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Item 1. Financial Statements

2024-08-14 compared with 2024-05-15 · 668 added, 563 removed, 392 unchanged (76% of the section changed)

FINANCIAL STATEMENTS

HOLDINGS CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands,

except par value and share data)

thousands, except par value and share data)

Current assets:

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Restricted cash

Interest, accounts receivable and other receivables,

Interest, accounts receivable and other receivables, net

Other current assets

Total current assets

Finance receivables, net of allowance for credit losses of $ 13,224 and $ 13,901 as of March 31, 2024 and December 31, 2023, respectively

Finance receivables, net of allowance for credit losses

of $ 13,083 and $ 13,901

as of June 30, 2024 and December 31, 2023, respectively

Collateral on foreign currency forward contract

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Accounts payable and accrued liabilities

Deferred income

Total current liabilities

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250,000,000 shares authorized;

12,481,944 and 12,497,770 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

12,447,195 and 12,497,770 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

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Total liabilities and stockholders’ equity

See accompanying

notes to the unaudited condensed consolidated financial statements.

accompanying notes to the unaudited condensed consolidated financial statements.

HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands,

except per share data)

thousands, except per share data)

Three Months Ended

Six Months Ended

Finance receivable interest income, including fees

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Costs and expenses:

Provision for credit losses

Provision (benefit) for credit losses

Loss on impairment of intangibles assets

Interest expense

Pharmaceutical manufacturing, research and development expense

Change in fair value of acquisition-related contingent consideration

Depreciation and amortization expense

General and administrative

General and administrative expense

Income from operations

Other income (expense), net

Unrealized net loss on warrants

Loss on exercise of warrants

Realized loss on sale of marketable investments

Gain on foreign currency transactions

Income before income tax expense (benefit)

Income tax expense (benefit)

Unrealized net gain (loss) on warrants

Net realized gain on sale of marketable investments

Realized gain (loss) on sale of assets

Gain on revaluation of finance receivable

Realized and unrealized foreign

currency transaction gains

Income before income tax expense

Income tax expense

Net income per share

Weighted average shares outstanding

See accompanying

notes to the unaudited condensed consolidated financial statements.

See accompanying notes

to the unaudited condensed consolidated financial statements.

HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands,

except share data)

Three Months Ended March 31, 2024

thousands, except share data)

Six Months Ended June 30, 2024

Additional Paid-

Stockholders’

Paid-In Capital

Balances at December 31, 2023

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( 4,144,675 )

Three Months Ended March 31, 2023

Stock-based compensation

Issuance of common stock upon vesting of restricted stock

Repurchases of common stock in open market

Net settlement for employee taxes on stock options

Stock options exercised, net

Balances at June 30, 2024

$ ( 4,140,280 )

Six Months Ended June 30, 2023

Additional Paid-

Stockholders’

Paid-In Capital

Balances at December 31, 2022

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( 4,156,053 )

See accompanying

notes to the unaudited condensed consolidated financial statements.

Stock-based compensation

Issuance of common stock upon vesting of restricted stock

Repurchase of common stock in open market

Balances at June 30, 2023

$ ( 4,152,119 )

See accompanying notes

to the unaudited condensed consolidated financial statements.

HOLDINGS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

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

Provision for credit losses

Right-of-use asset amortization

Provision (benefit) for credit losses

Loss on impairment of intangible assets

Right-of-use amortization and cease use costs

Amortization of debt issuance costs

Deferred income taxes

Change in fair value of warrants

Loss on exercise of warrants

Foreign currency transaction (gain) loss

Realized loss on sale of marketable investments

Loan discount and fee accretion on finance receivables

Deferred income taxes, net

Net change in fair value of warrant assets

Net realized gain on exercise of warrants

Realized loss from sale of assets

Change in fair value of acquisition-related contingent consideration

Gain on revaluation of finance receivable

Foreign currency transaction gain

Loan discount amortization and fee accretion

Interest paid-in-kind

Stock-based compensation

Depreciation and amortization

Depreciation and amortization expense

Changes in operating assets and liabilities:

Interest, accounts, and other receivables

Derivative assets and liabilities, net

Accounts payable and other liabilities

Interest, accounts receivable and other receivables

Accounts payable, accrued expenses,

and other non-current liabilities

Deferred income

Net cash provided by operating activities

Cash flows from investing activities:

Sale of finance receivables

Sale of marketable investments

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Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Net (payments on) proceeds from credit facility

Net settlement for employee taxes on stock options

Net payments on credit facility

Payments for financing costs

Repurchases of common stock, including fees and expenses

Net cash (used in) provided by financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net cash used in financing activities

Net increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at beginning of period

Cash, cash equivalents, and restricted cash at end of period

See accompanying

notes to the unaudited condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental non-cash investing and financing activities:

Derecognition of right-of-use assets

and operating lease liabilities upon termination of lease

See accompanying notes

to the unaudited condensed consolidated financial statements.

HOLDINGS CORPORATION

TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SWK Holdings Corporation and Summary of Significant Accounting Policies

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(collectively, “life sciences”).

We allocate capital to each segment in order to generate income through the sales

of life science products by third parties and related earned income sources.

The Company is headquartered in Dallas, Texas, and as of

March 31, 2024, the Company had 22 full-time employees.

We allocate capital to each segment in order to generate income through the sales of life

science products by third parties and related earned income sources.

The Company is headquartered in Dallas, Texas, and as of June 30,

2024, the Company had 22 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.

of May 8, 2024, the Company and its partners have executed transactions w ith 55 different parties under its specialty finance

strategy, funding an aggregate of $779.4 million in various financial products across the life science sector.

The Company’s portfolio

includes senior and subordinated debt backed by royalties an d synthetic royalties paid by companies in

the life science sector, and purchased royalties generated by sales of life science products and related intellectual property.

of August 8, 2024, the Company and its partners have executed transactions with 56 different parties under its specialty

finance strategy, funding an aggregate of $779.8 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.

2019, we commenced our Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc.

Enteris is a clinical development and manufacturing organization providing development services to pharmaceutical partners as

well as innovative formulation solutions built around its proprietary oral drug delivery technologies, the Peptelligence®

We seek to generate income by providing customers pharmaceutical development, formulation and manufacturing services

as well as licensing its internally developed intellectual property.

With an effective date of April 21, 2023 we entered into a collaboration agreement with a strategic partner under which we would be the

exclusive provider of certain contract development and manufacturing organization (CDMO) services to its customers.

is a clinical development and manufacturing organization providing development services to pharmaceutical partners as well as innovative

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

We seek to generate

income by providing customers pharmaceutical development, formulation and manufacturing services as well as licensing its internally

developed intellectual property.

an effective date of April 21, 2023 we entered into a collaboration agreement with a strategic partner under which we would be the exclusive

provider of certain contract development and manufacturing organization (“CDMO”) services to its customers.

Fee revenue generated

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income and is accounted for in accordance with our revenue recognition policy as described under Revenue Recognition below.

an effective date of January 1, 2024, we entered into an Option and Asset Purchase Agreement with the same strategic partner on

March 14, 2024, which granted the partner an exclusive option to acquire certain of Enteris’ assets related to its business of

providing CDMO services through Phase 1 and 2 to third parties, subject to certain exclusions.

an effective date of January 1, 2024, we entered into an Option and Asset Purchase Agreement with the same strategic partner on March

14, 2024, which granted the partner an exclusive option to acquire certain of Enteris’ assets related to its business of providing

CDMO services to third parties, subject to certain exclusions.

The partner must exercise the option by or before January 1, 2026.

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

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

Normally a controlling financial interest reflects

ownership of a majority of the voting interests.

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

both the power to direct the activities of the VIE that most significantly impact its economic performance and the Company is either

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

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

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

The Company consolidates its investments

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

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

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

remove the Company.

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

If circumstances

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

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

effect on its operations and/or total stockholders’ equity attributable to the Company.

The Company consolidates its investments in

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

Even though the

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

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

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

If circumstances change and it is determined

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

Although this would change

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

total stockholders’ equity attributable to the Company.

Interim Financial Information

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2023, filed with the SEC on March 20, 2024.

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

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

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

Significant estimates and assumptions are required

in the determination of revenue recognition;

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

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

amounts of revenues and expenses during the reporting period.

Significant estimates and assumptions are required in the determination

of revenue recognition;

stock-based compensation;

valuation of interest and accounts receivable;

of finance receivables;

allowance for credit losses;

long-lived assets;

valuation or impairment of long-lived assets;

property and equipment;

intangible assets;

of warrants and other investments;

valuation of warrants and other investments;

contingent consideration;

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and contingencies and litigation, among others.

of these judgments can be subjective and complex, and consequently, actual results may differ from these estimates.

The Company’s

estimates often are based on complex judgments, probabilities and assumptions that it believes to be reasonable but that are inherently

uncertain and unpredictable.

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

or assumptions that are reasonable.

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

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 CDMO services

to pharmaceutical partners as well as innovative formulation solutions built around its proprietary oral drug delivery technologies,

the Peptelligence ® platform.

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

Some of these judgments can be subjective and

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

The Company’s estimates often are based on complex judgments,

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

For any given individual

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

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

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

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

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

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

The Company adjusts

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

Those changes generally will be reflected in

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

accounting standard.

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

develop and support a range of alternative estimated amounts.

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

its specialty finance and asset management business offering customized

financing solutions to a broad range of life-sciences companies (“Finance Receivable segment”), and its business offering CDMO

services to pharmaceutical partners as well as innovative formulation solutions built around its proprietary oral drug delivery technologies,

the Peptelligence ® platform (“Pharmaceutical Development segment”).

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

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

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

non-refundable,

upfront license fees;

non-refundable, upfront license

reimbursement of certain costs;

customer option exercise fees;

development, regulatory and commercial milestone

and royalties on net sales of licensed products.

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.

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.

of an Error in Previously Issued Unaudited Condensed Financial Statements

the quarter ended June 30, 2024, the Company identified an error related to the recognition of a holdback liability for a royalty which

was incorrectly recorded into revenue.

This error affected the consolidated financial statements for the quarter ended March 31, 2024

and was determined to be immaterial to the prior period’s unaudited condensed consolidated financial statements and did not warrant

restatement and reissuance of the previously issued unaudited condensed consolidated financial statements.

However, the Company recorded

a correction to the prior quarter ended March 31, 2024 and the financial statements will be revised the next time they are presented

as comparative information in future filings.

The Company based their qualitative and quantitative analysis on SEC Staff’s Accounting

Bulletins Topic 1.M, “Materiality and Topic 1.N, Considering the Effects of Misstatements when Quantifying Misstatements in the

Current Year Financial Statements.”

following table details the revisions to the line items of our previously issued unaudited condensed financial statements to reflect

the correction of the error (in thousands):

Schedule of Revisions to the

line items of our previously issued financial statements

Three Months Ended March 31, 2024

Finance receivable interest income, including fees

Pharmaceutical development

Total revenues

Basic net income per share

Diluted net income per share

Finance receivables, net of allowance for credit

Stockholders’ equity:

Accumulated deficit

( 4,143,940 )

( 4,144,675 )

Total stockholders’ equity

and Development

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the unaudited condensed 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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Improvements to Reportable Segment Disclosures,”

which requires public entities to disclose information about their reportable segments’ significant expenses on an interim

and annual basis.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal

years beginning after December 15, 2024.

which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and

annual basis.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning

after December 15, 2024.

Early adoption is permitted.

Public entities are required to adopt the changes retrospectively,

recasting each prior-period disclosure for which a comparative income statement is presented in the period of adoption.

is currently evaluating the impact of this ASU on the Company’s consolidated financial statements and disclosures.

Public entities are required to adopt the changes retrospectively, recasting each

prior-period disclosure for which a comparative income statement is presented in the period of adoption.

The Company is currently evaluating

the impact of this ASU on the Company’s consolidated financial statements and disclosures.

December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

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beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

Net Income per

The Company is currently evaluating the impact of this ASU on its consolidated

financial statements and related disclosures.

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.

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

per share amounts):

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

Schedule of Basic

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, 2024 and 2023, outstanding options to purchase shares of common stock and outstanding shares

of restricted stock in an aggregate of approximately 163,000 and 119,000 , respectively, have been excluded from the calculation

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

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

the allowance for credit losses, 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.

the three months ended June 30, 2024 and 2023, outstanding options to purchase shares of common stock and outstanding shares of restricted

stock in an aggregate of approximately 159,000 and 118,000 , 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, 2024 and 2023, outstanding options to purchase shares

of common stock and outstanding shares of restricted stock in an aggregate of approximately 161,000 and 119,000 , respectively, have been

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

Finance Receivables

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

allowance for credit losses, 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.

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

Schedule of carrying value of finance receivables

March 31, 2024

June 30, 2024

December 31, 2023

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for Credit Losses

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.

allowance for credit loss (“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.

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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an entity develops and documents a systematic method for determining its allowance for credit losses.

As part of the Company’s quarterly

assessment of the allowance, the finance receivables portfolio included two portfolio pools:

Company adopted ASU 2016-13, as amended, on January 1, 2023 using the modified retrospective approach method.

The implementation of ASU

2016-13 also impacted the Company’s ACL on unfunded loan commitments, as the ACL now represents expected credit losses over the

contractual life of commitments not identified as unconditionally cancellable by the Company.

The reserve for unfunded commitments is

estimated using the same reserve or coverage rates calculated on collectively evaluated loans following the application of a funding

rate to the amount of the unfunded commitment.

The funding rate represents management’s estimate of the amount of the current unfunded

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

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, 2024 the

Company has a $0.1 million liability for credit losses on off-balance sheet exposures related to unfunded commitments, with this

liability included in accounts payable and accrued liabilities on the condensed consolidated balance sheets.

As of December 31, 2023,

the Company recorded a $0.2 million liability for credit losses on off-balance-sheet credit exposures related to unfunded commitments,

with this liability included in accounts payable and accrued liabilities on the condensed consolidated balance sheets.

Please refer to

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

for Credit Losses - methodology update for the three months ended June 30, 2024

the three months ended June 30, 2024, the Company revised its methodology for calculating the allowance for credit losses to be more

directly tied to the individual risk ratings, as determined by management, of investments.

This resulted in a re-allocation of

the existing allowance and did not have a material impact on the total allowance for credit losses amount.

Previously, the Company’s

quarterly assessment of the allowance included two portfolio pools:

Term Loans and Royalties.

Company adopted Accounting Standard Update (“ASU”) 2016-13, as amended, on January 1, 2023 using the modified retrospective

approach method.

The implementation of ASU 2016-13 also impacted the Company’s ACL on

unfunded loan commitments, as the ACL now represents expected credit losses over the contractual life of commitments not identified as

unconditionally cancellable by the Company.

The reserve for unfunded commitments is estimated using the same reserve or coverage rates

calculated on collectively evaluated loans following the application of a funding rate to the amount of the unfunded commitment.

funding rate represents management’s estimate of the amount of the current unfunded commitment that will be funded over the remaining

contractual life of the commitment and is based on historical data.

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, 2024 and December 31, 2023, the Company has recorded

a $0.2 million l iability for credit losses on off-balance-sheet credit exposures

related to unfunded commitments, with this liability included in accounts payable and accrued liabilities on the condensed consolidated balance

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 pool for each of the three-months

ended March 31 (in thousands):

After the change in methodology effective

for the quarter ended June 30, 2024, these pools are further broken down into individual risk ratings applied to each investment to allow

for a more precise method for calculating the allowance for credit losses.

following table details the changes in the allowance for credit losses by Term Loans and Royalties (in thousands):

Schedule of Allowance for Credit Losses

March 31, 2024

March 31, 2023

Months Ended June 30, 2024

Six Months Ended June 30, 2023

Allowance at beginning of period

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Provision (benefit) for credit losses

Write offs (1)

( 11,846 ) (1)

Allowance at end of period

of finance receivable-specific ACL recognized in prior periods and the effect of

the impairment recorded on the Trio loan during the three months ended March 31,

of finance receivable-specific ACL recognized in prior periods.

No impact to unaudited

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

Finance Receivables

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

This concentration of credit exposes

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

This concentration of credit exposes the Company

to a higher degree of risk associated with this sector.

a quarterly basis, the Company evaluates the carrying value of its finance receivables.

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

suspended amortization of any net deferred fees is suspended.

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

all delinquent interest and principal become current under the terms of the credit agreement and collectibility of remaining principal

and interest is no longer doubtful.

following table presents nonaccrual and performing finance receivables by portfolio pool, net of allowance for credit loss (in thousands) as of:

amortization of any net deferred fees is suspended.

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

interest and principal become current under the terms of the credit agreement.

following table presents nonaccrual and performing finance receivables by portfolio pool, net of allowance for credit losses (in thousands)

Schedule of Allowance for Credit Losses

March 31, 2024

June 30, 2024

December 31, 2023

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Total carrying value

of March 31, 2024, the Company had five finance receivables in nonaccrual status:

of June 30, 2024, the Company had five finance receivables in nonaccrual status:

(1) the term loan to Trio Healthcare Ltd.

(“Trio”), with a carrying value of $ 3.6

with a carrying value of $ 1.5

(2) the term loan to Exeevo, Inc (“Exeevo”), with a carrying value of

(3) the Flowonix Medical, Inc.

(“Flowonix”) royalty, with a

carrying value of $ 10.4 million (see Loan Modifications Made to Borrowers Experiencing Financial

Difficulty below for further details);

(“Flowonix”) royalty, with a carrying

value of $ 10.4

million (see Loan Modifications

Made to Borrowers Experiencing Financial Difficulty below for further details);

(4) the Best ABT, Inc.

(“Best”) royalty, with a carrying value of $ 2.5

royalty, with a carrying value of $ 2.4

and (5) the Ideal Implant, Inc.

(“Ideal”) royalty, with a carrying value of $ 3.6

As of March 31, 2024 Trio was considered impaired by $6.0 million, with the $6.0 million impairment recognized in provision for credit losses on the unaudited condensed consolidated statements of income for

the three months ended March 31, 2024.

The Company collected $0.7 million and $0.1 million on its nonaccrual finance receivables during the three months ended March 31, 2024 and 2023 , respectively .

Loan Modifications

Made to Borrowers Experiencing Financial Difficulty

January 1, 2023, the Company adopted the provisions of ASU 2022-02, which eliminated the accounting for TDRs while expanding loan

modification and vintage disclosure requirements.

The update specifically required additional disclosures on loan modifications

to borrowers experiencing financial difficulties that involved an interest rate reduction, other-than-insignificant payment delay,

a term extension, principal forgiveness or a combination thereof.

(“Ideal”) royalty, with a carrying value

As of June 30, 2024 Trio was considered impaired by $8.1 million and Exeevo was

impaired by $2.2 million with the impairments recognized as a reduction in the allowance for credit

losses on the unaudited condensed consolidated statements of income for the six months ended June 30, 2024.

The Company collected $0.7

million and $0.2 million on its nonaccrual finance receivables for the six months ended June 30, 2024 and 2023 ,

respectively .

Modifications Made to Borrowers Experiencing Financial Difficulty

January 1, 2023, the Company adopted the provisions of ASU 2022-02 “Troubled Debt Restructuring (“TDRs”) and Vintage Disclosures

(Topic 326)”, which eliminated the accounting for TDRs while expanding loan modification and vintage disclosure requirements.

update specifically required additional disclosures on loan modifications to borrowers experiencing financial difficulties that involved

an interest rate reduction, other-than-insignificant payment delay, a term extension, principal forgiveness or a combination thereof.

Company evaluates the carrying value of each finance receivable for impairment.

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On an ongoing basis, the Company monitors the performance of modified loans to their restructured

Credit Quality of Finance Receivables

of Finance Receivable

the three months ended June 30, 2024, the Company revalued its royalty for Iluvien as a result of entering into an amendment during

Pursuant to the amendment, the forecast of cash flows to be received over the life of the financial royalty was revised

resulting in a revaluation gain of $2.5 million and corresponding mark-up to the carrying value which is included in the “Gain

on revaluation of finance receivable” caption on our unaudited condensed consolidated statements of income for the three and six

months ended June 30, 2024.

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 and 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.

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

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 are generally on non-accrual, and while no

loss of impairment is anticipated, there is potential for future principal impairment.

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.

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

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performing in-line-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.

has demonstrated access to capital markets.

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 March 31, 2024

of a Royalty that is exceeding base underwritten case, Yellow indicates a Royalty performing in-line with underwritten plan, 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, 2024

and December 31, 2023 (in thousands):

Schedule of Financing Receivable by origination year

March 31, 2024

June 30, 2024

Subtotal - Term Loans

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Intangible Assets

of March 31, 2024 and December 31, 2023, the gross book value,

accumulated amortization, net book value and estimated useful life of acquired intangible assets were as follows (in thousands,

except estimated useful life data):

of June 30, 2024 and December 31, 2023, the

gross book value, accumulated amortization, net book value and estimated useful life of acquired intangible assets were as follows (in

thousands, except estimated useful life data):

Schedule of Intangible Assets

March 31, 2024

Licensing Agreement (1)

June 30, 2024

Trade names and trademarks

6 unchanged sentences

Total intangible assets

to our acquisition of Enteris, Enteris entered into 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

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

expense was $ 0.3

million and $ 0.4

million for the three months ended March

31, 2024 and 2023 , respectively, and was recognized within depreciation and amortization expense on the

unaudited condensed consolidated statements of income.

Based on amounts recorded at March 31, 2024 ,

to our acquisition of Enteris, Enteris entered into 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.

As of June 30, 2024, the Company concluded that

the milestones and royalties pursuant to the License Agreement would not be realized as a

result of non-viability of product covered by the License Agreement.

The Company has recognized

a full impairment on the license of its remaining net book value of $5.8 million which

is included in the “Loss on impairment of intangible assets” section of

our unaudited condensed consolidated statements of income for the three and six months ended

June 30, 2024.

expense was $ 0.2 million and $ 0.4 million for

the three months ended June 30, 2024 and 2023, respectively, and was recognized within depreciation and amortization expense on the unaudited condensed consolidated statements of income.

expense related to intangible assets was $0.5 million and $0.9 million for the six months ended June 30, 2024 and 2023, respectively.

Based on amounts recorded at June 30, 2024,

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

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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”),

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

with an initial maximum principal amount of $ 45.0 million .

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

3 unchanged sentences

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 Secured Overnight Financing Rate, or 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 percent, 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.

As of March 31, 2024 the Company was in compliance

with all covenants.

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.

October 10, 2023, the Company entered into a First Amendment to Credit Agreement pursuant to which Woodforest National Bank was

added as a lender under the Credit Agreement for an aggregate commitment of $15.0 million, thereby increasing the aggregate commitments

under the Credit Agreement from $45.0 million to $ 60.0 million .

of March 31, 2024 there were no amounts outstanding under the new Credit Agreement.

During the three months ended March 31, 2024 and

2023, the Company recognized $ 0.3

million and $ 0.2

million , respectively, of interest expense relating to the Credit Agreement and Prior Credit Agreement, respectively.

October 3, 2023, the Company issued a $30.0 million aggregate principal amount of 9 percent Senior Notes due 2027 (“2027

Senior Notes” or “Notes”) in a registered underwritten public offering.

On October 27, 2023, the underwriter exercised

in full, its over-allotment option by purchasing an additional approximately $3.0 million aggregate principal amount of the 2027

Senior Notes.

The interest rates are fixed at 9% per annum and are payable quarterly in arrears on March 31, June 30, September

30, and December 31 of each year, commencing on December 31, 2023, and until maturity.

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

Financing Rate, or SOFR (as defined in the Credit Agreement) plus (ii) 3.75 percent at all times prior to the Commitment Termination

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.

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.

The 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 percent, 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, (v) the weighted average risk rating in relation to Borrower portfolio of loan

assets will not be less than 3.00, and (vi) the Company's cumulative share repurchases will not exceed $5 million in value in any 12-month

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.

As of the date of this filing, the Company is in process of amending the Credit Agreement

whereby the covenant for net charge-off percentage will be revised upwards, the consolidated interest coverage ratio will be revised

downwards and the Company's share repurchase basket will be increased.

The amendment will address covenant defaults as of June 30, 2024

and waive any past defaults.

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.

October 10, 2023, the Company entered into a First Amendment to Credit Agreement pursuant to which Woodforest National Bank was added

as a lender under the Credit Agreement for an aggregate commitment of $15.0 million, thereby increasing the aggregate commitments under

the Credit Agreement from $45.0 million to $ 60.0 million .

of June 30, 2024 there were no amounts outstanding under the new Credit Agreement.

During the three months ended June 30, 2024 and 2023,

the Company recognized $ 1.1 million and $ 0.4 million , respectively, of interest expense relating to the Credit Agreement and Prior Credit

Agreement, respectively.

During the six months ended June 30, 2024 and 2023, the Company recognized $ 2.4 million and $ 0.5 million , respectively,

of interest expense in connection with the Credit Agreement.

Notes Due 2027

October 3, 2023, the Company issued a $30.0 million aggregate principal amount of 9.00% Senior Notes due 2027 (“2027 Senior Notes”

or “Notes”) in a registered underwritten public offering.

On October 27, 2023, the underwriter exercised in full, its over-allotment

option by purchasing an additional approximately $3.0 million aggregate principal amount of the 2027 Senior Notes.

The interest rates

are fixed at 9.00% per annum and are payable quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing

on December 31, 2023, and until maturity.

The Notes will mature on January 31, 2027.

The total net proceeds from the debt offering, after deducting initial purchase discounts and debt issuance costs, were approximately

$30.6 million.

The Company intends to use the net proceeds from the offering for general corporate purposes, including funding

future acquisitions and investments, repaying indebtedness, making capital expenditures, and funding working capital.

The following

table summarizes the outstanding balance of the Notes, net of debt issuance costs (in thousands):

The total net proceeds from the debt offering, after

deducting initial purchase discounts and debt issuance costs, were approximately $30.6 million.

The Company intends to use the net proceeds

from the offering for general corporate purposes, including funding future acquisitions and investments, repaying indebtedness, making

capital expenditures, and funding working capital.

The following table

summarizes the outstanding balance of the Notes, net of debt issuance costs (in thousands):

of Long Term Debt

June 30, 2024

December 31, 2023

2027 Senior Notes

1 unchanged sentence

Total unsecured senior notes, net

Company’s future principal obligations for the Notes were as follows (in thousands):

The Company’s

future principal obligations for the Notes were as follows (in thousands):

Schedule of Maturities of Long Term Notes

June 30, 2024

Remainder of 2024

Total unsecured senior notes, net

Company may redeem the Notes for cash in whole or in part at any time (i) on or after September 30, 2025 (the “First Call

Date”) and prior to September 30, 2026, at a price equal to the sum of 102% of their principal amount, and (ii) on or after

September 30, 2026 at a price equal to the sum of 100% of their principal amount, plus (in each case noted above) accrued and

unpaid interest to, but excluding, the date of redemption.

At any time prior to the First Call Date, the Company may, at its option,

redeem the Notes for cash, in whole at any time or in part from time to time at a redemption price equal to (i) 100% of the principal

amount of Notes redeemed, plus (ii) a Make-Whole Amount (as defined in the Indenture), plus (iii) accrued and unpaid interest,

if any, to, but excluding, the date of redemption.

On and after any redemption date, interest will cease to accrue on the redeemed

Additionally, upon the occurrence of a Triggering Event (as defined in the Indenture), holders of the Notes will have the

right to require the Company to make an offer to repurchase all or any portion of their Notes for cash at a purchase price equal

to 100% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase.

Notes are senior unsecured obligations of the Company and rank equal in right of payment with the Company’s existing and

future senior unsecured indebtedness.

Company evaluated the 2027 Senior Notes for derivatives pursuant to Accounting Standard Codification (“ASC”)

815, “Derivatives and Hedging,” and identified an embedded derivative that required bifurcation as the feature is not clearly

and closely related to the host instrument.

The embedded derivative was a default provision, which could require additional interest

The Company reassesses the feature quarterly to determine if it requires separate accounting.

There have been no changes to

the Company’s assessment through March 31, 2024 that the fair value of the embedded derivative is immaterial.

and Contingencies

Lease Obligations

Company may redeem the Notes for cash in whole or in part at any time (i) on or after September 30, 2025 (the “First Call Date”)

and prior to September 30, 2026, at a price equal to the sum of 102% of their principal amount, and (ii) on or after September 30, 2026

at a price equal to the sum of 100% of their principal amount, plus (in each case noted above) accrued and unpaid interest to, but excluding,

the date of redemption.

At any time prior to the First Call Date, the Company may, at its option, redeem the Notes for cash, in whole

at any time or in part from time to time at a redemption price equal to (i) 100% of the principal amount of Notes redeemed, plus (ii)

a Make-Whole Amount (as defined in the Indenture), plus (iii) accrued and unpaid interest, if any, to, but excluding, the date of redemption.

On and after any redemption date, interest will cease to accrue on the redeemed Notes.

Additionally, upon the occurrence of a Triggering

Event (as defined in the Indenture), holders of the Notes will have the right to require the Company to make an offer to repurchase all

or any portion of their Notes for cash at a purchase price equal to 100% of the aggregate principal amount thereof, plus accrued and

unpaid interest, if any, to, but excluding, the date of purchase.

Notes are senior unsecured obligations of the Company and rank equal in right of payment with the Company’s existing and future

senior unsecured indebtedness.

Company evaluated the 2027 Senior Notes for derivatives pursuant to Accounting Standard Codification (“ASC”) 815, “Derivatives

and Hedging,” and identified an embedded derivative that required bifurcation as the feature is not clearly and closely related

to the host instrument.

The embedded derivative was a default provision, which could require additional interest payments.

reassesses the feature quarterly to determine if it requires separate accounting.

There have been no changes to the Company’s assessment

that the fair value of the embedded derivative is immaterial through June 30, 2024.

Commitments and Contingencies

the Company’s material leases are operating leases.

Right-of-use (“ROU”) assets related to operating leases are included on

the unaudited condensed consolidated balance sheets in other non-current assets.

Right-of-use (“ROU”) assets related to operating leases are included

on the unaudited condensed consolidated balance sheets in other non-current assets.

Operating lease cost is recognized over the lease

term on a straight-line basis and is recorded within general and administrative expenses on the unaudited condensed consolidated statements of income.

In March of 2023, the Company entered into a new lease for additional office space in Dallas, Texas.

The Company’s corporate office

spaces in Dallas, Texas total approximately 6,850 square feet consisting of the two office locations.

Total rent expense recognized was

million and $ 0.03

million for three months ended March 31, 2024 and 2023, respectively.

The respective office

leases expire in August 2028 and August 2025.

term on a straight-line basis and is recorded within general and administrative expenses on the unaudited condensed consolidated statements

In March of 2023, the Company entered into a new lease for additional office space in Dallas, Texas on Sherry Lane.

The Company’s

corporate office spaces in Dallas, Texas total approximately 6,850 square feet consisting of the two office locations (Sherry Lane and

Preston Road).

Total rent expense recognized was $ 0.3 million

and $ 0.2 million

for six months ended June 30, 2024 and 2023, respectively.

June 10, 2024, the Company entered into a lease termination agreement to its Preston Road office lease in Dallas (the “Lease Termination”).

The Lease Termination terminated the Company’s rights and obligations with respect to the leased premises on June 30, 2024.

such, the ROU assets and operating lease liabilities were written off, and the Company recorded a gain of $4 thousand for the quarter

ended June 30, 2024 and paid an early termination fee of $9 thousand.

The remaining Sherry Lane office lease is set to expire in August

Enteris headquarters is located in Boonton, New Jersey, where Enteris leases approximately 32,000 square feet of space.

Total rent expense

recognized under the lease was $ 0.06

million for both the three months ended March 31, 2024 and 2023, respectively.

The office lease

expires in December 2024 with an option to renew for an additional five years.

components of lease cost was as follows (in thousands):

Three Months Ended

lease expires in December 2029 with an option to renew for an additional five years.

The components of lease cost was as follows

(in thousands):

Operating lease cost

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Total lease cost

minimum rent on the Company’s operating leases was as follows as of March 31, 2024 (in thousands):

Future minimum rent

on the Company’s operating leases was as follows as of June 30, 2024 (in thousands):

Schedule of Future Minimum Rent

2 unchanged sentences

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 March 31, 2024 and December 31, 2023 was $ 4.9 million .

The Company did not recognize a change

in the estimated fair value of its contingent consideration during the three months ended March 31, 2024 and 2023.

of March 31, 2024, the Company’s unfunded commitments were as follows (in thousands):

Schedule of Unfunded Commitments

Journey Medical Corporation

Total unfunded commitments

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.

Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course

of its business.

The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have

a material impact on the Company’s results of operations, balance sheets and cash flows due to defense costs, and divert

management resources.

fiscal year 2019 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.

As of June 30, 2024, it has

been determined the milestones and royalties pursuant to the License Agreement would not be realized as a result of non-viability of

the product covered by the License Agreement.

Accordingly, the Company has concluded that the liability for contingent consideration,

previously held at its estimated fair value of $4.9 million, should be $0.

The write-off of this contingent consideration liability

has resulted in a gain of $4.9 million, which is included in the “Change in fair value of acquisition-related contingent consideration”

caption of our unaudited condensed consolidated statements of income for the three and six months ended June 30, 2024.

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.

As of June 30, 2024 SWK had $5.0 million of unfunded commitments.

Company is involved in, or has been involved in, arbitrations or various other legal proceedings that arise from the normal course of

its business.

The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material

impact on the Company’s results of operations, balance sheets and cash flows due to defense costs, and divert management resources.

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

As of March 31,

2024, the Company is not involved in any arbitration and/or other legal proceeding that it expects to have a material effect on

its business, financial condition, results of operations and cash flows.

As of June 30, 2024, the Company is not involved

in any arbitration and/or other legal proceeding that it expects to have a material effect on its business, financial condition, results

of operations and cash flows.

Indemnification

permitted by Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or

occurrences while the officer or director is, or was, serving in such capacity, or in other capacities at the Company’s

The term of the indemnification period is for the officer’s or director’s lifetime.

The maximum potential

amount of future payments the Company could be required to make under these indemnification agreements is unlimited;

the Company has a director and officer insurance policy that limits its exposure and enables the Company to recover a portion

of any such amounts.

As a result of the Company’s insurance policy coverage, the Company believes the estimated fair value

of these indemnification agreements is insignificant.

Accordingly, the Company had no liabilities recorded for these agreements

as of March 31, 2024 and December 31, 2023.

Value Measurements

permitted by Delaware law, the Company has agreements whereby it indemnifies its officers and directors for certain events or occurrences

while the officer or director is, or was, serving in such capacity, or in other capacities at the Company’s request.

the indemnification period is for the officer’s or director’s lifetime.

The maximum potential amount of future payments the

Company could be required to make under these indemnification agreements is unlimited;

however, the Company has a director and officer

insurance policy that limits its exposure and enables the Company to recover a portion of any such amounts.

As a result of the Company’s

insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is insignificant.

the Company had no liabilities recorded for these agreements as of June 30, 2024 and December 31, 2023.

Fair Value Measurements

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

Fair value is the

price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants

at the measurement date (exit price).

Fair value is the price

that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date (exit price).

GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value.

The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and

the lowest priority to data lacking transparency (i.e., unobservable inputs).

An instrument’s categorization within the

fair value hierarchy is based on the lowest level of significant input to its valuation.

The following is a description of the

three hierarchy levels.

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.

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.

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.

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 three months ended March 31, 2024 and 2023.

There were no transfers

between any levels during the six months ended June 30, 2024 and 2023.

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

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financial instruments, other than investment in affiliates.

are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the

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

Cash and cash equivalents

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.

Finance Receivables

receivables are measured at amortized cost, which approximates fair value.

The fair value of finance receivables is 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.

The fair value of finance receivables is 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

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

Finance receivables are not measured at fair value on a recurring basis, but

estimates of fair value are reflected below.

Consideration

fair value measurements of the contingent consideration obligations and the related intangible assets arising from business combinations

are classified as Level 3 estimates under the fair value hierarchy, as these items have been valued using unobservable inputs.

These inputs include:

inputs include:

(a) the estimated amount and timing of projected cash flows;

(b) the probability of the achievement of the

factors on which the contingency is based;

and (c) the risk-adjusted discount rate used to present value the probability-weighted

Changes in fair value of this obligation are recorded as income or expense within operating income in our consolidated

statements of income.

Significant increases or decreases in any of those inputs in isolation could result in a significantly lower

or higher fair value measurement.

As of both March 31, 2024 and

December 31, 2023, the acquisition-related contingent consideration liability was $4.9 million.

For both the three months ended March

31, 2024 and 2023, the Company did not record a change in the estimated fair value of contingent consideration.

The Company made

no payments during the three months ended March 31, 2024 and 2023 against the contingent consideration liability.

The contingent consideration payable is valued using a discounted cash flow approach and includes a significant unobservable input which

is the discount rate.

As of the three months ended March 31, 2024 and year ended 2023 the discount rate was 14.5% for both periods, respectively.

During the year ended December 31, 2023 there was a change in the range of outcomes as a result of royalty and milestone cash flow projections

being decreased for the License Agreement.

Marketable Investments

(b) the probability of the achievement of the factors on

which the contingency is based;

and (c) the risk-adjusted discount rate used to present value the probability-weighted cash flows.

in fair value of this obligation are recorded as income or expense within operating income in our consolidated statements of income.

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

As noted above in Note 6, the acquisition-related contingent consideration liability was written down to $0 as of June 30, 2024 due to

non-viability of the underlying product.

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

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 benchmark 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

Derivative Instruments

are 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 are 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 are classified as Level 3, if the valuation models and broker quotes are based on inputs that are unobservable in the

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 benchmark 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.

The 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 in the consolidated balance sheets as of

March 31, 2024 and December 31, 2023 and totaled to $1.8 million and $1.0 million, respectively.

The Company recognized a $0.9 million

and $0.2 million gain due to changes in fair value related to its foreign currency forward contract during the three months ended March

31, 2024 and March 31, 2023, respectively.

following table presents financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 (in

For non-exchange

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 foreign currency forward was recorded

in other non-current assets in the condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 and totaled to $2.6

million and $1.0 million, respectively.

The Company recognized a $0.8 million and $1.2 million gain due to changes in fair value related

to its foreign currency forward contract during the three months ended June 30, 2024 and June 30, 2023, respectively.

The Company recognized

a $1.7 million and $1.6 million gain due to changes in fair value related to its foreign currency forward contract for

the six months ended June 30, 2024 and June 30, 2023, respectively.

following table presents financial assets measured at fair value on a recurring basis as of June 30, 2024 (in thousands):

Schedule of fair value assets measured on recurring basis

Quoted Prices

or Liabilities

1 unchanged sentence

Warrant assets

Foreign currency forward contract

Marketable investments

Financial Liabilities

Contingent consideration payable

The contingent consideration payable is valued

using a discounted cash flow approach and includes a significant unobservable input which is the discount rate.

As of the three months

ended March 31, 2024 and year ended 2023 the discount rate was 14.5% for both periods, respectively.

During the year ended December 31,

2023 there was a change in the range of outcomes as a result of royalty and milestone cash flow projections being decreased for the License

following table presents financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2023

(in thousands):

Quoted Prices

Foreign currency forward contract

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

or Liabilities

5 unchanged sentences

Contingent consideration payable

changes in fair value of the warrant assets during the three months ended March 31, 2024 and 2023 were as follows (in thousands):

contingent consideration payable was valued using a discounted cash flow approach and included a significant unobservable

input which is the discount rate.

During the six months ended June 30, 2024 there was a write off of the full balance of contingent consideration

liability due to the non-viability of the underlying product.

See Note 6 for further information.

changes in fair value of the warrant assets during the six months ended June 30, 2024 and 2023 were as follows (in thousands):

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

March 31, 2024

March 31, 2023

June 30, 2024

June 30, 2023

Fair value - December 31, 2023

4 unchanged sentences

Loss on foreign currency transactions

Fair value - March 31, 2024

Fair value - March 31, 2023

Fair value - June 30, 2024

Fair value - June 30, 2023

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:

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:

Schedule of weighted average assumptions

March 31, 2024

June 30, 2024

December 31, 2023

7 unchanged sentences

75.3 % to 154.3 %

The warrant assets

are valued using a market approach and include significant unobservable inputs such as risk-free rate, expected life, and expected volatility.

For the three months ended March 31, 2024 the risk-free rate range weighted average was 4.4 % ,

and had a median of 4.2 % .

For the year ended December 31, 2023 the risk-free rate range weighted average was 4.3 % ,

and had a median of 3.8 % .

For the three months ended March 31, 2024 the expected life range weighted average was 3.4

years , and had a median of 4.4

For the year ended December 31, 2023 the expected life range weighted average was 3.4

years , and had a median of 4.4

For the three months ended March 31, 2024 the expected volatility range weighted average was 124.6 % ,

and had a median of 134.4 % .

For the year ended December 31, 2023 the expected volatility range weighted average 124.6 % ,

and median of 134.4 % .

of March 31, 2024 and December 31, 2023, the Company had one royalty, Best, that was deemed to be impaired based on reductions

in carrying value in prior periods.

As of March 31, 2024, the Company had one loan, Trio Healthcare, that was deemed to be impaired based

on reductions in carrying value during the three months ended March 31, 2024.

The following table presents this royalty and loan

measured at amortized cost using the effective interest method, which approximates fair value, on a nonrecurring basis as of March 31,

2024 and December 31, 2023 (in thousands):

warrant assets are valued using a market approach and include significant unobservable inputs such as risk-free rate, expected life,

and expected volatility.

For the six months ended June 30, 2024 the risk-free rate range weighted average was 4.4 % , and had a median

For the year ended December 31, 2023 the risk-free rate range weighted average was 4.3 % , and had a median of 3.8 % .

months ended June 30, 2024 the expected life range weighted average was 4.2 years, and had a median of 4.5 years.

For the year ended

December 31, 2023 the expected life range weighted average was 3.4 years, and had a median of 4.4 years.

For the six months ended June

30, 2024 the expected volatility range weighted average was 102.7 % , and had a median of 90.8 % .

For the year ended December 31, 2023 the

expected volatility range weighted average 124.6 % , and median of 134.4 % .

of June 30, 2024 and December 31, 2023, the Company had one royalty, Best, that was deemed to be impaired based on reductions in carrying

value in prior periods.

As of June 30, 2024, the Company had two loans, Trio Healthcare and Exeevo, that was deemed to be impaired based

on reductions in carrying value during the six months ended June 30, 2024 .

The following table presents this royalty and the loans measured at amortized cost using the effective interest method,

which approximates fair value, on a nonrecurring basis as of June 30, 2024 and December 31, 2023 (in thousands):

Schedule of weighted average assumptions

Quoted Prices

or Liabilities

March 31, 2024

June 30, 2024

December 31, 2023

were no liabilities measured at fair value on a nonrecurring basis as of March 31, 2024 and December 31, 2023.

were no liabilities measured at fair value on a nonrecurring basis as of June 30, 2024 and December 31, 2023.

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.

following table presents the fair value of financial assets and liabilities as of March 31, 2024 (in thousands):

The disclosures include financial instruments

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

following table presents the fair value of financial assets as of June 30, 2024 (in thousands):

Schedule of fair value by balance sheet grouping

4 unchanged sentences

Foreign currency forward contract

Financial Liabilities

Contingent consideration payable

following table presents the fair value of financial assets and liabilities as of year ended December 31, 2023 (in thousands):

7 unchanged sentences

Revenue Recognition

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

as we believe it best depicts the nature, amount, timing and uncertainty of our revenue and cash flow.

The Company’s Finance Receivables

segment does not have any revenues received from contracts with customers.

following table provides the contract revenue recognized by revenue source for the three

months ended March 31, 2024 and 2023 (in thousands):

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

believe it best depicts the nature, amount, timing and uncertainty of our revenue and cash flow.

The Company’s Finance Receivables segment

does not have any revenues received from contracts with customers.

following table provides the contract revenue recognized by revenue source for the three and six months ended June 30, 2024 and 2023

(in thousands):

Schedule of Revenue Recognized by Revenue Source

Three Months Ended

Pharmaceutical Development Segment

License Agreement

Pharmaceutical Development

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 income and are included in accounts payable and accrued liabilities

in the consolidated balance sheets (in thousands):

Company’s contract liabilities represent advance consideration received from customers and are recognized as revenue when the related

performance obligation is satisfied.

Company’s contract liabilities are presented as deferred income and are included in accounts payable and accrued liabilities in

the consolidated balance sheets (in thousands):

Schedule of Company's Contract Liabilities

2 unchanged sentences

Total contract liabilities

the three months ended March 31, 2024, the Company did not recognize any of the 2023 deferred income from satisfaction of performance

The Company did not have any contract assets as

of March 31, 2024 or December 31, 2023.

Enteris Exclusive Option

and Asset Purchase Agreement

effective date of January 1, 2024, we entered into an exclusive option and asset purchase agreement with a strategic partner on March

the six months ended June 30, 2024, the Company recognized the full remaini ng balance of $9 thousand of 2023 deferred income from

satisfaction of performance obligations.

The Company did not have any contra ct

assets as of June 30, 2024 or December 31, 2023.

Exclusive Option and Asset Purchase Agreement

an effective date of January 1, 2024, we entered into an exclusive option and asset purchase agreement with a strategic partner on March

14, 2024 which granted the partner an exclusive option to acquire certain of Enteris’ assets related to its business of providing

3 unchanged sentences

exclusive purchase option the partner is to provide consideration in the form of an “option fee” and “guaranteed revenue

fee is broken into two components:

option fee is broken into two components:

A low-single digit million fee due within 30 business days of executing the agreement;

and should the

option not be exercised by the first anniversary of the effective date, an additional low-single digit million fee will be due at that

should the option not be exercised by the first anniversary of the effective date, an additional low-single digit million fee will be

due at that time.

The first option fee was paid in April 2024.

Option fee payments will be included in deferred income until the earlier of term

expiration or exercise of the purchase option.

Should the partner exercise the purchase option, any option fee payments made will be applied

towards the purchase price.

The guaranteed

revenue payments include two components:

A mid-single digit million guaranteed revenue payment in 2024 and a mid-single digit million

guaranteed revenue payment in 2025.

The revenue is to be derived by the partner under an existing collaboration agreement, and partner

is to pay the difference should the minimum amount not be met each year.

Each years' guaranteed revenue amount is to be paid in two installments

semi-annually each year.

Should revenue exceed the 2024 or 2025 guaranteed revenue amounts after receiving a difference payment in the

first half of the year, we must repay the partner the amount of such overpayment.

We are evaluating the revenue recognition policy of

the guaranteed revenue payments.

No guaranteed revenue was recognized during the three months ended March 31, 2024.

Option fee payments will be included in deferred income until the earlier

of term expiration or exercise of the purchase option.

Should the partner exercise the purchase option, any option fee payments made

will be applied towards the purchase price.

guaranteed revenue payments include two components:

A mid-single digit million guaranteed revenue payment in 2024 and a mid-single digit

million guaranteed revenue payment in 2025.

The revenue is to be derived by the partner under an existing collaboration agreement, and

partner is to pay the difference should the minimum amount not be met each year.

Each year’s guaranteed revenue amount is

to be paid in two installments semi-annually each year.

Should revenue exceed the 2024 or 2025 guaranteed revenue amounts after receiving

a difference payment in the first half of the year, we must repay the partner the amount of such overpayment.

Guaranteed revenue of $ 0.4

million was recognized during the three and six

months ended June 30, 2024 .

Segment Information

4 unchanged sentences

Consequently,

the segments are evident from the structure of the Company’s internal organization, focusing on financial information that

the 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.

the segments are evident from the structure of the Company’s internal organization, focusing on financial information that the

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

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

uses this measure of profit (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 Company does not report assets by reportable segment,

as this metric is not used by the Company’s CEO in assessing performance or allocating resources to the segments.

uses this measure of profit (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 Company does not report assets by reportable segment, as this metric is

not used by the Company’s CEO in assessing performance or allocating resources to the segments.

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

1 unchanged sentence

Geographic Region

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Pharmaceutical

1 unchanged sentence

Provision for credit losses

Loss on impairment of intangible assets

Interest expense

Manufacturing, research and development

Pharmaceutical manufacturing, research and development expense

Change in fair value of acquisition-related contingent consideration

Depreciation and amortization expense

General and administrative

Other expense, net

General and administrative expense

Other income (expense), net

Income tax expense

Net income (loss)

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Pharmaceutical

Other revenue

Benefit for credit losses

Interest expense

Manufacturing, research and development

Pharmaceutical manufacturing, research and development expense

Depreciation and amortization expense

General and administrative

General and administrative expense

Other income, net

Income tax expense

Net income (loss)

Six Months Ended June 30, 2024

Pharmaceutical

Other revenue

Provision for credit losses

Loss on impairment intangible assets

Interest expense

Pharmaceutical manufacturing, research and development

Change in fair value of acquisition-related contingent consideration

Depreciation and amortization expense

General and administrative expense

Other income (expense), net

Income tax expense

Net income (loss)

Six Months Ended June 30, 2023

Pharmaceutical

Other revenue

Benefit for credit losses

Interest expense

Pharmaceutical manufacturing, research and development expense

Depreciation and amortization expense

General and administrative expense

Other expense, net

Income tax benefit

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

consolidated amounts.

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

August 2, 2024, SWK Funding, a subsidiary of the Company, entered into a royalty purchase agreement with Relief Therapeutics Holding

SA (“Relief”) and APR Applied Pharma Research SA pursuant to which SWK Funding paid $5.8 million at closing with another

$5.3 million available for borrowing should Relief achieve certain milestones.

In exchange, SWK Funding will receive royalties based

off sales as listed in the agreement.

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