8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 6, 2008

Safeguard Scientifics, Inc.
(Exact name of registrant as specified in its charter)

Pennsylvania	1-5620	23-1609753
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

435 Devon Park Drive, Building 800, Wayne, PA	19087
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: 610-293-0600

Not applicable

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

þ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01. Entry into a Material Definitive Agreement.

As previously disclosed, on February 29, 2008, Safeguard Scientifics, Inc. (the “Registrant,” “Safeguard” or the “Company”) entered into a Purchase Agreement (as amended, the “Purchase Agreement”) with Saints Capital Dakota, L.P. (“Saints”), pursuant to which the Registrant agreed to sell to Saints all of its interests in six of its partner companies: Acsis, Inc, Alliance Holdings, Inc., Laureate Pharma, Inc., Neuronyx, Inc., ProModel Corporation and NextPoint Networks, Inc. On May 6, 2008, the Registrant and Saints entered into a First Amendment to Purchase Agreement (the “Amendment”), pursuant to which the parties agreed to exclude the sale of the Registrant’s interests in NextPoint Networks, Inc. from the transaction; to reduce the purchase price payable by Saints, based on the exclusion of the NextPoint interests; and to reduce the amount of proceeds to be held in escrow from $10 million to $6.4 million.

A copy of the Amendment is being filed as Exhibit 2.2 hereto.

ITEM 2.01. Completion of Acquisition or Disposition of Assets.

On May 6, 2008, the Registrant completed the transactions contemplated by the Purchase Agreement. At the closing, the Registrant transferred to Saints all of its interests in five of its partner companies: Acsis, Inc, Alliance Holdings, Inc., Laureate Pharma, Inc., Neuronyx, Inc., and ProModel Corporation (the “Transferred Companies”). In connection with the closing: 1) the Registrant received gross proceeds of approximately $74.5 million (including $6.4 million that will be held in escrow through April 2009 in order to secure the Registrant’s indemnification obligations under the Purchase Agreement) and was repaid amounts which had been advanced by Registrant to certain of the Transferred Companies subsequent to February 29, 2008; 2) the Registrant retained its existing interest in NextPoint Networks of approximately 12.2%, on a primary basis; and 3) Saints relieved the Registrant of an aggregate of $31.5 million in debt guarantees that it had provided for the benefit of certain of the Transferred Companies. In its consolidated financial statements for the quarter ended March 31, 2008, the Company wrote down the aggregate carrying value of the Transferred Companies by $3.6 million to the total gross proceeds received, net of the costs necessary to complete the transaction.

On May 7, 2008, the Registrant issued a press release announcing the closing of the transactions described above. A copy of this press release is being furnished as Exhibit 99.1 hereto.

ITEM 8.01. Other Events.

On May 7, 2008, the Registrant issued a press release announcing that its Board of Directors has authorized the Company, from time to time and depending on market conditions, to repurchase shares of its outstanding common stock, with up to an aggregate value of $10 million. These repurchases will be made in open market or privately negotiated transactions. The manner, timing and amount of any purchases will be determined by the Registrant based upon an evaluation of market conditions, stock price and other factors. The Board’s authorization does not obligate the Registrant to acquire any particular amount of common stock and may be modified or suspended at any time, at the Registrant’s discretion.

The Registrant also announced that its Board of Directors has authorized the Company to submit a proposal to its shareholders at its 2008 annual meeting seeking authorization to effect a reverse stock split of the Registrant’s common stock.

A copy of the Registrant’s press release describing the stock repurchase and proposal for a reverse stock split is being furnished as Exhibit 99.2 hereto.

Important Information about the Reverse Split Proposal
 
This communication may be deemed to be solicitation material in connection with the proposal to be submitted to Safeguard’s shareholders at its 2008 annual meeting seeking authorization to effect a reverse split of Safeguard’s common stock (the “Reverse Split Proposal”). In connection with the Reverse Split Proposal, Safeguard has filed a preliminary proxy statement on Schedule 14A with the Securities and Exchange Commission (the “SEC”). Shareholders of Safeguard are urged to read the preliminary proxy statement and all other relevant documents filed with the SEC when they become available, including Safeguard’s definitive proxy statement, because they will contain important information about the Reverse Split Proposal and Safeguard. A definitive proxy statement will be sent to holders of Safeguard stock in connection with seeking their authorization of the Reverse Split Proposal. This communication is not a solicitation of a proxy from any security holder of Safeguard.

Investors and security holders will be able to obtain the documents (when available) free of charge at the SEC’s web site, http://www.sec.gov. In addition, Safeguard shareholders may obtain free copies of the documents filed with the SEC when available by contacting Safeguard’s Investor Relations at 610-293-0600. You may also read and copy any reports, statements and other information filed by Safeguard with the SEC at the SEC public reference room at 100 F Street, N.E. Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.

Safeguard and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the holders of Safeguard common stock in respect of the Reverse Split Proposal. Information about the directors and executive officers of Safeguard is set forth in Safeguard’s Annual Report on Form 10-K/A (Amendment No. 2) which was filed with the SEC on April 29, 2008. Investors may obtain additional information regarding the interest of Safeguard and its directors and executive officers in the Reverse Split Proposal by reading the preliminary proxy statement and, when it becomes available, the definitive proxy statement relating to the 2008 annual meeting.

ITEM 9.01 Financial Statements and Exhibits.

(d) Exhibits.

2.1 Purchase Agreement, dated February 29, 2008, by and between Safeguard Scientifics, Inc., as Seller, and Saints Capital Dakota, L.P., as Purchaser (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on March 4, 2008)

2.2 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

99.1 Press release of Safeguard Scientifics, Inc., issued May 7, 2008, relating to disposition of partner companies

99.2 Press release of Safeguard Scientifics, Inc., issued May 7, 2008, relating to share repurchase program and proposed stock split

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Safeguard Scientifics, Inc.

Dated: May 7, 2008

By: BRIAN J. SISKO                                   
Brian J. Sisko
Senior Vice President and General Counsel

Exhibit Index

Exhibit

2.1 Purchase Agreement, dated February 29, 2008, by and between Safeguard Scientifics, Inc., as Seller, and Saints Capital Dakota, L.P., as Purchaser (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on March 4, 2008)

2.2 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

99.1 Press release of Safeguard Scientifics, Inc., issued May 7, 2008, relating to disposition of partner companies

99.2 Press release of Safeguard Scientifics, Inc., issued May 7, 2008, relating to share repurchase program and proposed stock split

EX-2.2

EXHIBIT 2.2

FIRST AMENDMENT TO PURCHASE AGREEMENT

THIS FIRST AMENDMENT TO PURCHASE AGREEMENT is made as of May 6, 2008 (this “Amendment”), by and between Safeguard Scientifics, Inc., a Pennsylvania corporation (“Seller”) and Saints Capital Dakota, L.P., a Delaware limited partnership (“Purchaser”). Seller and Purchaser are referred to herein as the “Parties”. Capitalized terms used in this Amendment shall have the meanings ascribed to them in the Agreement, as defined below.

Witnesseth:

Whereas, Seller and Purchaser are parties to that certain Purchase Agreement (the “Agreement”) made and entered into as of February 29, 2008, pursuant to which Seller is selling to Purchaser, and Purchaser is buying from Seller, all of Seller’s and its affiliates’ right, title and interest in, and to, all Investment Interests in the Companies upon the terms and subject to the conditions set forth in the Agreement; and

Whereas, the Parties desire to amend the Agreement pursuant to Section 10.7 of the Agreement, as set forth in this Amendment.

Now, Therefore, in consideration of the mutual covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

1. Amendments to the Agreement. The Agreement shall be amended as set forth below:

(a) The first recital is hereby amended and restated in its entirety to read as follows:

Whereas, Seller is the owner, directly or indirectly of each Investment Interest (as hereinafter defined) in each of Acsis, Inc., a Delaware corporation (“Acsis”), Alliance Holdings, Inc., a Delaware corporation (“Alliance”), Laureate Pharma, Inc., a Delaware corporation (“Laureate”), Neuronyx, Inc., a Delaware corporation (“Neuronyx”), and ProModel Corporation, a Pennsylvania corporation (“ProModel,” and collectively with Acsis, Alliance, Laureate and Neuronyx, the “Companies,” and each individually, a “Company”);

(b) The definition of “Escrow Reserve” in Article I of the Agreement is hereby amended and restated in its entirety to read as follows:

“Escrow Reserve” shall mean an amount equal to six million four hundred thousand dollars ($6,400,000).

(c) The definition of “Purchase Price” in Article I of the Agreement is hereby amended and restated in its entirety to read as follows:

“Purchase Price” shall mean the amount equal to seventy-four million five hundred thousand dollars ($74,500,000), less the amount of any Portfolio Proceeds, plus the amount of any Portfolio Investments, less the amount of any Transaction Bonus Offset, and less the Severance Offset, if any, as the same may be further adjusted pursuant to the provisions of this Agreement.

(d) Exhibit A of the Agreement is hereby amended and restated to read in its entirety as set forth in EXHIBIT A hereto.

(e) Exhibit B of the Agreement is hereby amended and restated to read in its entirety as set forth in EXHIBIT B hereto.

(f) Exhibit E of the Agreement is hereby amended and restated to read in its entirety as set forth in EXHIBIT C hereto.

(g) Schedule 3.6 of the Agreement is hereby amended and restated to read in its entirety as set forth in EXHIBIT D hereto.

(h) Schedule 6.6 of the Agreement is hereby amended and restated to read in its entirety as set forth in EXHIBIT E hereto.

(i) From and after the date hereof, any references to NextPoint Networks, Inc. in the Agreement or the exhibits and schedules thereto shall be given no force or effect.

2. Representations and Warranties of Seller. Seller has the corporate power and authority to execute and deliver this Amendment. The execution and delivery of this Amendment by Seller have each been duly authorized by all necessary corporate action. This Amendment has been duly executed and delivered by a duly authorized officer of Seller, and this Amendment constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws affecting the enforcement of creditors’ rights in general, or by general principles of equity (regardless of whether such enforceability is considered in a proceeding of equity or at law).

3. Representations of Purchaser. Purchaser has the corporate power and authority to execute and deliver this Amendment. The execution and delivery of this Amendment by Purchaser have each been duly authorized by all necessary corporate action. This Amendment has been duly executed and delivered by a duly authorized officer of Purchaser, and this Amendment constitutes the legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws affecting the enforcement of creditors’ rights in general, or by general principles of equity (regardless of whether such enforceability is considered in a proceeding of equity or at law).

4. No Other Modification. Except as set forth in this Amendment, the terms and conditions of the Agreement shall remain in full force and effect.

5. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the principles of conflicts of law thereof.

6. Counterparts. This Agreement maybe executed in two or more counterparts, each of which shall be an original, and all of which together shall constitute one and the same instrument.

7. Conflicts. In the event of any discrepancy between the provisions of this Amendment and any provision of the Agreement, then the provisions of this Amendment shall control.

[Signature pages to follow]

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IN WITNESS WHEREOF, each of the undersigned has caused this Amendment to be duly executed on its behalf by its representative thereunto duly authorized, as of the day and year first above written.

SELLER:

SAFEGUARD SCIENTIFICS, INC.

By: /s/ Brian J. Sisko                                    
Name: Brian J. Sisko
Title: Senior Vice President and General Counsel

PURCHASER:

SAINTS CAPITAL DAKOTA, L.P.

By: Saints Capital Dakota, LLC

Its: General Partner

By: /s/ Kenneth B. Sawyer                           
Name: Kenneth B. Sawyer
Title: Managing Director

EXHIBITS AND SCHEDULES:

Pursuant to the rules of the U.S. Securities and Exchange Commission, the schedules and similar attachments to the Agreement have not been filed herewith. The Seller agrees to furnish supplementally a copy of any of the following omitted schedules or attachments to the U.S. Securities and Exchange Commission upon request:

Exhibit A	Investment Interest and Ownership Information
Exhibit B	Operative Documents
Exhibit C	Approvals
Exhibit D	Agreements and Commitments
Exhibit E	Allocation Schedule

EX-99.1

EXHIBIT 99.1
FOR IMMEDIATE RELEASE

CONTACT:
John E. Shave
Vice President, Investor Relations and Corporate Communications
610.293.0600

SAFEGUARD SCIENTIFICS CLOSES TRANSACTION WITH SAINTS CAPITAL TO
SELL STAKES IN FIVE PARTNER COMPANIES

Transaction Aligns Safeguard Portfolio of Companies with Core Strategic Focus

Wayne, PA, May 7, 2008 – Safeguard Scientifics, Inc. (NYSE: SFE), a holding company which builds value in growth-stage technology and life sciences companies, today announced that it has closed the transaction with Saints Capital to exit its ownership position in five partner companies – Acsis, Inc., Alliance Consulting Group Associates, Inc., Laureate Pharma, Inc., Neuronyx, Inc. and ProModel Corporation.

Safeguard will receive gross proceeds of approximately $74.5 million, including $6.4 million to be held in escrow through April 2009. In addition, Safeguard was repaid amounts advanced to certain of the sold companies since the outset of the transaction, and was released from an aggregate of $31.5 million in debt guarantees involving certain of the companies which were sold. At closing, the transaction was revised to exclude NextPoint Networks; adjust the purchase price accordingly; and reduce the amount to be held in escrow. Safeguard will retain its 12.2% interest in NextPoint Networks and maintain its representation on NextPoint’s board of directors. In the quarter ended March 31, 2008, Safeguard wrote down the aggregate carrying value of the bundle companies by $3.6 million to the total anticipated gross proceeds, net of the costs necessary to complete the transaction.

Peter J. Boni, President and Chief Executive Officer of Safeguard said, “Our decision to maintain our ownership of NextPoint Networks, along with our board seat, was driven by our realization that we can continue to build value in NextPoint and realize a more valuable exit opportunity. With the close of this bundled transaction, we have fully aligned our portfolio of companies with our core strategy. We have a solid deal pipeline and backlog of opportunities and are building value in our holdings. We are executing against our game plan and anticipate a year of driving results for our shareholders.”

Safeguard invests in fast-growing companies with capital requirements between $5 and $50 million. Safeguard provides strategic guidance and operational support to accelerate partner growth and competitiveness, and ultimately targets a minimum return of three-to-five times initial capital deployment per company within three to five years. Safeguard targets technology companies in Software as a Service (SaaS) / Internet-based Businesses, Technology-Enabled Services and Vertical Software Solutions; and life sciences companies in Molecular and Point-of-Care Diagnostics, Medical Devices and Specialty Pharmaceuticals.

Safeguard Scientifics, Inc. | 435 Devon Park Drive, Building 800 | Wayne, PA 19087-1945 | T 610 293 0600 F 610 293 0601 | www.safeguard.com

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Safeguard now has 14 partner companies in its portfolio. They include:

TECHNOLOGY PARTNER COMPANIES
SOFTWARE AS A SERVICE / INTERNET-BASED BUSINESSES

• Authentium, Inc. is a leading developer of security SaaS technologies and systems that recently launched its new SafeCentral platform, a convenient Web service that prevents cyber crime and identity theft by locking down PCs, launching a secure browser, and connecting users to a trusted portal of more than 15,000 popular destinations.

• Beyond.com, Inc. is among the world’s largest networks of online niche career sites, owning more than 2,100 Internet domains and operating a network of over 15,000 geographic and industry-specific career communities.

• Bridgevine, Inc. is the leading comparative online shopping engine for digital services and products such as high speed internet, VoIP, digital TV, satellite radio and music.

• Our stealth technology company is a pre-launch technology company building the world’s first Social Information Management System (SIMS), a software suite that aggregates and intelligently integrates Web Applications with Content Management and Social Networking capabilities.

TECHNOLOGY-ENABLED SERVICES

• Advantedge Healthcare Solutions, Inc. is a technology-based services provider that provides medical billing solutions to physician groups using its proprietary software.

VERTICAL SOFTWARE SOLUTIONS

• NextPoint Networks, Inc. is a leading global provider of secure and sound intelligent IP-based connectivity solutions that allows its customers to build fully scalable networks so their high-quality voice, data and video sessions flow securely and efficiently.

• Portico Systems, Inc. offers health plans software solutions exclusively focused on unlocking the value of Provider Network Management

LIFE SCIENCES PARTNER COMPANIES
MOLECULAR AND POINT-OF-CARE DIAGNOSTICS

• Alverix, Inc. is a point-of-care diagnostic technology provider

• Avid Radiopharmaceuticals, Inc. is a leader in the development of molecular imaging products for neurodegenerative diseases

• Cellumen, Inc. is a cellular systems biology company that delivers proprietary services and products to support drug discovery and development

• Clarient, Inc. (Nasdaq: CLRT) is a premier technology and services resource for pathologists, oncologists, and the pharmaceutical industry

MEDICAL DEVICES

• Advanced BioHealing, Inc. is a leader in the science of regenerative medicine

• Rubicor Medical, Inc. is a medical device company focused on the development and commercialization of minimally invasive breast biopsy and tissue removal technologies.

SPECIALTY PHARMACEUTICALS

• NuPathe, Inc. specializes in the development of therapeutics for the treatment of neurological and psychiatric disorders including migraine, Parkinson’s disease and schizophrenia

Safeguard Scientifics, Inc. | 435 Devon Park Drive, Building 800 | Wayne, PA 19087-1945 | T 610 293 0600 F 610 293 0601 | www.safeguard.com

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About Safeguard Scientifics
Founded in 1953 and based in Wayne, PA, Safeguard Scientifics, Inc. (NYSE: SFE) provides growth capital for entrepreneurial and innovative technology and life sciences companies. Safeguard targets technology companies in Software as a Service (SaaS) / Internet-based Businesses, Technology-Enabled Services and Vertical Software Solutions, and life sciences companies in Molecular and Point-of-Care Diagnostics, Medical Devices and Specialty Pharmaceuticals with capital requirements between $5 and $50 million. Safeguard participates in expansion financings, corporate spin-outs, management buyouts, recapitalizations, industry consolidations and early-stage financings. www.safeguard.com
 
Forward-looking Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. These forward-looking statements that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute our strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations and legal liabilities, additional financing requirements, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.

# # #

Safeguard Scientifics, Inc. | 435 Devon Park Drive, Building 800 | Wayne, PA 19087-1945 | T 610 293 0600 F 610 293 0601 | www.safeguard.com

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EX-99.2

EXHIBIT 99.2
FOR IMMEDIATE RELEASE

CONTACT:
John E. Shave
Vice President, Investor Relations and Corporate Communications
Safeguard Scientifics, Inc.
610.293.0600

SAFEGUARD SCIENTIFICS ANNOUNCES SHARE REPURCHASE PROGRAM
AND PROPOSES REVERSE STOCK SPLIT

Board of Directors Approves Share Repurchase Program;
Company to Seek Shareholder Authorization for Reverse Stock Split

Wayne, PA, May 7, 2008 – Safeguard Scientifics, Inc. (NYSE: SFE), a holding company that builds value in growth-stage technology and life sciences companies, today announced that its Board of Directors has authorized a share repurchase program and intends to seek shareholder authorization for a reverse stock split.

The Board of Directors has authorized Safeguard, from time to time and depending on market conditions, to repurchase shares of its outstanding common stock, with up to an aggregate value of $10 million. These repurchases will be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission and other applicable legal requirements. The manner, timing and amount of any purchases will be determined by Safeguard based upon an evaluation of market conditions, stock price and other factors. The Board’s authorization does not obligate Safeguard to acquire any particular amount of common stock and may be modified or suspended at any time at Safeguard’s discretion.

Safeguard also announced that its Board of Directors has authorized the company to submit a proposal to its shareholders at its 2008 annual meeting seeking authorization to effect a reverse split of the company’s common stock. Further details regarding such a proposal will be forthcoming in the Company’s proxy materials for such a meeting. On May 6, 2008, the Company had approximately 121.5 million shares of common stock outstanding.

Peter J. Boni, President and Chief Executive Officer of Safeguard, said, “With the closing of the bundled sale which we also announced today, we have been evaluating potential uses of cash to complement our investment in high-growth partner companies in the life science and technology arena. This share repurchase program demonstrates the company’s confidence in our long-term strategy to deploy capital, build value in our partner companies, and realize that value through strategically-timed exits. In addition, we believe that a reverse stock split may also make our stock more appealing to a broader group of institutional shareholders.”

About Safeguard Scientifics
Founded in 1953 and based in Wayne, PA, Safeguard Scientifics, Inc. (NYSE: SFE) provides growth capital for entrepreneurial and innovative technology and life sciences companies. Safeguard targets technology companies in Software as a Service (SaaS) / Internet-based Businesses, Technology-Enabled Services and Vertical Software Solutions, and life sciences companies in Molecular and Point-of-Care Diagnostics, Medical Devices and Specialty Pharmaceuticals with capital requirements between $5 and $50 million. Safeguard participates in expansion financings, corporate spin-outs, management buyouts, recapitalizations, industry consolidations and early-stage financings. www.safeguard.com

Forward-Looking and Cautionary Statements
Statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. Such forward-looking statements that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute against stated strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations, additional financing requirements, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.

Important Information about the Reverse Split Proposal
This communication may be deemed to be solicitation material in connection with the proposal to be submitted to Safeguard’s shareholders at its 2008 annual meeting seeking authorization to effect a reverse split of Safeguard’s common stock (the “Reverse Split Proposal”). In connection with the Reverse Split Proposal, Safeguard has filed a preliminary proxy statement on Schedule 14A with the Securities and Exchange Commission. Shareholders of Safeguard are urged to read the preliminary proxy statement and all other relevant documents filed with the SEC when they become available, including Safeguard’s definitive proxy statement, because they will contain important information about the Reverse Split Proposal and Safeguard. A definitive proxy statement will be sent to holders of Safeguard stock in connection with seeking their authorization of the Reverse Split Proposal. This communication is not a solicitation of a proxy from any security holder of Safeguard.

Investors and security holders will be able to obtain the documents (when available) free of charge at the SEC’s web site, http://www.sec.gov. In addition, Safeguard shareholders may obtain free copies of the documents filed with the SEC when available by contacting Safeguard’s Investor Relations at 610-293-0600. You may also read and copy any reports, statements and other information filed by Safeguard with the SEC at the SEC public reference room at 100 F Street, N.E. Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC’s website for further information on its public reference room.

Safeguard and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Safeguard common stock in respect of the Reverse Split Proposal. Information about the directors and executive officers of Safeguard is set forth in Safeguard Annual Report on Form 10-K/A (Amendment No. 2) which was filed with the SEC on April 29, 2008. Investors may obtain additional information regarding the interest of Safeguard and its directors and executive officers in the Reverse Split Proposal by reading the preliminary proxy statement and, when it becomes available, the definitive proxy statement relating to the 2008 annual meeting.

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