SAFEGUARD SCIENTIFICS INC, 10-K filed on 3/5/2021
Annual Report
v3.20.4
Document And Entity Information - USD ($)
12 Months Ended
Dec. 31, 2020
Feb. 26, 2021
Jun. 30, 2020
Document Information [Line Items]      
Entity Central Index Key 0000086115    
Entity Registrant Name SAFEGUARD SCIENTIFICS INC    
Amendment Flag false    
Current Fiscal Year End Date --12-31    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2020    
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2020    
Document Transition Report false    
Entity File Number 1-5620    
Entity Incorporation, State or Country Code PA    
Entity Tax Identification Number 23-1609753    
Entity Address, Address Line One 150 N. Radnor Chester Road    
Entity Address, City or Town Radnor    
Entity Address, State or Province PA    
Entity Address, Postal Zip Code 19087    
City Area Code 610    
Local Phone Number 293-0600    
Title of 12(b) Security Common Stock ($.10 par value)    
Trading Symbol SFE    
Security Exchange Name NYSE    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
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 Public Float     $ 136,021,431
Entity Common Stock, Shares Outstanding   20,944,305  
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Thousands
Dec. 31, 2020
Dec. 31, 2019
Current Assets:    
Cash and cash equivalents $ 15,601 $ 25,028
Restricted cash 0 25
Prepaid expenses and other current assets 462 1,297
Total current assets 16,063 26,350
Property and equipment, net 1,790 2,101
Ownership interests and advances 50,398 77,129
Other assets 784 1,997
Total Assets 69,035 107,577
Current Liabilities:    
Accounts payable 56 39
Accrued compensation and benefits 2,677 1,364
Accrued expenses and other current liabilities 410 627
Lease liability - current 327 399
Total current liabilities 3,470 2,429
Other long-term liabilities 637 1,027
Lease liability - non-current 2,053 2,380
Total Liabilities 6,160 5,836
Commitments and contingencies (Note 12)
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, 2020 and 2019, respectively 2,157 2,157
Additional paid-in capital 807,582 810,856
Treasury stock, at cost; 688 and 930 shares at December 31, 2020 and 2019, respectively (10,200) (14,024)
Accumulated deficit (736,639) (697,223)
Accumulated other comprehensive loss (25) (25)
Total Equity 62,875 101,741
Total Liabilities and Equity $ 69,035 $ 107,577
v3.20.4
Consolidated Balance Sheets (Parentheticals) - $ / shares
shares in Thousands
Dec. 31, 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) 688 930
v3.20.4
Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
General and administrative expense $ 9,466 $ 9,982
Operating loss (9,466) (9,982)
Other income (loss), net (7,708) 12,255
Interest income 261 2,044
Interest expense 0 (14,023)
Equity income (loss), net (20,702) 64,267
Net income (loss) before income taxes (37,615) 54,561
Income tax benefit (expense) 0 0
Net income (loss) $ (37,615) $ 54,561
Net income (loss) per share:    
Basic (in dollars per share) $ (1.81) $ 2.64
Diluted (in dollars per share) $ (1.81) $ 2.64
Weighted average shares used in computing net income (loss) per share:    
Basic (in shares) 20,751 20,636
Diluted (in shares) 20,751 20,636
v3.20.4
Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Net income (loss) $ (37,615) $ 54,561
Other comprehensive (loss) income:    
Share of other comprehensive (loss) of equity method investments 0 (31)
Reclassification adjustment for sale of equity method investments 0 6
Total comprehensive income (loss) $ (37,615) $ 54,536
v3.20.4
Consolidated Statements of Changes in Shareholders' Equity - 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 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) 54,561 0 $ 0 0 $ 0 54,561
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net 0 0 $ 0 (1,213) $ 977 (236)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net (in shares)     0   16  
Stock-based compensation 0 0 $ 0 1,141 $ 0 1,141
Other comprehensive income (loss) 0 (25) 0 0 0 (25)
Dividends paid (20,679) 0 0 0 0 (20,679)
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) (37,615) 0 $ 0 0 $ 0 (37,615)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net 0 0 $ 0 (3,864) $ 3,824 (40)
Restricted stock awards, forfeitures and shares repurchased for tax withholdings, net (in shares)     0   (242)  
Stock-based compensation 0 0 $ 0 590 $ 0 590
Change in accounting at ownership interests (1,801) 0 0 0 0 (1,801)
Balance at Dec. 31, 2020 $ (736,639) $ (25) $ 2,157 $ 807,582 $ (10,200) $ 62,875
Balance (in shares) at Dec. 31, 2020     21,573   688  
v3.20.4
Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Cash Flows from Operating Activities:    
Net income (loss) $ (37,615) $ 54,561
Adjustments to reconcile to net cash used in operating activities:    
Depreciation 0 808
Amortization of debt discount 0 3,454
Amortization of right of use asset 311 260
Equity (income) loss, net 9,420 (67,232)
Impairments of ownership interests and advances 20,039 3,012
Income from change in fair value of derivative 0 (5,060)
Gain from observable price changes (1,224) (4,526)
Other, net 175 (2,315)
Stock-based compensation, including liability classified awards 965 1,237
Changes in assets and liabilities:    
Prepaid expenses and other current assets (137) (823)
Accounts payable, accrued expenses, and other current liabilities (77) (3,346)
Net cash used in operating activities (8,143) (19,970)
Cash Flows from Investing Activities:    
Acquisitions of ownership interests (7,534) (11,640)
Proceeds from sales and distributions from ownership interests 7,903 104,302
Advances and loans to ownership interests (1,638) (5,055)
Repayment of advances and loans from ownership interests 0 750
Purchase 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 (1,269) 126,303
Cash Flows from Financing Activities:    
Payment of dividend 0 (20,679)
Repayments on credit facility 0 (68,568)
Tax withholdings related to equity-based awards (40) (236)
Net cash used in financing activities (40) (89,483)
Net change in cash, cash equivalents and restricted cash (9,452) 16,850
Cash, cash equivalents and restricted cash equivalents at beginning of period 25,053 8,203
Cash, cash equivalents and restricted cash at end of period $ 15,601 $ 25,053
v3.20.4
Note 1 - General
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

1. General

 

Liquidity And Capital Resources

 

As of December 31, 2020, Safeguard ("the Company") had $15.6 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, are 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.

 

The Company believes that its cash and cash equivalents at December 31, 2020 will be sufficient to fund operations past one year from the issuance of these consolidated financial statements.

 

Significant Accounting Policies

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Safeguard and all of its subsidiaries in which a controlling financial interest is maintained. All intercompany accounts and transactions are eliminated in consolidation.

 

Principles of Accounting for Ownership Interests in Companies

 

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 the 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. 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 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. 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 investment 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 investments in Ownership interests and advances on the Consolidated Balance Sheets.

 

Accounting Estimates

 

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, 2020, 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.

 

Cash and Cash Equivalents and Marketable Securities

 

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 determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. Held-to-maturity securities were carried at amortized cost, which approximated fair value. Marketable securities consisted of held-to-maturity securities, primarily consisting of government agency bonds, commercial paper and certificates of deposits. Marketable securities with a maturity date greater than one year from the balance sheet date would be considered long-term. 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

 

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 Balance Sheets:

 

  

December 31, 2020

  

December 31, 2019

 
  

(In thousands)

 

Cash and cash equivalents

 $15,601  $25,028 

Restricted cash

     25 

Total cash, cash equivalents and restricted cash

 $15,601  $25,053 

 

Financial Instruments

 

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. 

 

Property and Equipment

 

Property and equipment represents right-of-use assets resulting from the adoption of Accounting Standards Update ("ASU") No. 2016-02, Leases, and other previously existing leasehold improvements. The leasehold improvements were amortized over the shorter of the estimated useful lives or the expected remaining term of the lease. 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.     

 

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, 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, 2020 and 2019, respectively, and $0.6 million for each of the years ended December 31, 2020 and 2019.

 

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, 2020 follows:

 

  Operating lease payments  

Expected sublease receipts

 
  

(In thousands)

 

2021

 $595  $525 

2022

  601   540 

2023

  607   556 

2024

  613   573 

2025

  619   590 

2026

  208   199 

Thereafter

      

Total future minimum lease payments

  3,243   2,983 

Less imputed interest

  (863)    

Total operating lease liabilities

 $2,380     

 

Valuation of Credit Facility repayment feature

 

The fair value of the Credit Facility repayment feature (a Level 3 measurement) was determined quarterly based on the present value of make-whole interest payments that were expected to be paid based on cash flow estimates that included a probability weighted estimate of exit transactions, estimated follow-on deployments, estimated quarterly operating cash flows and other cash commitments that would have resulted in qualified cash exceeding the $50 million threshold specified in the Credit Facility. This fair value of the Credit Facility repayment feature was eliminated in July 2019 upon the repayment of the Credit Facility.

 

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), 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.

 

Income Taxes

 

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.

 

Net Income (Loss) Per Share

 

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.

 

Segment Information

 

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.

 

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 is 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 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, the Company's private, calendar year companies adopted the new 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 an increase in accumulated deficit and a decrease in 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 year ended December 31, 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. 

 

v3.20.4
Note 2 - Ownership Interests and Advances
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Investments in and Advances to Affiliates, Schedule of Investments [Text Block]

2. Ownership Interests and Advances

 

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

 

  

December 31, 2020

  

December 31, 2019

 
  

(In thousands)

 

Equity Method:

        

Companies

 $27,550  $34,271 

Private equity funds

  271   271 
   27,821   34,542 

Other Method:

        

Companies

  19,683   27,031 

Private equity funds

  268   453 
   19,951   27,484 

Advances to companies (equity method)

  2,626   15,103 
  $50,398  $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), 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.

 

During 2019, the Company recognized an impairment of $3.0 million related to NovaSom, which is reflected in Equity income (loss), net in the Consolidated Statements of Operations. The impairment was the result of NovaSom Inc.'s August 2019 bankruptcy filing.

 

In January 2019, Propeller was acquired by another entity for cash. The Company received $41.5 million in cash proceeds in connection with the transaction, and $0.7 million in 2020 for amounts held in escrow. The Company recognized a gain of $35.1 million, which is included in Equity income (loss), net in the Consolidated Statements of Operations.

 

In January 2019, Brickwork merged into another privately-held company. The Company received a preferred equity interest in the acquiror and accounts for this interest as an equity interest without a readily determinable fair value. The Company did not recognize a gain or loss in 2019 as a result of this transaction.

 

In May 2019, Transactis was acquired by another entity for cash. To date, the Company received $57.5 million in cash proceeds in connection with the transaction, excluding certain amounts that continue to be held in escrow that may be released on various dates on or before May 2020. The Company has recognized gains of $50.7 million, which are included in Equity income (loss), net in the Consolidated Statements of Operations.

 

During 2019, the Company ceased accounting for T-REX Group, Inc. and Hoopla Software, Inc. under the equity method as a result of losing our ability to exercise significant influence.

 

During 2019, the Company recorded $4.5 million of non-cash gains in Other income (loss), net related to the increase in the value of certain equity securities based upon observable price changes.

 

Summarized Financial Information

 

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,

 
  

2020

  

2019

 
  

(In thousands)

 

Balance Sheets:

        

Current assets

 $104,024  $91,968 

Non-current assets

  26,352   26,231 

Total assets

 $130,376  $118,199 

Current liabilities

 $72,972  $80,783 

Non-current liabilities

  105,506   87,081 

Shareholders’ deficit

  (48,102)  (49,665)

Total liabilities and shareholders’ deficit

 $130,376  $118,199 
         

Number of equity method ownership interests

  12   13 

 

  

Year Ended December 31,

 
  

2020

  

2019

 
  

(In thousands)

 

Results of Operations:

        

Revenue

 $153,875  $145,632 

Gross profit

 $92,039  $78,465 

Net loss

 $(82,216) $(127,007)

 

As of December 31, 2020, 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 $17.9 million. Of this excess, $15.0 million was allocated to goodwill and $2.9 million was allocated to intangible assets.

 

v3.20.4
Note 3 - Acquisitions of Ownership Interests
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Cost and Equity Method Investments Disclosure [Text Block]

3. Acquisitions of Ownership Interests

 

2020 Transactions

 

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 $4.4 million to Syapse, Inc. during the six month period ended June 30, 2020, 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 deployed an additional $1.0 million to meQuilibrium during the three month period ended March 31, 2020. 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 funded an additional $0.7 million of convertible loans to Trice Medical, Inc. during the six month period ended June 30, 2020. 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 during the three month period ended June 30, 2020. 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 during the three month period ended March 31, 2020. 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.  See Note 2 for impairment recorded in 2020 and Note 16 for the sale of this ownership interest in 2021.

 

The Company funded an aggregate of $0.1 million of convertible loans to WebLinc, Inc. during the three month period ended March 31, 2020.  The Company had previously deployed an aggregate of $16.1 million.  WebLinc is an e-commerce platform for online retailers.  See Note 2 for impairment recorded in 2020 and Note 16 for the sale of this ownership interest in 2021.

 

2019 Transactions

 

The Company deployed an additional $5.0 million to Syapse, Inc. 

 

The Company deployed an additional $2.0 million to Moxe Health Corporation, including $0.3 million that was funded initially as a convertible loan. The Company had previously deployed $5.5 million in Moxe Health.

 

The Company deployed an additional $1.5 million to Aktana, Inc. 

 

The Company deployed an additional $1.5 million to meQuilibrium.

 

The Company deployed an additional $1.5 million to Zipnosis, Inc. The Company had previously deployed $8.5 million in Zipnosis. Zipnosis provides health systems with a white-labeled, fully integrated virtual care platform.

 

The Company deployed an aggregate of $0.4 million to Clutch Holdings. 

 

The Company funded an additional $2.0 million of convertible loans to Sonobi, Inc. The Company had previously deployed $11.4 million in Sonobi. Sonobi is an advertising technology developer that was acquired during 2020.  See Note 2 for impairment and sale recorded in 2020.

 

The Company funded an aggregate of $1.1 million of convertible loans to WebLinc, Inc. See Note 2 for impairment recorded in 2020 and Note 16 for the sale of this ownership interest in 2021.

 

The Company funded an aggregate of $1.0 million of convertible loans to NovaSom, Inc. The Company had previously deployed an aggregate of $26.4 million in NovaSom. See Note 2 for impairment recorded during the second quarter of 2019.

 

The Company funded an additional $0.6 million of convertible loans to QuanticMind.  See Note 2 for impairment recorded in 2020 and Note 16 for the sale of this ownership interest in 2021.

 

v3.20.4
Note 4 - Fair Value Measurements
12 Months Ended
Dec. 31, 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 (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 equivalents 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, 2020 and 2019.

 

v3.20.4
Note 5 - Credit Facility and Convertible Debentures
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Long-term Debt [Text Block]

5. Credit Facility and Convertible Debentures

 

Credit Facility     

 

The Company's credit facility was with HPS Investment Partners, LLC (“Lender”), and was amended in May 2018 ("Credit Facility"). The Credit Facility had a scheduled maturity of May 11, 2020 and interest at a rate of either: (A) LIBOR plus 8.5% (subject to a LIBOR floor of 1%), payable on the last day of the one, two or three month interest period applicable to the LIBOR rate advance, or (B) 7.5% plus the greater of: 2%; the Federal Funds Rate plus 0.5%; LIBOR plus 1%; or the U.S. Prime Rate, payable monthly in arrears. The Credit Facility was secured by all of the Company's assets in accordance with the terms of the Credit Facility.

 

The terms of the Credit Facility included a requirement that if the aggregate amount of the Company’s qualified cash at any quarter end date exceeded $50.0 million, the Company would be required to prepay outstanding principal amounts under the Credit Facility, plus any applicable interest and prepayment fees, in an amount equal to such excess. Based on this requirement, the Company made a principal payment of $24.0 million and a make-whole interest payment of $2.9 million on April 15, 2019 based on the Company's qualified cash at March 31, 2019. Additionally, the Company repaid the remaining principal of $44.5 million and make-whole interest of $4.1 million in July 2019.

 

The Company was subject to certain debt covenants under the Credit Facility including maintaining a specified level of liquidity threshold, maintaining an appraised value of ownership interests, limiting deployments to our remaining ownership interests, limiting certain expenses, and restricting any repurchases of outstanding common stock or issuing dividends until such time as the Credit Facility was repaid in full. The Company was in compliance with all applicable covenants.

 

The Credit Facility required prepayments of outstanding principal and interest amounts when the Company’s qualified cash at any quarter end date exceeded $50.0 million. This provision in the Credit Facility was an embedded derivative that was accounted for separately from the Credit Facility. A liability of $0.5 million was recorded on the 2018 amendment date for the fair value of potential future prepayments based upon management's probability weighted cash forecast. This amount was also included in debt issuance costs and had been amortized over the remaining term of the Credit Facility. The liability was adjusted to fair value at each balance sheet date based upon management's updated probability weighted cash forecast. During 2019, the Company recorded a decrease in the liability of $5.1 million, which is included in Other income (loss), net on the Consolidated Statements of Operations.

 

The Company recorded interest expense under the Credit Facility of $14.0 million for the year ended December 31, 2019. The effective interest rate on the Credit Facility was 15.1%. The Company made interest payments under the Credit Facility of $11.5 million for the year ended December 31, 2019.

 

v3.20.4
Note 6 - Equity
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Stockholders' Equity Note Disclosure [Text Block]

6. 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. During the years ended December 31, 2020 and 2019, the Company did not repurchase any shares under the existing authorization. 

 

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") which was ratified by shareholders at its 2018 Annual Meeting of Shareholders. The purpose of the Plan was 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 occur 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 was 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. Under the Plan, the Company would issue one preferred stock purchase right (the "Rights") for each share of Safeguard's common stock held by shareholders of record on March 2, 2018. The issuance of the Rights would not be taxable to Safeguard or its shareholders and would not affect Safeguard's reported earnings per share. The Rights would have traded with Safeguard's common shares and would have expired no later than February 19, 2021. Accordingly, the Plan has now expired.  

 

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, resulting in total dividends paid of $20.7 million.

 

v3.20.4
Note 7 - Stock-Based Compensation
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Share-based Payment Arrangement [Text Block]

7. Stock-Based Compensation

 

Equity Compensation Plans

 

The 2014 Equity Compensation Plan has 4.1 million shares authorized for issuance. During 2020 and 2019, 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, 2020, the Company had reserved 2.8 million shares of common stock for possible future issuance under its 2014 Equity Compensation Plan and other previously expired equity compensation plans.

 

Classification of Stock-Based Compensation Expense

 

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

 

  

Year Ended December 31,

 
  

2020

  

2019

 
  

(In thousands)

 

General and administrative expense

 $965  $1,237 
  $965  $1,237 

 

At December 31, 2020, the Company had outstanding options that vest based on two different types of vesting schedules:

 

1) performance-based; and

 

2) service-based.

 

Performance-based awards entitle 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. Vesting may occur, if at all, once per year. The requisite service periods for the performance-based awards are based on the Company’s estimate of when the performance conditions will be met. Compensation expense is recognized for performance-based awards for which the performance condition is considered probable of achievement. 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, 2020 and 2019.  During the years ended December 31, 2020 and 2019, there were no performance-based options that vested.  During the years ended December 31, 2020 and 2019, respectively, 72 thousand and 174 thousand performance-based options were canceled or forfeited. The Company recorded a reduction of compensation expense related to performance-based options of $0.0 million and $0.1 million for the years ended December 31, 2020 and 2019 respectively. The maximum number of unvested options at December 31, 2020 attainable under these grants was 21 thousand 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, 2020 and 2019, respectively, the Company issued no service-based options to employees and recorded $0.0 million compensation expense from the vesting of previously issued awards. During the years ended December 31, 2020 and 2019, respectively, 62 thousand and 57 thousand service-based options were canceled or forfeited.  

 

There were no options granted during 2020 and 2019.

 

Stock-based compensation expense of $1.0 million was recognized during the year ended December 31, 2020 related to Board fees and management bonuses earned in 2020 that were subsequently settled in stock.  The Company had liabilities of $0.5 million and $0.1 million as of December 31, 2020 and 2019, respectively, that were settled through the issuance of common stock in the subsequent period. Compensation expense of $0.1 million was also recognized during the year ended December 31, 2019 related to the dividend payments made to holders of unvested restricted stock awards pursuant to the terms of those instruments.  

 

Option activity of the Company is summarized below: 

 

  

Shares

  Weighted Average Exercise Price  

Weighted Average Remaining Contractual Life

  Aggregate Intrinsic Value 
  

(In thousands)

      

(In years)

  

(In thousands)

 

Outstanding at January 1, 2019

  410   14.66         

Options granted

              

Options exercised

              

Options canceled/forfeited

  (231)  14.19         

Outstanding at December 31, 2019

  179   15.27         

Options granted

              

Options exercised

              

Options canceled/forfeited

  (134)  14.36         

Outstanding at December 31, 2020

  45   14.20   2.29  $ 

Options exercisable at December 31, 2020

  22   14.48   3.08    

Shares available for future grant

  2,515             

 

At December 31, 2020, total unrecognized compensation cost related to non-vested service-based options was immaterial. At December 31, 2020, total unrecognized compensation cost related to non-vested performance-based options was immaterial.

 

Performance-based stock units vest based on achievement by the Company of target capital returns based on net cash proceeds received by the Company on the sale, merger or other exit transaction of certain identified companies, as described above related to performance-based awards. During 2020, the Company also initiated a 2021 CEO bonus award that will be settled in the vesting of performance-based units based on criteria determined by the Board of Directors.  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% for certain specified thresholds.  The maximum fair value associated with this award is $0.7 million, none of which has been recognized during the year ended December 31, 2020.  During the years ended December 31, 2020 and 2019, respectively, 100 thousand and 0 performance-based stock units were issued. No performance-based stock units vested during the years ended December 31, 2020 and 2019. During the years ended December 31, 2020 and 2019, respectively, 129 thousand and 339 thousand performance-based stock units were canceled or forfeited. Under the terms of the 2016 and 2015 performance-based awards, once performance-based stock units are fully vested, participants are entitled to receive cash payments based on their initial performance grant values as target capital returns described above are exceeded. At December 31, 2020, the liability associated with such potential cash payments was $0.0 million.

 

During the years ended December 31, 2020 and 2019, respectively, the Company issued 193 thousand and 31 thousand restricted shares to employees and directors. Restricted shares generally vest over a period of approximately two to four years, or are vested at issuance for directors 65 or older. During the years ended December 31, 2020 and 2019, respectively, 10 thousand and 75 thousand restricted shares were canceled or forfeited.

 

During the years ended December 31, 2020 and 2019, respectively, the Company issued 20 thousand to an employee, and 0 deferred stock units to non-employee directors for annual service grants or fees earned during the preceding quarter. Deferred stock units issued to directors in lieu of directors fees are 100% vested at the grant date; matching deferred stock units equal to 25% of directors’ fees deferred vest one year following the grant date or, if earlier, upon reaching age 65. Deferred stock units are payable in stock on a one-for-one basis. Payments related to the deferred stock units are generally distributable following termination of service, death or permanent disability.

 

Total compensation expense for deferred stock units, performance-based stock units and restricted stock was $0.5 million and $1.2 million, for the years ended December 31, 2020 and 2019, respectively. Unrecognized compensation expense related to deferred stock units, performance stock units and restricted stock at December 31, 2020 was $0.5 million. The total fair value of deferred stock units, performance stock units and restricted stock vested during the years ended December 31, 2020 and 2019 was $1.1 million and $1.2 million, respectively.

 

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

 

  

Shares

  Weighted Average Grant Date Fair Value 
  

(In thousands)

     

Unvested at January 1, 2019

  777  $14.08 

Granted

  31   12.12 

Vested

  (107)  11.79 

Forfeited

  (414)  14.28 

Unvested at December 31, 2019

  287   14.44 

Granted

  313   5.89 

Vested

  (174)  7.77 

Forfeited

  (139)  15.24 

Unvested at December 31, 2020

  287   8.78 

 

v3.20.4
Note 8 - Employee Benefit Plan
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Compensation and Employee Benefit Plans [Text Block]

8. Employee Benefit Plan

 

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, 2020 and 2019, were $0.2 million and $0.2 million, respectively.

 

v3.20.4
Note 9 - Income Taxes
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

9. Income Taxes

 

The federal and state provision (benefit) for income taxes was $0.0 million for the years ended December 31, 2020 and 2019.

 

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, 2020 and 2019 to net income (loss) before income taxes as a result of the following:

 

  

Year Ended December 31,

 
  

2020

  

2019

 

Statutory tax (benefit) expense

  21.0%  21.0%

Increase (decrease) in taxes resulting from:

        

Nondeductible expenses

  (4.1)  0.4 

Valuation allowance

  (16.9)  (21.4)
   0.0%  0.0%

 

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

 

  

As of December 31,

 
  

2020

  

2019

 
  

(In thousands)

 

Deferred tax asset:

        

Carrying values of ownership interests and other holdings

 $38,361  $32,760 

Tax loss and credit carryforwards

  76,023   70,914 

Disallowed interest carryforwards

  7,292   7,292 

Accrued expenses

  497   213 

Stock-based compensation

  302   432 

Other

  482   604 
   122,957   112,215 

Valuation allowance

  (122,957)  (112,215)

Net deferred tax asset

 $  $ 

 

As of December 31, 2020, the Company and its subsidiaries had federal net operating and capital loss carryforwards for tax purposes of approximately $362 million, of which approximately $37 million have an indefinite life. These carryforwards expire as follows: 

 

  

Total

 
  

(In thousands)

 

2021

 $3,728 

2022

  48,848 

2023

  52,512 

2024

  50,140 

2025 and thereafter

  170,189 
  $325,417 

 

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 no changes in the Company’s uncertain tax positions for the years ended December 31, 2020 and 2019.

 

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, 2020 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.

 

v3.20.4
Note 10 - Net Income (Loss) Per Share
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Earnings Per Share [Text Block]

10. Net Income (Loss) Per Share

 

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

 

  

Year Ended December 31,

 
  

2020

  

2019

 
  

(In thousands, except per share data)

 

Basic:

        

Net income (loss)

 $(37,615) $54,561 

Weighted average common shares outstanding

  20,751   20,636 

Net income (loss) per share

 $(1.81) $2.64 

Diluted:

        

Net income (loss)

 $(37,615) $54,561 

Weighted average common shares outstanding

  20,751   20,636 

Net income (loss) per share

 $(1.81) $2.64 

 

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, 2020 and 2019 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 December 31, 2020 and 2019, options to purchase 45 thousand and 179 thousand shares of common stock, respectively, at prices ranging from $10.37 to $17.11 per share, and $10.37 to $18.45 per share per share, respectively, were excluded from the calculation.

 

 

At December 31, 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.

 

 

For the year ended December 31, 2019, 0.8 million shares of common stock, respectively, representing the effect of assumed conversion of the 2019 Debentures were excluded from the calculations.

 

v3.20.4
Note 11 - Related Party Transactions
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Related Party Transactions Disclosure [Text Block]

11. Related Party Transactions

 

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.

 

v3.20.4
Note 12 - Commitments and Contingencies
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

12. Commitments and Contingencies

 

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 December 31, 2020 which related to one of the Company's private equity holdings.

 

In October 2001, the Company entered into an agreement with a former Chairman and Chief Executive Officer of the Company, to provide for annual payments of $0.65 million per year and certain health care and other benefits for life. The former executive passed away in 2019. Accordingly, the Company recorded a $1.7 million gain in Other income (loss), net which also eliminated the remaining projected benefits related to this agreement that were previously included in Accrued expenses and other current liabilities and Other long-term liabilities on the Consolidated Balance Sheets.

 

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 $2.3 million at December 31, 2020.

 

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 $1.8 million under the LTIP as of   December 31, 2020, which $1.5 million is estimated as current accrued compensation.

 

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.

 

v3.20.4
Note 13 - Supplemental Cash Flow Information
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Cash Flow, Supplemental Disclosures [Text Block]

13. Supplemental Cash Flow Information

 

During the years ended December 31, 2020 and 2019, the Company converted $6.8 million and $2.3 million, respectively, of advances into ownership interests. Cash paid for interest for the years ended December 31, 2020 and 2019 was $0.0 million and $11.5 million, respectively. Cash paid for taxes in each of the years ended December 31, 2020 and 2019 was $0.0 million.

 

v3.20.4
Note 14 - Segment Reporting
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

14. 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 December 31, 2020, the Company held ownership interests accounted for using the equity method in 12 non-consolidated companies. During 2019 we ceased using the equity method of accounting for Hoopla Software, Inc. and T-REX Group, Inc. as a result of other new investors diluting our interest. We have retained our ownership interests in those companies under the Other accounting method.

 

Certain of the Company’s ownership interests as of December 31, 2020 and 2019 included the following:

 

  Safeguard Primary Ownership as of December 31,  

Company Name

 

2020

 

2019

 

Accounting Method

Aktana, Inc.

  15.1%  17.8% 

Equity

Clutch Holdings, Inc.

  42.3%  41.2% 

Equity

Flashtalking, Inc.

  13.4%  10.1% 

Other

InfoBionic, Inc.

  25.2%  25.2% 

Equity

Lumesis, Inc.

  43.4%  43.5% 

Equity

MediaMath, Inc.

  13.3%  13.3% 

Other

meQuilibrium

  32.0%  32.7% 

Equity

Moxe Health Corporation

  27.6%  29.9% 

Equity

Prognos Health Inc.

  28.5%  28.7% 

Equity

QuanticMind, Inc. *

  24.2%  24.2% 

Equity

Syapse, Inc.

  18.9%  20.0% 

Equity

T-REX Group, Inc.

  13.5%  13.7% 

Other

Trice Medical, Inc.

  16.6%  16.6% 

Equity

WebLinc, Inc. *

  39.9%  38.5% 

Equity

Zipnosis, Inc

  37.2%  37.7% 

Equity

 

* These entities were sold subsequent to December 31, 2020.  See Note 16 - Subsequent Events, of the consolidated financials statements.

 

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

 

v3.20.4
Note 15 - Selected Quarterly Financial Information (Unaudited)
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Quarterly Financial Information [Text Block]

15. Selected Quarterly Financial Information (Unaudited)  

 

  

Three Months Ended

 
  

March 31

  

June 30

  

September 30 (b)

  

December 31 (b)

 
  

(In thousands, except per share data)

 

2020:

                

General and administrative expense

 $3,532  $2,028  $2,275  $1,631 

Operating loss

  (3,532)  (2,028)  (2,275)  (1,631)

Other income (loss), net

  (3,567)  (2,658)  (820)  (663)

Interest income

  105   52   52   52 

Equity income (loss), net

  (9,014)  (5,277)  (1,300)  (5,111)

Net loss before income taxes

  (16,008)  (9,911)  (4,343)  (7,353)

Income tax benefit (expense)

            

Net loss

 $(16,008) $(9,911) $(4,343) $(7,353)

Net loss per share (a)

                

Basic

 $(0.77) $(0.48) $(0.21) $(0.35)

Diluted

 $(0.77) $(0.48) $(0.21) $(0.35)

2019:

                

General and administrative expense

 $3,057  $2,603  $2,262  $2,060 

Operating loss

  (3,057)  (2,603)  (2,262)  (2,060)

Other income (loss), net

  (1,885)  3,118   8,777   2,245 

Interest income

  873   763   234   174 

Interest expense

  (2,535)  (5,682)  (5,806)   

Equity income (loss), net

  28,267   40,497   (3,440)  (1,057)

Net income (loss) before income taxes

  21,663   36,093   (2,497)  (698)

Income tax benefit (expense)

            

Net income (loss)

 $21,663  $36,093  $(2,497) $(698)

Net income (loss) per share (a)

                

Basic

 $1.05  $1.75  $(0.12) $(0.03)

Diluted

 $1.05  $1.75  $(0.12) $(0.03)

 

 

(a)

Per share amounts for the quarters have each been calculated separately. Accordingly, quarterly amounts may not add to the annual amounts because of differences in the average common shares outstanding during each period. Additionally, in regard to diluted per share amounts only, quarterly amounts may not add to the annual amounts because of the inclusion of the effect of potentially dilutive securities only in the periods in which such effect would have been dilutive, and because of the adjustments to net income (loss) for the dilutive effect of common stock equivalents and convertible securities at our ownership interests.

 

(b)

The three months ended December 31, 2019 includes equity income of $1.4 million related to an equity method investment that should have been recorded during the three months ended September 30, 2019. There was no impact on the full year results.

 

v3.20.4
Note 16 - Subsequent Events
12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Subsequent Events [Text Block]

16. Subsequent Events

 

In January 2021, WebLinc, Inc. was acquired by another entity.  To date, the Company received $3.2 million in cash proceeds and may receive additional amounts over the next 24 months based on certain transitional performance activities, which could be partially offset by indemnifiable claims.  During February 2021, QuanticMind, Inc. was acquired by another entity, however there were no resultant proceeds.

 

During February 2021, Syapse raised $68 million of preferred capital which reduced our ownership interest to approximately 11%.

 

v3.20.4
Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Principles of Consolidation

 

The consolidated financial statements include the accounts of Safeguard and all of its subsidiaries in which a controlling financial interest is maintained. All intercompany accounts and transactions are eliminated in consolidation.

 

Investment, Policy [Policy Text Block]

Principles of Accounting for Ownership Interests in Companies

 

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 the 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. 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 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. 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 investment 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 investments in Ownership interests and advances on the Consolidated Balance Sheets.

 

Use of Estimates, Policy [Policy Text Block]

Accounting Estimates

 

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, 2020, 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.

 

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents and Marketable Securities

 

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 determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. Held-to-maturity securities were carried at amortized cost, which approximated fair value. Marketable securities consisted of held-to-maturity securities, primarily consisting of government agency bonds, commercial paper and certificates of deposits. Marketable securities with a maturity date greater than one year from the balance sheet date would be considered long-term. 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.

 

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted Cash

 

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 Balance Sheets:

 

  

December 31, 2020

  

December 31, 2019

 
  

(In thousands)

 

Cash and cash equivalents

 $15,601  $25,028 

Restricted cash

     25 

Total cash, cash equivalents and restricted cash

 $15,601  $25,053 

 

Fair Value of Financial Instruments, Policy [Policy Text Block]

Financial Instruments

 

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. 

 

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

 

Property and equipment represents right-of-use assets resulting from the adoption of Accounting Standards Update ("ASU") No. 2016-02, Leases, and other previously existing leasehold improvements. The leasehold improvements were amortized over the shorter of the estimated useful lives or the expected remaining term of the lease. 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.     

 

Lessee, Leases [Policy Text Block]

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, 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, 2020 and 2019, respectively, and $0.6 million for each of the years ended December 31, 2020 and 2019.

 

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, 2020 follows:

 

  Operating lease payments  

Expected sublease receipts

 
  

(In thousands)

 

2021

 $595  $525 

2022

  601   540 

2023

  607   556 

2024

  613   573 

2025

  619   590 

2026

  208   199 

Thereafter

      

Total future minimum lease payments

  3,243   2,983 

Less imputed interest

  (863)    

Total operating lease liabilities

 $2,380     

 

Valuation of Credit Facility Repayment Feature, Policy [Policy Text Block]

Valuation of Credit Facility repayment feature

 

The fair value of the Credit Facility repayment feature (a Level 3 measurement) was determined quarterly based on the present value of make-whole interest payments that were expected to be paid based on cash flow estimates that included a probability weighted estimate of exit transactions, estimated follow-on deployments, estimated quarterly operating cash flows and other cash commitments that would have resulted in qualified cash exceeding the $50 million threshold specified in the Credit Facility. This fair value of the Credit Facility repayment feature was eliminated in July 2019 upon the repayment of the Credit Facility.

 

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

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), 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.

 

Income Tax, Policy [Policy Text Block]

Income Taxes

 

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.

 

Earnings Per Share, Policy [Policy Text Block]

Net Income (Loss) Per Share

 

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.

 

Segment Reporting, Policy [Policy Text Block]

Segment Information

 

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.

 

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 is 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 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, the Company's private, calendar year companies adopted the new 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 an increase in accumulated deficit and a decrease in 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 year ended December 31, 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. 

 

v3.20.4
Note 1 - General (Tables)
12 Months Ended
Dec. 31, 2020
Notes Tables  
Restrictions on Cash and Cash Equivalents [Table Text Block]
  

December 31, 2020

  

December 31, 2019

 
  

(In thousands)

 

Cash and cash equivalents

 $15,601  $25,028 

Restricted cash

     25 

Total cash, cash equivalents and restricted cash

 $15,601  $25,053 
Lessor, Operating Lease, Payment to be Received, Fiscal Year Maturity [Table Text Block]
  Operating lease payments  

Expected sublease receipts

 
  

(In thousands)

 

2021

 $595  $525 

2022

  601   540 

2023

  607   556 

2024

  613   573 

2025

  619   590 

2026

  208   199 

Thereafter

      

Total future minimum lease payments

  3,243   2,983 

Less imputed interest

  (863)    

Total operating lease liabilities

 $2,380     
v3.20.4
Note 2 - Ownership Interests and Advances (Tables)
12 Months Ended
Dec. 31, 2020
Notes Tables  
Schedule of Investments in and Advances to Affiliates, Schedule of Investments [Table Text Block]
  

December 31, 2020

  

December 31, 2019

 
  

(In thousands)

 

Equity Method:

        

Companies

 $27,550  $34,271 

Private equity funds

  271   271 
   27,821   34,542 

Other Method:

        

Companies

  19,683   27,031 

Private equity funds

  268   453 
   19,951   27,484 

Advances to companies (equity method)

  2,626   15,103 
  $50,398  $77,129 
Equity Method Investment Partner Company Results Of Operation [Table Text Block]
  

As of December 31,

 
  

2020

  

2019

 
  

(In thousands)

 

Balance Sheets:

        

Current assets

 $104,024  $91,968 

Non-current assets

  26,352   26,231 

Total assets

 $130,376  $118,199 

Current liabilities

 $72,972  $80,783 

Non-current liabilities

  105,506   87,081 

Shareholders’ deficit

  (48,102)  (49,665)

Total liabilities and shareholders’ deficit

 $130,376  $118,199 
         

Number of equity method ownership interests

  12   13 
Equity Method Investments [Table Text Block]
  

Year Ended December 31,

 
  

2020

  

2019

 
  

(In thousands)

 

Results of Operations:

        

Revenue

 $153,875  $145,632 

Gross profit

 $92,039  $78,465 

Net loss

 $(82,216) $(127,007)
v3.20.4
Note 7 - Stock-Based Compensation (Tables)
12 Months Ended
Dec. 31, 2020
Notes Tables  
Share-based Payment Arrangement, Activity [Table Text Block]
  

Year Ended December 31,

 
  

2020

  

2019

 
  

(In thousands)

 

General and administrative expense

 $965  $1,237 
  $965  $1,237 
Share-based Payment Arrangement, Option, Activity [Table Text Block]
  

Shares

  Weighted Average Exercise Price  

Weighted Average Remaining Contractual Life

  Aggregate Intrinsic Value 
  

(In thousands)

      

(In years)

  

(In thousands)

 

Outstanding at January 1, 2019

  410   14.66         

Options granted

              

Options exercised

              

Options canceled/forfeited

  (231)  14.19         

Outstanding at December 31, 2019

  179   15.27         

Options granted

              

Options exercised

              

Options canceled/forfeited

  (134)  14.36         

Outstanding at December 31, 2020

  45   14.20   2.29  $ 

Options exercisable at December 31, 2020

  22   14.48   3.08    

Shares available for future grant

  2,515             
Schedule Of Activity For Restricted Stock Units Deferred Stock Units And Performance Units [Table Text Block]
  

Shares

  Weighted Average Grant Date Fair Value 
  

(In thousands)

     

Unvested at January 1, 2019

  777  $14.08 

Granted

  31   12.12 

Vested

  (107)  11.79 

Forfeited

  (414)  14.28 

Unvested at December 31, 2019

  287   14.44 

Granted

  313   5.89 

Vested

  (174)  7.77 

Forfeited

  (139)  15.24 

Unvested at December 31, 2020

  287   8.78 
v3.20.4
Note 9 - Income Taxes (Tables)
12 Months Ended
Dec. 31, 2020
Notes Tables  
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]
  

Year Ended December 31,

 
  

2020

  

2019

 

Statutory tax (benefit) expense

  21.0%  21.0%

Increase (decrease) in taxes resulting from:

        

Nondeductible expenses

  (4.1)  0.4 

Valuation allowance

  (16.9)  (21.4)
   0.0%  0.0%
Schedule of Deferred Tax Assets and Liabilities [Table Text Block]
  

As of December 31,

 
  

2020

  

2019

 
  

(In thousands)

 

Deferred tax asset:

        

Carrying values of ownership interests and other holdings

 $38,361  $32,760 

Tax loss and credit carryforwards

  76,023   70,914 

Disallowed interest carryforwards

  7,292   7,292 

Accrued expenses

  497   213 

Stock-based compensation

  302   432 

Other

  482   604 
   122,957   112,215 

Valuation allowance

  (122,957)