Safeguard Scientifics, Inc. engages in the provision capital to technology-driven businesses in healthcare, financial services, and digital media. The company was founded by Warren V. Musser and Frank A. Diamond in 1953 and is headquartered in Radnor, PA.
The intended monetization of our partner company interests and return of capital to shareholders are subject to factors beyond our control.
The continuing costs and burdens associated with being a public company will constitute a much larger percentage of our expenses and we may in the future delist our Common Stock with the New York Stock Exchange and seek to deregister our Common Stock with the SEC.
Our principal business strategy depends upon our ability to make good decisions regarding the deployment of capital into, and subsequent disposition of, existing partner company interests and, ultimately, the performance of our partner companies, which is uncertain.
Our Credit Facility subjects us to interest rate risk.
Servicing the indebtedness under the Credit Facility will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control.
Our business model does not rely upon, or plan for, the receipt of operating cash flows from our partner companies. Our partner companies generally provide us with no cash flow from their operations. We rely on cash on hand, liquidity events and our ability to generate cash from capital raising activities to finance our operations.
Fluctuations in the price of the common stock of our publicly traded holdings may affect the price of our common stock.
We may be unable to obtain maximum value for our holdings or to sell our holdings on a timely basis.
Our success is dependent on our senior management.
Our business strategy may not be successful if valuations in the market sectors in which our partner companies participate decline.
Our partner companies could make business decisions that are not in our best interests or with which we do not agree, which could impair the value of our holdings.
We may have to buy, sell or retain assets when we would otherwise not wish to do so in order to avoid registration under the Investment Company Act.
Economic disruptions and downturns may have negative repercussions for us.
We cannot provide assurance that material weaknesses in our internal control over financial reporting will not be identified in the future.
Our partner companies face intense competition, which could adversely affect their business, financial condition, results of operations and prospects for growth.
The success or failure of many of our partner companies is dependent upon the ultimate effectiveness of newly-created technologies, medical devices, financial services, healthcare diagnostics, etc.
Our partner companies may fail if they do not adapt to changing marketplaces.
Our partner companies may grow rapidly and may be unable to manage their growth.
Based on our business model, some or all of our partner companies will need to raise additional capital to fund their operations at any given time. We may not be able to, or decline to, fund some or all of such amounts and such amounts may not be available from third parties on acceptable terms, if at all. Further, if our partner companies do raise additional capital from third parties, either debt or equity, such capital may rank senior to, or dilute, our interests in such companies.
Economic disruptions and downturns may negatively affect our partner companies’ plans and their results of operations.
Some of our partner companies may be unable to protect their proprietary rights and may infringe on the proprietary rights of others.
Certain of our partner companies could face legal liabilities from claims made against their operations, products or work.
Our partner companies’ success depends on their ability to attract and retain qualified personnel.
Government regulations and legal uncertainties may place financial burdens on the businesses of our partner companies.
Some of our partner companies may be subject to significant environmental, health, data security and safety regulation.
Catastrophic events may disrupt our partner companies’ businesses.
We operate as one operating segment based upon the similar nature of our technology-driven partner companies, the functional alignment of the organizational structure, and the reports that are regularly reviewed by the chief operating decision maker for the purpose of assessing performance and allocating resources.
There is intense competition in the markets in which our partner companies operate. Additionally, the markets in which these companies operate are characterized by rapidly changing technology, evolving industry standards, frequent introduction of new products and services, shifting distribution channels, evolving government regulation, frequently changing intellectual property landscapes and changing customer demands. Their future success depends on each company’s ability to execute its business plan and to adapt to its respective rapidly changing market.
As previously stated, throughout this document, we use the term “partner company” to generally refer to those companies in which we have an economic interest and in which we, generally, but not all cases, are actively involved influencing development, usually through board representation in addition to our equity ownership. During 2019 we ceased using the equity method of accounting for Hoopla Software, Inc. and T-REX Group, Inc. as a result of other new investors diluting our interest. We have retained our equity interests under the Other accounting method.