Inventories

9 Months Ended

Sep. 30, 2022

The Company works closely with third parties to manufacture and package finished goods for sale. Based on the arrangements 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 at the Company’s warehouses. The Company then holds such goods in inventory until distribution and sale. These finished goods 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 goods by comparing sales history and 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 September 30, 2022 and December 31, 2021, the Company had recognized and maintained cumulative net realizable value charges for potential obsolescence and discontinuance losses of approximately $1.8 million and $1.4 million, respectively.

The Company is responsible for the purchase of the active pharmaceutical ingredient (“API”) for Kristalose and maintains the inventory at third-party packagers. As that 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 at September 30, 2022 and December 31, 2021. Consigned inventory represents Authorized Generic inventory stored with our partner until shipment.

As part of the Vibativ acquisition, Cumberland acquired API and work in process inventories of $15.6 million that were all initially classified as non-current inventories at the date of acquisition. For the Sancuso acquisition, Cumberland acquired $3.0 million of work in progress non-current inventory. At September 30, 2022 and December 31, 2021, total non-current inventory, including Vibativ, Sancuso and our clinical trial drug ifetroban, was $7.5 million and $9.0 million, respectively. The Company had no Vibativ finished goods included in non-current inventory at September 30, 2022, and $0.5 million included at December 31, 2021. The Company also has obtained $0.2 million and $0.4 million of finished goods in non-current inventory for API related to its ifetroban clinical initiatives at September 30, 2022 and December 31, 2021, respectively.

At September 30, 2022 and December 31, 2021 the Company's net inventories consisted of the following:


	September 30, 2022		December 31, 2021

Raw materials and work in process	$	11,738,972	$	12,374,983
Consigned inventory	128,168		164,378
Finished goods	6,277,745		4,939,088
Total inventories	18,144,885		17,478,449
less non-current inventories	(7,497,356)		(9,048,567)
Total inventories classified as current	$	10,647,529	$	8,429,882