What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-10 · 509 added, 438 removed, 248 unchanged (79% of the section changed)

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands,

except par value and share data)

FINANCIAL STATEMENTS

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share data)

September 30,

Current assets:

24 unchanged sentences

5,000,000 shares authorized;

no shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Common stock, $ 0.001 par value;

250,000,000 shares authorized;

12,839,118 and 12,836,133 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

12,835,304 and 12,836,133 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

4 unchanged sentences

Total liabilities and stockholders’ equity

See accompanying

notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands,

except per share data)

See accompanying notes to the unaudited condensed

consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

(in thousands, except per share data)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Finance receivable interest income, including fees

8 unchanged sentences

Income from operations

Other (expense) income, net

Unrealized net (loss) gain on derivatives

Unrealized net (loss) gain on equity securities

Other income (expense), net

Unrealized net gain (loss) on derivatives

Unrealized net gain (loss) on equity securities

Income before income tax expense

2 unchanged sentences

Weighted average shares outstanding

See accompanying

notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands,

except share data)

Six Months Ended June 30, 2022

Stockholders’

Paid-In Capital

See accompanying notes to the unaudited condensed

consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF STOCKHOLDERS’ EQUITY

(in thousands, except share data)

Nine Months Ended September 30, 2022

Additional Paid-In

Total Stockholders’

Balances at December 31, 2021

9 unchanged sentences

( 4,160,453 )

Six Months Ended June 30, 2021

Stockholders’

Paid-In Capital

Stock-based compensation

Issuance of common stock upon vesting of restricted stock

Net settlement for employee taxes on restricted stock and options

Stock options exercised, net

Repurchases of common stock in open market

Balances at September 30, 2022

$ ( 4,153,837 )

Nine Months Ended September 30, 2021

Additional Paid-In

Total Stockholders’

Ca pital Deficit Equity

Balances at December 31, 2020

8 unchanged sentences

( 4,173,066 )

See accompanying

notes to the unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Stock-based compensation

Issuance of common stock upon vesting of restricted stock

Balances at September 30, 2021

$ ( 4,170,823 )

See accompanying notes to the unaudited condensed

consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS

OF CASH FLOWS

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

18 unchanged sentences

Purchases of property and equipment

Net cash provided by investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

Net settlement for employee taxes on restricted stock and options

Net payments on credit facility

Payment of acquisition-related contingent consideration

Repurchases of common stock, including fees and expenses

Net cash used in financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

See accompanying

notes to the unaudited condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SWK Holdings Corporation and Summary of Significant Accounting Policies

of Operations

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

September 1999.

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 June 30, 2022, the

Company had 34 full-time employees.

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 August 3, 2022, the Company and its partners have executed transactions with 46 different parties under its specialty

finance strategy, funding an aggregate of $649.6 million in various financial products across the life science sector.

See accompanying notes to the unaudited condensed

consolidated financial statements.

SWK HOLDINGS CORPORATION

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

SWK Holdings Corporation and

Summary of Significant Accounting Policies

Nature of Operations

SWK Holdings Corporation

(the “Company”) was incorporated in July 1996 in California and reincorporated in Delaware in September 1999.

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

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.

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

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 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 (“GAAP”).

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.

Interim Financial Information

unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments

that, in the opinion of management, are necessary for a fair presentation of the interim financial information.

The results of

operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter

or for the year ending December 31, 2022.

Certain information and footnote disclosures normally included in financial statements

prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the Securities and Exchange

Commission (“SEC”).

These unaudited condensed consolidated financial statements and notes included herein should be

read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report

on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 25, 2022.

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;

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.

is headquartered in Dallas, Texas, and as of September 30, 2022, the Company had 33 full-time employees.

The Company has net

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

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

As of November 1, 2022,

the Company and its partners have executed transactions with 48 different parties under its specialty finance strategy, funding an aggregate

of $691.0 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.

During 2019, the Company

commenced its Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc.

clinical stage biopharmaceutical company offering innovative formulation solutions built around its proprietary oral drug delivery technologies,

the Peptelligence® platform.

Basis of Presentation and Principles of Consolidation

The Company’s consolidated

financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).

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.

The 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.

Unaudited Interim Financial Information

The unaudited condensed

consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion

of management, are necessary for a fair presentation of the interim financial information.

The results of operations for the interim periods

presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31,

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been

condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”).

These unaudited condensed

consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements

and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 25,

Use of Estimates

The 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

stock-based compensation;

valuation of accounts receivable;

impairment of finance

impairment of finance receivables;

long-lived assets;

property and equipment;

and equipment;

intangible assets;

2 unchanged sentences

income taxes;

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.

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 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.

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

non-refundable,

upfront license fees;

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 reasonable.

The 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.

Segment Information

The 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 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.

Revenue Recognition

The 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;

reimbursement of certain costs;

customer option exercise fees;

development, regulatory and commercial milestone

development, regulatory and commercial milestone payments;

and royalties on net sales of licensed products.

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

date and is included in accounts payable and accrued liabilities in the unaudited condensed 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.

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.

Deferred revenue includes

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

The Company classifies as current the

portion of deferred revenue that is expected to be recognized within one year from the balance sheet date and is included in accounts

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

Research and Development

Research 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 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.

Recent Accounting Pronouncements

March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2022-02, “Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures,”

which updates the requirements for accounting for credit losses under Accounting Standards Codification 326, eliminates the accounting

guidance on troubled debt restructurings for creditors, and enhances creditors’ disclosure requirements related to loan

refinancings and restructurings for borrowers experiencing financial difficulty.

The ASU also amends the guidance on vintage disclosures

to require disclosure of gross write-offs by year of origination.

The amendments are effective in periods beginning after December

15, 2022 using either a prospective or modified retrospective transition.

Early adoption of certain or all of the amendments is

The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial

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

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

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.

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.

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.

March 2020, the FASB issued 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.

In March 2022, the

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-02, “Financial

Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures,” which updates the requirements for

accounting for credit losses under Accounting Standards Codification 326, eliminates the accounting guidance on troubled debt restructurings

for creditors, and enhances creditors’ disclosure requirements related to loan refinancings and restructurings for borrowers experiencing

financial difficulty.

The ASU also amends the guidance on vintage disclosures to require disclosure of gross write-offs by year of origination.

The amendments are effective in periods beginning after December 15, 2022 using either a prospective or modified retrospective transition.

Early adoption of certain or all of the amendments is permitted.

The Company is currently evaluating the provisions of the amendments

and the impact on its future consolidated financial statements.

In June 2016, the

FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU adds an impairment model, known as

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

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.

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.

In March 2020, the

FASB issued 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 are

These transactions include:

(i) contract modifications, (ii) hedging relationships,

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

ASU 2020-04 was effective upon issuance, and the

provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2024.

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.

Net Income per

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 net income per share for the following periods (in thousands, except

per share amounts):

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

classified as held-to-maturity.

ASU 2020-04 was effective upon issuance, and the provisions generally can be applied prospectively as

of January 1, 2020 through December 31, 2024.

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

Net Income per Share

Basic 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.

The following table shows

the computation of basic and diluted net income per share for the following periods (in thousands, except per share amounts):

Schedule of Basic

1 unchanged sentence

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Weighted-average shares outstanding

3 unchanged sentences

Diluted net income per share

the three months ended June 30, 2022 and 2021, outstanding options to purchase shares of common stock and outstanding shares of

restricted stock in an aggregate of approximately 308,000 and 391,000 , respectively, have been excluded from the calculation of

diluted net income per share, as such securities were anti-dilutive.

For the six months ended June 30, 2022 and 2021, outstanding

options to purchase shares of common stock and outstanding shares of restricted stock in an aggregate of approximately 309,000

and 401,000 , respectively, have been excluded from the calculation of diluted net income per share, as all such securities were

anti-dilutive.

Receivables, Net

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 June 30, 2022 and December 31, 2021, the Company had a credit loss allowance of $8.4 million.

Of the total $8.4 million, $ 1.2

million and $ 0.6 million are associated with the Company’s Cambia® and Besivance® royalties, respectively.

The remaining

$ 6.6 million is related to the ABT Molecular Imaging, Inc., now known as Best ABT, Inc.

(“Best”), second lien term loan

that was recognized in order to reflect the Best royalty at its estimated fair value.

Approximately $23,000 of cash receipts received from the Companys

Besivance® royalty during the six months ended June 30, 2022 were applied toward the allowance for credit losses.

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

For the three months ended

September 30, 2022 and 2021, outstanding options to purchase shares of common stock and outstanding shares of restricted stock in an aggregate

of approximately 186,000 and 367,000 , respectively, have been excluded from the calculation of diluted net income per share, as such securities

were anti-dilutive.

For the nine months ended September 30, 2022 and 2021, outstanding options to purchase shares of common stock and

outstanding shares of restricted stock in an aggregate of approximately 268,000 and 390,000 , respectively, have been excluded from the

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

Finance Receivables, Net

Finance receivables

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

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

interest method.

As of September 30, 2022

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

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

are associated with the Company’s Cambia® and Besivance® royalties, respectively.

The remaining $6.6 million is related to the

ABT Molecular Imaging, Inc., now known as Best ABT, Inc.

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

the Best royalty at its estimated fair value.

Approximately $21,000 of cash receipts received from the Company’s Besivance® royalty

during the nine months ended September 30, 2022 were applied toward the allowance for credit losses.

The carrying values of finance

receivables are as follows (in thousands):

Schedule of carrying value of finance receivables

June 30, 2022

September 30, 2022

December 31, 2021

3 unchanged sentences

Total carrying value

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

The following table presents

nonaccrual and performing finance receivables by portfolio segment, net of credit loss allowance (in thousands):

Schedule of analysis of nonaccrual and performing loans by portfolio segment

June 30, 2022

September 30, 2022

December 31, 2021

1 unchanged sentence

Total carrying value

of June 30, 2022, the Company had two finance receivables in nonaccrual status:

(1) the term loan to Flowonix

Medical, Inc.

(“Flowonix”), with a net carrying value of $ 9.8

million and (2) the Best royalty, with a net carrying value of $ 3.1 million .

Although in nonaccrual status, the Flowonix term loan was not considered impaired as of June 30, 2022 and December

The Company collected $0.6 million on its nonaccrual finance receivables during the six months ended June 30,

in available-for-sale corporate debt securities and equity securities as of June 30, 2022 and December 31, 2021 consist of the

following (in thousands):

As of September 30, 2022,

the Company had two finance receivables in nonaccrual status:

(1) the term loan to Flowonix Medical, Inc.

(“Flowonix”),

with a net carrying value of $ 9.8

million and (2) the Best royalty, with a net carrying value of $ 3.0

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

(1) the term loan to

Flowonix, with a net carrying value of $10.0 million, (2) the term loan with B&D Dental Corporation

(“B&D”), with a carrying amount of $8.3 million, and (3) the Best royalty, with a carrying amount of $3.4 million.

Although in nonaccrual status, the Flowonix and B&D term loans were not considered impaired as of September 30, 2022 and December

The Company collected $11.4 million on its nonaccrual finance receivables during the nine months ended September 30,

2022, which includes $10.7 million to settle the term loan with B&D.

Marketable Investments

Investments in available-for-sale

corporate debt securities and equity securities as of September 30, 2022 and December 31, 2021 consist of the following (in thousands):

Schedule of marketable investments

June 30, 2022

September 30, 2022

December 31, 2021

2 unchanged sentences

Total marketable investments

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

corporate debt securities as of June 30, 2022 and December 31, 2021, are as follows (in thousands):

The amortized cost

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

as of September 30, 2022 and December 31, 2021, are as follows (in thousands):

Schedule of marketable investments

June 30, 2022

September 30, 2022

December 31, 2021

following table presents unrealized net (loss) gain on equity securities during the three and six months ended June 30, 2022 and

2021 (in thousands):

The following table

presents unrealized net gain (loss) on equity securities during the three and nine months ended September 30, 2022 and 2021 (in thousands):

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

Three Months Ended

Six Months Ended June 30,

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

September 30,

Nine Months Ended September 30,

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

Intangible Assets

following table summarizes the gross book value, accumulated amortization and net book value balances of intangible assets as

of June 30, 2022 and December 31, 2021 (in thousands):

The following table summarizes

the gross book value, accumulated amortization and net book value balances of intangible assets as of September 30, 2022 and December

31, 2021 (in thousands):

Schedule of Intangible Assets

June 30, 2022

September 30, 2022

December 31, 2021

Gross Book Value

Accumulated Amortization

Net Book Value

Gross Book Value

Accumulated Amortization

Net Book Value

Licensing Agreement (1)

2 unchanged sentences

Total intangible assets

(1) Prior to the acquisition, Enteris entered into a non-exclusive

commercial license agreement (the “License Agreement”) with Cara Therapeutics, Inc.

(“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 related to intangible assets was $ 0.4 million and $ 0.7 million for the three months ended June 30, 2022 and 2021, respectively.

Amortization expense related to intangible assets was $ 0.9 million and $ 2.3 million for the six months ended June 30, 2022 and

2021, respectively.

estimated future amortization expense related to intangible assets as of June 30, 2022 is as follows (in thousands):

(1) Prior to the acquisition, Enteris

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

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.

Amortization expense related

to intangible assets was $ 0.4 million and $ 0.6 million for the three months ended September 30, 2022 and 2021, respectively.

expense related to intangible assets was $ 1.3 million and $ 2.9 million for the nine months ended September 30, 2022 and 2021, respectively.

The estimated future amortization

expense related to intangible assets as of September 30, 2022 is as follows (in thousands):

Schedule of Intangible Asset Amortization Expense

Remainder of 2022

and Contingencies

Consideration

Company recorded contingent consideration related to the 2019 acquisition of Enteris and sharing of certain milestone and royalties

due to Enteris pursuant to the License Agreement.

Contingent consideration is remeasured to fair value at each reporting date

until the contingency is resolved, with changes in the estimated fair value recognized in earnings.

The estimated fair value of

contingent consideration as of June 30, 2022 and December 31, 2021 was $ 8.5 million .

The Company did not recognize a change

in the estimated fair value of its contingent consideration during the six months ended June 30, 2022.

The Company recognized

a $0.1 million gain on the change in fair value of its contingent consideration during the six months ended June 30, 2021.

of June 30, 2022, the Company’s unfunded commitments were as follows (in millions):

Commitments and Contingencies

Contingent Consideration

The Company recorded contingent

consideration related to the 2019 acquisition of Enteris and sharing of certain milestone and royalties due to Enteris pursuant to the

License Agreement.

Contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved, with

changes in the estimated fair value recognized in earnings.

The estimated fair value of contingent consideration as of September 30, 2022

and December 31, 2021 was $ 8.5 million .

The Company did not recognize a change in the estimated fair value of its contingent consideration

during the nine months ended September 30, 2022.

The Company recognized a $0.1 million gain on the change in fair value of its contingent

consideration during the nine months ended September 30, 2021.

Unfunded Commitments

As of September 30, 2022,

the Company’s unfunded commitments were as follows (in millions):

Schedule of Unfunded Commitments

Aziyo Biologics, Inc.

MedMinder Systems, 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.

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).

Per the terms of the

royalty purchase or credit agreements, unfunded commitments are contingent upon reaching an established revenue threshold or other

performance metrics on or before a specified date or period of time, and

in the case of loan transactions, are subject to being advanced as long as an event of default does not exist.

Fair Value Measurements

The 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).

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.

quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

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.

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.

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 six months ended June 30, 2022.

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

unaudited condensed 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.

common equity securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices).

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

Consideration

Company recorded contingent consideration related to the 2019 acquisition of Enteris and sharing of certain milestone and royalties

due to Enteris pursuant to the License Agreement.

fair value measurements of contingent consideration obligations arising from business combinations are classified as Level 3 estimates

under the fair value hierarchy as these items have been valued using unobservable inputs.

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.

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

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.

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.

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.

Transfers into or out

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

There were no transfers between

any levels during the nine months ended September 30, 2022.

The following information

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

consolidated financial statements and the related market or fair value.

The disclosures include financial instruments and derivative financial

instruments, other than investment in affiliates.

Following 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

The carrying amounts

reported in the balance sheet for cash and cash equivalents approximate those assets’ fair values.

Marketable Investments

Certain common equity

securities are reported at fair value utilizing Level 1 inputs (exchange quoted prices).

Finance Receivables

The 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.

Finance receivables are

not measured at fair value on a recurring basis, but estimates of fair value are reflected below.

Contingent Consideration

The Company recorded contingent

consideration related to the 2019 acquisition of Enteris and sharing of certain milestone and royalties due to Enteris pursuant to the

License Agreement.

The fair value measurements

of contingent consideration obligations 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:

(a) the estimated

amount and timing of projected cash flows;

(a) the estimated amount and timing of projected cash

(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.

Significant increases or decreases

in any of those inputs in isolation could result in a significantly lower or higher fair value measurement.

Investments and Derivative Securities

and (c) the risk-adjusted discount rate

used to present value the probability-weighted cash flows.

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

result in a significantly lower or higher fair value measurement.

Marketable Investments and Derivative

Marketable Investments

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.

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 June 30, 2022 (in

If active market prices are

available, fair value measurement is based on quoted active market prices and, accordingly, these securities would be classified as Level

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

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

For exchange-traded derivatives,

fair value is based on quoted market prices, and accordingly, would be classified as Level 1.

For non-exchange traded derivatives, fair

value is based on option pricing models and are classified as Level 3.

The following table

presents financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2022 (in thousands):

Schedule of fair value assets measured on recurring basis

6 unchanged sentences

Contingent consideration payable

following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2021

(in thousands):

The following table presents

financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 (in thousands):

Quoted Prices

5 unchanged sentences

Contingent consideration payable

changes in fair value of the warrant assets during the six months ended June 30, 2022 and 2021 were as follows (in thousands):

The changes in fair value

of the warrant assets during the nine months ended September 30, 2022 and 2021 were as follows (in thousands):

Schedule of fair value assets measured on recurring basis unobservable input reconciliation

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

Fair value - December 31, 2021

2 unchanged sentences

Change in fair value

Fair value - June 30, 2022

Fair value - June 30, 2021

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

These warrants meet the definition

of a derivative and are included in the unaudited condensed consolidated balance sheets.

The fair values for warrants outstanding,

which do not have a readily determinable value, are measured using the Black-Scholes option pricing model.

The following ranges

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

Fair value - September 30, 2022

Fair value - September 30, 2021

The Company holds warrants

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

These warrants meet the definition of a derivative and are included

in the unaudited condensed consolidated balance sheets.

The fair values for warrants outstanding, which do not have a readily determinable

value, are measured using the Black-Scholes option pricing model.

The following ranges of assumptions were used in the models to determine

Schedule of weighted average assumptions

June 30, 2022

September 30, 2022

December 31, 2021

7 unchanged sentences

60.2 % to 142.0 %

of June 30, 2022 and December 31, 2021, the Company had two royalties, Best and Cambia®, that were deemed to be impaired based

on reductions in carrying values in prior periods.

The following table presents these royalties measured at fair value on a nonrecurring

basis as of June 30, 2022 and December 31, 2021 (in thousands):

As of September 30,

2022 and December 31, 2021, the Company had two royalties, Best and Cambia®, that were deemed to be impaired based on reductions in

carrying values in prior periods.

The following table presents these royalties measured at fair value on a nonrecurring basis as of September

30, 2022 and December 31, 2021 (in thousands):

Schedule of fair value

2 unchanged sentences

or Liabilities

June 30, 2022

September 30, 2022

December 31, 2021

were no liabilities measured at fair value on a nonrecurring basis as of June 30, 2022 and December 31, 2021.

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

unaudited condensed consolidated financial statements and the related market or fair value.

The disclosures include financial

instruments and derivative financial instruments measured at fair value on a recurring and non-recurring basis.

There were no liabilities

measured at fair value on a nonrecurring basis as of September 30, 2022 and December 31, 2021.

The following information

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

consolidated financial statements and the related market or fair value.

The disclosures include financial instruments and derivative financial

instruments measured at fair value on a recurring and non-recurring basis.

Schedule of fair value by balance sheet grouping

of June 30, 2022 (in thousands):

As of September 30, 2022

(in thousands):

Carrying Value

6 unchanged sentences

Contingent consideration payable

of December 31, 2021 (in thousands):

As of December 31, 2021 (in

Carrying Value

7 unchanged sentences

Revenue Recognition

Company’s Pharmaceutical Development segment recognizes revenues received from contracts with its customers by revenue source,

as the Company believes 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 three and six months ended June 30, 2022 and

2021 (in thousands):

The Company’s Pharmaceutical

Development segment recognizes revenues received from contracts with its customers by revenue source, as the Company believes 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 three and nine months ended September 30, 2022 and 2021 (in thousands):

Schedule of Revenue Recognized by Revenue Source

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Pharmaceutical Development Segment

2 unchanged sentences

Total contract revenue

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):

$ 5.0 million of milestone revenue

related to Enteris’s License Agreement with Cara was received during the nine months ended September 30, 2022.

The Company’s 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):

Schedule of Company's Contract Liabilities

September 30,

December 31, 2021

Pharmaceutical Development Segment

1 unchanged sentence

Total contract liabilities

the six months ended June 30, 2022, the Company recognized $ 0.1

million of 2021 deferred revenue from satisfaction of performance obligations.

During the nine months ended

September 30, 2022, the Company recognized $ 0.2 million of 2021 deferred revenue from satisfaction of performance obligations.

The Company did not have any contract assets

nor did it have any contract liabilities related to the License Agreement as of June 30, 2022 or December 31, 2021.

nor did it have any contract liabilities related to the License Agreement as of September 30, 2022 or December 31, 2021.

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.

The management approach is based on the way that management

organizes the segments within the Company for making operating decisions, allocating resources, and assessing performance.

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, 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 Company does not report assets by reportable segment, nor does the Company report results by

geographic region, as these metrics are not used by the Company’s chief executive officer in assessing performance or allocating

resources to the segments.

performance is evaluated based on several factors, including income (loss) from continuing operations before income taxes.

uses this measure of net income (loss) to evaluate segment performance because the Company believes this measure is indicative of performance

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):

Selected 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 organizes the segments

within the Company for making operating decisions, allocating resources, and assessing performance.

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.

As described in Note

1, 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.

Company does not report assets by reportable segment, nor does the Company report results by geographic region, as these metrics are not

used by the Company’s chief executive officer in assessing performance or allocating resources to the segments.

Segment performance

is evaluated based on several factors, including income (loss) from continuing operations before income taxes.

Management uses this measure

of net income (loss) to evaluate segment performance because the Company believes this measure is indicative of performance trends and

the overall earnings potential of each segment.

The following tables

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

Schedule of Reportable Segments

Three Months Ended June 30, 2022

Pharmaceutical

Development and

Holding Company

Three Months Ended September 30, 2022

Finance Receivables

Pharmaceutical Development and Other

Holding Company and Other

Other revenue

Interest expense

2 unchanged sentences

General and administrative

Other expense, net

Other income, net

Income tax expense

Net income (loss)

Three Months Ended June 30, 2021

Pharmaceutical

Development and

Holding Company

Three Months Ended September 30, 2021

Finance Receivables

Pharmaceutical Development and Other

Holding Company and Other

Interest expense

1 unchanged sentence

Depreciation and amortization expense

Change in fair value of acquisition-related contingent consideration

General and administrative

2 unchanged sentences

Net income (loss)

Six Months Ended June 30, 2022

Pharmaceutical

Development and

Holding Company

Nine Months Ended September 30, 2022

Finance Receivables

Pharmaceutical Development and Other

Holding Company and Other

Other revenue

3 unchanged sentences

General and administrative

Other expense, net

Other income, net

Income tax expense

Net income (loss)

Six Months Ended June 30, 2021

Pharmaceutical

Development and

Holding Company

Nine Months Ended September 30, 2021

Finance Receivables

Pharmaceutical Development and Other

Holding Company and Other

Other revenue

7 unchanged sentences

Net income (loss)

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

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

Subsequent Events

July 1, 2022, SWK Funding, a subsidiary of the Company, entered into a credit agreement pursuant to which SWK Funding provided to Exeevo,

(“Exeevo”) a term loan in the amount of $ 7.5 million .

SWK Funding funded $ 5.0 million at closing with the remaining $ 2.5

million becoming available upon Exeevo’s satisfaction of certain future conditions.

The loan matures on July 1, 2027 .

In connection with

the loan, SWK Funding also received a warrant to purchase 930 shares of Exeevo common stock.

July 1, 2022, SWK Funding received $ 4.3 million for the payoff of the Beleodaq® royalty.

Trio Healthcare

Ltd., (Ostomy Products Royalty)

July 25, 2022, SWK Funding received $ 6.1 million for the payoff of the Ostomy Products Royalty.

Included in Holding Company

and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs, including public company costs

and non-Enteris corporate employees, which have been included for purposes of reconciling to the consolidated amounts.

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

What changed 10-Q

Item 1. Financial Statements