##### Table of Contents





SECURITIES AND EXCHANGE
    COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934
  For the Fiscal Year Ended December 31,
    2010
  Commission File Number 1-5620
  Safeguard Scientifics,
    Inc.
 (Exact name of Registrant as
    specified in its charter)
  Pennsylvania

23-1609753(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer ID
    No.)435 Devon Park Drive
    Building 800
    Wayne, PA

19087(Zip Code)(Address of principal executive
    offices)   (610) 293-0600
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock ($.10 par value)

New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o
    (Do not check if a smaller reporting company)

Smaller reporting company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 





SAFEGUARD
    SCIENTIFICS, INC.
  FORM 10-K
  DECEMBER
    31, 2010
  
  PagePART IItem 1.

Business


3Item 1A.

Risk Factors


12Item 1B.

Unresolved Staff Comments


19Item 2.

Properties


19Item 3.

Legal Proceedings


19Item 4.

Reserved


19PART IIItem 5.

Market For Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


20Item 6.

Selected Consolidated Financial Data


22Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


24Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


39Item 8.

Financial Statements and Supplementary Data


40Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosures


83Item 9A.

Controls and Procedures


83Item 9B.

Other Information


84PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


84Item 11.

Executive Compensation


84Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


84Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


85Item 14.

Principal Accountant Fees and Services


85PART IVItem 15.

Exhibits and Financial Statement Schedules


86EXHIBIT 14.1EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 23.2EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2EXHIBIT 99.1   2




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##### Table of Contents



PART I
  Cautionary
    Note concerning Forward-Looking Statements
  Form 10-K
  Item 1.
    Business  Business
    Overview
      Life Sciences point-of-care
  Technology
      
    Deploy capital in companies within our strategic
    focus;
    Build value in partner companies by developing
    strong management teams, growing the companies organically and
    through acquisitions, and positioning the companies for
    liquidity at premium valuations;
    Realize the value of partner companies through
    selective, well-timed exits to maximize risk-adjusted
    value; and
    Provide the tools needed for investors to fully
    recognize the shareholder value that has been created by our
    efforts. 3




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
    finding opportunities to deploy our capital in additional
    partner companies and, possibly, extensions of our business
    model;
    helping partner companies to achieve additional market
    penetration, revenue growth, cash flow improvement and growth in
    long-term value; and
    realizing value in our partner companies if and when we believe
    doing so will maximize value for our shareholders.    Significant
    2010 Highlights
    
    During 2010, we deployed $23.9 million in additional
    capital to support the growth of the partner companies which we
    already had an interest in at December 31, 2009.
    In March 2010, Safeguard entered into privately negotiated
    agreements with certain institutional holders of an aggregate of
    $46.9 million in face value of our 2.625% senior
    convertible debentures due 2024 to exchange the debentures held
    by such holders for the same face amount of newly issued
    10.125% senior convertible debentures, due 2014. The
    remaining $31.3 million outstanding face amount of the 2024
    debentures remain outstanding.
    In September 2010, Safeguard deployed $6.8 million in Good
    Start Genetics, Inc., co-leading an $18.0 million
    financing. Good Start Genetics, a diagnostic company developing
    a clinical diagnostic DNA sequencing platform, is using proceeds
    from the financing to complete the development and launch of the
    companys pre-pregnancy genetic test, which utilizes an
    advanced DNA sequencing technology to screen for a panel of
    genetic disorders, including those recommended by the American
    Congress of Obstetricians and Gynecologists and the American
    College of Medical Genetics. In addition, proceeds will be used
    for additional product development, sales and marketing, and
    other general operation and working capital needs.
    In December 2010, Safeguard received net proceeds from the
    successful completion of GE Healthcares acquisition of
    partner company Clarient, Inc. (NASDAQ: CLRT) for
    $146.5 million. The taxable gain on the transaction will be
    offset by tax loss carryforwards.
    In December 2010, Safeguard received $32.3 million in
    initial sale proceeds from the successful completion of Eli
    Lilly and Companys (NYSE: LLY) acquisition of partner
    company Avid Radiopharmaceuticals, Inc. (Avid).
    Under terms of the Lilly definitive agreement, Lilly acquired
    all outstanding shares of Avid for an upfront payment of
    $300 million, adjusted based on existing cash on hand at
    closing, and subject to a portion of such amounts being held in
    escrow. Safeguard expects to receive an additional
    $3.4 million currently held in escrow and could receive up
    to an additional $60.0 million based upon contingent
    consideration payable upon the achievement of future regulatory
    and commercial milestones. It is difficult to assess the
    likelihood of receiving some or all of such amounts, or the
    timing thereof.
    Subsequent to the end of 2010, NuPathe Inc.s (Nasdaq:
    PATH) New Drug Application (NDA) for Zelrix was
    accepted for filing by the U.S. Food and Drug
    Administration (FDA). NuPathe submitted the Zelrix
    NDA on October 29, 2010. NuPathe received a Prescription
    Drug User Fee Act date of August 29, 2011. Zelrix is the
    first ever submission to the FDA of a transdermal patch for the
    treatment of migraine. In August, NuPathe raised
    $43 million in net proceeds from its initial public
    offering of public stock. The company continues to prepare for
    commercial launch. 4




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##### Table of Contents



Our
    Strategy
    
    Maturity  Many existing technologies,
    solutions and therapies are reaching the end of their designed
    lives or patent protection; the population of the U.S. is
    aging; IT infrastructure is maturing and the sectors are
    consolidating; and many businesses based on once-novel
    technologies are now facing consolidation and other competitive
    pressures.
    Migration  Many technology platforms
    are migrating to newer technologies with changing cost
    structures; many medical treatments are moving toward earlier
    stage intervention or generics; there is a migration from
    generalized treatments to personalized medicine; many business
    models are migrating towards different revenue-generation
    models, integrating technologies and services; and traditional
    media such as newspapers and advertising are migrating online.
    Convergence  Many technology and life
    sciences businesses are intersecting in fields like medical
    devices and diagnostics for targeted therapies. Within life
    sciences itself, devices, diagnostics and therapeutics are
    converging.
    Compliance Regulatory compliance is
    driving buying behavior in technology and life sciences. HIPPA,
    Sarbanes-Oxley, the FDA and the SEC are all telling businesses
    how to spend money.
    Cost containment  The importance of
    cost containment grows as healthcare costs and IT infrastructure
    maintenance costs grow.      Identifying
    Partner Company Opportunities
  go-to-market
  
    operating in large
    and/or
    growing markets;
    with barriers to entry by competitors, such as proprietary
    technology and intellectual property, or other competitive
    advantages;
    with capital requirements of up to $25 million; and
    with a compelling growth strategy.    point-of-care
   5




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Competition.
  
    responsive operational assistance, including strategy design and
    execution, business development, corporate development, sales,
    marketing, finance, risk management, human resources and legal
    support;
    the flexibility to structure minority or majority transactions
    with or without debt;
    occasional liquidity opportunities for founders and existing
    investors;
    a focus on maximizing risk-adjustedvalue growth, rather
    than absolutevalue growth within a narrow or
    predetermined time frame;
    interim C-level management support, as needed;
    opportunities to leverage Safeguards balance sheet for
    borrowing and stability; and
    a record of building value in our partner companies.  Helping
    Our Partner Companies Build Value
    
    applying our expertise to support a companys introduction
    of new products and services;
    leveraging our market knowledge to generate additional growth
    opportunities;
    leveraging our business contacts and relationships; and
    identifying and evaluating potential acquisitions and providing
    capital to pursue potential acquisitions to accelerate growth.  Strategic Support.
  
    defining short and long-term strategic goals;
    identifying and planning for the critical success factors to
    reach these goals;
    identifying and addressing the challenges and operational
    improvements required to achieve the critical success factors
    and, ultimately, the strategic goals;
    identifying and implementing the business measurements that we
    and others will apply to measure a companys
    success; and
    providing capital to drive growth.  Management and Operational Support.
 6




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##### Table of Contents



Realizing
    Value
    Our
    Partner Companies
    LIFE
    SCIENCES PARTNER COMPANIES
  Advanced
    BioHealing, Inc.
    (Safeguard Ownership: 28.1%)  ® www.advancedbiohealing.com
  Alverix,
    Inc.
    (Safeguard Ownership: 49.6%)  Point-of-Care 30-year www.alverix.com
  off-the-shelf
 7




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Good
    Start Genetics, Inc.
    (Safeguard Ownership: 26.3%)  www.goodstartgenetics.com
    Molecular
    Biometrics, Inc.
    (Safeguard Ownership: 35.0%)  tm www.molecularbiometrics.com
    NuPathe,
    Inc. (Nasdaq: PATH)
    (Safeguard Ownership: 18.1%)  tm www.nupathe.com
  tm
  Tengion,
    Inc. (Nasdaq: TNGN)
    (Safeguard Ownership: 4.8%)  tm
 8




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##### Table of Contents



www.tengion.com
      TECHNOLOGY
    PARTNER COMPANIES
  AdvantEdge
    Healthcare Solutions, Inc.
    (Safeguard Ownership: 40.2%)  www.ahsrcm.com
    below-to-average
  Beyond.com,
    Inc.
    (Safeguard Ownership: 38.3%)  one-of-a-kind www.beyond.com
      Bridgevine,
    Inc.
    (Safeguard Ownership: 22.8%)  tm www.bridgevine.com
 9




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MediaMath,
    Inc.
    (Safeguard Ownership: 17.3%)  ® www.mediamath.com
      Portico
    Systems, Inc.
    (Safeguard Ownership: 45.4%)  end-to-end
    SafeCentral,
    Inc.
    (Safeguard Ownership: 20.1%)  end-to-end man-in-the-middle www.safecentral.com
   10




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Swap.com
    (Safeguard Ownership: 45.6%)    e-Commerce
  Other
    Initiatives
    FINANCIAL
    INFORMATION ABOUT OPERATING SEGMENTS
    OTHER
    INFORMATION
    AVAILABLE
    INFORMATION
  Form 10-K, Form 10-Q, Form 8-K, 1-800-SEC-0330. www.sec.gov www.safeguard.com.
  Form 10-K.
   11




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Item 1A.
    Risk
    Factors  and/or
  Our
    business depends upon our ability to make good decisions
    regarding the deployment of capital into new or existing partner
    companies and, ultimately, the performance of our partner
    companies, which is uncertain.
    
    most of our partner companies have a history of operating losses
    and/or
    limited operating history;
    the intense competition affecting the products and services our
    partner companies offer could adversely affect their businesses,
    financial condition, results of operations and prospects for
    growth;
    the inability to adapt to changing marketplaces;
    the inability to manage growth;
    the need for additional capital to fund their operations, which
    we may not be able to fund or which may not be available from
    third parties on acceptable terms, if at all;
    the inability to protect their proprietary rights
    and/or
    infringing on the proprietary rights of others;
    that certain of our partner companies could face legal
    liabilities from claims made against them based upon their
    operations, products or work;
    the impact of economic downturns on their operations, results
    and growth prospects;
    the inability to attract and retain qualified personnel; and
    the existence of government regulations and legal uncertainties
    may place financial burdens on the businesses of our partner
    companies.    Our
    partner companies (and the nature of our interests in them)
    could vary widely from period to period.
    
    change the individual
    and/or types
    of partner companies on which we focus;
    sell some or all of our interests in any of our partner
    companies; or
    otherwise change the nature of our interests in our partner
    companies.     12




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Our
    business model does not rely, or plan, upon the receipt of
    operating cash flows from our partner companies. Our partner
    companies generally provide us with no cash flow from their
    operations. We rely on cash on hand, liquidity events and our
    ability to generate cash from capital raising activities to
    finance our operations.
    Fluctuations
    in the price of the common stock of our publicly traded holdings
    may affect the price of our common stock.
    Intense
    competition from other acquirors of interests in companies could
    result in lower gains or possibly losses on our partner
    companies.
    We may
    be unable to obtain maximum value for our holdings or to sell
    our holdings on a timely basis.
     13




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Our
    success is dependent on our executive management.
    Our
    business strategy may not be successful if valuations in the
    market sectors in which our partner companies participate
    decline.
    Our
    partner companies could make business decisions that are not in
    our best interests or with which we do not agree, which could
    impair the value of our holdings.
    
    the management of a partner company having economic or business
    interests or objectives that are different from ours; and
    the partner companies not taking our advice with respect to the
    financial or operating issues they may encounter.    We may
    have to buy, sell or retain assets when we would otherwise not
    wish to do so in order to avoid registration under the
    Investment Company Act.
     14




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Economic
    disruptions and downturns may have negative repercussions for
    the Company.
    We
    have had material weaknesses in our internal controls over
    financial reporting in the recent past and cannot provide
    assurance that additional material weaknesses will not be
    identified in the future. Our failure to effectively maintain
    our internal control over financial reporting could result in
    material misstatements in our Consolidated Financial Statements
    which could require us to restate financial statements, cause us
    to fail to meet our reporting obligations, cause investors to
    lose confidence in our reported financial information and/or
    have a negative effect on our stock price.
  and/or
  Risks
    Related to our Partner Companies
  Most
    of our partner companies have a history of operating losses
    and/or limited operating history and may never be
    profitable.
    Our
    partner companies face intense competition, which could
    adversely affect their business, financial condition, results of
    operations and prospects for growth.
   15




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The
    success or failure of many of our partner companies is dependent
    upon the ultimate effectiveness of newly-created information
    technologies, medical devices, healthcare diagnostics
    etc.
    Our
    partner companies may fail if they do not adapt to changing
    marketplaces.
      
    rapidly changing technology;
    evolving industry standards;
    frequently introducing new products and services;
    shifting distribution channels;
    evolving government regulation;
    frequently changing intellectual property landscapes; and
    changing customer demands.    Our
    partner companies may grow rapidly and may be unable to manage
    their growth.
    
    improve, upgrade and expand their business infrastructures;
    scale up production operations;
    develop appropriate financial reporting controls;
    attract and maintain qualified personnel; and
    maintain appropriate levels of liquidity.   16




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Based
    on our business model, some or all of our partner companies will
    need to raise additional capital to fund their operations at any
    given time. We may not be able to fund some or all of such
    amounts and such amounts may not be available from third parties
    on acceptable terms, if at all.
    Economic
    disruptions and downturns may negatively affect our partner
    companies plans and their results of
    operations.
    and/or and/or and/or
  Some
    of our partner companies may be unable to protect their
    proprietary rights and may infringe on the proprietary rights of
    others.
       17




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Certain
    of our partner companies could face legal liabilities from
    claims made against their operations, products or
    work.
    Our
    partner companies success depends on their ability to
    attract and retain qualified personnel.
    Government
    regulations and legal uncertainties may place financial burdens
    on the businesses of our partner companies.
    Some
    of our partner companies are subject to significant
    environmental, health and safety regulation.
   18




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##### Table of Contents



Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings  Form 10-K
  Item 4.
    Reserved  ANNEX TO
    PART I  EXECUTIVE OFFICERS OF THE
    REGISTRANT
  Name

Age

Position

Executive Officer SincePeter J. Boni


65


President, Chief Executive Officer and Director


2005James A. Datin


48


Executive Vice President and Managing Director, Life Sciences


2005Kevin L. Kemmerer


42


Executive Vice President and Managing Director, Technology


2008Brian J. Sisko


50


Senior Vice President and General Counsel


2007Stephen T. Zarrilli


49


Senior Vice President and Chief Financial  Officer


2008        19




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##### Table of Contents



PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities    High

LowFiscal year 2010:First quarter

$
13.34


$
10.07Second quarter


14.35



10.02Third quarter


13.27



10.04Fourth quarter


17.44



12.25Fiscal year 2009:First quarter

$
5.16


$
2.04Second quarter


8.40



3.48Third quarter


11.94



6.60Fourth quarter


12.47



8.60  20




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##### Table of Contents



one-for-six
    line-of-business line-of-business
  Comparison
    of Cumulative Total Returns
  
  
    Assumes reinvestment of dividends. We have not distributed cash
    dividends during this period.
    Assumes an investment of $100 on December 31, 2005. 21




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##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data    December 31,2010

2009

2008

2007

2006(In thousands)Consolidated Balance Sheet Data:Cash and cash equivalents

$
183,419


$
67,347


$
75,051


$
96,201


$
60,381Short-term investments


42,411



39,066



14,701



590



94,155Restricted cash equivalents


16,774















Cash held in escrow


6,434



6,910



6,934



22,686



19,398Working capital of continuing operations


197,769



105,983



88,400



97,184



133,643Total assets of continuing operations


337,050



282,099



232,402



258,075



277,019Convertible senior debentures


75,919



78,225



86,000



129,000



129,000Long-term debt, net of current portion










345



906



1,939Other long-term liabilities


5,311



5,461



9,600



9,111



9,276Total equity


246,936



190,507



104,710



155,831



216,698  22




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##### Table of Contents



Consolidated
    Statements of Operations Data
  Year Ended December 31,2010


2009


2008


2007


2006(In thousands except per share amounts)Revenue

$



$
34,839


$
73,736


$
42,995


$
27,723Operating Expenses:Cost of sales






13,811



33,007



26,914



19,824Selling, general and administrative


20,847



37,214



60,744



50,783



44,924Total operating expenses


20,847



51,025



93,751



77,697



64,748Operating loss


(20,847
)


(16,186
)


(20,015
)


(34,702
)


(37,025
)Other income (loss), net


74,809



108,881



10,280



(5,077
)


5,762Interest income


718



480



3,097



7,520



6,805Interest expense


(5,737
)


(3,164
)


(4,732
)


(5,489
)


(5,203
)Equity loss


(21,829
)


(23,227
)


(34,697
)


(15,178
)


(3,732
)Net income (loss) from continuing operations before income taxes


27,114



66,784



(46,067
)


(52,926
)


(33,393
)Income tax benefit






14



24



687



1,260Net income (loss) from continuing operations


27,114



66,798



(46,043
)


(52,239
)


(32,133
)Income (loss) from discontinued operations, net of tax






1,975



(9,620
)


(17,282
)


70,358Net income (loss)


27,114



68,773



(55,663
)


(69,521
)


38,225Net (income) loss attributable to noncontrolling interest






(1,163
)


3,650



3,653



7,218Net income (loss) attributable to Safeguard Scientifics,
    Inc.

$
27,114


$
67,610


$
(52,013
)

$
(65,868
)

$
45,443Basic Income (Loss) Per Share:Net income (loss) from continuing operations attributable to
    Safeguard Scientifics, Inc. common shareholders

$
1.32


$
3.26


$
(2.10
)

$
(2.28
)

$
(1.32
)Net income (loss) from discontinued operations attributable to
    Safeguard Scientifics, Inc. common shareholders






0.07



(0.46
)


(0.96
)


3.54Net income (loss) attributable to Safeguard Scientifics, Inc.
    common shareholders

$
1.32


$
3.33


$
(2.56
)

$
(3.24
)

$
2.22Shares used in computing basic income (loss) per share


20,535



20,308



20,326



20,328



20,246Diluted Income (Loss) Per Share:Net income (loss) from continuing operations attributable to
    Safeguard Scientifics, Inc. common shareholders

$
1.26


$
3.08


$
(2.10
)

$
(2.28
)

$
(1.32
)Net income (loss) from discontinued operations attributable to
    Safeguard Scientifics, Inc. common shareholders






0.06



(0.46
)


(0.96
)


3.54Net income (loss) attributable to Safeguard Scientifics, Inc.
    common shareholders

$
1.26


$
3.14


$
(2.56
)

$
(3.24
)

$
2.22Shares used in computing diluted income (loss) per share


21,507



22,383



20,326



20,328



20,246  23




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Cautionary
    Note concerning Forward-Looking Statements
  Form 10-K
  Overview
      Life Sciences point-of-care
  Technology
  Principles
    of Accounting for Ownership Interests in Partner
    Companies
  available-for-sale.
  Consolidation Method.
 24




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Fair Value Method. mark-to-market
  Equity Method.
    Cost Method.
  Available-for-Sale
    Securities. available-for-sale Available-for-sale
  Critical
    Accounting Policies and Estimates
    
    Impairment of ownership interests in and advances to partner
    companies;
    Income taxes;
    Commitments and contingencies; and
    Stock-based compensation. 25




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##### Table of Contents



Impairment
    of Ownership Interests In and Advances to Partner
    Companies
          Year Ended December 31,Accounting Method

2010


2009


2008(In millions)Equity

$
4.8


$
4.1


$
6.6Cost


2.1



10.1



2.3Available-for-sale


1.1







Total

$
8.0


$
14.2


$
8.9   available-for-sale
  Income
    Taxes
   26




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##### Table of Contents



Commitments
    and Contingencies
    Stock-Based
    Compensation
      Results
    of Operations
  mark-to-market mark-to-market
   27




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##### Table of Contents



Year Ended December 31,2010


2009


2008(In thousands)Life Sciences

$
70,658


$
99,289


$
(26,317
)Technology


(10,003
)


(12,742
)


(12,947
)Total segments


60,655



86,547



(39,264
)Other items:Corporate operations


(33,541
)


(19,763
)


(6,803
)Income tax benefit






14



24Total other items


(33,541
)


(19,749
)


(6,779
)Net income (loss) from continuing operations


27,114



66,798



(46,043
)Income (loss) from discontinued operations, net of tax






1,975



(9,620
)Net income (loss)


27,114



68,773



(55,663
)Net (income) loss attributable to noncontrolling interest






(1,163
)


3,650Net income (loss) attributable to Safeguard Scientifics, Inc.

$
27,114


$
67,610


$
(52,013
)        28




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##### Table of Contents



Life
    Sciences
    Safeguard Primary Ownership as ofDecember 31,

AccountingPartner Company

2010

2009

2008

MethodAdvanced BioHealing


28.1
%


28.3
%


28.3
%

EquityAlverix


49.6
%


49.6
%


50.0
%

EquityGood Start Genetics


26.3
%


NA



NA


EquityMolecular Biometrics


35.0
%


35.4
%


37.8
%

EquityNuPathe


18.1
%


22.9
%


23.5
%

Available-for-sale(1)Tengion


4.8
%


4.5
%


4.5
%

Available-for-sale(2)     (1)
    
    The Companys ownership interest in NuPathe is accounted
    for as
    available-for-sale
    securities following NuPathe s completion of an initial
    public offering in August 2010. We previously accounted for
    NuPathe under the equity method.(2)
    
    The Companys ownership interest in Tengion is accounted
    for as
    available-for-sale
    securities following Tengions completion of an initial
    public offering in April 2010. We previously accounted for
    Tengion under the cost method.    Year Ended December 31,2010


2009


2008(In thousands)Revenue

$



$
34,839


$
73,736Operating Expenses:Cost of sales






13,811



33,007Selling, general and administrative






19,407



42,329Total operating expenses






33,218



75,336Operating income (loss)






1,621



(1,600
)Other income (loss), net


82,444



114,222



Interest income






4



21Interest expense






(275
)


(880
)Equity loss


(11,786
)


(16,283
)


(23,858
)Net income (loss) from continuing operations before income taxes

$
70,658


$
99,289


$
(26,317
)   Year
    ended December 31, 2010 versus year ended December 31,
    2009
    Other Income (Loss), Net. mark-to-market
 29




---



##### Table of Contents



available-for-sale.
  mark-to-market
  Equity Loss.
    Year
    ended December 31, 2009 versus year ended December 31,
    2008
  Equity Loss.
  Technology
    Safeguard Primary Ownership as ofDecember 31


AccountingPartner Company

2010


2009


2008


MethodAHS


40.2
%


39.7
%


37.7
%

EquitySafeCentral


20.1
%


20.0
%


20.0
%

EquityBeyond.com


38.3
%


38.3
%


37.1
%

EquityBridgevine


22.8
%


23.6
%


20.8
%

EquityMediaMath


17.3
%


17.5
%


NA


CostPortico Systems


45.4
%


45.4
%


46.8
%

EquitySwap.com


45.6
%


29.3
%


29.3
%

Equity  30




---



##### Table of Contents



Year Ended December 31.2010


2009


2008(In thousands)Other income (loss), net

$
36


$
(5,846
)

$
(2,251
)Equity loss


(10,039
)


(6,896
)


(10,696
)Net loss from continuing operations before income taxes

$
(10,003
)

$
(12,742
)

$
(12,947
)   Year
    ended December 31, 2010 versus year ended December 31,
    2009
  Other Income (Loss), Net.
  Equity Loss.
  Year
    ended December 31, 2009 versus year ended December 31,
    2008
  Other Income (Loss), Net.
  Equity Loss.
  Corporate
    Operations
  Year Ended December 31,2010


2009


2008(In thousands)General and administrative

$
(16,949
)

$
(14,695
)

$
(16,511
)Stock-based compensation


(3,777
)


(2,982
)


(1,738
)Depreciation


(121
)


(130
)


(166
)Interest income


718



476



3,076Interest expense


(5,737
)


(2,889
)


(3,852
)Other income (loss), net


(7,671
)


505



12,531Equity loss


(4
)


(48
)


(143
)$
(33,541
)

$
(19,763
)

$
(6,803
)   Year
    Ended December 31, 2010 versus year ended December 31,
    2009
  General and Administrative.
 31




---



##### Table of Contents



Stock-Based Compensation.
    Interest Income.
    Interest Expense.
    Other Income (Loss), net.
    Income
    Tax (Expense) Benefit
    Discontinued
    Operations
   32




---



##### Table of Contents



Liquidity
    And Capital Resources
  Parent
    Company
             33




---



##### Table of Contents



34




---



##### Table of Contents



one-for-six
            19-30%.
 35




---



##### Table of Contents



Analysis
    of Parent Company Cash Flows
    Year Ended December 31,2009


2008(In thousands)Net cash used in operating activities

$
(14,682
)

$
(14,124
)Net cash provided by investing activities


15,861



27,327Net cash used in financing activities


(7,045
)


(34,675
)$
(5,866
)

$
(21,472
)   Cash Used
    In Operating Activities
  Year ended December 31, 2009 versus year ended
    December 31, 2008.
  Cash
    Provided by Investing Activities
  Year ended December 31, 2009 versus year ended
    December 31, 2008.
  Cash Used
    In Financing Activities
  Year ended December 31, 2009 versus year ended
    December 31, 2008.
  Consolidated
    Working Capital From Continuing Operations
   36




---



##### Table of Contents



Analysis
    of Consolidated Cash Flows
    Year Ended December 31,2010


2009


2008(In thousands)Net cash used in operating activities

$
(16,019
)

$
(19,170
)

$
(21,514
)Net cash provided by investing activities


131,856



47



32,805Net cash provided by (used in) financing activities


235



11,419



(31,386
)$
116,072


$
(7,704
)

$
(20,095
)   Cash Used
    In Operating Activities
  Year ended December 31, 2010 versus year ended
    December 31, 2009.
  Year ended December 31, 2009 versus year ended
    December 31, 2008.
  Cash
    Provided by Investing Activities
  Year ended December 31, 2010 versus year ended
    December 31, 2009.
  Year ended December 31, 2009 versus year ended
    December 31, 2008.
  Cash
    Provided by (Used In) Financing Activities
  Year ended December 31, 2010 versus year ended
    December 31, 2009.
 37




---



##### Table of Contents



Year ended December 31, 2009 versus year ended
    December 31, 2008.
  Contractual
    Cash Obligations and Other Commercial Commitments
    Payments Due by Period2012 and


2014 and


Due afterTotal


2011


2013


2015


2015(In millions)Contractual Cash Obligations:Convertible senior debentures(a)

$
78.2


$
31.3


$



$
46.9


$
Operating leases


1.9



0.5



1.0



0.4



Funding commitments(b)


0.4



0.4











Potential clawback liabilities(c)


2.2



0.9



1.3







Other long-term obligations(d)


4.0



0.8



1.5



1.5



0.2Total Contractual Cash Obligations

$
86.7


$
33.9


$
3.8


$
48.8


$
0.2   Amount of Commitment Expiration by Period2012 and


2014 and


AfterTotal


2011


2013


2015


2015(In millions)Other Commitments:Letters of credit(e)

$
6.3


$



$



$



$
6.3     (a)
    
    In February 2004, we completed the issuance of
    $150.0 million of our 2024 Debentures with a stated
    maturity of March 15, 2024. Through December 31, 2010,
    we have repurchased $71.8 million in face value of the 2024
    Debentures. The 2024 Debentures holders have the right to
    require the Company to repurchase the remaining outstanding 2024
    Debentures on March 21, 2011, March 20, 2014 or
    March 20, 2019 at a repurchase price equal to 100% of their
    respective face amount, plus accrued and unpaid interest. On
    March 10, 2010, we entered into agreements with
    institutional holders of an aggregate of $46.9 million in
    face value of our 2024 Debentures to exchange the 2024
    Debentures held by such holders for $46.9 million in face
    amount of our 2014 Debentures. The exchange became effective on
    March 26, 2010. Although contractually due in 2024, the
    remaining $31.3 million outstanding face amount of the 2024
    Debentures has been classified as due in 2011 to reflect the
    first required repurchase date and conform with the presentation
    of the 2024 Debentures as a current liability on the
    Consolidated Balance Sheet at December 31, 2010.(b)
    
    These amounts include $0.4 million in conditional
    commitments to provide non-consolidated partner companies with
    additional funding. Also included are funding commitments to
    private equity funds which have been included in the respective
    years based on estimated timing of capital calls provided to us
    by the funds management.(c)
    
    We have received distributions as both a general partner and a
    limited partner from certain private equity funds. Under certain
    circumstances, we may be required to return a portion or all the
    distributions we received as a general partner of a fund for a
    further distribution to such funds limited partners
    (clawback). The maximum clawback we could be
    required to return is approximately $2.2 million, of which
    $0.9 million was reflected in Accrued expenses and other
    current liabilities and $1.3 million was reflected in Other
    long-term liabilities on the Consolidated Balance Sheets.(d)
    
    Reflects the estimated amount payable to our former Chairman and
    CEO under an ongoing agreement.(e)
    
    A $6.3 million letter of credit is provided to the landlord
    of CompuComs Dallas headquarters lease as required in
    connection with our sale of CompuCom in 2004. 38




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk      FairAfter

Value atLiabilities

2011

2012

2013

2013

December 31, 20102024 Debentures due by year (in millions)

$
31.3


$



$



$



$
30.8Fixed interest rate


2.625
%


2.625
%


2.625
%


2.625
%


N/AInterest expense (in millions)

$
0.8


$
0.8


$
0.8


$
8.4



N/A2014 Debentures due by year (in millions)

$



$



$



$
46.9


$
63.4Fixed interest rate


10.125
%


10.125
%


10.125
%


10.125
%


N/AInterest expense (in millions)

$
5.5


$
5.6


$
5.8


$
1.2



N/A      39




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  Form 10-K.
   
 PageReport of Independent Registered Public
    Accounting Firm


41Report of Independent Registered Public
    Accounting Firm


42Consolidated Balance Sheets as of
    December 31, 2010 and 2009


43Consolidated Statements of Operations for the
    years ended December 31, 2010, 2009 and 2008


44Consolidated Statements of Comprehensive Income
    (Loss) for the years ended December 31, 2010, 2009 and
    2008


45Consolidated Statements of Changes in Equity for
    the years ended December 31, 2010, 2009 and 2008


46Consolidated Statements of Cash Flows for the
    years ended December 31, 2010, 2009 and 2008


47Notes to Consolidated Financial Statements


48   40




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm     Internal Control  Integrated Framework
        Internal Control  Integrated
    Framework
    
    41




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           Internal Control 
    Integrated Framework
  
    42




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.CONSOLIDATED BALANCE SHEETS
  As of December 31,2010


2009(In thousands except per share data)ASSETSCurrent Assets:Cash and cash equivalents

$
183,419


$
67,347Cash held in escrow


6,434



6,910Marketable securities


42,411



39,066Restricted cash equivalents


4,893



Prepaid expenses and other current assets


785



566Total current assets


237,942



113,889Property and equipment, net


295



310Ownership interests in and advances to partner companies
    ($80,483 at fair value at December 31, 2009)


60,761



167,387Available-for-sale
    securities


25,447



Long-term restricted cash equivalents


11,881



Other


724



513Total Assets

$
337,050


$
282,099LIABILITIES AND EQUITYCurrent Liabilities:Convertible senior debentures  current

$
31,289


$
Accounts payable


493



156Accrued compensation and benefits


4,168



3,425Accrued expenses and other current liabilities


4,223



4,325Total current liabilities


40,173



7,906Other long-term liabilities


5,311



5,461Convertible senior debentures  non-current


44,630



78,225Commitments and contingenciesEquity:Preferred stock, $0.10 par value; 1,000 shares
    authorized






Common stock, $0.10 par value; 83,333 shares
    authorized; 20,630 and 20,420 shares issued and outstanding
    in 2010 and 2009, respectively


2,063



2,042Additional paid-in capital


806,859



790,868Accumulated deficit


(574,802
)


(601,916
)Accumulated other comprehensive income


12,816



Treasury stock, at cost






(487
)Total equity


246,936



190,507Total Liabilities and Equity

$
337,050


$
282,099    43




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended December 31,2010


2009


2008(In thousands except per share data)Revenue

$



$
34,839


$
73,736Operating Expenses:Cost of sales






13,811



33,007Selling, general and administrative


20,847



37,214



60,744Total operating expenses


20,847



51,025



93,751Operating loss


(20,847
)


(16,186
)


(20,015
)Other income (loss), net


74,809



108,881



10,280Interest income


718



480



3,097Interest expense


(5,737
)


(3,164
)


(4,732
)Equity loss


(21,829
)


(23,227
)


(34,697
)Net income (loss) from continuing operations before income taxes


27,114



66,784



(46,067
)Income tax benefit






14



24Net income (loss) from continuing operations


27,114



66,798



(46,043
)Income (loss) from discontinued operations, net of tax






1,975



(9,620
)Net income (loss)


27,114



68,773



(55,663
)Net (income) loss attributable to noncontrolling interest






(1,163
)


3,650Net income (loss) attributable to Safeguard Scientifics,
    Inc.

$
27,114


$
67,610


$
(52,013
)Basic Income (Loss) Per Share:Net income (loss) from continuing operations attributable to
    Safeguard Scientifics, Inc. common shareholders

$
1.32


$
3.26


$
(2.10
)Net income (loss) from discontinued operations attributable to
    Safeguard Scientifics, Inc. common shareholders






0.07



(0.46
)Net income (loss) attributable to Safeguard Scientifics, Inc.
    common shareholders

$
1.32


$
3.33


$
(2.56
)Diluted Income (Loss) Per Share:Net income (loss) from continuing operations attributable to
    Safeguard Scientifics, Inc. common shareholders

$
1.26


$
3.08


$
(2.10
)Net income (loss) from discontinued operations attributable to
    Safeguard Scientifics, Inc. common shareholders






0.06



(0.46
)Net income (loss) attributable to Safeguard Scientifics, Inc.
    common shareholders

$
1.26


$
3.14


$
(2.56
)Average shares used in computing income (loss) per share:Basic


20,535



20,308



20,326Diluted


21,507



22,383



20,326Amounts attributable to Safeguard Scientifics, Inc. common
    shareholders:Net income (loss) from continuing operations

$
27,114


$
66,240


$
(42,777
)Net income (loss) from discontinued operations






1,370



(9,236
)Net income (loss) attributable to Safeguard Scientifics,
    Inc.

$
27,114


$
67,610


$
(52,013
)    44




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (LOSS)
  Year Ended December 31,2010


2009


2008(In thousands)Net income (loss)

$
27,114


$
68,773


$
(55,663
)Other comprehensive income (loss), before taxes:Unrealized net gain on
    available-for-sale
    securities


11,708







Reclassification adjustment for other than temporary impairment
    of
    available-for-sale
    securities included in net income (loss)


1,108







Foreign currency translation adjustments






(2
)


(54
)Reclassification adjustment for deconsolidation of subsidiary






31



Total comprehensive income (loss)


39,930



68,802



(55,717
)Comprehensive (income) loss attributable to the noncontrolling
    interest






(1,163
)


3,650Comprehensive income (loss) attributable to Safeguard
    Scientifics, Inc.

$
39,930


$
67,639


$
(52,067
)    45




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.CONSOLIDATED STATEMENTS OF CHANGES IN
    EQUITY
  AccumulatedOtherComprehensive








AdditionalAccumulated


Income


Common Stock


Paid-In


Treasury Stock


NoncontrollingTotal


Deficit


(Loss)


Shares


Amount


Capital


Shares


Amount


Interest(In thousands)Balance  December 31, 2007

$
155,831


$
(617,513
)

$
25



20,187


$
2,019


$
768,608






$



$
2,692Net loss


(55,663
)


(52,013
)


























(3,650
)Stock options exercised, net


115











4







33



(12
)


82



Issuance of restricted stock, net


255











74



7



251



5



(3
)


Stock-based compensation expense continuing and
    discontinued operations


3,911



















3,911











Repurchase of common stock


(1,296
)






















162



(1,296
)Gain on change in interest of equity method partner company


653



















653Impact of subsidiary equity transactions


958































958Other comprehensive loss


(54
)






(54
)






















Balance  December 31, 2008


104,710



(669,526
)


(29
)


20,265



2,026



773,456



155



(1,217
)


Net income


68,773



67,610



























1,163Stock options exercised, net


270











34



3



267



(1
)






Issuance of restricted stock, net


225











121



13



(1,038
)


(157
)


1,250



Stock-based compensation expense


3,825



















3,825











Repurchase of common stock


(44
)






















4



(44
)


Note receivable repayment in Company common stock






















476



43



(476
)


Impact of subsidiary equity transactions


12,750







31











13,882











(1,163
)Other comprehensive loss


(2
)






(2
)






















Balance  December 31, 2009


190,507



(601,916
)






20,420



2,042



790,868



44



(487
)


Net income


27,114



27,114



























Stock options exercised, net


1,107











102



10



923



(18
)


174



Issuance of restricted stock, net


142











84



9



133



3







Stock-based compensation expense


3,777



















3,777











Equity component of convertible senior debentures issued, net of
    issuance costs


10,842



















10,842











Stock awards


631











24



2



316



(29
)


313



Other comprehensive income


12,816







12,816























Balance  December 31, 2010

$
246,936


$
(574,802
)

$
12,816



20,630


$
2,063


$
806,859






$



$
    46




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended December 31,2010


2009


2008(In thousands)Cash Flows from Operating Activities:Net income (loss)

$
27,114


$
68,773


$
(55,663
)Adjustments to reconcile to net cash used in operating
    activities:(Income) loss from discontinued operations






(1,975
)


9,620Depreciation and amortization


121



1,425



3,551Equity loss


21,829



23,227



34,697Other (income) loss, net


(74,809
)


(108,881
)


(10,280
)Bad debt expense






3,936



12,199Stock-based compensation expense


3,777



3,825



3,449Changes in assets and liabilities, net of effect of acquisitions
    and dispositions:Accounts receivable, net


(195
)


(11,467
)


(20,495
)Accounts payable, accrued expenses, deferred revenue and other


6,144



1,967



4,696Cash flows from operating activities of discontinued operations










(3,288
)Net cash used in operating activities


(16,019
)


(19,170
)


(21,514
)Cash Flows from Investing Activities:Investment in restricted cash equivalents for interest on
    convertible senior debentures


(18,864
)






Proceeds from sales of and distributions from partner companies
    and funds


183,813



61,302



4,263Advances and loans to partner companies


(11,710
)


(1,350
)


(4,210
)Repayment of advances to partner companies


2,009



5,679



Acquisitions of ownership interests in partner companies and
    funds, net of cash acquired


(20,418
)


(35,939
)


(30,496
)Increase in marketable securities


(65,201
)


(73,187
)


(75,809
)Decrease in marketable securities


61,856



48,822



61,698Increase in restricted cash, net






(1,956
)


Capital expenditures


(106
)


(2,157
)


(3,530
)Deconsolidation of subsidary cash






(2,667
)


Proceeds from sale of discontinued operations, net


477



1,500



83,756Cash flows from investing activities of discontinued operations










(2,867
)Net cash provided by investing activities


131,856



47



32,805Cash Flows from Financing Activities:Costs on exchange of convertible senior debentures


(872
)






Repurchase of convertible senior debentures






(7,271
)


(33,494
)Borrowings on revolving credit facilities






23,726



37,633Repayments on revolving credit facilities






(33,237
)


(37,526
)Repayments on term debt






(107
)


(2,574
)Issuance of Company common stock, net


1,107



270



115Issuance of subsidiary equity, net






28,082



966Repurchase of Company common stock






(44
)


(1,296
)Cash flows from financing activities of discontinued operations










4,790Net cash provided by (used in) financing activities


235



11,419



(31,386
)Net Increase (Decrease) in Cash and Cash Equivalents


116,072



(7,704
)


(20,095
)Changes in Cash and Cash Equivalents from and Advances to Acsis,
    Alliance Consulting and Laureate Pharma included in assets of
    discontinued operations










(1,055
)116,072



(7,704
)


(21,150
)Cash and Cash Equivalents at beginning of period


67,347



75,051



96,201Cash and Cash Equivalents at end of period

$
183,419


$
67,347


$
75,051    47




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Significant
    Accounting Policies  Description
    of the Company
      Life Sciences point-of-care
  Technology
  Basis
    of Presentation
  mark-to-market
  available-for-sale Available-for-sale
    Principles
    of Accounting for Ownership Interests in Companies
  available-for-sale.
 48




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Consolidation Method.
  Fair Value Method. mark-to-market
  Equity Method.
    Cost Method.
 49




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Available-for-Sale
    Securities. available-for-sale Available-for-sale
  Accounting
    Estimates
        Cash
    and Cash Equivalents and Short-Term Marketable
    Securities
  Held-to-maturity held-to-maturity
  Restricted
    Cash Equivalents
    Financial
    Instruments
   50




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Property
    and Equipment
    Impairment
    of Ownership Interests In and Advances to Partner
    Companies
  available-for-sale
      written-up
  Defined
    Contribution Plans
    Income
    Taxes
   51




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Net
    income (loss) per share attributable to Safeguard Scientifics,
    Inc.
    Comprehensive
    income (loss) attributable to Safeguard Scientifics,
    Inc.
  available-for-sale
  Segment
    Information
    2.
    Discontinued
    Operations    Acsis,
    Alliance Consulting and Laureate Pharma
         52




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Clarient
    Technology Business
    Pacific
    Title & Art Studio
      Year Ended December 31,2009


2008(In thousands)Revenue

$



$
45,712Operating expenses






(49,652
)Impairment of carrying value






(3,634
)Other






(1,547
)Loss from operations before income taxes






(9,121
)Income tax benefit






Loss from operations






(9,121
)Gain (loss) on disposal, net of tax


1,975



(499
)Income (loss) from discontinued operations

$
1,975


$
(9,620
)  53




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    Ownership
    Interests in and Advances to Partner Companies    As of December 31,2010


2009(In thousands)Fair Value:

$



$
80,483Equity Method:Partner companies


44,412



54,597Private equity funds


2,265



2,22446,677



56,821Cost Method:Partner companies


6,654



24,887Private equity funds


2,908



3,0969,562



27,983Advances and loans to partner companies


4,522



2,100$
60,761


$
167,387Available-for-sale
    securities

$
25,447


$
   available-for-sale available-for-sale available-for-sale
  mark-to-market available-for-sale
  available-for-sale
   54




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##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              mark-to-market mark-to-market
    55




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  September 30, 2010(In thousands)(Unaudited)Balance Sheet:Current assets

$
42,758Non-current assets


32,392Total Assets

$
75,150Current liabilities

$
14,241Non-current liabilities


4,626Redeemable preferred stock


38,586Shareholders equity


17,697Total liabilities and shareholders equity

$
75,150   Nine Months EndedSeptember 30, 2010(In thousands)(Unaudited)Results of Operations:Revenue

$
86,803Operating income

$
3,564Net income from continuing operations

$
2,914     As of December 31,2010


2009(In thousands)Balance Sheets:Current assets

$
115,319


$
98,276Non-current assets


60,130



64,889Total Assets

$
175,449


$
163,165Current liabilities

$
52,136


$
48,460Non-current liabilities


29,511



28,633Shareholders equity


93,802



86,072Total liabilities and shareholders equity

$
175,449


$
163,165     56




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##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31,2010


2009


2008(In thousands)Results of Operations:Revenue

$
226,871


$
144,771


$
92,366Gross profit

$
162,820


$
98,626


$
52,906Net loss

$
(20,118
)

$
(50,436
)

$
(61,560
)     4.
    Acquisitions
    of Ownership Interests in Partner Companies      Point-of-Care
     57




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##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      available-for-sale
  tm available-for-sale
       58




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                    start-up
 59




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      5.
    Fair
    Value Measurements              Fair Value Measurement atCarrying


December 31, 2010Value


Level 1


Level 2


Level 3(In thousands)Cash and cash equivalents

$
183,419


$
183,419


$



$
Cash held in escrow

$
6,434


$
6,434


$



$
Restricted cash equivalents

$
16,774


$
16,774


$



$
Available-for-sale
    securities

$
25,447


$
25,447


$



$
Marketable securities 
    held-to-maturity:Commercial paper

$
27,362


$
27,362


$



$
U.S. Treasury Bills


12,053



12,053







Government agency bonds


2,996



2,996







$
42,411


$
42,411


$



$
  60




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value Measurement atCarrying


December 31, 2009Value


Level 1


Level 2


Level 3(In thousands)Cash and cash equivalents

$
67,347


$
67,347


$



$
Cash held in escrow

$
6,910


$
6,910


$



$
Ownership interest in Clarient

$
80,483


$
80,483


$



$
Marketable securities 
    held-to-maturity:Commercial paper

$
10,380


$
10,380


$



$
U.S. Treasury Bills


4,981



4,981







Government agency bonds


8,384



8,384







Certificates of deposit


15,321



15,321







$
39,066


$
39,066


$



$
   Held-to-maturity
        available-for-sale
  available-for-sale mark-to-market
   61




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##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          6.
    Property
    and Equipment    As of December 31,2010


2009(In thousands)Building and improvements

$
503


$
483Machinery and equipment


985



1,0391,488



1,522Accumulated depreciation


(1,193
)


(1,212
)$
295


$
310   7.
    Convertible
    Debentures and Credit Arrangements    As of December 31,2010


2009(In thousands)Convertible senior debentures due 2024

$
31,289


$
78,225Convertible senior debentures due 2014


44,630



75,919



78,225Less: current portion


(31,289
)


Convertible senior debentures  non-current

$
44,630


$
78,225   Convertible
    Senior Debentures due 2024
   62




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##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Convertible
    Senior Debentures due 2014
      
    during any fiscal quarter commencing after June 30, 2010 if
    the closing sale price per share of Company common stock is
    greater than or equal to 120% of the conversion price for at
    least 20 trading days during the period of 30 trading days
    ending on the last day of the preceding fiscal quarter;
    during the five day period immediately following any 10
    consecutive trading day period in which the trading price per
    $1,000 principal amount of 2014 Debentures for each trading day
    of such period was less than 100% of the product of the closing
    sale price per share of Company common stock multiplied by the
    conversion rate on each such trading day;
    If a fundamental change (as defined) occurs, including sale of
    all or substantially all of the Companys common stock or
    assets, liquidation, dissolution or a change in control. 63




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##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Credit
    Arrangements
   64




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Accrued
    Expenses and Other Current Liabilities    As of December 31,2010


2009(In thousands)Accrued interest

$
1,640


$
600Other


2,583



3,725$
4,223


$
4,325   9.
    Equity  Preferred
    Stock
    Shareholders
    Rights Plan
  1/1000
  10.
    Stock-Based
    Compensation  Equity
    Compensation Plans
     65




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Classification
    of Stock-Based Compensation Expense
    Year Ended December 31,2010


2009


2008(In thousands)Cost of sales

$



$
49


$
133Selling, general and administrative


3,777



3,776



3,316$
3,777


$
3,825


$
3,449                66




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2010

2009

2008Service-Based AwardsDividend yield

0%

0%

0%Expected volatility

58%

59%

52%Average expected option life

5 years

5 years

5 yearsRisk-free interest rate

2.0%

2.7%

3.1%   Year Ended December 31,2010

2009

2008Market-Based AwardsDividend yield

N/A

N/A

0%Expected volatility

N/A

N/A

59%Average expected option life

N/A

N/A

5 - 7 yearsRisk-free interest rate

N/A

N/A

3.4%   Year Ended December 31,2010

2009

2008Performance-Based AwardsDividend yield

0%

0%

0%Expected volatility

58%

59%

50%Average expected option life

4.9 years

4.9 years

4.4 yearsRisk-free interest rate

2.0%

2.7%

3.0%    67




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##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Life


Value(In thousands)





(In years)


(In thousands)Outstanding at December 31, 2007


3,570


$
12.22Options granted


880



7.47Options exercised


(34
)


7.88Options canceled/forfeited


(1,080
)


15.18Outstanding at December 31, 2008


3,336



10.05Options granted


267



9.99Options exercised


(34
)


7.77Options canceled/forfeited


(301
)


16.21Outstanding at December 31, 2009


3,268



9.51Options granted


224



14.65Options exercised


(121
)


9.16Options canceled/forfeited


(50
)


12.13Outstanding at December 31, 2010


3,321



9.83



4.4


$
24,144Options exercisable at December 31, 2010


1,263



10.12



3.4



8,901Options vested and expected to vest at December 31, 2010


2,548



9.80



4.0



18,632Shares available for future grant


864           one-for-one
 68




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    one-for-one
  marked-to-market
      Weighted AverageGrant Date FairShares


Value(In thousands)Unvested at December 31, 2008


32


$
7.87Granted


370



6.02Vested


(83
)


5.71Forfeited


(2
)


15.18Unvested at December 31, 2009


317



5.95Granted


133



14.80Vested


(147
)


5.80Forfeited


(5
)


7.73Unvested at December 31, 2010


298



10.09    69




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Other
    Income (Loss), Net  Year Ended December 31,2010


2009


2008(In thousands)Loss on exchange of convertible debentures

$
(8,289
)

$



$
Gain on repurchase of convertible debentures, net






457



9,030Gain (loss) on sale of companies and funds, net


20,291



(7,338
)


1,737Gain on distributions from private equity funds






30



1,042Gain on deconsolidation of Clarient






105,991



Gain on sale of Clarient


42,956







Gain on
    mark-to-market
    of holdings in Clarient


22,394



19,502



Impairment charges on cost method partner companies


(2,146
)


(10,079
)


(2,251
)Other than temporary impairment on
    available-for-sale
    securities


(1,108
)






Other


711



318



722$
74,809


$
108,881


$
10,280   12.
    Income
    Taxes    Year Ended December 31,2010


2009


2008(In thousands)Current, primarily state

$



$
(14
)

$
(24
)Deferred, primarily state










$



$
(14
)

$
(24
)     Year Ended December 31,2010


2009


2008Statutory tax expense (benefit)


35.0
%


35.0
%


(35.0
)%Increase (decrease) in taxes resulting from:State taxes, net of federal tax benefit


0.0



0.0



(0.1
)Valuation allowance


(36.7
)


(35.2
)


34.1Other adjustments


1.7



0.2



0.90.0
%


0.0
%


(0.1
)%  70




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    As of December 31,2010


2009(In thousands)Deferred tax asset (liability):Carrying values of partner companies and other holdings

$
54,821


$
43,006Tax loss and credit carryforwards


97,161



129,923Accrued expenses


1,928



1,854Stock-based compensation


6,405



5,088Other


1,244



1,152161,559



181,023Valuation allowance


(161,559
)


(181,023
)Net deferred tax liability

$



$
     Total(In thousands)2011

$
3,2252012


1732013


36,4652014


2015 and thereafter


226,609$
266,472          71




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2010


2009


2008(In thousands)Balance at beginning of year

$



$
14


$
44Settlements/lapses in statutes of limitation






(14
)


(30
)Balance at end of year

$



$



$
14    72




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    Net
    Income (Loss) Per Share    Year Ended December 31,2010


2009


2008(In thousands except per share data)Basic:Amounts attributable to Safeguard Scientifics, Inc. common
    shareholders:Net income (loss) from continuing operations

$
27,114


$
66,240


$
(42,777
)Net income (loss) from discontinued operations






1,370



(9,236
)Net income (loss) attributable to Safeguard Scientifics,
    Inc.

$
27,114


$
67,610


$
(52,013
)Average common shares outstanding


20,535



20,308



20,326Net income (loss) per share from continuing operations
    attributable to Safeguard Scientifics, Inc. common shareholders

$
1.32


$
3.26


$
(2.10
)Net income (loss) per share from discontinued operations
    attributable to Safeguard Scientifics, Inc. common shareholders






0.07



(0.46
)Net income (loss) per share attributable to Safeguard
    Scientifics Inc. common shareholds

$
1.32


$
3.33


$
(2.56
)Diluted:Amounts attributable to Safeguard Scientifics, Inc. common
    shareholders:Net income (loss) from continuing operations

$
27,114


$
66,240


$
(42,777
)Interest on covertible senior debentures






2,616



Net income (loss) from continuing operations for diluted per
    share computation


27,114



68,856



(42,777
)Net income (loss) from discontinued operations






1,370



(9,236
)Net income (loss) for diluted per share calculation

$
27,114


$
70,226


$
(52,013
)Number of shares used in basic per share computation


20,535



20,308



20,326Effect of dilutive securities:Convertible senior debentures






1,956



Unvested restricted stock and DSUs


115



111



Employee stock options


857



8



Number of shares used in diluted per share computation


21,507



22,383



20,326Net income (loss) per share from continuing operations
    attributable to Safeguard Scientifics, Inc. common shareholders

$
1.26


$
3.08


$
(2.10
)Net income (loss) per share from discontinued operations
    attributable to Safeguard Scientifics, Inc. common shareholders






0.06



(0.46
)Net income (loss) per share attributable to Safeguard
    Scientifics Inc. common shareholders

$
1.26


$
3.14


$
(2.56
)    73




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    At December 31, 2010, 2009 and 2008, options to purchase
    0.6 million, 2.7 million and 3.3 million shares
    of common stock, respectively, at prices ranging from $10.10 to
    $21.36 per share, $7.50 to $21.36 per share, and $3.90 to $39.42
    per share were excluded from the calculation.
    At December 31, 2010, 2009 and 2008, unvested restricted
    stock units, performance stock units and DSUs convertible into 2
    thousand, 6 thousand and 32 thousand shares of stock,
    respectively, were excluded from the calculations.
    At December 31, 2010, 2009 and 2008 a total of
    0.7 million, 0.0 million and 2.0 million related
    to the Companys 2024 Debentures representing the effect of
    assumed conversion of the 2024 Debentures were excluded from the
    calculation.
    At December 31, 2010, 2.8 million shares related to
    the Companys 2014 Debentures representing the effect of
    assumed conversion of the 2014 Debentures were excluded from the
    calculations.  14.
    Related
    Party Transactions      15.
    Commitments
    and Contingencies     74




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          19-30%.
            16.
    Parent
    Company Financial Information   75




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Parent
    Company Statements of Operations
  Year Ended December 31,2009


2008(In thousands)Operating expenses

$
(17,807
)

$
(18,415
)Other income (loss), net


108,881



10,275Recovery  related party






5Interest income


476



3,076Interest expense


(2,889
)


(3,852
)Equity loss


(22,435
)


(33,896
)Net income (loss) from continuing operations before income taxes


66,226



(42,807
)Income tax benefit


14



30Equity income (loss) attributable to discontinued operations


1,370



(9,236
)Net income (loss)

$
67,610


$
(52,013
)  76




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Parent
    Company Statements of Cash Flows
  2009


2008Cash Flows from Operating Activities:Net income (loss)

$
67,610


$
(52,013
)Adjustments to reconcile to net cash used in operating
    activities:Equity (income) loss from discontinued operations


(1,370
)


9,236Depreciation


130



166Equity loss


22,435



33,896Non-cash compensation charges


2,982



1,738Other income (loss), net


(108,881
)


(10,275
)Changes in assets and liabilities, net of effect of acquisitions
    and dispositions


2,412



3,128Net cash used in operating activities


(14,682
)


(14,124
)Cash Flows from Investing ActivitiesProceeds from sales of and distributions from companies and funds


61,302



4,263Advances to partner companies


(7,150
)


(23,731
)Repayments of advances to partner companies


21,179



6,913Acquisitions of ownership interests in partner companies and
    funds, net of cash acquired


(35,939
)


(30,496
)Increase in marketable securities


(73,187
)


(75,809
)Decrease in marketable securities


48,822



61,698Decrease in restricted cash


861



Capital expenditures


(27
)


(28
)Proceeds from sale of discontinued operations






84,517Net cash provided by investing activities


15,861



27,327Cash Flows from Financing Activities:Repurchase of convertible senior debentures


(7,271
)


(33,494
)Issuance of Company common stock, net


270



115Repurchase of Company common stock


(44
)


(1,296
)Net cash used in financing activities


(7,045
)


(34,675
)Net Decrease in Cash and Cash Equivalents


(5,866
)


(21,472
)Cash and Cash Equivalents at beginning of period


73,213



94,685Cash and Cash Equivalents at end of period

$
67,347


$
73,213   17.
    Supplemental
    Cash Flow Information     77




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      18.
    Operating
    Segments      Life
    Sciences
  Safeguard Primary Ownership as of December 31

AccountingPartner Company

2010

2009

2008

MethodAdvanced BioHealing, Inc.


28.1
%


28.3
%


28.3
%

EquityAlverix, Inc.


49.6
%


49.6
%


50.0
%

EquityGood Start Genetics, Inc.


26.3
%


NA



NA


EquityMolecular Biometrics, Inc.


35.0
%


35.4
%


37.8
%

EquityNuPathe, Inc.


18.1
%


22.9
%


23.5
%

Available-for-sale(1)Tengion, Inc.


4.8
%


4.5
%


4.5
%

Available-for-sale(2)     (1)
    
    The Companys ownership interest in NuPathe is accounted
    for as
    available-for-sale
    securities following NuPathes completion of an initial
    public offering in August 2010. The Company previously accounted
    for NuPathe under the equity method.(2)
    
    The Companys ownership interest in Tengion is accounted
    for as
    available-for-sale
    securities following Tengions completion of an initial
    public offering in April 2010. The Company previously accounted
    for Tengion under the cost method.  Technology
  Safeguard Primary Ownership as of December 31


AccountingPartner Company

2010


2009


2008


MethodAdvantedge Healthcare Solutions, Inc.


40.2
%


39.7
%


37.7
%

EquitySafeCentral, Inc. (formerlyAuthentium, Inc.)


20.1
%


20.0
%


20.0
%

EquityBeyond.com Inc.


38.3
%


38.3
%


37.1
%

EquityBridgevine, Inc.


22.8
%


23.6
%


20.8
%

EquityMediaMath, Inc.


17.3
%


17.5
%


NA


CostPortico Systems, Inc.


45.4
%


45.4
%


46.8
%

EquitySwap.com (formerly Swaptree, Inc.)


45.6
%


29.3
%


29.3
%

Equity    78




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                For the Year Ended December 31, 2010TotalLife



Total

Other

ContinuingSciences

Technology

Segments

Items

Operations(In thousands)Revenue

$



$



$



$



$
Operating income (loss)














(20,847
)


(20,847
)Equity loss


(11,786
)


(10,039
)


(21,825
)


(4
)


(21,829
)Net income (loss) from continuing operations


70,658



(10,003
)


60,655



(33,541
)


27,114Segment Assets:December 31, 2010


37,710



43,325



81,035



256,015



337,050   For the Year Ended December 31, 2009TotalLife



Total

Other

ContinuingSciences

Technology

Segments

Items

Operations(In thousands)Revenue

$
34,839


$



$
34,839


$



$
34,839Operating income (loss)


1,621







1,621



(17,807
)


(16,186
)Equity loss


(16,283
)


(6,896
)


(23,179
)


(48
)


(23,227
)Net income (loss) from continuing operations


99,289



(12,742
)


86,547



(19,749
)


66,798Segment Assets:December 31, 2009


117,529



41,876



159,405



122,694



282,099   79




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2008TotalLife



Total

Other

ContinuingSciences

Technology

Segments

Items

Operations(In thousands)Revenue

$
73,736


$



$
73,736


$



$
73,736Operating loss


(1,600
)






(1,600
)


(18,415
)


(20,015
)Equity loss


(23,858
)


(10,696
)


(34,554
)


(143
)


(34,697
)Net loss from continuing operations


(26,317
)


(12,947
)


(39,264
)


(6,779
)


(46,043
)Segment Assets:December 31, 2008


84,508



41,050



125,558



106,844



232,402     Year Ended December 31,2010


2009


2008(In thousands)Corporate operations

$
(33,541
)

$
(19,763
)

$
(6,803
)Income tax benefit






14



24$
(33,541
)

$
(19,749
)

$
(6,779
)  80




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  19.
    Selected
    Quarterly Financial Information
    (Unaudited)  Three Months EndedMarch 31


June 30


September 30


December 31(In thousands except per share data)2010:Revenue

$



$



$



$
Cost of sales














Selling, general and administrative


4,833



4,910



4,256



6,848Total operating expenses


4,833



4,910



4,256



6,848Operating loss


(4,833
)


(4,910
)


(4,256
)


(6,848
)Other income (loss), net


(11,297
)


14,408



8,144



63,554Interest income


97



239



180



202Interest expense


(730
)


(1,657
)


(1,674
)


(1,676
)Equity loss


(5,009
)


(5,155
)


(1,801
)


(9,864
)Net income (loss) from continuing operations before income taxes


(21,772
)


2,925



593



45,368Income tax benefit














Net income (loss) attributable to Safeguard Scientifics,
    Inc.

$
(21,772
)

$
2,925


$
593


$
45,368Basic income (loss) per share(a)Net income (loss) from continuing operations

$
(1.07
)

$
0.14


$
0.03


$
2.20Diluted income (loss) per share(a)Net income (loss) from continuing operations

$
(1.07
)

$
0.13


$
0.03


$
1.842009:Revenue

$
23,192


$
11,647


$



$
Cost of sales


8,966



4,845







Selling, general and administrative


17,089



10,983



4,237



4,905Total operating expenses


26,055



15,828



4,237



4,905Operating loss


(2,863
)


(4,181
)


(4,237
)


(4,905
)Other income (loss), net


(245
)


158,573



(1,908
)


(47,539
)Interest income


157



111



111



101Interest expense


(926
)


(817
)


(728
)


(693
)Equity loss


(5,513
)


(7,446
)


(4,827
)


(5,441
)Net income (loss) from continuing operations before income taxes


(9,390
)


146,240



(11,589
)


(58,477
)Income tax benefit






14







Net income (loss) from continuing operations


(9,390
)


146,254



(11,589
)


(58,477
)Income from discontinued operations, net of tax


1,500











475Net income (loss)


(7,890
)


146,254



(11,589
)


(58,002
)Net loss attributable to noncontrolling interest


(1,139
)


(24
)






Net income (loss) attributable to Safeguard Scientifics,
    Inc.

$
(9,029
)

$
146,230


$
(11,589
)

$
(58,002
)Basic income (loss) per share(a)Net income (loss) from continuing operations

$
(0.49
)

$
7.21


$
(0.57
)

$
(2.88
)Net income from discontinued operations


0.04











0.03$
(0.45
)

$
7.21


$
(0.57
)

$
(2.85
)Diluted income (loss) per share(a)Net income (loss) from continuing operations

$
(0.49
)

$
6.56


$
(0.57
)

$
(2.88
)Net income from discontinued operations


0.04











0.03$
(0.45
)

$
6.56


$
(0.57
)

$
(2.85
)   (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 partner company common stock
    equivalents and convertible securities. 81




---



##### Table of Contents



SAFEGUARD
    SCIENTIFICS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  20.
    Trade
    Accounts Receivable    (In thousands)Balance, December 31, 2007

$
3,370Charged to costs and expenses


12,199Charge-offs


(7,524
)Balance, December 31, 2008


8,045Charged to costs and expenses


3,856Charge-offs


(3,684
)Deconsolidation of Clarient


(8,217
)Balance, December 31, 2009


Charged to costs and expenses


Charge-offs


Balance, December 31, 2010

$
  82




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  (a)
    Evaluation
    of Disclosure Controls and Procedures  Rules 13a-15(e) 15d-15(e)
    (b)
    Managements
    Report on Internal Control Over Financial Reporting      Internal
    Control  Integrated Framework
  Form 10-K.
 83




---



##### Table of Contents



(c)
    Change in
    Internal Control over Financial Reporting    Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    SECURITIES
    AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
    PLANS
       84




---



##### Table of Contents



Form 10-K
  Equity
    Compensation Plan Information
  Number of SecuritiesRemaining Available forNumber of Securities to


Weighted-Average


Future Issuance UnderBe Issued Upon Exercise


Exercise Price of


Equity Compensation Plansof Outstanding Options,


Outstanding Options,


(Excluding SecuritiesWarrants and Rights(1)


Warrants and Rights(2)


Reflected in Column (a))Plan Category

(a)


(b)


(c)Equity compensation plans approved by security holders(3)


1,803,243


$
10.3345



755,195Equity compensation plans not approved by security holders(4)


1,835,609


$
9.3885



108,326Total


3,638,852


$
9.8277



863,521     (1)
    
    Includes a total of 243,762 shares underlying performance
    stock units and deferred stock units awarded for no
    consideration and 73,786 shares underlying deferred stock
    units awarded to directors in lieu of all or a portion of
    directors fees.(2)
    
    The weighted average exercise price calculation excludes
    317,548 shares underlying outstanding deferred stock units
    and performance stock units included in column (a) which
    are payable in stock, on a
    one-for-one
    basis.(3)
    
    Represents awards granted under the 1999 Equity Compensation
    Plan and the 2004 Equity Compensation Plan and shares available
    for issuance under the 2004 Equity Compensation Plan.(4)
    
    Includes awards granted and shares available for issuance under
    the 2001 Plan and 1,416,665 employee inducement
    awards.  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   85




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (a)
    Consolidated
    Financial Statements and Schedules  Form 10-K.
  (b)
    Exhibits    (c)
    Financial
    Statement Schedules  Rule 3-09 Regulation S-X,
  Exhibits
  Regulation S-K
  Incorporated Filing ReferenceExhibit



Form Type & Filing

OriginalNumber

Description

Date

Exhibit Number2
.1.1

Purchase Agreement, dated as of February 29, 2008, by and
    between Safeguard Scientifics, Inc., as Seller, and Saints
    Capital Dakota, L.P., as Purchaser.

Form 8-K
    3/4/08


2
.12
.1.2

First Amendment to Purchase Agreement, dated May 6, 2008,
    by and between Safeguard Scientifics, Inc., as Seller, and
    Saints Capital Dakota, L.P., as Purchaser

Form 8-K
    5/7/08


2
.13
.1.1

Seconded Amended and Restated Articles of Incorporation of
    Safeguard Scientifics, Inc.

Form 8-K
    10/25/07


3
.13
.1.2

Amendment to Seconded Amended and Restated Articles of
    Incorporation of Safeguard Scientifics, Inc.

Form 8-K
    8/27/09


3
.13
.1.3

Statement with Respect to Shares

Registration
    Statement on
    Form S-4
    12/17/10


3
.1.33
.2

Amended and Restated By-laws of Safeguard Scientifics, Inc.

Form 8-K
    10/25/07


3
.24
.1

Indenture, dated as of February 18, 2004, between Safeguard
    Scientifics, Inc. and Wachovia Bank, National Association, as
    trustee, including the form of 2.625% Convertible Senior
    Debentures due 2024

Form 10-K
    3/15/04


4
.104
.2

Indenture, dated as of March 26, 2010, by and between
    Safeguard Scientifics, Inc. and U.S. Bank, National Association

Form 8-K
    3/30/10


4
.14
.3

Global Note representing 10.125% Convertible Senior
    Debentures due March 15, 2014

Form 8-K
    3/30/10


4
.2 86




---



##### Table of Contents



Incorporated Filing ReferenceExhibit



Form Type & Filing

OriginalNumber

Description

Date

Exhibit Number4
.4

Escrow Agreement, dated as of March 26, 2010, by and among
    Safeguard Scientifics, Inc., U.S. Bank, National Association (as
    trustee) and U.S. Bank, National Association (in its capacity as
    escrow agent)

Form 8-K
    3/30/10


4
.310
.1*

Safeguard Scientifics, Inc. 1999 Equity Compensation Plan, as
    amended and restated on October 21, 2008

Form 10-Q
    11/6/08


10
.410
.2

Safeguard Scientifics, Inc. 2001 Associates Equity Compensation
    Plan, as amended and restated on October 21, 2008

Form 10-Q
    11/6/08


10
.510
.3*

Safeguard Scientifics, Inc. 2004 Equity Compensation Plan, as
    amended and restated on July 13, 2009 (attached to the
    Companys Definitive Proxy Statement filed on July 23,
    2009)

Form 10-K
    3/16/10


10
.310
.4*

Safeguard Scientifics, Inc. Executive Deferred Compensation Plan
    (amended and restated as of January 1, 2009)

Form 10-K
    3/19/09


10
.410
.5*

Management Incentive Plan

Form 8-K
    4/25/08


10
.110
.6*

Compensation Summary  Non-employee Directors

Form 10-Q
    7/30/10


10
.110
.7.1*

Amended and Restated Agreement by and between Safeguard
    Scientifics, Inc. and Peter J. Boni dated December 5, 2008

Form 10-K
    3/19/09


10
.710
.7.2*

Compensation Agreement by and between Safeguard Scientifics,
    Inc. and Peter J. Boni dated December 14, 2009

Form 10-K
    3/16/10


10
.7.210
.8.1*

Amended and Restated Agreement by and between Safeguard
    Scientifics, Inc. and James A. Datin dated December 31, 2008

Form 10-K
    3/19/09


10
.810
.8.2*

Compensation Agreement by and between Safeguard Scientifics,
    Inc. and James A. Datin dated December 14, 2009

Form 10-K
    3/16/10


10
.8.210
.9.1*

Agreement by and between Safeguard Scientifics, Inc. and Stephen
    Zarrilli dated as of May 28, 2008

Form 8-K
    5/29/08


10
.110
.9.2*

Letter Amendment dated December 9, 2008, to Agreement by
    and between Safeguard Scientifics, Inc. and Stephen Zarrilli
    dated as of May 28, 2008

Form 10-K
    3/19/09


10
.9.210
.10.1*

Agreement by and between Safeguard Scientifics, Inc. and Kevin
    L. Kemmerer dated December 29, 2008

Form 10-K
    3/19/09


10
.1110
.10.2*

Compensation Agreement by and between Safeguard Scientifics,
    Inc. and Kevin L. Kemmerer dated December 14, 2009

Form 10-K
    3/16/10


10
.10.210
.11.1*

Amended and Restated Letter Agreement by and between Safeguard
    Scientifics, Inc. and Brian J. Sisko dated December 3, 2008

Form 10-K
    3/19/09


10
.1210
.11.2*

Compensation Agreement by and between Safeguard Scientifics,
    Inc. and Brian J. Sisko dated December 14, 2009

Form 10-K
    3/16/10


10
.11.210
.12.1

Amended and Restated Loan and Security Agreement dated as of
    May 27, 2009, by and among Silicon Valley Bank, Safeguard
    Scientifics, Inc., Safeguard Delaware, Inc. and Safeguard
    Scientifics (Delaware), Inc.

Form 8-K
    5/28/09


10
.110
.12.2

Joinder and First Loan Modification Agreement dated as of
    December 31, 2010, by and among Silicon Valley Bank,
    Safeguard Scientifics, Inc., Safeguard Delaware, Inc., Safeguard
    Scientifics (Delaware), Inc. and Safeguard Delaware II, Inc.

Form 8-K
    1/4/11


10
.1 87




---



##### Table of Contents



Incorporated Filing ReferenceExhibit



Form Type & Filing

OriginalNumber

Description

Date

Exhibit Number10
.13

Purchase and Sale Agreement dated as of December 9, 2005 by
    and among HarbourVest VII Venture Ltd., Dover Street VI L.P. and
    several subsidiaries and affiliated limited partnerships of
    Safeguard Scientifics, Inc.

Form 10-K
    3/13/06


10
.3610
.14

Exchange Agreement dated as of March 10, 2010, by and
    between Safeguard Scientifics, Inc. and First Manhattan Co.

Form 8-K
    3/11/10


10
.110
.15

Exchange Agreement dated as of March 10, 2010, by and
    between Safeguard Scientifics, Inc. and the holders of the Old
    Debentures set forth on the schedules thereto

Form 8-K
    3/11/10


10
.210
.16

Exchange Agreement dated as of March 10, 2010, by and
    between Safeguard Scientifics, Inc. and Prism Partners IV
    Leveraged Offshore Fund

Form 8-K
    3/11/10


10
.310
.17

Exchange Agreement dated as of March 10, 2010, by and
    between Safeguard Scientifics, Inc. and Zazove Associates LLC

Form 8-K
    3/11/10


10
.414
.1

Code of Business Conduct and Ethics




21
.1

List of Subsidiaries




23
.1

Consent of Independent Registered Public Accounting
    Firm  KPMG LLP




23
.2

Consent of Independent Registered Public Accounting
    Firm  Deloitte & Touche LLP




31
.1

Certification of Peter J. Boni pursuant to
    Rules 13a-15(e)
    and 15d-15(e) of the Securities Exchange Act of 1934




31
.2

Certification of Stephen T. Zarrilli pursuant to
    Rules 13a-15(e)
    and 15d-15(e) of the Securities Exchange Act of 1934




32
.1

Certification of Peter J. Boni pursuant to 18 U.S.C.
    Section 1350, as Adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.




32
.2

Certification of Stephen T. Zarrilli pursuant to 18 U.S.C.
    Section 1350, as Adopted pursuant to Section 906 of
    the Sarbanes-Oxley Act of 2002.




99
.1

Consolidated Financial Statements of Clarient, Inc.




     
    
    Filed herewith*
    
    These exhibits relate to management contracts or compensatory
    plans, contracts or arrangements in which directors and/or
    executive officers of the Registrant may participate. 88




---



##### Table of Contents



SIGNATURES
    Safeguard Scientifics,
    Inc.
  By:
    PETER
    J. BONI  Peter J. Boni
 President and Chief Executive Officer
      Signature

Title

DatePeter
    J. BoniPeter
    J. Boni

President and Chief Executive Officer and Director (Principal
    Executive Officer)

March 4, 2011Stephen
    T. ZarrilliStephen
    T. Zarrilli

Senior Vice President and Chief Financial Officer (Principal
    Financial and Accounting Officer)

March 4, 2011Julie
    A. DobsonJulie
    A. Dobson

Director

March 4, 2011Andrew
    E. LietzAndrew
    E. Lietz

Chairman of the Board of Directors

March 4, 2011George
    MacKenzieGeorge
    MacKenzie

Director

March 4, 2011George
    D. McClellandGeorge
    D. McClelland

Director

March 4, 2011Jack
    L. MessmanJack
    L. Messman

Director

March 4, 2011John
    J. RobertsJohn
    J. Roberts

Director

March 4, 2011Robert
    J. RosenthalRobert
    J. Rosenthal

Director

March 4, 2011  89