x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Registrant’s Telephone Number, Including Area Code): ~~(972)~~(972) 687-7250

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o NoNO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).x Yes o NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o YES x NoNO

As of August ~~3, 2022,~~5, 2023, there were ~~12,828,704~~12,540,483 shares of the registrant’s Common Stock, $0.001 par value per share, outstanding.

In addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as ~~amended.~~amended (the “Exchange Act”). From time to time, we may also provide oral or written forward-looking statements in other materials we release to the public. Such forward-looking statements are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. The forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections about our business and industry, and our beliefs and assumptions, and include, but are not limited to, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Words such as “anticipate,” “believe,” “could,” “estimate,” “expects,” “intend,” “may,” “plan,” “should,” “will” and variations of these words and similar expressions identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, many of which are beyond our control, are difficult to predict and could cause actual results to differ materially (both favorably and unfavorably) from those expressed or forecasted in the forward-looking statements.

These risks and uncertainties include, but are not limited to, those described in ~~Part II,~~ Item 1A, “Risk Factors,” and elsewhere in this report. Forward-looking statements that were believed to be true at the time made may ultimately prove to be incorrect or false. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

See accompanying notes to the unaudited condensed consolidated financial statements.

Note 1. SWK Holdings Corporation and Summary of Significant Accounting Policies

SWK Holdings Corporation (the “Company”) was incorporated in July 1996 in California and reincorporated in Delaware in September 1999. In July 2012, the Company commenced its strategy of building a specialty finance and asset management business. In August 2019, the Company commenced a complementary strategy of building a pharmaceutical development, manufacturing and intellectual property licensing business. The Company’s operations comprise two reportable segments: “Finance Receivables” and “Pharmaceutical Development.” The Company allocates capital to each segment in order to generate income through the sales of life science products by third parties. The Company is headquartered in Dallas, Texas, and as of June 30, ~~2022,~~2023, the Company had 3423 full-time employees.

The Company has net operating loss carryforwards (“NOLs”) and believes that the ability to utilize these NOLs is an important and substantial asset. However, at this time, under current law, the Company does not anticipate that the Finance Receivables and/or Pharmaceutical Development segments will generate sufficient income to permit the Company to utilize all of its NOLs prior to their respective expiration dates. As such, it is possible that the Company might pursue additional strategies that it believes might result in the ability to utilize more of the NOLs.

As of August ~~3, 2022,~~5, 2023, the Company and its partners have executed transactions with 4650 different parties under its specialty finance strategy, funding an aggregate of ~~$649.6~~$725.7 million in various financial products across the life science sector. The Company’s portfolio includes senior and subordinated debt backed by royalties and synthetic royalties paid by companies in the life science sector, and purchased royalties generated by sales of life science products and related intellectual property.

During 2019, the Company commenced its Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc. (“Enteris”). Enteris is a clinical ~~stage biopharmaceutical company offering~~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. Since its founding in 2013, Enteris has advanced multiple internal and external programs leveraging Peptelligence®, which enables the oral delivery of molecules that are typically injected, including peptides and BCS Class II, III, and IV small molecules, in an enteric-coated tablet formulation. Peptelligence® utilizes a unique multifaceted approach to increase the solubility and absorption of peptides and small molecules, addressing the complex challenges regarding solubility and permeability of therapeutics with low oral bioavailability. Peptelligence® is protected by an extensive patent estate that extends until 2036.

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of all subsidiaries and affiliates in which the Company holds a controlling financial interest as of the financial statement date. Normally a controlling financial interest reflects ownership of a majority of the voting interests. The Company consolidates a variable interest entity (“VIE”) when it possesses both the power to direct the activities of the VIE that most significantly impact its economic performance and the Company is either obligated to absorb the losses that could potentially be significant to the VIE or the Company holds the right to receive benefits from the VIE that could potentially be significant to the VIE, after elimination of intercompany accounts and transactions.

The Company owns interests in various partnerships and limited liability companies, or LLCs. The Company consolidates its investments in these partnerships or LLCs where the Company, as the general partner or managing member, exercises effective control, even though the Company’s ownership may be less than 50 percent, the related governing agreements provide the Company with broad powers, and the other parties do not participate in the management of the entities and do not effectively have the ability to remove the Company. The Company has reviewed each of the underlying agreements to determine if it has effective control. If circumstances change and it is determined this control does not exist, any such investment would be recorded using the equity method of accounting. Although this would change individual line items within the Company’s consolidated financial statements, it would have no effect on its operations and/or total stockholders’ equity attributable to the Company.

The unaudited condensed consolidated financial statements have been prepared by the Company and reflect all normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the year ending December 31, ~~2022.~~2023. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements and notes included herein should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on March ~~25, 2022.~~31, 2023.

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are required in the determination of revenue recognition; stock-based compensation; valuation of interest and accounts receivable; impairment of finance receivables; allowance for credit losses; long-lived assets; property and equipment; intangible assets; goodwill; valuation of warrants and other investments; contingent consideration; income taxes; and contingencies and litigation, among others. Some of these judgments can be subjective and complex, and consequently, actual results may differ from these estimates. The Company’s estimates often are based on complex judgments, probabilities and assumptions that it believes to be reasonable but that are inherently uncertain and unpredictable. For any given individual estimate or assumption made by the Company, there may also be other estimates or assumptions that are reasonable.

The Company regularly evaluates its estimates and assumptions using historical experience and other factors, including the economic environment. As future events and their effects cannot be determined with precision, the Company’s estimates and assumptions may prove to be incomplete or inaccurate, or unanticipated events and circumstances may occur that might cause changes to those estimates and assumptions. Market conditions, such as illiquid credit markets, health crises such as the COVID-19 global pandemic, volatile equity markets, and economic downturns, can increase the uncertainty already inherent in the Company’s estimates and assumptions. The Company adjusts its estimates and assumptions when facts and circumstances indicate the need for change. Those changes generally will be reflected in our consolidated financial statements on a prospective basis unless they are required to be treated retrospectively under the relevant accounting standard. It is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

The Company earns revenues from its 2two 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 clinical development and manufacturing services as well as oral therapeutic formulation solutions built around Enteris’ pharmaceutical Peptelligence® platform, which enables the oral delivery of molecules that are typically injected, including peptides and BCS Class II, III, and IV small molecules in an enteric-coated tablet formulation.

The Company’s Pharmaceutical Development segment enters into collaboration and licensing agreements with strategic partners, under which it may exclusively license rights to research, develop, manufacture and commercialize its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, upfront license fees; reimbursement of certain costs; customer option exercise fees; development, regulatory and commercial milestone payments; and royalties on net sales of licensed products.

Deferred revenue includes amounts that have been billed per the contractual terms but have not been recognized as revenue. The Company classifies as current the portion of deferred revenue that is expected to be recognized within one year from the balance sheet date and is included in accounts payable and accrued liabilities in the unaudited condensed consolidated balance sheets.

Certain prior year amounts have been reclassified to conform to current year presentation. The amounts for prior periods have been reclassified to be consistent with current year presentation and have no impact on previously reported total assets, total stockholders’ equity or net income.

Research and development expenses include the costs associated with internal research and development and research and development conducted for the Company by third parties. These costs primarily consist of salaries, pre-clinical and clinical trials, outside consultants, and supplies. All research and development costs discussed above are expensed as incurred. Third-party expenses reimbursed under research and development contracts, which are not refundable, are recorded as a reduction to pharmaceutical manufacturing research and development expense in the consolidated statements of income.

In March ~~2022,~~2020, the Financial Accounting Standards Board (“FASB”) issued Accounting ~~Standards~~Standard Update (“ASU”) 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures,” which updates the requirements for accounting for credit losses under Accounting Standards Codification 326, eliminates the accounting guidance on troubled debt restructurings for creditors, and enhances creditors’ disclosure requirements related to loan refinancings and restructurings for borrowers experiencing financial difficulty. The ASU also amends the guidance on vintage disclosures to require disclosure of gross write-offs by year of origination. The amendments are effective in periods beginning after December 15, 2022 using either a prospective or modified retrospective transition. Early adoption of certain or all of the amendments is permitted. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326).” This ASU adds an impairment model, known as the current expected credit loss (“CECL”) model, that is based on expected losses rather than incurred losses. Under this guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of losses. This ASU describes the impairment allowance as a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Credit losses relating to available-for-sale debt securities should be measured in a manner similar to current GAAP; however, the amendments in this update require that credit losses be presented as an allowance rather than as a write-down, which will allow an entity the ability to record reversals of credit losses in current period net income. On November 15, 2019, the FASB issued ASU 2019-10, “Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates,” which finalized various effective date delays for private companies, not-for-profit organizations, and certain smaller reporting companies. Under ASU 2019-10, the effective date for implementation of CECL for smaller reporting companies was extended to fiscal years, and interim periods within those years, beginning after December 15, 2022. The Company is currently evaluating the new guidance but believes it is likely to incur more upfront losses on its portfolio under the new CECL model.

~~In March 2020, the FASB issued ASU~~ 2020-04, “Reference Rate Reform (Topic 848),” which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 provides optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. These transactions include: (i) contract modifications, (ii) hedging relationships, and (iii) sales or transfers of debt securities classified as held-to-maturity. ASU 2020-04 was effective upon issuance, and the provisions generally can be applied prospectively as of January 1, 2020 through December 31, 2024. The Company has identified existing loans that reference LIBOR and is in the process of evaluating alternatives in each situation. The Company expects that it will elect to apply some of the expedients and exceptions provided in ASU 2020-04 and does not believe the adoption of this standard will have a material impact on the Company’s consolidated financial statements.

The Company adopted ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), as amended, on January 1, 2023 using the modified retrospective approach method. ASU 2016-13 replaced the incurred loss impairment methodology with a methodology that reflects a current expected credit loss (“CECL”). ASU 2016-13 impacted all of the Company’s investments held at amortized cost. At December 31, 2022, the Company’s allowance for credit losses of $11.8 million was the accumulation of allowance for credit losses (“ACL”) applied to specific finance receivables, representing management’s prior estimates of potential future losses on such finance receivables. As part of the Company’s adoption of ASU 2016-13, management reviewed its prior estimates of finance receivable-specific ACL and chose to apply the full $11.8 million ACL under legacy GAAP to the finance receivables such allowance applied. Under the new CECL model, the net GAAP balances of such finance receivables are presented net of previously reported ACL and are included in the Company’s estimated ACL for its Royalties portfolio segment.

Upon adoption of ASC 2016-13 on January 1, 2023, the Company’s transition adjustment included $11.8 million of ACL on finance receivables, which is presented as a reduction to finance receivables, and a $0.4 million ACL on unfunded loan commitments, which is recorded within other non-current liabilities. The Company recorded a net decrease of $9.7 million to accumulated deficit as of January 1, 2023 for the cumulative effect of adopting ASU 2016-13, which reflects the transition adjustments noted above, net of the applicable deferred tax assets of $2.5 million. Results for reporting periods beginning after January 1, 2023 are presented under ASU 2016-13, while prior period amounts continue to be reported in accordance with previously applicable accounting standards. The Company elected not to measure an allowance for credit losses for accrued interest receivable and instead elected to reverse interest income on finance receivables when placed on nonaccrual status, or earlier if the Company believes the collection of interest is doubtful. The Company has concluded that this policy results in the timely reversal of uncollectible interest. Please refer to Note 3 for more information on how the Company determines its allowance for credit losses on finance receivables.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which removes the accounting guidance for troubled debt restructurings and requires entities to evaluate whether a modification provided to a borrower results in a new loan or continuation of an existing loan. The amendment enhances existing disclosures and requires new disclosures for receivables when there has been a modification in contractual cash flows due to a borrower experiencing financial difficulties. Additionally, the amendments require public business entities to disclose gross charge-off information by year of origination in the vintage disclosures. The Company adopted ASU 2022-02 on January 1, 2023 and incorporated the required disclosures into Note 3, Finance Receivables.

Basic net income per share is computed using the weighted-average number of outstanding shares of common ~~stock.~~stock during the applicable period. Diluted net income per share is computed using the weighted-average number of outstanding shares of common stock during the applicable period, and when dilutive, shares of common stock issuable upon exercise of options and warrants deemed outstanding using the treasury stock method.

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

For the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, outstanding options to purchase shares of common stock and outstanding shares of restricted stock in an aggregate of approximately ~~308,000~~118,000 and ~~391,000~~308,000, respectively, have been excluded from the calculation of diluted net income per share, as such securities were anti-dilutive. For the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, outstanding options to purchase shares of common stock and outstanding shares of restricted stock in an aggregate of approximately ~~309,000~~119,000 and ~~401,000~~309,000, respectively, have been excluded from the calculation of diluted net income per share, as all such securities were anti-dilutive.

Finance receivables are reported at their determined principal balances net of any unearned income, cumulative ~~charge-offs~~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.

~~As of June 30, 2022 and December 31, 2021, the Company had a credit loss allowance of $8.4 million. Of the total $8.4 million, $1.2 million~~ ~~and $0.6 million~~ ~~are associated with the Company’s Cambia® and Besivance® royalties, respectively. The remaining $6.6 million~~ is related to the ABT Molecular Imaging, Inc., now known as Best ABT, Inc. (“Best”), second lien term loan that was recognized in order to reflect the Best royalty at its estimated fair value. Approximately $23,000 of cash receipts received from the Company’s Besivance® royalty during the six months ended June 30, 2022 were applied toward the allowance for credit losses.

The ACL is management’s estimate of the amount of expected credit losses over the life of the loan portfolio, or the amount of amortized cost basis not expected to be collected, at the balance sheet date. This estimate encompasses information about historical events, current conditions and reasonable and supportable economic forecasts. Determining the amount of the ACL is complex and requires extensive judgment by management about matters that are inherently uncertain. Given the current level of economic uncertainty, the complexity of the ACL estimate and level of management judgment required, we believe it is possible that the ACL estimate could change, potentially materially, in future periods. Changes in the ACL may result from changes in current economic conditions, our economic forecast, and circumstances not currently known to us that may impact the financial condition and operations of our borrowers, among other factors.

Expected credit losses are estimated on a collective basis for groups of loans that share similar risk characteristics. For finance receivables that do not share similar risk characteristics with other finance receivables, expected credit losses are estimated on an individual basis. Expected credit losses are estimated over the contractual terms of the finance receivables, adjusted for expected prepayments and unfunded commitments, generally excluding extensions and modifications. The loan portfolio segment is defined as the level at which 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 segments: Term Loans and Royalties.

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, 2023, the $0.4 million liability for credit losses on off-balance-sheet credit exposures is included in other liabilities. Please refer to Note 6 for further information on the Company’s unfunded commitments.

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

The 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.

On a quarterly basis, the Company evaluates the carrying value of its finance receivables. Recognition of income is suspended, and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. This evaluation is generally based on delinquency information, an assessment of the borrower’s financial condition and the adequacy of collateral, if any. The Company would generally place term loans on nonaccrual status when the full and timely collection of interest or principal becomes uncertain and they are 90 days past due for interest or principal, unless the term loan is both well-secured and in the process of collection. When placed on nonaccrual, the Company would reverse any accrued unpaid interest receivable against interest income and 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.

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

As of June 30, ~~2022,~~2023, the Company had ~~two~~three finance receivables in nonaccrual status: (1) the term loan to Flowonix Medical, Inc. (“Flowonix”), with a net carrying value of $~~9.8~~11.9 million ~~and~~; (2) the Best royalty, with a net carrying value of $~~3.1~~2.8 million; and (3) the Ideal Implant, Inc. (“Ideal”) royalty, with a net carrying value of $4.3 million. Although in nonaccrual status, none of the ~~Flowonix term loan was not~~finance receivables were considered impaired as of June 30, ~~2022 and December 31, 2021.~~2023. The Company collected ~~$0.6~~$0.2 million on its nonaccrual finance receivables during the six months ended June 30, ~~2022.~~2023.

The Company evaluates all finance receivables on a quarterly basis and assigns a risk rating based upon management’s assessment of the borrower’s likelihood of repayment. The assessment is subjective and based on multiple factors, including but not limited to, financial strength of borrowers and operating results of the underlying business. The credit risk analysis and rating assignment is performed quarterly in conjunction with the Company’s assessment of its allowance for credit losses. The Company uses the following definitions for its risk ratings for Term Loans:

~~Investments~~1: 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 ~~available-for-sale corporate debt securities~~question. Finance receivables rated a 1 are on non-accrual and ~~equity securities as~~are at an elevated risk for principal impairment.

2: Borrower performing below plan, and the loan-to-value is generally worse than at the time of ~~June 30, 2022~~underwriting. Borrower has limited access to additional capital to operate its business. Finance receivables rated a 2 might be placed on non-accrual. While there is a potential for future principal impairment, we may refrain from placing borrower on non-accrual due to enterprise value coverage, continued receipt of interest payments, and/or anticipate a near-term capital raise.

3: Borrower performing inline-to-modestly below Company expectations, and ~~December 31, 2021 consist~~loan-to-value is similar to slightly worse than at the time of ~~the following (in thousands):~~underwriting. Borrower has demonstrated access to capital markets.

4: Borrower performing inline-to-modestly above Company expectations and loan-to-value similar or modestly better than underwriting case. Borrower has demonstrated access to capital markets.

~~Schedule~~5: Borrower performing in excess of ~~marketable investments~~Company expectations, and loan-to-value is better than at time of origination.

The ~~amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses~~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 ~~fair values~~Red reflective of ~~available-for-sale corporate debt securities as of June 30, 2022 and December 31, 2021, are as follows (in thousands):~~

The following table ~~presents unrealized net (loss) gain on equity securities during~~summarizes the ~~three and six months ended~~carrying value of Finance Receivables by origination year, grouped by risk rating as of June 30, ~~2022 and 2021 (in thousands):~~2023:

Schedule of ~~Proceeds from sales, gross unrealized gains and gross unrealized losses for available-for-sale securities~~Financing Receivable by origination year

The following table summarizes the gross book value, accumulated amortization and net book value balances of intangible assets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):

Amortization expense related to intangible assets was $0.4 million ~~and $0.7 million~~ for both the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. Amortization expense related to intangible assets was $0.9 million ~~and $2.3 million~~ for both the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

The estimated future amortization expense related to intangible assets as of June 30, ~~2022~~2023 is as follows (in thousands):

On June 28, 2023, the Company entered into a new Credit Agreement (the “Credit Agreement”) by and among SWK Funding LLC, the Company’s wholly-owned subsidiary (together with the Company, the “Borrower”), the lenders party thereto (“Lenders”), and First Horizon Bank as a Lender and Agent (the “Agent”). The Credit Agreement provides for a revolving credit facility with an initial maximum principal amount of $45.0 million. The Credit Agreement provides that the Company may request one or more incremental increases in an aggregate amount not to exceed $80.0 million, subject to the consent of the Agent and each Lender, at any time prior to the termination of the revolving credit period on June 28, 2026 (the “Commitment Termination Date”). The revolving credit period will be followed by a one-year amortization period, with the final maturity date of the Credit Agreement occurring on June 28, 2027.

The outstanding principal balance of the Credit Agreement will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined in the Credit Agreement) plus (ii) 3.75 percent at all times prior to the Commitment Termination Date. The outstanding principal balance of the Revolving Credit Facility will bear interest at a rate per annum equal to the sum of (i) Term SOFR (as defined in the Credit Agreement) plus (ii) 4.25 percent at all times on and after the Commitment Termination Date. Under the terms of the Credit Agreement, all accrued and unpaid interest shall be due and payable, in arrears, on the first business day of each calendar month.

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%, 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.

The 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.

As of June 30, 2023, no amounts were outstanding under either credit facility, and approximately $2.4 million was outstanding under the Prior Credit Agreement as of December 31, 2022. During the three months ended June 30, 2023 and 2022, the Company recognized $0.4 million and $0.1 million, respectively, of interest expense in connection with the Prior Credit Agreement. During the six months ended June 30, 2023 and 2022, the Company recognized $0.5 million and $0.2 million, respectively, of interest expense in connection with the Prior Credit Agreement.

The Company recorded contingent consideration related to the 2019 acquisition of Enteris and sharing of certain milestone and royalties due to Enteris pursuant to the License Agreement. Contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved, with changes in the estimated fair value recognized in earnings. The estimated fair value of contingent consideration as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was $~~8.5 million~~.$11.2 million. The Company did not recognize a change in the estimated fair value of its contingent consideration during the six months ended June 30, 2023 and 2022. ~~The Company recognized a $0.1 million gain on the change in fair value of its contingent consideration during the six months ended June 30, 2021.~~

As of June 30, ~~2022,~~2023, the Company’s unfunded commitments were as follows (in millions):

~~Unfunded~~Per the terms of the royalty purchase or credit agreements, unfunded commitments are contingent upon reaching an established revenue threshold or other performance metrics on or before a specified date or period of time, ~~per the terms of the royalty purchase or credit agreements,~~ and in the case of loan transactions, are ~~only~~ subject to being advanced as long as an event of default does not exist.

On January 1, 2023, the Company adopted ASU 2016-13, which replaced the incurred loss methodology with an expected loss model known as the CECL model. See Note 3 for information regarding the Company’s allowance for credit losses related to its unfunded commitments.

The 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 June 30, 2023, the Company is not involved in any arbitration and/or other legal proceeding that it expects to have a material effect on its business, financial condition, results of operations and cash flows.

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

The Company measures and reports certain financial and non-financial assets and liabilities on a fair value basis. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels.

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: 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.

Level 3: Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources.

Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels during the six months ended June 30, 2023 and 2022.

The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying ~~unaudited condensed~~ consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments, other than investment in affiliates.

Following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models and significant assumptions utilized.

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

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

The fair values of finance receivables are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the finance receivables. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. These receivables are classified as Level 3. Finance receivables are not measured at fair value on a recurring basis, but estimates of fair value are reflected below.

The Company recorded contingent consideration related to the August 2019 acquisition of Enteris and sharing of certain milestone and royalties due to Enteris pursuant to the License Agreement.

The 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: (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 cash flows. 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.

If active market prices are available, fair value measurement is based on quoted active market prices and, accordingly, these securities would be classified as Level 1. If active market prices are not available, fair value measurement is based on observable inputs other than quoted prices included within Level 1, such as prices for similar assets or broker quotes utilizing observable inputs, and accordingly these securities would be classified as Level 2. If market prices are not available and there are no observable inputs, then fair value would be estimated by using valuation models including discounted cash flow methodologies, commonly used option-pricing models and broker quotes. Such securities would be classified as Level 3, if the valuation models and broker quotes are based on inputs that are unobservable in the market. If fair value is based on broker quotes, the Company checks the validity of received prices based on comparison to prices of other similar assets and market data such as relevant bench mark indices. Available-for-sale securities are measured at fair value on a recurring basis, while securities with no readily available fair market value are not, but estimates of fair value are reflected below.

For exchange-traded derivatives, fair value is based on quoted market prices, and accordingly, would be classified as Level 1. For non-exchange traded derivatives, fair value is based on option pricing models and are classified as Level 3.

The ~~following table presents financial~~Company uses a foreign currency forward contract to manage the impact of fluctuations in foreign currency denominated cash flows expected to be received from one of its royalty finance receivables denominated in a foreign currency. The foreign currency forward contract is not designated as a hedging instrument, and changes in fair value are recognized in earnings. The foreign currency forward was recorded in other non-current assets and other non-current liabilities ~~measured at fair value on a recurring basis~~in the consolidated balance sheets as of June 30, ~~2022 (in thousands):~~

~~Schedule~~2023 and December 31, 2022. The Company recognized $1.6 million of changes in fair value ~~assets measured on recurring basis~~related to its foreign currency forward during the six months ended June 30, 2023.

The following table presents financial assets and liabilities measured at fair value on a recurring basis as of ~~December 31, 2021~~June 30, 2023 (in thousands):

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

	Total Carrying Value in Consolidated Balance Sheets		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Warrant assets	$	1,220	$	—	$	—	$	1,220
Marketable investments		76		—		—		76

Financial Liabilities
Contingent consideration payable	$	11,200	$	—	$	—	$	11,200
Foreign currency forward contract		754		—		—		754

The changes in fair value of the warrant assets during the six months ended June 30, ~~2022~~2023 and ~~2021~~2022 were as follows (in thousands):

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


June 30, 2022				June 30, 2021
Fair value - December 31, 2021	$	3,419		Fair value - December 31, 2020	$	2,972
June 30, 2023							June 30, 2023				June 30, 2022
Fair value - December 31, 2022								$	1,220		Fair value - December 31, 2021	$	3,419
Issued		227		Issued		—			822		Issued		227
Canceled		—		Canceled		—			—		Canceled		—
Change in fair value		(1,165	)	Change in fair value		892			(583	)	Change in fair value		(1,165	)
Fair value - June 30, 2022	$	2,481		Fair value - June 30, 2021	$	3,864
Fair value - June 30, 2023								$	1,459		Fair value - June 30, 2022	$	2,481

The Company holds warrants issued to the Company in conjunction with certain term loan investments. These warrants meet the definition of a derivative and are included in the unaudited condensed consolidated balance sheets. The fair values for warrants outstanding, which do not have a readily determinable value, are measured using the Black-Scholes option pricing model. The following ranges of assumptions were used in the models to determine fair value:

Schedule of weighted average assumptions

June 30, ~~2022~~2023

December 31, ~~2021~~2022

Dividend rate range

—

Risk-free rate range

2.9% to ~~3.0%~~4.9%

~~0.97%~~4.0% to ~~1.44%~~4.3%

Expected life (years) range

~~2.1~~ to ~~6.7~~

~~2.6~~1.7 to 7.0

2.0 to 6.9

Expected volatility range

~~52.6%~~63.6% to ~~147.5%~~137.8%

~~60.2%~~

54.8% to ~~142.0%~~139.4%

As of June 30, ~~2022 and~~2023, the Company had one royalty, Best, that was deemed to be impaired based on reductions in carrying value in prior periods. As of December 31, ~~2021,~~2022, the Company had two royalties, Best and Cambia®, that were deemed to be impaired based on reductions in carrying values in prior periods. The following table presents these royalties measured at fair value on a nonrecurring basis as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):

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

Total
Carrying
Value in
Consolidated
Balance
Sheets Quoted Prices
in Active
Markets for
Identical
Assets
or Liabilities
(Level 1) Significant
Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3)
June 30, 2022 $ 4,604 $ — $ — $ 4,604

December 31, 2021 $ 5,612 $ — $ — $ 5,612

	Total Carrying Value in Consolidated Balance Sheets		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2023	$	2,797	$	—	$	—	$	2,797

December 31, 2022	$	3,545	$	—	$	—	$	3,545

There were no liabilities measured at fair value on a nonrecurring basis as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

The following information is provided to help readers gain an understanding of the relationship between amounts reported in the accompanying unaudited condensed consolidated financial statements and the related market or fair value. The disclosures include financial instruments and derivative financial instruments measured at fair value on a recurring and non-recurring basis.

Schedule of fair value by balance sheet grouping

As of June 30, ~~2022~~2023 (in thousands):

	Carrying Value		Fair Value		Level 1		Level 2		Level 3		Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	55,118	$	55,118	$	55,118	$	—	$	—
Finance receivables		174,859		174,859		—		—		174,859	$	222,950	$	222,950	$	—	$	—	$	222,950
Marketable investments		585		585		487		—		98		59		59		—		—		59
Warrant assets		2,481		2,481		—		—		2,481		1,459		1,459		—		—		1,459
Foreign currency forward contract												811		811		—		—		811

Financial Liabilities
Contingent consideration payable	$	8,530	$	8,530	$	—	$	—	$	8,530	$	11,200	$	11,200	$	—	$	—	$	11,200

As of December 31, ~~2021~~2022 (in thousands):

	Carrying Value		Fair Value		Level 1		Level 2		Level 3		Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	42,863	$	42,863	$	42,863	$	—	$	—
Finance receivables		181,553		181,553		—		—		181,553	$	236,555	$	236,555	$	—	$	—	$	236,555
Marketable investments		1,153		1,153		1,034		—		119		76		76		—		—		76
Warrant assets		3,419		3,419		—		—		3,419		1,220		1,220		—		—		1,220

Financial Liabilities
Contingent consideration payable	$	8,530	$	8,530	$	—	$	—	$	8,530	$	11,200	$	11,200	$	—	$	—	$	11,200
Foreign currency forward contract												754		754		—		—		754

Note 8. Revenue Recognition

The Company’s Pharmaceutical Development segment recognizes revenues received from contracts with its customers by revenue source, as the Company believes it best depicts the nature, amount, timing and uncertainty of our revenue and cash flow. The Company’s Finance Receivables segment does not have any revenues received from contracts with customers.

The following table provides the contract revenue recognized by revenue source for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 (in thousands):

Schedule of Revenue Recognized by Revenue Source


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Pharmaceutical Development Segment
License Agreement	$	16	$	10,431	$	132	$	10,610	$	10	$	16	$	10	$	132
Pharmaceutical Development and other		98		30		698		545		173		98		291		698
Total contract revenue	$	114	$	10,461	$	830	$	11,155	$	183	$	114	$	301	$	830

The Company’s contract liabilities represent advance consideration received from customers and are recognized as revenue when the related performance obligation is satisfied.

The Company’s contract liabilities are presented as deferred revenues and are included in accounts payable and accrued liabilities in the consolidated balance sheets (in thousands):

~~Schedule of Company's Contract Liabilities~~

	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Pharmaceutical Development Segment
Deferred revenue	$	56	$	185	$	30	$	33
Total contract liabilities	$	56	$	185	$	30	$	33

During the six months ended June 30, ~~2022,~~2023, the Company recognized $0.1 million of ~~2021~~2022 deferred revenue from the satisfaction of performance obligations. The Company did not have any contract assets nor did it have any contract liabilities related to the License Agreement as of June 30, ~~2022~~2023 or December 31, ~~2021.~~2022.

Note 9. Segment Information

Selected financial and descriptive information is required to be provided about reportable operating segments, considering a “management approach” concept as the basis for identifying reportable segments. The management approach is based on the way that management organizes the segments within the Company for making operating decisions, allocating resources, and assessing performance. Consequently, the segments are evident from the structure of the Company’s internal organization, focusing on financial information that the Company’s ~~chief executive officer~~CEO uses to make decisions about the Company’s operating matters.

As 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.

Segment performance is evaluated based on several factors, including income (loss) from continuing operations before income taxes. Management uses this measure of ~~net income~~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.

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

Schedule of Reportable ~~Segments~~Revenue by Geographic Region

Three Months Ended June 30, 2022
Finance
Receivables Pharmaceutical
Development and
Other Holding Company
and Other Consolidated
Revenue $ 6,828 $ 114 $ — $ 6,942
Interest expense 80 — — 80
Manufacturing, research and development — 1,480 — 1,480
Depreciation and amortization expense — 625 1 626
General and administrative 2 905 2,111 3,018
Other expense, net (991 ) — — (991 )
Income tax expense — — 182 182
Net income (loss) 5,755 (2,896 ) (2,294 ) 565


	Three Months Ended June 30, 2023
	Finance Receivables			Pharmaceutical Development Services			Holding Company and Other			Consolidated
Revenue	$	9,278		$	183		$	—		$	9,461
Other revenue		36			—			—			36
Provision (benefit) for credit losses		(682	)		—			—			(682	)
Interest expense		363			—			—			363
Pharmaceutical manufacturing, research and development		—			1,509			—			1,509
Depreciation and amortization expense		—			633			4			637
General and administrative		137			981			1,879			2,997
Other income, net		715			—			—			715
Income tax expense		—			—			1,454			1,454
Net income (loss)		10,211			(2,940	)		(3,337	)		3,934


	Three Months Ended June 30, 2022
	Finance Receivables			Pharmaceutical Development and Other			Holding Company and Other			Consolidated
Revenue	$	6,828		$	114		$	—		$	6,942
Interest expense		80			—			—			80
Pharmaceutical manufacturing, research and development		—			1,480			—			1,480
Depreciation and amortization expense		—			625			1			626
General and administrative		2			905			2,111			3,018
Other expense, net		(991	)		—			—			(991	)
Income tax expense		—			—			182			182
Net income (loss)		5,755			(2,896	)		(2,294	)		565


	Six Months Ended June 30, 2023
	Finance Receivables			Pharmaceutical Development and Other			Holding Company and Other			Consolidated
Revenue	$	18,538		$	301		$	—		$	18,839
Other revenue		67			—			2			69
Provision (benefit) for credit losses		(682	)		—			—			(682	)
Interest expense		545			—			—			545
Pharmaceutical manufacturing, research and development		—			2,228			—			2,228
Depreciation and amortization expense		—			1,277			8			1,285
General and administrative		167			1,709			3,661			5,537
Other expense, net		(81	)		—			—			(81	)
Income tax expense		—			—			1,345			1,345
Net income (loss)		18,494			(4,913	)		(5,012	)		8,569

Three Months Ended June 30, 2021
Finance
Receivables Pharmaceutical
Development and
Other Holding Company
and Other Consolidated
Revenue $ 11,805 $ 10,461 $ — $ 22,266
Interest expense 94 — — 94
Manufacturing, research and development — 1,542 — 1,542
Depreciation and amortization expense — 809 2 811
Change in fair value of acquisition-related contingent consideration — (147 ) — (147 )
General and administrative 950 983 1,427 3,360
Other income, net 892 — — 892
Income tax expense — — 3,528 3,528
Net income (loss) 11,653 7,274 (4,957 ) 13,970

Six Months Ended June 30, 2022
Finance
Receivables Pharmaceutical
Development and
Other Holding Company
and Other Consolidated
Revenue $ 17,243 $ 350 $ — $ 17,593
Other revenue — 480 — 480
Interest expense 160 — — 160
Manufacturing, research and development — 3,381 — 3,381
Depreciation and amortization expense — 1,329 1 1,330
General and administrative 104 1,940 4,134 6,178
Other expense, net (1,712 ) — — (1,712 )
Income tax expense — — 1,269 1,269
Net income (loss) 15,267 (5,820 ) (5,404 ) 4,043


	Six Months Ended June 30, 2021											Six Months Ended June 30, 2022
	Finance Receivables		Pharmaceutical Development and Other			Holding Company and Other			Consolidated			Finance Receivables			Pharmaceutical Development and Other			Holding Company and Other			Consolidated
Revenue	$	20,484	$	10,659		$	—		$	31,143		$	17,243		$	350		$	—		$	17,593
Other revenue		—		496			—			496			—			480			—			480
Interest expense		239		—			—			239			160			—			—			160
Manufacturing, research and development		—		3,090			—			3,090
Pharmaceutical manufacturing, research and development													—			3,381			—			3,381
Depreciation and amortization expense		—		2,490			3			2,493			—			1,329			1			1,330
Change in fair value of acquisition-related contingent consideration		—		(147	)		—			(147	)
General and administrative		1,134		2,088			3,023			6,245			104			1,940			4,134			6,178
Other income, net		2,107		—			—			2,107
Other expense, net													(1,712	)		—			—			(1,712	)
Income tax expense		—		—			4,467			4,467			—			—			1,269			1,269
Net income (loss)		21,218		3,634			(7,493	)		17,359			15,267			(5,820	)		(5,404	)		4,043

Included in Holding Company and Other are the expenses of the parent holding company and certain other enterprise-wide overhead costs, including public company costs and non-Enteris corporate employees, which have been included for purposes of reconciling to the consolidated amounts.

~~Note 10.~~ ~~Subsequent Events~~

~~Exeevo, Inc.~~

~~On July 1, 2022, SWK Funding, a subsidiary of the Company, entered into a credit agreement pursuant to which SWK Funding provided to Exeevo, Inc. (“Exeevo”) a term loan in the amount of $7.5 million. SWK Funding funded $5.0 million~~ ~~at closing with the remaining $2.5 million~~ ~~becoming available upon Exeevo’s satisfaction of certain future conditions. The loan matures on~~ ~~July 1, 2027. In connection with the loan, SWK Funding also received a warrant to purchase 930 shares of Exeevo common stock.~~

~~Beleodaq® Royalty~~

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

~~Trio Healthcare Ltd., (Ostomy Products Royalty)~~

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

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, and the MD&A included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (“Annual Report”), as well as our unaudited condensed consolidated financial statements and the accompanying notes included in this report.

Overview

We have organized our operations into two segments: Finance Receivables and Pharmaceutical Development. These segments reflect the way the Company evaluates its business performance and manages its operations. Please refer to Item 1. Financial Statements, Note 9 of the notes to the unaudited condensed consolidated financial statements for further information regarding segment information.

Finance Receivables Portfolio Overview

The table below provides an overview of our outstanding finance receivables transactions as of, and for the three and six months ended June 30, 2023 (in thousands, except rate, share and per share data).

							Revenue (Loss) Recognized
Royalty Purchases	Licensed Technology	Footnote	Funded Amount		GAAP Balance		2Q 2023			Year-to- Date
Besivance®	Ophthalmic antibiotic	(1)	$	6,000	$	—	$	2		$	14
Best ABT, Inc.	Oncology diagnosis	(2), (3)		5,784		2,797		—			—
Coflex®/Kybella®	Spinal stenosis/submental fullness			4,350		3,824		87			156
Cambia®	NSAID migraine treatment	(4)		8,500		—		(37	)		(119	)
Duo Royalty	Japanese women’s health/cystic fibrosis			15,488		13,789		842			1,373
Forfivo XL®	Depressive disorder treatment			6,000		1,366		239			490
Ideal Implant, Inc.	Aesthetics	(3), (5)		4,314		4,314		—			—
Iluvien®	Diabetic macular edema			16,501		15,164		507			1,051
Veru, Inc.	Women’s health			10,000		3,517		132			264

											Revenue Recognized
Term Loans	Type	Footnote	Maturity Date	Principal		GAAP Balance		Rate			2Q 2023		Year-to- Date
4Web, Inc.	First lien		06/03/23	$	29,411	$	31,600		12.8	%	$	1,144	$	2,252
AOTI, Inc.	First lien		03/21/27		12,000		12,033		11.0	%		486		966
Acer Therapeutics, Inc.	First lien	(6)	03/04/24		—		—		12.0	%		313		1,560
Aziyo Biologics, Inc.	First lien		08/10/27		25,000		25,426		12.0	%		966		1,933
BIOLASE, Inc.	First lien		05/31/25		13,300		13,999		10.3	%		559		1,096
Biotricity, Inc.	First lien		12/21/26		12,364		12,372		14.5	%		616		1,144
Epica International, Inc.	First lien		07/23/24		11,750		12,495		9.5	%		660		1,062
eTon Pharmaceuticals, Inc.	First lien		11/13/24		6,230		6,396		10.0	%		250		498
Exeevo, Inc.	First lien		07/01/27		5,233		5,194		15.0	%		238		454
Flowonix Medical, Inc.	First lien	(3), (7)	12/23/25		12,518		11,879		14.0	%		—		—
MedMinder Systems, Inc.	First lien		08/18/27		20,000		20,019		12.9	%		711		1,397
MolecuLight, Inc.	First lien		12/29/26		10,000		10,142		12.8	%		457		906
NeoLight, LLC	First lien		02/17/27		5,000		4,971		13.5	%		206		293
SKNV	First lien		05/15/27		13,497		13,629		10.4	%		511		999
Trio Healthcare Ltd.	First lien		07/01/26		9,152		9,128		12.5	%		389		749

								Revenue Recognized
Marketable Investments	Number of Shares		Footnote	Funded Amount		GAAP Balance		2Q23		Year-to- Date
Secured Royalty Financing (Marketable Investment)		N/A	(2), (3)	$	3,000	$	59	$	—	$	—
Epica International, Inc.		25,000			N/A		—		—		—
SKNV		26,575			N/A		—		—		—

								Other Income (Loss) Recognized
Warrants to Purchase Stock	Number of Shares		Footnote	Exercise Price per Share ($)		GAAP Balance		2Q 2023			Year-to- Date
4Web, Inc.		TBD		$	—	$	—	$	—		$	—
AOTI, Inc.		92,490			—		—		—			—
Acer Therapeutics, Inc.		150,000			2.46		113		19			(184	)
Acer Therapeutics, Inc.		100,000			1.51		79		14			(131	)
Acer Therapeutics, Inc.		250,000			2.39		188		31			(257	)
Acer Therapeutics, Inc.		500,000			1.00		422		45			45
Acerus Pharmaceuticals Corporation		—			—		—		—			(5	)
Aziyo Biologics, Inc.		157,895			6.65		325		124			(190	)
Aziyo Biologics, Inc.		30,075			6.65		35		(3	)		(63	)
BIOLASE, Inc.		22,039			9.80		1		(1	)		(4	)
Biotricity, Inc.		57,536			6.26		17		5			7
CeloNova BioSciences, Inc.		TBD			—		—		—			—
DxTerity Diagnostics, Inc.		2,019,231			—		—		—			—
Epica International, Inc.		TBD			—		—		—			—
eTon Pharmaceuticals, Inc.		51,239			5.86		61		(9	)		18
eTon Pharmaceuticals, Inc.		18,141			6.62		22		(3	)		7
Exeevo, Inc.		930			—		—		—			—
EyePoint Pharmaceuticals, Inc.		40,910			11.00		170		153			150
EyePoint Pharmaceuticals, Inc.		7,773			19.30		26		24			24
Flowonix Medical, Inc.		155,561	(3), (7)		—		—		—			—
MedMinder Systems, Inc.		72,324			—		—		—			—
MolecuLight, Inc.		TBD			—		—		—			—

			Revenue Recognized
	Assets		2Q 2023		Year-to-Date
Total finance receivables, gross	$	234,054	$	9,278	$	18,538
Total marketable investments		59		N/A		N/A
Fair value of warrant assets		1,459		N/A		N/A
Total assets, gross/revenues	$	235,572	$	9,278	$	18,538

(1)	US royalty was paid off during the year ended December 31, 2021. SWK continues to receive insignificant royalties on international sales.
(2)	Investment considered partially impaired.
(3)	Investment on nonaccrual.
(4)	Royalty was paid off during the six months ended June 30, 2023.
(5)	In July 2023, Ideal Implant assets were sold to an aesthetics company.
(6)	Loan was sold to a third party during the six months ended June 30, 2023.
(7)	Flowonix Medical assets were sold to Algorithm Sciences, Inc. during the six months ended June 30, 2023.

Unless otherwise specified, our senior secured debt assets generally are repaid by a revenue interest that is charged on a company’s quarterly net sales and royalties.

Environmental, Social and Governance

As overseers of risk and stewards of long-term enterprise value, our management and Board of Directors (“Board”) play a vital role in assessing, identifying and understanding the potential impact and related risks of environmental, social and governance (“ESG”) issues on the organization’s operating model. Our Board and management are committed to identifying those ESG issues most likely to impact business operations and growth by focusing our investment strategy around supporting innovative, growth-oriented companies in the life sciences industry that maximize both social and investment value.

Among the ESG issues we support within the Company, we are committed to recruiting, motivating and developing a diversity of talent. We promote and foster a company culture where every voice is welcome, heard and respected, regardless of age, gender, race, religion, sexual orientation, physical conditions, cultural background or country of origin. Our commitment to ESG initiatives is an endeavor both the Board and management undertake for the general betterment of those both inside and outside the Company.

The nature of our business supports environmental sustainability by being mindful of products we and our partners use in our businesses. We promote recycling to reduce landfill, and we offer our employees a hybrid work model, which allows employees the flexibility to work remotely, thereby reducing the carbon output from commuting in cars or buses.

~~Overview~~

~~Finance Receivables Portfolio Overview~~

~~The table below provides an overview of our outstanding finance receivables transactions as of, and for the three and six months ended June 30, 2022~~ ~~(in thousands, except rate, share and per share data).~~

Revenue
Recognized
Royalty Purchases Licensed
Technology Footnote Funded
Amount GAAP
Balance Q2 YTD
Beleodaq® Oncology treatment (1) $ 7,600 $ 4,242 $ 470 $ 772
Besivance® Ophthalmic antibiotic (2) 6,000 — 3 13
Best ABT, Inc. Oncology diagnosis (3), (4) 5,784 3,127 — —
Coflex®/Kybella®/Zalviso® Spinal stenosis/submental fullness 4,350 4,001 167 292
Cambia® NSAID migraine treatment (3) 8,500 1,477 (44 ) (59 )
Forfivo XL® Depressive disorder treatment 6,000 1,416 224 672
Ideal Implant, Inc. Aesthetics 3,000 3,259 134 268
Iluvien® Diabetic macular edema 16,501 15,916 536 1,121
Narcan® Opioid overdose treatment 17,500 497 236 1,660
Ostomy Products Royalty Ostomy products (1) 3,900 3,961 18 181
Veru, Inc. Women’s health 10,000 3,959 237 525

Revenue Recognized

Term Loans Type Footnote Maturity
Date Principal GAAP
Balance Rate Q2 YTD
4Web, Inc. First lien 06/03/23 $ 27,797 $ 29,876 15.8 % $ 1,088 $ 2,144
AOTI, Inc. First lien 03/21/27 12,000 11,919 11.0 % 375 414
Acer Therapeutics, Inc. First lien 03/04/24 6,500 6,488 12.0 % 416 546
Acerus Pharmaceuticals Corporation First lien (5) 10/11/23 — — 12.0 % — 538
B&D Dental Corporation First lien (5) 12/10/18 — — 14.0 % — 2,401
BIOLASE, Inc. First lien 05/31/25 13,300 13,633 10.5 % 461 906
Biotricity, Inc. First lien 12/26/26 12,000 11,823 11.5 % 400 786
Epica International, Inc. First lien 07/23/24 12,000 12,291 9.5 % 359 712
eTon Pharmaceuticals, Inc. First lien 11/13/24 6,615 6,615 10.0 % 202 445
Flowonix Medical, Inc. First lien (4), (6) 12/23/25 10,428 9,789 14.0 % — —
Keystone Dental Group First lien (5) 08/01/23 — — 11.5 % 440 888
MolecuLight, Inc. First lien 12/29/26 10,000 9,951 12.5 % 349 623
Sincerus Pharmaceuticals, Inc. First lien 03/19/26 12,300 12,504 13.0 % 491 903
Trio Healthcare Ltd. First lien 07/01/26 8,150 8,115 12.5 % 266 492

Revenue Recognized
Cost Method Investment Licensed
Technology Footnote Maturity
Date Principal GAAP
Balance Rate Q2 YTD
Tissue Regeneration Therapeutics, Inc. Umbilical cord banking (4) N/A $ 3,491 $ 3,491 N/A $ — $ —

Income (Loss) Recognized
Marketable Investments Number of
Shares Footnote Funded
Amount GAAP
Balance Q2 YTD
Secured Royalty Financing (Marketable Investment) N/A (4) $ 3,000 $ 98 $ — $ —
Bioventus, Inc. Common Stock 71,361 N/A 487 (519 ) (547 )
Epica International, Inc. 25,000 N/A — — —
Sincerus Pharmaceuticals, Inc. 26,575 N/A — — —

Income (Loss) Recognized
Warrants to Purchase Stock Number of
Shares Footnote Exercise Price
per Share ($) GAAP
Balance Q2 YTD
4Web, Inc. TBD $ — $ — $ — $ —
AOTI, Inc. 92,490 — — — —
Acer Therapeutics, Inc. 150,000 2.46 99 (131 ) (127 )
Acerus Pharmaceuticals Corporation 7,764,004 0.053 CAD 52 (178 ) (49 )
BIOLASE, Inc. 22,039 0.39 63 (67 ) (121 )
Biotricity, Inc. 57,536 6.26 61 (16 ) (116 )
CeloNova BioSciences, Inc. TBD (7) — — — —
DxTerity Diagnostics, Inc. 2,019,231 (7) — — — —
Epica International, Inc. TBD — — — —
eTon Pharmaceuticals, Inc. 51,238 5.86 36 (62 ) (59 )
eTon Pharmaceuticals, Inc. 18,141 6.62 13 (22 ) (21 )
EyePoint Pharmaceuticals, Inc. 40,910 11.00 134 (137 ) (143 )
EyePoint Pharmaceuticals, Inc. 7,773 19.30 18 (22 ) (23 )
Flowonix Medical, Inc. 155,561 (4), (6) — — — —
Harrow Health, Inc. 373,847 (2) 2.08 2,005 163 (506 )

Total Revenue
Assets Q2 YTD
Total finance receivables $ 174,859 $ 6,828 $ 17,243
Total marketable investments 585 N/A N/A
Cost method investment 3,491 N/A N/A
Fair value of warrant assets 2,481 N/A N/A
Total assets/revenues $ 181,416 $ 6,828 $ 17,243

~~(1)~~	~~Royalty was paid off during the third quarter of 2022.~~
~~(2)~~	~~US royalty was paid off during the year ended December 31, 2021. SWK continues to receive insignificant royalties on international sales.~~
~~(3)~~	~~Investment considered impaired.~~
~~(4)~~	~~Investment on nonaccrual.~~
~~(5)~~	~~Loan was paid off during the six months ended June 30, 2022.~~
~~(6)~~	~~Flowonix is evaluating strategic alternatives for the business.~~
~~(7)~~	~~Loan was paid off during the year ended December 31, 2021.~~

~~Unless otherwise specified, our senior secured debt assets generally are repaid by a revenue interest that is charged on a company’s quarterly net sales and royalties.~~

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report. We believe there have been no new critical accounting policies or material changes to our existing critical accounting policies and estimates during the six months ended June 30, ~~2022,~~2023, compared to those discussed in our Annual Report.

Recent Accounting Pronouncements

Refer to Part I. Financial Information, Item 1. Financial Statements, Note 1 of the notes to the unaudited condensed consolidated financial statements for a listing of recent accounting pronouncements and their potential impact to our consolidated financial statements.

Comparison of the ~~Three Months Ended~~three months ended June 30, 2023 and 2022 ~~and 2021~~ (in millions)

	Three Months Ended June 30,									Three Months Ended June 30,
	2022			2021			Change			2023			2022			Change $
Revenues	$	6.9		$	22.3		$	(15.4	)	$	9.5		$	6.9		$	2.6
Provision (benefit) for credit losses											(0.7	)		—			(0.7	)
Interest expense		0.1			0.1			—			0.4			0.1			0.3
Pharmaceutical manufacturing, research and development expense		1.5			1.5			—			1.5			1.5			—
Change in fair value of acquisition-related contingent consideration		—			(0.1	)		0.1
Depreciation and amortization expense		0.6			0.8			(0.2	)		0.6			0.6			—
General and administrative		3.0			3.4			(0.4	)		3.0			3.0			—
Other (expense) income, net		(1.0	)		0.9			(1.9	)
Other income (expense), net											0.7			(1.0	)		1.7
Income tax expense		0.2			3.5			(3.3	)		1.5			0.2			1.3
Net income		0.6			14.0			(13.4	)		3.9			0.6			3.3

Revenues

Revenues ~~decreased~~increased to $9.5 million for the three months ended June 30, 2023 from $6.9 million for the three months ended June 30, ~~2022 from $22.3~~2022. The $2.6 million increase in revenue for the three months ended June 30, ~~2021. The $15.4 million decrease in revenue~~2023 consisted of a ~~$10.3~~$2.5 million ~~decrease~~increase in Finance Receivables segment revenue and a $0.1 million increase in Pharmaceutical Development segment ~~revenue and a $5.0~~revenue. The $2.5 million ~~decrease~~increase in Finance Receivables segment ~~revenue. The decrease in Pharmaceutical Development segment~~ revenue included $10.0 million of milestone revenue related to Enteris’ License Agreement with Cara received during the three months ended June 30, 2021, which did not recur during the three months ended June 30, 2022. The $5.0 million decrease in Finance Receivables segment revenues primarily consists of a $3.1 million decrease in interest and fees earned on finance receivables that were either paid off or paid down since the second quarter of 2021 and a $4.0 million decrease in net royalty incomewas primarily due to ~~the achievement of return premiums that caused a step down in royalty rates. The decrease in revenue was partially offset by a $2.1~~$2.5 million increase in interest and fees earned due to funding new and existing ~~loans.~~loans, a $0.8 million increase in interest income due to an overall increase in reference rates, and a net $0.5 million increase in royalty revenue when compared to the same period of the previous year. The increase was partially offset by a $1.3 million decrease in interest, royalties and fees earned on finance receivables that were paid off in 2022 and 2023.

Provision (benefit) for Credit Losses

Our allowance for credit losses is established through charges or credits to income in the form of the provision in order to bring our allowance for credit losses for loans and unfunded commitments to a level deemed appropriate by management. Our allowance for credit losses decreased by $0.7 million during the three months ended June 30, 2023 due to an overall decrease in finance receivables. Please refer to Item 1., Financial Statements, Note 3 of the notes to the unaudited condensed consolidated financial statements for further information regarding the provision for credit losses.

Interest Expense

Interest expense consists of interest accrued on our revolving line of credit, unused line of credit and maintenance fees, as well as amortization of debt issuance costs. Interest expense increased to $0.4 million for ~~both~~three months ended June 30, 2023 from $0.1 million for the three months ended June 30, ~~2022~~2022. The $0.3 million increase in interest expense was due to a higher average outstanding balance under the Prior Credit Agreement with Cadence Bank during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. On June 28, 2023, we terminated the Prior Credit Agreement with Cadence Bank and ~~2021 was $0.1 million, respectively.~~entered into a new Credit Agreement with First Horizon Bank. Please refer to Item 1., Financial Statements, Note 5 of the notes to the unaudited condensed consolidated financial statements for further information regarding the Credit Agreement with First Horizon.

Pharmaceutical Manufacturing, Research and Development Expense

~~Pharmaceutical~~We recognized $1.5 million of pharmaceutical manufacturing, research and development expense for both the three months ended June 30, ~~2022~~2023 and ~~2021 was $1.5 million, respectively. Pharmaceutical manufacturing, research and development expense primarily consists of manufacturing materials for our pipeline projects and clinical trials.~~2022.

Depreciation and Amortization

~~The $0.2~~We recognized $0.6 million ~~decrease in~~of depreciation and amortization expense ~~for~~during both the three months ended June 30, ~~2022~~2023 and 2022. Depreciation and amortization primarily consists of ~~a decrease in~~ amortization expense related to the intangible assets of Enteris. Amortization expense is aligned with the expected future cash flows of the intangible assets.

General and Administrative

General and administrative expenses consist primarily of compensation; stock-based compensation and related costs for management, staff and Board; legal and audit expenses; and corporate governance expenses. ~~General~~We recognized $3.0 million of general and administrative ~~expenses decreased to $3.0 million~~expense for both the three months ended June 30, ~~2022 from $3.4 million for the three months ended June 30, 2021. The $0.4 million decrease was primarily due to a $0.4 million decrease in corporate strategic planning~~2023 and ~~related board fees and a $0.2 million decrease in the performance-based bonus accrual. The decrease was partially offset by a $0.2 million increase in legal fees related to corporate governance.~~2022.

Other ~~(Expense)~~ Income, Net

Other income, net for three months ended June 30, 2023 reflected a net aggregate fair market value gain of $0.4 million on our warrant derivatives and a $0.3 million net gain from the remeasurement of foreign currency transactions into our functional currency, net of changes in fair value of the foreign currency forward contract.

Other expense, net for the three months ended June 30, 2022 reflected a net aggregate fair market value loss of $1.0 million on our warrant derivatives and Bioventus common stock. ~~Other income, net for three months ended June 30, 2021 reflected a net fair market value gain of $0.6 million on our warrant derivatives and a net fair market value gain of $0.3 million on our Misonix~~Our Bioventus common stock ~~which~~ was ~~tendered in October 2021 in exchange for $1.9 million in cash and 71,361 shares of Bioventus common stock.~~sold during the year ended December 31, 2022.

Income Tax Expense

During the three months ended June 30, ~~2022~~2023 and ~~2021,~~2022, we recognized income tax expense of ~~$0.2~~$1.5 million and ~~$3.5~~$0.2 million respectively. The ~~$3.3 million decrease~~increase in income tax expense is athe result of ~~lower~~higher taxable income for the three months ended June 30, 2023 when compared to the same period of ~~2021.~~the prior year.

Comparison of the ~~Six Months Ended~~six months ended June 30, 2023 and 2022 ~~and 2021~~ (in millions)

	Six Months Ended June 30,
	2023			2022			Change $
Revenues	$	18.9		$	18.1		$	0.8
Provision (benefit) for credit losses		(0.7	)		—			(0.7	)
Interest expense		0.5			0.2			0.3
Pharmaceutical manufacturing, research and development expense		2.2			3.4			(1.2	)
Depreciation and amortization expense		1.3			1.3			—
General and administrative		5.5			6.2			(0.7	)
Other expense, net		(0.1	)		(1.7	)		1.6
Income tax expense		1.3			1.3			—
Net income		8.6			4.0			4.6

Six Months Ended June 30,
2022 2021 Change
Revenues $ 18.1 $ 31.6 $ (13.5 )
Interest expense 0.2 0.2 —
Pharmaceutical manufacturing, research and development expense 3.4 3.1 0.3
Change in fair value of acquisition-related contingent consideration — (0.1 ) 0.1
Depreciation and amortization expense 1.3 2.5 (1.2 )
General and administrative 6.2 6.2 —
Other (expense) income, net (1.7 ) 2.1 (3.8 )
Income tax expense 1.3 4.5 (3.2 )
Net income 4.0 17.4 (13.4 )

Revenues

Revenues ~~decreased~~increased to $18.9 million for the six months ended June 30, 2023 from $18.1 million for the six months ended June 30, ~~2022 from $31.6~~2022. The $0.8 million increase in revenue for the six months ended June 30, ~~2021. The $13.5 million decrease in revenue~~2023 consisted of a ~~$10.3~~$1.3 million increase in Finance Receivables segment revenue and a $0.5 million decrease in Pharmaceutical Development segment ~~revenue and a $3.2~~revenue. The $1.3 million ~~decrease~~increase in Finance Receivables segment ~~revenue. The decrease in Pharmaceutical Development segment~~ revenue included $10.0 million of milestone revenue related to Enteris’ License Agreement with Cara received during the six months ended June 30, 2021, which did not recur during the six months ended June 30, 2022. The $3.2 million decrease in Finance Receivables segment revenues primarily consists of a $5.0 million decrease in interest and fees earned on finance receivables that were either paid off or paid down since the second quarter of 2021 and a $3.8 million decrease in net royalty income primarilywas due to ~~the achievement of return premiums that caused a step down in royalty rates. The decrease in revenue was partially offset by a $3.4~~$4.9 million increase in interest and fees earned due to funding new and existing loans, ~~and~~ a $2.4 million increase in interest income due to an overall increase in reference rates, and a net $0.4 million increase in royalty revenue when compared to the same period of the previous year. The increase was partially offset by a $6.4 million decrease in interest, royalties and fees earned on finance receivables that were paid off in 2022 and 2023.

Provision (benefit) for Credit Losses

Our allowance for credit losses is established through charges or credits to income in the ~~payoff~~form of the provision in order to bring our allowance for credit losses for loans and unfunded commitments to a ~~term loan~~level deemed appropriate by management. Our allowance for credit losses decreased by $0.7 million during the six months ended June 30, ~~2022.~~2023 due to an overall decrease in finance receivables. Please refer to Item 1., Financial Statements, Note 3 of the notes to the unaudited condensed consolidated financial statements for further information regarding the provision for credit losses.

Interest Expense

Interest expense consists of interest accrued on our revolving line of credit, unused line of credit and maintenance fees, as well as amortization of debt issuance costs. Interest expense increased to $0.5 million for ~~both~~six months ended June 30, 2023 from $0.2 million for the six months ended June 30, ~~2022~~2022. This $0.3 million increase in interest expense was due to a higher average outstanding balance under the Prior Credit Agreement with Cadence Bank during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. On June 28, 2023, we terminated the Prior Credit Agreement with Cadence Bank and ~~2021 was $0.2 million, respectively.~~entered into a new Credit Agreement with First Horizon Bank. Please refer to Item 1., Financial Statements, Note 5 of the notes to the unaudited condensed consolidated financial statements for further information regarding the Credit Agreement with First Horizon.

Pharmaceutical Manufacturing, Research and Development Expense

Pharmaceutical manufacturing, research and development expense ~~increased~~decreased from ~~$3.1 million for the six months ended June 30, 2021 to~~ $3.4 million for the six months ended June 30, ~~2022.~~2022 to $2.2 million for the six months ended June 30, 2023. The ~~$0.3~~$1.2 million ~~increase~~decrease was primarily due to ~~an increase~~a was primarily due to a reduction in ~~manufacturing materials for pipeline projects~~headcount as well as a reduction in R&D and clinical ~~trials.~~trial expenditures.

Depreciation and Amortization

~~The $1.2~~We recognized $1.3 million ~~decrease in~~of depreciation and amortization expense ~~for~~during both the six months ended June 30, ~~2022~~2023 and 2022. Depreciation and amortization primarily consists of ~~a decrease in~~ amortization expense related to the intangible assets of Enteris. Amortization expense is aligned with the expected future cash flows of the intangible assets.

General and Administrative

General and administrative expenses consist primarily of compensation; stock-based compensation and related costs for management, staff and Board; legal and audit expenses; and corporate governance expenses. General and administrative expenses decreased to $5.5 million for ~~both~~ the six months ended June 30, ~~2022~~2023 from $6.2 million for the six months ended June 30, 2022. The $0.7 million decrease included a net $0.6 million decrease in salaries, benefits, general office and ~~2021~~maintenance expense mainly due to a reduction in employee headcount in our Pharmaceutical Development segment; and a $0.3 million decrease in corporate strategic planning and related professional fees expense. The decrease was ~~$6.2 million.~~partially offset by $0.2 million increase in Board fees due to a revised Board compensation plan.

Other ~~(Expense) Income,~~Expense, Net

Other expense, net for the six months ended June 30, 2023 reflected a net aggregate fair market value loss of $0.6 million on our warrant derivatives and a $0.5 million gain from the remeasurement of foreign currency transactions into our functional currency, net of changes in fair value of the foreign currency forward contract.

Other expense, net for the six months ended June 30, 2022 reflected a net aggregate fair market value loss of $1.7 million on our warrant derivatives and Bioventus common stock. ~~Other income, net for six months ended June 30, 2021 reflected a net fair market value gain of $0.9 million on our warrant derivatives and a net fair market value gain of $1.2 million on our Misonix~~Our Bioventus common stock ~~which~~ was ~~tendered in October 2021 in exchange for $1.9 million in cash and 71,361 shares of Bioventus common stock.~~sold during the year ended December 31, 2022.

Income Tax Expense

~~During the six months ended June 30, 2022 and 2021, we~~We recognized income tax expense of $1.3 million for both the six months ended June 30, 2023 and ~~$4.5 million, respectively.~~2022. The ~~$3.2 million decrease~~nominal increase in income tax expense ~~is a~~was the result of ~~lower~~an increase in taxable income for the six months ended June 30, 2023 when compared to the same period of ~~2021.~~the prior year.

Liquidity and Capital Resources

As of June 30, ~~2022,~~2023, we had ~~$55.1~~$6.8 million in cash and cash equivalents, compared to ~~$42.9~~$6.2 million in cash and cash equivalents as of December 31, ~~2021.~~2022. The primary driver of the ~~$12.3~~$0.6 million increase in our cash balance was ~~$49.0~~$31.6 million of interest, fees, principal and royalty payments received on our finance ~~receivables and $0.6 million of customer payments generated by our Pharmaceutical Development segment.~~receivables. The increase in ~~our~~ cash ~~balance~~and cash equivalents was partially offset by ~~$25.0~~$13.7 million of investment funding, net of deferred fees and origination expenses; ~~$5.9 million of~~payroll, accounts payable ~~including $1.1~~and new credit facility closing costs totaled $9.6 million; $5.1 million ~~for Enteris’s internal pipeline projects; payroll~~to repurchase shares of the Company’s common stock in the open market; and ~~benefits expense~~net payments of ~~$6.3 million and $0.1~~$2.4 million of credit facility draws, principal, interest and ~~other expenses.~~fees paid on our credit facility with Cadence Bank.

We entered into a new $45.0 million revolving credit facility in June 2023 with First Horizon Bank. The Credit Agreement provides for one or more incremental increases not to exceed $80.0 million, subject to the consent of the Agent and each Lender, at any time prior to the Commitment Termination Date. As of June 30, 2023, no funds have been borrowed, and $45.0 million was available for borrowing under the new credit facility. Our Prior Credit Agreement with Cadence Bank was terminated in connection with the establishment of the new credit facility. Please refer to Item 1., Financial Statements, Note 5 of the notes to the unaudited condensed consolidated financial statements for further information regarding the Credit Agreement with First Horizon Bank.

Our ability to generate cash in the future depends primarily upon our success in implementing our Finance Receivables business model of generating income by providing capital to a broad range of life science companies, institutions and inventors, as well as the success of our Pharmaceutical Development segment. We generate income primarily from four sources:

Primarily owning or financing through debt investments, royalties generated by the sales of life science products and related intellectual property;

	2.
	2.	Receiving interest and other income by advancing capital in the form of secured debt to companies in the life science sector;

	3.
	3.	Pharmaceutical development, manufacturing, and licensing activities utilizing the Peptelligence® platform; and

	4.
	4.	To a lesser extent, realizing capital appreciation from equity-related investments in the life science sector.

As of June 30, ~~2022,~~2023, our finance receivables portfolio contains ~~$174.9~~$223.0 million of net finance receivables ~~$0.6~~and $0.1 million of marketable ~~investments, and $3.5 million related to our cost method investment. In the aggregate, we~~investments. We expect these assets to generate positive cash flows in ~~2022.~~2023. However, we continuously monitor the short and long-term financial position of our finance receivables portfolio. In addition, the majority of our finance receivables portfolio are debt instruments that carry floating interest rates with a SOFR, Prime, or LIBOR-based interest rate floor. Changes in interest ~~rates, including LIBOR~~ rates may affect the interest income for debt instruments with floating rates. We believe we are well positioned to benefit should market interest rates rise in the future.

We ~~expect~~continue to evaluate multiple attractive opportunities that, if consummated, we believe would similarly generate additional income. Since the ~~Pharmaceutical Development~~timing of any investment is difficult to predict, our Finance Receivables segment may not be able to generate positive cash flow above ~~its expenses~~what our existing assets are expected to produce in 2023. We do not assume any near-term repayments from ~~proceeds received under its license agreements~~borrowers, and ~~customer relationships; however,~~as a result, no assurances can be given that actual results would not differ materially from the ~~timing of the receipt of payments under the license agreements is uncertain and dependent upon the success of our technology licensees’ pharmaceutical development candidates.~~

Though we expect in the aggregate that the Company will generate positive cash flow in excess of our expenses, given the abrupt decline in global economic activity, and the uncertain recovery from such decline, we cannot predict this with certainty.

We entered into a $20.0 million revolving credit facility in June 2018. The credit facility was amended on September 27, 2021 to extend the termination date to September 30, 2022 and to increase the credit facility commitment to $22.0 million. We continue to explore options to either extend our current credit facility or obtain a new credit facility. As of June 30, 2022, $22.0 million was available for borrowing under the credit facility.statement above.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with GAAP, are not recorded in our consolidated financial statements. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are used primarily to manage partner companies’ requests for funding and take the form of loan commitments and lines of credit.

The contractual amounts of commitments to extend credit represent the amounts of potential accounting loss should the contract be fully drawn upon, the partner company defaults, and the value of any existing collateral becomes worthless. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments.

As of June 30, 2023, we had $7.4 million of unfunded commitments. Please refer to Item 1., Financial Statements, Note 6 of the notes to the unaudited condensed consolidated financial ~~statements.~~statements for further information regarding the Company’s commitments and contingencies.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

During the six months ended June 30, ~~2022,~~2023, our cash and cash equivalents were deposited in accounts at well capitalized financial institutions. The fair value of our cash and cash equivalents at June 30, ~~2022~~2023 approximated its carrying value.

Investment and Interest Rate Risk

We are subject to financial market risks, including changes in interest rates. Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flow.

As we seek to provide capital to a broad range of life science companies, institutions and investors with the majority of our finance receivables portfolio paying interest based on floating interest rates with a ~~LIBOR~~reference rate floor, our net investment income is dependent, in part, upon the difference between the rate at which we earn on our cash and cash equivalents and the rate at which we lend those funds to third parties. As a result, we are subject to risks relating to changes in market interest rates. We may use interest rate risk management techniques in an effort to limit our exposure to interest rate fluctuations by providing capital at variable interest rates. We do not currently engage in any interest rate hedging activities. We constantly monitor our portfolio and position our portfolio to respond appropriately to a reduction in credit rating of any of our investments.

We ~~have~~ entered into a revolving credit facility. As we borrow funds to make additional investments, our income will depend, in part, upon the difference between the rate at which we borrow funds and the rate at which we invest those funds. As a result, we are subject to risks relating to changes in market interest rates. In periods of rising interest rates when we have debt outstanding, our cost of funds would increase, which could reduce our income, especially to the extent we continue to hold fixed rate investments. We generally seek to mitigate this risk by pricing our debt investments with floating interest rates to maintain the spread of our portfolio over the cost of leverage. If deemed prudent, we may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations, which we have not done. Adverse developments resulting from changes in interest rates or hedging transactions could have a materially adverse effect on our business, financial condition and results of operations. Accordingly, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our investment income, net of borrowing expenses.

Inflation

~~We do not believe that inflation has had a significant~~Certain of our partner companies may be impacted by inflation. If such partner companies are unable to pass any increases in their costs along to their customers, it could adversely affect their results and impact their ability to pay interest and principal on our ~~revenues or operations.~~loans. In addition, any projected future decreases in our partner companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future unrealized losses and therefore reduce carrying value of our net assets.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

In connection with the preparation of this report, our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There have been no changes during the six months ended June 30, ~~2022~~2023 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in, or have been involved in, arbitrations or various other legal proceedings that arise from the normal course of our business. We cannot predict the timing or outcome of these claims and other proceedings. The ultimate outcome of any litigation is uncertain, and either unfavorable or favorable outcomes could have a material negative impact on our results of operations, balance sheets and cash flows due to defense costs, and divert management resources. Currently, we are not involved in any arbitration and/or other legal proceeding that we expect to have a material effect on our business, financial condition, results of operations and cash flows.

ITEM 1A. RISK FACTORS

Information regarding the Company’s risk factors appears in “Part I. – Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, filed with the SEC on March ~~25, 2022.~~31, 2023. There are no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~None.~~On May 31, 2022, the Board authorized a share repurchase program under which the Company was previously authorized to repurchase up to $10.0 million of the Company’s outstanding shares of common stock from time to time until May 15, 2023, through a Rule 10b5-1 trading plan in compliance with all applicable laws and regulations, including Rule 10b-18 of the Exchange Act (the “Prior Repurchase Program”). The purchase period for the Prior Repurchase Program was July 1, 2022 through May 15, 2023.

On May 16, 2023, the Company announced that the Board had authorized the Company to repurchase up to $10.0 million of the Company’s outstanding shares of common stock from time-to-time until May 16, 2024, through a trading plan established in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act (the “New Repurchase Program”). The actual timing, number and value of shares repurchased under the New Repurchase Program will depend on several factors, including the constraints specified in the Rule 10b5-1 trading plan, price, and general market conditions. There is no guarantee as to the exact number of shares that will be repurchased under the New Repurchase Program. Our Board may also suspend or discontinue the New Repurchase Program at any time, in its sole discretion. The purchase period for the New Repurchase Program is May 16, 2023 through May 16, 2024.

The table below summarizes information about our purchases of common stock during the three months ended June 30, 2023:

Period	Total Number of Shares Purchased			Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan			Maximum Number (or Appropriate Dollar Value) of Shares That May Yet Be Repurchased Under the Plan
April 1, 2023 - April 30, 2023		10,401		$	17.68		10,401			611,218
May 1, 2023 - May 31, 2023⁽¹⁾		111,669	⁽¹⁾		16.83		111,669	⁽¹⁾		8,305	⁽²⁾
June 1, 2023 - June 30, 2023		150,422			16.86		150,422			5,769	⁽²⁾
		272,492		$	16.88		272,492

⁽¹⁾	The Prior Repurchase Program expired on May 15, 2023, and the New Repurchase Program began on May 16, 2023.

⁽²⁾	Reflects approximate dollar value of shares available for repurchase under the New Repurchase Program as of the end of the applicable period.

As of June 30, 2023, the Company has repurchased an aggregate of 113,639 shares under the Prior Repurchase Program and an aggregate of 251,520 shares under the New Repurchase Program at a total cost of $6.3 million, or $17.16 per share. As of June 30, 2023, the maximum dollar value of shares that may yet be purchased under the New Repurchase Program was approximately $5.8 million of shares of common stock. No shares are available for repurchase under the Prior Repurchase Program, which expired on May 15, 2023.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

~~Number~~	~~Exhibit Description~~			~~Filing~~	~~Filed~~
		~~Form~~	~~Exhibit~~	~~Date~~	~~Herewith~~

~~31.01~~	~~Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~				X

~~31.02~~	~~Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~				X

~~32.01~~	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*				X

~~32.02~~	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*				X

~~101.INS+~~	~~XBRL Instance~~				X

~~101.SCH+~~	~~XBRL Taxonomy Extension Schema~~				X

~~101.CAL+~~	~~XBRL Taxonomy Extension Calculation~~				X

~~101.DEF+~~	~~XBRL Taxonomy Extension Definition~~				X

~~101.LAB+~~	~~XBRL Taxonomy Extension Labels~~				X

~~101.PRE+~~	~~XBRL Taxonomy Extension Presentation~~				X

				Filing	Filed
Number	Exhibit Description	Form	Exhibit	Date	Herewith

10.1	Credit Agreement dated June 28, 2023 by and among the Company, SWK Funding LLC, the Lenders party thereto and First Horizon Bank as a Lender and Agent.	8-K	10.1	June 20, 2023

31.01	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

31.02	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

32.01	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*				X

32.02	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*				X

101.INS+	XBRL Instance				X

101.SCH+	XBRL Taxonomy Extension Schema				X

101.CAL+	XBRL Taxonomy Extension Calculation				X

101.DEF+	XBRL Taxonomy Extension Definition				X

101.LAB+	XBRL Taxonomy Extension Labels				X

101.PRE+	XBRL Taxonomy Extension Presentation				X

* These certifications accompany this Quarterly Report on Form 10-Q. They are not deemed “filed” with the Securities and Exchange Commission and are not to be incorporated by reference in any filing of SWK Holdings Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

+ XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on August 10, ~~2022.~~2023.

	SWK Holdings Corporation

	By:	/s/ ~~Winston L. Black~~Joe D. Staggs
		~~Winston L. Black~~Joe D. Staggs
		President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ ~~Charles~~Yvette M. ~~Jacobson~~Heinrichson
		~~Charles~~Yvette M. ~~Jacobson~~Heinrichson
		Chief Financial Officer
		(Principal Financial Officer)

Delaware	77-0435679

(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

~~14755 Preston Road~~5956 Sherry Lane, Suite ~~105~~650
Dallas, TX	~~75254~~75225
(Address of Principal Executive Offices)	(Zip Code)

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share	SWKH	The Nasdaq Stock Market LLC
~~Preferred Stock Purchase Rights~~	~~SWKH~~	~~The~~ ~~Nasdaq~~ ~~Stock Market LLC~~

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Unaudited Condensed Consolidated Balance Sheets—June 30, ~~2022~~2023 and December 31, ~~2021~~2022	1

	Unaudited Condensed Consolidated Statements of ~~Income —Three~~Income—Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	2

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity—Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	3

	Unaudited Condensed Consolidated Statements of Cash Flows—Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	4

	Notes to the Unaudited Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1922

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2630

Item 4	Controls and Procedures	2630

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2731

Item 1A.	Risk Factors	2731

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2731

Item 3.	Defaults Upon Senior Securities	2731

Item 4.	Mine Safety Disclosures	2731

Item 5.	Other Information	2731

Item 6.	Exhibits	2832

	Signatures	2933

	June 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	55,118		$	42,863		$	6,805		$	6,156
Interest and accounts receivable, net		1,869			1,803			4,381			3,094
Marketable investments		487			1,034
Other current assets		1,366			1,727			1,885			1,114
Total current assets		58,840			47,427			13,071			10,364

Finance receivables, net		174,859			181,553
Finance receivables, net of allowance for credit losses of $11,104 and $11,846, as of June 30, 2023 and December 31, 2022, respectively								222,950			236,555
Collateral on foreign currency forward contract								2,750			2,750
Marketable investments		98			119			59			76
Cost method investment		3,491			3,491
Deferred tax assets, net		19,281			20,539			25,689			24,480
Warrant assets		2,481			3,419			1,459			1,220
Intangible assets, net		9,042			9,964			7,339			8,190
Goodwill		8,404			8,404			8,404			8,404
Property and equipment, net		6,071			5,779			5,598			5,840
Other non-current assets		1,858			1,970			3,123			1,742
Total assets	$	284,425		$	282,665		$	290,442		$	299,621

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,776		$	5,087		$	2,996		$	3,902
Revolving credit facility		—			8			—			2,445
Total current liabilities		2,776			5,095			2,996			6,347

Contingent consideration payable		8,530			8,530			11,200			11,200
Other non-current liabilities		1,589			1,804			2,362			2,145
Total liabilities		12,895			15,429			16,558			19,692

Commitments and contingencies (Note 6)

Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		—			—
Common stock, $0.001 par value; 250,000,000 shares authorized; 12,839,118 and 12,836,133 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively		13			13
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued and outstanding								—			—
Common stock, $0.001 par value; 250,000,000 shares authorized; 12,566,519 and 12,843,157 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively								12			12
Additional paid-in capital		4,431,970			4,431,719			4,425,991			4,430,922
Accumulated deficit		(4,160,453	)		(4,164,496	)		(4,152,119	)		(4,151,005	)
Total stockholders’ equity		271,530			267,236			273,884			279,929
Total liabilities and stockholders’ equity	$	284,425		$	282,665		$	290,442		$	299,621


	Six Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2023			2022
Cash flows from operating activities:
Net income	$	4,043		$	17,359		$	8,569		$	4,043
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (benefit) for credit losses								(682	)		—
Right-of-use asset amortization								156			113
Amortization of debt issuance costs		29			93			168			29
Deferred income taxes		1,257			4,369			1,316			1,257
Change in fair value of warrants		1,165			(892	)		583			1,165
Change in fair value of equity securities		547			(1,215	)		—			547
Change in fair value of acquisition-related contingent consideration		—			(147	)
Loan discount amortization and fee accretion		(780	)		(1,130	)
Interest income paid-in-kind		(1,599	)		(26	)
Foreign currency transaction gain								(516	)		—
Loan discount and fee accretion								(2,297	)		(780	)
Interest paid-in-kind								(957	)		(1,599	)
Stock-based compensation		251			364			199			251
Depreciation and amortization expense		1,330			2,493
Depreciation and amortization								1,285			1,330
Changes in operating assets and liabilities:
Interest and accounts receivable		(66	)		(728	)		(1,287	)		(66	)
Other assets		(256	)		(477	)		(792	)		(256	)
Accounts payable and other liabilities		(2,526	)		(813	)		(357	)		(2,526	)
Net cash provided by operating activities		3,395			19,250			5,388			3,508

Cash flows from investing activities:
Proceeds from sale of investments								13,942			—
Investment in finance receivables		(25,350	)		(20,100	)		(13,101	)		(25,350	)
Repayment of finance receivables		34,195			22,779			3,041			34,195
Corporate debt securities principal payments		21			31			17			21
Purchases of property and equipment		(111	)		(671	)		(191	)		(111	)
Other		113			163
Net cash provided by investing activities		8,868			2,202			3,708			8,755

Cash flows from financing activities:
Payments for financing costs								(872	)		—
Net payments on credit facility		(8	)		(11,758	)		(2,445	)		(8	)
Payment of acquisition-related contingent consideration		—			(6,083	)
Repurchases of common stock, including fees and expenses								(5,130	)		—
Net cash used in financing activities		(8	)		(17,841	)		(8,447	)		(8	)

Net increase in cash and cash equivalents		12,255			3,611			649			12,255
Cash and cash equivalents at beginning of period		42,863			3,008			6,156			42,863
Cash and cash equivalents at end of period	$	55,118		$	6,619		$	6,805		$	55,118


													Six Months Ended June 30, 2023
																								Total
													Common Stock					Additional			Accumulated			Stockholders’
													Shares			Amount		Paid-In Capital			Deficit			Equity
Balances at December 31, 2022														12,843,157		$	12	$	4,430,922		$	(4,151,005	)	$	279,929
Stock-based compensation														—			—		35			—			35
Effect of adoption of ASC 326														—			—		—			(9,683	)		(9,683	)
Issuance of common stock upon vesting of restricted stock														16,008			—		—			—			—
Repurchase of common stock in open market														(28,766	)		—		(531	)		—			(531	)
Net income														—			—		—			4,635			4,635
Balances at March 31, 2023														12,830,399			12		4,430,426			(4,156,053	)		274,385
Stock-based compensation														—			—		164			—			164
Issuance of common stock upon vesting of restricted stock														8,612			—		—			—			—
Repurchase of common stock in open market														(272,492	)		—		(4,599	)		—			(4,599	)
Net income														—			—		—			3,934			3,934
Balances at June 30, 2023														12,566,519		$	12	$	4,425,991		$	(4,152,119	)	$	273,884

	Six Months Ended June 30, 2022												Six Months Ended June 30, 2022
											Total													Total
	Common Stock					Additional		Accumulated			Stockholders’		Common Stock					Additional			Accumulated			Stockholders’
	Shares			Amount		Paid-In Capital		Deficit			Equity		Shares			Amount		Paid-In Capital			Deficit			Equity
Balances at December 31, 2021		12,836,133			13	$	4,431,719	$	(4,164,496	)	$	267,236		12,836,133		$	13	$	4,431,719		$	(4,164,496	)	$	267,236
Stock-based compensation		—			—		85		—			85		—			—		85			—			85
Issuance of common stock upon vesting of restricted stock		5,495			—		—		—			—		5,495			—		—			—			—
Forfeiture of unvested restricted stock		(6,815	)		—		—		—			—		(6,815	)		—		—			—			—
Net income		—			—		—		3,478			3,478		—			—		—			3,478			3,478
Balances at March 31, 2022		12,834,813			13		4,431,804		(4,161,018	)		270,799		12,834,813			13		4,431,804			(4,161,018	)		270,799
Stock-based compensation		—			—		166		—			166		—			—		166			—			166
Issuance of common stock upon vesting of restricted stock		4,305			—		—		—			—		4,305			—		—			—			—
Net income		—			—		—		565			565		—			—		—			565			565
Balances at June 30, 2022		12,839,118		$	13	$	4,431,970	$	(4,160,453	)	$	271,530		12,839,118		$	13	$	4,431,970		$	(4,160,453	)	$	271,530

	Six Months Ended June 30, 2021
											Total
	Common Stock					Additional		Accumulated			Stockholders’
	Shares			Amount		Paid-In Capital		Deficit			Equity
Balances at December 31, 2020		12,792,586		$	13	$	4,430,924	$	(4,190,425	)	$	240,512
Stock-based compensation		—			—		177		—			177
Issuance of common stock upon vesting of restricted stock		3,021			—		—		—			—
Net income		—			—		—		3,389			3,389
Balances at March 31, 2021		12,795,607			13		4,431,101		(4,187,036	)		244,078
Stock-based compensation		—			—		187		—			187
Issuance of common stock upon vesting of restricted stock		2,940			—		—		—			—
Net income		—			—		—		13,970			13,970
Balances at June 30, 2021		12,798,547		$	13	$	4,431,288	$	(4,173,066	)	$	258,235

	June 30, 2022			December 31, 2021			June 30, 2023			December 31, 2022
Term loans	$	133,004		$	136,312		$	189,283		$	188,836
Royalty purchases		50,220			53,629			44,771			59,565
Total before allowance for credit losses		183,224			189,941			234,054			248,401
Allowance for credit losses		(8,365	)		(8,388	)		(11,104	)		(11,846	)
Total carrying value	$	174,859		$	181,553
Total finance receivables, net							$	222,950		$	236,555


	Six Months Ended June 30, 2023									Six Months Ended June 30, 2022
	Term Loans			Royalties			Total			Term Loans		Royalties		Total
Allowance at beginning of period, prior to adoption of ASU 2016-13	$	—		$	11,846		$	11,846		$	—	$	8,388	$	8,388
Write offs (1)		—			(11,846	)		(11,846	)		—		—		—
Recoveries		—			—			—			—		23		23
Effect of Adoption of ASC 326		8,900			2,886			11,786			—		—		—
Provision (benefit) for credit losses		(572	)		(110	)		(682	)		—		—		—
Allowance at end of period	$	8,328		$	2,776		$	11,104		$	—	$	8,365	$	8,365


	June 30, 2022						December 31, 2021
	Nonaccrual		Performing		Total		Nonaccrual		Performing		Total
Term loans	$	9,789	$	123,215	$	133,004	$	18,288	$	118,024	$	136,312
Royalty purchases, net of credit loss allowance		3,127		38,728		41,855		3,362		41,879		45,241
Total carrying value	$	12,916	$	161,943	$	174,859	$	21,650	$	159,903	$	181,553

	June 30, 2022		December 31, 2021
Corporate debt securities	$	98	$	119
Equity securities		487		1,034
Total marketable investments	$	585	$	1,153

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss		Fair Value
June 30, 2022	$	98	$	—	$	—	$	98
December 31, 2021	$	119	$	—	$	—	$	119

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Unrealized net (loss) gain on equity securities reflected in the unaudited condensed consolidated statements of income	$	(519	)	$	283	$	(547	)	$	1,215

Fiscal Year	Amount
Remainder of 2023	$	851
2024		1,546
2025		1,076
2026		1,076
2027		1,076
Thereafter		1,714
Total	$	7,339

Fiscal Year	Amount
Remainder of 2022	$	851
2023		1,703
2024		1,546
2025		1,076
2026		1,076
Thereafter		2,790
Total	$	9,042


Trio Healthcare Ltd. Loan	$	1.4
MedMinder Systems, Inc.			$	5.0
Duo Royalty				2.4
Total unfunded commitments	$	1.4	$	7.4

~~Level 1~~	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Active markets are considered to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

~~Level 2~~	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.

~~Level 3~~	Unobservable inputs are not corroborated by market data. This category is comprised of financial and non-financial assets and liabilities whose fair value is estimated based on internally developed models or methodologies using significant inputs that are generally less readily observable from objective sources.

	Total Carrying Value in Consolidated Balance Sheets		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Financial Assets
Warrant assets	$	2,481	$	—	$	—	$	2,481
Marketable investments		585		487		—		98

Financial Liabilities
Contingent consideration payable	$	8,530	$	—	$	—	$	8,530


	Three Months Ended June 30, 2021
	Finance Receivables		Pharmaceutical Development and Other			Holding Company and Other			Consolidated
Revenue	$	11,805	$	10,461		$	—		$	22,266
Interest expense		94		—			—			94
Manufacturing, research and development		—		1,542			—			1,542
Depreciation and amortization expense		—		809			2			811
Change in fair value of acquisition-related contingent consideration		—		(147	)		—			(147	)
General and administrative		950		983			1,427			3,360
Other income, net		892		—			—			892
Income tax expense		—		—			3,528			3,528
Net income (loss)		11,653		7,274			(4,957	)		13,970

									Revenue Recognized
Royalty Purchases	Licensed Technology		Footnote		Funded Amount		GAAP Balance		Q2			YTD
Beleodaq®		Oncology treatment		(1)	$	7,600	$	4,242	$	470		$	772
Besivance®		Ophthalmic antibiotic		(2)		6,000		—		3			13
Best ABT, Inc.		Oncology diagnosis		(3), (4)		5,784		3,127		—			—
Coflex®/Kybella®/Zalviso®		Spinal stenosis/submental fullness				4,350		4,001		167			292
Cambia®		NSAID migraine treatment		(3)		8,500		1,477		(44	)		(59	)
Forfivo XL®		Depressive disorder treatment				6,000		1,416		224			672
Ideal Implant, Inc.		Aesthetics				3,000		3,259		134			268
Iluvien®		Diabetic macular edema				16,501		15,916		536			1,121
Narcan®		Opioid overdose treatment				17,500		497		236			1,660
Ostomy Products Royalty		Ostomy products		(1)		3,900		3,961		18			181
Veru, Inc.		Women’s health				10,000		3,959		237			525

														Revenue Recognized
Term Loans	Type		Footnote		Maturity Date		Principal		GAAP Balance		Rate			Q2		YTD
4Web, Inc.		First lien				06/03/23	$	27,797	$	29,876		15.8	%	$	1,088	$	2,144
AOTI, Inc.		First lien				03/21/27		12,000		11,919		11.0	%		375		414
Acer Therapeutics, Inc.		First lien				03/04/24		6,500		6,488		12.0	%		416		546
Acerus Pharmaceuticals Corporation		First lien		(5)		10/11/23		—		—		12.0	%		—		538
B&D Dental Corporation		First lien		(5)		12/10/18		—		—		14.0	%		—		2,401
BIOLASE, Inc.		First lien				05/31/25		13,300		13,633		10.5	%		461		906
Biotricity, Inc.		First lien				12/26/26		12,000		11,823		11.5	%		400		786
Epica International, Inc.		First lien				07/23/24		12,000		12,291		9.5	%		359		712
eTon Pharmaceuticals, Inc.		First lien				11/13/24		6,615		6,615		10.0	%		202		445
Flowonix Medical, Inc.		First lien		(4), (6)		12/23/25		10,428		9,789		14.0	%		—		—
Keystone Dental Group		First lien		(5)		08/01/23		—		—		11.5	%		440		888
MolecuLight, Inc.		First lien				12/29/26		10,000		9,951		12.5	%		349		623
Sincerus Pharmaceuticals, Inc.		First lien				03/19/26		12,300		12,504		13.0	%		491		903
Trio Healthcare Ltd.		First lien				07/01/26		8,150		8,115		12.5	%		266		492

									Income (Loss) Recognized
Marketable Investments	Number of Shares		Footnote		Funded Amount		GAAP Balance		Q2			YTD
Secured Royalty Financing (Marketable Investment)		N/A		(4)	$	3,000	$	98	$	—		$	—
Bioventus, Inc. Common Stock		71,361				N/A		487		(519	)		(547	)
Epica International, Inc.		25,000				N/A		—		—			—
Sincerus Pharmaceuticals, Inc.		26,575				N/A		—		—			—

			Total Revenue
	Assets		Q2		YTD
Total finance receivables	$	174,859	$	6,828	$	17,243
Total marketable investments		585		N/A		N/A
Cost method investment		3,491		N/A		N/A
Fair value of warrant assets		2,481		N/A		N/A
Total assets/revenues	$	181,416	$	6,828	$	17,243