Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains certain forward-looking statements which reflect management’s current views of future events and operations. These statements involve certain risks and uncertainties, and actual results may differ materially from them. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 our acquisitions. Other important factors that may cause actual results to differ materially from forward-looking statements are discussed in “Risk Factors” on pages 21 through 36, and “Special Note Regarding Forward-Looking Statements” on pages 36 and 37 of our Annual Report on Form 10-K for the year ended December 31, 2014. We do not undertake to publicly update or revise any of our forward-looking statements, even in the event that experience or future changes indicate that the anticipated results will not be realized. The following presentation of management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Form 10-Q.

OVERVIEW

Our Business

Cumberland Pharmaceuticals Inc. (“Cumberland,” the “Company,” or as used in the context of “we,” “us,” or “our”), is a specialty pharmaceutical company focused on the acquisition, development and commercialization of branded prescription products. Our primary target markets are hospital acute care and gastroenterology. These medical specialties are characterized by relatively concentrated prescriber bases that we believe can be penetrated effectively by small, targeted sales forces. Cumberland is dedicated to providing innovative products that improve quality of care for patients and address unmet or poorly met medical needs. We market and sell our approved products through our hospital and gastroenterology sales forces in the United States and are establishing a network of international partners to bring our products to patients in their countries.

Our product portfolio includes:

We have both product development and commercial capabilities, and believe we can leverage our existing infrastructure to support our expected growth. Our management team consists of pharmaceutical industry veterans experienced in business development, product development, regulatory, manufacturing, sales, marketing and finance. Our business development team identifies, evaluates and negotiates product acquisition, in-licensing and out-licensing opportunities. Our product development team develops proprietary product formulations, manages our clinical trials, prepares all regulatory submissions and manages our medical call center. Our quality and manufacturing professionals oversee the manufacture and release of our products. Our marketing and sales professionals are responsible for our commercial activities, and we work closely with our distribution partners to ensure availability and delivery of our products.

Growth Strategy

Our growth strategy involves maximizing the potential of our existing brands while continuing to build a portfolio of differentiated products. We currently market five products approved for sale in the United States. Through our international partners, we are working to bring our products to patients in countries outside the U.S. We also look for opportunities to expand our products into additional patient populations through clinical trials, new indications, and select investigator-initiated studies. We actively pursue opportunities to acquire additional marketed products as well as late-stage development product candidates in our target medical specialties. Further, we are supplementing these activities with the pipeline drug development activities at Cumberland Emerging Technologies ("CET"), our majority-owned subsidiary. CET partners with universities and other research organizations to identify and develop promising, early-stage product candidates, which Cumberland has the opportunity to further develop and commercialize. Specifically, we expect to grow by executing the following plans:

We were incorporated in 1999 and have been headquartered in Nashville, Tennessee since inception. During 2009, we completed an initial public offering of our common stock and listing on the NASDAQ exchange. Our website address is www.cumberlandpharma.com . We make available through our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all other press releases, filings and amendments to those reports as soon as reasonably practicable after their filing with the SEC. These filings are also available to the public at www.sec.gov.

Recent Developments and Highlights

Clinigen Strategic Alliance

In September 2015, we announced our strategic alliance with Clinigen Group plc (AIM: CLIN) ("Clinigen"), the global pharmaceutical and services company. Clinigen is a specialty pharmaceutical and services company focused on delivering the right drug to the right patient at the right time by providing medicines to patients with high unmet needs through clinical trials, licensed and ethically unlicensed supply.

The alliance will combine the respective strengths, expertise and geographical footprints of Cumberland and Clinigen with respect to potential future products. Under the agreement, we will have the opportunity to support Clinigen products through distribution, marketing and promotion within the United States. Clinigen will be responsible for the marketing, promotion, distribution and sale of our pharmaceutical products in select markets outside of the United States, allowing us to use Clinigen’s international reach to enter new markets for our products.

Cumberland Emerging Technologies

Cumberland Emerging Technologies Strategic Alliance with Piramal

In October 2015, we executed a Strategic Alliance Agreement with Piramal Enterprises Limited ("Piramal") for the manufacture and supply of Active Pharmaceutical Ingredients ("API"). Under the terms of this agreement, we will collaborate with Pirarmal on the manufacture and supply of API for New Chemical Entities ("NCE"). Piramal will provide both development and commercial supplies of API for select product candidates. Piramal is a diversified conglomerate with operations in over thirty countries and five API manufacturing plants.

Caldolor ^®  

Caldolor Patents Issued

We have an exclusive, worldwide license to clinical data for intravenous ibuprofen from Vanderbilt University, in consideration for royalty obligations related to Caldolor. During the third quarter of 2015, we obtained three additional patents for Caldolor. On July 7, 2015, the United States Patent and Trademark Office ("USPTO") issued U.S. Patent number’s 9,072,710 (the “710 Caldolor Patent”) and 9,072,661 (the “661 Caldolor Patent”) which are assigned to us. The claims of the 710 Caldolor Patent and the 661 Caldolor Patent include composition and methods of treating pain, inflammation and fever using intravenous ibuprofen. These Caldolor Patents are scheduled to expire in March 2032.

On August 25, 2015, the USPTO issued U.S. Patent number 9,114,068 (the “068 Caldolor Patent”) which is assigned to us. The claims of the 068 Caldolor Patent include methods of treating pain and inflammation using intravenous ibuprofen. Following its issuance, the 068 Caldolor Patent was listed in the FDA Orange Book and is scheduled to expire in September 2029.

Caldolor Competition

Information and discussion of Caldolor's competing products are included in Part 1, Item 1, Business - Competition , of our Form 10-K for the year ended December 31, 2014. As noted, Caldolor is marketed for the treatment of pain and fever, primarily in a hospital setting. A variety of other products address the acute pain market including Dyloject, an injectable diclofenac product approved by the FDA during 2014. We anticipate this new competing product will be launched by its manufacturer during 2015.

Caldolor Pediatric Information

Cumberland has completed a series of Phase IV studies for Caldolor in more than 1,000 patients in over 30 leading medical centers across the U.S. These studies included evaluation of the product in both children and adults. Following the completion of these Phase IV studies, we submitted a supplemental new drug application (sNDA) to the FDA for the product during the first quarter of 2015. This submission requested changes to the package insert to include pediatric data from Cumberland's post-marketing pediatric development program and we expect a response to this request during the fourth quarter of 2015.

Caldolor Label Safety Update

In July 2015, the FDA decided to strengthen the existing cardiovascular warning for nonsteroidal anti-inflammatory drugs (NSAIDs). This is a class label change for all NSAIDs including over-the-counter and prescription products. It was previously thought that all NSAIDs may have similar cardiovascular risks. While newer information makes it less clear that the cardiovascular risks are similar for all NSAIDs, this information is not sufficient for the FDA to determine that the risk of any particular NSAID is definitely higher or lower than that of any other particular NSAID. While we have not seen a cardiovascular side effect in our extensive Caldolor safety database, we will update our Caldolor label for this requested information once it becomes finalized by the FDA.

Hepatoren ^®  

Top Line Study Results

We are developing Hepatoren as a potential treatment for Hepatorenal Syndrome ("HRS") - a life threatening condition, with a high mortality rate and no approved pharmaceutical therapy in this country. We initiated a sixty four patient Phase II study to evaluate the safety, efficacy and pharmacokinetics of Hepatoren for this unmet medical need.

The study was designed to evaluate escalating dose levels of Hepatoren in HRS patients. Progression to higher dose levels is reviewed and approved by an independent safety committee. The study was stratified into Type I or Type II patients with HRS based upon the progression of their disease.

We completed the enrollment of Type II patients at the end of 2014. Top line results from these patients indicate that Hepatoren was overall well tolerated with no safety concerns noted. Furthermore, the patients receiving the higher dose levels of Hepatoren were more likely to experience increases in urine output, a signal of improved kidney function, compared to patients who received placebo. Based on these results, we will proceed with clinical development of this product candidate.

We subsequently completed enrollment of the Type I patients during the third quarter of 2015 and the analysis of those patient results is underway.

Boxaban ^tm  

New Phase II Program

During 2015, Cumberland announced an expansion of its pipeline with another Phase II development program. The Company is developing Boxaban for the treatment of Aspirin-Exacerbated Respiratory Disease ("AERD"). AERD is a respiratory disease involving chronic asthma and nasal polyposis that is worsened by aspirin. It is characterized by sharp increases in inflammatory mediators and platelet activity within the respiratory system. Ifetroban, an active thromboxane receptor antagonist, may interfere with these pathways to modify the disease and provide symptomatic relief.

Cumberland completed manufacturing of Boxaban oral capsules and initiated a Phase II clinical study to evaluate Boxaban in patients suffering AERD. The study was designed to gather initial safety and tolerability data on ifetroban in AERD patients. It was a multicenter study of sixteen patients with enrollment at several U.S. medical centers including the Scripps Clinic. The enrollment in this study was recently completed and top line results indicate that no adverse events were experienced by patients receiving Boxaban when compared to those receiving placebo. Further analysis of the full data set obtained from the study is underway.

Acetadote Litigation and Arbitration updates

Information and discussion of Acetadote's competing products are included in Part 1, Item 1, Business - Competition , of our Form 10-K for the year ended December 31, 2014. As noted, Acetadote is our injectable formulation of N-Acetylcysteine ("NAC") for the treatment of acetaminophen overdose. NAC is accepted worldwide as the standard of care for acetaminophen overdose. Our competitors in the acetaminophen overdose market are those companies selling orally administered NAC as well as injectable products. Our branded Acetadote and Authorized Generic Acetadote products contain the new formulation that does not include ethylene diamine tetra acetic acid ("EDTA").

As included in Part 2, Item 1, Legal Proceedings in this Form 10-Q for the quarter ended September 30, 2015, on September 14, 2015, the arbitrator issued a final award in our favor, enjoining Mylan Pharma Group Limited and Mylan Teoranta, together with all their affiliates, from selling, delivering, or giving away any acetylcysteine injectable drug product to another entity or person until April 30, 2018. The award notes that as the prevailing party, we are entitled to reimbursement of our attorney’s fees and related costs associated with the arbitration.

As included in Part 2, Item 1a, Risk Factors, in this Form 10-Q for the quarter ended September 30, 2015, on September 30, 2015, the United States District Court for the Northern District of Illinois, Eastern Division ruled in our favor in our lawsuit against Mylan for infringement of our U.S. Patent number 8,399,445 (the “445 Acetadote Patent”).  The opinion upheld our 445 Acetadote Patent and expressly rejected Mylan's validity challenge.   The court ruled that Mylan is liable to us for infringement of the 445 Acetadote patent in light of Mylan's Abbreviated New Drug Application in which Mylan sought to market a generic version of Acetadote. On October 30, 2015, Mylan filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit.

Acetadote Patents

We developed a new formulation of Acetadote ( acetylcysteine ) Injection as part of the Phase IV commitment in response to a request by the FDA regarding the role of EDTA in the products formulation. Since 2012, the USPTO has issued the following patents to us associated with Acetadote:

We continue to seek additional claims to protect our intellectual property associated with Acetadote and have additional patent applications relating to Acetadote which are pending with the USPTO. We intend to defend and protect our Acetadote product and related intellectual property rights. Additional information and discussion regarding our Acetadote patents and defense is contained in Part 1, Item 1, Business -Trademarks and Patents , of our Form 10-K for the year ended December 31, 2014, which is incorporated by reference herein.

Corporate Update

During the third quarter of 2015, we extended our lease agreement on the approximate 25,550 square feet of office space in Nashville, Tennessee for our corporate headquarters. The extended lease is now set to expire in October 2022 and we believe these facilities are adequate to meet our current and expected needs for office space.

On October 2, 2015, we announced that Rick S. Greene, who had been serving as the Company’s Vice President and Chief Financial Officer, transitioned out of that role effective October 14, 2015, as he pursues interests outside of the Company. A.J. Kazimi, Chief Executive Officer of the Company, serves as the Company’s Principal Financial Officer in addition to his duties as Principal Executive Officer.

 

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

Please see a discussion of our critical accounting policies and significant judgments and estimates on pages 43 through 46 in “Management’s Discussion and Analysis” of our Annual Report on Form 10-K for the year ended December 31, 2014.

Accounting Estimates and Judgments

The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. We base our estimates on past experience and on other factors we deem reasonable given the circumstances. Past results help form the basis of our judgments about the carrying value of assets and liabilities that cannot be determined from other sources. Actual results could differ from these estimates. These estimates, judgments and assumptions are most critical with respect to our accounting for revenue recognition, fair value of marketable securities, inventories, provision for income taxes, share-based compensation, research and development expenses and intangible assets.

Net revenues. Net revenues for the three months ended September 30, 2015 were approximately $7.9 million compared to $9.7 million for the three months ended September 30, 2014 , representing a decrease of $1.8 million , or 19.0% .

The following table summarizes net revenues by product for the periods presented:

The change in revenue from the prior year period was driven primarily by a $1.2 million reduction in Acetadote revenue and decreases in Caldolor revenue of $0.5 million and Omeclamox-Pak revenue of $0.3 million , while Vaprisol net revenue improved compared to the third quarter of 2014 .

Our branded Acetadote net revenue accounted for $0.8 million of the decline in total Acetadote revenue. This decrease was primarily due to a reduction in sales volume during the three months ended September 30, 2015 as a result of generic competition. Total Acetadote net revenue for the third quarter of 2015 and 2014 included $1.1 million and $1.4 million in revenue, respectively, from sales of our Authorized Generic distributed by Perrigo. It is likely that there will be further reductions in our revenue generated by Acetadote and our Authorized Generic as a result of generic competition.

The Caldolor product revenue decrease of $0.5 million for the three months ended September 30, 2015 was a 57.1% decline compared to the same period last year. The revenue decline was primarily due to the resumption in the supply of competing products following shortages earlier in the year. During the first quarter of 2015, we experienced the highest quarterly net revenue for Caldolor since the product was launched, which has impacted this product's revenue and sales volume in the following two quarters. While we expect 2015 Caldolor annual product revenue to continue to grow compared to 2014, we

anticipate quarterly fluctuations due to wholesaler and hospital buying patterns and other factors. During the third quarter of 2014 we also experienced higher than average net revenue for our Caldolor brand. Caldolor revenue in the third quarter of 2015 was also impacted by the lack of international sales while awaiting new supplies of the product. International Caldolor sales are expected to resume in the fourth quarter of 2015.

During the third quarter of 2015 , Omeclamox-Pak revenue decreased $0.3 million compared to the same period last year. The decrease was the result of lower sales volume partially offset by improved pricing. The sales volume decrease was impacted by the lack of sales calls supporting the product by our co-promotion partner for this period.

Kristalose revenue remained relativley consistent during the third quarter of 2015 when compared to the prior year period. The product's net revenue was negativley impacted by reduced sales volume. It was positively impacted from improved pricing and improvements in product net revenue per unit as we incurred a lower level of net revenue deductions from managed care contracts.

Vaprisol's revenue increase over the prior year was attributable to improved pricing with relatively consistent sales volume.

Cost of products sold . Cost of products sold for the third quarter of 2015 decreased $0.4 million compared to the prior year. As a percentage of net revenues, cost of products sold experienced a decrease to 12.4% during the three months ended September 30, 2015 compared to 13.8% during the three months ended September 30, 2014 . This decrease in costs of products sold as a percentage of revenue was attributable to a change in product mix during the quarter compared to the prior year.

Selling and marketing . Selling and marketing expense for the three months ended September 30, 2015 totaled approximately $3.6 million , which was a decrease of $0.2 million compared to the prior year's expense of $3.8 million . The decrease was the result of a $0.1 million reduction in Omeclamox product royalties and a decrease in sales force and promotional expenses. We continue to actively manage our selling and marketing efforts and expenses to efficiently support our five commercial brands.

Research and development . Research and development costs for the third quarter of 2015 were $0.8 million , compared to $0.9 million for the same period last year, representing a decrease of approximately 19.0% . We continued to fund clinical studies for both our Boxaban and Hepatoren product candidates during the third quarter of 2015 . A portion of our research and development costs are variable based on the number of studies, sites and participants involved in our product development activities.

General and administrative . General and administrative expense decreased 16.9% to $1.8 million for the three months ended September 30, 2015 compared to $2.2 million for the prior year. The $0.4 million decrease was primarily driven by a decrease in compensation and benefit expense during the period.

Amortization. Amortization expense is the ratable use of our capitalized intangible assets including product and license rights, patents, trademarks and patent defense costs. Amortization for both the three months ended September 30, 2015 and the three months ended September 30, 2014 totaled approximately $0.5 million .

Income tax expense . Income tax expense for the three months ended September 30, 2015 totaled $0.2 million , compared to income tax expense of $0.3 million in the third quarter of 2014 . The change was the result of the reduction in pretax income in the third quarter of 2015 compared to the same period last year. As a percentage of income before income taxes, income tax expense was 61.4% for the three months ended September 30, 2015 compared to 31.9% for the three months ended September 30, 2014 . The income tax rate for the three months ended September 30, 2015 was primarily a result of the lower pretax income impacted by adjustments to our valuation allowance and increases in our state income tax expense, including changes from legislation. The income tax rate for the three months ended September 30, 2014 was positively impacted by a reduction in our state tax expense during 2014.

As of September 30, 2015 , we have approximately $43.6 million of unrecognized net operating loss carryforwards resulting from the exercise of nonqualified stock options in 2009 that will be used to significantly offset future income tax obligations. These benefits will be recognized in the year in which they are able to reduce current income taxes payable.

Nine months ended September 30, 2015 compared to the nine months ended September 30, 2014

The following table presents the unaudited interim statements of operations for the nine months ended September 30, 2015 and 2014 :

Net revenues. Net revenues for the nine months ended September 30, 2015 were approximately $25.5 million compared to $27.6 million for the nine months ended September 30, 2014 , representing a decrease of $2.1 million , or 7.6% .

The following table summarizes net revenues by product for the periods presented:

Revenue increases in three of our five branded prescription products were offset by decreases in Omeclamox-Pak revenue of $1.1 million and Acetadote product revenue of $2.6 million . Our products with revenue gains were led by increases in Kristalose revenue of $1.3 million and Vaprisol revenue of $0.2 million .

Kristalose revenue increased by $1.3 million or 11.5% over the prior year period primarily due to new positioning for the product. We increased the price of Kristalose during the first quarter of 2014 to bring Kristalose more in line with the other marketed branded prescription products in its class. Concurrent with the price increase, we increased our patient focused initiatives to enhance patient affordability and increase demand. During the nine months ended September 30, 2015 we also experienced improvements in product net revenue per unit as we incurred a lower level of net revenue deductions from managed care contracts.

Vaprisol revenue increased 8.7% during the nine months ended September 30, 2015 compared to the prior year period primarily due to greater sales volume as a result of owning the product two additional months during 2015 compared to 2014. This increase was partly offset by lower sales volume during a portion of the nine months ended September 30, 2015 as we transitioned our marketable inventory from the Astellas labeled product to our Cumberland labeled product. Vaprisol's revenue increase over the prior year was also attributable to improved pricing.

The Caldolor product revenue also experienced a $0.1 million improvement which represents an increase of 2.9% during the nine months ended September 30, 2015 compared to the same period last year. Caldolor sales and net revenue were positively impacted by the efforts of our sales force, marketing initiatives and a temporary shortage of a competing product. While we expect 2015 Caldolor annual product revenue to continue to grow compared to 2014, we anticipate quarterly fluctuations due to wholesaler buying patterns and other factors.

Acetadote net revenue for the first nine months of 2015 included $3.3 million in revenue from sales of our Authorized Generic distributed by Perrigo, compared to $4.6 million for the same period last year. This decrease in sales of our Authorized Generic product accounted for almost half of the decline in total Acetadote revenue. The Authorized Generic sales were impacted by a temporary packaging delay and resulting shortage of marketable product that impacted revenue during a portion of the year-to-date period. Our branded Acetadote product net revenue decreased $1.4 million due to a reduction in sales volume as a result of generic competition, along with an increase in revenue deductions related to an increase in expired product during the first quarter of 2015 . It is likely that there will be further reductions in our revenue generated by Acetadote and our Authorized Generic as a result of generic competition.

Omeclamox-Pak revenue declined 31.2% during the first nine months of 2015 compared to the prior year. The decrease was the result of lower sales volume partially offset by improved pricing. The sales volume decrease was impacted by the lack of sales calls supporting the product by our co-promotion partner for this period.

Cost of products sold . Cost of products sold for the first nine months of 2015 decreased 8.5% as compared to the same period in the prior year. As a percentage of net revenues, cost of products sold was consistent with the prior year at 13.3% and is in line with the decline in net revenues.

Selling and marketing . Selling and marketing expense for the nine months ended September 30, 2015 totaled approximately $10.6 million , which was a decrease of $0.7 million compared to the prior year's expense of $11.4 million . The decrease was the result of a $0.3 million reduction in Omeclamox product royalties as well as decreases in sales force salaries and related costs. These decreases were partially offset by an increase in non-personal promotional spending. We continue to actively manage our selling and marketing efforts and expenses under our strategy to efficiently support our five commercial brands.

Research and development . Research and development costs for the first nine months of 2015 were $3.4 million , compared to $2.6 million for the same period last year, representing an increase of approximately $0.8 million , or 31.4% . This change was the result of a $1.2 million required fee that accompanied the Caldolor sNDA filed with the FDA during the first quarter of 2015. This submission requested changes to the Caldolor package insert to include pediatric data from Cumberland's post-marketing pediatric development program. We continued to fund clinical studies for both our Boxaban and Hepatoren product candidates during 2015. A portion of our research and development costs are variable based on the number of studies, sites and participants involved in our product development activities.

General and administrative . General and administrative expense was $5.6 million for the nine months ended September 30, 2015 , compared to $6.2 million during the same period last year. The $0.6 million decrease was primarily driven by a $0.3 million gain on contingent consideration as the result of a reduction in the cost of the Vaprisol acquisition. General and administrative expense was also benefited by a reduction in our travel and legal fees along with a decrease in compensation and benefit expense during the period.

Amortization. Amortization expense is the ratable use of our capitalized intangible assets including product and license rights, patents, trademarks and patent defense costs. Amortization for the nine months ended September 30, 2015 totaled approximately $1.5 million , which was an increase of $0.4 million over the prior year. The increase in amortization was attributable to additional product and license rights, capitalized patents and patent defense costs.

Income tax expense . Income tax expense for the nine months ended September 30, 2015 totaled $0.5 million , compared to income tax expense of $1.1 million in the nine months ended September 30, 2014 . The change was the result of the reduction in pretax income in the first nine months of 2015 compared to the same period last year. As a percentage of income before income taxes, income tax expense was 49.5% for the nine months ended September 30, 2015 compared to 38.0% for the nine months ended September 30, 2014 . The income tax rate for the nine months ended September 30, 2015 was primarily a result of the lower pretax income impacted by adjustments to our valuation allowance and increases in our state income tax expense, including changes from legislation. The income tax rate for the nine months ended September 30, 2014 was positively impacted by a reduction in our state tax expense during 2014.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

Our primary sources of liquidity are cash flows provided by our operations, the availability under our line of credit and the cash proceeds from our initial public offering of common stock that was completed in August 2009. For the nine months ended September 30, 2015 and 2014 , we generated $4.6 million and $4.0 million in cash flow from operations, respectively, and we borrowed $1.7 million on our line of credit during 2015. We believe that our internally generated cash flows and amounts available under our line of credit will be adequate to finance internal growth and fund capital expenditures.

We invest a portion of our cash reserves in variable rate demand notes ("VRDNs") and a portfolio of government-backed securities (including U.S. Treasuries, government-sponsored enterprise debentures and government-sponsored adjustable rate, mortgage-backed securities). The VRDNs are generally issued by municipal governments and are backed by a financial

institution letter of credit.  We hold a put right on the VRDNs, which allows us to liquidate the investments relatively quickly (less than one week).  The government-backed securities have an active secondary market that generally provides for liquidity in less than one week. At September 30, 2015 and December 31, 2014 , we had approximately $14.4 million and $14.8 million invested in marketable securities, respectively.

The following table summarizes our liquidity and working capital as of September 30, 2015 and December 31, 2014 :

	September 30, 2015				December 31, 2014
Cash and cash equivalents	$	38,316,291			$	39,866,037
Marketable securities	14,438,830				14,841,418
Total cash, cash equivalents and marketable securities	$	52,755,121			$	54,707,455
Working capital (current assets less current liabilities)	$	55,847,901			$	57,065,489
Current ratio (multiple of current assets to current liabilities)	5.7				5.2
Revolving line of credit availability	$	10,300,000			$	12,000,000