Eton Pharmaceuticals, Inc. Debt Disclosure
Note 7 – Debt
SWK Loan
In November 2019, the Company entered into a credit agreement (the “SWK Credit Agreement”) with SWK, which provided for up to $10,000 in debt financing. As a result of subsequent amendments to the SWK Credit Agreement, the Company expanded its credit facility to $30,000, extended the facility’s maturity to three years from closing with a loan maturity date of December 17, 2027, and reduced the facility’s annual interest rate to Secured Overnight Financing Rate (“”) plus 6.75%.
Interest payments are payable quarterly, with quarterly principal payments of $3,000 beginning in May 2026 with a final principal payment of $9,000 due at maturity in December 2027. The SWK Credit Agreement includes a 5.0% exit fee payable at maturity and this exit fee payable will be accreted to interest expense in the Company's Statement of Operations using the effective interest expense method. The SWK Credit Agreement contains a mandatory prepayment clause that can compel the Company to partially prepay the loan upon certain triggering events, which the Company has deemed to be remote. Borrowing under the SWK Credit Agreement is secured by the Company's assets, contains customary default provisions, which include limits on additional indebtedness. As of December 31, 2025 and 2024, the Company was in compliance with all financial covenants.
The Company recorded interest expense of $4,781, $2,005 and $1,060 in 2025, 2024 and 2023, respectively, which included $696, $1,109 and $117, respectively, of debt discount amortization. For the year ended December 31, 2024, debt discount included $1,170, which was associated with the issuance of warrants to SWK. The Company had accrued interest of $425 and $182 as of December 31, 2025 and 2024, respectively, which is included in accrued liabilities in the accompanying Balance Sheets. As of December 31, 2025 and 2024, the effective interest rate was 14.62% and 14.46%, respectively.
The table below reflects the future annual payments for the SWK loan principal as of December 31, 2025.
| Amount | ||||
| 2026 | $ | 9,000 | ||
| 2027 | 21,000 | |||
| Total payments | 30,000 | |||
| Less: unamortized discount | (330 | ) | ||
| Plus: accrued exit fees at December 31, 2025 | 888 | |||
| Debt, net of unamortized discount and accrued exit fees | $ | 30,558 | ||
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 19, 2026 | Showing above |
| 2023 | Mar 14, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 16, 2021 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.