CUMBERLAND PHARMACEUTICALS INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Disclosure regarding forward-looking statements The following discussion contains certain forward-looking statements which reflect management’s current views of future events and operations. These statements involve certain risks and uncertainties, and actual results may differ materially from them. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ significantly from the results discussed in these forward-looking statements. Some important factors which may cause results to differ from expectations include: availability of additional debt and equity capital; market conditions at the time additional capital is required; our ability to continue to acquire branded products; product sales; management of our growth and integration of our acquisitions and generally unpredictable conditions in national and international markets. While forward-looking statements reflect our beliefs and best judgment based upon current information, they are not guarantees of future performance. Other important factors that may cause actual results to differ materially from forward-looking statements are discussed in the sections entitled "Risk Factors" and "Special Note Regarding Forward-Looking Statements" of our Annual Report on Form 10-K for the year ended December 31, 2024, and our other filings with the SEC. We do not undertake to publicly update or revise any of our forward-looking statements, even in the event that experience or future changes indicate that the anticipated results will not be realized. The following presentation of management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this report on Form 10-Q. 18 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 pharmaceuticals. We are dedicated to our mission of working together to provide unique products that improve the quality of patient care. Our primary target markets are hospital acute care, gastroenterology and oncology. These medical specialties are characterized by relatively concentrated prescriber bases that we believe can be served effectively by small, targeted sales forces. We promote our approved products through our hospital, field and oncology sales divisions in the United States. We continue to build a network of established international partners with the needed regulatory and commercial capabilities to register and provide our medicines to patients in their countries. Our portfolio of brands approved for marketing by the U.S. Food and Drug Administration ("FDA") includes: • Acetadote ® ( acetylcysteine ) injection, for the treatment of acetaminophen poisoning; • Caldolor ® ( ibuprofen ) injection, for the treatment of pain and fever; • Kristalose ® ( lactulose ) oral solution, a prescription laxative for the treatment of constipation; • Sancuso ® ( granisetron ) transdermal, for the prevention of nausea and vomiting in patients receiving certain types of chemotherapy treatment; • Vaprisol ® ( conivaptan ) injection, to raise serum sodium levels in hospitalized patients with euvolemic and hypervolemic hyponatremia; and • Vibativ ® ( telavancin ) injection, for the treatment of certain serious bacterial infections including hospital-acquired and ventilator-associated bacterial pneumonia, as well as complicated skin and skin structure infections. In addition to these commercial brands, we recently completed a Phase II study in patients with cardiomyopathy associated with Duchenne muscular dystrophy (“DMD”).This rare, fatal genetic neuromuscular disease results in deterioration of the skeletal, heart and lung muscles. The next steps for this DMD Program include further data analysis and completion of a full study report in preparation for an end-of-Phase-II meeting with the FDA to determine next steps associated with the product’s development and commercialization. We also have Phase II clinical programs underway evaluating our ifetroban product candidate in patients with 1) Systemic Sclerosis (“SSc”) or scleroderma, a debilitating autoimmune disorder characterized by diffuse fibrosis of the skin and internal organs and 2) Idiopathic Pulmonary Fibrosis (“IPF”), the most common form of progressive fibrosing interstitial lung disease. Investigational new study applications have been cleared by the FDA enabling us to launch clinical studies in each of these areas. Cumberland has built core competencies for the acquisition, development and commercialization of pharmaceutical products in the U.S., and we believe we can leverage this existing infrastructure to support our continued growth. Our management team consists of pharmaceutical industry veterans with experience in business development, product development, regulatory, manufacturing, sales, marketing and finance. Our business development team identifies, evaluates, and negotiates product acquisition, licensing and co-promotion agreements. Our product development team creates proprietary formulations, manages our clinical studies, prepares our FDA submissions and staffs our medical call center. Our quality and manufacturing professionals oversee the manufacturing, release and shipment of our brands. Our marketing and sales organization is responsible for our commercial activities, and we work closely with our distribution partners to ensure the availability and delivery of our products. 19 GROWTH STRATEGY Cumberland’s growth strategy involves maximizing the potential of our existing brands, while continuing to build a portfolio of differentiated products. We currently own six products approved by the FDA in the United States. We are also building international partnerships to bring our medicines to patients in other countries. Additionally, we look for opportunities to expand our brands into new patient populations through clinical trials, new product presentations and our support of select, investigator-initiated studies. Meanwhile, our clinical team is developing a pipeline of new product candidates to address poorly met medical needs. We also pursue opportunities to acquire additional marketed brands, as well as late-stage development product candidates in our target medical specialties. We are supplementing these activities with the earlier-stage product development at Cumberland Emerging Technologies ("CET"), our majority-owned subsidiary. CET partners with academic research institutions to identify and support the progress of promising new product candidates, which Cumberland can further develop and commercialize. Specifically, we are seeking long-term, sustainable growth by: • Supporting and expanding the use of our marketed products. We continue to evaluate our products following their FDA approval to determine if additional clinical data could expand their market and use. For example, we have secured pediatric approval of Acetadote and Caldolor and expanded the labeling for both brands accordingly. We also added pre-surgery dosing for Caldolor, and more recently included newborns to the patients who can benefit from the product. • Selectively adding complementary brands. In addition to our product development activities, we are also seeking to acquire approved brands or late-stage development product candidates to continue to build our portfolio. We seek under-promoted, FDA-approved drugs as well as late-stage development products that can improve patient care. We will continue to target product acquisition candidates that are competitively differentiated and have valuable intellectual property or other protective features. Our acquisitions of Vibativ and Sancuso are examples of the implementation of this strategy. • Progressing our clinical pipeline and incubating future product opportunities at CET. We believe it is important to build a pipeline of innovative new product opportunities, as we are doing through our ifetroban Phase II development programs. We are also supplementing our acquisitions and late-stage development activities with the early-stage product development activities at CET. • Leveraging our infrastructure through co-promotion partnerships. We believe that our commercial infrastructure can help drive prescription volume and product sales. We also look for select partners that can complement our capabilities and enhance opportunities for our brands. For example, our co-promotion partnerships have allowed us to expand the support for Kristalose across the United States. • Building an international contribution to our business. We have established our own commercial capabilities, including three sales divisions, that focus on the U.S. market for our products. We are also working with a network of established international partners to register our products and make them available to patients in their countries. We will continue to support our partners’ registration and commercialization efforts in their respective territories. The acquisition of Vibativ resulted in several new international partners and market opportunities. • Managing our operations with financial discipline. We continually work to manage our expenses in line with our revenues, to deliver positive cash flow from operations. We seek to maintain favorable gross margins and a strong balance sheet. 20 RECENT DEVELOPMENTS FDA Approves Acetadote ® sNDA Cumberland previously announced the FDA approval of a supplemental New Drug Application for Acetadote ® , our IV treatment for preventing or lessening liver injury after ingestion of potentially toxic quantities of acetaminophen. Acetaminophen, a common over-the-counter pain reliever and fever reducer, is the leading cause of acute liver failure in the United States. Each year, thousands of individuals experience accidental or intentional acetaminophen poisoning, leading to serious liver damage. The new dosing regimen simplifies the administration of Acetadote by combining the first two bags of the standard regimen into a single, slower infusion. This streamlined approach has been implemented in hospitals across multiple countries and demonstrated to reduce the frequency of medication errors and potentially serious non-allergic anaphylactoid reactions without compromising effectiveness. By simplifying the dosing regimen, health care providers can administer the life-saving treatment more efficiently, potentially improving patient outcomes. New Study Compares Caldolor ® (ibuprofen injection) to ketorolac We also announced the publication of new real-world outcomes research involving 150,000 patients, which compared our Caldolor ® (ibuprofen) injection to its key competitor – ketorolac – in both adult and pediatric populations. The study, published in Frontiers of Pain Research , provided compelling evidence that Caldolor is associated with a significantly reduced incidence of adverse drug reactions (ADRs) and improved health care utilization when compared to ketorolac. This extensive, retrospective, payer database analysis evaluated the records of over 17 million patients who had received either Caldolor or ketorolac. Ultimately, 31,046 Caldolor and 124,184 ketorolac adult patients were selected and compared for ADRs and subsequent health care resource utilization, which includes inpatient, outpatient and emergency department visits as well as all procedures and prescriptions during the follow up time of 29 days. An additional 5,579 pediatric patients were identified in each arm and compared in a separate claims analysis. Key findings reveal that, in adults, Caldolor was associated with a 45% reduction in renal dysfunction (p<0.001) and a 78% decrease in hematuria rates (p<0.001) when compared to ketorolac. Notably, patients also experienced fewer gastrointestinal complications as well as reduced headaches, nausea and abdominal pain. Among pediatric patients, the results showed Caldolor was associated with a 51-65% lower rate of ADRs, including headache and nausea, with 95% confidence intervals supporting clinical significance. Caldolor also demonstrated a positive impact on health care resource utilization (HCRU) when compared to ketorolac, with decreased emergency room and outpatient visits, as well as a shortened hospital length of stay for both adults and children. These findings underscore Caldolor’s potential to improve patient care by reducing their treatment complications, while also delivering potential saving for health care systems through decreased hospital readmissions and shortened treatment times. 21 Ifetroban Clinical Studies In February, we announced positive top-line results from the Phase II study evaluating our ifetroban product candidate in patients with Duchenne muscular dystrophy (DMD). This marks a breakthrough for these patients, as it is the first successful Phase II study specifically targeting the cardiac complications of their condition. These study results were selected for a late-breaking presentation in March at the Muscular Dystrophy Association’s Clinical & Scientific Conference. That platform allowed us to share our promising results with the global DMD community, including leading researchers, clinicians and patient advocates who are working tirelessly to improve outcomes for those affected by this devastating disease. The next steps for our DMD program include further data analysis and completion of a full study report in preparation for an end-of-Phase-2 meeting with the FDA to determine the requirements for the product’s approval. We have been evaluating our ifetroban product candidate in a Phase II clinical programs evaluating our ifetroban product candidate in patients with Systemic Sclerosis or scleroderma, a debilitating autoimmune disorder characterized by diffuse fibrosis of the skin and internal organs. Enrollment in the study is now complete, and we are monitoring the clinical sites in preparation to lock the database and begin evaluating the study. We expect to announce top-line results from this study later this year. In addition, we have a Phase II clinical program underway in patients with Idiopathic Pulmonary Fibrosis, the most common form of progressive fibrosing interstitial lung disease. Patient enrollment is now underway in medical centers across the U.S. We have also completed a pilot Phase II study involving 1) patients suffering from Hepatorenal Syndrome, a life-threatening condition involving liver and kidney failure, 2) patients with Portal Hypertension associated with chronic liver disease and 3) patients with Aspirin-Exacerbated Respiratory Disease, a severe form of asthma. There were no significant safety issues identified with the use of ifetroban in these patients. Additional pilot studies of ifetroban are underway, through several investigator-initiated trials. We are awaiting results from these various studies before deciding on the best development path for the registration of ifetroban, our first new chemical entity. International Agreements We continue to support our international partners in their efforts to register Vibativ ® in their countries. We recently learned that our potent antibiotic Vibativ received approval from the regulatory authorities in China. That milestone provides us with access to the world’s second-largest pharmaceutical market – and we look forward to the launch of our product there. We previously announced a new partnership with Saudi Arabia-based Tabuk Pharmaceutical to introduce Vibativ into the Middle East. The arrangement provided Tabuk exclusive rights to distribute Vibativ in Saudi Arabia and Jordan, with the option to expand into other countries in the region. Tabuk has obtained the final approvals needed to commercialize Vibativ in Saudi Arabia. In late 2024, we began shipping Vibativ there and completed the needed product training to launch the product in that country. We also entered into an agreement with D.B. Pharm to register and commercialize our Vibativ product in South Korea. D.B. Pharm also distributes our Caldolor product there. They have filed for the approval of Vibativ and we have been supporting their efforts through the review process of their application in the country. The Korean regulatory authorities did not approve the initial submission, and indicated that additional manufacturing information will be required. We will work with D.B. Pharm to address the additional requirements. Additionally, in late 2024, PiSA Pharmaceutical, our partner for Caldolor in Mexico, completed and submitted a dossier to COFEPRIS, Mexico’s equivalent to the FDA, for the product’s approval in that country. 22 Competition The pharmaceutical industry is characterized by intense competition and rapid innovation. Our continued success in developing and commercializing pharmaceutical products will depend, in part, upon our ability to compete against existing and future products in our target markets. Competitive factors directly affecting our markets include but are not limited to: • product attributes such as efficacy, safety, ease-of-use and cost-effectiveness; • brand awareness and recognition driven by sales, marketing and distribution capabilities; • intellectual property and other exclusivity rights; • availability of resources to build and maintain developmental and commercial capabilities; • successful business development activities; • extent of third-party reimbursements, insurance coverage; and • establishment of advantageous collaborations to conduct development, manufacturing or commercialization efforts. Our products face competition from other branded products, generics and alternate medical treatments. Our task is to position each brand to feature its competitive advantages, implement a well-thought-out marketing plan and provide focused sales, field-based medical and other tactical support. Kristalose is a dry powder crystalline prescription formulation of lactulose indicated for the treatment of constipation. The U.S. constipation therapy market includes various prescription and over the counter, or OTC, products. There are several branded prescription products which we believe are our primary competitors including Amitiza ® , Movantik ® , Linzess ® and Vibrant ® . There are several hundred OTC products used to treat constipation marketed by numerous pharmaceutical and consumer health companies. MiraLax ® (polyethylene glycol 3350), previously a prescription product, was indicated for the treatment of constipation and manufactured and marketed by Bayer. MiraLax was converted to an OTC product and as a result the FDA rescinded the approval of the generic prescription polyethylene glycol 3350 products. There are also other lactulose products available in the U.S. including Constulose, Enulose and Generalac, as well as several generics. Prescriptions for our Kristalose product are often substituted and filled by one of these generic products. During the first quarter of 2025, a generic crystalline lactulose product was approved, available from PAI Pharma. Tariffs The United States and other countries have recently begun imposing new tariffs on international trade. While pharmaceuticals have been largely exempt from these recently imposed U.S. tariffs, such exemptions may be removed in the future. We continue to monitor and evaluate the impacts of tariffs on our business and the results of our operations. Summary We are entering an exciting time for our Company. We remain in the early stages of capitalizing on numerous opportunities and expect our momentum to continue. Our ongoing success can be driven by growth from our approved brands, expanded international partnerships, progress in our clinical development programs and the potential addition of select acquisitions. We will remain focused on our efforts and look forward to future opportunities to carry out our mission and report on our progress throughout the remainder of the year and beyond. 23 CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES Please see a discussion of our critical accounting policies and significant judgments and estimates in Note 1 to the Company's Condensed Consolidated Financial Statements accompanying this report and the section entitled " Management’s Discussion and Analysis of Financial Condition and Results of Operations " in our 2024 Annual Report on Form 10-K. Accounting Estimates and Judgments The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. We base our estimates on past experience and on other factors we deem reasonable given the circumstances. Past results help form the basis of our judgments about the carrying value of assets and liabilities that cannot be determined from other sources. Actual results could differ from these estimates. The Company's most significant estimates include: (1) its allowances for chargebacks and accruals for rebates and product returns, (2) the allowances for obsolescent or unmarketable inventory and (3) valuation of contingent consideration liabilities associated with business combinations. 24 RESULTS OF OPERATIONS Three months ended March 31, 2025 compared to the three months ended March 31, 2024 The following table presents the unaudited interim statements of operations for continuing operations for the three months ended March 31, 2025 and 2024: Three months ended March 31, 2025 2024 Change Net revenues $ 11,713,055 $ 8,497,701 $ 3,215,354 Costs and expenses: Cost of products sold 1,425,714 1,575,542 (149,828) Selling and marketing 4,231,980 4,154,588 77,392 Research and development 1,295,076 1,158,253 136,823 General and administrative 2,463,008 2,367,907 95,101 Amortization 1,005,330 1,110,661 (105,331) Total costs and expenses 10,421,108 10,366,951 54,157 Operating income (loss) 1,291,947 (1,869,250) 3,161,197 Interest income 125,709 96,746 28,963 Interest expense (163,802) (118,526) (45,276) Income (loss) before income taxes 1,253,854 (1,891,030) 3,144,884 Income tax expense (5,670) (11,442) 5,772 Net income (loss) $ 1,248,184 $ (1,902,472) $ 3,150,656 The following table summarizes net revenues by product for the periods presented: Three months ended March 31, 2025 2024 Change Products: Kristalose $ 3,484,310 $ 3,195,609 $ 288,701 Sancuso 2,256,294 1,827,769 428,525 Vibativ 1,378,066 1,605,489 (227,423) Caldolor 1,307,439 1,470,699 (163,260) Acetadote 151,651 80,203 71,448 Omeclamox-Pak (5,387) (1,615) (3,772) Vaprisol (600) 8,662 (9,262) RediTrex (347) 35,556 (35,903) Other revenue 3,141,629 275,329 2,866,300 Total net revenues $ 11,713,055 $ 8,497,701 $ 3,215,354 Net revenues. Net revenues for the three months ended March 31, 2025, were $11.7 million compared to $8.5 million for the three months ended March 31, 2024. As detailed in the table above, net revenue increased for three of our marketed products during the first quarter of 2025, Kristalose, Sancuso and Acetadote. Kristalose revenue was $3.5 million for the first quarter of 2025 and $3.2 million for the same period in the prior year. The increase was the result of sales to our co-promotion partner. Acetadote revenue includes net sales of our Acetadote brand and our share of net sales from our Authorized Generic. During the first quarter of 2025, there was an increase of $0.1 million in the product's revenue when compared to the prior year period due to an increase in sales of our Authorized Generic. 25 There were no Vaprisol branded product sales for the first quarter of 2025 as Cumberland is currently out of inventory of the product as we await FDA approval on a new manufacturer. The amount represents charges for product returns. Caldolor revenue was $1.3 million for the first quarter of 2025, compared to $1.5 million for the first quarter of 2024. The decrease results from higher international sales in 2024. Vibativ revenue was $1.4 million for the three months ended March 31, 2025, and $1.6 million for the same prior year period. The decrease in net revenue of the product was due to lower sales volume. Sancuso revenue was $2.3 million for the first quarter of 2025, compared to $1.8 million for the first quarter of 2024 resulting in an increase of $0.4 million. The increase resulted primarily from increased shipments as well as lower sales deductions associated with the product for the first quarter of 2025. Other revenue was $3.1 million for the three months ended March 31, 2025, compared to $0.3 million for the three months ended March 31, 2024. The increase results from a $3 million milestone payment received associated with the approval of Vibativ for the Chinese market. Cost of products sold . Co st of products sold for the first quarter of 2025 and 2024 were $1.4 million and $1.6 million, respectively. Cost of products sold, as a percentage of net revenues, were 12.2% during the three months ended March 31, 2025, compared to 18.5% during the three months ended March 31, 2024. The favorable percentage decrease is primarily due to milestone payments and higher international sales in 2024 which typically incur higher cost of goods sold as a percentage relative to the lower international revenue on a per unit basis. Selling and marketing . Selling and marketing expenses for the first quarter of 2025 were nominally increased by $0.1 million compared to the same period last year. Research and development . Research and development costs for the first quarter of 2025 were $1.3 million compared to $1.2 million for the same period in 2024. The increase is primarily due to a portion of our research and development costs is variable as we continue to fund the ongoing clinical initiatives associated with our pipeline product candidates. These variable costs depend on the number of active trials, study sites and patients as well as the cost per patient in each of our clinical programs. General and administrative . General and administrative expense for the first quarter of 2025 was $2.5 million compared to $2.4 million for the same period in 2024. The increase is due to higher compensation expenses. 26 The components of the statements of operations discussed above reflect the following impacts from Vibativ: Financial Impact of Vibativ Three months ended March 31, 2025 2024 Net revenue (1) $ 4,353,066 $ 1,605,489 Cost of products sold (2) 248,441 277,063 Royalty and operating expenses 510,676 478,473 Vibativ contribution $ 3,593,949 $ 849,953 (1) Net revenue includes $2,975,000 related to a milestone payment received in the three months ended March 31, 2025 and $1,288 related to other income received in the three months ended March 31, 2024. (2) The Vibativ inventory included in the costs of product sold during the period was acquired and paid for by Cumberland as part of the acquisition of the brand during 2018. The components of the statements of operations discussed above reflect the following impacts from Sancuso: Financial Impact of Sancuso Three months ended March 31, 2025 2024 Net revenue $ 2,256,294 $ 1,827,769 Cost of products sold (1) 143,976 256,578 Royalty and operating expenses 929,817 527,697 Sancuso contribution $ 1,182,501 $ 1,043,494 (1) The Sancuso inventory included in the costs of product sold during 2024 was acquired and paid for by Cumberland as part of the acquisition of the brand during 2022. Amortization. Amortization expense is the ratable use of our capitalized intangible assets including product and license rights, patents, trademarks and patent defense costs. Amortization for the three months ended March 31, 2025 and 2024, totaled approximately $1.0 million and $1.1 million, respectively. Income taxes . Income tax expense for the three months ended March 31, 2025 and for the three months ended March 31, 2024 was $0.01 million. 27 LIQUIDITY AND CAPITAL RESOURCES Working Capital Our primary sources of liquidity are cash equivalents, cash flows from operations and the amounts borrowed under our line of credit. We believe that our internally generated cash flows, existing working capital and our line of credit will be adequate to finance internal growth, finance business development initiatives, and fund capital expenditures for the foreseeable future. The following table summarizes our liquidity and working capital as of March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Cash and cash equivalents $ 15,108,413 $ 17,964,184 Working capital (current assets less current liabilities) $ 6,357,532 $ 4,830,429 Current ratio (multiple of current assets to current liabilities) 1.2 1.2 Revolving line of credit availability $ 14,759,267 $ 4,723,830 The following table summarizes our net changes in cash and cash equivalents for the three months ended March 31, 2025 and March 31, 2024: Three months ended March 31, 2025 2024 Net cash provided by (used in): Operating activities $ 3,898,517 $ (2,136,647) Investing activities (1,228,186) (58,186) Financing activities (5,526,102) 2,421,694 Net increase (decrease) in cash and cash equivalents $ (2,855,771) $ 226,861 The net $2.9 million decrease in cash and cash equivalents for the three months ended March 31, 2025, was primarily attributable to $6.8 million of cash used in financing and investing activities, partially offset by $3.9 million of cash provided by operating activities. Cash provided by operating activities totaled $3.9 million for the three months ended March 31, 2025, primarily due to the $1.2 million net income, adjusted by adding back a $1.2 million decrease in accounts receivable, a $1.0 million decrease in inventory, $0.3 million in amortization of operating lease right-of-use assets and $1.0 million in depreciation and amortization expense, partially offset by deducting a $0.2 million decrease in operating lease liability and a $0.6 million decrease in accounts payable and other current liabilities. Cash used in financing activities totaled $5.5 million for the three months ended March 31, 2025, primarily due to $10.0 million in payments on our line of credit, $0.5 million for cash settlement of contingent consideration, and $0.2 million in cash used to repurchase shares of our common stock, partially offset by $5.3 million in proceeds from our ATM offering. Debt Agreement On September 5, 2023, the Company entered into a new Revolving Credit Loan Agreement with Pinnacle Bank. This facility provides for an aggregate principal funding amount of up to $25 million. The initial revolving line of credit is up to $20 million, with the ability for Cumberland to increase the amount to $25 million, under certain conditions. It has a three year term expiring on October 1, 2026. The interest rate is based on Benchmark (Term SOFR) plus a spread of 2.75%. Cumberland is subject to one financial covenant, the maintenance of a Funded Debt Ratio, determined on a quarterly basis. Borrowings under the line of credit are collateralized by substantially all of our assets. On May 6, 2024, the Company entered into a First Amendment to the Loan Agreement which provides an alternative to the financial covenant by delivering to the lender a borrowing base certificate and complying with certain borrowing base requirements which set forth a maximum revolver amount equal to the lessor of (a) up to $20 million or (b) the sum of the Company's cash balances and eligible accounts receivable. 28 OFF-BALANCE SHEET ARRANGEMENTS During the three months ended March 31, 2025 and 2024, we did not engage in any off-balance sheet arrangements.