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, 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, 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 has
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, 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 , 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, 2023, 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.
80
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, 2023 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.
81
PART III
We
have omitted from Part III the information that will appear in our Definitive Proxy Statement for our 2024 Annual Meeting of Stockholders
(the “2024 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 2024 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 2024 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 2024 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 2024 Proxy Statement is
incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING
FEES AND SERVICES
Our independent public accounting firm is BPM LLP, San Francisco, CA, USA, PCAOB Auditor Firm ID 207.
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 2024 Proxy
Statement is incorporated herein by reference.
82
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)
40
Consolidated Balance Sheets
as of December 31, 2023 and 2022
42
Consolidated Statements
of Income for the years ended December 31, 2023 and 2022
43
Consolidated Statements
of Stockholders’ Equity for the years ended December 31, 2023 and 2022
44
Consolidated Statements
of Cash Flows for the years ended December 31, 2023 and 2022
45
Notes to the Consolidated
Financial Statements
46
2. Exhibits: See
attached Exhibit Index.
83
ITEM 16. FORM 10-K SUMMARY
None.
84
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 20, 2024.
SWK Holdings
Corporation
By:
/s/
Joe D. Staggs
Joe D. Staggs
Chief Executive Officer
(Principal Executive Officer, Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS
that each individual whose signature appears below constitutes and appoints Joe D. Staggs, his or her true and lawful attorney-in-fact
and agent, 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 attorney-in-fact and agent, 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 attorney-in-fact
and agent, 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 20, 2024.
By:
/s/
Joe D. Staggs
Joe D. Staggs
Chief Executive Officer
(Principal Executive 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
85
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
10-K
4.02
03/31/23
4.03
Indenture dated as of October 3, 2023, between the Company and Wilmington Trust, National Association, as trustee.
8-K
4.1
10/03/23
4.04
First Supplemental Indenture dated as of October 3, 2023, between the Company and Wilmington Trust, National Association, as trustee
8-K
4.2
10/03/23
4.05
Form of 9.00% Senior Notes due 2027 (included as Exhibit A to 4.04 above)
8-K
4.2.1
45202
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
10-K
10.1
3/31/23
10.09
Royalty Agreement dated December 13, 2016, among SWK Funding LLC and Opiant Pharmaceuticals, Inc.
10-K
10.16
03/29/18
86
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.
10-K
10.1
03/31/23
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
10.19
Credit Agreement, dated June 28, 2023 by and among SWK Holdings Corporation, SWK Funding LLC, the Lenders party thereto and First Horizon Bank as a Lender and Agent
8-K
10.1
06/30/23
10.20
First Amendment to Credit Agreement dated October 10, 2023 by and among the Company, SWK Funding LLC, the financial institutions party thereto and First Horizon Bank as a Lender and Agent
8-K
10.1
10/13/23
10.21
Second Amendment to Credit Agreement dated December [13], 2023 by and among the Company, SWK Funding LLC, the financial institutions party thereto and First Horizon Bank as a Lender and Agent~†
X
21.01
Subsidiaries
X
23.01
Consent of Independent Registered Public Accounting Firm - BPM LLP
X
87
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 Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.01
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
X
97.01
SWK Holdings Corporation Compensation Recovery
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
+ Certain portions of the exhibit have been omitted pursuant to Regulation S-K Item 601(b) because it is both (i) not material to investors
and (ii) likely to cause competitive harm to the Company if publicly disclosed.
~ Certain schedules and exhibits to the Agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted
schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.
88