SAFEGUARD SCIENTIFICS INC, 10-Q filed on 11/9/2020
Quarterly Report
v3.20.2
Document And Entity Information - shares
9 Months Ended
Sep. 30, 2020
Nov. 02, 2020
Document Information [Line Items]    
Entity Central Index Key 0000086115  
Entity Registrant Name SAFEGUARD SCIENTIFICS INC  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2020  
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2020  
Document Transition Report false  
Entity File Number 1-5620  
Entity Incorporation, State or Country Code PA  
Entity Tax Identification Number 23-1609753  
Entity Address, Address Line One 100 Matsonford Road  
Entity Address, City or Town Radnor  
Entity Address, State or Province PA  
Entity Address, Postal Zip Code 19087  
City Area Code 610  
Local Phone Number 293-0600  
Title of 12(b) Security common stock, par value $0.10  
Trading Symbol SFE  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Small Business true  
Entity Filer Category Non-accelerated Filer  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   20,893,063
v3.20.2
Consolidated Balance Sheets (Current Period Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Current Assets:    
Cash and cash equivalents $ 16,437 $ 25,028
Restricted cash 0 25
Prepaid expenses and other current assets 570 1,297
Total current assets 17,007 26,350
Property and equipment, net 1,869 2,101
Ownership interests in and advances 55,844 77,129
Other assets 1,368 1,997
Total Assets 76,088 107,577
Current Liabilities:    
Accounts payable 36 39
Accrued compensation and benefits 1,706 1,364
Accrued expenses and other current liabilities 531 627
Lease liability - current 338 399
Total current liabilities 2,611 2,429
Lease liability - non-current 2,139 2,380
Other long-term liabilities 1,109 1,027
Total Liabilities 5,859 5,836
Commitments and contingencies (Note 9)
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 shares issued at September 30, 2020 and December 31, 2019 2,157 2,157
Additional paid-in capital 809,189 810,856
Treasury stock, at cost; 789 and 930 shares at September 30, 2020 and December 31, 2019, respectively (11,806) (14,024)
Accumulated deficit (729,286) (697,223)
Accumulated other comprehensive loss (25) (25)
Total Equity 70,229 101,741
Total Liabilities and Equity $ 76,088 $ 107,577
v3.20.2
Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares
shares in Thousands
Sep. 30, 2020
Dec. 31, 2019
Preferred stock, par value (in dollars per share) $ 0.10 $ 0.10
Preferred stock, shares authorized (in shares) 1,000 1,000
Common stock, par value (in dollars per share) $ 0.10 $ 0.10
Common stock, shares authorized (in shares) 83,333 83,333
Common stock, shares issued (in shares) 21,573 21,573
Treasury stock, shares (in shares) 789 930
v3.20.2
Consolidated Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
General and administrative expense $ 2,275 $ 2,262 $ 7,835 $ 7,922
Operating loss (2,275) (2,262) (7,835) (7,922)
Other income (loss), net (820) 8,777 (7,045) 10,010
Interest income 52 234 209 1,870
Interest expense 0 (5,806) 0 (14,023)
Equity income (loss), net (1,300) (3,440) (15,591) 65,324
Net income (loss) before income taxes (4,343) (2,497) (30,262) 55,259
Income tax benefit (expense) 0 0 0 0
Net income (loss) $ (4,343) $ (2,497) $ (30,262) $ 55,259
Net income (loss) per share:        
Basic (in dollars per share) $ (0.21) $ (0.12) $ (1.46) $ 2.68
Diluted (in dollars per share) $ (0.21) $ (0.12) $ (1.46) $ 2.68
Weighted average shares used in computing income (loss) per share:        
Basic (in shares) 20,786 20,657 20,731 20,623
Diluted (in shares) 20,786 20,657 20,731 20,623
v3.20.2
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Net income (loss) $ (4,343) $ (2,497) $ (30,262) $ 55,259
Other comprehensive income (loss):        
Share of other comprehensive income (loss) of equity method interests 0 0 0 (31)
Reclassification adjustment for sale of equity method investments 0 0 0 6
Total comprehensive income (loss) $ (4,343) $ (2,497) $ (30,262) $ 55,234
v3.20.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Cash Flows from Operating Activities:    
Net cash used in operating activities $ (7,025) $ (18,543)
Cash Flows from Investing Activities:    
Proceeds from sales of and distributions from ownership interests 7,587 101,190
Acquisitions of ownership interests (7,510) (9,500)
Advances and loans to ownership interests (1,638) (4,954)
Purchases of marketable securities 0 (57,243)
Proceeds from sales and maturities in marketable securities 0 95,189
Net cash (used in) provided by investing activities (1,561) 124,682
Cash Flows from Financing Activities:    
Repayments on credit facility 0 (68,568)
Tax withholdings related to equity-based awards (30) (210)
Net cash used in financing activities (30) (68,778)
Net change in cash, cash equivalents and restricted cash (8,616) 37,361
Cash, cash equivalents and restricted cash at beginning of period 25,053 8,203
Cash, cash equivalents and restricted cash at end of period $ 16,437 $ 45,564
v3.20.2
Consolidated Statements of Changes in Equity (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Treasury Stock [Member]
Total
Balance (in shares)     21,573   914  
Balance at Dec. 31, 2018 $ (731,105) $ 0 $ 2,157 $ 810,928 $ (15,001) $ 66,979
Balance (in shares) at Dec. 31, 2018     21,573   914  
Net income (loss) 21,663 0 $ 0 0 $ 0 21,663
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net 0 0 $ 0 7 $ (156) (149)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net (in shares)     0   83  
Stock-based compensation expense 0 0 $ 0 417 $ 0 417
Balance (in shares)     21,573   914  
Stock options exercised, net of tax withholdings 0 0 $ 0 0 $ 0 0
Stock options exercised, net of tax withholdings (in shares)     0   1  
Other comprehensive income (loss) 0 (31) $ 0 0 $ 0 (31)
Balance at Mar. 31, 2019 (709,442) (31) 2,157 811,352 (15,157) 88,879
Balance at Dec. 31, 2018 (731,105) 0 $ 2,157 810,928 $ (15,001) 66,979
Balance (in shares) at Dec. 31, 2018     21,573   914  
Net income (loss)           55,259
Balance (in shares)     21,573   914  
Balance at Sep. 30, 2019 (675,846) (25) $ 2,157 810,649 $ (13,998) 122,937
Balance (in shares)     21,573   998  
Balance at Mar. 31, 2019 (709,442) (31) $ 2,157 811,352 $ (15,157) 88,879
Balance (in shares) at Mar. 31, 2019     21,573   998  
Net income (loss) 36,093 0 $ 0 0 $ 0 36,093
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net 0 0 $ 0 (1,220) $ 1,189 (31)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net (in shares)     0   (77)  
Stock-based compensation expense 0 0 $ 0 269 $ 0 269
Balance (in shares)     21,573   998  
Other comprehensive income (loss) 0 6 $ 0 0 $ 0 6
Balance at Jun. 30, 2019 (673,349) (25) $ 2,157 810,401 $ (13,968) 125,216
Balance (in shares)     21,573   921  
Balance (in shares) at Jun. 30, 2019     21,573   921  
Net income (loss) (2,497) 0 $ 0 0 $ 0 (2,497)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net 0 0 $ 0 0 $ (30) (30)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net (in shares)     0   7  
Stock-based compensation expense 0 0 $ 0 248 $ 0 248
Balance (in shares)     21,573   921  
Other comprehensive income (loss) 0 0 $ 0 0 $ 0 0
Balance at Sep. 30, 2019 (675,846) (25) $ 2,157 810,649 $ (13,998) 122,937
Balance (in shares)     21,573   928  
Balance (in shares)     21,573   930  
Balance at Dec. 31, 2019 (697,223) (25) $ 2,157 810,856 $ (14,024) 101,741
Balance (in shares) at Dec. 31, 2019     21,573   930  
Net income (loss) (16,008) 0 $ 0 0 $ 0 (16,008)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net 0 0 $ 0 (32) $ 104 72
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net (in shares)     0   (6)  
Stock-based compensation expense 0 0 $ 0 3 $ 0 3
Balance (in shares)     21,573   930  
Balance at Mar. 31, 2020 (713,231) (25) $ 2,157 810,827 $ (13,920) 85,808
Balance at Dec. 31, 2019 (697,223) (25) $ 2,157 810,856 $ (14,024) 101,741
Balance (in shares) at Dec. 31, 2019     21,573   930  
Net income (loss)           (30,262)
Balance (in shares)     21,573   930  
Balance at Sep. 30, 2020 (729,286) (25) $ 2,157 809,189 $ (11,806) 70,229
Balance (in shares)     21,573   924  
Balance at Mar. 31, 2020 (713,231) (25) $ 2,157 810,827 $ (13,920) 85,808
Balance (in shares) at Mar. 31, 2020     21,573   924  
Net income (loss) (9,911) 0 $ 0 0 $ 0 (9,911)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net 0 0 $ 0 (1,718) $ 1,790 72
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net (in shares)     0   (114)  
Stock-based compensation expense 0 0 $ 0 146 $ 0 146
Change in accounting at ownership interests (1,801) 0 $ 0 0 $ 0 (1,801)
Balance (in shares)     21,573   924  
Balance at Jun. 30, 2020 (724,943) (25) $ 2,157 809,255 $ (12,130) 74,314
Balance (in shares)     21,573   810  
Balance (in shares) at Jun. 30, 2020     21,573   810  
Net income (loss) (4,343) 0 $ 0 0 $ 0 (4,343)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net 0 0 $ 0 (251) $ 324 73
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net (in shares)     0   (21)  
Stock-based compensation expense 0 0 $ 0 185 $ 0 185
Balance (in shares)     21,573   810  
Balance at Sep. 30, 2020 $ (729,286) $ (25) $ 2,157 $ 809,189 $ (11,806) $ 70,229
Balance (in shares)     21,573   789  
v3.20.2
Note 1 - General
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. General

 

The accompanying unaudited interim Consolidated Financial Statements of Safeguard Scientifics, Inc. (“Safeguard” or the “Company”) were prepared in accordance with accounting principles generally accepted in the United States of America and the interim financial statement rules and regulations of the SEC. In the opinion of management, these statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Consolidated Financial Statements. The interim operating results are not necessarily indicative of the results for a full year or for any interim period. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations relating to interim financial statements. The Consolidated Financial Statements included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Form 10-Q and with the Company’s Consolidated Financial Statements and Notes thereto included in the Company’s 2019 Annual Report on Form 10-K.

 

Liquidity

 

As of September 30, 2020 the Company had $16.4 million of cash and cash equivalents.

 

In January 2018, Safeguard announced that, from that date forward, the Company will not deploy any capital into new opportunities and will focus on supporting our existing companies and maximizing monetization opportunities to return value to shareholders. In that context, the Company has, is and will consider initiatives including, among others: the sale of individual ownership interests, the sale of certain or all ownership interests in secondary market transactions, or a combination thereof, 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 September 30, 2020 will be sufficient to fund operations past one year from the issuance of these Consolidated Financial Statements.

 

Principles of Accounting for Ownership Interests

 

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, the Company also periodically makes advances to its companies in the form of promissory notes which are included in the Ownership interests in 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. 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) in the Consolidated Statements of Operations. The Company includes the carrying value of equity method companies in Ownership interests in 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. When 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 our equity interests in companies which are not accounted for under the equity method as equity securities without readily determinable fair values. We estimate the fair value of these securities 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 interest 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. We include the carrying value of these interests in Ownership interests and advances on the Consolidated Balance Sheets.

 

Impairment of Ownership Interests and Advances

 

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 fair 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) 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 is not written-up even if circumstances suggest the value of the company has subsequently recovered.

 

Recently Adopted Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 and related subsequent amendments outline a single comprehensive model to use to account for revenue arising from contracts with customers and supersede most current revenue recognition guidance. For public companies, the guidance was effective for annual periods beginning after December 15, 2017 and any interim periods that fall within that reporting period. For nonpublic companies, the guidance was effective for annual periods beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019 with early adoption permitted. Additionally, on June 3, 2020 the FASB issued ASU 2020-05, which extended the adoption of ASC 606 for all nonpublic business entities that have not issued their 2019 financial statements as of June 3, 2020, until January 1, 2020.

 

As the new standard superseded most existing revenue guidance, it impacted revenue and cost recognition for certain companies in which we hold an ownership interest. Any change in revenue or cost recognition for companies in which we hold an ownership interest could affect the Company's recognition of its share of the results of its equity method companies. On July 20, 2017, the SEC staff observer at the FASB’s Emerging Issues Task Force ("EITF") meeting announced that the SEC staff will not object if a private company equity method investee meeting the definition of a public business entity that otherwise would not meet the definition of a public business entity except for the inclusion of its financial statements or financial information in another entity’s filings with the SEC, uses private company adoption dates for the new revenue standard.  As a result, certain of the Company's private, calendar year companies adopted the revenue standard for the year ending December 31, 2019, including a cumulative effect where applicable as of the first day of the 2019 reporting period.

 

For our ownership interests that have adopted ASU 2014-09, the impact of adoption of the new revenue standard is reflected in the Company’s financial results for the interim and annual reporting periods beginning in 2020 on a one quarter-lag basis.  The impact upon adoption resulted in a decrease to retained earnings and ownership interests of $1.8 million, net, due to the deferral of revenue and certain costs at our underlying ownership interests.  Our results of operations for the nine months ended September 30, 2020 reflect a benefit of $1.8 million due primarily to the recognition of revenue in 2019 that was previously deferred as a result of the adoption of ASU 2014-09.  Accordingly, the cumulative impact of the adoption of ASU 2014-09 was not significant.  The Company continues to monitor the impact of ASU 2014-09 to our ownership interests that have not finalized their 2019 adoption or that may further delay adoption based on the June 3, 2020 update, however we do not expect any further adjustments to be significant.  

 

v3.20.2
Note 2 - Ownership Interests In and Advances
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Investments in and Advances to Affiliates, Schedule of Investments [Text Block]

2. Ownership Interests in and Advances

 

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

  

  

September 30, 2020

  

December 31, 2019

 
  

(Unaudited - In thousands)

 

Equity Method:

        

Companies

 $30,436  $34,271 

Private equity funds

  271   271 
   30,707   34,542 

Other Method:

        

Companies

  20,015   27,031 

Private equity funds

  423   453 
   20,438   27,484 

Advances to companies

  4,699   15,103 
  $55,844  $77,129 

 

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) in the Consolidated Statements of Operations for the three and nine months ended September 30, 2020.   

 

During the nine months ended September 30, 2020, Company recorded impairments of $9.2 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) in the Consolidated Statement of Operations.  During the three months and nine months ended September 30, 2020, the Company also recorded impairments of $0.4 million and $8.1 million, respectively, 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 methods 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 method available.  The aggregate estimated fair value of the ownership interests for which impairments were recorded is $12.5 million, $9.1 million and $2.2 million at March 31, 2020, June 30, 2020, and September 30, 2020, respectively.  Due to the unobservable nature of some of these inputs, we have determined these fair value estimates to be Level 3 fair value measurements.

 

During the nine months ended September 30, 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 three months ended September 30, 2020, the Company also recorded a $0.5 million Other loss of an other equity security based on an observable price change.

 

Summarized Financial Information

 

The following table summarizes the statement of operations data for the companies accounted for under the equity method for the three and nine months ended September 30, 2020 and 2019, respectively. These results have been compiled from the respective companies' financial statements, reflect certain historical adjustments, and are reported on a one quarter lag basis. Results of operations of the companies are excluded for periods prior to their acquisition, subsequent to their disposition and subsequent to the discontinuation of equity method of accounting. Historical results are not adjusted when the Company exits, writes-off or discontinues the equity method of accounting. 

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Unaudited - In thousands)

 

Results of Operations:

                

Revenue

 $39,388  $28,940  $119,270  $112,540 

Gross profit

 $23,244  $14,448  $73,395  $61,401 

Net loss

 $(15,650) $(30,470) $(56,684) $(99,282)

 

v3.20.2
Note 3 - Acquisitions of Ownership Interests
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Cost and Equity Method Investments Disclosure [Text Block]

3. Acquisitions of Ownership Interests

 

The following is a summary of additional deployments during the nine month period ended  September 30, 2020:

 

The Company deployed an additional $2.5 million to Aktana, Inc. during the three month period ended September 30, 2020.  The Company had previously deployed an aggregate of $11.7 million.  Aktana leverages big data and machine learning to enable pharmaceutical brands to dynamically optimize their strategy and enhance sales execution.

 

The Company deployed an additional $1.0 million to meQuilibrium. The Company had previously deployed an aggregate of $13.0 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 deployed an additional $4.4 million to Syapse, Inc., including the $0.6 million of convertible loans deployed in the first quarter of 2020, which was converted to equity in the second quarter. The Company had previously deployed $20.6 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 an additional $0.7 million of convertible loans to Trice Medical, Inc. The Company had previously deployed an aggregate of $10.2 million. Trice is focused on orthopedic diagnostics using fully integrated camera-enabled technologies to provide clinical solutions to physicians.

 

The Company deployed an aggregate of $0.2 million to Clutch Holdings.  The Company had previously deployed an aggregate of $16.7 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 an additional $0.2 million of convertible loans to QuanticMind. The Company had previously deployed an aggregate of $13.5 million. QuanticMind delivers an intelligent, scalable and fast platform for maximizing digital marketing performance, including paid search and social, for enterprises.

 

The Company funded an aggregate of $0.1 million of convertible loans to WebLinc, Inc. The Company had previously deployed an aggregate of $16.1 million. WebLinc is an e-commerce platform for online retailers.

    

v3.20.2
Note 4 - Fair Value Measurements
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

4. Fair Value Measurements

 

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 or liabilities (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. Financial instruments recorded at fair value on the Company’s Consolidated Balance Sheets are categorized as follows:

 

Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2—Include other inputs that are directly or indirectly observable in the marketplace.

 

Level 3—Unobservable inputs which are supported by little or no market activity.

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

 

The following table provides the carrying value and fair value of certain financial assets and liabilities of the Company measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019:

 

  

Carrying

  

Fair Value Measurement at September 30, 2020

 
  

Value

  

Level 1

  

Level 2

  

Level 3

 
  

(Unaudited - In thousands)

 

Cash and cash equivalents

 $16,437  $16,437  $  $ 
                 

 

 

  

Carrying

  

Fair Value Measurement at December 31, 2019

 
  

Value

  

Level 1

  

Level 2

  

Level 3

 
  

(Unaudited - In thousands)

 

Cash and cash equivalents

 $25,028  $25,028  $  $ 
                 

Restricted cash equivalents

 $25  $25  $  $ 

 

v3.20.2
Note 5 - Stock-Based Compensation
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]

5. Stock-Based Compensation

 

Stock-based compensation expense was recognized in the Consolidated Statements of Operations as follows:  

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Unaudited - In thousands)

 

General and administrative expense

 $452  $248  $979  $934 
  $452  $248  $979  $934 

 

 

During the nine months ended September 30, 2020 and 2019, the Company granted 79 thousand and 30 thousand restricted stock awards, respectively to non-employee directors for compensation.

v3.20.2
Note 6 - Income Taxes
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

6. Income Taxes

 

The Company’s consolidated income tax benefit (expense) was $0.0 million for the three and nine months ended September 30, 2020 and 2019. The Company has recorded a valuation allowance to reduce its net deferred tax asset to an amount that is more likely than not to be realized in future years. Accordingly, the tax provision that would have been recognized in the three and nine months ended September 30, 2020 was offset by changes in the valuation allowance. During the three and nine months ended September 30, 2020, the Company had no material changes in uncertain tax positions.

v3.20.2
Note 7 - Net Income (Loss) Per Share
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Earnings Per Share [Text Block]

7. Net Income (Loss) Per Share

 

The calculations of net income (loss) per share were as follows:

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Unaudited - In thousands, except per share data)

 

Basic:

                

Net income (loss)

 $(4,343) $(2,497) $(30,262) $55,259 

Weighted average common shares outstanding

  20,786   20,657   20,731   20,623 

Net income (loss) per share

 $(0.21) $(0.12) $(1.46) $2.68 
                 

Diluted:

                

Net income (loss) for dilutive share computation

 $(4,343) $(2,497) $(30,262) $55,259 
                 

Number of shares used in basic per share computation

  20,786   20,657   20,731   20,623 

Unvested restricted stock and DSU's

            

Employee stock options

            

Weighted average common shares outstanding

  20,786   20,657   20,731   20,623 
                 

Net income (loss) per dilutive share

 $(0.21) $(0.12) $(1.46) $2.68 

 

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 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 earnings per share do not reflect the following potential shares of common stock that would have an anti-dilutive effect or have unsatisfied performance or market conditions:

 

 

At September 30, 2020 and 2019, options to purchase 0.2 million and 0.2 million shares of common stock, respectively, at prices ranging from $10.37 to $17.11 and $9.83 to $19.41, respectively, were excluded from the calculations.

   
 

At September 30, 2020 and 2019, unvested restricted stock, performance-based stock units and DSUs convertible into 0.3 million and 0.3 million shares of stock, respectively, were excluded from the calculations.

   
v3.20.2
Note 8 - Segment Reporting
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

8. Segment Reporting

 

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 September 30, 2020, the Company held ownership interests accounted for using the equity method in 12 non-consolidated companies. 

 

Certain of the Company’s ownership interests as of September 30, 2020 included the following:   

 

Company Name

 

Safeguard Primary Ownership as of September 30, 2020

 

Accounting Method

Aktana, Inc.

 15.2% 

Equity

Clutch Holdings, Inc.

 41.2% 

Equity

Flashtalking

 13.4% 

Other

InfoBionic, Inc.

 25.2% 

Equity

Lumesis, Inc.

 43.5% 

Equity

MediaMath, Inc.

 13.3% 

Other

meQuilibrium

 32.0% 

Equity

Moxe Health Corporation

 29.9% 

Equity

Prognos Health Inc.

 28.5% 

Equity

QuanticMind, Inc.

 24.2% 

Equity

Syapse, Inc.

 19.6% 

Equity

T-REX Group, Inc. 13.7% Other

Trice Medical, Inc.

 16.6% 

Equity

WebLinc, Inc.

 39.9% 

Equity

Zipnosis, Inc.

 37.7% 

Equity

 

As of September 30, 2020 and December 31, 2019, all of the Company’s assets were located in the United States.

v3.20.2
Note 9 - Commitments and Contingencies
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

9. Commitments and Contingencies

 

In March 2019, the Company entered into a sublease of its prior corporate headquarters office space beginning in June 2019. 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, a company in which we hold an ownership interest, beginning in June 2019. The term of this sublease expires during the fourth quarter of 2020 and is not expected to be renewed.

 

A summary of the Company's operating lease cash flows at September 30, 2020 follows:

 

  

Operating lease payments

  

Expected sublease receipts

 
  

(Unaudited - In thousands)

 

2020 (three months ending December 31)

 $170  $129 

2021

  595   525 

2022

  601   540 

2023

  607   556 

2024

  613   573 

2025

  619   590 

Thereafter

  208   199 

Total future minimum lease payments

  3,413  $3,112 

Less imputed interest

  (936)    

Total operating lease liabilities

 $2,477     

 

 

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 had outstanding guarantees of $3.8 million at September 30, 2020 which related to one of the Company's private equity holdings.

 

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 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 has accrued approximately $1.5 million under the LTIP as of September 30, 2020, which $0.9 million is estimated as current accrued compensation.

 

The Company recorded severance expense of $1.9 million during the nine months ended September 30, 2020 primarily for the former CEO in accordance with an existing employment arrangement.  Obligations under this arrangement with the former CEO were paid during the second quarter.  Other accrued compensation amounts previously deferred will be paid during the fourth quarter of 2020.  Additional contingent amounts could be paid based on continued participation in prior awards granted pursuant to the LTIP.  The Company has agreements with certain remaining 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 employment and severance agreements for remaining employees was approximately $2.5 million at September 30, 2020.

 

In June 2011, the Company's former ownership interest, 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.

 

v3.20.2
Note 10 - Equity
9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

10. Equity

 

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. The Company has not repurchased any shares under the existing authorization during 2019 or the nine months ended September 30, 2020.

 

In February 2018, the Company's Board of Directors adopted a tax benefits preservation plan (the "Plan") designed to protect and preserve the Company's ability to utilize its net operating loss carryforwards ("NOLs"). The Company submitted the Plan for shareholder ratification at its 2019 Annual Meeting of Shareholders and the Plan was ratified by shareholders. The purpose of the Plan is to preserve the Company's ability to use its NOLs, which would be substantially limited if the Company experienced an "ownership change" as defined under Section 382 of the Internal Revenue Code. In general, an ownership change would be deemed to have occurred if the Company's shareholders who are treated as owning five percent or more of the outstanding shares of Safeguard for purposes of Section 382 ("five-percent shareholders") collectively increase their aggregate ownership in the Company's overall shares outstanding by more than 50 percentage points. Whether this change has occurred would be measured by comparing each five-percent shareholder's current ownership as of the measurement date to such shareholders' lowest ownership percentage during the three-year period preceding the measurement date. To protect the Company's NOLs from being limited or permanently lost under Section 382, the Plan is intended to deter any person or group from acquiring beneficial ownership of 4.99% or more of the Company's outstanding common stock without the approval of the Board, reducing the likelihood of an unintended ownership change. If such beneficial ownership is acquired without the approval of the Board, under the Plan, the Company will issue one preferred stock purchase right (the "Rights") for each share of Safeguard's common stock held by shareholders as of the applicable date of record. The issuance of the Rights will not be taxable to Safeguard or its shareholders and will not affect Safeguard's reported earnings per share. The Rights will trade with Safeguard's common shares and will expire no later than February 19, 2021. The Rights and the Plan may also expire on an earlier date upon the occurrence of other events, including a determination by the Company's Board that the Plan is no longer necessary or desirable for the preservation of the Company's tax attributes or that no tax attributes may be carried forward (with such expiration occurring as of the beginning of the applicable taxable year). There can be no assurance that the Plan will prevent the Company from experiencing an ownership change.

v3.20.2
Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Liquidity, Policy [Policy Text Block]

Liquidity

 

As of September 30, 2020 the Company had $16.4 million of cash and cash equivalents.

 

In January 2018, Safeguard announced that, from that date forward, the Company will not deploy any capital into new opportunities and will focus on supporting our existing companies and maximizing monetization opportunities to return value to shareholders. In that context, the Company has, is and will consider initiatives including, among others: the sale of individual ownership interests, the sale of certain or all ownership interests in secondary market transactions, or a combination thereof, 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 September 30, 2020 will be sufficient to fund operations past one year from the issuance of these Consolidated Financial Statements.

 

Investment, Policy [Policy Text Block]

Principles of Accounting for Ownership Interests

 

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, the Company also periodically makes advances to its companies in the form of promissory notes which are included in the Ownership interests in 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. 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) in the Consolidated Statements of Operations. The Company includes the carrying value of equity method companies in Ownership interests in 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. When 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 our equity interests in companies which are not accounted for under the equity method as equity securities without readily determinable fair values. We estimate the fair value of these securities 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 interest 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. We include the carrying value of these interests in Ownership interests and advances on the Consolidated Balance Sheets.

 

Impairment of Ownership Interests and Advances

 

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 fair 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) 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 is not written-up even if circumstances suggest the value of the company has subsequently recovered.

 

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 and related subsequent amendments outline a single comprehensive model to use to account for revenue arising from contracts with customers and supersede most current revenue recognition guidance. For public companies, the guidance was effective for annual periods beginning after December 15, 2017 and any interim periods that fall within that reporting period. For nonpublic companies, the guidance was effective for annual periods beginning after December 15, 2018 and interim periods within annual periods beginning after December 15, 2019 with early adoption permitted. Additionally, on June 3, 2020 the FASB issued ASU 2020-05, which extended the adoption of ASC 606 for all nonpublic business entities that have not issued their 2019 financial statements as of June 3, 2020, until January 1, 2020.

 

As the new standard superseded most existing revenue guidance, it impacted revenue and cost recognition for certain companies in which we hold an ownership interest. Any change in revenue or cost recognition for companies in which we hold an ownership interest could affect the Company's recognition of its share of the results of its equity method companies. On July 20, 2017, the SEC staff observer at the FASB’s Emerging Issues Task Force ("EITF") meeting announced that the SEC staff will not object if a private company equity method investee meeting the definition of a public business entity that otherwise would not meet the definition of a public business entity except for the inclusion of its financial statements or financial information in another entity’s filings with the SEC, uses private company adoption dates for the new revenue standard.  As a result, certain of the Company's private, calendar year companies adopted the revenue standard for the year ending December 31, 2019, including a cumulative effect where applicable as of the first day of the 2019 reporting period.

 

For our ownership interests that have adopted ASU 2014-09, the impact of adoption of the new revenue standard is reflected in the Company’s financial results for the interim and annual reporting periods beginning in 2020 on a one quarter-lag basis.  The impact upon adoption resulted in a decrease to retained earnings and ownership interests of $1.8 million, net, due to the deferral of revenue and certain costs at our underlying ownership interests.  Our results of operations for the nine months ended September 30, 2020 reflect a benefit of $1.8 million due primarily to the recognition of revenue in 2019 that was previously deferred as a result of the adoption of ASU 2014-09.  Accordingly, the cumulative impact of the adoption of ASU 2014-09 was not significant.  The Company continues to monitor the impact of ASU 2014-09 to our ownership interests that have not finalized their 2019 adoption or that may further delay adoption based on the June 3, 2020 update, however we do not expect any further adjustments to be significant.  

 

v3.20.2
Note 2 - Ownership Interests In and Advances (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Investments in and Advances to Affiliates, Schedule of Investments [Table Text Block]
  

September 30, 2020

  

December 31, 2019

 
  

(Unaudited - In thousands)

 

Equity Method:

        

Companies

 $30,436  $34,271 

Private equity funds

  271   271 
   30,707   34,542 

Other Method:

        

Companies

  20,015   27,031 

Private equity funds

  423   453 
   20,438   27,484 

Advances to companies

  4,699   15,103 
  $55,844  $77,129 
Equity Method Investments [Table Text Block]
  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Unaudited - In thousands)

 

Results of Operations:

                

Revenue

 $39,388  $28,940  $119,270  $112,540 

Gross profit

 $23,244  $14,448  $73,395  $61,401 

Net loss

 $(15,650) $(30,470) $(56,684) $(99,282)
v3.20.2
Note 4 - Fair Value Measurements (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]
  

Carrying

  

Fair Value Measurement at September 30, 2020

 
  

Value

  

Level 1

  

Level 2

  

Level 3

 
  

(Unaudited - In thousands)

 

Cash and cash equivalents

 $16,437  $16,437  $  $ 
                 
  

Carrying

  

Fair Value Measurement at December 31, 2019

 
  

Value

  

Level 1

  

Level 2

  

Level 3

 
  

(Unaudited - In thousands)

 

Cash and cash equivalents

 $25,028  $25,028  $  $ 
                 

Restricted cash equivalents

 $25  $25  $  $ 
v3.20.2
Note 5 - Stock-Based Compensation (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Share-based Payment Arrangement, Activity [Table Text Block]
  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Unaudited - In thousands)

 

General and administrative expense

 $452  $248  $979  $934 
  $452  $248  $979  $934 
v3.20.2
Note 7 - Net Income (Loss) Per Share (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 
  

(Unaudited - In thousands, except per share data)

 

Basic:

                

Net income (loss)

 $(4,343) $(2,497) $(30,262) $55,259 

Weighted average common shares outstanding

  20,786   20,657   20,731   20,623 

Net income (loss) per share

 $(0.21) $(0.12) $(1.46) $2.68 
                 

Diluted:

                

Net income (loss) for dilutive share computation

 $(4,343) $(2,497) $(30,262) $55,259 
                 

Number of shares used in basic per share computation

  20,786   20,657   20,731   20,623 

Unvested restricted stock and DSU's

            

Employee stock options

            

Weighted average common shares outstanding

  20,786   20,657   20,731   20,623 
                 

Net income (loss) per dilutive share

 $(0.21) $(0.12) $(1.46) $2.68 
v3.20.2
Note 8 - Segment Reporting (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Schedule of Partner Company Ownership Interest [Table Text Block]

Company Name

 

Safeguard Primary Ownership as of September 30, 2020

 

Accounting Method

Aktana, Inc.

 15.2% 

Equity

Clutch Holdings, Inc.

 41.2% 

Equity

Flashtalking

 13.4% 

Other

InfoBionic, Inc.

 25.2% 

Equity

Lumesis, Inc.

 43.5% 

Equity

MediaMath, Inc.

 13.3% 

Other

meQuilibrium

 32.0% 

Equity

Moxe Health Corporation

 29.9% 

Equity

Prognos Health Inc.

 28.5% 

Equity

QuanticMind, Inc.

 24.2% 

Equity

Syapse, Inc.

 19.6% 

Equity

T-REX Group, Inc. 13.7% Other

Trice Medical, Inc.

 16.6% 

Equity

WebLinc, Inc.

 39.9% 

Equity

Zipnosis, Inc.

 37.7% 

Equity

v3.20.2
Note 9 - Commitments and Contingencies (Tables)
9 Months Ended
Sep. 30, 2020
Notes Tables  
Lessee, Operating Lease, Liability, Maturity [Table Text Block]
  

Operating lease payments

  

Expected sublease receipts

 
  

(Unaudited - In thousands)

 

2020 (three months ending December 31)

 $170  $129 

2021

  595   525 

2022

  601   540 

2023

  607   556 

2024

  613   573 

2025

  619   590 

Thereafter

  208   199 

Total future minimum lease payments

  3,413  $3,112 

Less imputed interest

  (936)    

Total operating lease liabilities

 $2,477     
v3.20.2
Note 1 - General (Details Textual) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2020
Apr. 01, 2020
Dec. 31, 2019
Cash and Cash Equivalents, at Carrying Value, Ending Balance $ 16,437   $ 25,028
Retained Earnings (Accumulated Deficit), Ending Balance (729,286)   $ (697,223)
Accounting Standards Update 2014-09 [Member]      
Contract with Customer, Liability, Revenue Recognized $ 1,800    
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2014-09 [Member]      
Retained Earnings (Accumulated Deficit), Ending Balance   $ (1,800)  
v3.20.2
Note 2 - Ownership Interests In and Advances (Details Textual) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Equity Securities, FV-NI, Unrealized Gain (Loss), Total $ (0.5) $ 1.5    
Fair Value, Inputs, Level 3 [Member]        
Impaired Investments in Affiliates Subsidiaries Associates and Joint Ventures, FairValue 2.2 2.2 $ 9.1 $ 12.5
WebLinc, Inc and QuanticMind, Inc [Member]        
Equity Method Investment, Other than Temporary Impairment   9.2    
T-Rex Group, Inc [Member]        
Equity Securities without Readily Determinable Fair Value, Impairment Loss, Annual Amount 0.4 $ 8.1    
Sonobi [Member]        
Proceeds from Sale of Equity Method Investments $ 6.6      
v3.20.2
Note 2 - Ownership Interests In and Advances - Carrying Value of Ownership Interests (Details) - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Equity Method Companies $ 30,707 $ 34,542
Other Companies 20,438 27,484
Advances to companies 4,699 15,103
Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures, Total 55,844 77,129
Partnership Interest [Member]    
Equity Method Companies 30,436 34,271
Other Companies 20,015 27,031
Private Equity Funds [Member]    
Equity Method Companies 271 271
Other Companies $ 423 $ 453
v3.20.2
Note 2 - Ownership Interests In and Advances - Results of Operations (Details) - Equity Method Investment, Nonconsolidated Investee or Group of Investees [Member] - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Revenue $ 39,388 $ 28,940 $ 119,270 $ 112,540
Gross profit 23,244 14,448 73,395 61,401
Net loss $ (15,650) $ (30,470) $ (56,684) $ (99,282)
v3.20.2
Note 3 - Acquisitions of Ownership Interests (Details Textual) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 31, 2020
Sep. 30, 2020
Sep. 30, 2019
Dec. 31, 2019
Payments to Acquire Equity Method Investments   $ 7,510 $ 9,500  
Equity Method Investments   30,707   $ 34,542
Aktana, Inc. [Member]        
Payments to Acquire Equity Method Investments   2,500    
Equity Method Investments     11,700  
meQuilibrium [Member]        
Payments to Acquire Equity Method Investments   1,000    
Equity Method Investments     $ 13,000  
Syapse, Inc. [Member]        
Payments to Acquire Equity Method Investments $ 600 4,400    
Equity Method Investments   20,600    
Trice Medical [Member]        
Equity Method Investments   10,200    
Convertible Bridge Loan   700    
Clutch Holdings [Member]        
Payments to Acquire Equity Method Investments   200    
Equity Method Investments   16,700    
QuanticMind [Member]        
Equity Method Investments   13,500    
Convertible Bridge Loan   200    
WebLinc, Inc. [Member]        
Equity Method Investments   16,100    
Convertible Bridge Loan   $ 100    
v3.20.2
Note 4 - Fair Value Measurements - Fair Value of Assets and Liabilities Measured On Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($)
$ in Thousands
Sep. 30, 2020
Dec. 31, 2019
Cash and cash equivalents $ 16,437 $ 25,028
Restricted cash equivalents   25
Fair Value, Inputs, Level 1 [Member]    
Cash and cash equivalents 16,437 25,028
Restricted cash equivalents   25
Fair Value, Inputs, Level 2 [Member]    
Cash and cash equivalents 0 0
Restricted cash equivalents   0
Fair Value, Inputs, Level 3 [Member]    
Cash and cash equivalents $ 0 0
Restricted cash equivalents   $ 0
v3.20.2
Note 5 - Stock-Based Compensation (Details Textual) - shares
shares in Thousands
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total (in shares) 79 30
v3.20.2
Note 5 - Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Stock-based compensation expense $ 452 $ 248 $ 979 $ 934
General and Administrative Expense [Member]        
Stock-based compensation expense $ 452 $ 248 $ 979 $ 934
v3.20.2
Note 6 - Income Taxes (Details Textual) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Income Tax Expense (Benefit), Total $ 0 $ 0 $ 0 $ 0
v3.20.2
Note 7 - Net Income (Loss) Per Share (Details Textual) - $ / shares
shares in Millions
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)   0.2
Share-based Payment Arrangement, Option [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 0.2  
Share-based Payment Arrangement, Option, Exercise Price Range, Lower Range Limit (in dollars per share) $ 10.37 $ 9.83
Share-based Payment Arrangement, Option, Exercise Price Range, Upper Range Limit (in dollars per share) $ 17.11 $ 19.41
Restricted Stock, Performance-based Stock Units, and Deferred Stock Units [Member]    
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares) 0.3 0.3
v3.20.2
Note 7 - Net Income (Loss) Per Share - Calculations of Net Income (Loss) Per Share (Details) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Mar. 31, 2020
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Sep. 30, 2020
Sep. 30, 2019
Basic:                
Net income (loss) $ (4,343) $ (9,911) $ (16,008) $ (2,497) $ 36,093 $ 21,663 $ (30,262) $ 55,259
Basic (in shares) 20,786     20,657     20,731 20,623
Basic (in dollars per share) $ (0.21)     $ (0.12)     $ (1.46) $ 2.68
Diluted:                
Net income (loss) $ (4,343) $ (9,911) $ (16,008) $ (2,497) $ 36,093 $ 21,663 $ (30,262) $ 55,259
Basic (in shares) 20,786     20,657     20,731 20,623
Unvested restricted stock and DSU's (in shares) 0     0     0 0
Employee stock options (in shares) 0     0     0 0
Diluted (in shares) 20,786     20,657     20,731 20,623
Diluted (in dollars per share) $ (0.21)     $ (0.12)     $ (1.46) $ 2.68
v3.20.2
Note 8 - Segment Reporting (Details Textual)
9 Months Ended
Sep. 30, 2020
Number of Operating Segments 1
v3.20.2
Note 8 - Segment Reporting - Active Partner Companies by Segment (Details)
Sep. 30, 2020
Aktana, Inc. [Member]  
Ownership Interest Under Equity Method, Percent 15.20%
Clutch Holdings [Member]  
Ownership Interest Under Equity Method, Percent 41.20%
Flashtalking [Member]  
Ownership Interest Under Other Method, Percent 13.40%
InfoBionic, Inc. [Member]  
Ownership Interest Under Equity Method, Percent 25.20%
Lumesis, Inc. [Member]  
Ownership Interest Under Equity Method, Percent 43.50%
MediaMath, Inc. [Member]  
Ownership Interest Under Other Method, Percent 13.30%
meQuilibrium [Member]  
Ownership Interest Under Equity Method, Percent 32.00%
Moxe Health Corporation [Member]  
Ownership Interest Under Equity Method, Percent 29.90%
Prognos Health, Inc. [Member]  
Ownership Interest Under Equity Method, Percent 28.50%
QuanticMind [Member]  
Ownership Interest Under Equity Method, Percent 24.20%
Syapse, Inc. [Member]  
Ownership Interest Under Equity Method, Percent 19.60%
T-Rex Group, Inc [Member]  
Ownership Interest Under Other Method, Percent 13.70%
Trice Medical, Inc. [Member]  
Ownership Interest Under Equity Method, Percent 16.60%
WebLinc, Inc. [Member]  
Ownership Interest Under Equity Method, Percent 39.90%
Zipnosis [Member]  
Ownership Interest Under Equity Method, Percent 37.70%
v3.20.2
Note 9 - Commitments and Contingencies (Details Textual) - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2020
Jun. 30, 2020
Deferred Compensation Liability, Current and Noncurrent, Total $ 1.5  
Deferred Compensation Liability, Current, Total 0.9  
Employee and Severance Agreement, Maximum Aggregate Exposure 2.5  
Employee Severance [Member]    
Restructuring Charges, Total $ 1.9  
Minimum [Member]    
Long-term Incentive Plan, Bonus Pool, Percent of Proceeds Received 0.20%  
Maximum [Member]    
Long-term Incentive Plan, Bonus Pool, Percent of Proceeds Received 1.30% 1.00%
Private Equity Funds [Member]    
Guarantor Obligations, Current Carrying Value $ 3.8  
v3.20.2
Note 9 - Commitments and Contingencies - Operating Lease Cash Flow (Details)
$ in Thousands
Sep. 30, 2020
USD ($)
2020 (three months ending December 31) $ 170
2020 (three months ending December 31) 129
2021 595
2021 525
2022 601
2022 540
2023 607
2023 556
2024 613
2024 573
2025 619
2025 590
Thereafter 208
Thereafter 199
Total future minimum lease payments 3,413
Total future minimum lease payments 3,112
Less imputed interest (936)
Total operating lease liabilities $ 2,477
v3.20.2
Note 10 - Equity (Details Textual) - USD ($)
$ in Millions
9 Months Ended 12 Months Ended
Sep. 30, 2020
Dec. 31, 2019
Feb. 28, 2019
Jul. 31, 2015
Stock Repurchase Program, Authorized Amount       $ 25
Treasury Stock, Shares, Acquired (in shares) 0 0    
Sale of Stock, Individual Ownership, Percent, Maximum     4.99%  
Preferred Stock Purchase Right to be Exchanged for Common Stock Above Maximum Ownership Threshold (in shares)     1