What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-10 · 284 added, 266 removed, 502 unchanged (52% of the section changed)

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED

CONSOLIDATED BALANCE SHEETS

(in thousands, except

par value and share data)

FINANCIAL STATEMENTS

HOLDINGS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

thousands, except par value and share data)

Current assets:

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Total current assets

Finance receivables, net of allowance for credit losses of $ 11,786 and $ 11,846 , as of

March 31, 2023 and December 31, 2022, respectively

Finance receivables, net of allowance for credit losses of $ 11,104 and $ 11,846 , as of June 30, 2023 and December 31, 2022, respectively

Collateral on foreign currency forward contract

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250,000,000 shares authorized;

12,830,399 and 12,843,157 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

12,566,519 and 12,843,157 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

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accompanying notes to the unaudited condensed consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except

per share data)

Three Months Ended

HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

thousands, except per share data)

Finance receivable interest income, including fees

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Costs and expenses:

Provision (benefit) for credit losses

Interest expense

4 unchanged sentences

Other income (expense), net

Unrealized net loss on warrants

Unrealized net gain (loss) on warrants

Unrealized net loss on equity securities

1 unchanged sentence

Income before income tax expense

Income tax (benefit) expense

Income tax expense

Net income per share

Weighted average shares outstanding

See accompanying notes

to the unaudited condensed consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except

Months Ended March 31, 2023

See accompanying

notes to the unaudited condensed consolidated financial statements.

HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

thousands, except share data)

Months Ended June 30, 2023

Stockholders’

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( 4,156,053 )

Three Months Ended March 31, 2022

of common stock upon vesting of restricted stock

of common stock in open market

at June 30, 2023

$ ( 4,152,119 )

Months Ended June 30, 2022

Stockholders’

Paid-In Capital

Balances at December 31, 2021

at December 31, 2021

$ ( 4,164,496 )

Stock-based compensation

Issuance of common stock upon vesting of restricted stock

Forfeiture of unvested restricted stock

Balances at March 31, 2022

of common stock upon vesting of restricted stock

of unvested restricted stock

at March 31, 2022

( 4,161,018 )

See accompanying notes

to the unaudited condensed consolidated financial statements.

SWK HOLDINGS CORPORATION

UNAUDITED CONDENSED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

of common stock upon vesting of restricted stock

at June 30, 2022

$ ( 4,160,453 )

See accompanying

notes to the unaudited condensed consolidated financial statements.

HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

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

Provision (benefit) for credit losses

Right-of-use asset amortization

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Interest and accounts receivable

Derivative assets and liabilities, net

Accounts payable and other liabilities

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Cash flows from investing activities:

Proceeds from sale of investments

Investment in finance receivables

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Purchases of property and equipment

Net cash used in investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Net proceeds from (payments on) credit facility

Payments for financing costs

Net payments on credit facility

Repurchases of common stock, including fees and expenses

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Net cash used in financing activities

Net 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

See accompanying

notes to the unaudited condensed consolidated financial statements.

HOLDINGS CORPORATION

TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SWK HOLDINGS CORPORATION

NOTES TO THE UNAUDITED

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Holdings Corporation and Summary of Significant Accounting Policies

Nature of Operations

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

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by third parties.

The Company is headquartered in Dallas, Texas, and as of March 31, 2023, the Company had 23 full-time employees.

The Company is headquartered in Dallas, Texas, and as of June 30, 2023, the Company had 23 full-time employees.

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

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to utilize more of the NOLs.

of May 3, 2023, the Company and its partners have executed transactions with 50 different parties under its specialty finance strategy,

funding an aggregate of $725.2 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

of August 5, 2023, the Company and its partners have executed transactions with 50 different parties under its specialty finance

strategy, funding an aggregate of $725.7 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.

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innovative formulation solutions built around its proprietary oral drug delivery technologies, the Peptelligence® platform.

Basis of Presentation and Principles

of Consolidation

of Presentation and Principles of Consolidation

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

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tablet formulation.

Revenue Recognition

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

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

or net (loss) income.

or net income.

and Development

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

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the consolidated statements of income.

Recent Accounting Pronouncements

Accounting Pronouncements

March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2020-04,

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Company adopted ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments

(“ASU 2016-13”), as amended, on January 1, 2023 using the modified retrospective approach method.

ASU 2016-13 replaced

the incurred loss impairment methodology with a methodology that reflects a current expected credit loss (“CECL”).

2016-13 impacted all of the Company’s investments held at amortized cost.

At December 31, 2022, the Company's allowance for

credit losses of $11.8 million was the accumulation of allowance for credit losses (“ACL”) applied to specific finance

receivables, representing management's prior estimates of potential future losses on such finance receivables.

As part of the

Company's adoption of ASU 2016-13, management reviewed its prior estimates of finance receivable-specific ACL and wrote off the full

$11.8 million ACL recognized in prior periods to the finance receivables such allowance applied.

Under the new CECL model, the net GAAP

balances of such finance receivables are presented net of previously reported ACL and are included in the Company's estimated ACL

for its Royalties portfolio segment.

adoption of ASC 2016-13 on January 1, 2023, the Company’s transition adjustment included $ 11.8

million of ACL on finance receivables, which is presented as a reduction to finance receivables, and a $ 0.4

million ACL on unfunded loan commitments, which is recorded within other non-current liabilities.

The Company recorded a net

decrease of $ 9.7

million to accumulated deficit as of January 1, 2023 for the cumulative effect of adopting ASU 2016-13, which reflects

the transition adjustments noted above, net of the applicable deferred tax assets of $2.5 million.

Results for reporting

periods beginning after January 1, 2023 are presented under ASU 2016-13, while prior period amounts continue to be reported in

accordance with previously applicable accounting standards.

The Company elected not to measure an allowance for credit losses for

accrued interest receivable and instead elected to reverse interest income on finance receivables when placed on nonaccrual

status, or earlier if the Company believes the collection of interest is doubtful.

The Company has concluded that this

policy results in the timely reversal of uncollectible interest.

Please refer to Note 3 for more information on how the Company

determines its allowance for credit losses on finance receivables.

Measurement of Credit Losses on Financial Instruments (“ASU

2016-13”), as amended, on January 1, 2023 using the modified retrospective approach method.

ASU 2016-13 replaced the incurred loss

impairment methodology with a methodology that reflects a current expected credit loss (“CECL”).

ASU 2016-13 impacted all

of the Company’s investments held at amortized cost.

At December 31, 2022, the Company’s allowance for credit losses of $11.8 million

was the accumulation of allowance for credit losses (“ACL”) applied to specific finance receivables, representing management’s

prior estimates of potential future losses on such finance receivables.

As part of the Company’s adoption of ASU 2016-13, management

reviewed its prior estimates of finance receivable-specific ACL and chose to apply the full $11.8 million ACL under legacy GAAP to the

finance receivables such allowance applied.

Under the new CECL model, the net GAAP balances of such finance receivables are presented

net of previously reported ACL and are included in the Company’s estimated ACL for its Royalties portfolio segment.

adoption of ASC 2016-13 on January 1, 2023, the Company’s transition adjustment included $11.8 million of ACL on finance receivables,

which is presented as a reduction to finance receivables, and a $ 0.4 million ACL on unfunded loan commitments, which is recorded within

other non-current liabilities.

The Company recorded a net decrease of $ 9.7 million to accumulated deficit as of January 1, 2023 for

the cumulative effect of adopting ASU 2016-13, which reflects the transition adjustments noted above, net of the applicable deferred tax

assets of $2.5 million.

Results for reporting periods beginning after January 1, 2023 are presented under ASU 2016-13, while prior period

amounts continue to be reported in accordance with previously applicable accounting standards.

The Company elected not to measure an

allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on finance receivables

when placed on nonaccrual status, or earlier if the Company believes the collection of interest is doubtful.

The Company has

concluded that this policy results in the timely reversal of uncollectible interest.

Please refer to Note 3 for more information on how

the Company determines its allowance for credit losses on finance receivables.

March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326):

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Net 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.

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

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

period, 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

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and Diluted Earning per Share

Three Months Ended

Weighted-average shares outstanding

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Diluted net income per share

the three months ended March 31, 2023 and 2022, outstanding options to purchase shares of common stock and outstanding shares of restricted

the three months ended June 30, 2023 and 2022, outstanding options to purchase shares of common stock and outstanding shares of restricted

stock in an aggregate of approximately 118,000 and 308,000 , respectively, have been excluded from the calculation of diluted net income

per share, as such securities were anti-dilutive.

Receivables, Net

For the six months ended June 30, 2023 and 2022, outstanding options to purchase shares

of common stock and outstanding shares of restricted stock in an aggregate of approximately 119,000 and 309,000 , respectively, have been

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

Finance Receivables, Net

receivables are reported at their determined principal balances net of any unearned income, cumulative write offs charged against the

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Schedule of carrying value of finance receivables

March 31, 2023

June 30, 2023

December 31, 2022

2 unchanged sentences

Allowance for credit losses

Total carrying value

Total finance receivables, net

for Credit Losses

The ACL is management’s estimate of the amount of expected credit losses over the life of the

loan portfolio, or the amount of amortized cost basis not expected to be collected, at the balance sheet date.

This estimate encompasses

information about historical events, current conditions and reasonable and supportable economic forecasts.

Determining the amount of

the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain.

Given the current level

of economic uncertainty, the complexity of the ACL estimate and level of management judgment required, we believe it is possible that

the ACL estimate could change, potentially materially, in future periods.

Changes in the ACL may result from changes in current economic

conditions, our economic forecast, and circumstances not currently known to us that may impact the financial condition and operations

of our borrowers, among other factors.

ACL is management’s estimate of the amount of expected credit losses over the life of the loan portfolio, or the amount of amortized

cost basis not expected to be collected, at the balance sheet date.

This estimate encompasses information about historical events, current

conditions and reasonable and supportable economic forecasts.

Determining the amount of the ACL is complex and requires extensive judgment

by management about matters that are inherently uncertain.

Given the current level of economic uncertainty, the complexity of the ACL

estimate and level of management judgment required, we believe it is possible that the ACL estimate could change, potentially materially,

in future periods.

Changes in the ACL may result from changes in current economic conditions, our economic forecast, and circumstances

not currently known to us that may impact the financial condition and operations of our borrowers, among other factors.

credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics.

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the current unfunded commitment that will be funded over the remaining contractual life of the commitment and is based on historical

On January 1, 2023, the Company recorded an adjustment for unfunded commitments of $0.4 million for the

adoption of ASU 2016-13.

As of March 31, 2023, th e $0.4 million liabili ty for credit losses

on off -balance-sheet credit exposures is included in other liabilities.

Please refer to Note 6 for further information on the Company’s

unfunded commitments.

On January 1, 2023, the Company recorded an adjustment for unfunded commitments of $0.4 million for the adoption of ASU 2016-13.

As of June 30, 2023, the $0.4 million liability for credit losses on off-balance-sheet credit exposures is included in other liabilities.

Please refer to Note 6 for further information on the Company’s unfunded commitments.

following table details the changes in the allowance for credit losses by portfolio segment for the respective periods (in thousands):

Schedule of Allowance for Credit Losses

Three Months Ended March 31, 2023

Three Months Ended March 31, 2022

Six Months Ended June 30, 2023

Six Months Ended June 30, 2022

Allowance at beginning of period, prior to adoption of ASU 2016-13

Write offs (1)

Effect of adoption of ASU 2016-13

Provision expense

Effect of Adoption of ASC 326

Provision (benefit) for credit losses

Allowance at end of period

(1) Reversal of finance receivable-specific ACL

recognized in prior periods.

No impact to consolidated statement of income for the three-months ended March 31, 2023.

to Note 1 for further details.

(1) Reversal of finance receivable-specific ACL recognized in prior periods.

No impact to consolidated

statement of income for the six months ended June 30, 2023 .

Please refer to Note 1 for further details.

Finance Receivables

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Schedule of analysis of nonaccrual and performing loans by portfolio segment

March 31, 2023

June 30, 2023

December 31, 2022

Royalty purchases

Total carrying value

of March 31, 2023, the Company had three finance receivables in nonaccrual status:

Total finance receivables, net

of June 30, 2023, the Company had three finance receivables in nonaccrual status:

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

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Although in nonaccrual status, none of the finance receivables

were considered impaired as of March 31, 2023.

The Company collected $0.1 million on its nonaccrual finance receivables during the three

months ended March 31, 2023.

Credit Quality of Finance Receivables

were considered impaired as of June 30, 2023.

The Company collected $0.2 million on its nonaccrual finance receivables during the six

months ended June 30, 2023.

Quality of Finance Receivables

Company evaluates all finance receivables on a quarterly basis and assigns a risk rating based upon management’s assessment of

the borrower’s ability likelihood of repayment.

The assessment is subjective and based on multiple factors, including but not limited

to, financial strength of borrowers and operating results of the underlying business.

The credit risk analysis and rating assignment

is performed quarterly in conjunction with the Company’s assessment of its allowance for credit losses.

The Company uses the following

definitions for its risk ratings for Term Loans:

performing well below Company expectations, and the borrower’s ability to raise sufficient capital to operate its business or repay debt

is highly in question.

the borrower’s likelihood of repayment.

The assessment is subjective and based on multiple factors, including but not limited to,

financial strength of borrowers and operating results of the underlying business.

The credit risk analysis and rating assignment is performed

quarterly in conjunction with the Company’s assessment of its allowance for credit losses.

The Company uses the following definitions

for its risk ratings for Term Loans:

Borrower performing well below Company expectations, and the borrower’s ability to raise sufficient capital to operate its business or

repay debt is highly in question.

Finance receivables rated a 1 are on non-accrual and are at an elevated risk for principal impairment.

performing below plan, and the loan-to-value is generally worse than at the time of underwriting.

Borrower has limited access to additional

capital to operate its business.

Finance receivables rated a 2 are generally on non-accrual, and while no loss of impairment is anticipated,

there is potential for future principal impairment.

performing inline-to-modestly below Company expectations, and loan-to-value is similar to slightly worse than at the time of underwriting.

Borrower performing below plan, and the loan-to-value is generally worse than at the time of underwriting.

Borrower has limited

access to additional capital to operate its business.

Finance receivables rated a 2 might be placed on non-accrual.

While there is a

potential for future principal impairment, we may refrain from placing borrower on non-accrual due to enterprise value coverage, continued receipt of interest payments,

and/or anticipate a near-term capital raise.

Borrower performing inline-to-modestly below Company expectations, and loan-to-value is similar to slightly worse than at the time of

underwriting.

Borrower has demonstrated access to capital markets.

performing inline-to-modestly above Company expectations and loan-to-value similar or modestly better than underwriting case.

has demonstrated access to capital markets.

performing in excess of Company expectations, and loan-to-value is better than at time of origination.

use an internal credit rating system which rates each Royalty on a color scale of Green to Red, with Green typically indicative of a

Royalty that is exceeding base underwritten case and Red reflective of underperformance relative to plan.

following table summarizes the carrying value of Finance Receivables by origination year, grouped by risk rating as of March 31, 2023:

Schedule of Financing

Receivable by origination year

March 31, 2023

Borrower performing inline-to-modestly above Company expectations and loan-to-value similar or modestly better than underwriting case.

Borrower has demonstrated access to capital markets.

Borrower performing in excess of Company expectations, and loan-to-value is better than at time of origination.

Company uses an internal credit rating system which rates each Royalty on a color scale of Green to Red, with Green typically indicative

of a Royalty that is exceeding base underwritten case and Red reflective of underperformance relative to plan.

following table summarizes the carrying value of Finance Receivables by origination year, grouped by risk rating as of June 30, 2023:

Schedule of Financing Receivable by origination year

June 30, 2023

Subtotal - Term Loans

Subtotal - Royalties

Total Finance Receivables

Total Finance Receivables, gross

Intangible Assets

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

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

30, 2023 and December 31, 2022 (in thousands):

Schedule of Intangible Assets

March 31, 2023

June 30, 2023

December 31, 2022

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Total intangible assets

(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 ™ 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 $ 0.5 million for the three months ended March 31, 2023 and 2022, respectively.

estimated future amortization expense related to intangible assets as of March 31, 2023 is as follows (in thousands):

to the acquisition, 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 related to intangible assets was $ 0.4 million for both the three months ended June 30, 2023 and 2022, respectively.

expense related to intangible assets was $ 0.9 million for both the six months ended June 30, 2023 and 2022, respectively.

estimated future amortization expense related to intangible assets as of June 30, 2023 is as follows (in thousands):

Schedule of Intangible Asset Amortization Expense

Remainder of 2023

Credit Facility

November 16, 2022, the Company entered into the Fifth Amendment to Loan and Security Agreement (the “Fifth Amendment”) with

Cadence Bank, N.A.

as a lender and the administrative agent.

Pursuant to the Fifth 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, 2025 and increase

the Loan Agreement Commitment to $35.0 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 monthly SOFR Rate, with a floor of 1.00 percent, plus a 2.65 percent margin and principal is repayable

in full at maturity.

Interest is generally required to be paid monthly in arrears.

In connection with the Fifth Amendment, the Company

paid approximately $173,000 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 March 31, 2023 and December 31, 2022, approximately $ 10.5 million and $ 2.4 million , respectively, was outstanding under the credit

As of March 31, 2023, $ 24.5 million was available for borrowing.

During the three months ended March 31, 2023 and 2022, the

Company recognized $ 0.2 million and $ 0.1 million , respectively, of interest expense.

and Contingencies

Contingent Consideration

Revolving Credit Facility

June 28, 2023, the Company entered into a new Credit Agreement (the “Credit Agreement”) by and among SWK Funding LLC, the

Company’s wholly-owned subsidiary (together with the Company, the “Borrower”), the lenders party thereto (“Lenders”),

and First Horizon Bank as a Lender and Agent (the “Agent”).

The Credit Agreement provides for a revolving credit facility

with an initial maximum principal amount of $45.0 million.

The Credit Agreement provides that the Company may request one or more incremental

increases in an aggregate amount not to exceed $80.0 million, subject to the consent of the Agent and each Lender, at any time prior

to the termination of the revolving credit period on June 28, 2026 (the “Commitment Termination Date”).

The revolving credit

period will be followed by a one-year amortization period, with the final maturity date of the Credit Agreement occurring on June 28,

outstanding principal balance of the Credit Agreement will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined

in the Credit Agreement) plus (ii) 3.75 percent at all times prior to the Commitment Termination Date.

The outstanding principal balance

of the Revolving Credit Facility will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined in the Credit Agreement)

plus (ii) 4.25 percent at all times on and after the Commitment Termination Date.

Under the terms of the Credit Agreement, all accrued

and unpaid interest shall be due and payable, in arrears, on the first business day of each calendar month.

Credit Agreement contains customary affirmative and negative covenants, in addition to financial covenants specifying that, as of

the end of each calendar month, (i) the consolidated leverage ratio of Borrower will not exceed 1.00 to 1.00, (ii) the consolidated

interest coverage ratio of Borrower will not be less than 4.00 to 1.00, (iii) the cash collection rate in relation to

Borrower’s portfolio of loan assets will not be less than 4.5%, for such calendar month, (iv) the net charge-off percentage in

relation to Borrower’s portfolio of loan assets will not exceed 3 percent for such calendar month, and (v) the weighted

average risk rating in relation to Borrower portfolio of loan assets will not be less than 3.00.

In addition, the Credit Agreement

provides that at no time shall the Company permit its consolidated tangible net worth to be less than $145.0 million, or its

Liquidity (as defined in the Credit Agreement) to be less than $5.0 million.

The Credit Agreement also contains events of default

customary for such financings, the occurrence of which would permit the Agent and Lenders to accelerate the aggregate principal

amount due thereunder.

Credit Agreement refinances the Company’s Loan and Security Agreement dated as of June 29, 2018 (the “Prior Credit Agreement”),

as amended, between the Company and Cadence Bank, N.A.

(“Cadence Bank”), as the lender and administrative agent, which was

due to expire on September 30, 2025.

The Prior Credit Agreement was terminated by the Company, effective as of June 28, 2023.

of June 30, 2023, no amounts were outstanding under either credit facility, and approximately $ 2.4 million was outstanding under the

Prior Credit Agreement as of December 31, 2022.

During the three months ended June 30, 2023 and 2022, the Company recognized $ 0.4 million

and $ 0.1 million , respectively, of interest expense in connection with the Prior Credit Agreement.

During the six months ended June 30,

2023 and 2022, the Company recognized $ 0.5 million and $ 0.2 million , respectively, of interest expense in connection with the Prior Credit

Commitments and Contingencies

Consideration

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

3 unchanged sentences

The estimated fair value of contingent consideration as

of March 31, 2023 and December 31, 2022 was $11.2 million.

of June 30, 2023 and December 31, 2022 was $11.2 million.

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

its contingent consideration during the three months ended March 31, 2023 and 2022.

Unfunded Commitments

of March 31, 2023, the Company’s unfunded commitments were as follows (in millions):

its contingent consideration during the six months ended June 30, 2023 and 2022.

of June 30, 2023, the Company’s unfunded commitments were as follows (in millions):

Schedule of Unfunded Commitments

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The Company cannot predict the timing or outcome of these claims and other proceedings.

As of March 31, 2023, the Company is not involved

As of June 30, 2023, 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

10 unchanged sentences

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 March 31, 2023 and December 31, 2022.

the Company had no liabilities recorded for these agreements as of June 30, 2023 and December 31, 2022.

Fair Value Measurements

Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis.

11 unchanged sentences

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.

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.

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There were no transfers

between any levels during the three months ended March 31, 2023 and 2022.

between any levels during the six months ended June 30, 2023 and 2022.

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

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models, key inputs to those models and significant assumptions utilized.

Cash and cash equivalents

and cash equivalents

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

Finance Receivables

fair values of finance receivables are estimated using discounted cash flow analyses, using market rates at the balance sheet date that

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

Contingent Consideration

Consideration

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

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

Marketable Investments

active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities

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on a recurring basis, while securities with no readily available fair market value are not, but estimates of fair value are reflected

Derivative Instruments

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

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

Company uses a foreign currency forward contract to manage the impact of fluctuations in foreign currency denominated cash flows expected

to be received from one of its royalty finance receivables denominated in a foreign currency.

The foreign currency forward contract is

not designated as a hedging instrument, and changes in fair value are recognized in earnings.

The liability related to the derivative

instrument was recorded in other non-current liabilities in the consolidated balance sheets.

following table presents financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 (in thousands):

of fair value of assets and liabilities measured on recurring basis

Quoted Prices

or Liabilities

Company uses a foreign currency forward contract to manage the impact of fluctuations in foreign currency denominated cash flows

expected to be received from one of its royalty finance receivables denominated in a foreign currency.

The foreign currency forward

contract is not designated as a hedging instrument, and changes in fair value are recognized in earnings.

The foreign currency

forward was recorded in other non-current assets and other non-current liabilities in the consolidated balance sheets as of June 30, 2023 and December 31, 2022.

The Company recognized $1.6 million of changes in fair value related to its foreign currency forward during the six

months ended June 30, 2023.

following table presents financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 (in thousands):

Schedule of fair value of assets and liabilities measured on recurring basis

Financial Assets

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Marketable investments

Foreign currency forward contract

Financial Liabilities

Contingent consideration payable

Derivative liability - foreign currency forward

following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 (in thousands):

Quoted Prices

or Liabilities

Financial Assets

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Contingent consideration payable

Derivative liability - foreign currency forward

changes in fair value of the warrant assets during the three months ended March 31, 2023 and 2021 were as follows (in thousands):

Foreign currency forward contract

changes in fair value of the warrant assets during the six months ended June 30, 2023 and 2022 were as follows (in thousands):

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

March 31, 2023

March 31, 2022

June 30, 2023

June 30, 2022

Fair value - December 31, 2022

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Change in fair value

Fair value - March 31, 2023

Fair value - March 31, 2022

Fair value - June 30, 2023

Fair value - June 30, 2022

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

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Schedule of weighted average assumptions

March 31, 2023

December 31, 2022

Dividend rate range

Risk-free rate range

3.6 % to 4.1 %

4.0 % to 4.3 %

Expected life (years) range

Expected volatility range

59.5 % to 135.5 %

54.8 % to 139.4 %

of March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022 (in thousands):

of June 30, 2023, the Company had one royalty, Best, that was deemed to be impaired based on reductions in carrying value in prior periods.

As of December 31, 2022, 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, 2023 and December 31, 2022 (in thousands):

of fair value of assets and liabilities measured on nonrecurring basis

Quoted Prices

or Liabilities

March 31, 2023

June 30, 2023

December 31, 2022

were no liabilities measured at fair value on a nonrecurring basis as of March 31, 2023 and December 31, 2022.

were no liabilities measured at fair value on a nonrecurring basis as of June 30, 2023 and December 31, 2022.

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

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Schedule of fair value by balance sheet grouping

of March 31, 2023 (in thousands):

of June 30, 2023 (in thousands):

Financial Assets

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Warrant assets

Foreign currency forward contract

Financial Liabilities

Contingent consideration payable

Derivative liability - foreign currency forward

of December 31, 2022 (in thousands):

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Contingent consideration payable

Derivative liability - foreign currency forward

Foreign currency forward contract

Revenue Recognition

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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 three months ended March 31, 2023 and 2022

following table provides the contract revenue recognized by revenue source for the three and six months ended June 30, 2023 and 2022

(in thousands):

Schedule of Revenue Recognized by Revenue Source

Three Months Ended

Pharmaceutical Development Segment

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in the consolidated balance sheets (in thousands):

Schedule of Company's Contract Liabilities

Pharmaceutical Development Segment

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Total contract liabilities

the three months ended March 31, 2023, the Company recognized $ 0.1 million of 2022 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 March 31, 2023 or December 31, 2022.

the six months ended June 30, 2023, the Company recognized $ 0.1 million of 2022 deferred revenue from the satisfaction of performance

The Company did not have any contract assets nor did it have any contract liabilities related to the License Agreement as

of June 30, 2023 or December 31, 2022.

Segment Information

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Company’s CEO 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 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.

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 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

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

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Geographic Region

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Pharmaceutical

Development and

Holding Company

Other revenue

Provision (benefit) for credit losses

Interest expense

Manufacturing, research and development

Pharmaceutical manufacturing, research and development

Depreciation and amortization expense

General and administrative

Other income, net

Income tax expense

Net income (loss)

Three Months Ended June 30, 2022

Pharmaceutical

Holding Company

Interest expense

Pharmaceutical manufacturing, research and development

Depreciation and amortization expense

General and administrative

Other expense, net

Income tax benefit

Income tax expense

Net income (loss)

Three Months Ended March 31, 2022

Six Months Ended June 30, 2023

Pharmaceutical

Development and

Holding Company

Other revenue

Provision (benefit) for credit losses

Interest expense

Manufacturing, research and development

Pharmaceutical manufacturing, research and development

Depreciation and amortization expense

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Net income (loss)

Six Months Ended June 30, 2022

Pharmaceutical

Holding Company

Other revenue

Interest expense

Pharmaceutical manufacturing, research and development

Depreciation and amortization expense

General and administrative

Other expense, net

Income tax expense

Net income (loss)

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

1 unchanged sentence

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