What changed in this filing

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Item 1. Financial Statements

2020-08-14 compared with 2020-05-14 · 447 added, 265 removed, 806 unchanged (47% of the section changed)

28 unchanged sentences

5,000,000 shares authorized;

no shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

no shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

Common stock, $0.001 par value;

250,000,000 shares authorized;

12,918,006 and 12,917,348 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively

12,849,238 and 12,917,348 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

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notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands,

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Three Months Ended

Six Months Ended

Finance receivables interest income, including fees

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Pharmaceutical manufacturing, research and development expense

Change in fair value of acquisition-related contingent consideration

Depreciation and amortization expense

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Other (expense) income, net

Unrealized net (loss) gain on warrants

Unrealized net loss on equity securities

(Loss) income before provision for income taxes

Provision for income taxes

Unrealized net gain (loss) on warrants

Unrealized net gain (loss) on equity securities

(Loss) income before provision (benefit) for income taxes

(Benefit) provision for income taxes

Consolidated net (loss) income

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Three Months Ended

Six Months Ended

Consolidated net (loss) income

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except share data)

Months Ended March 31, 2020

Six Months Ended June 30, 2020

Additional Paid-

Stockholders’

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Issuance of common stock

Repurchases of common

stock in open market

Repurchases of common stock in open market

Balances at March 31, 2020

Stock-based compensation

Issuance of common stock in lieu of payment of

employee cash bonuses

Issuance of common stock

Repurchases of common stock in open market

Balances at June 30, 2020

$ (4,199,411 )

Months Ended March 31, 2019

Six Months Ended June 30, 2019

Additional Paid-

Stockholders’

3 unchanged sentences

Issuance of common stock

Repurchases of common

stock in open market

Repurchases of common stock in open market

Balances at March 31, 2019

Stock-based compensation

Issuance of common stock

Repurchases of common stock in open market

Balances at June 30, 2019

$ (4,208,569 )

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(in thousands)

Six Months Ended

Cash flows from operating activities:

2 unchanged sentences

Provision for loan credit losses

Security impairment expense

Impairment expense

Amortization of debt issuance costs

2 unchanged sentences

Change in fair value of equity securities

Change in fair value of acquisition-related contingent consideration

Loan discount amortization and fee accretion

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Changes in operating assets and liabilities:

Interest and accounts receivable, net

Accounts payable, accrued liabilities, and other liabilities

Interest and accounts receivable

Accounts payable and other liabilities

Net cash provided by operating activities

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Repayment of finance receivables

Corporate debt security principal payment

Net cash (used in) provided by investing activities

Corporate debt security principal payments

Purchases of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

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the sales of life science products by third parties.

The Company is headquartered in Dallas, Texas, and as of March 31, 2020,

the Company had 32 employees.

The Company is headquartered in Dallas, Texas, and as of June 30, 2020, the

Company had 33 employees.

Company has net operating loss carryforwards (“NOLs”) and believes that the ability to utilize these NOLs is an important

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might result in the ability to utilize more of the NOLs.

of May 11, 2020, and since inception of the strategy, the Company and its partners have executed transactions with 36 different

parties under its specialty finance strategy, funding an aggregate $540.1 million in various financial products across the life

science sector.

The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic royalties

paid by companies in the life science sector, and purchased royalties generated by sales of life science products and related

intellectual property.

of August 10, 2020, and since inception of the strategy, the Company and its partners have executed transactions with 36

different parties under its specialty finance strategy, funding an aggregate $540.1 million in various financial products across

the life science sector.

The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic

royalties paid by companies in the life science sector, and purchased royalties generated by sales of life science products and

related intellectual property.

August 26, 2019, the Company commenced its Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc.

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judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

We account for

business combinations under the acquisition method of accounting.

This method requires the recording of acquired assets and assumed

liabilities at their acquisition date fair values.

The excess of the purchase price over the fair value of assets acquired and

liabilities assumed is recorded as goodwill.

Results of operations related to business combinations are included prospectively

beginning with the date of acquisition and transaction costs related to business combinations are recorded within selling, general

and administrative expenses.

Refer to Note 3, Business Combinations , for further information regarding our acquisition

account for business combinations under the acquisition method of accounting.

This method requires the recording of acquired assets

and assumed liabilities at their acquisition date fair values.

The excess of the purchase price over the fair value of assets

acquired and liabilities assumed is recorded as goodwill.

Results of operations related to business combinations are included

prospectively beginning with the date of acquisition and transaction costs related to business combinations are recorded within

selling, general and administrative expenses.

Refer to Note 3, Business Combinations , for further information regarding

our acquisition of Enteris.

Company earns revenues from its two U.S.-based business segments:

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classifies as current the portion of deferred revenue that is expected to be recognized within one year from the balance sheet

Deferred revenue was $0.7 million and $0.1 million as of March 31, 2020 and December 31, 2019, respectively, and is included

Deferred revenue was $0.7 million and $0.1 million as of June 30, 2020 and December 31, 2019, respectively, and is included

in accounts payable and accrued liabilities in the unaudited condensed consolidated balance sheets.

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research and development contracts, which are not refundable, are recorded as a reduction to pharmaceutical manufacturing research

and development expense in the unaudited condensed consolidated statements of (loss) income.

and development expense in the unaudited condensed consolidated statements of operations.

Recent Accounting Pronouncements

March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting”

(Topic 848), which provides

optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of)

reference rate reform on financial reporting.

ASU 2020-04 provides optional expedients and exceptions for applying GAAP to transactions

affected by reference rate reform if certain criteria are met.

2020-04, “Reference Rate Reform (Topic 848),”

which provides optional guidance for a limited period of time to ease

the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria

These transactions include:

(i) contract modifications, (ii) hedging

relationships, and (iii) sales or transfers of debt securities classified as held-to-maturity.

ASU 2020-04 is effective from March

12, 2020 through December 31, 2022.

An entity may elect to adopt the amendments for contract modifications as of any date from

the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim

period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.

An entity may elect to apply the amendments in ASU 2020-04 to eligible hedging relationships existing as of the beginning of the

interim period that includes March 12, 2020 and to new eligible hedging relationships entered into after the beginning of the

interim period that includes March 12, 2020.

The one-time election to sell, transfer, or both sell and transfer debt securities

classified as held-to-maturity may be made at any time after March 12, 2020 but no later than December 31, 2022.

The Company expects

that it will elect to apply some of the expedients and exceptions provided in ASU 2020-04;

however, the Company is still evaluating

the guidance, and therefore, the impact of the adoption of ASU 2020-04 on the Company’s financial condition and results

of operations has not yet been determined.

(i) contract modifications, (ii) hedging relationships, and (iii) sales or transfers of debt

securities classified as held-to-maturity.

ASU 2020-04 is effective from March 12, 2020 through December 31, 2022.

An entity may

elect to adopt the amendments for contract modifications as of any date from the beginning of an interim period that includes

or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March

12, 2020, up to the date that the financial statements are available to be issued.

An entity may elect to apply the amendments

in ASU 2020-04 to eligible hedging relationships existing as of the beginning of the interim period that includes March 12, 2020

and to new eligible hedging relationships entered into after the beginning of the interim period that includes March 12, 2020.

The one-time election to sell, transfer, or both sell and transfer debt securities classified as held-to-maturity may be made

at any time after March 12, 2020 but no later than December 31, 2022.

The Company expects that it will elect to apply some of

the expedients and exceptions provided in ASU 2020-04;

however, the Company is still evaluating the guidance, and therefore, the

impact of the adoption of ASU 2020-04 on the Company’s financial condition and results of operations has not yet been determined.

June 2016, the FASB issued ASU No.

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rather than as a write-down, which will allow an entity the ability to record reversals of credit losses in current period net

On November 15, 2019, the FASB issued ASU 2019-10, “Credit Losses (Topic 326), Derivatives and Hedging (Topic 815),

and Leases (Topic 842):

On November 15, 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Losses (Topic 326), Derivatives

and Hedging (Topic 815), and Leases (Topic 842):

Effective Dates,”

which finalized various effective dates delay for private companies, not-for-profit

organizations, and certain smaller reporting companies.

Under ASU 2019-10, the effective date for implementation of CECL for smaller

reporting companies was extended to fiscal years, and interim periods within those years, beginning after December 15, 2022.

Company is currently evaluating the new guidance but believes it is likely to incur more upfront losses on its portfolio under

the new CECL model.

which finalized various effective date delays for private

companies, not-for-profit organizations, and certain smaller reporting companies.

Under ASU 2019-10, the effective date for implementation

of CECL for smaller reporting companies was extended to fiscal years, and interim periods within those years, beginning after

December 15, 2022.

The Company is currently evaluating the new guidance but believes it is likely to incur more upfront losses

on its portfolio under the new CECL model.

Net (Loss) Income

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except per share amounts):

Three Months Ended

Six Months Ended

Net (loss) income

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Diluted net (loss) income per share

the three months ended March 31, 2020 and 2019, outstanding stock options, restricted stock units and warrants to purchase

shares of common stock in an aggregate of approximately 460,000 and 400,000, respectively, have been excluded from the

calculation of diluted net (loss) income per share as all such securities were anti-dilutive.

the three months ended June 30, 2020 and 2019, outstanding stock options, restricted stock units and warrants to purchase shares

of common stock in an aggregate of approximately 495,000 and 447,000, respectively, have been excluded from the calculation

of diluted net (loss) income per share as all such securities were anti-dilutive.

For the six months ended June 30, 2020 and 2019,

outstanding stock options and warrants to purchase shares of common stock in an aggregate of approximately 483,000, and

424,000, respectively, have been excluded from the calculation of diluted net (loss) income per share as all such securities were

anti-dilutive.

Business Combinations

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The total merger consideration was $34.6 million, which

included contingent consideration of $14.5 million.

The purchase price was subject to certain adjustments with respect to cash,

debt, working capital, transaction expenses and the value of the contingent consideration agreement entered into, in connection

with the transaction.

included contingent consideration of $14.5 million, which was remeasured to $16.3 million as of June 30, 2020.

The purchase price

was subject to certain adjustments with respect to cash, debt, working capital, transaction expenses and the value of the contingent

consideration agreement entered into, in connection with the transaction.

to the acquisition, Enteris entered into a non-exclusive commercial license agreement with Cara Therapeutics, Inc.

“License Agreement”), for oral formulation rights to Enteris’

Peptelligence®

technology to develop and commercialize

Oral KORSUVA in any indication worldwide, excluding South Korea and Japan.

Cara is obligated to pay Enteris certain development,

regulatory and tiered commercial milestone payments, as well as low single-digit royalties based on net sales in the licensed

acquisition was accounted for under the acquisition method of accounting.

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1, 2019, the earliest period presented herein (in thousands):

Three Months Ended

Six Months Ended

June 30, 2019

pro forma financial information includes adjustments that are directly attributable to the business combination and are factually

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of operations that would have been achieved nor are they indicative of future results of operations.

was no change in the carrying amount of goodwill from December 31, 2019 to March 31, 2020, and net book value

was no change in the carrying amount of goodwill from December 31, 2019 to June 30, 2020, and net book value

remains at $8.4 million.

The net book value of goodwill is solely related to the Enteris acquisition in 2019.

As of March 31,

2020, the Company concluded that it is more likely than not that fair value of the reporting unit is greater than its carrying

value, and goodwill is not considered to be impaired.

of March 31, 2020, the gross book value and accumulated amortization of acquired intangible assets were as follows (in thousands,

except estimated useful life data):

of March 31, 2020

As of June 30, 2020,

the Company concluded that it is more likely than not that fair value of the reporting unit is greater than its carrying value,

and goodwill is not considered to be impaired.

of June 30, 2020, the gross book value, accumulated amortization, net book value and estimated useful life of acquired intangible

assets were as follows (in thousands, except estimated useful life data):

of June 30, 2020

Trade names and trademarks

relationships

expense from the acquisition of Enteris was $3.4 million for the period ended March 31, 2020 and was

recorded in depreciation and amortization expense.

Based on amounts recorded at March 31, 2020, the Company will recognize

acquired intangible asset amortization as follows (in thousands):

Customer relationships

Deferred patent costs

Total intangibles

expense from the acquisition of Enteris was $6.8 million for the period ended June 30, 2020 and was recorded

in depreciation and amortization expense.

Based on amounts recorded at June 30, 2020, the Company will recognize acquired

intangible asset amortization as follows (in thousands):

2020 (remaining)

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expected using the effective interest method.

of March 31, 2020, the Company had a credit loss allowance of $8.4 million.

of June 30, 2020, the Company had a credit loss allowance of $8.4 million.

Of the total $8.4 million, $1.2 million and $0.6 million

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following table presents nonaccrual and performing finance receivables by portfolio segment, net of credit loss allowance (in

March 31, 2020

June 30, 2020

December 31, 2019

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Total carrying value

of March 31, 2020 and December 31, 2019, the Company had three finance receivables in nonaccrual status:

(a) the term loan

to B&D Dental Corporation (“B&D”), with a net carrying value of $8.3 million, (b) the Best royalty, with a

net carrying value of $4.1 million, and (c) the Tissue Regeneration Therapeutics, Inc.

(“TRT”) royalty, with a net

carrying value of $3.5 million.

Although in nonaccrual status, the B&D term loan and the TRT royalty were not considered impaired

as of both March 31, 2020 and December 31, 2019.

The Company did not collect any cash on its nonaccrual royalties during

the three months ended March 31, 2020.

of June 30, 2020 and December 31, 2019, the Company had three finance receivables in nonaccrual status:

(a) the term loan to B&D

Dental Corporation (“B&D”), with a net carrying value of $8.3 million, (b) the Best royalty, with a net carrying

value of $4.1 million and (c) the Tissue Regeneration Therapeutics, Inc.

(“TRT”) royalty, with a net carrying value

of $3.5 million.

Although in nonaccrual status, the B&D term loan and the TRT royalty were not considered impaired as of both

June 30, 2020 and December 31, 2019.

The Company collected an aggregate $0.1 million in cash on two of its nonaccrual royalties

during the six months ended June 30, 2020.

(Please see B&D, Best and TRT below for further details regarding nonaccrual

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thus, accrued

interest has not been reversed nor has an allowance been recorded as of March 31, 2020.

interest has not been reversed nor has an allowance been recorded as of June 30, 2020.

October 31, 2018, ABT announced that it entered into an asset purchase agreement with Best, a wholly-owned subsidiary of Best

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On November 8, 2018, the Bankruptcy Court approved the asset sale transaction, and the Company has no further funding liabilities.

the year ended December 31, 2018, the Company re-evaluated its collateral position, considering the expected outcome of the Chapter

During the year

ended December 31, 2018, the Company re-evaluated its collateral position, considering the expected outcome of the Chapter 11

process, and as a result, the Company recognized an impairment expense of $5.3 million to write off the second lien term loan,

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licensee terminating a technology license.

The Company and TRT continue to evaluate both options in regard to enforcing TRT’s

The Company and TRT continue to evaluate options in regard to enforcing TRT’s

intellectual property rights against this licensee, as well as seeking additional U.S.

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intellectual property, the

Company has placed the TRT royalty on non-accrual status, although does not consider it impaired as of March 31, 2020.

evaluated several factors in this determination, including input from intellectual property counsel regarding the strength of

the related intellectual property, continued receipt of Canadian licensee royalty payments and anticipated terms of the restructured

purchase agreement.

in corporate debt securities and equity securities at March 31, 2020 and December 31, 2019 consist of the following (in thousands):

Company has placed the TRT royalty on non-accrual status, although the Company does not consider it impaired as of June 30, 2020.

The Company evaluated several factors in this determination, including input from intellectual property counsel regarding the

strength of the related intellectual property, continued receipt of Canadian licensee royalty payments and anticipated terms of

the restructured purchase agreement.

in corporate debt securities and equity securities at June 30, 2020 and December 31, 2019 consist of the following (in thousands):

Corporate debt securities

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amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale

debt securities as of March 31, 2020 and December 31, 2019, are as follows (in thousands):

March 31, 2020

debt securities as of June 30, 2020 and December 31, 2019, are as follows (in thousands):

June 30, 2020

Corporate debt securities

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Corporate debt securities

following table presents unrealized net losses on equity securities during the three months ended March 31, 2020 and 2019 (in

following table presents unrealized net gains and losses on equity securities during the three and six months ended June 30, 2020

and 2019 (in thousands):

Three Months Ended

Unrealized net loss on equity securities reflected in the unaudited condensed consolidated statements of (loss) income

Six Months Ended

Unrealized net gain (loss) on equity securities reflected in the unaudited condensed consolidated statements of operations

Equity Securities

of March 31, 2020, the Company’s equity securities include 96,810 shares of Misonix, Inc.

of June 30, 2020, the Company’s equity securities include 96,810 shares of Misonix, Inc.

(“Misonix”) common stock received

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that expires on September 27, 2020.

As of March 31, 2020, the 96,810 shares of Misonix common stock are reflected at their estimated

As of June 30, 2020, the 96,810 shares of Misonix common stock are reflected at their estimated

fair value of $1.3 million.

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secured notes have been placed on non-accrual status as of June 30, 2016.

Total cash collected during the three months ended

March 31, 2020 and 2019 was $17,660 and $21,000, respectively, which was credited to the notes’

Total cash collected during the six months ended

June 30, 2020 and 2019 was $33,000 and $34,000, respectively, which was credited to the notes’

carrying value.

three months ended March 31, 2020, impairment expense of $0.2 million was recognized in order to reflect the notes at their estimated

six months ended June 30, 2020, impairment expense of $0.2 million was recognized in order to reflect the notes at their estimated

fair value of $0.3 million.

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minimum asset coverage and minimum interest coverage ratios.

both the three months ended March 31, 2020 and 2019, the Company recognized $0.1 million of interest expense.

On March 17, 2020,

the Company drew $15.0 million on its revolving credit facility in order to support existing business partners and to finance

future investment opportunities.

As of March 31, 2020, $14.3 million was outstanding under the revolving credit facility, and

$5.7 million was available for borrowing.

the six months ended June 30, 2020 and 2019, the Company recognized $0.3 million and $0.2 million, respectively, of interest

On March 17, 2020, the Company drew $15.0 million on its revolving credit facility in order to support existing business

partners and to finance future investment opportunities.

As of June 30, 2020, $6.4 million was outstanding under the revolving

credit facility, and $13.6 million was available for borrowing.

Party Transactions

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liability in the unaudited condensed consolidated balance sheets.

The Company recorded a nominal loss for the three months ended

March 31, 2020.

The Company recorded a nominal loss for the six months ended

June 30, 2020.

The Company determined the fair value using the Black-Scholes option pricing model with the following assumptions:

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Expected volatility

changes on the value of the warrant liability during the three months ended March 31, 2020 were as follows (in thousands):

changes on the value of the warrant liability during the six months ended June 30, 2020 were as follows (in thousands):

Fair value –

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Fair value –

March 31, 2020

June 30, 2020

Commitments and Contingencies

of March 31, 2020, the Company’s unfunded commitments were as follows (in millions):

of June 30, 2020, the Company’s unfunded commitments were as follows (in millions):

Aimmune Therapeutics, Inc.

(“Aimmune”)

eTon Pharmaceuticals, Inc.

(“eTon”)

Total unfunded commitments

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are only subject to being advanced as long as an event of default does not exist.

As of August 11, 2020, the aggregate unfunded

commitment increased to $8.0 million due to the expiration of SWK Funding’s commitment to Aimmune and SWK Funding’s

amendment with eTon subsequent to quarter ended June 30, 2020 (please refer to Note 12, Subsequent Events for further

details on SWK Funding’s amendment with eTon).

Stockholders’

Compensation Plans

the three months ended March 31, 2020 and 2019, the Company’s Board of Directors (the “Board”) approved compensation

for Board services by granting 5,937 and 4,725 shares, respectively, of common stock as compensation for the non-employee directors.

During the three months ended March 31, 2020 and 2019, the Company recorded approximately $0.1 million and $47,000, respectively,

the six months ended June 30, 2020 and 2019, the Company’s Board of Directors (the “Board”) approved compensation for

Board services by granting 10,506 and 5,725 shares, respectively, of common stock as compensation for the non-employee directors.

During the six months ended June 30, 2020 and 2019, the Company recorded approximately $0.2 million and $0.1 million, respectively,

in Board stock-based compensation expense.

The aggregate stock-based compensation expense, including the quarterly Board grants,

recognized by the Company for the three months ended March 31, 2020 and 2019 was $0.2 million and $0.1 million, respectively.

recognized by the Company for the six months ended June 30, 2020 and 2019 was $0.4 million and $0.2 million, respectively.

the six months ended June 30, 2020, the Company issued 5,200 shares of its common stock valued at $0.1 million to two of its employees

as partial payment in lieu of cash for their 2019 bonuses.

Share Repurchase

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The March 26, 2020 share repurchase

program will expire on September 30, 2020.

program will expire not later than September 30, 2020.

Fair Value Measurements

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into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred.

no transfers between any levels during the three months ended March 31, 2020.

no transfers between any levels during the six months ended June 30, 2020.

following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying

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details on the Company’s acquisition of Enteris and contingent consideration.

fair value measurements of contingent consideration obligations and the related intangible assets arising from business combinations

fair value measurements of the contingent consideration obligations and the related intangible assets arising from business combinations

are classified as Level 3 estimates under the fair value hierarchy, as these items have been valued using unobservable inputs.

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and (c) the risk-adjusted discount rate used to present value the probability-weighted

Significant increases or decreases in any of those inputs in isolation could result in a significantly lower or higher

fair value measurement.

of March 31, 2020 and December 31, 2019, the Company’s contingent consideration was recorded at its estimated fair value of $14.5

Changes in fair value of this obligation are recorded as income or expense within operating income in our condensed

consolidated statements of operations.

Significant increases or decreases in any of those inputs in isolation could result in

a significantly lower or higher fair value measurement.

of June 30, 2020 and December 31, 2019, the Company’s contingent consideration was recorded at its estimated fair value of $16.3

million and $14.5 million, respectively.

Investments and Derivative Securities

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non-exchange traded derivatives, fair value is based on option pricing models and are classified as Level 3.

following table presents financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 (in

following table presents financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2020 (in

Quoted Prices

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Warrant liability

changes on the value of the warrant assets during the three months ended March 31, 2020 were as follows (in thousands):

changes on the value of the warrant assets during the six months ended June 30, 2020 were as follows (in thousands):

Fair value –

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Fair value –

March 31, 2020

June 30, 2020

Company holds warrants issued to the Company in conjunction with certain term loan investments.

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of assumptions were used in the models to determine fair value:

Risk-free rate

Expected life

(years) range

Expected volatility

of March 31, 2020 and December 31, 2019, the Company had three royalties, Besivance®, Best, and Cambia®, that were deemed

Risk-free rate range

Expected life (years)

Expected volatility range

of June 30, 2020 and December 31, 2019, the Company had three royalties, Besivance®, Best, and Cambia®, that were deemed

to be impaired based on reductions in carrying values in prior periods.

The following table presents these royalties measured

at fair value on a nonrecurring basis as of March 31, 2020 and December 31, 2019 (in thousands):

at fair value on a nonrecurring basis as of June 30, 2020 and December 31, 2019 (in thousands):

Quoted Prices

or Liabilities

March 31, 2020

June 30, 2020

Impaired royalties

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Impaired royalties

were no liabilities measured at fair value on a nonrecurring basis as of March 31, 2020 and December 31, 2019.

were no liabilities measured at fair value on a nonrecurring basis as of June 30, 2020 and December 31, 2019.

following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying

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instruments and derivative financial instruments.

of March 31, 2020 (in thousands):

of June 30, 2020 (in thousands):

Financial Assets

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Consequently, the segments are evident from the structure of the Company’s internal organization, focusing

on financial information that a Company’s chief operating decision-makers use to make decisions about the Company’s operating

on financial information that the Company’s chief operating decision-makers use to make decisions about the Company’s operating

described in Note 1, SWK Holdings Corporation and Summary of Significant Accounting Policies, the Company has determined

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following tables present financial information for the Company’s reportable segments for the periods indicated (in thousands):

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Pharmaceutical

Interest expense

Pharmaceutical manufacturing, research and development expense

Depreciation and amortization

Change in fair value of acquisition-related contingent consideration

General and administrative

Other income, net

Benefit for income taxes

Net income (loss)

Six months ended June 30, 2020

Pharmaceutical

Provision for credit losses and impairment expense

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Depreciation and amortization

Change in fair value of acquisition-related contingent consideration

General and administrative

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Net income (loss)

in Holdings Company and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs,

in Holding Company and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs,

including public company costs and non-Enteris corporate employees, which have been included for purposes of reconciling to the

consolidated amounts.

Subsequent Events

Pharmaceuticals, Inc.

August 11, 2020, SWK Funding entered into an amendment to the credit agreement with eTon to increase the maximum principal amount

of the term loan to $15.0 million.

SWK Funding funded $2.0 million at closing of the amendment, bringing the drawn balance to

$7.0 million.

eTon may draw up to $8.0 million of the remaining commitment upon eTon receiving certain FDA product approval milestones.

The amendment provides for a reduction in the interest rate between 0.75 percent to 2.25 percent, dependent upon eTon achieving

certain FDA product approval milestones and financial performance metrics.

In connection with the amendment, SWK Funding also

received a warrant to purchase shares of eTon common stock.

August 12, 2020, SWK Funding entered into an amendment to the credit agreement with BIOLASE, Inc.

(“BIOLASE”) to extend

the interest only period by one year, extend the maturity date by six months and reset liquidity and financial performance covenants.

The amendment also requires BIOLASE to make a principal payment in the amount of $0.7 million.

MANAGEMENT’S

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our business, financial condition and results of operations.

in late-March 2020, the governor of New Jersey, where the manufacturing facility of our Pharmaceutical Development segment is

located, issued “shelter-in-place”

late-March 2020, the governor of New Jersey, where the manufacturing facility of our Pharmaceutical Development segment is located,

issued “shelter-in-place”

or “stay at home”

orders restricting non-essential activities, travel and

business operations for an indefinite period of time, subject to certain exceptions for necessary activities.

orders restricting non-essential activities, travel and business

operations for an indefinite period of time, subject to certain exceptions for necessary activities.

Such orders or restrictions

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negatively impacting our operations.

Other disruptions or potential disruptions include restrictions on our personnel and personnel

of our customers and suppliers to travel and access customers;

Starting in July 2020, the governor of New Jersey began a phased re-opening of the state’s

economy, though much non-essential activities remain limited, which continues to impact operations.

Other disruptions or potential

disruptions include restrictions on our personnel and personnel of our customers and suppliers to travel and access customers;

delays in product development efforts;

and additional government

requirements or other incremental mitigation efforts that may further impact our business.

and additional government requirements or other incremental mitigation efforts that may

further impact our business.

the potential economic impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, the widespread

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the portfolio of our Finance Receivables segment.

We expect that we will need to amend certain performance covenants under

some of our credit agreements, and may determine to advance additional capital or allow some interest payments to be paid in-kind

for specified periods in order to support our business partners.

The ultimate extent of the effects of the COVID-19 pandemic

on us is highly uncertain and will depend on future developments which cannot be predicted.

refer to Part II., Item 1A., Risk Factors , for additional information on risk factors related to the pandemic or other

risks that could impact our business and results of operations.

We have and will continue to amend certain performance covenants under some

of our credit agreements and will continue to consider advancing additional capital or allow some interest payments to be paid

in-kind for specified periods in order to support our business partners.

The value of the marketable securities that we hold might

also be negatively impacted as a result of COVID-19.

The ultimate extent of the effects of the COVID-19 pandemic on us is highly

uncertain and will depend on future developments which cannot be predicted.

refer to Part II, Item 1A, Risk Factors , for additional information on risk factors related to the pandemic or other risks

that could impact our business and results of operations.

have organized our operations into two segments:

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way the Company evaluates it business performance and manages its operations.

Please refer to Item 1.

Financial Statements, Note

11 of the notes to the unaudited condensed consolidated financial statements for further information regarding segment information.

Please refer to Part I, Item I, F inancial Statements ,

Note 11 of the notes to the unaudited condensed consolidated financial statements for further information regarding segment information.

Receivables Segment

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the marketing efforts of a partner company.

Our structured debt investments may include warrants or other features, giving

us the potential to realize enhanced returns on a portion of our portfolio.

Our structured debt investments may include warrants or other features, giving us

the potential to realize enhanced returns on a portion of our portfolio.

Pharmaceutical

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Receivables Portfolio Overview

table below provides an overview of our outstanding finance receivables transactions as of, and for the three months ended March

table below provides an overview of our outstanding finance receivables transactions as of, and for the six months ended June

30, 2020 (in thousands, except rate, share and per share data).

Purchases and Financings

Purchases and

Beleodaq®

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Synthetic Royalty

Change in Fair

Change in Fair Value

Misonix, Inc.

Change in Fair Value

Warrants to Purchase Stock

Exercise Price

Acerus Pharmaceuticals, Inc.

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on nonaccrual.

impairment expense of $163 was recognized during the three months ended March 31, 2020.

expense of $163 was recognized during the six months ended June 30, 2020.

accordance with credit agreement, $3,000 was funded on January 16, 2020.

First amendment to credit agreement was signed on

May 28, 2020, allowing 4Web to pay in-kind the interest due in May 2020.

accordance with credit agreement, $2,500 was funded on February 19, 2020.

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retired the facility in April 2020 with its final scheduled payment.

facility to allow DxTerity to pay in kind the interest payments due in January 2019 and April 2019 subject to DxTerity raising

additional subordinated capital, which it accomplished.

Amendment also allowed DxTerity to pay in-kind the interest payments

due in October 2019, January 2020 and April 2020, subject to DxTerity raising additional subordinated capital.

executed an amendment on May 15, 2020, which consolidated first, second and third warrants, for a total of 550,977 shares

at $0.39198 per share.

We executed an amendment on August 12, 2020, which requires BIOLASE to make a principal payment in the amount of $700.

The August 2020

amendment also extended the interest only period by twelve months and the maturity date by six months.

amended the facility to allow DxTerity to pay in kind the interest payments due in January 2019 and April 2019, subject to

DxTerity raising additional subordinated capital, which it accomplished.

The amendment also allowed DxTerity to pay in-kind

the interest payments due in October 2019, January 2020 and April 2020, subject to DxTerity raising additional subordinated

capital, which DxTerity did not accomplish by the required date.

This resulted in a default under the credit agreement.

paid the interest payment due in July 2020, and we are currently working with DxTerity to remedy the default.

We executed an amendment on August

11, 2020 to increase the maximum principal amount of the term loan to $15,000.

eTon may draw up to $8,000 upon reaching certain

milestones outlined in the amendment.

The amendment allows provides for a decrease in the interest rate to between 0.75 and

2.25 percent, also dependent upon eTon achieving certain milestones outlined in the amendment.

We funded $2,000 at closing.

accordance with credit agreement, $608 was funded on April 1, 2020.

amendment on March 27, 2020, which extended the maturity date to November 2022.

executed an amendment on March 27, 2020, which extended the maturity date to November

otherwise specified, our senior secured debt assets generally are repaid by a revenue interest that is charged on a company’s

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We believe there have been no new critical accounting policies or material changes to our

existing critical accounting policies and estimates during the three months ended March 31, 2020, compared to those discussed

in our Annual Report on Form 10-K for the year ended December 31, 2019.

existing critical accounting policies and estimates during the six months ended June 30, 2020, compared to those discussed in

our Annual Report on Form 10-K for the year ended December 31, 2019.

Recent Accounting Pronouncements

Financial Information, Item 1.

Financial Statements, Note 1 of the notes to the unaudited condensed consolidated financial

statements for a listing of recent accounting pronouncements and their potential impact to our consolidated financial statements.

of the Three Months Ended March 31, 2020 and 2019 (in millions)

Three Months Ended March 31,

Provision for credit losses and impairment expenses

to Part I, Item 1, Financial Statements , Note 1 of the notes to the unaudited condensed consolidated financial statements

for a listing of recent accounting pronouncements and their potential impact to our consolidated financial statements.

of the Three Months Ended June 30, 2020 and 2019 (in millions)

Three Months Ended June 30,

Interest expense

Pharmaceutical manufacturing, research and development expense

Change in fair value of acquisition-related contingent consideration

Depreciation and amortization expense

General and administrative expense

Other income, net

(Benefit) provision for income taxes

Consolidated net income

generated revenues of $7.9 million and $5.7 million for the three months ended June 30, 2020 and 2019, respectively, which

consisted primarily of interest and fees earned on our finance receivables.

The $2.2 million increase primarily consists of a

$1.8 million net increase in royalty income and a $1.6 million increase in fees and interest earned on our finance receivables

due to funding new and existing loans.

The increase in revenue was offset by a $1.3 million decrease in interest and fees earned

on finance receivables that were paid off or paid down since the second quarter of 2019.

expense consists of interest on amounts borrowed, unused line of credit and maintenance fees, as well as amortization of debt

issuance costs on our revolving line of credit.

Interest expense was $0.2 million and $0.1 million for the three months ended

June 30, 2020 and 2019, respectively.

On March 17, 2020, we drew $15.0 million on our revolving credit facility in order to support

existing business partners and to finance future investment opportunities, which accounts for the $0.1 million increase in interest

Pharmaceutical

Manufacturing, Research and Development Expense

Pharmaceutical

manufacturing, research and development expense totaling $1.0 million was incurred by our Pharmaceutical Development segment,

which was acquired in the third quarter of 2019.

and Amortization

and amortization increased by $3.4 million due to the increase in fixed and intangible assets that were obtained in the acquisition

of Enteris, which was acquired in the third quarter of 2019.

and Administrative

and administrative expenses consist primarily of compensation, stock-based compensation and related costs for management, staff,

Board of Directors, legal and audit expenses, and corporate governance.

General and administrative expenses increased to $2.6

million for the three months ended June 30, 2020 from $1.3 million for the three months ended June 30, 2019, which was due

to a $0.8 million increase in salaries, benefits and stock-based compensation expense;

a $0.2 million increase in general office,

insurance and rent expense;

and a $0.3 million increase in accounting, audit, legal and other professional fees.

in general and administrative expenses were primarily due to the addition of Enteris, which was acquired in the third quarter

in Fair Value of Warrants and Marketable Investments

income, net for the three months ended June 30, 2020 reflected a net fair market value gain of $0.6 million on our warrant

derivatives and a net fair market value gain of $0.4 million on our Misonix common stock.

income for the three months ended March 31, 2019 reflected a net fair market value gain of $0.7 million on our warrant derivatives.

in Fair Value of Contingent Consideration

change in the fair value of the contingent consideration for the three months ended June 30, 2020 was $1.8 million.

The contingent

consideration is the earnout related to the August 26, 2019 acquisition of Enteris and sharing of certain milestone and royalties

due to Enteris pursuant to the License Agreement (please refer to Part I, Item 1, Financial Statements , Note 3 of the notes

to the unaudited condensed consolidated financial statements for further information on contingent consideration and the acquisition

The contingent consideration was remeasured to fair value as of June 30, 2020.

The carrying amount of the liability

may fluctuate significantly, and actual amounts paid may be materially different from the estimated value of the liability.

Tax Expense (Benefit) Expense

the three months ended June 30, 2020, we recognized an income tax benefit of $1.0 million when compared to $0.7

million income tax expense for the three months ended June 30, 2019, which represented effective tax rates of negative 7.38

percent and 14.0 percent, respectively.

The provision for income taxes during interim reporting periods is calculated

by applying an estimate of the annual effective tax rate for the full fiscal year to ordinary income or loss for the interim reporting

The annual effective tax rate is adjusted for nondeductible expenses and other permanent differences, including changes

in fair value in our acquisition-related contingent consideration, warrant derivatives and equity securities, which resulted

in a $1.7 million decrease in income tax expense during the three months ended June 30, 2020 when compared

to the same period of the prior year.

of the Six Months Ended June 30, 2020 and 2019 (in millions)

Six Months Ended June 30,

Provision for credit losses and impairment expense

Interest expense

Pharmaceutical manufacturing, research and development expense

Change in fair value of acquisition-related contingent consideration

Depreciation and amortization expense

General and administrative

Other (expense) income, net

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Consolidated net (loss) income

generated revenues of $7.3 million and $9.4 million for the three months ended March 31, 2020 and 2019, respectively, which consisted

primarily of interest and fees earned on our finance receivables.

The decrease in revenue was primarily due to a $3.5 million

decrease in interest and fees earned on a finance receivable that was paid off during the first quarter of 2019 partially offset

by approximately $1.2 million increase in interest and fees earned on new investments or increased funding.

generated revenues of $15.2 million and $15.0 million for the six months ended June 30, 2020 and 2019, respectively.

increase in revenue was primarily the result of a $2.2 million net increase in royalty income, a $1.9 million net increase in

fees and interest earned on our finance receivables due to funding on new and existing loans, and a $0.3 million increase from

our pharmaceutical development segment.

The increase in revenue was offset by a $4.2 million decrease in interest and fees earned

on finance receivables that were paid off or paid down since the second quarter of 2019.

for Credit Losses and Impairment Expense

recognized impairment expense of $0.2 million on our debt security during the three months ended March 31, 2020.

the three months ended March 31, 2019, we recognized credit loss provision expense of $0.6 million related to the Besivance®

recognized impairment expense of $0.2 million on our debt securities during the six months ended June 30, 2020.

Please refer to

Part I, Item I, Financial Statements , Note 5 of the Notes to the unaudited condensed consolidated financial statements

for further information regarding the provision for credit loss recognized during the six months ended June 30, 2020.

the six months ended June 30, 2019, we recognized credit loss provision expense of $0.6 million related to the Besivance®

royalty, which was due to increases in sales chargebacks and various rebates (gross sales to net sales deductions) and lower sales

expense consists of unused line of credit and maintenance fees, as well as amortization of debt issuance costs on our revolving

line of credit.

Interest expense for both the three months ended March 31, 2020 and 2019 was $0.1 million.

expense includes interest on amounts borrowed, unused line of credit and maintenance fees, as well as amortization of debt issuance

costs on our revolving line of credit.

Interest expense was $0.3 million and $0.2 million for the six months ended June 30, 2020

and 2019, respectively.

On March 17, 2020, we drew $15.0 million on our revolving credit facility in order to support existing

business partners and to finance future investment opportunities, which accounts for the $0.1 million increase in interest expense.

Pharmaceutical

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Pharmaceutical

manufacturing, research and development expense totaling $1.2 million was incurred by our Pharmaceutical Development segment which

was acquired in the third quarter of 2019.

manufacturing, research and development expense totaling $2.2 million was incurred by our Pharmaceutical Development segment,

which was acquired in the third quarter of 2019.

and Amortization

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General and administrative expenses increased to $5.7

million for the three months ended March 31, 2020 from $1.3 million for the three months ended March 31, 2019, which was due to

a $0.6 million increase in consulting and advisory and legal fees, a $0.4 million increase in office and rent expenses and a $0.6

million increase in salaries and benefits expense due to the addition of Enteris, which was acquired in the third quarter of 2019.

million for the six months ended June 30, 2020 from $2.6 million for the six months ended June 30, 2019, which was due to a $1.5

million increase in salaries, benefits and stock-based compensation expense;

a $0.7 million increase in general office, insurance

and rent expense;

an $0.8 million increase in accounting, audit, legal and other professional fees;

and a $0.1 million increase

in business development expense.

The increase in general and administrative expenses were primarily due to the addition of Enteris,

which was acquired in the third quarter of 2019, along with our recent uplisting to the Nasdaq Stock Market.

Income (Expense), Net

income (expense), net for the three months ended March 31, 2020 reflected a net fair market value loss of $1.9 million on our

warrant derivatives and a net fair market value loss of $0.9 million on our Misonix common stock.

We believe that the net fair

market value losses in our warrant derivative and common stock holdings is primarily attributable to the impact the COVID-19 pandemic

in Fair Value of Warrants and Marketable Investments

income (expense), net for the six months ended June 30, 2020 reflected a net fair market value loss of $1.2 million on our warrant

derivatives and a net fair market value loss of $0.5 million on our Misonix common stock.

We believe that the net fair market

value losses in our warrant derivative and common stock holdings is primarily attributable to the impact the COVID-19 pandemic

has had on global markets.

income for the three months ended March 31, 2019 reflected a net fair market value gain of $0.3 million on our warrant derivatives.

the three months ended March 31, 2020 and 2019, we recognized income tax expense of $1.3 million and $1.1 million, respectively,

which represented effective tax rates of negative 37.0 percent and 14.2 percent, respectively.

The provision

for income taxes during interim reporting periods is calculated by applying an estimate of the annual effective tax rate for the

full fiscal year to ordinary income or loss for the interim reporting period.

The annual effective tax rate is adjusted for nondeductible

expenses and other permanent differences, including changes in fair value on our warrant derivatives and equity securities, which resulted in a $0.2 million increase in income tax expense during the three months ended March 31, 2020 when compared

to the same period of the prior year.

March 27, 2020, The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted and signed

law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19

There were no significant tax implications as a result of the CARES Act during the three months ended March 31, 2020.

income for the six months ended June 30, 2019 reflected a $1.0 million net fair market value gain on our warrant derivatives.

in Fair Value of Contingent Consideration

change in the fair value of the contingent consideration for the six months ended June 30, 2020 was $1.8 million.

The contingent

consideration is the earnout related to the August 26, 2019 acquisition of Enteris and sharing of certain milestone and royalties

due to Enteris pursuant to the License Agreement (please refer to Part I, Item 1, Financial Statements , Note 3 of the notes

to the unaudited condensed consolidated financial statements for further information on contingent consideration and the acquisition

The contingent consideration was remeasured to fair value as of June 30, 2020.

The carrying amount of the liability

may fluctuate significantly, and actual amounts paid may be materially different from the estimated value of the liability.

Tax Provision

the six months ended June 30, 2020 and 2019, we recognized income tax expense of $0.3 million and $1.8 million, respectively.

The $1.5 million decrease in income tax expense is primarily the result of our pre-tax loss position for the six months ended

June 30, 2020 compared to our pre-tax loss income position for the six months ended June 30, 2019.

and Capital Resources

of March 31, 2020, we had $24.3 million in cash and cash equivalents, compared to $11.2 million in cash and cash equivalents as

of June 30, 2020, we had $17.2 million in cash and cash equivalents, compared to $11.2 million in cash and cash equivalents as

of December 31, 2019.

The primary driver of the increase in our cash balance was a result of a $15.0 million draw on the credit

facility and receipt of $7.1 million of interest, principal, and royalty payments during the quarter.

The increase was offset

by $5.0 million of investment funding, $0.8 million of interest and loan repayments and $0.1 million to repurchase shares of the

Company’s common stock on the open market.

ability to generate cash in the future depends primarily upon our success in implementing our Finance Receivable business model

of generating income by providing capital to a broad range of life science companies, institutions and inventors, as well as the

success of our Pharmaceutical Development segment.

The primary driver of the increase in our cash balance was the result of a $15.0 million draw on our credit

facility and receipt of $15.6 million of interest, principal, and royalty payments received on our finance receivables.

was offset by $8.0 million of interest and principal payments made on our credit facility;

$6.0 million of investment funding,

net of deferred fees and origination expenses;

$3.8 million of salaries, employee benefits and accounts payable;

and $1.1 million

to repurchase shares of the Company’s common stock on the open market.

ability to generate cash in the future depends primarily upon our success in implementing our Finance Receivable segment business

model of generating income by providing capital to a broad range of life science companies, institutions and inventors, as well

as the success of our Pharmaceutical Development segment.

We generate income primarily from four sources:

Primarily owning or financing

through debt investments, royalties generated by the sales of life science products and related intellectual property;

Receiving interest and other

income by advancing capital in the form of secured debt to companies in the life science sector;

Pharmaceutical development,

manufacturing, and licensing activities utilizing the Peptelligence®

To a lesser extent, realizing

capital appreciation from equity-related investments in the life science sector.

of March 31, 2020, our finance receivables portfolio contains $178.0 million of finance receivables and $1.2 million of marketable

Primarily owning or financing through debt

investments, royalties generated by the sales of life science products and related intellectual property;

Receiving interest and other income by

advancing capital in the form of secured debt to companies in the life science sector;

Pharmaceutical development, manufacturing,

and licensing activities utilizing the Peptelligence®

To a lesser extent, realizing capital appreciation

from equity-related investments in the life science sector.

of June 30, 2020, our finance receivables portfolio contains $178.4 million of finance receivables and $1.6 million of

marketable investments.

We expect these assets to generate positive cash flows in 2020.

However, the COVID-19 pandemic has created substantial

uncertainty in the global markets and economy;

However, the COVID-19 pandemic has created

substantial uncertainty in the global markets and economy;

therefore, we will continue to monitor the short and long-term impact

this may have on our finance receivables portfolio.

We continue to evaluate multiple attractive opportunities that, if

consummated, we believe would similarly generate additional income.

Since the timing of any investment is difficult to predict,

our finance receivables segment may not be able to generate positive cash flow above what our existing assets will produce in

of March 31, 2020, our Pharmaceutical Development segment did not have a material impact on our cash flow.

We expect the Pharmaceutical

Development segment to generate positive cash flow above its expenses from proceeds received under its license agreements and

customer relationships;

however, the timing of the receipt of payments under the license agreements is uncertain and dependent

upon the success of our technology licensees’

pharmaceutical development candidates.

Also, the COVID-19 pandemic has

resulted in disruption and delays to pharmaceutical clinical trials in general and may impact the expected timing of our technology

licensees' ability to achieve milestones upon which we receive income pursuant to our license agreements.

expect in the aggregate that the Company will generate positive cash flow in excess of our expenses.

In addition, the majority of our finance receivables portfolio are debt instruments

that carry floating interest rates with a LIBOR-based interest rate floor.

Changes in interest rates, including LIBOR rates, may

affect the interest income for debt instruments with floating rates.

We believe we are well positioned to benefit should market

interest rates rise in the future.

continue to evaluate multiple attractive opportunities that, if consummated, we believe would similarly generate additional income.

Since the timing of any investment is difficult to predict, our finance receivables segment may not be able to generate positive

cash flow above what our existing assets are expected to produce in 2020.

We do not assume any near-term repayments from borrowers,

and as a result, no assurances can be given that actual results would not differ materially from the statement above.

of June 30, 2020, our Pharmaceutical Development segment did not have a material impact on our overall ability to generate

positive cash flow.

We expect the Pharmaceutical Development segment to generate positive cash flow above its expenses from

proceeds received under its license agreements and customer relationships;

however, the timing of the receipt of payments under

the license agreements is uncertain and dependent upon the success of our technology licensees’

pharmaceutical development

Also, the COVID-19 pandemic has resulted in disruption and delays to pharmaceutical clinical trials in general and

may impact the expected timing of our technology licensees’

ability to achieve milestones upon which we receive income pursuant

to our license agreements.

we expect in the aggregate that the Company will generate positive cash flow in excess of our expenses, given the abrupt decline

in global economic activity, and the uncertain recovery from such decline, caused by COVID-19, we cannot predict with this with

entered into a $20.0 million revolving credit facility in June 2018.

On March 17, 2020, the Company drew $15.0 million on its revolving

credit facility in order to support existing business partners and to finance future investment opportunities.

As of March 31,

2020, $14.3 million was outstanding under the revolving credit facility and $5.7 million was available for borrowing.

On March 17, 2020, the Company drew $15.0 million

on our revolving credit facility in order to support existing business partners and to finance future investment opportunities.

As of August 10, 2020, $4.9 million was outstanding under the revolving credit facility and $15.1 million was available for borrowing.

Sheet Arrangements

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Such transactions are used primarily to manage partner companies’

requests for funding and take the form of loan

commitments and lines of credit.

requests for funding and take the form

of loan commitments and lines of credit.

contractual amounts of commitments to extend credit represent the amounts of potential accounting loss should the contract be

2 unchanged sentences

policies in making commitments and conditional obligations as we do for on-balance sheet instruments.

Please refer to Item 1.

Financial Statements, Note 8 of the notes to the unaudited condensed consolidated financial statements.

Please refer to Part I,

Item I, Financial Statements , Note 8 of the notes to the unaudited condensed consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements