UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ___________

Commission File Number 1-5620

Safeguard Scientifics, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania		23-1609753
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

150 N. Radnor Chester Road Suite F-200 Radnor, PA		19087
(Address of principal executive offices)		(Zip Code)

(610) 293-0600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($.10 par value)	SFE	~~New York~~The NASDAQ Stock ~~Exchange~~Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐		Smaller reporting company ☑
Non-accelerated filer ☑			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of June 30, ~~2021,~~2022, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was ~~$154,839,292~~$50,494,095 based on the closing sale price as reported on the New York Stock Exchange.

The number of shares outstanding of the registrant’s common stock as of March 76, ~~2022~~2023 was ~~16,629,844~~16,268,270.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement (the “Definitive Proxy Statement”) to be filed with the Securities and Exchange Commission for the Company’s ~~2022~~2023 Annual Meeting of Shareholders are incorporated by reference into Part III of this report.

Table of Contents

This Annual Report on Form 10-K contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about Safeguard Scientifics, Inc. (“Safeguard” or “we”), the industries in which we operate and other matters, as well as management's beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Our forward-looking statements are subject to risks and uncertainties. Factors that could cause actual results to differ materially include, among others, our ability to make good decisions about the deployment of capital, the fact that our ownership interests may vary from period to period, our substantial capital requirements and absence of liquidity from our ownership interests, fluctuations in the market prices of our publicly traded ownership interests, competition, our inability to obtain maximum value for our ownership interests, our ability to attract and retain qualified employees, our ability to execute our strategy, market valuations in sectors in which our companies operate, our inability to control our ownership interests, the uncertainty of the outcomes of corporate strategic transactions, if any, our need to manage our assets to avoid registration under the Investment Company Act of 1940, and risks associated with our ownership interests and their performance, including the fact that most of our ownership interests have a limited history and a history of operating losses, face intense competition and may never be profitable, the effect of economic conditions in the business sectors in which our ownership interests operate, compliance with government regulation and legal liabilities, all of which are discussed in Item 1A. “Risk Factors.” Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by this cautionary statement. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report might not occur.

~~Over the recent past,~~Historically, Safeguard has provided capital and relevant expertise to fuel the growth of technology-driven businesses. ~~Typically,~~In many, but not all cases, we are actively involved ~~in strategic and operational decisions~~influencing development through ~~our~~ board representation and management support in addition to the influence we exert through our equity ownership. We also continue to hold relatively small equity interests in other enterprises where we do not exert significant influence and do not participate in management activities. In some cases, those ownership interests relate to residual interests from prior larger interests or from companies that acquired companies in which we had ownership interests.

In January 2018, Safeguard ceased deploying capital into new opportunities in order to focus on supporting the existing ownership interests and maximizing monetization opportunities to enable returning value to shareholders. We have considered and taken action on various initiatives including the sale of ~~our~~individual ownership interests, the sale of certain or all ~~of our~~ ownership interests in secondary market transactions as well as other opportunities to maximize shareholder value. In December 2019, we declared and paid a $1.00 per share special dividend. In 2021, we repurchased 4.5 million shares through a combination of open market purchases and a tender offer for an aggregate of $40.7 million resulting in an average price of $8.95 per share. In 2022, we repurchased 711,481 shares for $2.9 million at an average price of $4.13 per share through subsequent open market repurchase plans. We will continue to actively work with our ownership interests to seek monetization ~~opportunties~~opportunities while we also evaluate additional strategic alternatives. These strategic alternatives could include the sale of all of our ownership interests in a single transaction or a series of transactions, ~~as well as~~ merger, business combinations or other strategic transactions.

We incorporated in the Commonwealth of Pennsylvania in 1953. Our corporate headquarters are located at 150 N. Radnor Chester Road, Suite F-200, Radnor, Pennsylvania 19087.

Founded in 1953, Safeguard has a distinguished track record of building market leading companies through providing capital and operational support to entrepreneurs across an evolving and innovative spectrum of industries. Over the recent past, Safeguard has provided capital and relevant expertise to fuel the growth of technology-driven businesses in healthcare, financial services and digital media. Since January 2018, Safeguard ceased deploying capital into new opportunities in order to focus on supporting the existing ownership interests with the goal of pursuing monetization opportunities and maximizing the value returned to shareholders.

We offer strategic, operational and management support to certain of our ownership interests.

Strategic Support. We play an active role in developing the strategic direction to certain of our ownership interests, which include:

Management and Operational Support. Our executives serve on the boards of directors of certain of our companies, working with them to develop and implement strategic and operating plans. We measure and monitor achievement of these plans through regular review of operational and financial performance measurements.

The primary way we realize value from our ownership interests is when the underlying company enters into a sale or merger transaction and we receive cash consideration for our ownership stake. From time to time, we engage in discussions with other companies interested in acquiring our ownership interests, either in response to inquiries or as part of a process we initiate. To the extent we believe that a company’s further growth and development can best be supported by a different ownership structure or if we otherwise believe it is in our shareholders’ best interests, we will seek to sell some or all of our position in the company. These sales may take the form of privately negotiated sales of stock or assets, mergers and acquisitions, public offerings of the company’s securities and, in the case of publicly traded companies, sales of their securities in the open market. In the past, we have taken companies public through rights offerings and directed share subscription programs. We will continue to consider these (or similar) programs and the sale of certain company interests in secondary market transactions to maximize value for our shareholders.

Given our strategy, the value of Safeguard is primarily dependent upon the value of our existing ownership interests. We have returned capital to our shareholders in the form of stock repurchases and a special dividends to shareholders.

An understanding of our ownership interests is important to understanding Safeguard. We categorize our ownership interests into stages based upon revenue generation. This includes those positions which are accounted for under the equity method as well as certain companies where we do not have significant influence but whose value is a substantial portion of our portfolio. The Company reflects revenue categories based on a one quarter lag, i.e. the categories below reflect the trailing year ended September 30, ~~2021.~~2022.

The ownership percentages indicated below are presented as of December 31, ~~2021~~2022 for certain companies in which we held ownership interests and reflect the percentage of the vote we were entitled to cast at that date based on issued and outstanding voting securities (on a common stock equivalent basis), excluding the effect of options, warrants and convertible debt (primary ownership).

There are no companies in which we have an ownership interest and account for under the equity method that are within this stage of growth. However, see section below regarding Other Ownership Interests.

Headquartered in Madison, Wisconsin, Moxe Health provides a clinical data clearinghouse that connects health systems with their network of health plans. Moxe’s key products, Substrate and Convergence, allow for bi-directional data flow between payors and providers to complete various risk adjustment, quality, and prior authorization use cases. www.moxehealth.com

Headquartered in Stamford, Connecticut, Lumesis is a financial technology company focused on providing business efficiency, data and regulatory solutions to the municipal bond marketplace. Lumesis’ DIVER platform helps more than 500 firms with more than 43,000 users efficiently meet credit, regulatory and risk needs. ~~www.lumesis.com~~

Headquartered in Ambler, Pennsylvania, Clutch has revolutionized how marketing teams for premier brands develop and foster relationships with their customers. Clutch’s advanced marketing platform serves as a customer hub, delivering deep intelligence derived from real-time behaviors and transactions across in-store, online, mobile and social channels. www.clutch.com

Headquartered in Waltham, Massachusetts, InfoBionic is an emerging digital health company focused on creating patient monitoring solutions for cardiac arrhythmias. InfoBionic’s MoMe^® Kardia cloud-based, remote patient monitoring platform delivers on-demand, actionable monitoring data and analytics directly to the physicians themselves. www.infobionic.com

Headquartered in Boston, Massachusetts, meQuilibrium is an engagement and performance platform that leverages behavioral psychology and data science to improve workforce resilience, agility, and adaptive capacity. The Company offers solutions for managers, teams, and individual employees. www.mequilibrium.com

Headquartered in Palo Alto, California, Syapse is on a mission to deliver the best care for every cancer patient through precision medicine. Syapse’s platform, data sharing network, and industry partnerships enable healthcare providers to bring precision cancer care to every patient who needs it. www.syapse.com

Headquartered in San Francisco, California, Aktana is a pioneer in decision support for global life science sales teams. Aktana helps its customers improve their commercial effectiveness by delivering data-driven insights and suggestions directly to sales reps, coordinating multi-channel actions and providing insight regarding which strategies work best for which customers under which conditions. www.aktana.com

Headquartered in New York, New York, Prognos is a healthcare platform company transforming the ability to access, manage and analyze healthcare data in partnership with life sciences brands, payers, and clinical diagnostics organizations. Prognos’ innovations enhance the value of laboratory results and clinical diagnostic data through advanced analytics and artificial intelligence techniques. www.prognos.ai

Headquartered in Malvern, Pennsylvania, Trice Medical was founded to fundamentally improve orthopedic diagnostics for the patient, physician and payor by providing instant, eyes-on, answers. Trice has pioneered fully integrated camera-enabled technologies that provide a clinical solution that is optimized for the physician's office. Trice's mission is to provide more immediate and definitive patient care, eliminating the false reads associated with current indirect modalities and significantly reduce the overall cost to the healthcare system. www.tricemedical.com

Headquartered in New York, New York, Prognos is a healthcare platform company transforming the ability to access, manage and analyze healthcare data in partnership with Life Sciences brands, payers, and clinical diagnostics organizations. Prognos’ innovations enhance the value of laboratory results and clinical diagnostic data through advanced analytics and artificial intelligence techniques. ~~www.prognos.ai~~

Headquartered in New York, New York, MediaMath is a global technology company that is leading the movement to revolutionize traditional marketing and drive transformative results for marketers through its TerminalOne Marketing Operating System^®. MediaMath empowers marketers with an extensible, open platform that activates data, automates execution and optimizes interactions across all addressable media, delivering superior performance, transparency and control to all marketers and better, more individualized experiences for consumers. ~~www.mediamath.com~~

In addition to the above companies, we also have smaller ownership interests in a variety of other companies where we do not exert significant influence and do not participate in any management activities. In some cases, these ownership interests generally are the result of previous positions that have been diluted or residual interests resulting from the acquisition of companies where we had an ownership interest.

Bright Health Group: A technology-enabled, fully aligned ~~sytem~~system of care built for healthcare's consumer retail market. Bright HealthCare offers commercial and Medicare health plan products to over 1 million consumers across the nation. www.brighthealthgroup.com

~~BigToken:~~ A consumer-managed data marketplace providing consumers, advertisers and media companies access to transparent, verified consumer data. BigToken merged with Britepool in December 2021. BigToken became a public company earlier in 2021 as a result of a reverse merger with Fire Protection Video Equipment Corp. ~~www.bigtoken.com~~

MedCrypt: Developer of a data security platform designed to protect medical devices. The company's platform enables functions such as authenticating users, encrypting data and cryptographically sign settings and patient prescriptions, as well as has the ability to monitor transactions between clinicians and devices for malicious behavior, enabling hospitals and health systems to prevent unauthorized access and misuse of their medical devices. ~~www.medcrypt.co~~www.medcrypt.com

WellTrackONE: Provider of wellness program services. The company's services include scheduling, screening and documentation that provide data for outcomes and clinical measurements, enabling healthcare professionals to offer wellness visits to their patients. ~~www.welltrackone.co~~www.welltrackone.com

We also have residual interests in a variety of private funds that are in the process of winding down and other companies.

We operate as one operating segment based upon the similar nature of our technology-driven 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.

The operations of Safeguard and the companies in which it has ownership interests are subject to environmental laws and regulations. Safeguard does not believe that expenditures relating to those laws and regulations will have a material adverse effect on the business, financial condition or results of operations of Safeguard.

Safeguard is subject to the informational requirements of the Securities Exchange Act of 1934, as amended. Therefore, we file our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and proxy statements and other information with, and furnish other reports to, the Securities and Exchange Commission (“SEC”). You can read and copy such documents at the SEC’s public reference facilities in Washington, D.C., New York, New York and Chicago, Illinois. You may obtain information on the operation of the SEC’s public reference facilities by calling the SEC at 1-800-SEC-0330. Such material may also be accessed electronically by means of the SEC’s home page on the Internet at www.sec.gov or through Safeguard’s website at www.safeguard.com. Such documents are available as soon as reasonably practicable after electronic filing of the material with the SEC. Copies of these reports (excluding exhibits) also may be obtained free of charge, upon written request to: Investor Relations, Safeguard Scientifics, Inc., 150 N. Radnor Chester Road, Suite F-200, Radnor, Pennsylvania 19087.

The Internet website addresses for Safeguard and its ownership interests are included in this report for identification purposes. The information contained therein or connected thereto is not intended to be incorporated into this Annual Report on Form 10-K.

The following corporate governance documents are available free of charge on Safeguard’s website: the charters of our Audit, Compensation and Nominating & Corporate Governance Committees, our Corporate Governance Guidelines and our Code of Business Conduct and Ethics. We also will post on our website any amendments to or waivers of our Code of Business Conduct and Ethics that relate to our directors and executive officers.

You should carefully consider the information set forth below. The following risk factors describe situations in which our business, financial condition and/or results of operations could be materially harmed, and the value of our securities may be adversely affected. You should also refer to other information included or incorporated by reference in this report.

Our ability to obtain value from our companies and the return of such value to our shareholders are subject to factors beyond our control.

In January 2018, we announced that we will not deploy any capital into new companies. We will instead focus on supporting, and maximizing monetization opportunities for, our existing company interests to return value to shareholders. In that context, we have ~~are~~considered and ~~will~~continue to consider monetization initiatives including, among others: the sale of our ownership interests, the sale of certain or all ownership interests in secondary market transactions, or a combination thereof, the sale of all of our ownership interests in a single transaction or a series of transactions, business combinations and other strategic transactions as well as other opportunities to maximize shareholder value. However, this strategic plan may require providing additional capital and operational support to such existing companies and we may not be able to complete any such transaction during any specific time frame or otherwise on desirable terms, if at all, and there can be no assurance as to how long this process will take or the results that this process will yield. In addition, there can be no assurance that any exploration of a strategic transaction will result in any strategic change or outcome and disclosure of any developments related to such exploration may not be disclosed until required. Further, if one or more strategic or other transactions are completed, ~~there~~we may be required to retain or reinvest additional amounts of our capital as part of such transaction. There can also be no assurance as to whether we will realize the value of escrowed proceeds, holdbacks or other contingent consideration, if any, associated with ~~such~~any transaction. Additionally, there can be no assurance that we will be able to satisfy our liabilities during this process. The method, timing and amount of any return of value resulting from such a transaction will also be at the discretion of our Board of Directors and may depend on market and business conditions and our overall liabilities, capital structure and liquidity position.

A disposition of one or more of our company interests may occur at a time that will yield less value than if we held such interests for a longer period of time.

Our companies are at various stages in their lifecycles. The value of our interests in our companies at any point in time is highly dependent on the progress and success such companies have made at such time with respect to the development and marketing of their products and services and that value may fluctuate significantly. ~~In order~~The resulting effects of the COVID-19 pandemic and certain other macroeconomic factors continue to ~~effect~~impact the mergers and acquisitions market for certain companies, which in some cases has resulted in lower valuation expectations and extended exit timelines for such companies. This, in turn, could negatively affect the amount and timing of the monetization opportunities for such companies and our ~~strategy of monetizing our interests in our companies, we may dispose of such interests at a time prior~~ability to ~~the applicable company reaching its maximum value. Doing so will result in a~~ return of value to ~~shareholders that is less than that which may have been returned if we retained our interests in such company for a longer period of time.~~shareholders.

The effects of the COVID-19 pandemic may adversely affect the businesses, financial conditions and operating results of the companies in which we have an ownership interest, as well as our ability to monetize such interests, and it may also cause us to increase the amount of additional capital we will need to provide to such companies.

To varying degrees, the economic and market conditions caused by the COVID-19 pandemic have negatively impacted, and continue to negatively impact, the companies in which we have ownership interests, including, without limitation, their operations, supply chains, sales infrastructures and the demand for their products and services. This is negatively affecting their businesses, financial conditions and operating results. As a result, we may be required to provide additional capital to certain companies, which may cause us to face liquidity issues that will constrain our ability to execute our business strategy and limit our ability to provide financial support to all of our existing companies in the amounts that we desire. The COVID-19 pandemic is also impacting the mergers and acquisitions market for certain companies, which in some cases has resulted in lower valuation expectations and extended exit timelines for such companies. This, in turn, could negatively affect the amount and timing of the monetization opportunities for such companies and our ability to return value to shareholders.

Our principal business strategy depends upon our ability to make good decisions regarding the deployment of capital into, and subsequent disposition of, our existing company interests and, ultimately, the performance of such companies, which is uncertain.

If we make poor decisions regarding the deployment of capital into, and subsequent disposition of, our existing companies, our business strategy will not succeed. If such companies do not succeed, the value of our assets could be significantly reduced and require substantial impairments or write-offs and our results of operations and the price of our common stock would be adversely affected. The risks relating to our companies include:

These and other risks are discussed in detail under the caption “Risks Related to Our Companies” below.

As we execute against our strategy, a significant amount of our deployed capital may be concentrated in fewer companies. These remaining companies may also operate in the same or similar industries. This will limit our diversification and make us more susceptible to a single negative event.

As we execute against our strategy, our capital deployments will be deployed in a decreasing number of companies. Further, our remaining companies could be concentrated in the same or similar industries. Fewer companies, as well as potential industry concentration, may cause us to be more susceptible to any single economic, regulatory or other occurrence affecting a single company or a particular industry than we would have otherwise been if we had a larger number of companies and our companies operated in more diversified industries.

Our business model does not rely upon, or plan for, the receipt of operating cash flows from our companies. Our companies do not provide us with 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.

We need capital to fund the capital needs of our existing companies. We also need cash to finance our corporate overhead and meet our existing funding commitments. As a result, we have substantial cash requirements. Our companies do not provide us with cash flow from their operations. To the extent our companies generate any cash from operations, they generally retain the funds to develop their own businesses. As a result, we must rely on cash on hand, company liquidity events and new capital raising activities to meet our cash needs. If we are unable to find ways of monetizing our holdings of company interests or raising additional capital on attractive terms, we may face liquidity issues that will require us to constrain our ability to execute our business strategy and limit our ability to provide financial support to our existing companies.

We may be unable to obtain maximum value for our holdings or to sell our holdings on a timely basis.

We hold significant positions in our companies. If we were to divest all or part of our holdings in a company, we may have to sell our interests at a relative discount to intrinsic value. For companies with publicly traded stock, we may be unable to sell our holdings at then-quoted market prices. The trading volume and public float in the common stock of a publicly traded company in which we have an interest may be small relative to our holdings. As a result, any significant open-market divestiture by us of our holdings in such a company, if possible at all, would likely have a material adverse effect on the market price of its common stock and on our proceeds from such a divestiture. Additionally, we may not be able to take our companies public as a means of monetizing our position or creating shareholder value. Registration and other requirements under applicable securities laws and contractual restrictions also may adversely affect our ability to dispose of our company holdings on a timely basis.

Our success is dependent on our senior management team’s ability to execute our strategy. In connection with our strategy announced in 2018, we made a series of management changes intended to streamline our organizational structure and reduce our operating costs and since then we have made, and may make, further management changes from time to time. A loss of one or more of the remaining members of our senior management team without adequate replacement could have a material adverse effect on us.

Our business strategy may not be successful if valuations in the market sectors in which our companies participate decline.

Our strategy involves creating value for our shareholders by helping our companies build value and, if appropriate, ~~accessing~~access the public and private capital markets. Therefore, our success is dependent on the value of our companies as determined by the public and private capital markets. Many factors, including reduced market interest, may cause the market value of our companies to decline. If valuations in the market sectors in which our companies participate decline, their access to the public and private capital markets on terms acceptable to them may be limited.

Our 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.

Although we currently own a significant, influential interest in some of our companies, we do not maintain a controlling interest in any of our companies. Acquisitions of interests in companies in which we share or have no control, and the dilution of our interests in or a further reduction of our control of companies, will involve additional risks that could cause the performance of our interests and our operating results to suffer, including:

Our inability to control our companies also could prevent us from assisting them, financially or otherwise, or could prevent us from liquidating our interests in them at a time or at a price that is favorable to us. Additionally, our companies may not act in ways that are consistent with our business strategy. These factors could hamper our ability to maximize returns on our interests and cause us to incur losses on our interests in these companies.

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.

The Investment Company Act of 1940 regulates companies which are engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities. Under the Investment Company Act, a company may be deemed to be an investment company if it owns investment securities with a value exceeding 40% of the value of its total assets (excluding government securities and cash items) on an unconsolidated basis, unless an exemption or safe harbor applies. We refer to this test as the “40% Test.” Securities issued by companies other than consolidated companies are generally considered “investment securities” for purposes of the Investment Company Act, unless other circumstances exist which actively involve the company holding such interests in the management of the underlying company. We are a company that partners with growth-stage companies to build value; we are not engaged primarily in the business of investing, reinvesting or trading in securities. We are in compliance with the 40% Test. Consequently, we do not believe that we are an investment company under the Investment Company Act.

We monitor our compliance with the 40% Test and seek to conduct our business activities to comply with this test. It is not feasible for us to be regulated as an investment company because the Investment Company Act rules are inconsistent with our strategy of actively helping our companies in their efforts to build value. In order to continue to comply with the 40% Test, we may need to take various actions which we would otherwise not pursue. For example, we may be limited in the manner or timing in which we sell our interests in a company. Our ownership levels also may be affected if our companies are acquired by third parties or if our companies issue stock which dilutes our ownership interest. The actions we may need to take to address these issues while maintaining compliance with the 40% Test could adversely affect our ability to create and realize value at our ~~companies.~~companies

The COVID-19 pandemic may adversely affect parties with obligations to us, including the subtenant of our previous office space.

In March 2019, we entered into a sublease of our prior corporate headquarters office space beginning in June 2019. The term of the sublease is through April 2026, the same as our underlying lease. Fixed sublease payments to us are escalating over the term of the sublease. We remain obligated under the original lease for such office space and, in the event the subtenant of such office space fails to satisfy its obligations under the sublease, we would be required to satisfy our obligations directly to the landlord under such original lease.

Most of our companies have a history of operating losses and/or limited operating history and may never be profitable.

Most of our companies have a history of operating losses and/or limited operating history, have significant historical losses and may never be profitable. Many have incurred substantial costs to develop and market their products, have incurred net losses and cannot fund their cash needs from operations. We expect that the operating expenses of certain of our companies will increase substantially in the foreseeable future as they continue to develop products and services, increase sales and marketing efforts, and expand operations.

Our companies face intense competition, which could adversely affect their business, financial condition, results of operations and prospects for growth.

There is intense competition in the technology marketplaces, and we expect competition to intensify in the future. Our business, financial condition, and results of operations will be materially adversely affected if our companies are not able to compete successfully. Many of the present and potential competitors may have greater financial, technical, marketing and other resources than those of our companies. This may place our companies at a disadvantage in responding to the offerings of their competitors, technological changes or changes in client requirements. Also, our companies may be at a competitive disadvantage because many of their competitors have greater name recognition, more extensive client bases and a broader range of product offerings. In addition, our companies may compete against one another.

The success or failure of many of our companies is dependent upon the ultimate effectiveness of newly-created technologies, medical devices, ~~financial services,~~ healthcare diagnostics, etc.

Our companies’ business strategies are often highly dependent upon the successful launch and commercialization of an innovative technology or device, including, without limitation, technologies or devices used in healthcare ~~financial services~~ or digital media. Despite all of our efforts to understand the research and development underlying the innovation or creation of such technologies and devices before we deploy capital into a company, sometimes the performance of the technology or device does not match our expectations or those of such company. In those situations, it is likely that we will incur a partial or total loss of the capital which we deployed in such company.

If our companies fail to adapt to changes in technology and customer and supplier demands, they may not become or remain profitable. There is no assurance that the products and services of our companies will achieve or maintain market penetration or commercial success, or that the businesses of our companies will be successful.

Our future success will depend on our companies’ ability to adapt to these evolving marketplaces. They may not be able to adequately or economically adapt their products and services, develop new products and services or establish and maintain effective distribution channels for their products and services. If our companies are unable to offer competitive products and services or maintain effective distribution channels, they will sell fewer products and services and forego potential revenue, possibly causing them to lose money. In addition, we and our companies may not be able to respond to the marketplace changes in an economically efficient manner, and our companies may become or remain unprofitable.

Our companies may grow rapidly, including through acquisitions of other businesses, and may be unable to manage their growth.

We expect some of our companies to grow rapidly, including through acquisitions of other businesses. Such growth often places considerable operational, managerial, integration and financial strain on a business. To successfully manage such growth, our companies must, among other things:

If our companies are unable to manage their growth successfully, their ability to respond effectively to competition and to achieve or maintain profitability will be adversely affected. Further, a material weakness in any of our companies’ internal controls over their financial reporting could result in material misstatements in our Consolidated Financial Statements. These misstatements could result in a restatement of our Consolidated Financial Statements, cause us to fail to meet our reporting obligations and/or cause investors to lose confidence in our reported financial information, leading to a decline in our stock price.

Based on our business model, some or all of our 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 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 companies’ plans and their results of operations.

Many of our companies are largely dependent upon outside sources of capital to fund their operations. Disruptions in the availability of capital from such sources will negatively affect the ability of such companies to pursue their business models and will force such companies to revise their growth and development plans accordingly. Any such changes will, in turn, negatively affect our ability to realize the value of our capital deployments in such companies.

In addition, downturns in the economy as well as possible governmental responses to such downturns and/or to specific situations in the economy could affect the business prospects of certain of our companies, including, but not limited to, in the following ways: ~~weaknesses in the financial services industries;~~ reduced business and/or consumer spending; and/or systemic changes in the ways the healthcare system operates in the United States.

Some of our companies may be unable to protect their proprietary rights and may infringe on the proprietary rights of others.

Our companies assert various forms of intellectual property protection. Intellectual property may constitute an important part of our companies’ assets and competitive strengths. Federal law, most typically copyright, patent, trademark and trade secret laws, generally protects intellectual property rights. Although we expect that our companies will take reasonable efforts to protect the rights to their intellectual property, third parties may develop similar intellectual property independently. Moreover, the complexity of international trade secret, copyright, trademark and patent law, coupled with the limited resources of our companies and the demands of quick delivery of products and services to market, create a risk that our companies’ efforts to prevent misappropriation of their technology will prove inadequate.

Some of our companies also license intellectual property from third parties and it is possible that they could become subject to infringement actions based upon their use of the intellectual property licensed from those third parties. Our companies generally obtain representations as to the origin and ownership of such licensed intellectual property. However, this may not adequately protect them. Any claims against our companies’ proprietary rights, with or without merit, could subject the companies to costly litigation and divert their technical and management personnel from other business concerns. If our companies incur costly litigation and their personnel are not effectively deployed, the expenses and losses incurred by our companies will increase and their profits, if any, will decrease.

Third parties have and may assert infringement or other intellectual property claims against our companies based on their patents or other intellectual property claims. Even though we believe our companies’ products do not infringe any third party’s patents, they may have to pay substantial damages, possibly including treble damages, if it is ultimately determined that they do. They may have to obtain a license to sell their products if it is determined that their products infringe on another person’s intellectual property. Our companies might be prohibited from selling their products before they obtain a license, which, if available at all, may require them to pay substantial royalties. Even if infringement claims against our companies are without merit, defending these types of lawsuits takes significant time, is expensive and may divert management attention from other business concerns.

Certain of our companies could face legal liabilities from claims made against their operations, products or work.

Because the manufacture and sale of certain company products entail an inherent risk of product liability, certain of our companies maintain product liability insurance. Although none of our current companies have experienced any material losses in this regard, there can be no assurance that they will be able to maintain or acquire adequate product liability insurance in the future and any product liability claim could have a material adverse effect on a company’s financial stability, revenues and results of operations. In addition, many of the engagements of our companies involve projects that are critical to the operation of their clients’ businesses. If our companies fail to meet their contractual obligations, they could be subject to legal liability, which could adversely affect their business, operating results and financial condition. Our companies’ contracts typically include provisions designed to limit their exposure to legal claims relating to their services and products. However, these provisions may not protect our companies or may not be enforceable. Also, some of our companies depend on their relationships with their clients and their reputation for high-quality services and integrity to retain and attract clients. As a result, claims made against our companies’ work may damage their reputation, which in turn could impact their ability to compete for new work and negatively impact their revenue and profitability.

Our companies’ success depends on their ability to attract and retain qualified personnel.

Our companies depend upon their ability to attract and retain senior management and key personnel, including trained technical and marketing personnel. Our companies also will need to continue to hire additional personnel as they expand. Although our current companies have not been the subject of a work stoppage, any future work stoppage could have a material adverse effect on their respective operations. A shortage in the availability of the requisite qualified personnel or work stoppage would limit the ability of our companies to grow, to increase sales of their existing products and services, and to launch new products and services.

Government regulations and legal uncertainties may place financial burdens on the businesses of our companies.

Manufacturers of medical diagnostic devices and operators of laboratory facilities are subject to strict federal and state regulation regarding validation and the quality of manufacturing and laboratory facilities. Failure to comply with these quality regulation systems requirements could result in civil or criminal penalties or enforcement proceedings, including the recall of a product or a “cease distribution” order. The enactment of any additional laws or regulations that affect healthcare insurance policy and reimbursement (including Medicare reimbursement) could negatively affect some of our companies. If Medicare or private payers change the rates at which our companies or their customers are reimbursed by insurance providers for their products, such changes could adversely impact our companies.

Some of our companies may be subject to significant environmental, health, data security and safety regulation.

Some of our companies may be subject to licensing and regulation under federal, state and local laws and regulations relating to the protection of the environment and human health and safety, including laws and regulations relating to the handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive materials, as well as to the safety and health of manufacturing and laboratory employees. In addition, some of our companies are subject to federal, state and local financial securities and data security regulations, including, without limitation, the Health Insurance Portability and Accountability Act of 1996, as amended, the California Consumer Privacy Act and the European General Data Protection Regulation, which impose varying degrees of additional obligations, costs and risks upon such companies, including the imposition of significant penalties in the event of any non-compliance. Further, the federal Occupational Safety and Health Administration has established extensive requirements relating to workplace safety. Compliance with such regulations could increase operating costs at certain of our companies, and the failure to comply could negatively affect the operations and results of some of our companies.

Some of our companies are highly automated businesses and rely on their network infrastructure, various software applications and many internal technology systems and data networks for their customer support, development, sales and marketing and accounting and finance functions. Further, some of our companies provide services to their customers from data center facilities in multiple locations. Some of these data centers are operated by third parties, and the companies have limited control over those facilities. A disruption or failure of these systems or data centers in the event of a natural disaster, telecommunications failure, power outage, cyber-attack, war, terrorist attack or other catastrophic event could cause system interruptions, reputational harm, delays in product development, breaches of data security and loss of critical data. Such an event could also prevent the companies from fulfilling customer orders or maintaining certain service level requirements, particularly in respect of their SaaS offerings. While certain of our companies have developed certain disaster recovery plans and maintain backup systems to reduce the potentially adverse effect of such events, a catastrophic event that resulted in the destruction or disruption of any of their data centers or their critical business or information technology systems could severely affect their ability to conduct normal business operations and, as a result, their business, operating results and financial condition could be adversely affected.

We cannot provide assurance that our companies’ disaster recovery plans will address all of the issues they may encounter in the event of a disaster or other unanticipated issue, and their business interruption insurance may not adequately compensate them for losses that may occur from any of the foregoing. In the event that a natural disaster, terrorist attack or other catastrophic event were to destroy any part of their facilities or interrupt their operations for any extended period of time, or if harsh weather or health conditions prevent them from delivering products in a timely manner, their business, financial condition and operating results could be adversely affected.

Fluctuations in the price of the common stock of our publicly traded holdings may affect the price of our common stock.

From time to time, we may hold equity interests in companies that are publicly traded. Fluctuations in the market prices of the common stock of publicly traded holdings may affect the price of our common stock. Historically, the market prices of our publicly traded holdings have been highly volatile and subject to fluctuations unrelated or disproportionate to operating performance.

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~~ NASDAQ exchangeand seek to deregister our common stock with the SEC.

We will remain a public company and will continue to be subject to the listing standards of the ~~New York Stock Exchange~~NASDAQ exchange and SEC rules and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Sarbanes-Oxley Act of 2002. The costs and burdens of being a public company will be a significant and continually increasing portion of our expenses if we are able to monetize our company interests. ~~As part of such monetization efforts, we will likely~~We may in the future ~~once the majority of our company interests have been monetized,~~ delist our common stock from the ~~New York Stock Exchange~~NASDAQ exchange and seek to deregister our common stock with the SEC. However, there can be no assurance as to the timing of such transactions, or whether such transactions will be ~~completed~~undertaken at all, and we will continue to face the costs and burdens of being a public company until such time as our common stock is delisted with the ~~New York Stock Exchange~~NASDAQ exchange and deregistered with the SEC.

Economic disruptions and downturns may have negative repercussions for us.

Events in the United States and international capital markets, debt markets and economies may negatively impact our stock price and our ability to pursue certain tactical and strategic initiatives, such as accessing additional public or private equity or debt financing for us or for our companies and selling our interests in companies on terms acceptable to us and in time frames consistent with our expectations.

We cannot provide assurance that material weaknesses in our internal control over financial reporting will not be identified in the future.

We cannot assure you that material weaknesses in our internal control over financial reporting will not be identified in the future. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in a material weakness, or could result in material misstatements in our Consolidated Financial Statements. These misstatements could result in a restatement of our Consolidated Financial Statements, cause us to fail to meet our reporting obligations and/or cause investors to lose confidence in our reported financial information, leading to a decline in our stock price.

Our current corporate headquarters and administrative offices in Radnor, Pennsylvania is approximately 100 square feet of office space in one building. The lease term expires in November 2022. The sublease for our previous corporate headquarters and administrative offices for approximately 4,000 square feet of office space in Radnor, Pennsylvania expired in November 2020 (from a company in which we have an equity interest).2023.

Additionally, we have additional administrative offices located in Radnor, Pennsylvania comprising approximately 15,600 square feet, that have been sublet to an unaffiliated party through April, 2026, the remainder of the lease term.

We, as well as our companies in which we hold ownership interests, are from time to time involved in various claims and legal actions arising in the ordinary course of business. While in the current opinion of management, the ultimate disposition of any of these matters which are currently pending will not have a material adverse effect on our consolidated financial position or results of operations, no assurance can be given as to the outcome of these situations, and one or more adverse dispositions could have a material adverse effect on our consolidated financial position and results of operations, or that of our companies. See Note 11 to the Consolidated Financial Statements for a discussion of ongoing claims and legal actions.

Mr. Salzman joined Safeguard as Chief Restructuring Officer in April 2020. Mr. Salzman began serving as the Chief Executive Officer in December 2020. Mr. Salzman has a 25-year track record partnering with growth companies as an investor, board member and strategic advisor. He has worked in M&A, restructuring, growth and special situations investing at a number of investment banks and private equity funds, including Credit Suisse and Lehman Brothers. Mr. Salzman helped oversee the monetization of a $2 billion portfolio of illiquid assets in the Lehman Brothers Bankruptcy Estate and subsequently advised several investment funds on value-maximization strategies for their respective portfolios. He currently serves as a director on a number of Safeguard portfolio companies as well as an independent director at publicly traded Leonardo DRS, Inc., Movella Holdings Inc. and 8x8, Inc. Mr. Salzman earned a B.A. Honors from the University of Michigan and an MBA from Harvard University.

Mr. Herndon joined Safeguard as Senior Vice President and Chief Financial Officer in September 2018. Prior to joining Safeguard, Mr. Herndon served in a variety of client service and national office roles at PricewaterhouseCoopers from 1991 to 2018, including his position as Assurance Partner from 2006 until 2018. Mr. Herndon earned a B.B.A in Accounting from Georgia Southern University and an MBA from Emory University’s Goizueta Business School.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the ~~New York Stock~~NASDAQ Exchange (Symbol: SFE). The high and low sale prices reported within each quarter of ~~2021~~2022 and ~~2020~~2021 were as follows:

The high and low sale prices reported in the first quarter of ~~2022~~2023 through March ~~11, 2022~~6, 2023 were $7$3~~.53~~.25 and ~~$5.32~~$2.85 respectively, and the last sale price reported on March ~~11, 2022,~~6, 2023, was ~~$5.35~~$3.03. As of March ~~11, 2022,~~6, 2023, there were approximately ~~8,570~~7,774 beneficial holders of our common stock.

On November 7, 2019, the Board of Directors declared a special cash dividend of $1.00 per share, payable on December 30, 2019 to shareholders of record as of the close of business on December 23, 2019.

The following table provides information about our purchases of equity securities during the quarter ended December 31, ~~2021~~2022 registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"):

(a) During the fourth quarter of ~~2021,~~2022, we repurchased an aggregate of approximately 38 thousand shares of our common stock initially issued as restricted stock awards to employees and subsequently withheld from employees to satisfy the statutory withholding tax liability upon the vesting of such restricted stock awards.

(b) In ~~October 2021,~~2015, the Company completed a modified Dutch auction self-tender that resulted in the repurchase of 4.3 million common shares for an aggregated price of $39.0 million, or $9.06 per share, including $0.3 million of transaction costs. In July 2015, ourCompany's Board of Directors authorized us, from time to time and depending on market conditions, to repurchase ~~shares of our outstanding common stock with an aggregate value of~~ up to $25.0 ~~million. These repurchases may be made in open market or privately negotiated transactions, including under plans complying with Rule 10b5-1~~million of the ~~Exchange Act, based on market conditions, stock price,~~Company's outstanding common stock. During the years ended December 31, 2022 and ~~other factors.~~2021, we did not repurchase any shares under this authorization. In May 2021, ~~our~~the Company's Board of Directors authorized a ~~new~~ $6.0 million share repurchase program (the "2021 Plan") using existing funds in accordance with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. ~~The~~During the year ended December 31, 2021, the Company purchased 236,159 shares under the 2021 Plan at an aggregate cost of $1.6 million, or $6.94 per share. During October 2021, the Company suspended the 2021 Plan and completed a modified Dutch auction self-tender that resulted in the repurchase of 4.3 million common shares for an aggregate price of $38.7 million, or $9.00 per share. In March 2022, the Company's Board of Directors replaced the 2021 Plan and authorized a separate $3.0 million share repurchase ~~programs do not obligate us to acquire any specific number~~program (the "2022 Plan") using existing funds in accordance with the requirements of ~~shares.~~Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. During the year ended December 31, 2022, the Company purchased 711,481 shares under the 2022 Plan at an aggregate cost of $2.9 million, or $4.13 per share. The Company completed the 2022 Plan in January 2023 by purchasing an additional 25,096 shares, resulting in an average price of $4.09 for the 2022 Program.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Annual Report on Form 10-K contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about Safeguard Scientifics, Inc. (“Safeguard” or “we”), the industries in which we operate and other matters, as well as management's beliefs and assumptions and other statements regarding matters that are not historical facts. These statements include, in particular, statements about our plans, strategies and prospects. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Our forward-looking statements are subject to risks and uncertainties. Factors that could cause actual results to differ materially include, among others, our ability to make good decisions about the deployment of capital, the fact that our ownership interests may vary from period to period, our substantial capital requirements and absence of liquidity from our holdings, competition, our inability to obtain maximum value for our ownership interests, our ability to attract and retain qualified employees, our ability to execute our strategy, market valuations in sectors in which our ownership interests operate, our inability to control our ownership interests companies, the uncertainty of the outcomes of corporate strategic transactions, if any, our need to manage our assets to avoid registration under the Investment Company Act of 1940, and risks associated with our ownership interests and their performance, including the fact that most of the companies in which we have an ownership interest have a limited history and a history of operating losses, face intense competition and may never be profitable, the effect of economic conditions in the business sectors in which they operate, compliance with government regulation and legal liabilities, all of which are discussed in Item 1A. “Risk Factors.” Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. All forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by this cautionary statement. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report might not occur.

~~Over the recent past,~~Historically, Safeguard has provided capital and relevant expertise to fuel the growth of technology-driven businesses. Typically, we are actively involved in strategic and operational decisions through our board representation in addition to the influence we exert through our equity ownership. We also continue to hold relatively small equity interests in other enterprises where we do not exert significant influence and do not participate in management activities. In some cases, those ownership interests relate to residual interests from prior larger interests or from companies that acquired companies in which we had ownership interests.

In January 2018, Safeguard ceased deploying capital into new opportunities in order to focus on supporting the existing ownership interests and maximizing monetization opportunities to enable returning value to shareholders. We have considered and taken action on various initiatives including the sale of our ownership interests, the sale of certain or all of our ownership interests in secondary market transactions as well as other opportunities to maximize shareholder value. In December 2019, we declared and paid a $1.00 per share special dividend. In 2021, we repurchased 4.5 million shares through a combination of open market purchases and a tender offer for an aggregate of $40.7 million resulting in an average price of $8.95 per share. In 2022, we repurchased 711,481 shares for $2.9 million at an average price of $4.13 per share through subsequent open market repurchase plans. We will continue to actively work with our ownership interests to seek monetization ~~opportunties~~opportunities while we also evaluate additional strategic alternatives. These strategic alternatives could include the sale of all of our ownership interests in a single transaction or a series of transactions, merger, business combinations or other strategic transactions.

We account for our ownership interests using one of the following methods: Equity or Other. The accounting method applied is generally determined by the degree of our influence over the entity, primarily determined by our voting interest in the entity.

Equity Method. The Company accounts for ownership interests whose results are not consolidated, but over which it exercises significant influence, under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an ownership interest depends on an evaluation of several factors including, among others, representation on the board of directors and our ownership level, which is generally a 20% to 50% interest in the voting securities of a company, including voting rights associated with the Company’s holdings in common, preferred and other convertible instruments in the company. The Company records the initial ownership interest at cost. Under the equity method of accounting, the Company does not reflect a company’s financial statements within our Consolidated Financial Statements; however, our share of the income or loss of such company is reflected in Equity income (loss), net in the Consolidated Statements of Operations. The Company also adjusts the carrying value to reflect third party investments in the ownership interests, which typically result in a dilution gain. The Company includes the carrying value of equity method companies in Ownership interests and advances on the Consolidated Balance Sheets. Any excess of the Company’s cost over its underlying interest in the net assets of equity method companies that is allocated to intangible assets is amortized over the estimated useful lives of the related intangible assets. The Company reflects its share of the income or loss of the equity method companies on a one quarter lag. This reporting lag could result in a delay in recognition of the impact of changes in the business or operations of these companies.

When the Company’s carrying value in an equity method company is reduced to zero, the Company records no further losses in its Consolidated Statements of Operations unless the Company has an outstanding guarantee obligation or has committed additional funding to such equity method company. If such equity method company subsequently reports income, the Company will not record its share of such income until it exceeds the amount of the Company’s share of losses not previously recognized.

Other Method. We account for ownership interests in companies that are not accounted for under the equity method that do not have a readily determinable fair value under the fair value measurement alternative. Under the fair value measurement alternative, these ownership interests are based on our original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar interests of the same issuer. Under this method, our share of the income or losses of such companies is not included in our Consolidated Statements of Operations, however, the result of observable price changes, if any, are reflected in Other income (loss), net. We include the carrying value of these interests in Ownership interests and advances on the Consolidated Balance Sheets.

The Company accounts for ownership interests that are not accounted for under the equity method and have a readily determinable fair value at fair value based on the closing stock price on the last trading day of the reporting period. Under this method, the changes in fair value are reflected in Other income (loss), net. As of December 31, 2022 those ownership interests consist of approximately 1.3 million shares of Bright Health Group ("Bright Health") common shares valued at $0.9 million.

Accounting policies, methods and estimates are an integral part of the Consolidated Financial Statements prepared by management and are based upon management’s current judgments. These judgments are normally based on knowledge and experience with regard to past and current events and assumptions about future events. Certain accounting policies, methods and estimates are particularly important because of their significance to the financial statements and because of the possibility that future events affecting them may differ from management’s current judgments. While there are a number of accounting policies, methods and estimates affecting our financial statements as described in Note 1 to our Consolidated Financial Statements, the most significant relate to impairment of ownership interests and advances.

On a periodic basis, but no less frequently than atquarterly, the ~~end of each quarter, we evaluate~~Company evaluates the carrying value of ~~our~~its ownership interests and advances for possible impairment based on achievement of business plan objectives and milestones, the estimated fair value of each company relative to its carrying value, the financial condition and prospects of the company, ~~market conditions~~ and other relevant factors. The business plan objectives and milestones we consider include, among others, those related to financial performance, such as achievement of planned financial results or completion of capital raising activities, and those that are not primarily financial in nature, such as hiring of key employees or the establishment of strategic relationships. WeManagement then ~~determine~~determines whether there has been an other than temporary decline in the ~~value of our ownership interest in the~~ company. ~~Any impairment to be recognized~~Impairment is measured as the amount by which the carrying value of an asset exceeds its estimated fair value.

The ~~adjusted~~reduced carrying value ~~of an ownership interest~~a previously impaired company accounted for using the Equity method is not increased even if circumstances suggest the value of the company has subsequently recovered.

The estimated fair value of privately held companies is generally determined based on the value at which independent third parties have invested or have committed to invest in these companies, or based on other valuation methods including discounted cash flows, valuations of comparable public companies and valuations of acquisitions of comparable companies.

Our companies operate in industries which are rapidly evolving and extremely competitive. It is reasonably possible that our accounting estimates with respect to the ultimate recoverability of the carrying value of ownership interests and advances could change in the near term and that the effect of such changes on our Consolidated Financial Statements could be material. While we believe that the current recorded carrying values of our equity and other method companies are not impaired, there can be no assurance that our future results will confirm this assessment or that a significant write-down or write-off will not be required in the future.

Total impairment charges related to our Ownership interests and advances were as follows:

Impairment charges related to equity method companies are included in Equity income (loss), net in the Consolidated Statements of Operations. Impairment charges related to other ownership interests are included in Other income (loss), net in the Consolidated Statements of Operations.

We operate as one operating segment based upon the similar nature of our technology-driven 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 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.

The following is a listing of certain of our ownership interests as of December 31, ~~2021~~2022 and ~~2020.~~2021. The ownership percentages indicated below are presented as of December 31, ~~2021~~2022 for certain companies in which we held ownership interests and reflect the percentage of the vote we were entitled to cast at that date based on issued and outstanding voting securities (on a common stock equivalent basis), excluding the effect of options, warrants and convertible debt (primary ownership).

Year ended December 31, ~~2021~~2022 versus year ended December 31, ~~2020~~2021

General and Administrative Expense. Our general and administrative expenses consist primarily of employee compensation, stock based compensation, insurance, office ~~rent~~costs and professional services such as consulting, legal, and accounting. General and administrative expense also includes stock-based compensation expense which consists primarily of expense related to grants of restricted stock and deferred stock units to our employees and directors.services. General and administrative expense decreased ~~$2.3~~$2.4 million, or 33%, for the year ended December 31, ~~2021~~2022 compared to the prior year ~~primarily~~ due to ~~decreases in severance of $1.2 million,~~lower employee compensation of ~~$1.5~~$1.1 million, lower ~~professional fees~~severance costs of ~~$0.1 million, and other various costs, which were partially offset by~~ $0.8 million, ~~of higher~~lower stock based compensation ~~compensation.~~costs of $0.3 million, lower insurance costs of $0.2 million and various other lower costs. General and administrative expenses also can include amounts estimated for the Transaction Bonus Plan (the "LTIP"), which is a component of employee compensation. As described in Note 11 in the accompany consolidated financial statements, the LTIP provides a cash bonus pool to employees based upon meeting certain thresholds of sales of the Company's ownership interests. Expense recognized pursuant to the LTIP was ~~$0.7 million~~zero and ~~$1.3~~$0.7 million during the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company paid $2.5 million pursuant to the LTIP plan during 2021. No further amounts have been accrued with respect to the LTIP. General and administrative expense also includes stock based compensation expense of ~~$1.8~~$1.4 million and ~~$1.0~~$1.8 million years ended December 31, 2022 and 2021, ~~and 2020,~~ respectively. The increase of stock based compensation for the year ended December 31, 2021 is primarily attributable to amounts associated with management compensation of $0.4 million and shares granted to a consultant for services of $0.2 million. Stock based compensation for the year ended December 31, 2020 also reflected reductions, that did not recur to the same extent in 2021, in compensation related to certain performance based awards that had a reduction in expected vesting, expired or were forfeited. Stock based compensation continues to include a significant proportion of management's overall compensation, including the settlement of amounts due pursuant to the annual management incentive plan, and Director compensation, which aggregated to ~~$0.6~~$0.7 million for the year ended December 31, ~~2021.~~2022.

Other income (loss), net. Other income (loss), net ~~increased~~decreased by ~~$29.7~~$25.3 million for the year ended December 31, ~~2021,~~2022, compared to the prior year. During the year ended December 31, 2022, the primary component was unrealized losses resulting from the decline in the fair value of BHG common stock of $3.7 million. During the year ended December 31, 2021, the Company recorded a gain from the sale of Flashtalking of $32.5 million, ~~and~~ gains aggregating to $2.8 million from the sales of Velano Vascular and T-REX ~~Group. The Company recorded~~Group, unrealized losses net of $10.8 million from an observable price change and subsequent changes in the fair value of BHG common stock, ~~of $10.8 million, net,~~ and a $2.5 million impairment related to certain other ownership interests. ~~During the year ended December 31, 2020, the Company recorded impairments of $8.8 million related to the ownership interests of T-REX, b8ta and others accounted for under the Other method.~~ The impairments were determined based on declines in the fair value of our ownership interests resulting from reduced valuation expectations and extended exit timelines resulting from the more challenging mergers and acquisitions environment related to COVID-19 and the related uncertain economic impact. The Company also recorded a $0.3 million reduction in the carrying value of an other equity security based on an observable price change. Partially offsetting these impairments, was a $1.5 million non-cash gain for the increase in the fair value of our ownership interest in Flashtalking based upon an observable price change.

Interest Income. ~~There was no significant change in interest~~Interest income increased $0.5 million for the year ended December 31, ~~2021~~2022 compared to the prior ~~year.~~year due primarily to higher market interest rates on marketable securities during 2022.

Equity Income (Loss), net. Equity income (loss), net fluctuates with the number of companies accounted for under the equity method, our voting ownership percentage in those companies and the net results of operations of those companies. We recognize our share of losses to the extent we have cost basis in the equity of the company or we have outstanding commitments or guarantees. Certain amounts recorded to reflect our share of the income or losses of our companies accounted for under the equity method are based on estimates and on unaudited results of operations of those companies and may require adjustments in the future when audits of these entities are made final. We report our share of the results of our equity method companies on a one quarter lag basis.

Equity income (loss), net ~~increased $32.5~~decreased $18.8 million for the year ended December 31, ~~2021~~2022 compared to the prior year. The components of equity income (loss), net for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 were as follows:

During the year ended December 31, 2022, the gains on sales of ownership interests are primarily related to Lumesis of $4.9 million. During the year ended December 31, 2021, the gains on sales of ownership interests are comprised primarily of gains related to Zipnosis for $17.3 million and AHS for $2.0 million. ~~There were no material~~

The unrealized dilution gains ~~or losses on sales of ownership interests~~ for the year ended December 31, ~~2020, however Sonobi was sold resulting in $6.6 million of cash proceeds.~~

~~The unrealized dilution gains~~2022 were related to Moxe and for the year ended December 31, 2021 were the result of Syapse and Trice, who each raised additional equity capital that diluted the Company's interest in those entities. ~~The unrealized dilution gains for the year ended December 31, 2020 were related to Aktana, meQuilibrium, Moxe and Syapse.~~

During the year ended December 31, 2020 the Company recorded impairments of $11.3 million related to the ownership interests of WebLinc, Inc., QuanticMind, Inc. and Sonobi accounted for under the equity method. The impairments were determined based on declines in the fair value of our ownership interests resulting from reduced valuation expectations and extended exit timelines resulting from the more challenging mergers and acquisitions environment related to COVID-19 and the related uncertain economic impact.

The increase in our share of losses of our equity method companies for the ~~2021~~2022 year compared to the prior year period was due to increased losses at principally ~~two healthcare~~three companies ~~one of~~ which did not experience their planned revenue ~~growth and the other incurred a variety of financing and acquisition expenses during 2021.~~growth. These ~~factors~~increases were ~~partially~~ offset ~~by the impact due to~~ the decrease in ~~the number of~~losses applicable to two ownership interests ~~accounted for under the equity method and a decrease in losses associated with the remaining ownership interests.~~where our carrying value was reduced to zero.

There was no income tax benefit (expense) for the years ended December 31, ~~2021~~2022 and ~~2020.~~2021. We have recorded a valuation allowance to reduce our net deferred tax asset to an amount that is more likely than not to be realized in future years. Accordingly, the benefit of the net operating loss that would have been recognized in each year was offset by changes in the valuation allowance.

As of December 31, ~~2021,~~2022, the Company had ~~$24.7~~$13.3 million of cash and cash ~~equivalents.~~equivalents and $6.0 million of marketable securities.

In 2015, the Company's Board of Directors authorized us, from time to time and depending on market conditions, to repurchase up to $25.0 million of the Company's outstanding common stock. During the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, we did not repurchase any shares under this authorization.

In May 2021, the Company's Board of Directors authorized a ~~new~~ $6.0 million share repurchase program (the "2021 Plan") using existing funds in accordance with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. During the year ended December 31, 2021, the Company purchased 236,159 shares under ~~this program~~the 2021 Plan at an aggregate cost of $1.6 million, or $6.94 per share. During October 2021, the Company suspended the 2021 Plan and completed a modified Dutch auction self-tender that resulted in the repurchase of 4.3 million common shares for an aggregate price of $38.7 million, or $9.00 per share.

In March 2022, the Company's Board of Directors replaced the 2021 Plan and authorized a separate $3.0 million share repurchase program (the "2022 Plan") using existing funds in accordance with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. During the year ended December 31, 2022, the Company purchased 711,481 shares under the 2022 Plan at an aggregate cost of $2.9 million, or $4.13 per share. The Company completed the 2022 Plan in January 2023 by purchasing an additional 25,096 shares, resulting in an average price of $4.09 for the 2022 Program.

We may consider additional stock repurchases or dividends in the future based on prevailing market conditions and other factors when and if additional liquidity becomes available.

Our ability to generate liquidity from transactions involving our ownership interests has been adversely affected from time to time by adverse circumstances in the U.S. capital markets and other factors, including the impact of COVID-19. We may be requested to provide additional capital to our companies, which may cause us to face liquidity issues that will constrain our ability to execute our business strategy and limit our ability to provide financial support to all of our existing companies in the amounts that we desire. The transactions we enter into in pursuit of our strategy could increase or decrease our liquidity at any point in time. As we seek to provide additional funding to existing companies where we have an ownership interest or commit capital to other initiatives, we may be required to expend our cash or incur debt, which will decrease our liquidity. Conversely, as we dispose of our interests in our ownership interests, we may receive proceeds from such sales, which could increase our liquidity. From time to time, we are engaged in discussions concerning acquisitions and dispositions which, if consummated, could impact our liquidity, perhaps significantly. Accordingly, the Company could also pursue other sources of capital in order to maintain its liquidity. The Company believes that its cash and cash equivalents at December 31, ~~2021~~2022 will be sufficient to fund operations past one year from the issuance of these financial statements.

Year ended December 31, ~~2021~~2022 versus year ended December 31, ~~2020.~~2021. Net cash used in operating activities ~~remained consistent~~decreased for the year ended December 31, ~~2021~~2022 compared to the prior year. The activity during the year ended December 31, 2022 was primarily the result of various non-cash adjustments to net loss, including $7.0 million of equity loss and a $3.7 million unrealized loss on the decrease in fair value of Bright Health common stock. The activity during the year ended December 31, 2021 was primarily the result of various non-cash adjustments to net income, including the $11.8 million of equity income, non-cash gains, net, of $8.5 million for observable prices changes and $35.3 million for gain on sales of ownership interests which were partially offset by $19.3 million change in the fair value of ownership interests and $2.5 million impairment losses at certain Other ownership interests. The activity during the year ended December 31, 2020 was primarily the result of various non-cash adjustments to net loss, including the $20.0 million impairment losses and $9.4 million of equity loss, which were partially offset by non-cash gains, net, of $1.2 million for observable price changes.

Year ended December 31, ~~2021~~2022 versus year ended December 31, ~~2020.~~2021. Net cash (used in) provided by investing activities ~~increased~~decreased by ~~$59.4~~$62.8 million for the year ended December 31, ~~2021~~2022 compared to the prior year. ~~The increase primarily related~~During the year ended December 31, 2022, the Company funded an aggregate of $5.7 million to ~~$60.8 million of proceeds from the sale of ownership interests, primarily Flashtalking, Zipnosis, WebLinc Velano~~Syapse, Inc, Prognos Health, Clutch Holdings, meQuilibrium and ~~T-Rex,~~Trice Medical, Inc. as compared to ~~the $6.6~~aggregate of $2.7 million ~~of proceeds from the sale of Sonobi in the third quarter of 2020. In addition, the Company's investing outflows resulting from acquisitions of ownership interests~~funded to Trice Medical and ~~advances to ownership interests~~Aktana during the year ended December 31, ~~2021 were $7.5~~2021. During the year ended December 31, 2022, the Company received $5.5 million ~~less than~~of cash proceeds from the ~~prior year.~~Lumesis transaction and various other amounts resulting from the resolution or expiration of escrow contingencies, as compared to the Company receiving an aggregate of $60.8 million of cash proceeds from the Flashtalking, WebLinc, Zipnosis, T-REX and Velano Vascular transactions during the year ended December 31, 2021.

Year ended December 31, ~~2021~~2022 versus year ended December 31, ~~2020.~~2021. Net cash used in financing activities ~~increased~~decreased by ~~$40.8~~$37.3 million for the year ended December 31, ~~2021~~2022 compared to the prior year. The ~~increase~~decrease was primarily the result of repurchases of common stock of $2.9 million for the year ended December 31, 2022 as compared to $40.7 million ~~in repurchases of our common stock.~~for the year ended December 31, 2021. There were no other significant financing activities for the years ended December 31, ~~2021.~~2022.

(a) In 2015, we entered into an agreement for the lease of our former principal executive offices which expires in April 2026. Payments pursuant to this lease are approximately ~~$2.6~~$2.0 million through expiration, however, in March 2019 we entered into a sublease for this office space which is ~~also~~ expected to result in future aggregate sublease receipts of ~~$2.5~~$1.9 million through April 2026.

(b) The maximum aggregate exposure under employment and severance agreements for remaining employees was approximately ~~$1.0~~$1.1 million at December 31, ~~2021.~~2022 and up to 250,000 common shares. We are involved from time to time in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of any of these matters which are currently pending will not have a material adverse effect on our consolidated financial position or results of operation.

Item 8. Financial Statements and Supplementary Data

The following Consolidated Financial Statements, and the related Notes thereto, of Safeguard Scientifics, Inc. and the Reports of Independent Registered Public Accounting Firm are filed as a part of this Form 10-K.

	Page
Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248)	22
~~Report of Independent Registered Public Accounting Firm (KPMG LLP, Philadelphia, PA, Auditor Firm ID: 185)~~	23
Consolidated Balance Sheets as of December 31, ~~2021~~2022 and ~~2020~~2021	2523
Consolidated Statements of Operations for the years ended December 31, ~~2021~~2022 and ~~2020~~2021	2624
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, ~~2021~~2022 and ~~2020~~2021	2725
Consolidated Statements of Cash Flows for the years ended December 31, ~~2021~~2022 and ~~2020~~2021	2826
Notes to Consolidated Financial Statements	2927

Table of Contents

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
Safeguard Scientifics, Inc

Opinion on the financial statements

We have audited the accompanying consolidated balance ~~sheet~~sheets of Safeguard Scientifics, Inc. (a Pennsylvania corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the ~~year then~~two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the ~~year then~~two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our ~~audit.~~audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our ~~audit~~audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our ~~audit~~audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our ~~audit~~audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our ~~audit~~audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our ~~audit~~audits provide a reasonable basis for our opinion.

Critical audit ~~matters~~matter

The critical audit ~~matters~~matter communicated below ~~are matters~~is a matter arising from the current period audit of the financial statements that ~~were~~was communicated or required to be communicated to the audit committee and that: (1) ~~relate~~relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit ~~matters~~matter below, providing a separate ~~opinions~~opinion on the critical audit ~~matters~~matter or on the accounts or disclosures to which ~~they relate.~~it relates.

~~As discussed in Note 1 and Note 2 to the consolidated financial statements, the Company’s~~Impairment of ownership interests ~~balance as of December 31, 2021 was $22.0 million, of which $21.1 million is accounted for under the equity method~~ and ~~$0.9 million is accounted for under the fair value measurement alternative. On a periodic basis, but not less frequently than quarterly, the~~advances

The Company evaluates the carrying value of its ownership interests and advances for ~~impairment based on~~possible impairment. This evaluation requires management to apply significant judgment particularly related to the achievement of business plan objectives and milestones, the financial condition and prospects of the portfolio company, market conditions and other relevant factors. The business plan objectives and milestones the company considers include, among others, those related to financial performance, such as achievement of planned financial results or completion of capital raising activities, and those that are not primarily financial in nature, such as hiring of key employees or the establishment of strategic relationships. Based on the above, management then determines whether there has been an other than temporary decline in the value of its ownership interest in or advance to the portfolio company. ~~If it is determined that there has been an~~The identification of other than temporary ~~decline in the value~~impairment of ~~its~~ ownership interests ~~in the portfolio company, impairment is measured as the amount by which the carrying value of an asset exceeds its estimated fair value.~~and advances was determined to be a critical audit matter.

The principal consideration for our determination that the identification of other than temporary impairment of ownership interests and advances is a critical audit matter is due to it being an area of the financial statements requiring significant auditor judgment and subjectivity in assessing the results of management’s qualitative impairment analysis. Ownership interests and advances held by the Company are primarily comprised of early-stage companies in industries that are rapidly evolving, where evaluation of other than temporary declines in value requires significant judgment by management.

Our audit procedures related to identification of other than temporary impairment of ownership interests and advances included the following, among others:

●

We evaluated the design of certain internal controls related to the Company’s impairment assessment. This included controls over the identification of other than temporary declines in value and the impairment analysis, including financial condition, prospects and other factors present at the portfolio company.

●

We held discussions with those outside of accounting with intimate knowledge of the portfolio companies, including those with board positions and those employed by the portfolio companies, to gain an understanding of operational performance, milestones achieved, and potential indicators of other than temporary declines in value.

●

WeFor a selection of portfolio companies, we reviewed the financial performance, ~~of the underlying portfolio companies,~~ relevant third-party information with indications of company values, board materials, press releases and other public information ~~relating to the portfolio companies~~ for potential indicators of other than temporary declines in value.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2021.

Philadelphia, Pennsylvania

March ~~11, 2022~~10, 2023

Table of Contents

~~Report of Independent Registered Public Accounting Firm~~

To the Shareholders and Board of Directors
Safeguard Scientifics, Inc.:

~~Opinion on the Consolidated Financial Statements~~

We have audited the accompanying consolidated balance sheet of Safeguard Scientifics, Inc. and subsidiaries (the Company) as of December 31, 2020, the related consolidated statements of operations, shareholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

~~Basis for Opinion~~

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

~~/s/KPMG LLP~~

~~We served as the Company’s auditor from 1986 to2021.~~

Philadelphia, Pennsylvania
March 5, 2021

~~Table of Contents~~

SAFEGUARD SCIENTIFICS, INC.

CONSOLIDATED BALANCE SHEETS

(In ~~thousands)~~thousands, except per share data)

	*As of December 31,*						*As of December 31,*
	*2021*			*2020*			2022			2021
ASSETS
Current Assets:
Cash and cash equivalents	$	24,739		$	15,601		$	13,331		$	24,739
Restricted cash		25			0			25			25
Marketable securities								5,956			—
Ownership interests		4,549			0			860			4,549
Prepaid expenses and other current assets		965			462			1,251			965
Total current assets		30,278			16,063			21,423			30,278
Right-of-use asset, net		1,561			1,790			1,290			1,561
Ownership interests and advances		21,972			50,398			14,545			21,972
Other assets		217			784			434			217
Total Assets	$	54,028		$	69,035		$	37,692		$	54,028
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable	$	41		$	56		$	16		$	41
Accrued compensation and benefits		794			2,677			507			794
Accrued expenses and other current liabilities		524			410			865			524
Lease liability - current		375			327			429			375
Total current liabilities		1,734			3,470			1,817			1,734
Lease liability - non-current								1,249			1,678
Other long-term liabilities		50			637			50			50
Lease liability - non-current		1,678			2,053
Total Liabilities		3,462			6,160			3,116			3,462
Commitments and contingencies (Note 11)
Equity:
Preferred stock, $0.10 par value; 1,000 shares authorized		0			0			—			—
Common stock, $0.10 par value; 83,333 shares authorized; 21,573 issued at December 31, 2021 and 2020, respectively		2,157			2,157
Common stock, $0.10 par value; 83,333 shares authorized; 21,573 issued at December 31, 2022 and 2021, respectively								2,157			2,157
Additional paid-in capital		806,638			807,582			804,752			806,638
Treasury stock, at cost; 5,068 and 688 shares at December 31, 2021 and 2020, respectively		(48,569	)		(10,200	)
Treasury stock, at cost; 5,478 and 5,068 shares at December 31, 2022 and 2021, respectively								(48,410	)		(48,569	)
Accumulated deficit		(709,635	)		(736,639	)		(723,898	)		(709,635	)
Accumulated other comprehensive loss		(25	)		(25	)		(25	)		(25	)
Total Equity		50,566			62,875			34,576			50,566
Total Liabilities and Equity	$	54,028		$	69,035		$	37,692		$	54,028

As of December 31, ~~2021~~2022, Safeguard Scientifics, Inc. ("the Company") had ~~$24.7~~$13.3 million of cash and cash ~~equivalents.~~equivalents and $6.0 million of marketable securities.

In January 2018, Safeguard ceased deploying capital into new opportunities in order to focus on supporting the existing ownership interests and maximizing monetization opportunities to enable returning value to shareholders. We have considered and taken action on various initiatives including the sale of our ownership interests, the sale of certain or all of our ownership interests in secondary market transactions as well as other opportunities to maximize shareholder value. As we seek to provide additional funding to existing companies where we have an ownership interest, we may be required to expend our cash or incur debt, which will decrease our liquidity. From time to time, we are engaged in discussions concerning acquisitions and dispositions which, if consummated, could impact our liquidity, perhaps significantly. Accordingly, the Company could also pursue other sources of capital in order to maintain its liquidity.

The Company believes that its cash and cash equivalents at December 31, ~~2021~~2022 will be sufficient to fund operations past one year from the issuance of these consolidated financial statements.

The consolidated financial statements include the accounts of Safeguard and all of its wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation.

The Company accounts for its ownership interests using one of the following methods: Equity or Other. The accounting method applied is generally determined by the degree of the Company's influence over the entity, primarily determined by our voting interest in the entity.

In addition to holding voting and non-voting equity and debt securities, the Company also periodically makes advances to its companies in the form of promissory notes which are included in Ownership interests and advances on the Consolidated Balance Sheets.

Equity Method. The Company accounts for ownership interests whose results are not consolidated, but over which it exercises significant influence, under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an ownership interest depends on an evaluation of several factors including, among others, representation on the board of directors and our ownership level, which is generally a 20% to 50% interest in the voting securities of a company, including voting rights associated with the Company’s holdings in common, preferred and other convertible instruments in the company. The Company records the initial ownership interest at cost. Under the equity method of accounting, the Company does not reflect a company’s financial statements within our Consolidated Financial Statements; however, our share of the income or loss of such company is reflected in Equity income (loss), net in the Consolidated Statements of Operations. The Company also adjust the carrying value to reflect third party investments in the ownership interests, which typically result in a dilution gain. The Company includes the carrying value of equity method companies in Ownership interests and advances on the Consolidated Balance Sheets. Any excess of the Company’s cost over its underlying interest in the net assets of equity method companies that is allocated to intangible assets is amortized over the estimated useful lives of the related intangible assets. The Company reflects its share of the income or loss of the equity method companies on a one quarter lag. This reporting lag could result in a delay in recognition of the impact of changes in the business or operations of these companies.

When the Company’s carrying value in an equity method company is reduced to zero, the Company records no further losses in its Consolidated Statements of Operations unless the Company has an outstanding guarantee obligation or has committed additional funding to such equity method company. If such equity method company subsequently reports income, the Company will not record its share of such income until it exceeds the amount of the Company’s share of losses not previously recognized.

Other Method. We account for ownership interests in companies that are not accounted for under the equity method that do not have a readily determinable fair value under the fair value measurement alternative. Under the fair value measurement alternative, these ownership interests are based on our original cost less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar interests of the same issuer. Under this method, our share of the income or losses of such companies is not included in our Consolidated Statements of Operations, however, the result of observable price changes, if any, are reflected in Other income (loss), net. We include the carrying value of these interests in Ownership interests and advances on the Consolidated Balance Sheets.

The Company accounts for ownership interests that are not accounted for under the equity method and have a readily determinable fair value at fair value based on the closing stock price on the last trading day of the reporting period. Under this method, the changes in fair value are reflected in Other income (loss), net. As of December 31, ~~2021~~2022 those ownership interests consist of approximately 1.3 million common shares of Bright Health Group ("Bright Health") valued at ~~$4.5~~$0.9 million.

During the years ended December 31, ~~2021~~2022 or ~~2020,~~2021, there were no items of comprehensive income (loss).

The preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect amounts reported in the financial statements and accompanying notes. Actual results may differ from these estimates. These estimates include the evaluation of the recoverability of the Company’s ownership interests and advances, the recoverability of deferred tax assets, stock-based compensation and commitments and contingencies. Management evaluates its estimates on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances.

Certain amounts recorded to reflect the Company’s share of income or losses for companies accounted for under the equity method are based on unaudited results of operations of those companies and may require adjustments in the future when audits of these entities’ financial statements are completed.

It is reasonably possible that the Company’s accounting estimates with respect to the ultimate recoverability of the carrying value of the Company’s ownership interests and advances could change in the near term and that the effect of such changes on the consolidated financial statements could be material. At December 31, ~~2021~~2022, the Company believes the carrying value of the Company’s ownership interests and advances is not impaired, although there can be no assurance that the Company’s future results will confirm this assessment, that a significant write-down or write-off will not be required in the future or that a significant loss will not be recorded in the future upon the sale of a company.

The Company considers all highly liquid instruments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits that are readily convertible into cash. The Company has not experienced any significant losses on cash equivalents and does not believe it is exposed to any significant credit risk on cash and cash equivalents.

Restricted cash ~~equivalents~~ represents cash required to be set aside by a contractual agreement as a shareholder representative. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statements of Cash Flows:

The Company’s financial instruments (principally cash and cash equivalents, marketable securities, accounts receivable, notes receivable, accounts payable and accrued expenses) are carried at cost, which approximates fair value due to the short-term maturity of these instruments.

Right-of-use assets represent an operating lease for office facilities. The right-of-use assets are reduced over the remaining term of the applicable lease (principally April 2026) in a manner that results in a straight-line lease expense, when combined with the interest factor on the lease liability.

The initial lease liability represents the present value of the fixed escalating lease payments through April 2026 associated with the Company's prior corporate headquarters operating office lease. The discount rate used to calculate the lease liability was based on the Company's incremental borrowing rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the lease, which was approximately 12%, at the transition to the guidance of ASU No. 2016-02, Leases. Subsequent values of the lease liability reflect the reduction in the lease liability for operating lease payments less an amount representing interest, which is included in the straight-line lease expense. There is no residual value guarantee associated with this operating lease arrangement. The Company has incurred operating lease expenses and operating cash outflows of $0.5 million for each of the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, and $0.6 million for each of the years ended December 31, ~~2021~~2022 and ~~2020~~2021.

In March 2019, the Company entered into a sublease of its prior corporate headquarters office space. The term of the sublease is through April 2026, the same as the Company's underlying lease. Fixed sublease payments to the Company are escalating over the term of the sublease and are reported as a component of general and administrative expenses.

In ~~April 2019,~~ ~~the Company entered into a sublease for replacement office space with a related party, an equity method ownership interest, beginning in~~ ~~June 2019.~~ ~~The 18 month term of this sublease expired in~~ ~~2020.~~ ~~The aggregate payments under this sublease were~~ ~~not~~ ~~material.~~

A summary of the Company's operating lease cash flows at December 31, ~~2021~~2022 follows:

On a periodic basis, but no less frequently than quarterly, the Company evaluates the carrying value of its ownership interests and advances for possible impairment based on achievement of business plan objectives and milestones, the estimated value of each company relative to its carrying value, the financial condition and prospects of the company and other relevant factors. The business plan objectives and milestones the Company considers include, among others, those related to financial performance, such as achievement of planned financial results or completion of capital raising activities, and those that are not primarily financial in nature, such as hiring of key employees or the establishment of strategic relationships.

Management then determines whether there has been an other than temporary decline in the value of its ownership interest in the company. Impairment is measured as the amount by which the carrying value of an asset exceeds its estimated fair value.

The estimated fair value of privately held companies is generally determined based on the value at which independent third parties have invested or have committed to invest in these companies or based on other valuation methods, including discounted cash flows, valuation of comparable public companies and the valuation of acquisitions of similar companies.

Impairment charges related to equity method companies are included in Equity income (loss), net in the Consolidated Statements of Operations. Impairment charges related to non-equity method companies and funds are included in Other income (loss), net in the Consolidated Statements of Operations.

The reduced cost basis of a previously impaired company accounted for using the Equity method are not written-up if circumstances suggest the value of the company has subsequently recovered.

The Company accounts for income taxes under the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company measures deferred tax assets and liabilities using enacted tax rates in effect for the year in which the temporary differences are expected to be recovered or settled. The Company recognizes the effect on deferred tax assets and liabilities of a change in tax rates in income in the period of the enactment date. The Company provides a valuation allowance against the net deferred tax asset for amounts which are not considered more likely than not to be realized.

The Company computes net income (loss) per share using the weighted average number of common shares outstanding during each year. The Company includes in diluted net income (loss) per share common stock equivalents (unless anti-dilutive) which would arise from the exercise of stock options and conversion of other convertible securities and adjusted, if applicable, for the effect on net income (loss) of such transactions. Diluted net income (loss) per share calculations adjust net income (loss) for the dilutive effect of common stock equivalents and convertible securities issued by the Company’s consolidated or equity method companies.

The Company operates as one operating segment based upon the similar nature of its technology-driven 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.

The following summarizes the carrying value of the Company’s ownership interests and advances.

In September 2022, Lumesis, Inc. was acquired by another entity for cash. The Company received $5.5 million in cash proceeds in connection with this transaction, excluding holdbacks and escrows. This transaction resulted in a gain of $4.9 million, including $0.8 million other receivable related to an indemnification escrow during the year ended December 31,2022.

In March 2021, Zipnosis, Inc. was acquired by another entity, Bright Health. The Company received $3.5 million in cash proceeds, including escrows, and $15.3 million in preferred equity in the acquiror in connection with this transaction. This ownership interest represented a security that did not have a readily determinable fair value. Due to the inherent uncertainty of determining the fair value of ownership interests that do not have a readily determinable fair value, this estimated value may differ significantly from the value that would have been reported had a ready market for the security existed, and it is reasonably possible that the difference could be material. The Company recognized a $17.3 million gain on the sale, which is included in Equity income (loss), net in the Consolidated Statements of Operations. The fair value of the ownership interest received as a result of the acquisition was estimated based on evaluating several valuation methods available, including the value at which independent third parties have recently invested, the valuation of comparable public companies, and the present value of our expected outcomes. Assumptions considered within these methods include determining which public companies are comparable, projecting forward revenues, selecting an appropriate valuation multiple, discounts to apply for the lack of marketability or lack of comparability, other factors and the relative weight to apply to each valuation method available. Due to the unobservable nature of some of these inputs, we ~~have~~ determined this initial estimate to be a Level 3 fair value measurement. During the three months ended June 30, 2021, Bright Health completed an initial public offering that resulted in our ownership interest converting into approximately 1.3 million common shares. Accordingly, the Bright Health common shares represent an ownership interest with a readily determinable fair value (Level 1), which will subsequently be measured at fair value with unrealized gains (losses) being reported as a component of Other income (loss), net. As a result, the Company recognized a $10.8 million unrealized loss, net, on Bright Health subsequent to the initial public offering during the ~~year-ended~~year ended December 31, 2021. ~~Subsequent to~~The Company recognized a $3.7 million unrealized loss on Bright Health during the year ended December 31, ~~2021,~~ ~~the fair value of our Bright Health ownership interest declined to approximately $2.3 million as of~~ ~~March 7,~~ 2022.

In August 2021, Flashtalking was acquired by another entity. The Company has received $45.0 million in cash proceeds, including escrows, and included a $32.5 million gain in Other income (loss), net, during the year ended December 31, 2021. The Company may receive additional amounts of up to approximately $0.5 million over the next 2412 months from the resolution of escrow contingencies.

In January 2021, WebLinc, Inc. was acquired by another entity. The Company has received $3.6 million in cash proceeds to-date, ~~and~~ ~~may~~ ~~receive additional amounts over the next~~ 12 ~~months based on certain transactional performance activities,~~ which could be partially offset by indemnifiable claims. The Company has recognized a $0.1 million loss on the sale during the year ended December 31, 2021, which is included in Equity income (loss), as certain contingencies were resolved. ToDuring the ~~extent~~year ended December 31, 2022, the Company recognized $0.5 million as gain on sale as the result of the collection of additional amounts ~~are collected~~and as contingencies ~~are~~were resolved, those amounts ~~will be~~were recorded as gain on the sale and included within Equity income (loss).

QuanticMind and Hoopla were acquired in separate transactions during the first quarter of 2021 by other entities, however there were no resultant proceeds to the Company. There was no resulting gain or loss due to this equity method ownership interest being impaired during the prior year.

In March 2021, the Company's ownership interest in T-REX Group, Inc., which was accounted for using the fair value measurement alternative, was acquired for $3.0 million in cash. The Company recognized a $0.9 million gain, which is included in Other income (loss), net.

In April 2021, Velano Vascular was acquired by another entity. The Company has received ~~$3.5~~$4.0 million in cash proceeds, including escrows, and included a $1.9 million gain in Other income (loss), net, for the year ended December 31, 2021. ~~The Company~~ ~~may~~ ~~receive additional amounts over the next 12 months from the resolution of escrow contingencies.~~

In December 2021, the Company received $2 million of contingent proceeds resulting from resolution of certain valuation thresholds remaining from the 2018 sale of AdvantEdge Healthcare Solutions.

During the year ended December 31, 2021, the Company recorded an impairment of $2.5 million related to reduced expectations for certain Other ownership interests, which is included in Other income (loss), net.

In ~~September 2020,~~ Sonobi, Inc. was acquired by another entity for cash. The Company received $6.6 million in cash proceeds in connection with this transaction, excluding holdbacks and escrows. The Company recognized an insignificant gain on the sale, which is included in Equity income (loss), net in the Consolidated Statements of Operations.

~~During the year ended~~ ~~December 31, 2020,~~ the Company recorded impairments of $11.3 million related to the ownership interests of WebLinc, Inc., QuanticMind, Inc. and Sonobi, Inc. accounted for under the equity method, which are reflected in Equity income (loss), net in the Consolidated Statement of Operations. During the year ended ~~December~~ ~~31,~~~~2020,~~ ~~the Company also recorded impairments of $8.8 million related to the ownership interests of T-REX Group, Inc.,~~ ~~b8ta~~ and others accounted for under the Other method, which are reflected in Other income (loss), net in the Consolidated Statement of Operations. The impairments were determined based on declines in the fair value of our ownership interests resulting from reduced valuation expectations and extended exit timelines resulting from the more challenging mergers and acquisitions environment related to COVID-19 and the related uncertain economic impact. The measurement of fair value for these impairments was estimated based on evaluating several valuation inputs available for each of the applicable ownership interests, primarily including the value at which independent ~~third~~ parties have invested, the valuation of comparable public companies, the valuation of acquisitions of similar companies and the present value of our expected outcomes. Assumptions considered within these methods include determining which public companies are comparable, projecting forward revenues for the measured ownership interest, discounts to apply for the lack of marketability or lack of comparability, other factors and the relative weight to apply to each valuation input available. Due to the unobservable nature of some of these inputs, we have determined these fair value estimates to be non-recurring Level 3 ~~fair value measurements.~~

~~During the year ended~~ ~~December 31, 2020,~~ the Company recorded a $1.5 million non-cash gain based upon an observable price change related to our ownership interest in Flashtalking Inc. accounted for under the Other method, which is reflected in Other income (loss), net in the Consolidated Statement of Operations. During the year ended ~~December~~ ~~31,~~~~2020,~~ ~~the Company also recorded a $0.3 million non-cash Other loss based on an observable price change for another ownership interest accounted for under the Other method.~~

As of December 31, ~~2021~~2022, the Company held ownership interests accounted for using the equity method in 98 non-consolidated companies.

Certain of the Company’s ownership interests as of December 31, ~~2021~~2022 and ~~2020~~2021 included the following:

The following table provides summarized financial information for ownership interests accounted for under the equity method for the periods presented and has been compiled from respective company financial statements, reflect certain historical adjustments, and are reported on a one quarter lag. Results of operations are excluded for periods prior to their acquisition and subsequent to their disposition. Historical results are not adjusted when the Company exits or writes-off a company.

As of December 31, ~~2021~~2022, the Company’s carrying value in equity method companies, in the aggregate, exceeded the Company’s share of the net assets of such companies by approximately ~~$11.4~~$2.7 million. Of this excess, ~~$10.4~~$2.5 million was allocated to goodwill and ~~$1.0~~$0.2 million was allocated to intangible assets.

The Company funded $1.6 million of convertible loans to Syapse, Inc. The Company had previously deployed an aggregate of $25.0 million. Syapse drives healthcare transformation through precision medicine, enabling provider systems to improve clinical outcomes, streamline operations, and shift to new payment models.

The Company funded $2.0 million of convertible loans to Prognos Health Inc. The Company had previously deployed an aggregate of $12.6 million. Prognos is a healthcare platform company transforming the ability to access, manage and analyze healthcare data in partnership with life sciences brands, payers, and clinical diagnostics organizations. Prognos' innovations enhance the value of laboratory results and clinical diagnostic data through advanced analytics and artificial intelligence techniques.

The Company funded $1.4 million of convertible loans to Clutch Holdings, Inc. The Company had previously deployed an aggregate of $16.9 million. Clutch provides customer intelligence and personalized engagements that empower consumer-focused businesses to identify, understand and motivate each segment of their customer base.

The Company funded $0.5 million of convertible loans to meQuilibrium. The Company had previously deployed an aggregate of $14.0 million. meQuilibrium is a digital coaching platform that delivers clinically validated and highly personalized resilience solutions to employers, health plans, wellness providers, and consumers increasing engagement, productivity and performance, as well as improving outcomes in managing stress, health and well-being.

The Company funded $0.1 million of convertible loans to Trice Medical. The Company had previously deployed an aggregate of $11.8 million. Trice Medical is focused on orthopedic diagnostics using fully integrated camera-enabled technologies to provide clinical solutions to physicians. The Company also committed to provide another $0.3 million under certain conditions pursuant to a subordinated line of credit. The Company's obligation under this line of credit is included in accrued expenses. Subsequent to the year end, the Company funded $0.3 million in accordance with this line of credit.

The Company funded $1.7 million to Aktana, Inc. during the three months ended September 30, 2021. The Company had previously deployed an aggregate of $14.2 million. Aktana helps its customers improve their commercial effectiveness by delivering data-driven insights and suggestions directly to sales reps, coordinating multi-channel actions and providing insight regarding which strategies work best for which customers under which conditions.

Syapse raised $68 million of preferred equity during the three months ended March 31, 2021, which reduced the Company's ownership interest to approximately 11.1%. The Company recorded a $7.3 million dilution gain as a result of this transaction, which is included in Equity income (loss), net in the Consolidated Statements of Operation. ~~Syapse drives healthcare transformation through precision medicine, enabling provider systems to improve clinical outcomes, streamline operations, and shift to new payment models.~~

The Company funded $1 million of convertible loans to Trice Medical, Inc. during the three months ended June 30, 2021. The Company had previously deployed an aggregate of $10.8 million. Trice Medical is foucsed on orthopedic diagnostics using fully integrated camera-enabled technologies to provide clinical solutions to physicians. During the three months ended September 30, 2021, Trice Medical raised additional preferred equity which reduced the Company's ownership interest to 12.6%. The Company's existing convertible loans and related ~~interst~~interest in Trice Medical were also converted into this new class of preferred equity. As a result of this transaction, the Company recorded a $2.0 million dilution gain for the year ended December 31, 2021.

~~The Company funded an additional $0.7 million of convertible loans to Trice Medical, Inc.~~

~~The Company funded an additional $0.2 million of convertible loans to QuanticMind. See Note~~ 2 ~~for impairment recorded in~~ ~~2020~~ ~~and the sale of this ownership interest in~~ ~~2021.~~

~~The Company funded an aggregate of $0.1 million of convertible loans to WebLinc, Inc. See Note~~ 2 ~~for impairment recorded in~~ ~~2020~~ ~~and the sale of this ownership interest in~~ ~~2021.~~

The Company categorizes its financial instruments into a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

Cash, cash equivalents and restricted cash approximate fair value due to their short term nature. The Company did not have any Level 2 or Level 3 financial assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2021~~ ~~and~~ ~~2020~~2022.

Ownership interests accounted for at fair value as of December 31, ~~2021~~2022 consist of approximately 1.3 million common shares of Bright Health. The securities are carried at fair value based on the closing stock price on the last trading day of the reporting period. The Company was restricted from trading these securities until December 2021 as a result of a~~six-month~~ lock-up agreement from the Bright Health Group initial public offering.

In July 2015, the Company's Board of Directors authorized the Company, from time to time and depending on market conditions, to repurchase up to $25.0 million of the Company's outstanding common stock. During the years ended December 31, ~~2021~~2022 and ~~2020~~2021, the Company did not repurchase any shares under the existing authorization.

In May 2021, the Company's Board of Directors authorized a ~~new~~ $6.0 million share repurchase program (the "2021 Plan") using existing funds in accordance with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. During the year ended December 31, 2021, the Company ~~repurchased~~purchased 236,159 shares ~~for~~under the 2021 Plan at an aggregate ~~price~~cost of $1.6 million, ~~at an average cost of~~or $6.94 per share.

During October 2021, the Company suspended the 2021 Plan and completed a modified Dutch auction self-tender that resulted in the repurchase of 4.3 million common shares for an ~~aggregated~~aggregate price of ~~$39.0~~$38.7 million, or ~~$9.06~~$9.00 per share.

In March 2022, the Company's Board of Directors replaced the 2021 Plan and authorized a separate $3.0 million share ~~including $0.3~~repurchase program (the "2022 Plan") using existing funds in accordance with the requirements of Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934, as amended. During the year ended December 31, 2022, the Company purchased 711,481 shares under the 2022 Plan at an aggregate cost of $2.9 million, or $4.13 per share. The Company completed the 2022 Plan in January 2023 by purchasing an additional 25,096 shares, resulting in an average price of ~~transaction costs.~~$4.09 for the 2022 Program.

The 2014 Equity Compensation Plan has 4.1 million shares authorized for issuance. During ~~2021~~2022 and ~~2020~~2021, the Company issued no stock-based awards outside of existing plans. To the extent allowable, service-based options are incentive stock options. Options granted under the plans are at prices equal to or greater than the fair market value at the date of grant. Upon exercise of stock options, the Company issues shares first from treasury stock, if available, then from authorized but unissued shares. At December 31, ~~2021~~2022, the Company had reserved ~~2.6~~2.2 million shares of common stock for possible future issuance under its 2014 Equity Compensation Plan and other previously expired equity compensation plans.

Stock-based compensation consists of time based awards to employees, financial liability based awards to employees and non-employees to be settled in stock, performance based awards to employees, and financial liability based awards to Directors for quarterly and annual services. Stock-based compensation expense was recognized in the Consolidated Statements of Operations as follows:

Stock-based compensation expense of $1.2 million and ~~$1.0~~$1.2 million was recognized during the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively, related to annual and quarterly Board fees, time based management awards and management bonuses earned during the year that were subsequently settled in stock. For the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, the Company issued 83165 thousand and 9383 thousand of restricted shares to Directors for their annual and quarterly services. The annual grants vest over a one year period, or are vested at issuance for directors 65 or older, while quarterly amounts are paid in arrears. The Company vested 95110 thousand and ~~78 thousand during the years ended~~ ~~December 31, 2021~~ ~~and~~ ~~2020.~~ ~~The Company vested 67 thousand and 96~~95 thousand shares during the years ended December 31, 2022 and 2021. The Company vested 22 thousand and 67 thousand shares during the years ended December 31, 2022 and ~~2020~~2021, respectively, for time based management compensation. The Company settled in stock other management bonuses resulting in the issuance of 6082 thousand and 060 thousand vested shares for the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company issued 15 thousand and 20 thousand vested shares to a non-employee for services during the years ended ~~2021.~~December 31, 2022 and 2021. The Company had liabilities of ~~$0.8~~$0.4 million and ~~$0.5~~$0.8 million as of December 31, ~~2021~~2022 and ~~2020,~~2021, respectively, that were settled through the issuance of common stock in the subsequent period.

The Company has previously granted certain performance-based stock units that vest based on the achievement of targeted capital returns based on net cash proceeds received by the Company on the sale, merger or other exit transaction of certain identified companies. The requisite service periods for these performance-based awards were based on the Company’s estimate of when the performance conditions will be met. Compensation expense was recognized for performance-based awards for which the performance condition is considered probable of achievement. During the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, 692 thousand and ~~129~~6 thousand performance-based stock units pursuant to these targeted capital return pools were canceled or forfeited. The Company recorded a reduction of compensation expense related to these performance-based awards of ~~$0.1 million~~zero and ~~$0.7~~$0.1 million for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively. During October 2020and in January 2022, the Company ~~also~~ granted athe CEO ~~bonus award~~restricted stock units that ~~will be settled in the vesting of performance-based units~~may vest based on certain performance targets and criteria determined by the Board of Directors. ~~The~~Such performance-based stock units represent the right to receive shares of the Company’s common stock, on a one-for-one basis at target, or up to 120% with respect to the 2020 grant, for certain specified thresholds. ~~The~~For the years ended ~~2020~~December 31, 2022 and 2021, ~~award resulted in~~the Company recognized stock based compensation expense of $0.2 million and $0.5 million, ~~of compensation cost in~~ ~~2021~~ ~~based upon the vesting of~~respectively, and vested 64 thousand and 85 thousand ~~performance based units. The~~ ~~January 2022~~ ~~award could result in the vesting of up~~shares, respectively, pursuant to 80 ~~thousand performance-based stock units.~~these arrangements.

Unrecognized compensation expense related to performance stock units and restricted stock at December 31, ~~2021~~2022 was immaterial.

While there were no stock options granted during ~~2021~~2022 and ~~2020~~2021, the Company had outstanding options that vest based on two different types of vesting schedules:

Performance-based option awards also entitled participants to vest in a number of awards determined by achievement by the Company of target capital returns based on net cash proceeds received by the Company upon the sale, merger or other exit transaction of certain identified companies. Compensation expense is recognized over the requisite service periods using the straight-line method but is accelerated if capital return targets are achieved earlier than estimated. The Company did not issue any performance-based units during the years ended December 31, ~~2021~~2022 and ~~2020~~2021. During the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, 10 thousand and 01 thousand performance-based options vested and an immaterial amount of compensation cost was recognized. During the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, 11 thousand and 7211 thousand performance-based options were canceled or forfeited. The maximum number of unvested options at December 31, ~~2021~~2022 attainable under these grants was ~~10 thousand~~zero shares.

Service-based awards generally vest over four years after the date of grant and expire eight years after the date of grant. Compensation expense is recognized over the requisite service period using the straight-line method. The requisite service period for service-based awards is the period over which the award vests. During the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively, the Company issued 0no service-based options to employees and recorded ~~$0.0 million of~~zero compensation expense from the vesting of previously issued awards. During the years ended December 31, ~~2021~~2022 and ~~2020~~2021, respectively, 50 thousand and 625 thousand service-based options were canceled or forfeited.

At December 31, ~~2021~~2022, total unrecognized compensation cost related to non-vested service-based options was immaterial. At December 31, ~~2021~~2022, total unrecognized compensation cost related to non-vested performance-based options was immaterial.

Deferred stock unit, performance-based stock unit and restricted stock activity are summarized below:

The Company maintains a qualified 401(k) retirement plan for eligible employees. The Plan’s matching formula is 100% of the first 5% of participants’ qualified compensation. Compensation expense related to our matching contributions to the Plan for the years ended December 31, ~~2021~~2022 and ~~2020~~2021, were $0.1 million and ~~$0.2~~$0.1 million, respectively.

The federal and state provision (benefit) for income taxes was $0.0 million for the years ended December 31, ~~2021~~2022 and ~~2020~~2021.

The total income tax provision (benefit) differed from the amounts computed by applying the U.S. federal income tax rate of 21.0% for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 to net income (loss) before income taxes as a result of the following:

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets were as follows:

As of December 31, ~~2021~~2022, the Company and its subsidiaries had federal net operating and capital loss carryforwards for tax purposes of approximately ~~$367~~$326 million, of which approximately ~~$52~~$60 million have an indefinite life. These carryforwards expire as follows:

In assessing the recoverability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has determined that it is more likely than not that certain future tax benefits may not be realized as a result of current and future income. Accordingly, a valuation allowance has been recorded against substantially all of the Company’s deferred tax assets.

The Company recognizes in its Consolidated Financial Statements the impact of a tax position if that position is more likely than not to be sustained upon examination, based on the technical merits of the position. All uncertain tax positions relate to unrecognized tax benefits that would impact the effective tax rate when recognized.

The Company does not expect any material increase or decrease in its income tax expense, in the next twelve months, related to examinations or changes in uncertain tax positions.

There were 0no changes in the Company’s uncertain tax positions for the years ended December 31, ~~2021~~2022 and ~~2020~~2021.

The Company files income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. Tax years 2015 and forward remain open for examination for federal tax purposes and the Company’s more significant state tax jurisdictions. To the extent utilized in future years’ tax returns, net operating loss carryforwards at December 31, ~~2021~~2022 will remain subject to examination until the respective tax year is closed. The Company recognizes penalties and interest accrued related to income tax liabilities in income tax benefit (expense) in the Consolidated Statements of Operations.

Basic and diluted average common shares outstanding for purposes of computing net income (loss) per share includes outstanding common shares and vested deferred stock units (DSUs).

If an equity method company has dilutive stock options, unvested restricted stock, DSUs, or warrants, diluted net income (loss) per share is computed by first deducting from net income (loss) the income attributable to the potential exercise of the dilutive securities of the company from net income (loss). Any impact is shown as an adjustment to net income (loss) for purposes of calculating diluted net income (loss) per share.

Diluted income (loss) per share for the years ended December 31, ~~2021~~2022 and ~~2020~~2021 do not reflect the following potential shares of common stock that would have an anti-dilutive effect or have unsatisfied performance or market conditions:

In the normal course of business, the Company’s officers and employees hold board positions with companies in which the Company has a direct or indirect ownership interest.

The Company and the companies in which it holds ownership interests are involved in various claims and legal actions arising in the ordinary course of business. In the current opinion of the Company, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations, however, no assurance can be given as to the outcome of these actions, and one or more adverse rulings could have a material adverse effect on the Company’s consolidated financial position and results of operations or that of its companies. The Company records costs associated with legal fees as such services are rendered.

The Company has provided a guarantee, which is fully funded by escrowed funds held by a third party, of $3.8 million at December 31, ~~2021~~2022 which related to one of the Company's private equity holdings.

The Company has agreements with certain employees that provide for severance payments to the employee in the event the employee is terminated without cause or an employee terminates his employment for “good reason.” The maximum aggregate exposure under severance agreements for remaining employees is approximately ~~$1.0~~$1.1 million at December 31, ~~2021~~2022. and 250,000 common shares.

In 2018, the Board of Directors (the “Board”) of the Company adopted a long-term incentive plan, which was amended in February 2019 and June 2020, known as the Amended and Restated Safeguard Scientifics Transaction Bonus Plan (the “LTIP”). The purpose of the LTIP is to promote the interests of the Company and its shareholders by providing an additional incentive to employees to maximize the value of the Company in connection with the execution of the business strategy that the Company adopted and announced in January 2018. The June 2020 amendment lowered the level of the first threshold and the resulting bonus pool percentage as an incentive to employees to accelerate actions consistent with the business strategy. Under the LTIP, participants, which ~~include~~includes certain current and former employees, have received awards that may result in cash payments in connection with sales of the Company’s ownership interests (“Sale Transaction(s)”). The LTIP provides for a bonus pool corresponding to: (i) specified vesting thresholds or (ii) specified events. In the first case, the bonus pool will range from an amount equal to 0.2% (previously 1.0%) of received proceeds at the first threshold to 1.3% at higher ~~thresholds and~~ no ~~bonus pool will be created if the transaction consideration is less than certain minimum~~ thresholds. In the second case, a minimum pool will be created and paid under specified circumstances. The bonus pool will be allocated and paid to participants in the LTIP based on the product of (i) the participant’s applicable bonus pool percentage and (ii) the bonus pool calculated as of the vesting date, minus any previously paid portion of the bonus pool. Any portion of the bonus pool available as of the applicable vesting date that is reserved will be allocated in connection with each vesting date so that the entire bonus pool available as of such vesting date is allocated and payable to participants. Subject to the terms of the LTIP, payments under the LTIP will be paid in cash within 60 days of the applicable vesting date. All current officers and employees of the Company are eligible to participate in the LTIP. The Board, in its sole discretion, will determine the participants to whom awards are granted under the LTIP. The Company recorded compensation expense of ~~$0.7 million~~zero and ~~$1.3~~$0.7 million during the years ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company paid $2.5 million during the year ended December 31, 2021 and has 0no amounts accrued under the LTIP as of December 31, ~~2021~~2022.

In June 2011, Advanced BioHealing, Inc. (“ABH”) was acquired by Shire plc (“Shire”). Prior to the expiration of the escrow period in March 2012, Shire filed a claim against all amounts held in escrow related to the sale based principally upon a United States Department of Justice (“DOJ”) false claims act investigation relating to ABH (the “Investigation”). In connection with the Investigation, in July 2015 the Company received a Civil Investigation Demand-Documentary Material (“CID”) from the DOJ regarding ABH and Safeguard’s relationship with ABH. Pursuant to the CID, the Company provided the requested materials and information. To the Company’s knowledge, the CID was related to multiple qui tam (“whistleblower”) actions, one of which was filed in 2014 by an ex-employee of ABH that named the Company and one of the Company’s employees along with other entities and individuals as defendants. At this time, the DOJ has declined to pursue the qui tam action as it relates to the Company and such Company employee. In addition, in connection with the above matters, the Company and other former equity holders in ABH entered into a settlement and release with Shire, which resulted in the release to Shire of all amounts held in escrow related to the sale of ABH.

During the years ended December 31, ~~2021~~2022 and ~~2020~~2021, the Company converted ~~$1.0 million~~zero and ~~$6.8~~$1.0 million, respectively, of advances into ownership interests.

The Company operates as one operating segment based upon the similar nature of its technology-driven 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.

As of December 31, ~~2021~~2022 and ~~2020~~2021, all of the Company’s assets were located in the United States.

~~During~~ ~~February 2022,~~ the Company funded an additional $2.0 million of convertible loans to Prognos Health, Inc. The Company has previously deployed an aggregate of $12.6 million. Prognos is a healthcare platform company transforming the ability to access, manage and analyze healthcare data in partnership with Life Sciences brands, payers, and clinical diagnostics organizations. Prognos’ innovations enhance the value of laboratory results and clinical diagnostic data through advanced analytics and artificial intelligence technique.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, ~~2021.~~2022. Based on that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of December 31, ~~2021~~2022 are functioning effectively.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2021.~~2022. In making this assessment, management used the framework established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As a result of this assessment and based on the criteria in the COSO framework, management has concluded that, as of December 31, ~~2021,~~2022, the Company’s internal control over financial reporting was effective.

No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Incorporated by reference to the portions of our Definitive Proxy Statement entitled “Election of Directors,” “Corporate Governance and Board Matters” and “Section 16(a) Beneficial Ownership Reporting Compliance.” Information about our Executive Officers is included in Annex to Part I above.

Incorporated by reference to the portions of our Definitive Proxy Statement entitled “Compensation Discussion and Analysis,” “Compensation Committee Report” and “Executive Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The material features of our equity compensation plans are described in Note 7 to the Consolidated Financial Statements filed as part of our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Incorporated by reference to the portions of the Definitive Proxy Statement entitled “Corporate Governance Principles and Board Matters – ‘Board Independence’ and “Review and Approval of Transactions with Related Persons.”

Incorporated by reference to the portion of the Definitive Proxy Statement entitled “Independent Public Accountant – Audit Fees.”

The exhibits required to be filed as part of this Report are listed in the exhibit index below.

The following is a list of exhibits required by Item 601 of Regulation S-K filed as part of this Report. For exhibits that previously have been filed, the Registrant incorporates those exhibits herein by reference. The exhibit table below includes the Form Type and Filing Date of the previous filing and the location of the exhibit in the previous filing which is being incorporated by reference herein. Documents which are incorporated by reference to filings by parties other than the Registrant are identified in footnotes to this table.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

	Page
PART I
Item 1. Business	3
Item 1A. Risk Factors	8
Item 1B. Unresolved Staff Comments	13
Item 2. Properties	13
Item 3. Legal Proceedings	13
Item 4. Mine Safety Disclosures	13
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6. Selected Consolidated Financial Data	15
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	20
Item 8. Financial Statements and Supplementary Data	21
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	4442
Item 9A. Controls and Procedures	4442
Item 9B. Other Information	4442
PART III
Item 10. Directors, Executive Officers and Corporate Governance	4543
Item 11. Executive Compensation	4543
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	4543
Item 13. Certain Relationships and Related Transactions, and Director Independence	4644
Item 14. Principal Accountant Fees and Services	4644
PART IV
Item 15. Exhibits and Financial Statement Schedules	4745

	High		Low		High		Low
Fiscal year 2022:
First quarter					$	7.53	$	4.81
Second quarter						5.48		3.32
Third quarter						4.54		3.60
Fourth quarter						3.89		2.95
Fiscal year 2021:
First quarter	$	8.59	$	6.35	$	8.59	$	6.35
Second quarter		7.90		5.95		7.90		5.95
Third quarter		8.93		7.38		8.93		7.38
Fourth quarter		8.98		6.23		8.98		6.23
Fiscal year 2020:
First quarter	$	11.11	$	4.43
Second quarter		7.87		4.92
Third quarter		7.12		5.15
Fourth quarter		7.25		5.33

Period	Total Number of Shares Purchased (a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan (b)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan (b)
October 1, 2021 - October 31, 2021		4,306,847	$	9.00		4,304,826	$	18,996,988
November 1, 2021 - November 30, 2021		92	$	8.37		—	$	18,996,988
December 1, 2021 - December 31, 2021		509	$	7.04		—	$	18,996,988
Total		4,307,448	$	9.00		4,304,826

Period	Total Number of Shares Purchased (a)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan (b)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan (b)
October 1, 2022 - October 31, 2022		38,934	$	3.61		36,392	$	15,454,297
November 1, 2022 - November 30, 2022		177,526	$	3.45		174,984	$	14,854,705
December 1, 2022 - December 31, 2022		49,112	$	3.09		46,570	$	14,711,067
Total		265,572	$	3.41		257,946

	Safeguard Primary Ownership as of December 31,
Company Name	2021			2020			Accounting Method
Aktana, Inc.		13.4	%		15.1	%	Equity
Clutch Holdings, Inc.		41.7	%		42.3	%	Equity
InfoBionic, Inc.		25.2	%		25.2	%	Equity
Lumesis, Inc.		43.2	%		43.4	%	Equity
MediaMath, Inc.		13.2	%		13.3	%	Other
meQuilibrium		31.9	%		32.0	%	Equity
Moxe Health Corporation		27.6	%		27.6	%	Equity
Prognos Health Inc.		28.5	%		28.5	%	Equity
Syapse, Inc.		11.1	%		18.9	%	Equity
Trice Medical, Inc.		12.6	%		16.6	%	Equity

Name	Age	Position	Executive Officer Since	Age	Position	Executive Officer Since
Eric C. Salzman	54	Chief Executive Officer	2020	55	Chief Executive Officer	2020
Mark A. Herndon	52	Senior Vice President and Chief Financial Officer	2018	53	Senior Vice President and Chief Financial Officer	2018

	Year Ended December 31,				Year Ended December 31,
Accounting Method	2021		2020		2022		2021
	(In thousands)				(In thousands)
Equity	$	—	$	11,282	$	—	$	—
Other		2,521		8,757		—		2,521
Total	$	2,521	$	20,039	$	—	$	2,521

	Payments Due by Period										Payments Due by Period
	Total		2022		2023 and 2024		2025 and 2026		After 2026		Total		2023		2024 and 2025		2026 and 2027		After 2027
	(In millions)										(In millions)
Contractual Cash Obligations:
Operating leases (a)	$	2.6	$	0.6	$	1.2	$	0.8	$	—	$	2.0	$	0.6	$	1.2	$	0.2	$	—
Total Contractual Cash Obligations (b)	$	2.6	$	0.6	$	1.2	$	0.8	$	—	$	2.0	$	0.6	$	1.2	$	0.2	$	—

	*Year Ended December 31,*						*Year Ended December 31,*
	*2021*			*2020*			*2022*			*2021*
General and administrative expense	$	7,153		$	9,466		$	4,775		$	7,153
Operating loss		(7,153	)		(9,466	)		(4,775	)		(7,153	)
Other income (loss), net		22,035			(7,708	)		(3,297	)		22,035
Interest income		276			261			794			276
Equity income (loss), net		11,846			(20,702	)		(6,985	)		11,846
Net income (loss) before income taxes		27,004			(37,615	)		(14,263	)		27,004
Income tax benefit (expense)		—			—			—			—
Net income (loss)	$	27,004		$	(37,615	)	$	(14,263	)	$	27,004
Net income (loss) per share:
Basic	$	1.36		$	(1.81	)	$	(0.87	)	$	1.36
Diluted	$	1.36		$	(1.81	)	$	(0.87	)	$	1.36
Weighted average shares used in computing net income (loss) per share:
Basic		19,827			20,751			16,337			19,827
Diluted		19,827			20,751			16,337			19,827

				*Accumulated*			*Accumulated Other Comprehensive*			*Common Stock*				*Additional Paid-In*			*Treasury Stock*									*Accumulated*			*Accumulated Other Comprehensive*			*Common Stock*				*Additional Paid-In*			*Treasury Stock*
	*Total*			*Deficit*			*Loss*			*Shares*		*Amount*		*Capital*			*Shares*			*Amount*			*Total*			*Deficit*			*Loss*			*Shares*		*Amount*		*Capital*			*Shares*			*Amount*
Balance — December 31, 2019	$	101,741		$	(697,223	)	$	(25	)		21,573	$	2,157	$	810,856			930		$	(14,024	)
Net loss		(37,615	)		(37,615	)		—			—		—		—			—			—
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net		(40	)		—			—			—		—		(3,864	)		(242	)		3,824
Stock-based compensation		590			—			—			—		—		590			—			—
Change in accounting at ownership interests		(1,801	)		(1,801	)		—			—		—		—			—			—
Balance — December 31, 2020	$	62,875		$	(736,639	)	$	(25	)		21,573	$	2,157	$	807,582			688		$	(10,200	)	$	62,875		$	(736,639	)	$	(25	)		21,573	$	2,157	$	807,582			688		$	(10,200	)
Net income		27,004			27,004			—			—		—		—			—			—			27,004			27,004			—			—		—		—			—			—
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net		736			—			—			—		—		(1,550	)		(161	)		2,286			736			—			—			—		—		(1,550	)		(161	)		2,286
Stock-based compensation		606			—			—			—		—		606			—			—			606			—			—			—		—		606			—			—
Repurchases of common stock		(40,655	)		—			—			—		—		—			4,541			(40,655	)		(40,655	)		—			—			—		—		—			4,541			(40,655	)
Balance — December 31, 2021	$	50,566		$	(709,635	)	$	(25	)		21,573	$	2,157	$	806,638			5,068		$	(48,569	)	$	50,566		$	(709,635	)	$	(25	)		21,573	$	2,157	$	806,638			5,068		$	(48,569	)
Net loss																								(14,263	)		(14,263	)		—			—		—		—			—			—
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net																								477			—			—			—		—		(2,622	)		(302	)		3,099
Stock-based compensation																								736			—			—			—		—		736			—			—
Repurchases of common stock																								(2,940	)		—			—			—		—		—			712			(2,940	)
Balance — December 31, 2022																							$	34,576		$	(723,898	)	$	(25	)		21,573	$	2,157	$	804,752			5,478		$	(48,410	)

	*December 31, 2021*		*December 31, 2020*		*December 31, 2022*		*December 31, 2021*
	(In thousands)				(In thousands)
Cash and cash equivalents	$	24,739	$	15,601	$	13,331	$	24,739
Restricted cash		25		0		25		25
Total cash, cash equivalents and restricted cash	$	24,764	$	15,601	$	13,356	$	24,764

	*Operating lease payments*			*Expected sublease receipts*		*Operating lease payments*			*Expected sublease receipts*
	(In thousands)					(In thousands)
2022	$	601		$	540
2023		607			556	$	607		$	556
2024		613			573		613			573
2025		619			590		619			590
2026		207			199		207			199
2027		0			0		—			—
2028							—			—
Thereafter		0			0		—			—
Total future minimum lease payments		2,647			2,458		2,046			1,918
Less imputed interest		(595	)				(368	)
Total operating lease liabilities	$	2,052				$	1,678

	*Safeguard Primary Ownership as of December 31,*
Company Name	*2022*			*2021*			*Accounting Method*
Aktana, Inc.		13.6	%		13.4	%	Equity
Clutch Holdings, Inc.		41.7	%		41.7	%	Equity
InfoBionic, Inc.		25.2	%		25.2	%	Equity
meQuilibrium		31.3	%		31.9	%	Equity
Moxe Health Corporation		19.3	%		27.6	%	Equity
Prognos Health Inc.		28.4	%		28.5	%	Equity
Syapse, Inc.		11.0	%		11.1	%	Equity
Trice Medical, Inc.		11.6	%		12.6	%	Equity

	*Carrying*		*Fair Value Measurement at December 31, 2021*						*Carrying*		*Fair Value Measurement at December 31, 2022*
	*Value*		*Level 1*		*Level 2*		*Level 3*		*Value*		*Level 1*		*Level 2*		*Level 3*
	(in thousands)								(in thousands)
Cash and cash equivalents	$	24,739	$	24,739	$	—	$	—	$	13,331	$	13,331	$	—	$	—

Restricted cash	$	25	$	25	$	—	$	—	$	25	$	25	$	—	$	—

Marketable securities—held-to-maturity:
U.S. Government securities									$	5,956	$	5,956	$	—	$	—

Ownership interests	$	4,549	$	4,549	$	—	$	—	$	860	$	860	$	—	$	—

	*Shares*			*Weighted Average Exercise Price*		*Weighted Average Remaining Contractual Life*		*Aggregate Intrinsic Value*		*Shares*			*Weighted Average Exercise Price*		*Weighted Average Remaining Contractual Life*		*Aggregate Intrinsic Value*
	(In thousands)					(In years)		(In thousands)		(In thousands)					(In years)		(In thousands)
Outstanding at January 1, 2020		179			15.27
Options granted		0			0
Options exercised		0			0
Options canceled/forfeited		(134	)		14.36
Outstanding at December 31, 2020		45			14.20
Outstanding at January 1, 2021											45			14.20
Options granted		0			0						—			—
Options exercised		0			0						—			—
Options canceled/forfeited		(16	)		14.20						(16	)		14.20
Outstanding at December 31, 2021		29			14.20		1.85	$	0		29			14.20
Options exercisable at December 31, 2021		19			14.06		2.43		0
Options granted											—			—
Options exercised											—			—
Options canceled/forfeited											(11	)		14.48
Outstanding at December 31, 2022											18			14.05		1.50	$	—
Options exercisable at December 31, 2022											18			14.05		1.50		—
Shares available for future grant		2,374									2,134

	*Shares*			*Weighted Average Grant Date Fair Value*		*Shares*			*Weighted Average Grant Date Fair Value*
	(In thousands)					(In thousands)
Unvested at January 1, 2020		287		$	14.44
Granted		313			5.89
Vested		(174	)		7.77
Forfeited		(139	)		15.24
Unvested at December 31, 2020		287			8.78
Unvested at January 1, 2021							287		$	8.78
Granted		163			7.21		163			7.21
Vested		(242	)		6.82		(242	)		6.82
Forfeited		(6	)		14.99		(6	)		14.99
Unvested at December 31, 2021		202			9.70		202			9.70
Granted							343			5.60
Vested							(293	)		5.77
Forfeited							(92	)		13.90
Unvested at December 31, 2022							160			5.70

	*Three Months Ended*												*Three Months Ended*
	*March 31*			*June 30*			*September 30*			*December 31*			*March 31*			*June 30*			*September 30*			*December 31*
	(In thousands, except per share data)												(In thousands, except per share data)
2021:
2022:
General and administrative expense	$	2,463		$	1,991		$	1,564		$	1,135		$	1,234		$	1,146		$	1,360		$	1,035
Operating loss		(2,463	)		(1,991	)		(1,564	)		(1,135	)		(1,234	)		(1,146	)		(1,360	)		(1,035	)
Other income (loss), net		706			6,733			20,588			(5,992	)		(1,997	)		30			(1,012	)		(318	)
Interest income		53			74			70			79			101			145			230			318
Equity income (loss), net		19,329			(5,136	)		(761	)		(1,586	)		(3,579	)		1,454			(1,022	)		(3,838	)
Net loss before income taxes		17,625			(320	)		18,333			(8,634	)		(6,709	)		483			(3,164	)		(4,873	)
Income tax benefit (expense)		—			—			—			—			—			—			—			—
Net loss	$	17,625		$	(320	)	$	18,333		$	(8,634	)	$	(6,709	)	$	483		$	(3,164	)	$	(4,873	)
Net loss per share (a)
Basic	$	0.84		$	(0.02	)	$	0.88		$	(0.51	)	$	(0.40	)	$	0.03		$	(0.19	)	$	(0.30	)
Diluted	$	0.84		$	(0.02	)	$	0.88		$	(0.51	)	$	(0.40	)	$	0.03		$	(0.19	)	$	(0.30	)
2020:
2021:
General and administrative expense	$	3,532		$	2,028		$	2,275		$	1,631		$	2,463		$	1,991		$	1,564		$	1,135
Operating loss		(3,532	)		(2,028	)		(2,275	)		(1,631	)		(2,463	)		(1,991	)		(1,564	)		(1,135	)
Other income (loss), net		(3,567	)		(2,658	)		(820	)		(663	)		706			6,733			20,588			(5,992	)
Interest income		105			52			52			52			53			74			70			79
Equity income (loss), net		(9,014	)		(5,277	)		(1,300	)		(5,111	)		19,329			(5,136	)		(761	)		(1,586	)
Net income (loss) before income taxes		(16,008	)		(9,911	)		(4,343	)		(7,353	)		17,625			(320	)		18,333			(8,634	)
Income tax benefit (expense)		—			—			—			—			—			—			—			—
Net income (loss)	$	(16,008	)	$	(9,911	)	$	(4,343	)	$	(7,353	)	$	17,625		$	(320	)	$	18,333		$	(8,634	)
Net income (loss) per share (a)
Basic	$	(0.77	)	$	(0.48	)	$	(0.21	)	$	(0.35	)	$	0.84		$	(0.02	)	$	0.88		$	(0.51	)
Diluted	$	(0.77	)	$	(0.48	)	$	(0.21	)	$	(0.35	)	$	0.84		$	(0.02	)	$	0.88		$	(0.51	)

		Incorporated Filing Reference			Incorporated Filing Reference
Exhibit Number	Description	Form Type & Filing Date	Original Exhibit Number	Description	Form Type & Filing Date	Original Exhibit Number
1.a	Description			Description
3.1.1	Seconded Amended and Restated Articles of Incorporation of Safeguard Scientifics, Inc.	Form 8-K 10/25/07	3.1	Seconded Amended and Restated Articles of Incorporation of Safeguard Scientifics, Inc.	Form 8-K 10/25/07	3.1
3.1.2	Amendment to Seconded Amended and Restated Articles of Incorporation of Safeguard Scientifics, Inc.	Form 8-K 8/27/09	3.1	Amendment to Seconded Amended and Restated Articles of Incorporation of Safeguard Scientifics, Inc.	Form 8-K 8/27/09	3.1
3.1.3	Statement with Respect to Shares	Form 10-Q 4/25/14	3.1	Statement with Respect to Shares	Form 10-Q 4/25/14	3.1
3.1.4	Statement of Designation of Series B Junior Participating Preferred Stock	Form 8-K 2/20/18	3.1	Statement of Designation of Series B Junior Participating Preferred Stock	Form 8-K 2/20/18	3.1
3.2	Third Amended and Restated By-laws of Safeguard Scientifics, Inc.	Form 8-K 2/13/18	3.1	Third Amended and Restated By-laws of Safeguard Scientifics, Inc.	Form 8-K 2/13/18	3.1
10.1*	Safeguard Scientifics, Inc. 1999 Equity Compensation Plan, as amended and restated on October 21, 2008	Form 10-Q 11/6/08	10.4	Safeguard Scientifics, Inc. 1999 Equity Compensation Plan, as amended and restated on October 21, 2008	Form 10-Q 11/6/08	10.4
10.2	Safeguard Scientifics, Inc. 2001 Associates Equity Compensation Plan, as amended and restated on October 21, 2008	Form 10-Q 11/6/08	10.5	Safeguard Scientifics, Inc. 2001 Associates Equity Compensation Plan, as amended and restated on October 21, 2008	Form 10-Q 11/6/08	10.5
10.3*	Safeguard Scientifics, Inc. 2014 Equity Compensation Plan, as amended and restated on March 5, 2014	Form 10-Q 7/25/14	10.1	Safeguard Scientifics, Inc. 2014 Equity Compensation Plan, as amended and restated on March 5, 2014	Form 10-Q 7/25/14	10.1
10.4*	Safeguard Scientifics, Inc. Executive Deferred Compensation Plan (amended and restated as of January 1, 2009)	Form 10-K 3/19/09	10.4	Safeguard Scientifics, Inc. Executive Deferred Compensation Plan (amended and restated as of January 1, 2009)	Form 10-K 3/19/09	10.4
10.5*	Management Incentive Plan	Form 8-K 4/25/08	10.1	Management Incentive Plan	Form 8-K 4/25/08	10.1
10.6*	Amended and Restated Safeguard Scientifics, Inc. Transaction bonus plan	Form 10-Q 8/12/20	10.6	Amended and Restated Safeguard Scientifics, Inc. Transaction bonus plan	Form 10-Q 8/12/20	10.6
10.7	Compensation Summary — Non-employee Directors	—	—	Compensation Summary — Non-employee Directors	Form 10-K 3/11/22	10.7
10.9.2*	Letter Agreement between Safeguard Scientifics, Inc. and Eric Salzman dated December 21, 2021	Form 8-K 12/21/21	10.1	Letter Agreement between Safeguard Scientifics, Inc. and Eric Salzman dated January 1, 2023	Form 8-K 1/4/23	10.1

10.12*	Compensation Agreement by and between Safeguard Scientifics, Inc. and Mark Herndon dated September 17, 2018	Form 8-K 9/18/18	99.1	Compensation Agreement by and between Safeguard Scientifics, Inc. and Mark Herndon dated September 17, 2018	Form 8-K 9/18/18	99.1
10.13*	Key Employee Compensation Recoupment Policy	Form 10-Q 7/26/13	10.2	Key Employee Compensation Recoupment Policy	Form 10-Q 7/26/13	10.2
10.14	Purchase and Sale Agreement dated as of December 9, 2005 by and among HarbourVest VII Venture Ltd., Dover Street VI L.P. and several subsidiaries and affiliated limited partnerships of Safeguard Scientifics, Inc.	Form 10-K 3/13/06	10.36	Purchase and Sale Agreement dated as of December 9, 2005 by and among HarbourVest VII Venture Ltd., Dover Street VI L.P. and several subsidiaries and affiliated limited partnerships of Safeguard Scientifics, Inc.	Form 10-K 3/13/06	10.36
10.15	Consent Agreement, dated as of May 17, 2011, by and among Shire Pharmaceuticals, Inc. and certain stockholders of Advanced BioHealing, Inc.	Form 8-K 5/18/11	10.1	Consent Agreement, dated as of May 17, 2011, by and among Shire Pharmaceuticals, Inc. and certain stockholders of Advanced BioHealing, Inc.	Form 8-K 5/18/11	10.1
10.16	Lease Agreement, effective February 2, 2015, between Safeguard Scientifics, Inc., a Pennsylvania corporation, and Radnor Properties-SDC, L.P., a Delaware limited partnership	Form 10-Q 4/24/15	10.1	Lease Agreement, effective February 2, 2015, between Safeguard Scientifics, Inc., a Pennsylvania corporation, and Radnor Properties-SDC, L.P., a Delaware limited partnership	Form 10-Q 4/24/15	10.1
10.17	Sublease Agreement, effective March 15, 2019, by and between Safeguard Scientifics, Inc., a Pennsylvania corporation and the subtenant named therein	Form 8-K 3/20/19	10.1	Sublease Agreement, effective March 15, 2019, by and between Safeguard Scientifics, Inc., a Pennsylvania corporation and the subtenant named therein	Form 8-K 3/20/19	10.1
14.1	Code of Business Conduct and Ethics	—	—	Code of Business Conduct and Ethics	—	—
21.1 †	List of Subsidiaries	—	—	List of Subsidiaries	—	—
23.1 †	Consent of Independent Registered Public Accounting Firm — Grant Thornton LLP	—	—	Consent of Independent Registered Public Accounting Firm — Grant Thornton LLP	—	—
23.2 †	Consent of Independent Registered Public Accounting Firm — KPMG LLP	—	—
31.1 †	Certification of Eric C. Salzman pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934	—	—	Certification of Eric C. Salzman pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934	—	—
31.2 †	Certification of Mark A. Herndon pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934	—	—	Certification of Mark A. Herndon pursuant to Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934	—	—
32.1 ‡	Certification of Eric C. Salzman pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—	Certification of Eric C. Salzman pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—
32.2 ‡	Certification of Mark A. Herndon pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—	Certification of Mark A. Herndon pursuant to 18 U.S.C. Section 1350, as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—
101	The following materials from Safeguard Scientifics, Inc. Annual Report on Form 10-K for the year ended December 31, 2021, formatted in Inline XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Shareholders' Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.	—	—	The following materials from Safeguard Scientifics, Inc. Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Shareholders' Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.	—	—
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	—	—	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	—	—


*	These exhibits relate to management contracts or compensatory plans, contracts or arrangements in which directors and/or executive officers of the Registrant may participate.

		SAFEGUARD SCIENTIFICS, INC.

		By:		/s/ ERIC C. SALZMAN
				Eric C. Salzman
				Chief Executive Officer

Signature	Title	Date

/s/ ERIC C. SALZMAN	Chief Executive Officer (Principal Executive Officer)	March ~~11, 2022~~10, 2023
Eric C. Salzman
/s/ MARK A. HERNDON	Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)	March ~~11, 2022~~10, 2023
Mark A. Herndon
/s/ ROSS D. DEMONT	Director	March 10, 2023
Ross D. DeMont
/s/ RUSSELL D. GLASS	Director	March ~~11, 2022~~ 10, 2023
Russell D. Glass
~~JOSEPH M. MANKO, JR.~~/s/ BETH S. MICHELSON	Director	March ~~11, 2022~~ 10, 2023
~~Joseph M. Manko, Jr.~~Beth S. Michelson
/s/ JOSEPH M. MANKO, JR.	Chairman of the Board of Directors	March 10, 2023
Joseph M. Manko, Jr.
/s/ MAUREEN F. MORRISON	Director	March ~~11, 2022~~ 10, 2023
Maureen F. Morrison
~~ROBERT J. ROSENTHAL~~	~~Chairman of the Board of Directors~~	~~March 11, 2022~~
~~Robert J. Rosenthal~~