunded Status of Incentives</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Plan is intended to constitute an &#147;unfunded&#148; plan for incentive compensation. With
respect to any payments not yet made to a Participant pursuant to an Incentive, nothing contained
in the Plan or any Incentive shall give any such Participant any rights that are greater than those
of a general creditor of the Company; <U>provided</U>, <U>however</U><I>, </I>that the Committee may
authorize the creation of trusts or make other arrangements to meet the Company&#146;s obligations under
the Plan to deliver cash, shares of Stock, other Incentives, or other property pursuant to any
Incentive, which trusts or other arrangements shall be consistent with the &#147;unfunded&#148; status of the
Plan unless the Committee otherwise determines with the consent of each affected Participant.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>20. Nonexclusivity of the Plan</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Neither the adoption of the Plan by the Board nor its submission to the stockholders of the
Company for approval shall be construed as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem
desirable, including, without limitation, arrangements granting options and other Incentives
otherwise than under the Plan, and such arrangements may be either applicable generally or only in
specific cases.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->20<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>21. Successors and Assigns</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Plan shall be binding on all successors and assigns of the Company and a Participant,
including, without limitation, the estate of such Participant and the executor, administrator or
trustee of such estate, and any receiver or trustee in bankruptcy or representative of the
Participant&#146;s creditors.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>22. Severability</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If any provision of the Plan is or becomes or is deemed invalid, illegal or unenforceable in
any jurisdiction, or would disqualify the Plan or any Incentive under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended to conform to applicable laws or
if it cannot be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan
shall remain in full force and effect.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt"><B>23. Miscellaneous</B>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The provisions of this Plan shall be severable, and the invalidity of any particular provision
of the Plan shall not cause the Plan as a whole to be invalid. Any definition set forth in this
Plan of the singular form of a term shall also apply to the plural form of that term, and any
definition of the plural form of a term shall also apply to the singular form of the term. Any
reference in this Plan to one gender shall also include the other gender.
</DIV>

<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">Adopted by the Board of Directors of Cumberland Pharmaceuticals Inc. this 4th day of November,
2010.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>/s/ Jean W. Marstiller</I>
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Jean W. Marstiller
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior Vice President and Corporate Secretary</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Date Signed: November&nbsp;4, 2010</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



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<P align="center" style="font-size: 10pt"><!-- Folio -->21<!-- /Folio -->
</DIV>



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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>c08393exv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;31.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATION OF CHIEF EXECUTIVE OFFICER<BR>
PURSUANT TO SECTION 302 OF<BR>
THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">I, A.J. Kazimi, certify that:
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this Form 10-Q of Cumberland Pharmaceuticals Inc.;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the registrant&#146;s internal control over financial
reporting that occurred during the registrant&#146;s most recent fiscal quarter (the
registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the
audit committee of the registrant&#146;s board of directors (or persons performing the equivalent
functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrant&#146;s ability to record, process, summarize and report financial information;
and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant&#146;s internal control over financial reporting.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD align="left">November 15, 2010&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left"><I>/s/ A. J. Kazimi</I>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">A. J. Kazimi&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>c08393exv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;31.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATION OF CHIEF FINANCIAL OFFICER<BR>
PURSUANT TO SECTION 302 OF<BR>
THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">I, David L. Lowrance, certify that:
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this Form 10-Q of Cumberland Pharmaceuticals Inc.;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and
15d-15(e)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the registrant&#146;s internal control over financial
reporting that occurred during the registrant&#146;s most recent fiscal quarter (the
registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the
audit committee of the registrant&#146;s board of directors (or persons performing the equivalent
functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrant&#146;s ability to record, process, summarize and report financial information;
and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant&#146;s internal control over financial reporting.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD align="left">November 15, 2010&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left"><I>/s/ David L. Lowrance</I>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">David L. Lowrance&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" nowrap>Vice President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>c08393exv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;32.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND<BR>
CHIEF FINANCIAL OFFICER<BR>
PURSUANT TO 18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO SECTION 906<BR>
OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">In connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended September&nbsp;30,
2010 of Cumberland Pharmaceuticals Inc. (the &#147;Company&#148;), as filed with the Securities and Exchange
Commission on the date hereof (the &#147;Report&#148;), I, A.J. Kazimi, Chief Executive Officer, and David L.
Lowrance, Vice President and Chief Financial Officer, of the Company, certify, pursuant to
Section&nbsp;906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. section 1350), that:
</DIV>


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">     <I>/s/ A. J. Kazimi</I>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">A. J. Kazimi&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">November 15, 2010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">   <I>/s/ David L. Lowrance</I>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">David L. Lowrance&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Vice President and Chief Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">November 15, 2010</TD>
    <TD>&nbsp;</TD>
</TR></TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>6
<FILENAME>c08393c0839301.gif
<DESCRIPTION>GRAPHIC
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`
end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
