Inventories

3 Months Ended

Mar. 31, 2020

The Company works closely with third parties to manufacture and package finished goods for sale. Based on the relationship with the manufacturer or packager, the Company will either take title to the finished goods at the time of shipment or at the time of arrival from the manufacturer. The Company then warehouses such goods until distribution and sale. Inventories are stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method.

The Company continually evaluates inventory for potential losses due to excess, obsolete or slow-moving inventory by comparing sales history and sales projections to the inventory on hand. When evidence indicates that the carrying value may not be recoverable, a charge is taken to reduce the inventory to its current net realizable value. At March 31, 2020 and December 31, 2019, there were no cumulative obsolescence and discontinuance losses necessary.

In connection with the acquisition of certain product rights related to the Kristalose brand, the Company is responsible for the purchase of the active pharmaceutical ingredient (“API”) for Kristalose and maintains the inventory at the third-party manufacturer. As the API is consumed in production, the value of the API is transferred from raw materials to finished goods. API for the Company's Vaprisol brand is also included in the raw materials inventory total. Consigned inventory represents Authorized Generic inventory stored until shipment.

As part of the Vibativ acquisition, Cumberland acquired API and work in process inventories that are classified as non-current inventories. During 2019, Cumberland also obtained $0.3 million in non-current inventory for API related to its ifetroban clinical initiatives. At March 31, 2020 and December 31, 2019, total non-current inventory, including Vibativ and ifetroban, was $15.6 million. The Company did not have any finished goods included in the non-current inventories at March 31, 2020 or December 31, 2019, respectively.

The Company's net inventories consisted of the following:


	March 31, 2020		December 31, 2019

Raw materials and work in process	$	19,456,867	$	19,345,723
Consigned inventory	245,354		416,468
Finished goods	4,017,923		4,664,055
Total inventories	23,720,144		24,426,246
less non-current inventories	(15,569,992)		(15,554,992)
Total inventories classified as current	$	8,150,152	$	8,871,254