86115--3/19/2009--SAFEGUARD_SCIENTIFICS

related topics

{product, market, service}

{investment, property, distribution}

{stock, price, share}

{condition, economic, financial}

{control, financial, internal}

{debt, indebtedness, cash}

{stock, price, operating}

{acquisition, growth, future}

{personnel, key, retain}

{interest, director, officer}

{property, intellectual, protect}

{financial, litigation, operation}

Our partner companies (and the nature of our interests in them) could vary widely from period to period. Our business model does not rely, or plan, upon the receipt of operating cash flows from our partner companies. Our partner companies currently 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 sell our holdings on a timely basis. 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. 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. Recent economic disruptions and downturns may have negative repercussions for the Company. We have material weaknesses in our internal control over financial reporting 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 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 affect on our stock price. If we do not meet the New York Stock Exchange continued listing requirements, our common stock may be delisted. There could be negative effects if we do effect a reverse split of our Common Stock. Risks Related to our Partner Companies Most of our partner companies have a history of operating losses 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. Our partner companies may fail if they do not adapt to the rapidly changing technology and life sciences marketplaces. Our partner companies may grow rapidly and may be unable to manage their growth. Based on our business model, some or all of our partner companies will need to raise additional capital to fund their operations at any given time. We may not be able to fund some or all of such amounts, and such amounts may not be available from third parties on acceptable terms, if at all. Recent economic disruptions and downturns may negatively affect our partner companies plans and their results of operations. Our partner companies are subject to independent audits and the results of such independent audits could adversely impact our partner companies. Some of our partner companies may be unable to protect their proprietary rights and may infringe on the proprietary rights of others. Certain of our partner companies could face legal liabilities from claims made against their operations, products or work.

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86115--3/19/2009--SAFEGUARD_SCIENTIFICS_INC