Company: SWKH
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001628280-25-040420
Chunk: 71

Company: SWK Holdings Corp
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 71
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 including but not limited to, financial strength of borrowers and operating results of the underlying business. The credit risk analysis and rating assignment is performed quarterly in conjunction with the Company's assessment of its allowance for credit losses. The Company uses the following definitions for its risk ratings for Term Loans:1: Borrower performing well below Company expectations, and the borrower's ability to raise sufficient capital to operate its business or repay debt is highly in question. Finance receivables rated a 1 are on non-accrual and are at an elevated risk for principal impairment.2: Borrower performing below plan, and the loan-to-value is generally worse than at the time of underwriting. Borrower has limited access to additional capital to operate its business. Finance receivables rated a 2 are generally on non-accrual, and while no loss of impairment is anticipated, there is potential for future principal impairment.3: Borrower performing in-line-to-modestly below Company expectations, and loan-to-value is similar to slightly worse than at the time of underwriting. Borrower has demonstrated access to capital markets.4: Borrower performing in-line-to-modestly above Company expectations and loan-to-value similar or modestly better than underwriting case. Borrower has demonstrated access to capital markets.5: Borrower performing in excess of Company expectations, and loan-to-value is better than at time of origination.The Company uses an internal credit rating system which rates each Royalty on a color scale of Green to Red, with Green typically indicative of a Royalty that is exceeding base underwritten case, Yellow indicates a royalty is performing in-line with underwritten plan, and Red reflective of underperformance relative to plan. Royalties rated as Red are generally classified as non-accrual.

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The following table summarizes the gross carrying value of Finance Receivables by origination year, grouped by risk rating (in thousands):June 30, 202520252024202320222021PriorTotalTerm Loans5$— $29,389 $— $19,602 $16,396 $— $65,387 49,717 8,007 39,366 22,912 — — 80,002 3— — 19,905 25,175 — 22,953 68,033 2— — 5,702 — 14,994 — 20,696 Subtotal - Term Loans$9,717