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What changed in SWK Holdings Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SWK Holdings Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+174 added−214 removedSource: 10-K (2025-03-20) vs 10-K (2024-03-20)

Top changes in SWK Holdings Corp's 2024 10-K

174 paragraphs added · 214 removed · 136 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

18 edited+2 added−3 removed20 unchanged
Biggest change(“Aptar”) on March 14, 2024 which granted Aptar an exclusive option to acquire certain of Enteris’ assets related to its business of providing good manufacturing practice (GMP) manufacturing and clinical supply services through Phase 1 and 2 to third parties, subject to certain exclusions. Aptar must exercise the option by or before January 1, 2026.
Biggest changeWith an effective date of January 1, 2024, we entered into an Option and Asset Purchase Agreement ( the "Option") with a strategic partner on March 14, 2024, which granted the strategic partner an exclusive option to acquire certain of Enteris’ assets related to its business of providing good manufacturing practice (GMP) manufacturing and clinical supply services through Phase 1 and 2 to third parties, subject to certain exclusions.
Some of these competitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create a competitive disadvantage for us. As a result, we tend not to compete on price, but instead focus on our industry experience, flexible financing options and speed to evaluate and complete a transaction.
Some of these competitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create a competitive disadvantage for us. As a result, we tend not to compete on price, but instead focus on our industry experience, reputation, flexible financing options and speed to evaluate and complete a transaction.
We intend to fund transactions through our own working capital and our revolving credit facility, as well as by building our asset management business by raising additional third-party capital. We fill an underserved niche in the sub-$50 million transaction size market.
We intend to fund transactions through our own working capital and our revolving credit facility, as well as by building our asset management business by raising additional third-party capital. We fill an underserved niche in the sub-$50.0 million transaction size market.
Our operations comprise two reportable segments: “Finance Receivables” and “Pharmaceutical Development.” We evaluate and invest in a broad range of healthcare related companies and products with innovative intellectual property, including the biotechnology, medical device, medical diagnostics and related tools, animal health and pharmaceutical industries (collectively, “life science”).
Our operations comprise two reportable segments: “Finance Receivables” and “Pharmaceutical Development.” We evaluate and invest in a broad range of healthcare related companies and products with innovative intellectual property, including the biotechnology, medical device, medical diagnostics and related tools, animal health and pharmaceutical industries (collectively, “life sciences”).
We may seek to raise discretionary capital from similar investors in the future. 2 We source our investment opportunities through a combination of our senior management’s proprietary relationships within the industry, outbound business development efforts and inbound inquiries from companies, institutions and inventors interested in learning about our capital financing alternatives.
We may seek to raise discretionary capital from similar investors in the future. We source our investment opportunities through a combination of our senior management’s relationships within the industry, outbound business development efforts and inbound inquiries from companies, institutions and inventors interested in learning about our capital financing alternatives.
We have deploy our assets to earn interest, fees, and other income pursuant to this strategy, and we continue to identify and review financing and similar opportunities on an ongoing basis with financial solutions that are tailored to the individual needs of our business partners.
We have deployed our assets to earn interest, fees, and other income pursuant to this strategy, and we continue to identify and review financing and similar opportunities on an ongoing basis with financial solutions that are tailored to the individual needs of our business partners.
We generally fund the full amount of transactions up to $25 million through our working capital. In circumstances where a transaction is greater than $25 million, we typically seek to syndicate amounts in excess of $25 million to both other investors and our investment advisory clients.
We generally fund the full amount for transactions up to $25.0 million through our working capital. In circumstances where a transaction is greater than $25.0 million, we typically seek to syndicate amounts in excess of $25.0 million to both other investors and our investment advisory clients.
For additional information concerning the competitive risks we face, see Item 1A., Risk Factors . Governmental Regulation For additional information concerning the effect of existing or probable government regulation on our business, see Item 1A., Risk Factors . Human Capital Resources As of December 31, 2023, we had 23 employees, all of whom are full-time.
For additional information concerning the competitive risks we face, see Item 1A., Risk Factors . Governmental Regulation For additional information concerning the effect of existing or probable government regulation on our business, see Item 1A., Risk Factors . Human Capital Resources As of December 31, 2024, we had 24 employees, all of whom are full-time.
Information on or accessible through our website is not a part of, and is not incorporated into, this Annual Report. 4
Information on or accessible through our website is not a part of, and is not incorporated into, this Annual Report. 3
We allocate capital to each segment in order to generate income through the sales of life science products by third parties and related earned income sources.
We allocate capital to each segment in order to generate income through the sales of life science products by third parties and related earned income sources. We are headquartered in Dallas, Texas.
We are headquartered in Dallas, Texas. 1 Finance Receivables Segment Our Finance Receivables segment strategy is to be a leading healthcare capital provider by offering customized financing solutions to a broad range of life science companies, institutions and inventors.
Finance Receivables Segment Our Finance Receivables segment strategy is to be a leading healthcare capital provider by offering customized financing solutions to a broad range of life science companies, institutions and inventors.
Since many of our competitors that provide non-traditional debt and/or royalty financings typically have greater financial resources than us, they prioritize transaction sizes above $50 million. As such, we believe we face less competition in transactions that are less than $50 million.
Since many of our competitors that provide non-traditional debt and/or royalty financings typically have greater financial resources than us, they prioritize transaction sizes above $50.0 million.
In addition, since many of our competitors that provide non-traditional debt and/or royalty financing have greater financial resources than us, they prioritize transaction sizes above $50 million. As such, we believe we face less competition in transactions that are less than $50 million. In our Pharmaceutical Development segment, we face competition in providing clinical development and manufacturing services.
In addition, since many of our competitors that provide non-traditional debt and/or royalty financing have greater financial resources than us, they prioritize transaction sizes above $50.0 million.
As of March 14, 2024, and since inception of the strategy, we and our partners have executed transactions with 55 different parties under our specialty finance strategy, funding an aggregate of approximately $779.4 million in various financial products across the life science sector.
As such, we believe we face less competition in transactions that are less than $50.0 million. 1 As of March 7, 2025, and since inception of the strategy, we and our partners have executed transactions with 58 different parties under our specialty finance strategy, funding an aggregate of approximately $852.5 million in various financial products across the life science sector.
Enteris is a clinical development and manufacturing organization providing development services to pharmaceutical partners as well as innovative formulation solutions built around its proprietary oral drug delivery technologies, the Peptelligence® platform. We seek to generate income by providing customers pharmaceutical development, formulation and manufacturing services as well as licensing its internally developed intellectual property.
We seek to generate income by providing customers pharmaceutical development, formulation and manufacturing services as well as licensing its internally developed intellectual property.
We are an equal opportunity employer and we maintain policies that prohibit unlawful discrimination based on race, color, religion, gender, sexual orientation, gender identity/expression, national origin/ancestry, age, disability, marital and veteran status. 3 Additional Information We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act’’), with the Securities and Exchange Commission (“SEC”).
We are an equal opportunity employer and we maintain policies that prohibit unlawful discrimination based on race, color, religion, gender, sexual orientation, gender identity/expression, national origin/ancestry, age, disability, marital and veteran status.
Our investment advisory clients generally do not originate investment opportunities for us. Pharmaceutical Development Segment During 2019, we commenced our Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc. (“Enteris”).
Our investment advisory clients generally do not originate investment opportunities for us. Pharmaceutical Development Segment During 2019, we commenced our Pharmaceutical Development segment with the acquisition of Enteris BioPharma, Inc. (“Enteris”). Enteris is a clinical development and manufacturing organization providing development services to pharmaceutical partners as well as innovative formulation solutions built around its proprietary oral drug delivery technologies.
Our SEC filings are available to the public from the SEC’s internet site at http://www.sec.gov. Our internet site is http://www.swkhold.com.
Additional Information We file annual, quarterly and current reports, proxy statements and other information required by the Securities Exchange Act of 1934, as amended (the “Exchange Act’’), with the Securities and Exchange Commission (“SEC”). Our SEC filings are available to the public from the SEC’s internet site at http://www.sec.gov. Our internet site is http://www.swkhold.com.
Removed
With an effective date of January 1, 2024, we entered into an Option and Asset Purchase Agreement with AptarGroup, Inc.
Added
The strategic partner must exercise the option by or before January 1, 2026. As of December 31, 2024, Enteris is classified as held for sale as the option is expected to be exercised within the next 12-months - see Note 7 for further details.
Removed
We also face competition in introducing products that improve efficacy, safety, patients’ and clinicians’ ease of use and cost-effectiveness.
Added
As such, we believe we face less competition in transactions that are less than $50.0 million. 2 In our Pharmaceutical Development segment, we face competition in providing clinical development and manufacturing services from large, multinational contract development and manufacturing organizations ("CDMO"), smaller specialized CDMO's, as well as the in-house capabilities of pharmaceutical and biotech companies.
Removed
The success of new product offerings will depend on many factors, including our ability to properly anticipate and satisfy customer needs, obtain regulatory approvals on a timely basis, develop and manufacture products in an economic and timely manner, obtain or maintain advantageous positions with respect to intellectual property, and differentiate products from competitors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

54 edited+21 added−52 removed200 unchanged
Biggest changeIn addition, the small and middle-market companies that we target to advance debt are subject to a number of other significant risks, including: · these companies may have limited financial resources and may be unable to meet their obligations under their financial instruments that we hold, which may be accompanied by a deterioration in the value of their assets or of any collateral with respect to any financial obligations and a reduction in the likelihood of our realization of any guarantees we may have obtained in connection with our investment; · they may have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns; · they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our partner company, and in turn, on us; · they may have less predictable operating results, may from time to time be parties to litigation, may be engaged in changing businesses with products subject to a risk of obsolescence and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position; · they operate in the life science industry, which is both highly competitive and subject to extensive regulatory oversight, and their products may be recalled or displaced by new products, or they may lose regulatory approval altogether; · changes in laws and regulations, as well as their interpretations, may adversely affect their business, financial structure or prospects; and · they may have difficulty accessing capital markets to meet future capital needs. 5 Under circumstances where a partner company does not achieve commercial success or achieves lower sales than we anticipate, and the partner company requires additional capital that other stakeholders are not willing or are otherwise unable to provide, we may determine it is in our best interest to advance additional capital to such partner company in order to preserve the partner company’s collateral value and protect our investment.
Biggest changeIn addition, the small and middle-market companies that we target to advance debt are subject to a number of other significant risks, including: • these companies may have limited financial resources and may be unable to meet their obligations under their financial instruments that we hold, which may be accompanied by a deterioration in the value of their assets or of any collateral with respect to any financial obligations and a reduction in the likelihood of our realization of any guarantees we may have obtained in connection with our investment; • they may have shorter operating histories, narrower product lines and smaller market shares than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns; • they are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our partner company, and in turn, on us; • they may have less predictable operating results, may from time to time be parties to litigation, may be engaged in changing businesses with products subject to a risk of obsolescence and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position; • they operate in the life science industry, which is both highly competitive and subject to extensive regulatory oversight, and their products may be recalled or displaced by new products, or they may lose regulatory approval altogether; • changes in laws and regulations, as well as their interpretations, may adversely affect their business, financial structure or prospects; and • they may have difficulty accessing capital markets to meet future capital needs.
ITEM 1A. RISK FACTORS An investment in our common stock involves significant risks. You should carefully consider the risks and uncertainties and the risk factors set forth in the documents and reports filed with the SEC and the risks described below before you make an investment decision regarding our common stock.
ITEM 1A. RISK FACTORS An investment in our common stock involves significant risks. You should carefully consider the risks and uncertainties, the risk factors set forth in the documents and reports filed with the SEC, and the risks described below before you make an investment decision regarding our common stock.
For purposes of the 40 percent test, the term “investment securities” does not include U.S. government securities or securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, such as majority-owned subsidiaries that rely on Section 3(c)(6), which, based on the SEC staff’s interpretations, requires us to invest, either directly or through majority-owned subsidiaries, at least 55 percent of our assets in, as relevant here, businesses relying on Section 3(c)(5)(A).
For purposes of the 40% test, the term “investment securities” does not include U.S. government securities or securities issued by majority-owned subsidiaries that are not themselves investment companies and are not relying on Section 3(c)(1) or Section 3(c)(7) of the 1940 Act, such as majority-owned subsidiaries that rely on Section 3(c)(6), which, based on the SEC staff’s interpretations, requires us to invest, either directly or through majority-owned subsidiaries, at least 55% of our assets in, as relevant here, businesses relying on Section 3(c)(5)(A).
Under these rules, a company of which more than 50 percent of the voting power is held by an individual, a group or another company is a “controlled company” and may elect not to comply with certain Nasdaq corporate governance requirements, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, and (3) the requirement that the board have a compensation committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “controlled company” and may elect not to comply with certain Nasdaq corporate governance requirements, including (1) the requirement that a majority of the board of directors consist of independent directors, (2) the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities, and (3) the requirement that the board have a compensation committee composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
Our subsidiaries that are so engaged rely on Section 3(c)(5)(A) of the 1940 Act, which, as interpreted by the SEC staff, requires each such subsidiary to invest at least 55 percent of its assets in “notes, drafts, acceptances, open accounts receivable and other obligations representing part of all of the sales price of merchandise, insurance and services,” which we refer to as the ICA Exception Qualifying Assets.
Our subsidiaries that are so engaged rely on Section 3(c)(5)(A) of the 1940 Act, which, as interpreted by the SEC staff, requires each such subsidiary to invest at least 55% of its assets in “notes, drafts, acceptances, open accounts receivable and other obligations representing part of all of the sales price of merchandise, insurance and services,” which we refer to as the ICA Exception Qualifying Assets.
Generally, a company will be determined to be an “investment company” if, absent an exclusion or exemption, it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or owns or proposes to acquire investment securities having a value exceeding 40 percent of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
Generally, a company will be determined to be an “investment company” if, absent an exclusion or exemption, it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
Although we have endeavored to implement any management transition in a non-disruptive manner, such transitions might impact our business, and give rise to uncertainty among our customers, investors, vendors, employees and others concerning our future direction and performance, which may materially and adversely affect our business, financial condition, results of operations and cash flows, and our ability to execute our business model.
Although we have endeavored to implement any management and director transition in a non-disruptive manner, such transitions might impact our business, and give rise to uncertainty among our customers, investors, vendors, employees and others concerning our future direction and performance, which may materially and adversely affect our business, financial condition, results of operations and cash flows, and our ability to execute our business model.
These business decisions or risks may lead to adverse business or financial consequences for our partner companies, which in turn could adversely affect the performance of our Finance Receivables segment. 7 If we make investments in unsecured debt backed by royalties or revenue interests, those investments might not generate sufficient cash flow to service our debt obligations.
These business decisions or risks may lead to adverse business or financial consequences for our partner companies, which in turn could adversely affect the performance of our Finance Receivables segment. If we make investments in unsecured debt backed by royalties or revenue interests, those investments might not generate sufficient cash flow to service our debt obligations.
If we were to fully avail ourselves of the controlled company rules, you do not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements. 16 If we are unable to obtain additional debt or equity financing on commercially reasonable terms our business could be materially adversely affected.
If we were to fully avail ourselves of the controlled company rules, you do not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements. If we are unable to obtain additional debt or equity financing on commercially reasonable terms our business could be materially adversely affected.
Failure by our partner companies to successfully commercialize pipeline products in which we have an economic interest could have a material adverse effect on our business, financial condition and results of operations. 23 Changes in healthcare laws and other regulations applicable to some of our partner companies’ businesses may constrain their ability to offer their products and services.
Failure by our partner companies to successfully commercialize pipeline products in which we have an economic interest could have a material adverse effect on our business, financial condition and results of operations. Changes in healthcare laws and other regulations applicable to some of our partner companies’ businesses may constrain their ability to offer their products and services.
As a result of these new entrants, competition for investment opportunities in our target markets has intensified, which is a trend we expect to continue. Many of our Finance Receivables segment’s existing and potential competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do.
As a result of these new entrants, competition for investment opportunities in our target markets has intensified, which is a trend we expect to continue. 4 Many of our Finance Receivables segment’s existing and potential competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do.
Efforts to retain or attract key personnel may result in significant additional expenses, which could adversely affect our profitability. 15 Changes in our management may cause uncertainty in, or be disruptive to, our business. Certain of our directors and management team members have been with us in those capacities for only a short time.
Efforts to retain or attract key personnel may result in significant additional expenses, which could adversely affect our profitability. Changes in our management may cause uncertainty in, or be disruptive to, our business. Certain of our directors and management team members have been with us in those capacities for only a short time.
While we have successfully regained compliance, we can provide no assurance that we will continue to maintain compliance with such standards. 18 The trading price of our common stock could be subject to wide fluctuations in response to quarter-to-quarter variations in our operating results and other events or factors.
While we have successfully regained compliance, we can provide no assurance that we will continue to maintain compliance with such standards. The trading price of our common stock could be subject to wide fluctuations in response to quarter-to-quarter variations in our operating results and other events or factors.
Additionally, the Rights Agreement is intended to protect our ability to utilize our NOL carryforwards and make it difficult for a third party to acquire a significant number of shares of our common stock. 19 Our certificate of incorporation and bylaws include provisions that may deter an unsolicited offer to purchase us.
Additionally, the Rights Agreement is intended to protect our ability to utilize our NOL carryforwards and make it difficult for a third party to acquire a significant number of shares of our common stock. Our certificate of incorporation and bylaws include provisions that may deter an unsolicited offer to purchase us.
If our partner companies incur costly litigation and their personnel are not effectively deployed, the expenses and losses incurred by our partner companies will increase and their profits, if any, will decrease. 22 Third parties have and may assert infringement or other intellectual property claims against our partner companies based on their patents or other intellectual property rights.
If our partner companies incur costly litigation and their personnel are not effectively deployed, the expenses and losses incurred by our partner companies will increase and their profits, if any, will decrease. Third parties have and may assert infringement or other intellectual property claims against our partner companies based on their patents or other intellectual property rights.
Also, registration and other requirements under applicable securities laws and contractual restrictions also may adversely affect our ability to dispose of our partner company holdings on a timely basis. 11 Our financial condition and results of operations will depend on our ability to manage future growth of our Finance Receivables segment effectively.
Also, registration and other requirements under applicable securities laws and contractual restrictions may adversely affect our ability to dispose of our partner company holdings on a timely basis. Our financial condition and results of operations will depend on our ability to manage future growth of our Finance Receivables segment effectively.
This interpretation was promulgated by the SEC staff in a no-action letter issued to the predecessor of Royalty Pharma plc on August 13, 2010. 20 Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our businesses.
This interpretation was promulgated by the SEC staff in a no-action letter issued to the predecessor of Royalty Pharma plc on August 13, 2010. Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our businesses.
To the extent these companies are adversely impacted by developments in the financial services industry, the performance of our Finance Receivables segment would also be adversely impacted. 8 We may have limited access to information about privately-held royalty streams and companies in which we invest.
To the extent these companies are adversely impacted by developments in the financial services industry, the performance of our Finance Receivables segment would also be adversely impacted. We may have limited access to information about privately-held royalty streams and companies in which we invest.
In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5 percent stockholders, applying certain look-through and aggregation rules) increases by more than 50 percent over such stockholders’ lowest percentage ownership during the testing period (generally three years).
In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% stockholders, applying certain look-through and aggregation rules) increases by more than 50% over such stockholders’ lowest percentage ownership during the testing period (generally three years).
The Notes will mature on January 31, 2027, unless earlier redeemed, and will bear interest at a rate of 9.00 percent per annum, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year and at maturity, commencing on December 31, 2023.
The Notes will mature on January 31, 2027, unless earlier redeemed, and will bear interest at a rate of 9.00% per annum, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year and at maturity, commencing on December 31, 2023.
We refer to this investment company definition test as the “40 percent test.” We do not hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting or trading in securities and believe that we are not engaged primarily in the business of investing, reinvesting or trading in securities.
We refer to this investment company definition test as the “40% test.” We do not hold ourselves out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting or trading in securities and believe that we are not engaged primarily in the business of investing, reinvesting or trading in securities.
Increased scrutiny and approval processes may limit the ability of our partner companies to market and commercialize their products in the U.S. and in foreign countries. The development of products by life science companies requires significant research and development, clinical trials and regulatory approvals.
Increased scrutiny and approval processes may limit the ability of our partner companies to market and commercialize their products in the U.S. and in foreign countries. 17 The development of products by life science companies requires significant research and development, clinical trials and regulatory approvals.
Our ability to make scheduled payments on, or to refinance our obligations under, the Notes or future indebtedness, will depend on our financial and operating performance and that of our subsidiaries, which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which may be beyond our control. 17 We may not maintain a level of cash flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on the Notes or future indebtedness.
Our ability to make scheduled payments on, or to refinance our obligations under, the Notes or future indebtedness, will depend on our financial and operating performance and that of our subsidiaries, which, in turn, will be subject to prevailing economic and competitive conditions and to financial and business factors, many of which may be beyond our control. 12 We may not maintain a level of cash flow from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on the Notes or future indebtedness.
Unfavorable economic conditions could also increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.
Unfavorable economic 16 conditions could also increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us.
Because Carlson controls a majority of our common stock, we are a “controlled company” within the meaning of the Nasdaq Capital Market (“Nasdaq”) listing standards.
Because Carlson controls a majority of our common stock, we are a “controlled company” within the meaning of the Nasdaq Capital Market ("Nasdaq") listing standards.
We have invested and plan to continue investing in cash flow streams produced by life science products that are subject to extensive regulation by the Food and Drug Administration (“FDA”), similar foreign regulatory authorities, and to a lesser extent, other federal and state agencies.
We have invested and plan to continue investing in cash flow streams produced by life science products that are subject to extensive regulation by the Food and Drug Administration ("FDA"), similar foreign regulatory authorities, and to a lesser extent, other federal and state agencies.
These factors may materially adversely affect any of our future royalty-related assets. 9 Aside from any limited audit rights relating to the activities of the licensees that we may have in certain circumstances, we do not have the rights or ability to manage the operations of the licensees.
These factors may materially adversely affect any of our future royalty-related assets. 7 Aside from any limited audit rights relating to the activities of the licensees that we may have in certain circumstances, we do not have the rights or ability to manage the operations of the licensees.
On October 10, 2023, we entered into a First Amendment to Credit Agreement pursuant to which Woodforest National Bank was added as a lender under the Credit Agreement for an aggregate commitment of $15.0 million, thereby increasing the aggregate commitments under the Credit Agreement from $45.0 million to $60.0 million.
On October 10, 2023, we entered into a First Amendment to Credit Agreement pursuant to which Woodforest National Bank was added as a lender under the Credit Agreement for an aggregate commitment of $15.0 million, thereby increasing the aggregate commitments under the Credit Agreement from $45.0 million to $60.0 million, subject to certain limitations.
Additionally, any such changes to pharmaceutical product reimbursement similarly could reduce the revenues of the pharmaceutical products from which we receive royalties. 24
Additionally, any such changes to pharmaceutical product reimbursement similarly could reduce the revenues of the pharmaceutical products from which we receive royalties. 18
Fluctuations in the price of our publicly traded equity holdings and the price at which we sell such holdings may affect the price of our common stock. Our Finance Receivables segment generally holds equity interests in companies that are publicly traded. Fluctuations in the market prices of our publicly traded equity holdings may affect the price of our common stock.
Fluctuations in the price of our publicly traded equity holdings and the price at which we sell such holdings may affect the price of our common stock. Our Finance Receivables segment may hold equity interests in companies that are publicly traded. Fluctuations in the market prices of our publicly traded equity holdings may affect the price of our common stock.
Risks Related to Our Business and Structure Our ability to use NOL carryforwards to offset future taxable income for U.S. federal income tax purposes may be limited, and our future cash tax liability may increase. As of December 31, 2023, we had Net Operating Loss ("NOL") carryforwards for U.S. federal income tax purpose s of $87.7 million.
Risks Related to Our Business and Structure Our ability to use NOL carryforwards to offset future taxable income for U.S. federal income tax purposes may be limited, and our future cash tax liability may increase. As of December 31, 2024, we had Net Operating Loss ("NOL") carryforwards for U.S. federal income tax purposes of $58.1 million.
Funds affiliated with Carlson can control or exert significant influence over our management and policies through their ownership of a large amount of our common stock. As of December 31, 2023, funds affiliated with Carlson owned in the aggregate 73.0 percent of our combined issued and outstanding common stock and unvested restricted stock.
Funds affiliated with Carlson can control or exert significant influence over our management and policies through their ownership of a large amount of our common stock. As of December 31, 2024, funds affiliated with Carlson owned in the aggregate 68.7% of our combined issued and outstanding common stock and unvested restricted stock.
Our success depends upon the continued services of executive officers and other key personnel, as well as their ability to effectively transition to their successors. We have experienced significant changes in our senior leadership in 2023, including the appointment of a new Chief Executive Officer.
Our success depends upon the continued services of executive officers and other key personnel, as well as their ability to effectively transition to their successors. We have experienced changes in our senior leadership in 2024, including the appointment of a new Chief Financial Officer in July 2024, following the resignation of our former Chief Financial Officer in February 2024.
If the SEC or its staff in the future adopts a contrary interpretation to that provided in the no-action letter to the predecessor of Royalty Pharma plc or otherwise restricts the conclusions in the SEC staff’s no-action letter such that royalty interests are no longer treated as ICA Exception Qualifying Assets for purposes of Section 3(c)(6), or the SEC or its staff in the future determines that the no-action letter does not apply to some or all types of royalty receivables relating to biopharmaceutical assets, our business will be materially and adversely affected.
Therefore, the assets that we and our subsidiaries hold and acquire are limited by the provisions of the 1940 Act and the rules and regulations promulgated thereunder. 14 If the SEC or its staff in the future adopts a contrary interpretation to that provided in the no-action letter to the predecessor of Royalty Pharma plc or otherwise restricts the conclusions in the SEC staff’s no-action letter such that royalty interests are no longer treated as ICA Exception Qualifying Assets for purposes of Section 3(c)(6), or the SEC or its staff in the future determines that the no-action letter does not apply to some or all types of royalty receivables relating to biopharmaceutical assets, our business could be materially and adversely affected.
It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our shareholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
In recent years, many such changes have been made, and changes are likely to continue to occur in the future. 10 It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our shareholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
In addition, pursuant to the terms of a Stockholders’ Agreement entered into on February 27, 2023 (as amended, the “Stockholders’ Agreement”), funds affiliated with Carlson have the right to approve specific transactions, including the incurrence of indebtedness over specified amounts, the sale of assets over specified amounts, declaration of dividends, loans, capital contributions to or investments in any third party over specified amounts, changes in the size of the board of directors and repurchases of common stock.
The investment objectives of Carlson and its affiliates may from time to time be different than or conflict with those of our other stockholders. 13 In addition, pursuant to the terms of a Stockholders’ Agreement entered into on February 27, 2023 (as amended, the “Stockholders’ Agreement”), funds affiliated with Carlson have the right to approve specific transactions, including the incurrence of indebtedness over specified amounts, the sale of assets over specified amounts, declaration of dividends, loans, capital contributions to or investments in any third party over specified amounts, changes in the size of the board of directors and repurchases of common stock.
For example, with and effective date of January 1, 2024, we entered into an exclusive option and asset purchase agreement (the “Option”) with Aptar which granted Aptar an exclusive option to acquire certain of Enteris’ assets related to its business of providing contract manufacturing, formulation and development services. Aptar must exercise its Option by or before January 1, 2026.
For example, with an effective date of January 1, 2024, we entered into an exclusive Option and Asset Purchase Agreement with a strategic partner which granted the strategic partner an exclusive option to acquire certain of Enteris’ assets related to its business of providing contract manufacturing, formulation and development services.
These guidelines require that Enteris conduct its production operations in strict compliance with established rules for manufacturing and quality controls. Any of these agencies can suspend production operations and product sales if they find significant or repeated deviations from these guidelines. A suspension would likely cause Enteris to incur additional costs or delays in product development and manufacturing.
These guidelines require that Enteris conduct its production operations in strict compliance with established rules for manufacturing and quality controls. Any of these agencies can suspend production operations and product sales if they find significant or repeated deviations from these guidelines.
This limitation would be derived by multiplying the fair market value of our common stock as of the ownership change by the applicable federal long-term tax-exempt rate, which was 3.33 percent for March 2024.
This limitation would be derived by multiplying the fair market value of our common stock as of the ownership change by the applicable federal long-term tax-exempt rate.
As of December 31, 2023, we had $4.5 million of cash and cash equivalents plus $47.7 million available to be borrowed under our new credit facility with First Horizon Bank.
As of December 31, 2024, we had $5.9 million of cash and cash equivalents plus $35.6 million available to be borrowed under our new credit facility with First Horizon Bank.
Continuing impacts of the pandemic and supply chain disruptions could continue to increase the risk of delinquencies, defaults, declining collateral values associated with our existing loans, and impairments or losses on our loans.
Continuing impacts of the pandemic and supply chain disruptions could continue to increase the risk of delinquencies, defaults, declining collateral values associated with our existing loans, and impairments or losses on our loans. Any such impairment could increase our credit risk and adversely affect the assets and results of operations of our Finance Receivables segment.
There is a possibility that Aptar may not exercise its Option in the anticipated timeframe or at all. Additionally, the existence of the Option may deter future potential opportunities to monetize certain Enteris assets. Any of the foregoing could adversely affect our business and results of operations. We are dependent upon our key management personnel for our future success.
Additionally, the existence of the Option may deter future potential opportunities to monetize certain Enteris assets. Any of the foregoing could adversely affect our business and results of operations. We are dependent upon our key management personnel for our future success.
The U.S. federal NOL carryforwards, if not offset against future income, will expire by 2037. We may recognize additional NOLs in the future. In order to utilize the NOLs, we must generate taxable income that can offset such carryforwards. The Internal Revenue Service (“IRS”) has not audited our tax returns for any of the years during the carryforward period.
The U.S. federal NOL carryforwards, if not offset against future income, will expire by 2037. We may recognize additional NOLs in the future. In order to utilize the NOLs, we must generate taxable income that can offset such carryforwards.
The commercial success of such products and services could be compromised if governmental or third-party payors do not provide coverage and reimbursement, breach, rescind or modify their contracts or reimbursement policies or delay payments for such products and services. 6 Companies in the life science industry may also have a limited number of suppliers of necessary components or a limited number of manufacturers for their products, and therefore face a risk of disruption to their manufacturing process if they are unable to find alternative suppliers when needed.
Companies in the life science industry may also have a limited number of suppliers of necessary components or a limited number of manufacturers for their products, and therefore face a risk of disruption to their manufacturing process if they are unable to find alternative suppliers when needed.
Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our business, financial condition or results of operations.
Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above, could have material adverse impacts on our liquidity and our business, financial condition or results of operations. 6 Further, the performance of our Finance Receivables segment is substantially dependent upon the underlying performance of the companies in our portfolio, each of which is subject to the risks and factors discussed above.
Failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations. Risks Related to Pharmaceutical Development Segment Enteris’ licensees may not be successful in efforts to develop products for many years, if ever.
Failure to manage our future growth effectively could have a material adverse effect on our business, financial condition and results of operations. Risks Related to Pharmaceutical Development Segment Enteris’ technology or products could give rise to product liability claims.
Consequently, we may not be successful in attracting, motivating and retaining such personnel, and our failure to do so could have a negative effect on our business including our ability to successfully develop, introduce, and market our products which may adversely impact our operating results, or financial condition.
Consequently, we may not be successful in attracting, motivating and retaining such personnel, and our failure to do so could have a negative effect on our business including our ability to successfully develop, introduce, and market our products which may adversely impact our operating results, or financial condition. 11 Because we are relying on the exemptions from corporate governance requirements as a result of being a “controlled company” within the meaning of the Nasdaq listing standards, you do not have the same protections afforded to stockholders of companies that are subject to such requirements.
In addition, the ability of generic manufactures to invalidate a partner company’s patents protecting its products or to invalidate the patents supporting products in which we receive royalty-related income could have a material adverse effect on our business.
In addition, the ability of generic manufactures to invalidate a partner company’s patents protecting its products or to invalidate the patents supporting products in which we receive royalty-related income could have a material adverse effect on our business. 5 Our business, financial condition, results of operations, liquidity and cash flows depend on the accuracy of our management’s assumptions and estimates, and we could experience significant gains or losses if these assumptions and estimates differ significantly from actual results.
Any sustained disruption in the capital markets from the COVID-19 pandemic could negatively impact our and our partner companies’ ability to raise capital.
Any abrupt and substantial change in economic conditions also may decrease the value of collateral securing some of our loans and the value of our equity investments. Any sustained disruption in the capital markets from the COVID-19 pandemic could negatively impact our and our partner companies’ ability to raise capital.
If the IRS were successful in challenging our NOLs, all or some portion of the NOLs would not be available to offset any future consolidated income which would negatively impact our results of operations and cash flows. 14 Under Section 382 of the Internal Revenue Code (the “Code”), a corporation that undergoes an “ownership change” may be subject to limitations on its ability to utilize its pre-change NOL carryforward amounts to offset future taxable income.
Under Section 382 of the Internal Revenue Code (the “Code”), a corporation that undergoes an “ownership change” may be subject to limitations on its ability to utilize its pre-change NOL carryforward amounts to offset future taxable income.
Cybersecurity threat actors and their techniques change frequently, are often sophisticated in nature, and may not be detected until after a cybersecurity incident has occurred.
Additionally, certain data privacy and security laws, as well as industry best practice standards, may require us to implement and maintain additional cybersecurity measures. 15 Cybersecurity threat actors and their techniques change frequently, are often sophisticated in nature, and may not be detected until after a cybersecurity incident has occurred.
We expend resources trying to protect against cybersecurity threats to our information technology systems. Additionally, certain data privacy and security laws, as well as industry best practice standards, may require us to implement and maintain additional cybersecurity measures.
We expend resources trying to protect against cybersecurity threats to our information technology systems.
Funds associated with Carlson own an aggregate of 73.0 percent (9,093,766 common shares).
Funds associated with Carlson own an aggregate of 68.7% (8,393,088 c ommon shares).
Due to the uncertainty of the replacement for LIBOR, the potential effect of any such event on our cost of capital and investment income cannot yet be determined. A rise in the reference rates could have an adverse impact on the ability of our partner companies to service their debt obligations to us.
The transition away from LIBOR to alternative reference rates is complex and could have a material adverse effect on our business, financial condition and results of operations, including as a result of any changes in the pricing of our investments, changes to the documentation for certain of our investments and the pace of such changes, disputes and other actions regarding the interpretation of current and prospective loan documentation or modifications to processes and systems. 8 A rise in the reference rates could have an adverse impact on the ability of our partner companies to service their debt obligations to us.
Removed
Our business, financial condition, results of operations, liquidity and cash flows depend on the accuracy of our management’s assumptions and estimates, and we could experience significant gains or losses if these assumptions and estimates differ significantly from actual results.
Added
Under circumstances where a partner company does not achieve commercial success or achieves lower sales than we anticipate, and the partner company requires additional capital that other stakeholders are not willing or are otherwise unable to provide, we may determine it is in our best interest to advance additional capital to such partner company in order to preserve the partner company’s collateral value and protect our investment.
Removed
Further, the performance of our Finance Receivables segment is substantially dependent upon the underlying performance of the companies in our portfolio, each of which is subject to the risks and factors discussed above.
Added
The commercial success of such products and services could be compromised if governmental or third-party payors do not provide coverage and reimbursement, breach, rescind or modify their contracts or reimbursement policies or delay payments for such products and services.
Removed
The interest rates of some of our term loans to partner companies are priced using a spread over LIBOR.
Added
The phase-out and replacement of LIBOR may adversely affect the value of our portfolio securities As of June 30, 2023, no settings of LIBOR continue to be published on a representative basis and publication of many non-U.S. Dollar LIBOR settings have been entirely discontinued. On July 29, 2021, the U.S.
Removed
We have used U.S. dollar London Interbank Offered Rate (“LIBOR”) as a reference rate in term loans we extend to partner companies such that the interest due to us pursuant to a term loan extended to a partner company is calculated using LIBOR.
Added
Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, recommended replacing U.S. dollar LIBOR with alternative reference rates based on the Secured Overnight Financing Rate (“SOFR”). SOFR significantly differs from LIBOR, both in the actual rate and how it is calculated.
Removed
Most of our term loan agreements with partner companies contain a stated minimum value for the reference rate. As of December 31, 2023, approximatel y 18% of term loans with our partner companies utilized LIBOR, including a stated minimum of LIBOR, as a reference rate.
Added
Further, on March 15, 2022, the Consolidated Appropriations Act of 2022, which includes the Adjustable Interest Rate (LIBOR) Act (“LIBOR Act”), was signed into law in the United States. This legislation established a uniform benchmark replacement process for certain financial contracts that mature after June 30, 2023 that do not contain clearly defined or practicable LIBOR fallback provisions.
Removed
On June 30, 2023, the United Kingdom’s Financial Conduct Authority and the administrator of LIBOR ceased the publication of the most commonly used LIBOR settings. The publication of all other LIBOR settings ceased to be published as of December 31, 2021.
Added
The legislation also created a safe harbor that shields lenders from litigation if they choose to utilize a replacement rate recommended by the Board of Governors of the U.S. Federal Reserve. In addition, the U.K.
Removed
The bank regulatory agencies indicated that entering into new contracts that use LIBOR as a reference rate after December 31, 2021, would create safety and soundness risks and that they would examine bank practices accordingly.
Added
Financial Conduct Authority, which regulates the publisher of LIBOR (ICR Benchmark Administration) has announced that it will require the continued publication of one, three and six month tenors of U.S. dollar LIBOR on a non-representative synthetic basis until the end of September 2024, which may result in certain non-U.S. law-governed contracts and U.S. law-governed contracts not being covered by the federal legislation remaining on synthetic U.S. dollar LIBOR until the end of this period.
Removed
The Adjustable Interest Rate (LIBOR) Act, enacted in March 2022, provides a statutory framework to replace U.S. dollar LIBOR with a benchmark rate based on the Secured Overnight Financing Rate (“SOFR”) for contracts governed by U.S. law that have no or ineffective fallback, and in December 2022, the Federal Reserve Board adopted related implementing rules. 10 SOFR is observed and backward looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members.
Added
The transition from LIBOR or the use of synthetic LIBOR in floating-rate debt securities in our portfolio or issued by us could have a material and adverse impact on the value or liquidity of those instruments.
Removed
Given that SOFR is a secured rate backed by government securities, it is a rate that does not take into account bank credit risk (as is the case with LIBOR). SOFR is therefore likely to be lower than LIBOR and is less likely to correlate with the funding costs of financial institutions.
Added
A suspension would likely cause Enteris to incur additional costs or delays in product development and manufacturing. 9 Enteris relies on third parties to supply most of the necessary raw materials and supplies for the products we manufacture on behalf of our customers and our inability to obtain such raw materials or supplies may adversely impact our business, financial condition, and results of operations.
Removed
While SOFR has been adopted in select product areas it has not achieved full implementation as an alternative reference rate. At this time, it is not possible to predict how markets will respond to alternative reference rates as markets continue to transition away from LIBOR.
Added
Our operations require various raw materials, including proprietary media, resins, buffers, and filters, in addition to numerous additional raw materials supplied primarily by third parties. We or our customers specify the raw materials and other items required to manufacture their product and, in some cases, specify the suppliers from whom we must purchase these raw materials.
Removed
Furthermore, because of the complexity of the transition from LIBOR, at this time, it is not possible to predict what rate or rates may become accepted alternatives to LIBOR, or what the effect of any such changes in views or alternatives may be on the value of LIBOR-based securities and variable rate loans or other securities or financial arrangements.
Added
In certain instances, the raw materials and other items can only be supplied by a limited number of suppliers and, in some cases, a single source, or in limited quantities.
Removed
The transition from LIBOR could create considerable costs and additional risk. We cannot predict whether or when LIBOR will actually cease to be available.
Added
If third-party suppliers do not supply raw materials or other items on a timely basis, it may cause a manufacturing run to be delayed or canceled which would adversely impact our financial condition and results of operations. Additionally, we do not have long-term supply contracts with any of our single source suppliers.
Removed
If LIBOR ceases to exist, we may need to renegotiate the credit agreements with our partner companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established. Our term loans typically contain provisions to facilitate the transition to such new standard.
Added
If we experience difficulties acquiring sufficient quantities of required materials or products from our existing suppliers, or if our suppliers are found to be non-compliant with the FDA’s quality system regulation, Current Good Manufacturing Practices ("CGMPs") or other applicable laws or regulations, we would be required to find alternative suppliers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have not identified any cybersecurity incidents or threats that have materially affected us or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition; however, like other companies in our industry, we and our third-party vendors have from time to time experienced threats that could affect our information or systems.
Biggest changeWe have not identified any cybersecurity incidents or threats that have materially affected us or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition; however, like other companies in our industry, we and our third-party vendors do, from time to time, experience threats and security incidents relating to our, and our third party vendors', information systems.
The CEO briefs the Board on information regarding cybersecurity matters at least quarterly. Our risk manager, along with the CEO, oversee our policies with respect to risk assessment and risk management, including with respect to cybersecurity risks. The Audit Committee of our Board was recently tasked with oversight of the management of risks related to cybersecurity.
The CEO briefs the Board on information regarding cybersecurity matters at least quarterly. Our risk manager, along with the CEO, oversee our policies with respect to risk assessment and risk management, including with respect to cybersecurity risks. The Audit Committee of our Board is tasked with oversight of the management of risks related to cybersecurity.
The Audit Committee administers its risk oversight function by receiving reports from members of senior management, including the risk manager and CEO, on areas of identified material risk to the Company.
The Audit Committee administers its risk oversight function by receiving periodic reports from members of senior management, including the risk manager and CEO, on areas of identified significant risk to the Company.
For more information about the cybersecurity risks we face, see Item 1A “Risk Factors.” Governance Related to Cybersecurity Risks We engage a managed services provider as discussed above, which includes services to assist us with the identification, monitoring, and management of cybersecurity risks. Our managed services provider reports periodically to our management team, including our Chief Executive Officer (“CEO”).
For more information, see Item 1A " Risk Factors ." Governance Related to Cybersecurity Risks We engage a managed services provider as discussed above, which includes services to assist us with the identification, monitoring, and management of cybersecurity risks. Our managed services provider reports periodically to our management team, including our Chief Executive Officer (“CEO”).

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our corporate headquarters and the location of our Finance Receivables segment are in Dallas, Texas, where we lease two office spaces totaling approximately 6,850 square feet of space. The Pharmaceutical Development segment’s headquarters is located in Boonton, New Jersey, where Enteris leases approximately 32,000 square feet of space.
Biggest changeITEM 2. PROPERTIES Our corporate headquarters and the location of our Finance Receivables segment are in Dallas, Texas, where we lease office space totaling approximately 4,450 square feet of space. The Pharmaceutical Development segment’s headquarters is located in Boonton, New Jersey, where Enteris leases approximately 32,000 square feet of space. We believe these facilities are adequate for our business requirements.
Removed
We believe these facilities are adequate for our business requirements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe purchase period for the New Repurchase Program is May 16, 2023 through May 16, 2024. 26 The table below summarizes information about our purchases of common stock during the three months ending December 31, 2023 (in thousands, except per share data): Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan October 1, 2023 - October 31, 2023 7,104 $ 15.75 7,104 $ 4,694 November 1, 2023 - November 30, 2023 1,283 16.10 1,283 4,673 December 1, 2023 - December 31, 2023 5,846 17.37 5,846 4,571 14,233 $ 16.45 14,233 As of December 31, 2023, the Company has repurchased an aggregate of 113,639 shares under the Prior Repurchase Program and an aggregate of 326,088 shares under the New Repurchase Program at a total cost of $7.5 million, or $16.97 per share.
Biggest changeThe table below summarizes information about our purchases of common stock during the three months ending December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan (in thousands) October 1, 2024 - October 31, 2024 33,858 $ 16.96 33,858 $ 5,655 November 1, 2024 - November 30, 2024 10,669 16.70 10,669 $ 5,476 December 1, 2024 - December 31, 2024 5,856 16.48 5,856 $ 5,380 50,383 $ 16.85 50,383 As of December 31, 2024, the Company has repurchased an aggregate of 793,411 shares under the Prior Repurchase Programs and Current Repurchase Program at a total cost of $13.5 million, or $16.99 per share.
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.
The actual timing, number and value of shares repurchased under the 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 Repurchase Program.
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”).
On May 16, 2024, 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, 2025, through a trading plan established in compliance with Rule 10b5-1 and Rule 10b-18 of the Exchange Act (the “Current Repurchase Program”).
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . Market Information Since January 22, 2020, our common stock has been listed on the Nasdaq Capital Market, under the symbol “SWKH.” Holders of Record There were approximately 88 stockholders of record of our common stock as of February 27, 2024.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . Market Information Since January 22, 2020, our common stock has been listed on the Nasdaq Capital Market, under the symbol “SWKH.” Holders of Record There were approximately 76 stockholders of record of our common stock as of February 27, 2025.
Dividend Policy To date, we have not paid any cash dividends on our capital stock. We intend to retain our cash and do not anticipate paying any cash dividends in the foreseeable future. Recent Sales of Unregistered Equity Securities None.
Dividend Policy To date, we have not paid any cash dividends on our capital stock. We intend to retain our cash and do not anticipate paying any cash dividends in the foreseeable future.
Our Board may also suspend or discontinue the New Repurchase Program at any time, in its sole discretion.
Our Board may also suspend or discontinue the Current Repurchase Program at any time, in its sole discretion. The purchase period for the Current Repurchase Program is May 16, 2024 through May 16, 2025.
As of December 31, 2023, the maximum dollar value of shares that may yet be purchased under the New Repurchase Program was approximately $4.6 million shares of common stock. No shares are available for repurchase under the Prior Repurchase Program, which expired on May 15, 2023.
As of December 31, 2024, the maximum dollar value of shares that may yet be purchased under the Current Repurchase Program was approximately $5.4 million shares of common stock.
Issuer Purchases of Equity Securities 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”).
Recent Sales of Unregistered Equity Securities None Issuer Purchases of Equity Securities On May 31, 2022, the Board authorized a share repurchase program under which the Company was authorized to repurchase up to $10.0 million of the Company’s outstanding shares of common stock.
The purchase period for the Prior Repurchase Program was July 1, 2022 through May 15, 2023.
The previous repurchase periods under this program were July 1, 2022 through May 15, 2023 and May 16, 2023 through May 15, 2024 (the "Prior Repurchase Programs").

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeComparison of the Years Ended December 31, 2023 and 2022 The following table summarizes the results of our operations for the years ended December 31, 2023 and 2022: (in millions) For the Year Ended December 31, 2023 2022 Change Revenues $ 37.8 $ 41.5 $ (3.7 ) Allowance for credit losses 1.9 3.5 (1.6 ) Interest expense 1.8 0.3 1.5 Impairment of goodwill 8.4 — 8.4 Pharmaceutical manufacturing, research and development expense 3.4 7.0 (3.6 ) Increase (decrease) in fair value of acquisition-related contingent consideration (6.3 ) 5.2 (11.5 ) Depreciation and amortization expense 2.6 2.6 — General and administrative expense 11.2 13.0 (1.8 ) Other (expense) income, net — (0.5 ) 0.5 Income tax expense (1.3 ) (4.0 ) 2.7 Net income 15.9 13.5 2.4 Revenues We generated revenues of $37.8 million and $41.5 million for the years ended December 31, 2023 and 2022, respectively.
Biggest changeComparison of the Years Ended December 31, 2024 and 2023 The following table summarizes the results of our operations: (in millions) For the Year Ended December 31, Change 2024 2023 Revenues $ 45.0 $ 37.8 $ 7.2 Provision for credit losses 12.8 1.9 $ 10.9 Loss on impairment of intangible assets 5.8 — $ 5.8 Impairment of goodwill — 8.4 $ (8.4) Interest expense 4.7 1.8 $ 2.9 Pharmaceutical manufacturing, research and development expense 2.2 3.4 $ (1.2) Change in fair value of acquisition-related contingent consideration (4.9) (6.3) $ 1.4 Depreciation and amortization expense 1.4 2.6 $ (1.2) General and administrative expense 11.5 11.2 $ 0.3 Other income, net 6.8 — $ 6.8 Income tax expense (benefit) 4.9 (1.3) $ 6.2 Net income 13.5 15.9 $ (2.4) Revenues Revenues increased to $45.0 million for the year ended December 31, 2024 from $37.8 million for the year ended December 31, 2023.
Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion.
Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current deferred revenue. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our financial statements and the related notes included elsewhere in this Annual Report. Statements below regarding future events or performance are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with our financial statements and the related notes included elsewhere in this Annual Report. Statements below regarding future events or performance are “forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
Other administrative service revenues are recognized when contractual obligations are fulfilled or as services are provided. 32 Pharmaceutical Development Segment Our 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.
Other administrative service revenues are recognized when contractual obligations are fulfilled or as services are provided. Pharmaceutical Development Segment Our 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.
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.
We entered into a $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.
The Notes will mature on January 31, 2027, unless earlier redeemed, and will bear interest at a rate of 9.00 percent per annum, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year and at maturity, commencing on December 31, 2023.
The Notes will mature on January 31, 2027, unless earlier redeemed, and will bear interest at a rate of 9.00% per annum, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year and at maturity, commencing on December 31, 2023.
Discussion of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Discussion of 2023 items and year-to-year comparisons between 2023 and 2022 that are not included in this Annual Report can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Income Taxes The recognition of certain net deferred tax assets of our reporting entities are dependent upon, but not limited to, the future profitability of the reporting entity, when the underlying temporary differences will reverse, and tax planning strategies.
Income Taxes The recognition of certain net deferred tax assets of our reporting entities is dependent upon, but not limited to, the future profitability of the reporting entity, when the underlying temporary differences will reverse, and tax planning strategies.
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. 31 Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”).
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. 24 Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP").
Please refer to Part I, Item 1, Business and Part II, Item 8, Financial Statements , Notes 1 and 11 of the notes to the consolidated financial statements for further information regarding segment information.
Please refer to Part I, Item 1, Business and Part II, Item 8, Financial Statements , Notes 1 and 13 of the notes to the consolidated financial statements for further information regarding segment information.
Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, refer to Note 1 of the notes to the consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data . 33 Results of Operations This section of this Annual Report generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, refer to Note 1 of the notes to the consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data . 26 Results of Operations This section of this Annual Report generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
With an effective date of January 1, 2024, we entered into an exclusive option and asset purchase agreement with Aptar on March 14, 2024 which granted Aptar an exclusive option to acquire certain of Enteris’ assets related to its business of providing good manufacturing practice (GMP) manufacturing and clinical supply services through Phase 1 and 2 to third parties, subject to certain exclusions.
With an effective date of January 1, 2024, we entered into an exclusive Option and Asset Purchase Agreement with a strategic partner on March 14, 2024, which granted the strategic partner an exclusive option to acquire certain of Enteris’ assets related to its business of providing good manufacturing practice (GMP) manufacturing and clinical supply services through Phase 1 and 2 to third parties, subject to certain exclusions.
Please refer to Note 12 of the notes to the consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data .
Please refer to Note 14 of the notes to the consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data .
We generate income primarily from four sources: 1. Primarily owning or financing through debt investments, royalties generated by the sales of life science products and related intellectual property; 2. Receiving interest and other income by advancing capital in the form of secured debt to companies in the life science sector; 3. Pharmaceutical development, manufacturing, and licensing activities; and 4.
Primarily owning or financing through debt investments, royalties generated by the sales of life science products and related intellectual property; 2. Receiving interest and other income by advancing capital in the form of secured debt to companies in the life science sector; 3. Pharmaceutical development, manufacturing, and licensing activities; and 4.
Primary Driver of Cash Flow Our ability to generate cash in the future depends primarily upon our success in implementing our Finance Receivable segment 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.
Primary Driver of Cash Flow 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: 1.
We do not assume any near-term repayments from borrowers, and as a result, no assurances can be given that actual results would not differ materially from the 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.
We anticipate near-term repayments from borrowers, however, no assurances can be given that actual results would not differ materially from the 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.
Allowance 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.
The increase in the Pharmaceutical Development segment was primarily due to the strategic partner collaboration agreement. Provision for Credit Losses Our provision 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.
The Company received net proceeds after discounts, commissions, expenses and fees, of approximately $30.6 million.
The Company received net proceeds after discounts, commissions, expenses and fees, of approximately $30.6 million. See Note 8 for more information.
As of December 31, 2023, we had $5.0 million of unfunded commitments. Please refer to Part II, Item 8, Financial Statements , Note 7 of the notes to the consolidated financial statements for further information regarding the Company’s commitments and contingencies. 37
As of December 31, 2024, we had $5.8 million in unfunded commitments. Please refer to Item 1., Financial Statements , Note 9 of the notes to the consolidated financial statements for further information regarding the Company’s commitments and contingencies. 29
The $3.7 million decrease in revenue for the year ended December 31, 2023, consisted mainly of a $4.3 million decrease in Pharmaceutical Development segment revenue and a $0.9 million increase in Finance Receivables segment revenue.
The $7.2 million increase in revenue for the year ended December 31, 2024 consisted of a $4.8 million increase in Finance Receivables segment revenue and a $2.4 million increase in Pharmaceutical Development segment revenue.
Oncology diagnosis (2), (3) 5,784 2,587 — Coflex®/Kybella® Spinal stenosis/submental fullness 4,350 3,212 (270 ) Cambia® NSAID migraine treatment (4) 8,500 — 100 Duo Royalty Japanese Women’s health/cystic fibrosis 15,488 13,588 2,701 Flowonix Medical, Inc. Drug delivery device (3), (5) 10,433 10,433 — Forfivo XL® Depressive disorder treatment 6,000 1,340 1,053 Ideal Implant, Inc.
(2), (3) Oncology diagnosis 5,784 2,347 — Coflex®/Kybella® Spinal stenosis/submental fullness 4,350 3,053 246 Cambia® (4) NSAID migraine treatment 8,500 — 420 Duo Royalty Japanese Women's health/cystic fibrosis 15,353 11,231 2,346 Flowonix Medical, Inc. (3),(5) Drug delivery device 12,455 8,433 — Forfivo XL® Depressive disorder treatment 6,000 1,267 1,239 Ideal Implant, Inc.
Since the timing of any investment is difficult to predict, our Finance Receivables segment may not be able to generate positive cash flow above what our existing assets are expected to produce in 2023.
We continue to evaluate multiple attractive opportunities that, if consummated, we believe would similarly generate additional income. Since the timing of any investment is difficult to predict, our Finance Receivables segment may not be able to generate positive cash flow above what our existing assets are expected to produce in 2025.
The contingent consideration is the earnout related to the 2019 acquisition of Enteris and sharing of certain milestone and royalties due to Enteris pursuant to the License Agreement with Cara for oral formulation rights to Enteris' Peptelligence® technology to develop and commercialize Oral KORSUVA™ in any indication worldwide, excluding South Korea and Japan (please refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 7 of the notes to the consolidated financial statements for further information on contingent consideration).
The contingent consideration is the earnout related to the 2019 acquisition of Enteris and sharing of certain milestone and royalties due to Enteris pursuant to a license agreement ("License Agreement") with Cara Therapeutics, Inc. ("Cara") for oral formulation rights to Enteris' technology to develop and commercialize Oral KORSUVA™ in any indication worldwide, excluding South Korea and Japan.
Interest expense increased to $1.8 million for the year ended December 31, 2023 from $0.3 million for the year ended December 31, 2022. This increase in interest expense was mainly due to issuing approximately $32.9 million of Notes in an underwritten public offering in October of 2023.
The $2.9 million increase in interest expense was mainly due to issuing approximately $32.9 million of Notes in an underwritten public offering in October of 2023. 27 Pharmaceutical Manufacturing, Research and Development Expense Pharmaceutical manufacturing, research and development expense decreased from $3.4 million for the year ended December 31, 2023 to $2.2 million for the year ended December 31, 2024.
To a lesser extent, realizing capital appreciation from equity-related investments in the life science sector. As of December 31, 2023, our finance receivables portfolio contains $274.5 million of net finance receivables and $48,000 of marketable investments. We expect these assets to generate positive cash flows in 2024.
Realizing capital appreciation from equity-related investments in the life science sector. As of December 31, 2024, our finance receivables portfolio contains $277.8 million of net finance receivables and $0.6 million of marketable investments. We expect these assets to generate positive cash flows in 2025. We continuously monitor the short and long-term financial position of our finance receivables portfolio.
Change in Fair Value of Contingent Consideration We recognized a $6.3 million gain from the change in fair value of acquisition-related contingent consideration during the year ended December 31, 2023 and recognized a $5.2 million loss in 2022.
Change in Fair Value of Contingent Consideration We recognized gains of $4.9 million and $6.3 million from the change in fair value of acquisition-related contingent consideration during the years ended December 31, 2024 and 2023, respectively.
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. Changes in interest rates, including the levels of the underlying reference rates may affect the interest income for debt instruments with floating rates.
In addition, the majority of our finance receivables portfolio are debt instruments that carry floating interest rates. Changes in interest rates, including the levels of the underlying reference 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.
Please refer to Part II, Item 8, Financial Statements , Note 13 of the notes to the consolidated financial statements for further information regarding the Option and Asset Purchase Agreement with Aptar. 28 Finance Receivables Portfolio Overview The tables below provide an overview of our outstanding transactions as of, and for the year ended, December 31, 2023 (in thousands, except rate, share and per share data): Royalty Purchases Licensed Technology Footnote Funded Amount GAAP Balance Revenue (Loss) Recognized Besivance® Ophthalmic antibiotic (1) $ 6,000 $ — $ 23 Best ABT, Inc.
Finance Receivables Portfolio Overview The tables below provide an overview of our outstanding transactions as of, and for the year ended, December 31, 2024 (in thousands, except rate, share and per share data): Royalty Purchases Licensed Technology Funded Amount GAAP Balance Revenue Recognized Besivance® (1) Ophthalmic antibiotic $ 6,000 $ — $ 29 Best ABT, Inc.
As of December 31, 2023, $12.4 million was outstanding under the new Credit Agreement, and $47.7 million was available for borrowing.
As of December 31, 2024, there was $6.2 million outstanding amount under the new Credit Agreement, and $35.6 million was available for borrowing.
TBD — — — 30 Assets Revenue Recognized Total gross finance receivables $ 288,405 $ 36,346 Total marketable investments 48 — Fair value of warrant assets 1,759 — Total gross assets/revenues $ 290,212 $ 36,346 (1) US royalty was paid off during the year ended December 31, 2021. SWK continues to receive insignificant royalties on international sales.
TBD — — — 23 Assets Revenue Recognized Total gross finance receivables $ 289,009 $ 40,787 Total marketable investments 580 — Fair value of warrant assets 4,366 — Total $ 293,955 $ 40,787 (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.
(2) Investment considered partially impaired. (3) Investment on non-accrual. (4) Investment was paid off during the year ended December 31, 2023. (5) Flowonix Medical assets were sold to Algorithm Sciences, Inc. during the year ended December 31, 2023.
(3) Investment on non-accrual. (4) Carrying value was paid off during the year ended December 31, 2023. SWK continues to receive royalties on actual sales. (5) Flowonix Medical assets were sold to a medical device company during the year ended December 31, 2023.
Income Tax (Benefit) Expense During the years ended December 31, 2023 and 2022, we recognized income tax benefit of $1.3 million and $4.0 million, respectively. The $2.7 million decrease in income tax benefit is mainly the result of releasing the valuation allowance against deferred tax assets.
Income Tax Expense During the years ended December 31, 2024 and 2023 we recognized $4.9 million income tax expense and $1.3 million of income tax benefit, respectively.
Management uses judgment to determine whether milestones or other variable consideration, except for royalties, should be included in the transaction price as described further below. The transaction price is allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied.
Management uses judgment to determine whether milestones or other variable consideration, except for royalties, should be included in the transaction price as described further below.
The increase was partially offset by a net $1.2 million decrease in royalty revenue when compared to the same period of the previous year and an $10.5 million decrease in interest, royalties and fees earned on finance receivables that were paid off in 2022.
The $4.8 million increase in Finance Receivables segment revenue was primarily due to a $8.2 million increase in interest and fees earned due to funding new and existing loans offset by $2.5 million decrease in interest, fees and royalties earned on finance receivables that were paid off during the period.
In exchange for releasing its lien, the Flowonix estate received $2.5M cash and is expected to receive royalties on sales of two products. The finance receivable is now classified as a royalty.
In exchange for releasing its lien, SWK received cash at close and is expected to receive royalties on sales of two products. The finance receivable is now classified as a royalty. (6) In July 2023, Ideal Implant assets were sold to an aesthetics company, which is expected to pay SWK a mid-single digit, capped royalty on implant sales.
We recognized Allowance for credit loss expense of $1.9 million and $3.5 million during the years ended December 31, 2023 and 2022, respectively (please refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 3 of the notes to the consolidated financial statements for further information on the allowance for credit losses). 34 Interest Expense Interest expense consists of interest accrued on our revolving line of credit, 9.00% Senior Notes due 2027 (“Notes”), unused line of credit and maintenance fees, as well as amortization of debt issuance costs.
Interest Expense Interest expense consists of interest accrued on our revolving line of credit, 9.00% Senior Notes due 2027, unused line of credit and maintenance fees, as well as amortization of debt issuance costs. Interest expense increased to $4.7 million for year ended December 31, 2024 from $1.8 million for the year ended December 31, 2023.
The primary driver of the $0.9 million decrease in our cash balance was $55.8 million of interest, fees, principal and royalty payments received on our finance receivables, a $9.9 million net increase on our credit facility, a $0.9 million increase in Enteris revenue receipts, and $33.0 million cash received from the issuance of Senior Notes.
The primary driver of the $1.4 million increase in our cash balance was $88.2 million of interest, fees, principal and royalty payments received on our finance receivables and $5.0 million of cash receipts from pharmaceutical development revenues.
The federal federal research credits begin to expire in 2023 and will fully expire by 2042. Liquidity and Capital Resources As of December 31, 2023, we had $5.2 million in cash, cash equivalents and restricted cash, compared to $6.2 million as of December 31, 2022.
Liquidity and Capital Resources As of December 31, 2024, we had $5.9 million in cash and cash equivalents, compared to $4.5 million as of December 31, 2023.
Aesthetics (3), (6) 3,834 3,834 — Iluvien® Diabetic macular edema 16,501 14,650 2,041 Immune Globulin Portfolio Immune Globulin Therapeutics 14,100 14,197 — Veru, Inc. Women’s health 10,000 3,419 526 Term Loans Type Footnote Maturity Date Principal GAAP Balance Rate Revenue (Loss) Recognized 4Web, Inc. First lien 12/31/24 $ 29,411 $ 31,807 12.8 % $ 4,769 AOTI, Inc.
(3), (6) Aesthetics 4,025 3,050 — Immune Globulin Immune Globulin Therapeutics 14,100 11,685 1,729 Iluvien® Diabetic macular edema 16,501 15,865 1,774 Relief Rare Disease Portfolio 7,701 8,005 490 Veru, Inc (7) Women's health 10,000 — 582 22 Term Loans Type Maturity Date Principal GAAP Balance Rate Revenue Recognized 4Web, Inc.
The increase in cash and cash equivalents was offset by $74.1 million of investment funding, net of deferred fees and origination expenses; payroll, accounts payable and credit facility closing costs of $18.4 million; and $6.3 million to repurchase shares of the Company’s common stock in the open market.
The increase in cash and cash equivalents was partially offset by $64.1 million of investment funding, net of deferred fees and origination expenses, a net credit facility payment of $6.2 million, a payroll and benefits expense of $5.4 million, $10.8 million of payments on accounts payable, and share repurchases of $6.0 million.
The goodwill impairment test concluded that the fair value of the Company’s Pharmaceutical Development reporting unit did not exceed the carrying amount and the Company recognized an impairment charge of $8.4 million and reduced the goodwill balance to $0. Refer to Note 2 for further information.
As part of the Company's annual goodwill impairment analysis, the Company elected to bypass the qualitative goodwill impairment assessment and proceed directly with a quantitative assessment. The goodwill impairment test concluded that the fair value of the Company's Pharmaceutical Development reporting unit did not exceed the carrying amount and the Company recognized an impairment.
TBD — — — eTon Pharmaceuticals, Inc. 51,239 5.86 97 53 eTon Pharmaceuticals, Inc. 18,141 6.62 37 20 Exeevo, Inc. 930 — — — EyePoint Pharmaceuticals, Inc. 40,910 11.00 711 690 EyePoint Pharmaceuticals, Inc. 7,773 19.30 125 123 Shield Warrant 8,910,540 — 449 (96 ) MedMinder Systems, Inc. 57,859 — — — MolecuLight, Inc.
TBD — — — Eton Pharmaceuticals, Inc. Tranche 1 51,239 5.86 424 327 Eton Pharmaceuticals, Inc. Tranche 2 18,141 6.62 148 111 Eton Pharmaceuticals, Inc. Tranche 3 289,736 5.32 3,008 1,936 EyePoint Pharmaceuticals, Inc. 40,910 11.00 — 127 EyePoint Pharmaceuticals, Inc. 7,773 19.30 — 22 Shield Warrant (10) 8,910,540 0.14 201 (193) MedMinder, System, Inc.
First lien (3) 07/01/26 9,152 9,128 12.5 % 749 29 Marketable Investments Number of Shares Footnote Funded Amount GAAP Balance Change in Fair Value Active Investment as of 12/31/23 Secured Royalty Financing (Marketable Investment) N/A (2), (3) $ 3,000 $ 48 $ — Yes Epica International, Inc. 25,000 N/A — — Yes Sincerus Pharmaceuticals, Inc. 26,575 N/A — — Yes Warrants to Purchase Stock Number of Shares Footnote Exercise Price per Share GAAP Balance Change in Fair Value 4Web, Inc.
First lien 11/30/26 6,000 6,144 12.8 % 1,039 NeoLight, LLC First lien 2/15/26 5,000 5,250 13.5 % 992 Shield Therapeutics, Plc First lien 9/28/28 20,000 19,670 14.3 % 3,296 SKNV First lien 11/15/28 15,997 16,378 12.0 % 2,059 Triple Ring First lien 12/6/28 8,000 7,930 12.0 % 76 Marketable Investments Number of Shares Funded Amount GAAP Balance Change in Fair Value Secured Royalty Financing (Marketable Investment) (2), (3) N/A $ 3,000 $ 21 $ — AOTI Common Stock (8) 402,634 N/A 559 (85) EyePoint Pharmaceuticals — N/A — (181) Warrants to Purchase Stock Number of Shares Exercise Price per Share GAAP Balance Change in Fair Value 4Web, Inc.
General and Administrative General and administrative expenses consist primarily of compensation, including 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 $11.2 million for the year ended December 31, 2023 from $13.0 million for the year ended December 31, 2022.
Amortization expense is aligned with the expected future cash flows of the intangible assets. See Note 3 for more information on the impairment of the Cara license. General and Administrative Expense 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.
First lien 12/21/26 12,364 12,493 14.5 % 2,286 CDMO Manufacturer First lien 09/13/27 5,000 5,026 13.3 % 234 Epica International, Inc. First lien 07/23/24 9,750 10,485 9.5 % 1,863 eTon Pharmaceuticals, Inc. First lien 11/13/24 5,460 5,696 10.0 % 972 Exeevo, Inc.
First lien 8/10/27 21,045 23,944 12.0 % 3,767 Epica International, Inc. First lien 7/23/24 — — 11.5 % 957 Eton Pharmaceuticals, Inc. First lien 12/17/27 30,000 28,925 12.1 % 900 Exeevo, Inc. (3), (9) First lien 7/1/27 — — 12.8 % 8 Journey Medical Corporation First lien 12/27/27 25,000 24,964 12.8 % 2,611 MedMinder Systems, Inc.
Pharmaceutical Manufacturing, Research and Development Expense Pharmaceutical manufacturing, research and development expense decreased from $7.0 million for the year ended December 31, 2022 to $3.4 million for the year ended December 31, 2023. The $3.6 million decrease was primarily due to a reduction in headcount, as well as a reduction in research and development and clinical trial expenditures.
The $1.2 million decrease was primarily due to a reduction in research and development and clinical trial expenditures related to cancelled projects during the period.
See Note 6 for further information on the Notes, new Credit Agreement, and Prior Credit Agreement. Impairment of Goodwill We recognized a $8.4 million impairment charge during the year ended December 31, 2023. As part of the Company’s annual goodwill impairment analysis, the Company elected to bypass the qualitative goodwill impairment assessment and proceed directly with a quantitative assessment.
Most of the change was related to a $8.1 million impairment on the Trio loan and $2.2 million impairment on the Exeevo loan that were included within the provision for credit losses during the year ended December 31, 2024. Impairment of Goodwill We recognized a $8.4 million impairment charge during the year ended December 31, 2023.
Removed
Aptar must exercise the option by or before January 1, 2026.
Added
The strategic partner must exercise the Option by or before January 1, 2026. As of December 31, 2024, Enteris is classified as held for sale as the Option is expected to be exercised within the next 12-months.
Removed
First lien 03/21/27 12,000 12,104 11.0 % 1,989 Acer Therapeutics, Inc. First lien (7) 03/04/24 — — 12.0 % 1,560 Elutia, Inc. First lien 08/10/27 23,045 24,285 12.0 % 3,992 BIOLASE, Inc. First lien 05/31/25 13,135 14,015 11.3 % 2,263 Biotricity, Inc.
Added
Please refer to Part II, Item 8, Financial Statements , Note 13 and Note 7 of the notes to the consolidated financial statements for further information regarding the Option and Asset Purchase Agreement with the strategic partner and held for sale classification.
Removed
First lien 07/01/27 6,952 6,924 15.0 % 960 Journey Medical Corporation First lien 12/27/27 15,000 14,802 12.8 % 24 MedMinder Systems, Inc. First lien 08/18/27 20,000 20,107 12.9 % 2,849 MolecuLight, Inc. First lien 12/29/26 10,000 10,227 12.8 % 1,867 Nicoya Lifesciences, Inc.
Added
First lien 6/30/25 $ 23,736 $ 26,482 11.3 % $ 4,722 AOTI, Inc. First lien 3/21/27 8,478 8,635 11.2 % 1,895 BIOLASE, Inc. (2) (3) First lien 5/31/25 1,000 1,000 10.3 % 916 Biotricity, Inc. First lien 2/15/27 14,446 14,749 11.5 % 2,387 CDMO Manufacturer First lien 9/13/27 5,000 5,298 13.3 % 806 Elutia, Inc.
Removed
First lien 11/30/26 6,000 5,971 12.8 % 221 NeoLight, LLC First lien 02/17/27 5,000 5,016 13.5 % 720 Shield Therapeutics, Plc First lien 09/28/28 20,000 19,325 14.3 % 799 SKNV First lien 05/15/27 13,497 13,734 10.4 % 2,055 Trio Healthcare Ltd.
Added
First lien 8/18/28 22,500 22,774 12.3 % 2,884 MolecuLight, Inc. First lien 12/29/27 10,881 11,930 12.8 % 2,617 Nicoya Lifesciences, Inc.
Removed
TBD $ — $ — $ — AOTI, Inc. 92,490 — — — Acer Therapeutics, Inc. 150,000 2.46 — (185 ) Acer Therapeutics, Inc. 100,000 1.51 — (132 ) Acer Therapeutics, Inc. 250,000 2.39 — (259 ) Acer Therapeutics, Inc. 500,000 1.00 — 24 Acerus Pharmaceuticals Corporation — — — (5 ) Aziyo Biologics, Inc. 157,895 6.65 283 (232 ) Aziyo Biologics, Inc. 30,075 6.65 54 (45 ) BIOLASE, Inc. 22,039 9.80 — (4 ) Biotricity, Inc. 57,536 6.26 3 (7 ) CDMO Manufacturer 211,442 1.42 — — CeloNova BioSciences, Inc.
Added
TBD $ — $ — $ — Aziyo Biologics, Inc. Tranche 1 157,895 6.65 353 70 Aziyo Biologics, Inc. Tranche 2 30,075 6.65 67 13 Biotricity, Inc. Tranche 1 9,589 37.56 2 (2) Biotricity, Inc. Tranche 2 600,000 0.50 163 (5) CDMO Manufacturer 211,442 1.42 — — DxTerity Diagnostics, Inc. 2,019,231 — — — Epica International, Inc.
Removed
TBD — — — DxTerity Diagnostics, Inc. 2,019,231 — — — Epica International, Inc.
Added
Tranche 1 57,859 10.37 — — MedMinder Systems, Inc. Tranche 2 14,465 10.37 — — Neolight, LLC 52,524 7.62 — — MolecuLight, Inc.
Removed
(6) In July 2023, Ideal Implant assets were sold to an aesthetics company, which is expected to pay SWK a mid-single digit, capped royalty on implant sales beginning in 2024. (7) Loan was sold to a third party during the year ended December 31, 2023.
Added
(7) The Veru royalty was repaid during the year ended 2024. (8) AOTI warrants exercised and converted to shares. (9) Investment paid off during the year ended December 31, 2024. (10) Exercise price is converted from 0.111 British Pound per share.
Removed
Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in our consolidated balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current deferred revenue.
Added
The transaction price is allocated to each performance obligation on a relative stand‑alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. 25 Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in our consolidated balance sheets.
Removed
The decrease in Pharmaceutical Development segment revenue was primarily due to $5.0 million of milestone revenue related to Enteris’ license agreement ("License Agreement") with Cara Therapeutics, Inc. ("Cara") received during the year ended December 31, 2022, and no similar milestone revenue was recognized during year end December 31, 2023.
Added
We recognized a net provision for credit losses of $12.8 million and $1.9 million for the years ended December 31, 2024 and 2023, respectively.
Removed
The $0.9 million increase in Finance Receivables segment revenue was primarily due to $9.0 million increase in interest and fees earned due to funding new and existing loans and a $3.8 million increase in interest earned on our finance receivables due to an overall increase in reference rates.
Added
During the year ended December 31, 2024, it was determined the milestones and royalties pursuant to the License Agreement would not be realized as a result of non-viability of the product covered by the License Agreement. Accordingly, the Company concluded that the liability for contingent consideration, previously held at its estimated fair value of $4.9 million, should be $0.
Removed
Additionally, during the year ended December 31, 2023 there was acceleration of debt issuance costs related to the Prior Credit Agreement with Cadence Bank, as well as interest expense incurred on both the Prior Credit Agreement and the new Credit Agreement with First Horizon Bank.
Added
Depreciation and Amortization Expense The $1.2 million decrease in depreciation and amortization expense for the year ended December 31, 2024 primarily consists of a decrease in amortization expense related to no longer amortizing intangible assets related to the Cara license as the intangible assets were fully impaired during the year.
Removed
The carrying amount of the liability may fluctuate significantly, and actual amounts paid may be materially different from the estimated value of the liability. Depreciation and Amortization Depreciation and amortization expense for the year ended December 31, 2023 and 2022 was $2.6 million. Amortization expense is aligned with the expected future cash flows of the intangible assets.
Added
General and administrative expenses increased to $11.5 million for the year ended December 31, 2024 from $11.2 million for the year ended December 31, 2023. Other Income, Net Other income, net increased to $6.8 million for the year ended December 31, 2024. Other income, net was immaterial for the year ended December 31, 2023.
Removed
The $1.8 million decrease was primarily driven by a one-time severance payment of $1.1 million paid to the former CEO during the three months ended September 30, 2022; a $0.8 million decrease in one-time professional fees and other expense related to corporate strategic planning; and a net $0.5 million decrease in Pharmaceutical Development segment operational expenses due to a reduction in headcount and business development expense.
Added
The $6.8 million increase includes a $2.5 million gain on revaluation related to the Iluvien royalty after a contractual re-negotiation, a $2.4 million increase in unrealized gains on warrants, a $1.1 million gain on asset payoff, and a gain of $0.6 million due to foreign currency transactions.
Removed
The decrease was partially offset by a $0.6 million increase in salaries and wages for the Finance Receivables segment due to additional headcount and annual pay increases. 35 Other (Expense) Income, Net Other expense, net for the year ended December 31, 2023 was approximately $36.9 thousand which consisted of a realized loss of $0.8 million from the write off of warrants and a net aggregate fair market value loss of approximately $54.4 thousand on our warrant derivatives.
Added
Income tax expense increased period over period due to the release of valuation allowance on deferred tax assets of $6.7 million during the year ended December 31, 2023 and an increase in the Company's effective tax rate to 26.6% as of December 31, 2024 from a benefit of 8.7% for the same period in the prior year.
Removed
This was offset by a $0.8 million gain from the remeasurement of foreign currency transactions into our functional currency.
Added
The $60.0 million Credit Agreement contains a $5.0 million liquidity covenant, bringing the total amount available for borrowing to $35.6 million. 28 On October 3, 2023, the Company completed a registered underwritten public offering of $30.0 million of the Notes.
Removed
Other income, net for the year ended December 31, 2022 reflected a net aggregate fair market value gain of $0.4 million on our warrant derivatives and a net fair value loss $0.5 million on the change in fair value of our Bioventus and Harrow common stock.
Removed
Additionally, a realized loss $0.2 million was reflected on the sale of our Bioventus and Harrow common stock, in addition to a $0.2 million loss from the remeasurement of foreign currency transactions into our functional currency, net of changes in fair value of the foreign currency forward contract.
Removed
As of December 31, 2023 and 2022, our cumulative gross deferred tax assets were $28.4 million and $33.1 million, respectively. Based on historical and expected future operating performance, we concluded that it was more likely than not that we will not be able to realize the full benefit of the U.S. federal and state deferred tax assets in the future.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs 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, 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.
Biggest changeAs 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 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK During the year ended December 31, 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 December 31, 2023, approximated its carrying value.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK During the year ended December 31, 2024, our cash and cash equivalents were deposited in accounts at well capitalized financial institutions. The fair value of our cash and cash equivalents at December 31, 2024 approximated its carrying value.
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. 38
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. 30

Other SWKH 10-K year-over-year comparisons