SWK Holdings (SWKHL) risk factors, FY2025 10-K

Risks Related to Finance Receivables Segment

1. 01We may suffer losses on our principal invested in credit and royalty transactions
2. 02We operate in a highly competitive market for investment opportunities
3. 03Healthcare and life sciences industries are subject to extensive government regulation, litigation risk, reimbursement risk and certain other risks particular to those industries
4. 04Companies in the life sciences 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
5. 05The pharmaceutical industry is subject to numerous risks, including competition, extensive government regulation, product liability, patent exclusivity and commercial difficulties
6. 06Our 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
7. 07We generally do not control our partner companies, and our partner companies may make decisions with which we don’t agree or that don’t serve our business or financial interestsNew
8. 08If 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
9. 09We may have limited access to information about privately-held royalty streams and companies in which we invest
10. 10Prepayments of our debt investments by our partner companies could adversely impact our results of operations and reduce our return on equity
11. 11Our quarterly and annual operating results are subject to fluctuation as a result of the nature of our business, and if we fail to achieve our investment objective, the market price of our common stock may decline
12. 12Our investments in royalty-related transactions depend on third parties to market royalty-generating products
13. 13Our Finance Receivables segment has a limited number of assets, which subjects our aggregate returns, and the value of our common stock, to a greater risk of significant loss if any of our debt securities declines in value or if any of our royalty investments substantially underperforms our expectations
14. 14Our allowance for credit losses may prove inadequate
15. 15A rise in the reference rates could have an adverse impact on the ability of our partner companies to service their debt obligations to us
16. 16Fluctuations 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
17. 17Our financial condition and results of operations will depend on our ability to manage future growth of our Finance Receivables segment effectively

Risks Related to Pharmaceutical Development Segment

1. 18MOD3's technology or products could give rise to product liability claims
2. 19Because MOD3 is a biopharmaceutical company, its operations are subject to extensive government regulation
3. 20MOD3 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

Risks Related to Our Business and Structure

1. 21Our 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
2. 22Changes in tax law may adversely affect us or our investors
3. 23From time to time, we engage in acquisitions, divestitures and joint ventures and may encounter difficulties in integrating and separating these businesses and therefore we may not realize the anticipated benefits61% rewritten
4. 24We are dependent upon our key management personnel for our future success
5. 25Changes in our management may cause uncertainty in, or be disruptive to, our businessNew
6. 26Because 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
7. 27As of December 31, 2025, we had $42.8 million of cash and cash equivalents plus $10.0 million available to be borrowed under our new credit facility with First Horizon Bank42% rewritten
8. 28Our prior credit agreement with Cadence Bank was terminated in connection with the establishment of the new Credit Agreement
9. 29We may not be able to generate sufficient cash to service all of our debt, and may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful
10. 30Our use of leverage may limit our operational flexibility and increase our overall risk, which may adversely affect our business and results of operations
11. 31The liquidity, market price and volume of our stock are volatile73% rewritten
12. 32We have in the past received a letter from Nasdaq indicating that we were not in compliance with Nasdaq's listing standards. While we have successfully regained compliance, we can provide no assurance that we will continue to maintain compliance with such standardsNew
13. 33Funds affiliated with Carlson can control or exert significant influence over our management and policies through their ownership of a large amount of our common stock23% rewritten
14. 34If there are substantial sales of shares of our common stock, the price of our common stock could decline29% rewritten
15. 35We have adopted provisions in our certificate of incorporation and bylaws, and have entered into the Rights Agreement, which could delay or prevent an acquisition of the Company
16. 36Additionally, the Rights Agreement is intended to protect our ability to utilize our NOL carryforwards and contains provisions that make it difficult for a third party to acquire a significant number of shares of our common stock
17. 37We have not been and do not intend to become registered as an “investment company” under the Investment Company Act of 1940, or the 1940 Act. We intend to conduct our business so as not to become regulated as an investment company under the 1940 Act
18. 38Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our businesses
19. 39Cybersecurity incidents and other disruptions to our information technology systems, or the information systems of third parties whom we do business with, may compromise our information and expose us to liability that could adversely impact our financial condition, business operations, and reputation54% rewritten
20. 40AI presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information, and personal dataNew
21. 41Public health epidemics, pandemics or outbreaks could adversely affect our and our partner companies’ businesses61% rewritten
22. 42Economic recessions or downturns could impair the ability of our partner companies to repay loans, which, in turn, could increase our non- performing assets, decrease the value of our assets, reduce our volume of new loans and have a material adverse effect on our results of operations56% rewritten
23. 43Some of our partner companies may be unable to protect their proprietary rights and may infringe on the proprietary rights of others
24. 44The development of products by life science companies requires significant research and development, clinical trials and regulatory approvals
25. 45Changes in healthcare laws and other regulations applicable to some of our partner companies’ businesses may constrain their ability to offer their products and services
26. 46The potential inability of our partner companies’ and counterparties to charge desired prices with respect to prescription drugs could impact their revenues and in turn their ability to repay us or the magnitude of their royalty payments to us

Risks Relating to the Mergers

1. 47Stockholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the MergersNew
2. 48The announcement and pendency of the Mergers could adversely affect our businesses, financial results and operationsNew
3. 49If the Mergers do not close, we will not benefit from the expenses they have incurred in pursuit of the MergersNew
4. 50The termination of the Merger Agreement could negatively impact our businessNew
5. 51The Mergers are subject to closing conditions, including approval by Company stockholders, that, if not satisfied or (to the extent legally allowed) waived, will result in the Mergers not being completed, which may result in material adverse consequences to the business and operations of RWAY and the CompanyNew
6. 52We will be subject to operational uncertainties and contractual restrictions while the Mergers are pendingNew
7. 53Litigation filed against RWAY or the Company in connection with the Mergers could result in substantial costs and could delay or prevent the Mergers from being completedNew
8. 54The Mergers may trigger certain “change of control” provisions and other restrictions in our contracts, and the failure to obtain any required consents or waivers could adversely impact the combined companyNew
9. 55The shares of RWAY common stock to be received by our stockholders as a result of the Mergers will have different rights associated with them than our shares of common stock currently held by themNew
10. 56Our stockholders may receive a form or combination of consideration different from what they electNew
11. 57The market price of RWAY common stock will continue to fluctuate after the MergersNew