What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-25 compared with 2021-03-31 · 1034 added, 1197 removed, 374 unchanged (86% of the section changed)

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TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID #207)

Balance Sheets

Statements of Income

Statements of Stockholders’ Equity

Statements of Cash Flows

to the Consolidated Financial Statements

Of Independent Registered Public Accounting Firm

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on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of SWK Holdings Corporation and its subsidiaries (the “Company”)

as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, stockholders’

and cash flows, for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred

to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly,

in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations

and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally

accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express

an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm

registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be

independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and

regulations of the Securities and Exchange Commission and the PCAOB.

have audited the accompanying consolidated balance sheets of SWK Holdings Corporation and its subsidiaries (the Company)

as of December 31, 2021 and 2020, the related consolidated statements of income, stockholders equity, and cash flows, for each

of the two years in the period ended December 31, 2021, and the related notes (collectively referred to as the consolidated financial

statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position

of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the

period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether

due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over

financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting

but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis,

evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the

accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that

was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are

material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements,

taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical

audit matter or on the accounts or disclosures to which it relates.

The critical audit

matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated

or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated

financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical

audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating

the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which

of Finance Receivables

As described in Notes

1 and 3 to the consolidated financial statements, the Company’s consolidated finance receivables balance was $204.5 million

as of December 31, 2020, which is net of the allowance for credit losses of $8.4 million.

The Company has also generated $30.8 million

described in Note 3 to the consolidated financial statements, the Companys consolidated finance receivables balance was $181.6

million as of December 31, 2021, which is net of the allowance for credit losses of $8.4 million.

The Company generated $39.3 million

of finance receivable interest income, including fees during the year ended December 31, 2021.

The Company’s finance receivables

The Companys finance receivables

are stated at amortized cost, net of unamortized origination fees, if any.

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an accrual basis based on the effective interest rate method to the extent that the Company expects to collect such amounts.

evaluates the collectability of both interest and principal for each finance receivable to determine whether it is impaired.

evaluates the collectibility of both interest and principal for each finance receivable to determine whether it is impaired.

receivable is considered to be impaired when, based on current information and events, the Company determines it is probable that it

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value of the finance receivables and results of operations.

The principal

considerations for our determination that performing procedures relating to valuation of the finance receivables is a critical

audit matter are its overall impact on the consolidated financial statements, including the realization of the Company’s

deferred tax asset, and the significant amount of judgement by management in developing the assumptions of the expected future

cash flows, which in turn led to significant auditor judgement, subjectivity, and effort in performing audit procedures and evaluating

audit evidence relating to the expected future cash flows.

Additionally, for certain finance receivables, there may be limited

historical data with which to evaluate the expected future cash flows.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the

consolidated financial statements.

These procedures included, among others, evaluating management’s process and valuation

method for developing the estimate of expected cash flows of its finance receivables and potential credit losses, testing the

completeness and accuracy of the underlying data used in the estimate, and evaluating management’s assumptions used to estimate

future cash flows.

Evaluating management’s assumptions used to estimate future cash flows for reasonableness involved considering

historical cash flows from the Company’s finance receivable portfolio, comparing prior period estimates to actual results

of the same period, publicly available information which supports or is to the contrary of the estimated future cash flows and

determining whether the estimated cash flows used were consistent with evidence obtained in other areas of the audit.

have served as the Company’s auditor since 2006.

The principal considerations

for our determination that performing procedures relating to valuation of the finance receivables is a critical audit matter are its

overall impact on the consolidated financial statements, including the realization of the Company’s deferred tax asset, and the

significant amount of judgement by management in developing the assumptions of the expected future cash flows, which in turn led to significant

auditor judgement, subjectivity, and effort in performing audit procedures and evaluating audit evidence relating to the expected future

Additionally, for certain finance receivables, there may be limited historical data with which to evaluate the expected future

Addressing the matter

involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial

These procedures included, among others, evaluating management’s process and valuation method for developing the estimate

of expected cash flows of its finance receivables and potential credit losses, testing the completeness and accuracy of the underlying

data used in the estimate, and evaluating management’s assumptions used to estimate future cash flows.

Evaluating management’s

assumptions used to estimate future cash flows for reasonableness involved considering historical cash flows from the Company’s

finance receivable portfolio, comparing prior period estimates to actual results of the same period, publicly available information which

supports or is to the contrary of the estimated future cash flows and determining whether the estimated cash flows used were consistent

with evidence obtained in other areas of the audit.

PCAOB Number:

have served as the Company’s auditor since 2006.

Jose, California

March 25, 2022

HOLDINGS CORPORATION

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Marketable investments

Investment in TRT

Deferred tax asset, net

Cost method investment

Deferred tax assets, net

Warrant assets

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Other non-current assets

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

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Contingent consideration payable

Warrant liability

Other non-current liabilities

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Commitments and contingencies (Note 7)

Stockholders’

Stockholders’ equity:

Preferred Stock, $ 0.001 par value;

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Accumulated deficit

Total SWK Holdings Corporation stockholders’

Total liabilities and stockholders’

( 4,164,496 )

( 4,190,425 )

Total stockholders’ equity

Total liabilities and stockholders’ equity

See accompanying

notes to the consolidated financial statements.

SWK HOLDINGS CORPORATION

HOLDINGS CORPORATION

STATEMENTS OF INCOME

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Costs and expenses:

Provision for loan credit losses

Impairment expense

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Depreciation and amortization expense

Interest expense

Change in fair value of acquisition-related contingent consideration

Interest expense

Total costs and expenses

Other (expense) income, net:

Unrealized net (loss) gain on derivatives

Unrealized net (loss) gain on equity securities

Gain on sale of investments

Income before income tax benefit

Income tax benefit

Other income (expense), net

Unrealized net gain (loss) on warrants

Unrealized net gain (loss) on equity securities

Realized (loss) gain on sale of investments

Income before income tax expense (benefit)

Income tax expense (benefit)

Consolidated net income

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HOLDINGS CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31,

Consolidated net income

Other comprehensive income, net of tax

Comprehensive income

See accompanying

notes to the consolidated financial statements.

HOLDINGS CORPORATION

STATEMENTS OF STOCKHOLDERS’

STATEMENTS OF STOCKHOLDERS’ EQUITY

thousands, except share data)

Stockholders’

at December 31, 2018

$ (4,219,455 )

Paid-In Capital

Stockholders’

Balances at December 31, 2019

Stock-based compensation

Issuance of common

Repurchases of common

stock in open market

Cumulative effect of

adoption of ASU 2016-01

Issuance of common stock upon vesting of

restricted stock

Issuances of common stock in lieu of employee cash bonuses

Repurchases of common stock in open market

Balances at December 31, 2020

Stock-based compensation

Issuance of common

stock in lieu of employee cash bonuses

Repurchases of common

stock in open market

at December 31, 2020

$ (4,190,425 )

Issuance of common stock upon vesting of

restricted stock

settlement for employee taxes on restricted stock and options

options exercised, net

Balances at December 31, 2021

See accompanying

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STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

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Adjustments to reconcile net income to net cash provided by operating activities

Provision for loan credit losses

Amortization of debt issuance costs

Impairment expense

Amortization of debt issuance costs

Deferred income taxes

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Change in fair value of equity securities

Gain on sale of investments

Loss (gain) on sale of investments

Change in fair value of acquisition-related contingent consideration

Loan discount amortization and fee accretion

Loan discount and fee accretion

Interest paid-in-kind

Stock-based compensation

Interest income in excess of cash collected

Depreciation and amortization

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Cash flows from investing activities:

Acquisition of business, net of cash acquired

Cash received from settlement of warrants

Proceeds from sale of investments

Investment in equity securities

Cash received from settlement of warrants and equity securities

Investment in finance receivables

Repayment of finance receivables

Corporate debt security principal payment

Corporate debt securities principal payments

Purchases of property and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

settlement for employee taxes on restricted stock and options

Repurchases of common stock, including fees and expenses

Net proceeds and payments under credit facility

Net (payments on) proceeds from credit facility

Payment of acquisition-related contingent consideration

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Fair value of common stock issued in lieu of employee cash bonuses

Contingent consideration in connection with business combination

Cash paid for interest

Fair value of common stock received in connection with payoff of term loan

See accompanying

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SWK Holdings Corporation and Summary of Significant Accounting Policies

Nature of Operations

Holdings Corporation (the “Company”) was incorporated in July 1996 in California and reincorporated in Delaware in

September 1999.

of Operations

Holdings Corporation (the “Company”) was incorporated in July 1996 in California and reincorporated in Delaware in September

In July 2012, the Company commenced its strategy of building a specialty finance and asset management business.

In August 2019, the Company commenced a complementary strategy of building a pharmaceutical development, manufacturing and intellectual

property licensing business.

The Company’s operations comprise two reportable segments:

“Finance Receivables”

and “Pharmaceutical Development.”

The Company allocates capital to each segment in order to generate income through

the sales of life science products by third parties.

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

the Company had 34 employees.

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

In August 2019,

the Company commenced a complementary strategy of building a pharmaceutical development, manufacturing and intellectual property licensing

The Company’s operations comprise two reportable segments:

“Finance Receivables” and “Pharmaceutical

Development.” The Company allocates capital to each segment in order to generate income through the sales of life science products

by third parties.

The Company is headquartered in Dallas, Texas.

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

and substantial asset.

However, at this time, under current law, the Company does not anticipate that the Finance Receivables

and/or Pharmaceutical Development segments will generate sufficient income to permit the Company to utilize all of its NOLs prior

to their respective expiration dates.

As such, it is possible that the Company might pursue additional strategies that it believes

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

of March 25, 2021, the Company and its partners have executed transactions with 41 different parties under its specialty

finance strategy, funding an aggregate $584.0 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.

However, at this time, under current law, the Company does not anticipate that the Finance Receivables and/or

Pharmaceutical Development segments will generate sufficient income to permit the Company to utilize all of its NOLs prior to their respective

expiration dates.

As such, it is possible that the Company might pursue additional strategies that it believes might result in the ability

to utilize more of the NOLs.

of March 21, 2022, the Company and its partners have executed transactions with 43 different parties under its specialty finance

strategy, funding an aggregate $619.7 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.

(“Enteris”).

SWK Products Holdings LLC (“SWK Products”), a wholly-owned subsidiary of the Company, entered

into a merger agreement pursuant to which Enteris became a wholly-owned subsidiary of SWK Products.

is a clinical stage biopharmaceutical company offering innovative formulation solutions built around its proprietary oral drug

delivery technologies, the Peptelligence®

Since its founding in 2013, Enteris has advanced multiple internal and

external programs leveraging Peptelligence®, which enables the oral delivery of molecules that are typically injected, including

peptides and BCS Class II, III, and IV small molecules, in an enteric-coated tablet formulation.

Peptelligence®

unique multifaceted approach to increase the solubility and absorption of peptides and small molecules, addressing the complex

challenges regarding solubility and permeability of therapeutics with low oral bioavailability.

Peptelligence®

by an extensive patent estate that extends until 2036.

Basis of Presentation

and Principles of Consolidation

Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in

the United States.

The consolidated financial statements include the accounts of all subsidiaries and affiliates in which the

Company holds a controlling financial interest as of the financial statement date.

Normally a controlling financial interest reflects

ownership of a majority of the voting interests.

The Company consolidates a variable interest entity (“VIE”) when

it possesses both the power to direct the activities of the VIE that most significantly impact its economic performance and the

Company is either obligated to absorb the losses that could potentially be significant to the VIE or the Company holds the right

to receive benefits from the VIE that could potentially be significant to the VIE, after elimination of intercompany accounts

and transactions.

Enteris is a clinical stage biopharmaceutical company offering innovative formulation solutions built around its proprietary oral drug

delivery technologies, the Peptelligence® platform.

Since its founding in 2013, Enteris has advanced multiple internal and external

programs leveraging Peptelligence®, which enables the oral delivery of molecules that are typically injected, including peptides

and BCS Class II, III, and IV small molecules, in an enteric-coated tablet formulation.

Peptelligence® utilizes a unique multifaceted

approach to increase the solubility and absorption of peptides and small molecules, addressing the complex challenges regarding solubility

and permeability of therapeutics with low oral bioavailability.

Peptelligence® is protected by an extensive patent estate, some of

which extends until 2036.

of Presentation and Principles of Consolidation

Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United

The consolidated financial statements include the accounts of all subsidiaries and affiliates in which the Company holds a controlling

financial interest as of the financial statement date.

Normally a controlling financial interest reflects ownership of a majority of

the voting interests.

The Company consolidates a variable interest entity (“VIE”) when it possesses both the power to direct

the activities of the VIE that most significantly impact its economic performance and the Company is either obligated to absorb the losses

that could potentially be significant to the VIE or the Company holds the right to receive benefits from the VIE that could potentially

be significant to the VIE, after elimination of intercompany accounts and transactions.

Company owns interests in various partnerships and limited liability companies, or LLCs.

The Company consolidates its investments

in these partnerships or LLCs, where the Company, as the general partner or managing member, exercises effective control, even

though the Company’s ownership may be less than 50 percent, the related governing agreements provide the Company with broad

powers, and the other parties do not participate in the management of the entities and do not effectively have the ability to

remove the Company.

The Company has reviewed each of the underlying agreements to determine if it has effective control.

If circumstances

change and it is determined this control does not exist, any such investment would be recorded using the equity method of accounting.

Although this would change individual line items within the Company’s consolidated financial statements, it would have no

effect on its operations and/or total stockholders’

equity attributable to the Company.

The Company consolidates its investments in

these partnerships or LLCs, where the Company, as the general partner or managing member, exercises effective control, even though the

Company’s ownership may be less than 50 percent, the related governing agreements provide the Company with broad powers, and the

other parties do not participate in the management of the entities and do not effectively have the ability to remove the Company.

Company has reviewed each of the underlying agreements to determine if it has effective control.

If circumstances change and it is determined

this control does not exist, any such investment would be recorded using the equity method of accounting.

Although this would change

individual line items within the Company’s consolidated financial statements, it would have no effect on its operations and/or

total stockholders’ equity attributable to the Company.

Reclassification

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The amounts for prior periods have been reclassified

to be consistent with current year presentation and have no impact on previously reported total assets, total stockholders’

to be consistent with current year presentation and have no impact on previously reported total assets, total stockholders’ equity

or net income.

Use of Estimates

preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates

and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements

and the reported amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions are required

in the determination of revenue recognition;

preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and

assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported

amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions are required in the determination

of revenue recognition;

stock-based compensation;

valuation of accounts receivable;

impairment of finance

impairment of finance receivables;

long-lived assets;

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and contingencies and litigation, among others.

Some of these judgments can be subjective

and complex, and consequently, actual results may differ from these estimates.

The Company’s estimates often are based on

complex judgments, probabilities and assumptions that it believes to be reasonable but that are inherently uncertain and unpredictable.

For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are

Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic

As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions

may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause changes to those

estimates and assumptions.

Market conditions, such as illiquid credit markets, health crises such as the COVID-19 global pandemic,

volatile equity markets, and economic downturns, can increase the uncertainty already inherent in the Company’s estimates

and assumptions.

The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change.

Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required

to be treated retrospectively under the relevant accounting standard.

It is possible that other professionals, applying reasonable

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

most significant estimates and assumptions are used to determine amounts and values of, but are not limited to:

revenue recognition

related to product and collaboration revenue;

acquisition date fair value and subsequent fair value estimates used to assess impairment

of long-lived assets, including goodwill;

licensing agreements;

in-process research and development;

other intangible assets;

contingent consideration;

and income taxes, inclusive of a valuation allowance.

Business Combination

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 2, Business Combinations , for further information regarding

our acquisition of Enteris.

Segment Information

Some of these judgments can be subjective and complex, and consequently, actual results

may differ from these estimates.

The Company’s estimates often are based on complex judgments, probabilities and assumptions that

it believes to be reasonable but that are inherently uncertain and unpredictable.

For any given individual estimate or assumption made

by the Company, there may also be other estimates or assumptions that are reasonable.

Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic environment.

As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be

incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause changes to those estimates and assumptions.

Market conditions, such as illiquid credit markets, health crises such as the COVID-19 global pandemic, volatile equity markets, and

economic downturns, can increase the uncertainty already inherent in the Company’s estimates and assumptions.

The Company adjusts

its estimates and assumptions when facts and circumstances indicate the need for change.

Those changes generally will be reflected in

our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant

accounting standard.

It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could

develop and support a range of alternative estimated amounts.

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

its specialty finance and asset management business offering

customized financing solutions to a broad range of life-sciences companies, and as of August 26, 2019, the Company’s business

offering oral therapeutic formulation solutions built around Enteris’

pharmaceutical Peptelligence®

platform, which

enables the oral delivery of molecules that are typically injected, including peptides and BCS Class II, III, and IV small molecules

in an enteric-coated tablet formulation.

financial results of Enteris are included in the Pharmaceutical Development segment as of the acquisition date.

its specialty finance and asset management business offering customized

financing solutions to a broad range of life-sciences companies, and its business offering oral therapeutic formulation solutions built

around Enteris’ pharmaceutical Peptelligence® platform, which enables the oral delivery of molecules that are typically injected,

including peptides and BCS Class II, III, and IV small molecules in an enteric-coated tablet formulation.

and Intangible Assets

Company’s methodology for allocating the purchase price of an acquisition is based on established valuation techniques that

reflect the consideration of a number of factors, including a valuation performed by a third-party appraiser.

Goodwill is measured

as the excess of the cost of an acquired business over the fair value assigned to identifiable assets acquired and liabilities

Goodwill is considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is

less than its carrying value.

If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment

is recognized based on that difference, not to exceed the carrying amount of goodwill.

A reporting unit is an operating segment

or a component of an operating segment provided that the component constitutes a business for which discrete financial information

is available and management regularly reviews the operating results of that component.

Goodwill arising from the Enteris acquisition

has been allocated to the Pharmaceutical Development segment.

Company’s methodology for allocating the purchase price of an acquisition is based on established valuation techniques that reflect

the consideration of a number of factors, including a valuation performed by a third-party appraiser.

Goodwill is measured as the excess

of the cost of an acquired business over the fair value assigned to identifiable assets acquired and liabilities assumed.

considered impaired when the estimated fair value of the reporting unit that was allocated the goodwill is less than its carrying value.

If the estimated fair value of such reporting unit is less than its carrying value, goodwill impairment is recognized based on that difference,

not to exceed the carrying amount of goodwill.

A reporting unit is an operating segment or a component of an operating segment provided

that the component constitutes a business for which discrete financial information is available and management regularly reviews the

operating results of that component.

Goodwill arising from the Enteris acquisition has been allocated to the Pharmaceutical Development

intangible assets are amortized over their estimated useful life, which is the period over which the assets are expected to contribute

directly or indirectly to the future cash flows of the Company.

Intangible assets should be tested for impairment at the time

of a triggering event, if one were to occur.

Finite-lived intangible assets may be impaired when the estimated undiscounted future

cash flows generated from the assets are less than their carrying amounts.

are stated at the lower of cost or net realizable value, valued at specifically identified cost which approximates the first-in,

first-out (“FIFO”) method.

The components of inventory include raw materials of $0.1 million and $0.2 million as of

December 31, 2020 and 2019 and are reflected in current assets in the consolidated balance sheets.

Goodwill and indefinite-lived intangible assets are not amortized, but

instead, are subject to annual impairment testing.

We review goodwill and indefinite-lived intangible assets for impairment annually

during the fourth quarter and continually assess whether a triggering event has occurred to determine whether the carrying value exceeds

the implied fair value.

For the years ended December 31, 2021 and 2020, the Company determined there were no indicators of impairment

relating to identifiable finite-lived intangible assets.

identification and measurement of goodwill impairment involves the estimation of the fair value of the reporting unit.

We have the option

to assess impairment through a qualitative assessment, which includes factors such as general economic conditions, negative developments

in equity and credit markets, adverse changes in the markets in which a reporting unit operates, increases in input costs that have a

negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others.

a potential impairment is indicated, we perform quantitative testing by comparing the estimated fair value of the reporting unit to the

carrying value of the reported net assets.

Under our quantitative testing, fair value is generally based on the income approach using

a calculation of discounted cash flows, based on the most recent financial projections for the reporting unit.

The revenue growth rates

included in the financial projections are our best estimates based on current and forecasted market conditions, and the profit margin

assumptions are projected by the reporting unit based on current cost structure and, when applicable, anticipated net cost reductions.

on the Company’s 2021 goodwill impairment testing, no goodwill impairment was indicated as of December 31, 2021.

are stated at the lower of cost or net realizable value, valued at specifically identified cost which approximates the first-in, first-out

The components of inventory include raw materials of $ 0.6 million and $ 0.1 million as of December 31, 2021 and 2020 and are reflected

in current assets in the consolidated balance sheets.

and Equipment, Net

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are capitalized, while minor replacements, maintenance, and repairs are charged to expense as incurred.

In addition, we capitalize

interest on borrowings during the active construction period of capital projects.

Capitalized interest is added to the cost of

the assets and depreciated over the estimated useful lives of the assets.

Leased property meeting certain criteria is capitalized

and the present value of the related lease payments is recorded as a liability and included in current liabilities.

In addition, we capitalize interest

on borrowings during the active construction period of capital projects.

Capitalized interest is added to the cost of the assets and

depreciated over the estimated useful lives of the assets.

Leased property meeting certain criteria is capitalized and the present value

of the related lease payments is recorded as a liability and included in current liabilities.

is recorded over the estimated useful lives of the assets involved using the straight-line method.

Leasehold improvements and

capitalized lease assets are amortized to depreciation expense over the estimated useful life of the asset or the respective lease

term used in determining lease classification, whichever is shorter.

Leasehold improvements and capitalized

lease assets are amortized to depreciation expense over the estimated useful life of the asset or the respective lease term used in determining

lease classification, whichever is shorter.

The range of estimated useful lives is as follows:

of Useful Life of Property and Equipment, Net

of lease term or useful life

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revenue includes amounts that have been billed per the contractual terms but have not been recognized as revenue.

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

Deferred revenue was $0.4 million and $0.1 million as of December 31, 2020 and 2019, respectively, and is included

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

The Company classifies

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

Deferred revenue

was $0.2 million and $0.4 million as of December 31, 2021 and 2020, respectively, and is included in accounts payable and accrued liabilities

in the consolidated balance sheets.

and Development

and development expenses include the costs associated with internal research and development and research and development conducted

for the Company by third parties.

These costs primarily consist of salaries, pre-clinical and clinical trials, outside consultants,

and supplies.

and development expenses include the costs associated with internal research and development and research and development conducted for

the Company by third parties.

These costs primarily consist of salaries, pre-clinical and clinical trials, outside consultants, and supplies.

All research and development costs discussed above are expensed as incurred.

Third-party expenses reimbursed under

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

and development expense in the consolidated statements of income.

Cost Method Investment

Company holds an investment in TRT.

The common stock of TRT does not have a readily determinable fair value and is measured at cost minus

impairment, if any.

Management regularly evaluates the recoverability of its investment in TRT based on TRT’s performance and financial

position, including the status of its intellectual property and related intellectual property licensing agreements.

During the year ended

December 31, 2020, the Company evaluated the recoverability of its investment in TRT and determined there were no indicators of impairment.

Third-party expenses reimbursed under research and development

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

the consolidated statements of income.

Company extends credit to customers through a variety of financing arrangements, including revenue interest term loans.

outstanding on loans are referred to as finance receivables and are included in finance receivables on the consolidated

balance sheets.

It is the Company’s expectation that the loans originated will be held for the foreseeable future or until

In certain situations, for example to manage concentrations and/or credit risk, some or all of certain exposures may

Loans for which the Company has the intent and ability to hold for the foreseeable future or until maturity are classified

as held for investment (“HFI”).

If the Company no longer has the intent or ability to hold loans for the foreseeable

future, then the loans are transferred to held for sale (“HFS”).

Loans entered into with the intent to resell are

classified as HFS.

it is determined that a loan should be transferred from HFI to HFS, then the balance is transferred at the lower of cost or fair

At the time of transfer, a write-down of the loan is recorded as an impairment when the carrying amount exceeds fair value

and the difference relates to credit quality.

Otherwise the write-down is recorded as a reduction in finance receivable interest

income, and any loan loss reserve is reversed.

Once classified as HFS, the amount by which the carrying value exceeds fair value

is recorded as a valuation allowance and is reflected as a reduction to finance receivable interest income.

it is determined that a loan should be transferred from HFS to HFI, the loan is transferred at the lower of cost or fair value

on the transfer date, which coincides with the date of change in management’s intent.

The difference between the carrying

value of the loan and the fair value, if lower, is reflected as a loan discount at the transfer date, which reduces its carrying

Subsequent to the transfer, the discount is accreted into earnings as an increase to finance revenue interest income over

the life of the loan using the effective interest method.

The amounts outstanding

on loans are referred to as finance receivables and are included in finance receivables on the consolidated balance sheets.

Company’s expectation that the loans originated will be held for the foreseeable future or until maturity.

In certain situations,

for example to manage concentrations and/or credit risk, some or all of certain exposures may be sold.

Loans for which the Company has

the intent and ability to hold for the foreseeable future or until maturity are classified as held for investment (“HFI”).

If the Company no longer has the intent or ability to hold loans for the foreseeable future, then the loans are transferred to held for

sale (“HFS”).

Loans entered into with the intent to resell are classified as HFS.

it is determined that a loan should be transferred from HFI to HFS, then the balance is transferred at the lower of cost or fair value.

At the time of transfer, a write-down of the loan is recorded as an impairment when the carrying amount exceeds fair value and the difference

relates to credit quality.

Otherwise the write-down is recorded as a reduction in finance receivable interest income, and any loan loss

reserve is reversed.

Once classified as HFS, the amount by which the carrying value exceeds fair value is recorded as a valuation allowance

and is reflected as a reduction to finance receivable interest income.

it is determined that a loan should be transferred from HFS to HFI, the loan is transferred at the lower of cost or fair value on the

transfer date, which coincides with the date of change in management’s intent.

The difference between the carrying value of the

loan and the fair value, if lower, is reflected as a loan discount at the transfer date, which reduces its carrying value.

to the transfer, the discount is accreted into earnings as an increase to finance revenue interest income over the life of the loan using

the effective interest method.

Company accounts for its finance receivables at amortized cost, net of unamortized origination fees, if any.

Related fees and

costs are recorded net of any amounts reimbursed, and interest is accreted or accrued to interest revenue using the effective

interest method.

When and if supplemental payments are received from these long-term receivables, an adjustment to the estimated

effective interest rate is affected prospectively.

Company evaluates the collectability of both interest and principal for each loan to determine whether it is impaired.

is considered to be impaired when, based on current information and events, the Company determines it is probable that it will

be unable to collect amounts due according to the existing contractual terms.

When a loan is considered to be impaired, the amount

of loss is calculated by comparing the carrying value of the financial asset to the value determined by discounting the expected

future cash flows at the loan’s effective interest rate or to the estimated fair value of the underlying collateral, less

costs to sell, if the loan is collateralized and the Company expects repayment to be provided solely by the collateral.

assessments require significant judgments and are based on significant assumptions related to the borrower’s credit risk,

financial performance, expected sales, and estimated fair value of the collateral.

Allowance for Credit

Losses on Finance Receivables

Related fees and costs are

recorded net of any amounts reimbursed, and interest is accreted or accrued to interest revenue using the effective interest method.

When and if supplemental payments are received from these long-term receivables, an adjustment to the estimated effective interest rate

is affected prospectively.

Company evaluates the collectibility of both interest and principal for each loan to determine whether it is impaired.

A loan is considered

to be impaired when, based on current information and events, the Company determines it is probable that it will be unable to collect

amounts due according to the existing contractual terms.

When a loan is considered to be impaired, the amount of loss is calculated by

comparing the carrying value of the financial asset to the value determined by discounting the expected future cash flows at the loan’s

effective interest rate or to the estimated fair value of the underlying collateral, less costs to sell, if the loan is collateralized

and the Company expects repayment to be provided solely by the collateral.

Impairment assessments require significant judgments and are

based on significant assumptions related to the borrower’s credit risk, financial performance, expected sales, and estimated fair

value of the collateral.

for Credit Losses on Finance Receivables

allowance for credit losses is intended to provide for credit losses inherent in the finance receivables portfolio and is periodically

reviewed for adequacy considering credit quality indicators, including expected and historical losses and levels of and trends

in past due loans, non-performing assets and impaired loans, collateral values and economic conditions.

The allowance for credit

losses is determined based on specific allowances for loans that are impaired, based upon the value of underlying collateral or

projected cash flows.

Changes to the allowance for credit losses are recorded in the provision for loan credit losses in the consolidated

statement of income.

Marketable Investments

Company’s marketable investment portfolio includes debt and equity securities as of December 31, 2020.

reviewed for adequacy considering credit quality indicators, including expected and historical losses and levels of and trends in past

due loans, non-performing assets and impaired loans, collateral values and economic conditions.

The allowance for credit losses is determined

based on specific allowances for loans that are impaired, based upon the value of underlying collateral or projected cash flows.

to the allowance for credit losses are recorded in the provision for loan credit losses in the consolidated statement of income.

Company’s marketable investment portfolio includes debt and equity securities as of December 31, 2021.

Equity securities that have

1 unchanged sentence

The debt security is classified

as an available-for-sale security, which is reported at fair value with unrealized gains or losses recorded in statements of other

comprehensive income, net of applicable income taxes.

In any case where fair value might fall below amortized cost, the Company would

consider whether that security is other-than temporarily impaired using all available information about the collectability of the security.

The Company would not consider that an other-than temporary impairment for a debt security has occurred if (1) the Company does not intend

to sell the debt security, (2) it is not more likely than not that the Company will be required to sell the debt security before recovery

of its amortized cost basis and (3) the present value of estimated cash flows will fully cover the amortized cost of the security.

Company would consider that an other-than-temporary impairment has occurred if any of the above mentioned three conditions are not met.

a debt security for which an other-than-temporary impairment is considered to have occurred, the Company would recognize the entire

difference between the amortized cost and the fair value in earnings if the Company intends to sell the debt security or it is

more likely than not that the Company will be able to sell the debt security before recovery of its amortized cost basis.

Company does not intend to sell the debt security and it is not more likely than not that the Company will be required to sell

the debt security before recovery of its amortized cost basis, the Company would separate the difference between the amortized

cost and the fair value of the debt security into the credit loss component and the non-credit loss component.

The credit loss

component would be recognized in earnings and the non-credit loss component would be recognized in other comprehensive income,

net of applicable income taxes.

as an available-for-sale security, which is reported at fair value with unrealized gains or losses recorded in statements of other comprehensive

income, net of applicable income taxes.

In any case where fair value might fall below amortized cost, the Company would consider whether

that security is other-than temporarily impaired using all available information about the collectibility of the security.

would not consider that an other-than temporary impairment for a debt security has occurred if (1) the Company does not intend to sell

the debt security, (2) it is not more likely than not that the Company will be required to sell the debt security before recovery of

its amortized cost basis and (3) the present value of estimated cash flows will fully cover the amortized cost of the security.

would consider that an other-than-temporary impairment has occurred if any of the above mentioned three conditions are not met.

a debt security for which an other-than-temporary impairment is considered to have occurred, the Company would recognize the entire difference

between the amortized cost and the fair value in earnings if the Company intends to sell the debt security or it is more likely than

not that the Company will be able to sell the debt security before recovery of its amortized cost basis.

If the Company does not intend

to sell the debt security and it is not more likely than not that the Company will be required to sell the debt security before recovery

of its amortized cost basis, the Company would separate the difference between the amortized cost and the fair value of the debt security

into the credit loss component and the non-credit loss component.

The credit loss component would be recognized in earnings and the non-credit

loss component would be recognized in other comprehensive income, net of applicable income taxes.

derivatives held by the Company are recognized in the consolidated balance sheets at fair value.

The accounting treatment for

subsequent changes in the fair value depends on their use, and whether they qualify as effective “hedges”

for accounting

Derivatives that are not hedges must be adjusted to fair value through the consolidated statements of income.

If a derivative

is a hedge, then depending on its nature, changes in its fair value will be either offset against change in the fair value of

hedged assets or liabilities through the consolidated statements of income or recorded in other comprehensive income.

had no derivatives designated as hedges as of December 31, 2020 and 2019.

The Company holds warrants issued to the Company in

conjunction with term loan investments discussed in Note 3.

These warrants meet the definition of a derivative and are included

in warrant assets in the consolidated balance sheets.

The Company issued a warrant on its own common stock as discussed in Note

The warrant expired on September 6, 2020.

Revenue Recognition

Finance Receivables Segment

Company’s Finance Receivables segment records interest income on an accrual basis based on the effective interest rate method

to the extent that it expects to collect such amounts.

The Company recognizes investment management fees when clients invest in

our recommended transactions as earned over the period the services are rendered.

In general, the majority of investment management

fees earned are charged either monthly or quarterly.

Incentive fees, if any, are recognized when earned at the end of the relevant

performance period, pursuant to the underlying contract.

The Company has not recognized any management or incentive fees in 2019

Other service revenues are recognized when contractual obligations are fulfilled or as services are provided.

Pharmaceutical Development Segment

Company’s Pharmaceutical Development segment enters into collaboration and licensing agreements with strategic partners,

under which it may exclusively license rights to research, develop, manufacture and commercialize its product candidates to third

The accounting treatment for subsequent

changes in the fair value depends on their use, and whether they qualify as effective “hedges” for accounting purposes.

that are not hedges must be adjusted to fair value through the consolidated statements of income.

If a derivative is a hedge, then depending

on its nature, changes in its fair value will be either offset against change in the fair value of hedged assets or liabilities through

the consolidated statements of income or recorded in other comprehensive income.

The Company had no derivatives designated as hedges

as of December 31, 2021 and 2020.

The Company holds warrants issued to the Company in conjunction with term loan investments discussed

These warrants meet the definition of a derivative and are included in warrant assets in the consolidated balance sheets.

Receivables Segment

Company’s Finance Receivables segment records interest income on an accrual basis based on the effective interest rate method to

the extent that it expects to collect such amounts.

The Company recognizes investment management fees when clients invest in our recommended

transactions as earned over the period the services are rendered.

In general, the majority of investment management fees earned are charged

either monthly or quarterly.

Incentive fees, if any, are recognized when earned at the end of the relevant performance period, pursuant

to the underlying contract.

The Company did not recognize any management or incentive fees in 2021 or 2020.

Other service revenues are

recognized when contractual obligations are fulfilled or as services are provided.

Pharmaceutical

Development Segment

Company’s Pharmaceutical Development segment enters into collaboration and licensing agreements with strategic partners, under

which it may exclusively license rights to research, develop, manufacture and commercialize its product candidates to third parties.

The terms of these arrangements typically include payment to the Company of one or more of the following:

non-refundable,

upfront license fees;

non-refundable, upfront license

reimbursement of certain costs;

customer option exercise fees;

development, regulatory and commercial milestone

and royalties on net sales of licensed products.

determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the

Company performs the following steps:

development, regulatory and commercial milestone payments;

and royalties

on net sales of licensed products.

determining the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements, the Company

performs the following steps:

(i) identification of the promised goods or services in the contract;

(ii) determination

of whether the promised goods or services are performance obligations including whether they are distinct in the context of the

(iii) measurement of the transaction price, including the constraint on variable consideration;

(iv) allocation of the

transaction price to the performance obligations;

and (v) recognition of revenue when (or as) the Company satisfies each performance

As part of the accounting for these arrangements, the Company must use its judgment to determine:

a) the number of

performance obligations based on the determination under step (ii) above;

(ii) determination of whether the

promised goods or services are performance obligations including whether they are distinct in the context of the contract;

(iii) measurement

of the transaction price, including the constraint on variable consideration;

(iv) allocation of the transaction price to the performance

and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

As part of the accounting

for these arrangements, the Company must use its judgment to determine:

(a) the number of performance obligations based on the determination

under step (ii) above;

(b) the transaction price under step (iii) above;

the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price

in step (iv) above;

and d) the contract term and pattern of satisfaction of the performance obligations under step (v) above.

The Company uses judgment to determine whether milestones or other variable consideration, except for royalties, should be included

in the transaction price as described further below.

The transaction price is allocated to each performance obligation on a relative

stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract

are satisfied.

received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s consolidated

balance sheets.

Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified

as current deferred revenue.

Amounts not expected to be recognized as revenue within the 12 months following the balance sheet

date are classified as deferred revenue, net of current portion.

Deferred revenue as of December 31, 2020 and 2019 was $0.4

million and $0.1 million and is classified as current deferred revenue in the consolidated balance sheets.

Company evaluates collaboration agreements with respect to FASB ASC Topic 808, Collaborative Arrangements , considering

the nature and contractual terms of the arrangement and the nature of its business operations to determine the classification

of the transactions.

When the Company is an active participant in the activity and exposed to significant risks and rewards dependent

on the commercial success of the collaboration, it will record its transactions on a gross basis in the consolidated financial

statements and describe the rights and obligations under the collaborative arrangement in the notes to the consolidated financial

the license to the Company’s intellectual property is determined to be distinct from the other promises or performance obligations

identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when

the license is transferred to the customer and the customer is able to use and benefit from the license.

In assessing whether

a promise or performance obligation is distinct from the other promises, the Company considers factors such as the research, manufacturing

and commercialization capabilities of the collaboration partner;

identified in the contract for the allocation of transaction price in step (iv) above;

and (d) the contract term and pattern of satisfaction

of the performance obligations under step (v) above.

The Company uses judgment to determine whether milestones or other variable consideration,

except for royalties, should be included in the transaction price as described further below.

The transaction price is allocated to each

performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance

obligations under the contract are satisfied.

received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s consolidated balance

Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current

deferred revenue.

Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified

as deferred revenue, net of current portion.

Deferred revenue as of December 31, 2021 and 2020 was $ 0.2 million and $ 0.4 million and

is classified as current deferred revenue and is included in accounts payable and accrued liabilities in the consolidated balance sheets.

Company evaluates collaboration agreements with respect to FASB ASC Topic 808, Collaborative

Arrangements , considering the nature and contractual terms of the arrangement and the nature of its business operations to

determine the classification of the transactions.

When the Company is an active participant in the activity and exposed to significant

risks and rewards dependent on the commercial success of the collaboration, it will record its transactions on a gross basis in the consolidated

financial statements and describe the rights and obligations under the collaborative arrangement in the notes to the consolidated financial

the license to the Company’s intellectual property is determined to be distinct from the other promises or performance obligations

identified in the arrangement, the Company recognizes revenue from non-refundable, upfront fees allocated to the license when the license

is transferred to the customer and the customer is able to use and benefit from the license.

In assessing whether a promise or performance

obligation is distinct from the other promises, the Company considers factors such as the research, manufacturing and commercialization

capabilities of the collaboration partner;

the retention of any key rights by the Company;

and the availability

of the associated expertise in the general marketplace.

In addition, the Company considers whether the collaboration partner can

benefit from a promise for its intended purpose without the receipt of the remaining promises, whether the value of the promise

is dependent on the unsatisfied promise, whether there are other vendors that could provide the remaining promise, and whether

it is separately identifiable from the remaining promise.

For licenses that are combined with other promises, the Company exercises

judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation

is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing

The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance

and related revenue recognition.

The measure of progress, and thereby periods over which revenue should be recognized, are subject

to estimates by management and may change over the course of the research and development and licensing agreement.

Such a change

could have a material impact on the amount of revenue the Company records in future periods.

an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the

goods and services underlying the customer options are not considered to be performance obligations at the outset of the arrangement,

as they are contingent upon option exercise.

The Company evaluates the customer options for material rights, or options to acquire

additional goods or services for free or at a discount.

If the customer options are determined to represent a material right,

the material right is recognized as a separate performance obligation at the outset of the arrangement.

The Company allocates

the transaction price to material rights based on the relative standalone selling price, which is determined based on the identified

discount and the probability that the customer will exercise the option.

Amounts allocated to a material right are not recognized

as revenue until, at the earliest, the option is exercised.

and the availability of the associated expertise

in the general marketplace.

In addition, the Company considers whether the collaboration partner can benefit from a promise for its intended

purpose without the receipt of the remaining promises, whether the value of the promise is dependent on the unsatisfied promise, whether

there are other vendors that could provide the remaining promise, and whether it is separately identifiable from the remaining promise.

For licenses that are combined with other promises, the Company exercises judgment to assess the nature of the combined performance obligation

to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate

method of measuring progress for purposes of recognizing revenue.

The Company evaluates the measure of progress each reporting period

and, if necessary, adjusts the measure of performance and related revenue recognition.

The measure of progress, and thereby periods over

which revenue should be recognized, are subject to estimates by management and may change over the course of the research and development

and licensing agreement.

Such a change could have a material impact on the amount of revenue the Company records in future periods.

an arrangement is determined to contain customer options that allow the customer to acquire additional goods or services, the goods and

services underlying the customer options are not considered to be performance obligations at the outset of the arrangement, as they are

contingent upon option exercise.

The Company evaluates the customer options for material rights, or options to acquire additional goods

or services for free or at a discount.

If the customer options are determined to represent a material right, the material right is recognized

as a separate performance obligation at the outset of the arrangement.

The Company allocates the transaction price to material rights

based on the relative standalone selling price, which is determined based on the identified discount and the probability that the customer

will exercise the option.

Amounts allocated to a material right are not recognized as revenue until, at the earliest, the option is exercised.

and Development Services

promises under the Company’s collaboration agreements may include research and development services to be performed by the

Company on behalf of the partner.

Payments or reimbursements resulting from the Company’s research and development efforts

are recognized as the services are performed and presented on a gross basis because the Company is the principal for such efforts.

Reimbursements from and payments to the partner that are the result of a collaborative relationship with the partner, instead

of a customer relationship, such as co-development activities, are recorded as a reduction to research and development expense.

the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are

considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount

If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the

transaction price.

Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals,

are not considered probable of being achieved until those approvals are received.

The Company evaluates factors such as the scientific,

clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment.

There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur.

At the end of each subsequent reporting period, the Company reevaluates the probability of achievement of all milestones subject

to constraint and, if necessary, adjusts its estimate of the overall transaction price.

Any such adjustments are recorded on a

cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.

arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed

to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related

sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied

(or partially satisfied).

promises under the Company’s collaboration agreements may include research and development services to be performed by the Company

on behalf of the partner.

Payments or reimbursements resulting from the Company’s research and development efforts are recognized

as the services are performed and presented on a gross basis because the Company is the principal for such efforts.

Reimbursements from

and payments to the partner that are the result of a collaborative relationship with the partner, instead of a customer relationship,

such as co-development activities, are recorded as a reduction to research and development expense.

the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered

probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method.

is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price.

Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable

of being achieved until those approvals are received.

The Company evaluates factors such as the scientific, clinical, regulatory, commercial,

and other risks that must be overcome to achieve the particular milestone in making this assessment.

There is considerable judgment involved

in determining whether it is probable that a significant revenue reversal would not occur.

At the end of each subsequent reporting period,

the Company reevaluates the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate

of the overall transaction price.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings

in the period of adjustment.

arrangements that include sales-based royalties, including milestone payments based on a level of sales, and the license is deemed to

be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur,

or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

To date, the Company has not recognized any royalty revenue resulting from any of its licensing arrangements.

and Cash Equivalents

Company considers all highly liquid investments with an original maturity date of three months or less at the date of purchase to be

cash equivalents.

Company considers all highly liquid investments with an original maturity date of three months or less at the date of purchase

to be cash equivalents.

There were no such investments at December 31, 2020 or 2019, as all of our cash was held in checking,

savings and brokerage accounts.

As of December 31, 2020, cash equivalents were deposited in financial institutions

and consisted of immediately available fund balances.

The Company maintains its cash deposits and cash equivalents

with well-known and stable financial institutions.

Interest and Accounts Receivable

Company records interest receivable on an accrual basis and recognizes it as earned in accordance with the contractual terms of

the loan agreement, to the extent that such amounts are expected to be collected.

When management does not expect that principal,

interest, and other obligations due will be collected in full, the Company will generally place the loan on nonaccrual status

and cease recognizing interest income on that loan until all principal and interest due has been paid or the Company believes

the portfolio company has demonstrated the ability to repay the Company’s current and future contractual obligations.

uncollected interest related to prior periods is reversed from income in the period that collection of the interest receivable

is determined to be doubtful.

However, the Company may make exceptions to this policy if the investment has sufficient collateral

value and is in the process of collection.

The Company recognized $2.2 million in provision for loan credit losses during 2019.

The Company did not recognize any provision for loan credit losses in 2020.

There were no such investments at December 31, 2021 or 2020, as all of our cash was held in checking, savings and brokerage

As of December 31, 2021, cash equivalents were deposited in financial institutions and consisted of immediately available

fund balances.

The Company maintains its cash deposits and cash equivalents with well-known and stable financial institutions.

and Accounts Receivable

Company records interest receivable on an accrual basis and recognizes it as earned in accordance with the contractual terms of the loan

agreement, to the extent that such amounts are expected to be collected.

When management does not expect that principal, interest, and

other obligations due will be collected in full, the Company will generally place the loan on nonaccrual status and cease recognizing

interest income on that loan until all principal and interest due has been paid or the Company believes the partner company has demonstrated

the ability to repay the Company’s current and future contractual obligations.

Any uncollected interest related to prior periods

is reversed from income in the period that collection of the interest receivable is determined to be doubtful.

However, the Company may

make exceptions to this policy if the investment has sufficient collateral value and is in the process of collection.

The Company did

not recognize any provision for loan credit losses in 2021 and 2020.

receivable for management fees are recorded at the aggregate unpaid amount less any allowance for doubtful accounts.

determines an account receivable’s delinquency status based on its contractual terms.

Interest is not charged on outstanding

Accounts are written-off only when all methods of recovery have been exhausted.

As of December 31, 2020 and 2019, the

allowance for doubtful accounts was zero.

Certain Risks and Concentrations

instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash

equivalents, accounts receivable, finance receivables and marketable investments.

The Company invests its excess cash with major

The Company determines

an account receivable’s delinquency status based on its contractual terms.

Interest is not charged on outstanding balances.

are written-off only when all methods of recovery have been exhausted.

As of December 31, 2021 and 2020, the allowance for doubtful accounts

Risks and Concentrations

instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents,

interest and accounts receivable, finance receivables and marketable investments.

The Company invests its excess cash with major U.S.

banks and financial institutions.

The Company has not experienced any losses on its cash and cash equivalents.

Receivables Segment

Company performs ongoing credit evaluations of its partner companies and generally requires collateral.

For the year ended

December 31, 2020, three of our business partners accounted for 34 percent of total finance receivable interest income, including

The Company’s Narcan®

royalty accounted for 10 percent of total finance receivable interest income, including

fees as of December 31, 2019.

For the year ended December

31, 2021, five of our business partners accounted for 63 percent of our interest and accounts receivable.

For the year ended December

31, 2020, five of our business partners accounted for 68 percent of our interest and accounts receivable.

Pharmaceutical

Development Segment

the years ended December 31, 2021 and 2020, Cara Therapeutics, Inc.

(“Cara”) accounted for approximately 98 percent of Pharmaceutical

Development segment revenues.

Company does not expect its current or future credit risk exposures to have a significant impact on its operations.

However, there

can be no assurance that its business will not experience any adverse impact from credit risk in the future.

Stock-based Compensation

employee and director stock-based compensation is measured at the grant date, based on the estimated fair value of the award,

and is recognized as an expense over the requisite service period.

Stock-based compensation expense is reduced for estimated future

However, there can

be no assurance that its business will not experience any adverse impact from credit risk in the future.

employee and director stock-based compensation is measured at the grant date, based on the estimated fair value of the award, and is

recognized as an expense over the requisite service period.

Stock-based compensation expense is reduced for estimated future forfeitures.

These estimates are revised in future periods if actual forfeitures differ from the estimates.

Changes in forfeiture

estimates impact compensation expense in the period in which the change in estimate occurs.

restricted stock, the Company recognizes compensation expense in accordance with the fair value of the Company’s stock as

determined on the grant date, amortized over the applicable service period.

When vesting of awards is based wholly or in part

upon the future performance of the stock price, such terms result in adjustments to the grant date fair value of the award and

the derivation of a service period.

If service is provided over the derived service period, the adjusted fair value of the awards

will be recognized as compensation expense, regardless of whether or not the awards vest.

Changes in forfeiture estimates impact

compensation expense in the period in which the change in estimate occurs.

restricted stock, the Company recognizes compensation expense in accordance with the fair value of the Company’s stock as determined

on the grant date, amortized over the applicable service period.

When vesting of awards is based wholly or in part upon the future performance

of the stock price, such terms result in adjustments to the grant date fair value of the award and the derivation of a service period.

If service is provided over the derived service period, the adjusted fair value of the awards will be recognized as compensation expense,

regardless of whether or not the awards vest.

tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial

statement carrying amounts of existing assets and liabilities and their respective tax bases.

A valuation allowance is recorded

to reduce deferred tax assets to an amount where realization is more likely than not.

the Company ultimately determines that the payment of such a liability is not necessary, then the Company reverses the liability

and recognizes a tax benefit during the period in which the determination is made that the liability is no longer necessary.

Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax benefit in

the statements of income.

Comprehensive Income

A valuation allowance is recorded to reduce

deferred tax assets to an amount where realization is more likely than not.

the Company ultimately determines that the payment of such a liability is not necessary, then the Company reverses the liability and

recognizes a tax benefit during the period in which the determination is made that the liability is no longer necessary.

recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax benefit in the statements

Comprehensive

income and its components attributable to the Company and non-controlling interests have been reported, net of tax, in the consolidated

statements of stockholders’

equity and the consolidated statements of comprehensive income.

Comprehensive income equals net

income for the years ended December 31, 2020 and 2019.

Net Income per Share

consolidated statements of comprehensive income have been omitted, as net income equals comprehensive income for the years ended December

31, 2021 and 2020.

Income per Share

net income per share is computed using the weighted-average number of outstanding shares of common stock.

Diluted net income per

share is computed using the weighted average number of outstanding shares of common stock, and when dilutive, shares of common

stock issuable upon exercise of options and warrants deemed outstanding using the treasury stock method.

following table shows the computation of basic and diluted earnings per share for the following (in thousands, except per share

Net income attributable to SWK Holdings Corporation stockholders

Diluted net income per share

is computed using the weighted-average number of outstanding shares of common stock, and when dilutive, shares of common stock issuable

upon exercise of options and warrants deemed outstanding using the treasury stock method.

following table shows the computation of basic and diluted earnings per share for the following (in thousands, except per share amounts):

Schedule of Basic

and Diluted Earning per Share

Year Ended December 31,

Weighted-average shares outstanding

3 unchanged sentences

Diluted net income per share

of December 31, 2020 and 2019, outstanding stock options and warrants to purchase shares of common stock in an aggregate of approximately

443,000 and 436,000 shares, respectively, have been excluded from the calculation of diluted net income per share as these

securities were anti-dilutive.

Recent Accounting Pronouncements

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

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.

of December 31, 2021 and 2020, outstanding options to purchase shares of common stock and outstanding shares of restricted stock in an

aggregate of approximately 368,000 and 443,000 , respectively, have been excluded from the calculation of diluted net income per share

as such securities were anti-dilutive.

Accounting Pronouncements

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

ASU 2020-04 provides optional

expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met.

These transactions

(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 2016-13, “Financial Instruments - Credit Losses (Topic 326).”

This standard adds an

impairment model, known as the current expected credit loss (“CECL”) model, that is based on expected losses rather

than incurred losses.

Under this guidance, an entity recognizes as an allowance its estimate of expected credit losses, which

the FASB believes will result in more timely recognition of losses.

This ASU describes the impairment allowance as a valuation

account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount

expected to be collected on the financial asset.

Credit losses relating to available-for-sale debt securities should be measured

in a manner similar to current GAAP;

however, the amendments in this update require that credit losses be presented as an allowance

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, “Financial Instruments - Credit Losses (Topic 326), Derivatives

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

Effective Dates,”

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.

Business Combinations

August 26, 2019, Enteris, a biopharmaceutical company offering innovative formulation solutions utilizing its proprietary oral

drug delivery technology, became a wholly-owned subsidiary of the Company.

The total merger consideration was $34.6 million, which

included contingent consideration of $14.5 million, which was remeasured to $16.9 million as of December 31, 2020.

year ended December 31, 2020, the Company recognized $5.0 million of revenue related to the completion of a milestone under the

License Agreement (as defined below) with Cara Therapeutics, Inc.

(“Cara”).

During the year ended December 31, 2020,

the Company paid $2.0 million of such amount to the seller of Enteris, pursuant to earnout provisions of the merger agreement.

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 (the “License Agreement”),

for oral formulation rights to Enteris’

Peptelligence®

technology to develop and commercialize Oral KORSUVA™

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 territory.

acquisition was accounted for under the acquisition method of accounting.

Accordingly, the merger consideration was allocated

to the assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition.

of the merger consideration over the estimated fair value of the net assets of Enteris was recorded as goodwill, which consists

largely of synergies and the acquisition of intangible assets.

The resulting goodwill is not expected to be deductible for tax

following table summarizes the allocation of the purchase consideration (at fair value) to the assets and liabilities of Enteris

as of August 26, 2019 (the date of acquisition) (in thousands):

Accounts receivable

Prepaid expenses and other current assets

Property and equipment

Patents and other intangible assets

Right of use operating lease asset

Accounts payable

Accrued expenses and other current liabilities

Deferred revenue

Lease liability

Deferred tax liability

Total purchase price

Unaudited Supplemental

Pro Forma Information

following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred

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

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

The pro forma adjustments include incremental amortization and depreciation of intangible assets and property and

equipment based on preliminary values of each asset and acquisition-related expenses.

The pro forma financial information excludes

non-recurring acquisition-related expenses.

These pro forma results are illustrative only and not indicative of the actual results

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 December 31, 2020,

and net book value remains at $8.4 million.

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 has identified existing

loans that reference LIBOR and is in the process of evaluating alternatives in each situation.

The Company expects that it will elect

to apply some of the expedients and exceptions provided in ASU 2020-04 and does not believe the adoption of this standard will have a

material impact on the Company’s consolidated financial statements.

June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This standard adds an impairment

model, known as the current expected credit loss (“CECL”) model, that is based on expected losses rather than incurred losses.

Under this guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result

in more timely recognition of losses.

This ASU describes the impairment allowance as a valuation account that is deducted from the amortized

cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

Credit losses relating to available-for-sale debt securities should be measured in a manner similar to current GAAP;

however, the amendments

in this update require that credit losses be presented as an allowance rather than as a write-down, which will allow an entity the ability

to record reversals of credit losses in current period net income.

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

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.

Goodwill and Intangible Assets

was no change in the carrying amount of goodwill from December 31, 2020 to

December 31, 2021 , and net book value remains at $8.4

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

The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the

carrying value of an asset may not be recoverable.

The Company first assesses qualitative factors to determine whether it is more-likely-than-not

that the fair value of the reporting unit is less than the carrying amount as a basis for determining whether it is necessary

to perform an impairment test.

If the qualitative assessment warrants further analysis, the Company compares the fair value of

the reporting unit to its carrying value.

The fair value of the reporting unit is determined using the market approach.

fair value of the reporting unit exceeds the carrying value of net assets of the reporting unit, goodwill is not impaired.

the carrying value of the reporting unit’s goodwill exceeds its fair value, then the Company must record an impairment charge

equal to the difference.

As of December 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

of December 31, 2020, the gross book value, accumulated amortization, net book value and estimated useful life of acquired

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

The Company reviews goodwill for impairment

on an annual basis or whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit

is less than the carrying amount as a basis for determining whether it is necessary to perform an impairment test.

If the qualitative

assessment warrants further analysis, the Company compares the fair value of the reporting unit to its carrying value.

The fair value

of the reporting unit is determined using the market approach.

If the fair value of the reporting unit exceeds the carrying value of

net assets of the reporting unit, goodwill is not impaired.

If the carrying value of the reporting unit’s goodwill exceeds its

fair value, then the Company must record an impairment charge equal to the difference.

As of December 31, 2021 ,

Licensing agreement

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

goodwill is not considered to be impaired.

of December 31, 2021 and 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):

Schedule of Intangible Assets

As of December 31, 2021

Net Book Value

Estimated Useful

License Agreement (1)

Trade names and trademarks

Customer relationships

Deferred patent costs

Total intangibles

Total intangible assets

As of December 31, 2020

Licensing agreement

Net Book Value

Estimated Useful

License Agreement (1)

Trade names and trademarks

Customer relationships

Deferred patent costs

Total intangibles

expense was $11.7 million and $4.8 million for the years ended December 31, 2020 and

2019, respectively, and was recorded in depreciation and amortization expense.

Based on amounts recorded at December

31, 2020, the Company will recognize acquired intangible asset amortization as follows (in thousands):

Total intangible assets

(1) Prior to our acquisition

of Enteris, Enteris entered into a non-exclusive commercial license agreement (the “License Agreement”) with Cara Therapeutics,

(“Cara”), for oral formulation rights to Enteris’ Peptelligence® technology to develop and commercialize Oral

KORSUVA TM 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 territory.

expense was $ 3.5 million and $ 11.7 million for the years ended December 31, 2021

and 2020 , respectively, and was recorded in depreciation and

amortization expense.

Based on amounts recorded at December 31, 2021, the Company will recognize acquired intangible asset

amortization as follows (in thousands):

Schedule of Intangible Asset Amortization Expense

Finance Receivables

receivables are reported at their determined principal balances net of any unearned income, cumulative charge-offs and unamortized

deferred fees and costs.

Unearned income and deferred fees and costs are amortized to interest income based on all cash flows

expected using the effective interest method.

receivables are reported at their determined principal balances net of any unearned income, cumulative charge-offs and unamortized deferred

fees and costs.

Unearned income and deferred fees and costs are amortized to interest income based on all cash flows expected using the

effective interest method.

of December 31, 2021, the Company had a credit loss allowance of $8.4 million.

Of the total $8.4 million, $ 1.2 million is associated

with the Company's Cambia®

royalty, and $0.6 million is associated with the Company’s Besivance®

The Cambia®

and Besivance®

provision for credit losses were recognized in 2018 and 2019, respectively.

The remaining $6.6 million is related

to the ABT Molecular Imaging, Inc.

(“ABT”), now known as Best ABT, Inc.

(“Best”), second lien term loan that

was recognized in 2018 and 2019 in order to reflect the Best royalty at its then estimated fair value of $4.1 million.

The carrying values

of finance receivables are as follows (in thousands):

As of December 31,

with the Company’s Cambia® royalty, and $ 0.6 million is associated with the Company’s Besivance® royalty.

The remaining

$ 6.6 million is related to the Best ABT, Inc.

(“Best”), second lien term loan that was recognized in order to reflect the

Best royalty at its estimated fair value.

The carrying values of finance receivables are as follows (in thousands):

Schedule of carrying value of finance receivables

Royalty purchases

2 unchanged sentences

Total carrying value

Credit Quality of Finance

Quality of Finance Receivables

Company originates finance receivables to companies primarily in the life sciences sector.

This concentration of credit exposes

the Company to a higher degree of risk associated with this sector.

This concentration of credit exposes the Company

to a higher degree of risk associated with this sector.

a quarterly basis, the Company evaluates the carrying value of each finance receivable for impairment.

A term loan is considered

to be impaired when, based on current information and events, it is determined that the Company will not be able to collect the

amounts due according to the loan contract, including scheduled interest payments.

This evaluation is generally based on delinquency

information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any.

The Company would

generally place term loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain

and they are 90 days past due for interest or principal, unless the term loan is both well-secured and in the process of collection.

When placed on nonaccrual, the Company would reverse any accrued unpaid interest receivable against interest income and amortization

of any net deferred fees is suspended.

Generally, the Company would return a term loan to accrual status when all delinquent interest

and principal become current under the terms of the credit agreement and collectability of remaining principal and interest is

no longer doubtful.

In certain circumstances, the Company may place a finance receivable on nonaccrual status but conclude it

is not impaired.

The Company may retain independent third-party valuations on such nonaccrual positions to support impairment

associated with royalty stream purchases would be considered to be impaired when it is probable that the Company will be unable

to collect the book value of the remaining investment based upon adverse changes in the estimated underlying royalty stream.

the Company identifies a finance receivable as impaired, it measures the impairment based on the present value of expected future

cash flows, discounted at the receivable’s effective interest rate, or the estimated fair value of the collateral, less

estimated costs to sell.

If it is determined that the value of an impaired receivable is less than the recorded investment, the

Company would recognize impairment with a charge to the allowance for credit losses.

When the value of the impaired receivable

is calculated by discounting expected cash flows, interest income would be recognized using the receivable’s effective interest

rate over the remaining life of the receivable.

A term loan is considered to be

impaired when, based on current information and events, it is determined that the Company will not be able to collect the amounts due

according to the loan contract, including scheduled interest payments.

This evaluation is generally based on delinquency information,

an assessment of the borrower’s financial condition and the adequacy of collateral, if any.

The Company would generally place term

loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain and they are 90 days past due

for interest or principal, unless the term loan is both well-secured and in the process of collection.

When placed on nonaccrual, the

Company would reverse any accrued unpaid interest receivable against interest income and amortization of any net deferred fees is suspended.

Generally, the Company would return a term loan to accrual status when all delinquent interest and principal become current under the

terms of the credit agreement and collectibility of remaining principal and interest is no longer doubtful.

In certain circumstances,

the Company may place a finance receivable on nonaccrual status but conclude it is not impaired.

The Company may retain independent third-party

valuations on such nonaccrual positions to support impairment decisions.

associated with royalty stream purchases would be considered to be impaired when it is probable that the Company will be unable to collect

the book value of the remaining investment based upon adverse changes in the estimated underlying royalty stream.

the Company identifies a finance receivable as impaired, it measures the impairment based on the present value of expected future cash

flows, discounted at the receivable’s effective interest rate, or the estimated fair value of the collateral, less estimated costs

If it is determined that the value of an impaired receivable is less than the recorded investment, the Company would recognize

impairment with a charge to the allowance for credit losses.

When the value of the impaired receivable is calculated by discounting expected

cash flows, interest income would be recognized using the receivable’s effective interest rate over the remaining life of the receivable.

Company individually develops the allowance for credit losses for any identified impaired loans.

In developing the allowance for

credit losses, the Company considers, among other things, the following credit quality indicators:

business characteristics and financial conditions of obligors;

In developing the allowance for credit

losses, the Company considers, among other things, the following credit quality indicators:

business characteristics and financial

conditions of obligors;

current economic conditions and trends;

4 unchanged sentences

any other relevant factors predicting investment recovery.

The following table

presents nonaccrual and performing loans by portfolio segment (in thousands):

The following

table presents nonaccrual and performing loans by portfolio financing structure:

(in thousands):

Schedule of analysis of nonaccrual and performing loans by portfolio segment

December 31, 2021

2 unchanged sentences

Total carrying value

of December 31, 2020 the Company had two finance receivables in nonaccrual status:

of December 31, 2021, the Company had three finance receivables in nonaccrual status:

(1) the term loan to B&D Dental Corporation

(“B&D”), with a net carrying value of $8.3 million and (2) the Best royalty, with a net carrying value of $3.9

Although in nonaccrual status, the B&D term loan was not considered impaired as of December 31, 2020 and 2019.

The Company collected $0.3 million on two of its nonaccrual royalties during the year ended December 31, 2020.

(Please see B&D,

Best and Besivance below for further details regarding nonaccrual and impaired finance receivables).

December 10, 2013, the Company entered into a five-year credit agreement to provide B&D a senior secured term loan with a

principal amount of $6.0 million funded upon close, net of an arrangement fee of $60,000.

The loan was scheduled to mature on

December 10, 2018.

Subsequently, the terms of the loan have been amended, and the Company has funded additional amounts to B&D.

As of December 31, 2020 and 2019, the total amount funded was $8.3 million.

B&D is currently evaluating strategic options,

including a potential sale of the business.

is currently in default under the terms of the credit agreement, and as a result, the Company classified the loan to nonaccrual

status as of September 30, 2015.

During 2016 and 2018, the Company executed three additional amendments to the loan to advance

an additional $0.7 million in order to directly pay critical vendors and protect the value of the collateral.

The Company periodically

obtains third-party valuations of B&D.

As a result of the third-party valuations and facts and circumstances regarding B&D’s

operations, including its intellectual property position, improved profitability and working capital position, the Company believes

its collateral position is greater than the unpaid balance;

thus, accrued interest has not been reversed nor has an allowance

been recorded as of December 31, 2020.

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

of Best Medical International, Inc.

(“Best”), for aggregate consideration of (i) $500,000, paid over ten years in

equal quarterly installments, plus (ii) a ten percent royalty on ABT’s net sales, including any commercialized improvements

made to ABT’s technology, paid quarterly for the ten year period from closing pursuant to a royalty security agreement by

and between Best and SWK Funding LLC, a wholly-owned subsidiary of the Company (“SWK Funding”).

SWK Funding will receive

100 percent of the consideration.

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

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

as well as provision for credit losses of $5.0 million to reflect the Best royalty at its estimated fair value of $5.7 million.

the year ended December 31, 2019, the Company re-evaluated the value of the Best royalty based on 2019 business trends, and as

a result, the Company recognized a provision for credit losses of $1.6 million.

The estimated fair value as of December 31, 2020

is $3.9 million.

April 2, 2013, the Company purchased an effective 2.4 percent royalty on sales of Besivance®

from InSite Vision for $6.0 million.

Besivance is marketed by Bausch & Lomb, formerly known as Valeant Pharmaceuticals.

Sales performance of Besivance®

weakened primarily due to substantial declines in prescription volumes, which in conjunction with elevated sales chargebacks and

various rebates (gross sales to net sales deductions), has resulted in material reductions in the product’s net sales and

associated royalties payable to the Company.

During 2019, the Company reduced its expectations for future royalty receipts and

recognized an allowance for credit loss on the royalty purchase of $0.6 million.

the year ended December 31, 2020, the Company re-evaluated the value of the Besivance®

royalty based on 2020 business

trends, and as a result, the Company determined a further provision of credit losses was not warranted based on improving royalty

trends over prior periods.

The estimated fair value as of December 31, 2020 is $0.4 million.

(“B&D”), with a net carrying value of $ 8.3 million , (2) the term loan to Flowonix Medical, Inc.

(“Flowonix”),

with a net carrying value of $ 10.0 million , and (3) the Best royalty, with a net carrying value of $ 3.4 million .

Although in nonaccrual

status, the B&D and Flowonix term loans were not considered impaired as of December 31, 2021 and 2020.

The Company collected $1.2

million on two of its nonaccrual finance receivables during the year ended December 31, 2021, of which $0.7 million was collected from

Flowonix prior to being placed on non-accrual.

March 2022, SWK Funding negotiated to terminate the B&D term loan upon receiving payment of $ 10.4

million , which was received on March 17, 2022.

The carrying value of the term loan was $ 8.3

million as of December 31, 2021.

Following this payment, B&D has no remaining payment obligations to the

Property and Equipment, Net

and equipment, net consisted of the following as of December 31, 2021 and 2020 (in thousands):

equipment and other

Schedule of Property

and Equipment, Net

December 31, 2021

December 31, 2020

Production equipment and other

Furniture and fixtures

Leasehold improvements

Construction-in

accumulated depreciation

and equipment, net

Construction-in progress

Capitalized software

Less accumulated depreciation and amortization

Property and equipment, net

and amortization expense on property and equipment was $ 0.6 million and $ 0.4 million for the years ended December 31, 2021 and 2020,

2 unchanged sentences

in corporate debt securities and equity securities as of December 31, 2021 and 2020 consist of the following (in thousands):

Schedule of marketable investments

Corporate debt securities

1 unchanged sentence

Total marketable investments

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

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

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

securities as of December 31, 2021 and 2020, are as follows (in thousands):

Schedule of available-for-sale securities reconciliation

December 31, 2021

Amortized Cost

Gross Unrealized

Corporate debt securities

December 31, 2020

Amortized Cost

Gross Unrealized

Corporate debt securities

following table presents unrealized gains and losses on equity securities as prescribed by ASC 321, Investment - Equity Securities

during the year ended December 31, 2020 and 2019.

Unrealized net income (loss) on equity securities reflected in the Consolidated Statements of Income

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

(“Misonix”) common

stock received pursuant to Misonix’s purchase of Solsys Medical, Inc.

(“Solsys”) on September 27, 2019.

the three months ended September 30, 2019 and prior to the acquisition, the Company exercised its Solsys warrants in a cashless

transaction to purchase Solsys preferred stock and exercised its preemptive right to protect against dilution of its Solsys equity

Of the total 109,353 shares of Misonix common stock received for its Solsys equity interests, 12,543 shares were held

in escrow by Misonix and were subject to reduction based on terms of the acquisition agreement.

The remaining 12,543 shares were

released at the end of the escrow period on January 4, 2021, which was subsequent to December 31, 2020.

The initial 96,810 shares

were subject to a one year lock-up that expired on September 27, 2020;

the 12,543 escrow shares are not subject to a lock-up.

As of December 31, 2020, the 96,810 shares of Misonix common stock are reflected at their estimated fair value of $1.2 million.

Debt Securities

July 9, 2013, the Company entered into a note purchase agreement to purchase, at par, $3.0 million of a total of $100.0 million

aggregate principal amount of senior secured notes due in November 2026.

The agreement allows the first interest payment date

to include paid-in-kind notes for any cash shortfall, of which the Company received $0.1 million on November 15, 2013.

are secured only by certain royalty and milestone payments associated with the sales of pharmaceutical products.

The senior secured

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

Total cash collected during the year ended December 31, 2020

and 2019 was $62,000 and $65,000, respectively, which was credited to the notes’

carrying value.

During the year ended December

31, 2020, impairment expense of $0.2 million was recognized in order to reflect the notes at their estimated fair value of $0.2

The notes are included in long-term marketable investments in the consolidated balance sheets.

following table presents realized and unrealized gains and losses on equity securities as prescribed by ASC 321, Investment

- Equity Securities during the year ended December 31, 2021 and 2020.

Schedule of Proceeds from sales, gross unrealized gains and gross unrealized losses for available-for-sale securities

Unrealized net gain (loss) on equity securities reflected in the Consolidated Statements of Income

Proceeds received on tender of equity securities

Realized loss on tender/sale of equity securities reflected in the Consolidated Statements of Income

October 29, 2021, Misonix, Inc.

(“Misonix”) was acquired by Bioventus, Inc.

(“Bioventus”).

Upon closing of the

transaction, the Company tendered its Misonix common stock and received $1.9 million in cash and 71,361 shares of Bioventus common stock,

which are reflected at their estimated fair value of $1.0 million as of December 31, 2021.

The Company recognized a $0.1 million realized

loss on the tender of the Misonix common stock.

Revolving Credit Facility

June 29, 2018, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with State Bank and Trust

Company as a lender and the administrative agent (“State Bank”) pursuant to which State Bank provides the Company

with up to a $20 million revolving senior secured credit facility, which the Company can draw down and repay until maturity, subject

to borrowing base eligibility.

The Loan Agreement matures on June 30, 2021.

Loan Agreement accrues interest at the Daily LIBOR Rate, with a floor of 1.00 percent, plus a 3.25 percent margin and principal

is repayable in full at maturity.

September 27, 2021, the Company entered into the Third Amendment to Loan and Security Agreement (the “Third Amendment”) with

Cadence Bank, N.A.

as a lender and the administrative agent.

Pursuant to the Third Amendment, the Loan and Security Agreement dated as

of June 29, 2018 (“Loan Agreement”) was amended to extend the Loan Agreement Termination Date to September 30, 2022 and increase

the Loan Agreement Commitment to $22.0 million.

The Loan Agreement requires the payment of an unused line fee of 0.50 percent and also

provides for quarterly minimum fee income of $60,000 less the aggregate interest and unused line fees paid during the immediately preceding

Unused line fees and minimum fee income are recorded as interest expense.

Loan Agreement accrues interest at the Daily LIBOR Rate, with a floor of 1.00 percent, plus a 3.25 percent margin and principal is repayable

in full at maturity.

Interest is generally required to be paid monthly in arrears.

The Loan Agreement requires the

payment of an unused line fee of 0.50 percent, which will be recorded as interest expense.

The Company paid $0.5 million in fees

at closing, which have been capitalized as deferred financing costs and are being amortized on a straight-line basis over the

term of the Loan Agreement.

Loan Agreement has an advance rate against the Company’s finance receivables portfolio, including 85 percent against senior

first lien loans, 70 percent against second lien loans and 50 percent against royalty receivables, subject to certain eligibility

requirements as defined in the Loan Agreement.

The Loan Agreement contains certain affirmative and negative covenants including

minimum asset coverage and minimum interest coverage ratios.

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

As of December 31, 2020, $11.8 million was outstanding under the

credit facility, and $8.2 million was available for borrowing.

As of March 25, 2021, the Company drew an additional $9.0 million under

the credit facility, incurred and paid $0.1 million of interest and fees and made principal payments of $11.2 million.

As of March 25,

In connection with the Third Amendment, the Company

paid approximately $58,000 in amendment and other fees, which were capitalized as deferred financing costs and are being amortized on

a straight-line basis over the remaining term of the Loan Agreement.

Loan Agreement has an advance rate against the Company’s finance receivables portfolio, including 85 percent against senior first

lien loans, 70 percent against second lien loans and 50 percent against royalty receivables, subject to certain eligibility requirements

as defined in the Loan Agreement.

The Loan Agreement contains certain affirmative and negative covenants including minimum asset coverage

and minimum interest coverage ratios.

of December 31, 2021, approximately $ 8,000

was outstanding under the credit facility, and $ 22.0

million was available for borrowing.

Our credit facility matures on June 30, 2021.

We are exploring options with respect

to a new credit facility.

Related Party Transactions

September 6, 2013, in connection with entering into a credit facility, the Company issued warrants to an affiliate of a stockholder,

Carlson Capital, L.P.

(the “Stockholder”), for 100,000 shares of the Company’s common stock at a strike price

of $13.88 per share.

The warrants had a price anti-dilution mechanism that was triggered by the price that shares were sold by

the Company in a rights offering in 2014, and as a result, the strike price of the warrants was reduced to $13.48 per share.

warrants expired unexercised on September 6, 2020.

Company determined the fair value of the warrants as of December 31, 2019 using the Black-Scholes option pricing model with the

following assumptions:

Dividend rate

Risk-free rate

Expected life (years)

Expected volatility

changes on the value of the warrant liability during the years ended December 31, 2020 and 2019 were as follows (in thousands):

Fair value –

December 31, 2018

Change in fair value

Fair value –

December 31, 2019

Changes in fair value

Fair value –

December 31, 2020

During the year ended December 31, 2021 and 2020, the

Company recognized $ 0.4

million and $ 0.5

million , respectively, of interest expense.

Commitments and Contingencies

Lease Obligations

842 establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on

the balance sheet for all leases with a term longer than twelve months.

Leases are classified as finance or operating, with classification

affecting the pattern and classification of expense recognition in the income statement.

The Company's leases consist of operating

leases for office space.

842 establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance

sheet for all leases with a term longer than twelve months.

Leases are classified as finance or operating, with classification affecting

the pattern and classification of expense recognition in the income statement.

The Company’s leases consist of operating leases for office

The Company determines if an arrangement is a lease at inception.

ROU assets represent the Company's

right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments

arising from the lease.

Operating lease right-of-use assets are recognized at commencement date based on the present value of

lease payments over the lease term.

As the Company's leases do not provide an implicit rate, the Company uses its incremental

borrowing rate based on the information available at commencement date in determining the present value of lease payments.

Company’s corporate headquarters is in Dallas, Texas, where it leases approximately 2,400 square feet.

expense recognized under the lease was $58,000 and $57,000 for the years ended December 31, 2020 and

2019, respectively.

The office lease expires in May 2025.

ROU assets represent the Company’s right to use an underlying

asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

lease right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term.

Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available

at commencement date in determining the present value of lease payments.

Company’s corporate headquarters is in Dallas, Texas, where it leases approximately 2,400 square feet.

Total rent expense

recognized under the lease was $ 69,000 and $ 58,000 for the years ended December 31, 2021 and 2020, respectively.

The office lease

expires in May 2025.

Enteris headquarters is located in Boonton, New Jersey, where Enteris leases approximately 32,000 square feet of space.

rent expense recognized under the lease was $240,000 and $73,000 for the years ended December 31, 2020

The office lease expires in December 2024.

Total rent expense

recognized under the lease was $ 0.3 million and $ 0.2 million for the years ended December 31, 2021 and 2020.

The office lease expires

in December 2024 with an option to renew for an additional five years.

future minimum rent is as follows (in thousands):

lease payments

Unfunded Commitments

of December 31, 2020, the Company did not have any unfunded commitments.

Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course

of its business.

The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have

a material impact on the Company’s results of operations, balance sheets and cash flows due to defense costs, and divert

management resources.

The Company cannot predict the timing or outcome of these claims and other proceedings.

December 31, 2020, the Company is not involved in any arbitration and/or other legal proceeding that it expects to have a material

effect on its business, financial condition, results of operations and cash flows.

Schedule of Future

Total future lease payments

of December 31, 2021, the Company’s unfunded commitments were as follows (in millions):

Schedule of Unfunded Commitments

Ideal Implant, Inc.

Trio Healthcare Ltd.

Total unfunded commitments

commitments are contingent upon reaching an established revenue threshold or other performance metrics on or before a specified date

or period of time per the terms of the royalty purchase or credit agreements, and in the case of loan transactions, are only subject

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

Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course of

its business.

The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material

impact on the Company’s results of operations, balance sheets and cash flows due to defense costs, and divert management resources.

Company cannot predict the timing or outcome of these claims and other proceedings.

As of December 31, 2021, the Company is not involved

in any arbitration and/or other legal proceeding that it expects to have a material effect on its business, financial condition, results

of operations and cash flows.

Indemnification

permitted by Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or

occurrences while the officer or director is, or was, serving in such capacity, or in other capacities at the Company’s

The term of the indemnification period is for the officer’s or director’s lifetime.

The maximum potential

amount of future payments the Company could be required to make under these indemnification agreements is unlimited;

the Company has a director and officer insurance policy that limits its exposure and enables the Company to recover a portion

of any such amounts.

As a result of the Company’s insurance policy coverage, the Company believes the estimated fair value

of these indemnification agreements is insignificant.

Accordingly, the Company had no liabilities recorded for these agreements

as of December 31, 2020 and 2019.

Stockholders’

permitted by Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences

while the officer or director is, or was, serving in such capacity, or in other capacities at the Company’s request.

the indemnification period is for the officer’s or director’s lifetime.

The maximum potential amount of future payments the

Company could be required to make under these indemnification agreements is unlimited;

however, the Company has a director and officer

insurance policy that limits its exposure and enables the Company to recover a portion of any such amounts.

As a result of the Company’s

insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is insignificant.

the Company had no liabilities recorded for these agreements as of December 31, 2021 and 2020.

Stockholders’ Equity

total number of shares of common stock, $ 0.001 par value, that the Company is authorized to issue is 250,000,000 .

Issuer Purchases of Equity Securities

December 21, 2018, the Board authorized a share repurchase program under which the Company was authorized to repurchase up to $3.5 million

of the Company’s outstanding shares of common stock, or approximately 312,497 common shares, in accordance with all applicable

securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act.

The December 21, 2018 share repurchase program

expired on May 31, 2019 and was renewed on September 5, 2019 and March 26, 2020.

Under the March 26, 2020 share repurchase program, the

Board authorized the repurchase of up to $2.0 million worth of common shares.

As of December 31,

2020, the Company repurchased an aggregate 384,368 shares of its outstanding common stock, including three privately negotiated purchases

outside of the share repurchase programs, at a total cost of $4.2 million or $11.06 per share.

The program expired on September 30, 2020.

Preferred Stock

Company’s board of directors (the “Board”) may, without further action by the stockholders, issue one or more

series of preferred stock and fix the rights and preferences of those shares, including the dividend rights, dividend rates, conversion

rights, exchange rights, voting rights, terms of redemption, redemption price or prices, liquidation preferences, the number of

shares constituting any series and the designation of such series.

As of December 31, 2020, no shares of preferred stock have

Stock Compensation Plans

Company’s 2010 Stock Incentive Plan (the “2010 Stock Incentive Plan”) provides for options, restricted stock,

and other customary forms of equity to be granted to the Company’s directors, officers, employees, and independent contractors.

All forms of equity incentive compensation are granted at the discretion of the Board and have a term not greater than 10 years

from the date of grant.

The calculation of

the fair values of our stock-based compensation plans requires estimates that require management’s judgments.

Under ASC 718, the

fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model.

The valuation models require

assumptions and estimates to determine expected volatility, expected life and expected risk-free interest rates.

The expected volatility

was determined using historical volatility of our stock based on the contractual life of the award.

The risk-free interest rate assumption

was based on the yield on zero-coupon U.S.

Purchases of Equity Securities

June 15, 2021, the Company’s board of directors (the “Board”) authorized a share repurchase program under which the Company

was authorized to repurchase up to $ 5.0 million of the Company’s outstanding shares of common stock, or approximately 312,500 common

shares, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities and Exchange Act.

The share repurchase program expired on March 15, 2022.

As of December 31, 2021, no shares had been repurchased under the share repurchase

Company’s Board may, without further action by the stockholders, issue one or more series of preferred stock and fix the rights

and preferences of those shares, including the dividend rights, dividend rates, conversion rights, exchange rights, voting rights, terms

of redemption, redemption price or prices, liquidation preferences, the number of shares constituting any series and the designation

of such series.

As of December 31, 2021, no shares of preferred stock have been issued.

Compensation Plans

Company’s 2010 Stock Incentive Plan (the “2010 Stock Incentive Plan”) provides for options, restricted stock, and other

customary forms of equity to be granted to the Company’s directors, officers, employees, and independent contractors.

of equity incentive compensation are granted at the discretion of the Board and have a term not greater than 10 years from the date of

calculation of the fair values of our stock-based compensation plans requires estimates that require management’s judgments.

ASC 718, the fair value of each stock option is estimated on the grant date using the Black-Scholes option-pricing model.

The valuation

models require assumptions and estimates to determine expected volatility, expected life and expected risk-free interest rates.

volatility was determined using historical volatility of our stock based on the contractual life of the award.

The risk-free interest

rate assumption was based on the yield on zero-coupon U.S.

Treasury strips at the award grant date.

In valuing options granted in the fiscal years ended

December 31, 2020 and 2019, we used the following weighted average assumptions:

the Year Ended

In valuing options granted in the

fiscal year ended December 31, 2020, we used the below weighted-average assumptions.

There were no options granted in the fiscal year

ended December 31, 2021.

of Assumptions of Fair Value of Options Granted

For the Year Ended

Risk-free interest rate

0.40 % - 0.47 %

Expected stock-price volatility

47.9 % - 48.3 %

Expected life

1 unchanged sentence

table summarizes activities under the 2010 Stock Incentive Plan for the indicated periods:

of Stock Option Activity

Options Outstanding

(in thousands)

Balances, December 31, 2019

9 unchanged sentences

Options vested and exercisable at December 31, 2021

December 31, 2020, there were 1.2 million shares reserved for issuance under the 2010 Stock Incentive Plan, and the Company

had $0.4 million of total unrecognized stock option expense, net of estimated forfeitures, which will be recognized over the weighted

average remaining period of 1.3 years.

December 31, 2021, there were approximately 950,000 shares reserved for issuance under the 2010 Stock Incentive Plan, and the

Company had $0.2 million of total unrecognized stock option expense for time-based awards, net of estimated forfeitures, which will be recognized over

the weighted-average remaining period of 1.0 years.

following table summarizes significant ranges of outstanding and exercisable options as of December 31, 2021:

of Stock Options Outstanding

Exercise Prices

Life (in years)

stock-based compensation expense recognized for time-vesting options for the years ended December 31, 2020 and 2019, uses the

Black-Scholes option pricing model for estimating the fair value of options granted under the Company’s equity incentive

Risk-free interest rates for the options were taken from the Daily Federal Yield Curve Rates on the grant dates for the

expected life of the options as published by the Federal Reserve.

The expected volatility was based upon historical data and other

relevant factors such as the Company’s changes in historical volatility and its capital structure, in addition to mean reversion.

Employee stock-based compensation expense recognized for market performance-vesting options uses a binomial lattice model for

estimating the fair value of options granted under the Company’s equity incentive plan.

calculating the expected life of stock options, the Company determines the amount of time from grant date to exercise date for

exercised options and adjusts this number for the expected time to exercise for unexercised options.

The expected time to exercise

for unexercised options is calculated from grant as the midpoint between the expiration date of the option and the later of the

measurement date or the vesting date.

In developing the expected life assumption, all amounts of time are weighted by the number

of underlying options.

stock-based compensation expense recognized for time-vesting options for the years ended December 31, 2021 and 2020, uses the Black-Scholes

option pricing model for estimating the fair value of options granted under the Company’s equity incentive plans.

Risk-free interest

rates for the options were taken from the Daily Federal Yield Curve Rates on the grant dates for the expected life of the options as

published by the Federal Reserve.

The expected volatility was based upon historical data and other relevant factors such as the Company’s

changes in historical volatility and its capital structure, in addition to mean reversion.

Employee stock-based compensation expense

recognized for market performance-vesting options uses a binomial lattice model for estimating the fair value of options granted under

the Company’s equity incentive plan.

calculating the expected life of stock options, the Company determines the amount of time from grant date to exercise date for exercised

options and adjusts this number for the expected time to exercise for unexercised options.

The expected time to exercise for unexercised

options is calculated from grant as the midpoint between the expiration date of the option and the later of the measurement date or the

vesting date.

In developing the expected life assumption, all amounts of time are weighted by the number of underlying options.

the year ended December 31, 2021, the Company’s Board approved the modification of the CEO’s

stock options with respect to 75,000 shares with an exercise price of $8.30 per share pursuant to an award agreement dated May 14, 2012.

The Company considered 50 percent of the 75,000 shares that had not vested to be fully vested as of December 31, 2021, and a cashless

exercise of the 2012 award was facilitated by net settlement of exercise price and taxes.

During the year ended December 31, 2021, the

Company recognized $0.4 million of stock-based compensation expense as a result of this modification.

the year ended December 31, 2021, the Companys Board also approved the modification of the CEO’s stock options

with respect to 100,000 Shares with an exercise price of $13.70 per share pursuant to an award agreement dated August 18, 2014.

The Company and the CEO agreed that (i) the 2014 award will expire on August 18, 2024, unless it expires earlier due to a termination

of employment in accordance with the 2014 award agreement, and (ii) 50 percent of the 2014 award has already vested due

to the satisfaction of time-based vesting conditions set forth in the 2014 award agreement.

The Company also agreed that the 50

percent of the 2014 award that had not vested as of December 31, 2021 shall not be forfeited as of December 31, 2021 and

instead shall continue to be outstanding through the expiration of the 2014 award and eligible to vest upon the earlier to occur

of (x) the first date on which the average closing price of a share as reported on the Nasdaq (or other exchange or quotation

system on which the Shares are listed or traded) for the 30 consecutive calendar days ending on such date is greater than or equal to

$20.60 or (y) the consummation of a Corporate Transaction in relation to the November 23, 2021 letter from Carlson Capital to members

of the Board of the Company, provided that such event in (x) or (y) occurs prior to the expiration of the 2014 award.

the year ended December 31, 2021, 8,761 restricted shares were granted and 24,727 restricted shares vested.

During the year ended

December 31, 2019, 57,155 restricted shares were granted and 12,500 restricted shares vested.

As of December 31, 2020 and 2019,

there were 27,471 and 44,655 shares of restricted stock outstanding.

October 2019, the Board approved a change in the compensation plan for non-employee directors such that each non-employee director

shall receive an annual cash retainer of $45,000 payable quarterly in arrears and an annual equity retainer of $25,000 payable

in advance annually on October 1 of restricted shares of the Company’s common stock, subject to a one year cliff vesting

In addition, each member of (i) the Audit Committee shall receive an additional fee of $11,000 payable quarterly in arrears;

(ii) the Compensation Committee shall receive an additional fee of $2,000 payable quarterly in arrears and (iii) the Governance

Committee shall receive an additional fee of $4,000 payable quarterly in arrears.

Each non-employee director has the option to

elect to receive up to 100 percent of the annual cash retainer in shares of the Company’s common stock.

the years ended December 31, 2020 and 2019, the Board approved compensation for Board services by granting 24,940 and 25,574 shares,

respectively, of common stock as compensation for the non-employee directors.

The Company recorded $0.3 million and $0.2 million

in Board compensation expense during the years ended December 31, 2020 and 2019, respectively.

The Company recorded aggregate

stock-based compensation expense, including the quarterly and annual Board grants, of $0.7 million and $0.5 million for

the years ended December 31, 2020 and 2019, respectively.

During the year ended December

31, 2020, 8,305 restricted shares were granted and 37,989 restricted shares vested.

As of December 31, 2021 and 2020, there were 74,221

and 27,471 shares of restricted stock outstanding, respectively.

October 2019, the Board approved a change in the compensation plan for non-employee directors such that each non-employee director shall

receive an annual cash retainer of $45,000 payable quarterly in arrears and an annual equity retainer of $25,000 payable in advance annually

on October 1 of restricted shares of the Company’s common stock, subject to a one year cliff vesting period.

In addition, each

member of (i) the Audit Committee shall receive an additional fee of $11,000 payable quarterly in arrears;

(ii) the Compensation Committee

shall receive an additional fee of $2,000 payable quarterly in arrears and (iii) the Governance Committee shall receive an additional

fee of $4,000 payable quarterly in arrears.

Each non-employee director has the option to elect to receive up to 100 percent of the annual

cash retainer in shares of the Company’s common stock.

the years ended December 31, 2021 and 2020, the Board approved compensation for Board services by granting 18,978

shares, respectively, of common stock as compensation for the non-employee directors.

Company recorded $ 0.3

million in Board stock-based compensation expense during both the years ended December 31,

2021 and 2020.

The Company recorded aggregate stock-based compensation expense, including the quarterly and annual Board grants, of $1.2

million and $0.7 million during the years ended December 31, 2021 and 2020, respectively.

Fair Value Measurements

Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis.

Fair value is the

price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date (exit price).

Fair value is the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date (exit price).

GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value.

The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and

the lowest priority to data lacking transparency (i.e., unobservable inputs).

An instrument’s categorization within the

fair value hierarchy is based on the lowest level of significant input to its valuation.

The following is a description of the

three hierarchy levels.

1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or

Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient

frequency and volume to provide pricing information on an ongoing basis.

2 Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially

the full term of the asset or liability.

This category includes quoted prices for similar assets or liabilities in active markets

and quoted prices for identical or similar assets or liabilities in inactive markets.

3 Unobservable inputs are not corroborated by market data.

This category is comprised of financial and non-financial assets and

liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that

are generally less readily observable from objective sources.

value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority

to data lacking transparency (i.e., unobservable inputs).

An instrument’s categorization within the fair value hierarchy is based

on the lowest level of significant input to its valuation.

The following is a description of the three hierarchy levels.

Level 1 Unadjusted

quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide

pricing information on an ongoing basis.

Level 2 Quoted

prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term

of the asset or liability.

This category includes quoted prices for similar assets or liabilities in active markets and quoted prices

for identical or similar assets or liabilities in inactive markets.

Level 3 Unobservable

inputs are not corroborated by market data.

This category is comprised of financial and non-financial assets and liabilities whose fair

value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable

from objective sources.

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 years ended December 31, 2020 and 2019.

following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying consolidated financial statements and the related market or fair value.

The disclosures include financial

instruments and derivative financial instruments, other than investment in affiliates.

are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the

valuation models, key inputs to those models and significant assumptions utilized.

Cash and cash equivalents

carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’

Securities available for

There were no transfers

between any levels during the years ended December 31, 2021 and 2020.

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

consolidated financial statements and the related market or fair value.

The disclosures include financial instruments and derivative

financial instruments, other than investment in affiliates.

are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation

models, key inputs to those models and significant assumptions utilized.

and cash equivalents

carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values.

available for sale

common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices).

Finance Receivables

fair values of finance receivables are estimated using discounted cash flow analyses, using market rates at the balance sheet

date that reflect the credit and interest rate-risk inherent in the finance receivables.

Projected future cash flows are calculated

based upon contractual maturity or call dates, projected repayments and prepayments of principal.

These receivables are classified

Finance receivables are not measured at fair value on a recurring basis, but estimates of fair value are reflected

Contingent Consideration

Company recorded contingent consideration related to the August 2019 acquisition of Enteris and sharing of certain milestone and

royalties due to Enteris pursuant to the License Agreement.

Please refer to Note 2, Business Combinations , for further

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

fair values of finance receivables are estimated using discounted cash flow analyses, using market rates at the balance sheet date that

reflect the credit and interest rate-risk inherent in the finance receivables.

Projected future cash flows are calculated based upon

contractual maturity or call dates, projected repayments and prepayments of principal.

These receivables are classified as Level 3.

receivables are not measured at fair value on a recurring basis, but estimates of fair value are reflected below.

Consideration

Company recorded contingent consideration related to the August 2019 acquisition of Enteris and sharing of certain milestone and royalties

due to Enteris pursuant to the License Agreement.

Please refer to Note 2, Business

Combinations , for further details on the Company’s acquisition of Enteris and contingent consideration.

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.

These inputs include:

inputs include:

(a) the estimated amount and timing of projected cash flows;

(b) the probability of the achievement of the

factors on which the contingency is based;

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

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

statements of income.

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

lower or higher fair value measurement.

(b) the probability of the achievement of the factors on

which the contingency is based;

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

in fair value of this obligation are recorded as income or expense within operating income in our consolidated statements of income.

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

of December 31, 2021 and 2020, the acquisition-related contingent consideration was $8.5 million and $16.9 million, respectively.

During the year ended December 31, 2020, the Company recorded $4.4 million of expense for the change in fair value of contingent

consideration.

The Company also made payments of $2.0 million against the contingent consideration liability.

Marketable Investments

the year ended December 31, 2021 and 2020, the Company recorded $0.3 million of income and $4.4 million of expense, respectively, for

the change in fair value of contingent consideration.

The Company made payments of $8.1 million and $2.0 million against the contingent

consideration liability during the years ended December 31, 2021 and 2020, respectively.

active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities

would be classified as Level 1.

If active market prices are not available, fair value measurement is based on observable inputs

other than quoted prices included within Level 1, such as prices for similar assets or broker quotes utilizing observable inputs,

and accordingly these securities would be classified as Level 2.

If market prices are not available and there are no observable

inputs, then fair value would be estimated by using valuation models including discounted cash flow methodologies, commonly used

option-pricing models and broker quotes.

Such securities would be classified as Level 3, if the valuation models and broker quotes

are based on inputs that are unobservable in the market.

If fair value is based on broker quotes, the Company checks the validity

of received prices based on comparison to prices of other similar assets and market data such as relevant bench mark indices.

Available-for-sale securities are measured at fair value on a recurring basis, while securities with no readily available fair

market value are not, but estimates of fair value are reflected below.

Derivative securities

If active market prices are not available, fair value measurement is based on observable inputs other

than quoted prices included within Level 1, such as prices for similar assets or broker quotes utilizing observable inputs, and accordingly

these securities would be classified as Level 2.

If market prices are not available and there are no observable inputs, then fair value

would be estimated by using valuation models including discounted cash flow methodologies, commonly used option-pricing models and broker

Such securities would be classified as Level 3, if the valuation models and broker quotes are based on inputs that are unobservable

in the market.

If fair value is based on broker quotes, the Company checks the validity of received prices based on comparison to prices

of other similar assets and market data such as relevant bench mark indices.

Available-for-sale securities are measured at fair value

on a recurring basis, while securities with no readily available fair market value are not, but estimates of fair value are reflected

exchange-traded derivatives, fair value is based on quoted market prices, and accordingly, would be classified as Level 1.

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 December 31, 2020

(in thousands):

For 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 December 31, 2021 (in thousands):

Schedule of fair value assets measured on recurring basis

Total Carrying

Balance Sheet

Quoted Prices

Identical Assets

or Liabilities

Balance Sheets

Active Markets for

Identical Assets or

Observable Inputs

Financial assets:

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Contingent consideration payable

following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2019

(in thousands):

Total Carrying

Balance Sheet

Quoted Prices

Identical Assets

or Liabilities

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

Balance Sheets

Active Markets for

Identical Assets or

Observable Inputs

Financial assets:

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Contingent consideration payable

Warrant liability

changes on the value of the warrant assets during the years ended December 31, 2021 and 2020 were as follows (in thousands):

Fair value –

December 31, 2018

Schedule of fair value assets measured on recurring basis unobservable input reconciliation

Fair Value - December 31, 2019

Change in fair value

Fair value –

December 31, 2019

Fair Value - December 31, 2020

Change in fair value

Fair value –

December 31, 2020

Fair Value - December 31, 2021

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

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a derivative and are included in the consolidated balance sheet.

The fair values for warrants outstanding, for companies that

have a readily determinable value, are measured using the Black-Scholes option pricing model.

The following range of assumptions were

used in the models to determine fair value:

The fair values for warrants outstanding, for companies that have a

readily determinable value, are measured using the Black-Scholes option pricing model.

The following range of assumptions were used in

the models to determine fair value:

Schedule of weighted average assumptions

Dividend rate

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0.97 % to 1.44 %

0.17 % to 0.65 %

Expected life (years)

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74.3 % to 174.7 %

following table presents financial assets measured at fair value on a nonrecurring basis as of December 31, 2020 and 2019 (in

following table presents financial assets measured at fair value on a nonrecurring basis as of December 31, 2021 and 2020 (in thousands):

Schedule of fair value

assets and liabilities measured on nonrecurring basis

Total Carrying

Balance Sheet

Quoted Prices

Identical Assets

or Liabilities

Balance Sheets

Active Markets for

Identical Assets or

Observable Inputs

December 31, 2021

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Impaired royalties

refer to Note 3 for further information on impaired loans.

were no liabilities measured at fair value on a nonrecurring basis as of December 31, 2021 or 2020.

The disclosures include financial

instruments and derivative financial instruments.

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

consolidated financial statements and the related market or fair value.

The disclosures include financial instruments and derivative

financial instruments.

Schedule of fair value by balance sheet grouping

the year ended December 31, 2021 (in thousands):

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Contingent consideration payable

year ended December 31, 2019 (in thousands):

ended December 31, 2020 (in thousands):

Financial assets:

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Contingent consideration payable

Warrant liability

Revenue Recognition

Company’s Pharmaceutical Development segment recognizes revenues received from contracts with its customers by revenue source,

as we believe it best depicts the nature, amount, timing and uncertainty of our revenue and cash flow.

The Company’s Finance Receivables

segment does not have any revenues received from contracts with customers.

The following table provides the contract revenue recognized

by revenue source for the year ended December 31, 2020 (in thousands):

Company’s Pharmaceutical Development segment recognizes revenues received from contracts with its customers by revenue source, as we

believe it best depicts the nature, amount, timing and uncertainty of our revenue and cash flow.

The Company’s Finance Receivables segment

does not have any revenues received from contracts with customers.

following table provides the contract revenue recognized by revenue source for the years ended December 31, 2021 and 2020 (in thousands):

Schedule of Revenue Recognized by Revenue Source

Pharmaceutical Development Segment

License Agreement

Pharmaceutical

development and other

Total contract revenue

As of December

31, 2020 and 2019, the Company recognized $0.1 million and $0.1 million, respectively, of accounts receivable related

to its Pharmaceutical Development segment revenue.

Contract Assets and Liabilities

contract liabilities represent advance consideration received from customers and are recognized as revenue when the related performance

obligation is satisfied.

The Company’s contract liabilities are presented as deferred revenues and are included in accounts payable

and accrued liabilities in the consolidated balance sheets (in thousands):

Company’s contract liabilities represent advance consideration received from customers and are recognized as revenue when the related

performance obligation is satisfied.

Company’s contract liabilities are presented as deferred revenues and are included in accounts payable and accrued liabilities

in the consolidated balance sheets (in thousands):

Schedule of Company's Contract Liabilities

Pharmaceutical Development Segment

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Total contract liabilities

the year ended December 31, 2020, the Company recognized $0.1 million of 2019 deferred revenue from satisfaction of performance

Please refer to Notes 1 and 2 for further details on the Company’s deferred revenue and License Agreement,

respectively.

The Company did not have any contract assets nor did it have any contract liabilities related to the License Agreement

as of December 31, 2020 or 2019.

the year ended December 31, 2021, the Company recognized $ 0.3 million of 2020 deferred revenue from satisfaction of performance obligations.

Please refer to Notes 1 and 2 for further details on the Company’s deferred revenue and License Agreement, respectively.

did not have any contract assets nor did it have any contract liabilities related to the License Agreement as of December 31, 2021 or

Segment Information

financial and descriptive information is required to be provided about reportable operating segments, considering a “management

approach”

concept as the basis for identifying reportable segments.

financial and descriptive information is required to be provided about reportable operating segments, considering a “management

approach” concept as the basis for identifying reportable segments.

The management approach is based on the way that management

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Consequently,

the segments are evident from the structure of the Company’s internal organization, focusing on financial information that the

Company’s chief executive officer uses to make decisions about the Company’s operating matters.

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

it has two reportable segments:

Finance Receivables and Pharmaceutical Development, and each are individually managed and provide

separate services.

Revenues by segment represent revenues earned on the services offered within each segment.

the segments are evident from the structure of the Company’s internal organization, focusing on financial information that the

Company’s chief executive officer uses to make decisions about the Company’s operating matters.

described in Note 1, SWK Holdings Corporation and Summary of Significant

Accounting Policies, the Company has determined it has two reportable segments:

Finance Receivables and Pharmaceutical Development,

and each are individually managed and provide separate services.

Revenues by segment represent revenues earned on the services offered

within each segment.

performance is evaluated based on several factors, including income (loss) from continuing operations before income taxes.

1 unchanged sentence

trends and the overall earnings potential of each segment.

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

The Company does not report assets by reportable segment, as this metric

is not used by the Company's chief executive officer in assessing performance or allocating resources to the segments.

The following table

presents financial information for the Company’s reportable revenue by geographic region for the periods indicated (in thousands):

Year Ended December 31,

United States, country of domicile

International

Total revenue

following tables present financial information for the Company’s reportable segments for

the periods indicated (in thousands):

Schedule of Reportable Segments

Year Ended December 31, 2021

Pharmaceutical

Provision for credit losses and impairment

Other revenue

Interest expense

3 unchanged sentences

General and administrative

Other income (expense), net

Income tax benefit

Other income, net

Income tax expense

Consolidated net income (loss)

1 unchanged sentence

Pharmaceutical

Provision for credit losses and impairment

Other revenue

Provision for credit losses and impairment expense

Interest expense

1 unchanged sentence

Depreciation and amortization expense

Change in fair value of acquisition-related contingent

consideration

Change in fair value of acquisition-related contingent consideration

General and administrative

Other income (expense), net

Other (expense) income, net

Income tax benefit

Consolidated net income (loss)

in Holdings Company and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs, which have been included for purposes of reconciling to the

consolidated amounts.

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

have been included for purposes of reconciling to the consolidated amounts.

The components

of income before income tax provision are as follows (in thousands):

the years ended December 31, 2020 or 2019, the Company’s provision for (benefit from) income taxes was as follows (in thousands):

Current provision

Deferred provision (benefit)

Total income tax benefit

Schedule of Income before Income Tax Provision

the years ended December 31, 2021 or 2020, the Company’s provision for (benefit from) income taxes was as follows (in thousands):

of Components of Income Tax Expense (Benefit)

Current expense (benefit)

Deferred expense (benefit)

Total income tax expense (benefit)

The components

of the income tax provision (benefit) are as follows (in thousands):

Federal tax provision

at statutory rate

Federal tax provision at statutory rate

Change in valuation allowance

Transaction costs

Contingent consideration

off of expired deferred tax assets

income tax benefit

State taxes, net of federal income tax benefit

Mark-to-market adjustments

Contingent consideration revaluation

Write off of deferred tax assets

Total income tax expense (benefit)

Company records deferred tax assets if the realization of such assets is more likely than not to occur in accordance with accounting

standards that address income taxes.

Significant management judgment is required in determining whether a valuation allowance

against the Company’s deferred tax assets is required.

The Company has considered all available evidence, both positive

and negative, such as historical levels of income and predictability of future forecasts of taxable income from existing investments,

in determining whether a valuation allowance is required.

The Company is also required to forecast future taxable income in accordance

with accounting standards that address income taxes to assess the appropriateness of a valuation allowance, which further requires

the exercise of significant management judgment.

The Company focuses on forecasting future taxable income for the investment portfolio

that exists as of the balance sheet date.

Specifically, the Company evaluated the following criteria when considering a valuation

Significant management judgment is required in determining whether a valuation allowance against

the Company’s deferred tax assets is required.

The Company has considered all available evidence, both positive and negative, such

as historical levels of income and predictability of future forecasts of taxable income from existing investments, in determining whether

a valuation allowance is required.

The Company is also required to forecast future taxable income in accordance with accounting standards

that address income taxes to assess the appropriateness of a valuation allowance, which further requires the exercise of significant

management judgment.

The Company focuses on forecasting future taxable income for the investment portfolio that exists as of the balance

Specifically, the Company evaluated the following criteria when considering a valuation allowance:

history of tax net operating losses in recent years;

5 unchanged sentences

of December 31, 2021, the Company had cumulative net income before tax for the three years then ended.

Based on its historical

operating performance, the Company has concluded that it was more likely than not that the Company would not be able to realize

the full benefit of the U.S.

Based on its historical operating

performance, the Company has concluded that it was more likely than not that the Company would not be able to realize the full benefit

federal and state deferred tax assets in the future.

However, the Company has concluded that it is

more likely than not that the Company will be able to realize approximately $27.5 million benefit of the U.S.

federal and state

deferred tax assets in the future.

Company will continue to assess the need for a valuation allowance on the deferred tax assets by evaluating both positive and

negative evidence that may exist on a quarterly basis.

Any adjustment to the deferred tax asset valuation allowance would be recorded

in the consolidated statements of income for the period that the adjustment is determined to be required.

The valuation allowance

against deferred tax assets was $37.5 million and $51.7 million as of December 31, 2020 and 2019, respectively.

tax assets consist of the following (in thousands):

However, at December 31, 2021 the Company has concluded that it is more

likely than not that the Company will be able to realize approximately $20.5 million benefit of the U.S.

federal and state deferred tax

assets in the future.

Company will continue to assess the need for a valuation allowance on the deferred tax assets by evaluating both positive and negative

evidence that may exist on a quarterly basis.

Any adjustment to the deferred tax asset valuation allowance would be recorded in the consolidated

statements of income for the period that the adjustment is determined to be required.

The valuation allowance against deferred tax assets

was $16.3 million and $37.5 million as of December 31, 2021 and 2020, respectively.

assets consist of the following (in thousands):

Schedule of Deferred Tax Assets and Liabilities

Deferred tax assets:

7 unchanged sentences

Net deferred tax assets

Tax Reform Act of 1986 limits the use of NOLs and tax credit carryforwards in certain situations where stock ownership changes

In the event the Company has had a change in ownership, the future utilization of the Company’s net operating loss

and tax credit carryforwards could be limited.

Tax Reform Act of 1986 limits the use of NOLs and tax credit carryforwards in certain situations where stock ownership changes occur.

In the event the Company has had a change in ownership, the future utilization of the Company’s net operating loss and tax credit

carryforwards could be limited.

of December 31, 2021, the Company had NOL carryforwards for federal income tax purposes of approximately $ 154.1 million .

NOL carryforwards, if not offset against future income, will expire by 2037, with the majority of such NOLs expiring by 2021.

NOL carryforwards, if not offset against future income, will expire by 2037.

Approximately $4.0 million can be carried forward indefinitely.

Company also had federal research carryforwards of $ 3.1 million .

The federal credits will expire by 2039, with the majority of

such credits expiring by 2029.

Company records liabilities, where appropriate, for all uncertain income tax positions and recognizes potential accrued

interest and penalties related to unrecognized tax benefits within income tax expense.

As of both December 31,

2020 and 2019, the Company had approximately $0.1 million of unrecognized tax benefit.

The Company does not expect the

unrecognized tax benefits to change materially over the next twelve months.

There are no tax positions for which it is

reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve

The federal credits will expire by 2040, with the majority of such credits

expiring by 2029.

Company records liabilities, where appropriate, for all uncertain income tax positions and recognizes potential accrued interest and

penalties related to unrecognized tax benefits within income tax expense.

As of December 31, 2021 and 2020, the Company had approximately

$ 0.3 million and

$0.1 million, respectively, of unrecognized tax benefit, none of which would impact the effective tax rate if recognized.

Company does not expect the unrecognized tax benefits to change materially over the next twelve months.

There are no tax positions for

which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within twelve

months of December 31, 2021.

1 unchanged sentence

and various state jurisdictions.

The Company is currently open to audit under

the statute of limitations by the Internal Revenue Service for the years ending December 31, 1999 through December 31, 2020 due

to carryforward of unutilized net operating losses and research and development credits.

The Company does not anticipate

significant changes to its uncertain tax positions through December 31, 2020.

Investment in TRT

June 13, 2013, the Company purchased royalties from TRT related to its technology licenses in the family cord banking services

sector for $2.0 million, and on October 20, 2014, funded an additional $1.25 million upon the achievement of royalty receipts-based

During the quarter ended March 31, 2016, royalty payments from the primary U.S.

licensee ended as a result of the

licensee terminating a technology license.

SWK and TRT continue to evaluate both options in regard to enforcing TRT’s intellectual

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

TRT’s Canadian licensee continues to

pay royalties.

August 21, 2020, the Company and TRT agreed to terminate the royalty purchase agreement in exchange for TRT issuing the Company TRT common

equity and a convertible note.

The convertible note carries no interest, can be redeemed in cash without penalty at any time by TRT,

and converts into common equity of TRT at decreasing valuations over time to induce repayment in cash.

The convertible feature is

at the option of TRT.

of December 31, 2020, the Company does not believe there is an impairment of the carrying value of the investment in TRT.

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

intellectual property, advancements with TRT’s intellectual property estate and technology license agreements generally, continued

receipt of Canadian licensee royalty payments and a third party valuation the Company’s investment in TRT.

As of December 31,

2020, there were no adjustments to the carrying amount of $3.5 million.

The Company is currently open to audit under the statute

of limitations by the Internal Revenue Service for the years ending December 31, 2001 through December 31, 2021 due to carryforward of

unutilized net operating losses and research and development credits.

The Company does not anticipate significant changes to its

uncertain tax positions through December 31, 2021.

Subsequent Events

March 19, 2021, SWK Funding entered into a credit agreement pursuant to which SWK Funding provided to Sincerus Pharmaceuticals,

(“Sincerus”) a term loan in the maximum principal amount of $9.0 million.

SWK Funding funded $7.1 million at

The loan matures on March 19, 2026.

The loan bears interest at the greater of (a) three-month LIBOR and (b) 1.0 percent,

plus a margin of 12.0 percent, payable in cash, quarterly in arrears.

March 2022, SWK Funding negotiated to terminate the B&D term loan upon receiving payment of $ 10.4

million , which was received on March 17,

The carrying value of the term loan was $ 8.3

million as of December 31, 2021.

this payment, B&D has no remaining payment obligations to the Company.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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-K

Item 8. Financial Statements and Supplementary Data