Item 9A. Controls and Procedures
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information
required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Chief
Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.
In
connection with the preparation of this report, our management, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of
the period covered by this report.
Management’s
Report on Internal Control over Financial Reporting
Our
management, under the supervision of the Chief Executive Officer and the Chief Financial Officer, is responsible for establishing
and maintaining adequate internal control over financial reporting. Internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles
generally accepted in the United States of America. Internal control over financial reporting includes those policies and procedures
which (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with GAAP, (iii) provide reasonable assurance that receipts and expenditures are being made
only in accordance with appropriate authorization of management and the board of directors, and (iv) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material
effect on the financial statements.
In
connection with the preparation of this report, our management, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial
reporting as of the end of the period covered by this report based on the criteria established in Internal Control—Integrated
Framework issued in 2013, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
As a result of that evaluation, management concluded that as of December 31, 2022, our internal control over financial reporting
was effective based on the criteria set forth in the COSO framework.
This
Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control
over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant
to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.
71
Inherent
Limitations over Internal Controls
Our
system of controls is designed to provide reasonable, not absolute, assurance regarding the reliability and integrity of accounting
and financial reporting. Our management does not expect that our disclosure controls and procedures or our internal control over
financial reporting will prevent or detect all errors and fraud. A control system, no matter how well-designed and operated, can
provide only reasonable, not absolute, assurance that the objectives of the control system will be met. These inherent limitations
include the following:
· Judgments
in decision-making can be faulty, and control and process breakdowns can occur because
of simple errors or mistakes;
· Controls
can be circumvented by individuals, acting alone or in collusion with each other, or
by management override;
· The
design of any system of controls is based in part on certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving
its stated goals under all potential future conditions;
· Over
time, controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with associated policies or procedures; and
· The
design of a control system must reflect the fact that resources are constrained, and
the benefits of controls must be considered relative to their costs.
Because
of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, have been detected.
Changes
in Internal Control over Financial Reporting
There
have been no changes during the Company’s fiscal year ended December 31, 2022 in our internal control over financial reporting
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
Not
Applicable.
ITEM
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not
Applicable.
72
PART
III
We
have omitted from Part III the information that will appear in our Definitive Proxy Statement for our 2023 Annual Meeting of Stockholders
(the “2023 Proxy Statement”), which we intend to file within 120 days after the end of our fiscal year pursuant to
Regulation 14A.
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our
Board has adopted a Code of Ethics and Conduct that applies to our principal executive officer, principal financial officer and
principal accounting officer, as well as to the members of our Board and our other officers and employees. This Code of Ethics
and Conduct is available on our website at www.swkhold.com. We intend to satisfy the amendment and waiver disclosure requirements
under applicable securities regulations by posting any amendments of, or waivers to, the Code of Ethics and Conduct on our website.
The
information under the principal headings “ELECTION OF DIRECTORS,” “SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE,” and “CODE OF ETHICS AND CONDUCT,” the information regarding executive officers of the Company under
the subheading “Executive Officers”, and the information regarding the Audit Committee under the subheading “Board
Meetings and Committees” under the principal heading “CORPORATE GOVERNANCE,” in the Company’s 2023 Proxy
Statement is incorporated herein by reference.
ITEM
11. EXECUTIVE COMPENSATION
The
information under the principal headings “DIRECTOR COMPENSATION,” “COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION,” “EXECUTIVE COMPENSATION,” and “RELATED INFORMATION” in the Company’s 2023
Proxy Statement is incorporated herein by reference.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The
information under the principal headings “EQUITY COMPENSATION PLAN INFORMATION” and “OWNERSHIP OF EQUITY SECURITIES
OF THE COMPANY” in the Company’s 2023 Proxy Statement is incorporated herein by reference.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The
information under the principal heading “TRANSACTION WITH RELATED PERSONS” in the Company’s 2023 Proxy Statement
is incorporated herein by reference.
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The
information under the subheadings “Audit Fees and All Other Fees” and “Audit Committee Pre-Approval of Audit
and Permissible Non-Audit Services of Independent Auditors” below the principal heading “AUDIT FEES” in the
Company’s 2023 Proxy Statement is incorporated herein by reference.
73
PART
IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)
The following documents are filed as part of this Report:
1.
Financial Statements:
Page
Report
of Independent Registered Public Accounting Firm (PCAOB ID #207)
37
Consolidated
Balance Sheets as of December 31, 2022 and 2021
39
Consolidated
Statements of Income for the years ended December 31, 2022 and 2021
40
Consolidated
Statements of Stockholders’ Equity for the years ended December 31, 2022 and 2021
41
Consolidated
Statements of Cash Flows for the years ended December 31, 2022 and 2021
42
Notes
to the Consolidated Financial Statements
43
2.
Exhibits: See attached Exhibit Index.
74
ITEM 16.
FORM 10-K SUMMARY
None.
75
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on March 31, 2023.
SWK
Holdings Corporation
By:
/s/
Joe D. Staggs
Joe
D. Staggs
Chief
Executive Officer
(Principal
Executive Officer)
POWER
OF ATTORNEY
KNOW
ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Joe D. Staggs and Yvette
M. Heinrichson and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution, for
him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report
on Form 10-K and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them,
or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated below as of March 31, 2023.
By:
/s/
Joe D. Staggs
Joe
D. Staggs
Chief
Executive Officer
(Principal
Executive Officer)
By:
/s/
Yvette M. Heinrichson
Yvette
M. Heinrichson
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
By:
/s/
Jerry Albright
Jerry
Albright
Director
By:
/s/
Laurie M. Dotter
Laurie
M. Dotter
Director
By:
/s/
Robert K. Hatcher
Robert
K. Hatcher
Director
By:
/s/
Marcus E. Pennington
Marcus
E. Pennington
Director
76
EXHIBIT
INDEX
Exhibit
Number
Exhibit
Description
Form
Exhibit
Filing
Date
Filed
Herewith
3.01
Third
Amended and Restated Certificate of Incorporation, dated as of August 12, 2022.
8-K
3.1
08/15/22
3.02
Amended
and Restated Bylaws, dated as of August 12, 2022.
8-K
3.02
08/15/22
4.01
Form
of Specimen Common Stock Certificate
S-1/A
4.01
09/21/99
4.02
Description of Securities Registered Under Section 12 of the Exchange Act
X
10.01
2010
Equity Incentive Plan, as amended.*
DEF
14A
Appendix
A
10/25/19
10.02
SWK
Holdings Corporation 2010 Equity Incentive Plan Form of Restricted Stock Award Agreement.*
10-Q
10.2
11/09/10
10.03
Registration
Rights Agreement, dated as of September 6, 2013, among Double Black Diamond, L.P., Double Black Diamond Offshore Ltd., Black
Diamond Offshore, Ltd. and the Company
8-K
10.4
09/09/13
10.04
Employment
Agreement, dated January 28, 2019, between the Company and Winston L. Black III.*
8-K
10.1
01/30/19
10.05
Royalty
Agreement, dated April 2, 2013, among SWK Funding LLC, Bess Royalty, L.P. and InSite Vision Incorporated.**#
S-1/A
10.1
04/01/14
10.06
Stockholders’
Agreement, dated August 18, 2014, among Double Black Diamond Offshore Ltd., Black Diamond Offshore Ltd. and SWK Holdings Corporation
8-K
10.2
08/19/14
10.07
Amendment
No. 1 to the Stockholders’ Agreement dated June 28, 2022
8-K
10.1
06/29/22
10.08
Amendment No. 2 to the Stockholders’ Agreement dated February 27, 2023
X
10.09
Purchase and Sale Agreement, dated December 13, 2016, between SWK Funding LLC and Opiant Pharmaceuticals, Inc.
10-K
10.16
03/29/18
77
Exhibit
Number
Exhibit
Description
Form
Exhibit
Filing
Date
Filed
Herewith
10.10
Loan
and Security Agreement between SWK Holdings Corporation and SWK Funding LLC as Borrowers and Certain Financial Institutions
as Lenders and State Bank and Trust Company as Agent dated June 29, 2018
8-K
10.1
07/02/18
10.11
First Amendment to Loan and Security Agreement dated August 26, 2019 by and among SWK Holdings Corporation and Cadence Bank, N.A.
X
10.12
Second
Amendment to Loan and Security Agreement dated June 29, 2021 by and among SWK Holdings Corporation and Cadence Bank, N.A.
8-K
10.1
06/29/21
10.13
Third
Amendment to Loan and Security Agreement dated September 27, 2021 by and among SWK Holdings Corporation and Cadence Bank,
N.A.
8-K
10.1
10/01/21
10.14
Fourth
Amendment to Loan and Security Agreement, dated September 26, 2022, by and among SWK Holdings Corporation, SWK Funding LLC
and Cadence Bank, N.A.
8-K
10.1
09/28/22
10.15
Fifth
Amendment to Loan and Security Agreement between SWK Holdings Corporation and SWK Funding LLC as Borrowers, and Cadence Bank,
a Mississippi bank and successor by merger to Cadence Bank, N.A., a
8-K
10.1
11/22/22
10.16
Letter
Agreement, dated June 30, 2022, by and between the Company and Winston L. Black III
8-K
10.1
07/08/22
10.17
Separation
and Release Agreement, dated August 31, 2022, by and between the Company and Winston L. Black III.
10-Q
10.2
11/09/22
10.18
Employment
Agreement, dated January 2, 2023 between SWK Holdings Corporation and Jody Staggs
8-K
10.1
01/03/23
21.01
List
of Subsidiaries
X
23.01
Consent of Independent Registered Public Accounting Firm - BPM LLP
X
78
Exhibit
Number
Exhibit
Description
Form
Exhibit
Filing
Date
Filed
Herewith
24.01
Power of Attorney (included on signature page of this Annual Report on Form 10-K).
X
31.01
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
31.02
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.01
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
X
32.02
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
X
101.INS+
XBRL
Instance Document
101.SCH+
XBRL
Taxonomy Extension Schema Document
101.CAL+
XBRL
Taxonomy Extension Calculation Linkbase
101.DEF+
XBRL
Taxonomy Extension Definition Linkbase
101.LAB+
XBRL
Taxonomy Extension Labels Linkbase
101.PRE+
XBRL
Taxonomy Extension Presentation Linkbase
104
Cover
Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Management
contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report.
**
These
certifications accompany SWK’s Annual Report on Form 10-K; they are not deemed “filed” with the SEC and
are not to be incorporated by reference in any filing of SWK under the Securities Act or the Exchange Act, whether made before
or after the date hereof and irrespective of any general incorporation language in any filings, except to the extent that
SWK specifically incorporates it by reference.
#
Confidential
treatment is requested for certain confidential portions of these exhibit pursuant to Rule 24b-2 under the Exchange Act. In
accordance with Rule 24b-2, these confidential portions have been omitted from these exhibits and filed separately with the
Securities and Exchange Commission
+
XBRL
information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or
12 of the Securities Act is deemed not filed for purposes of Section 18 of the Exchange Act and otherwise is not subject to
liability under these sections.
79