HARRIS & HARRIS GROUP, INC. |
(Exact Name of Registrant as Specified in Its Charter) |
New York | 13-3119827 |
(State or Other Jurisdiction of | (I.R.S. Employer Identification No.) |
Incorporation or Organization) |
1450 Broadway, New York, New York | 10018 |
(Address of Principal Executive Offices) | (Zip Code) |
(212) 582-0900 |
(Registrant's Telephone Number, Including Area Code) |
Large accelerated filer ¨ | Accelerated filer x | |
Non-accelerated filer ¨ | Smaller reporting company ¨ | |
(Do not check if a smaller reporting company) |
Class | Shares outstanding at November 8, 2016 |
Common Stock, $0.01 par value per share | 30,880,829 shares |
Page Number | |
i-v |
HARRIS & HARRIS GROUP, INC. CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) |
September 30, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Investments, in portfolio securities at value: | |||||||
Unaffiliated privately held companies (cost: $10,878,510 and $18,857,235, respectively) | $ | 4,715,016 | $ | 5,376,472 | |||
Unaffiliated rights to milestone payments (adjusted cost basis: $781,863 and $781,863, respectively) | 3,442,745 | 3,362,051 | |||||
Unaffiliated publicly traded securities (cost: $2,664,644 and $1,623,029, respectively) | 922,605 | 957,544 | |||||
Non-controlled affiliated privately held companies (cost: $51,750,473 and $49,262,921, respectively) | 45,985,741 | 41,909,262 | |||||
Non-controlled affiliated publicly traded companies (cost: $17,073,716 and $23,165,788, respectively) | 5,431,815 | 18,371,105 | |||||
Controlled affiliated privately held companies (cost: $24,382,537 and $23,205,336, respectively) | 7,247,421 | 7,010,534 | |||||
Equity method privately held companies (adjusted cost basis: $251,244 and $165,936, respectively) | 251,244 | 165,936 | |||||
Total, investments in private portfolio companies, rights to milestone payments and public securities at value (cost: $107,782,987 and $117,062,108, respectively) | 67,996,587 | 77,152,904 | |||||
Cash | 13,384,820 | 17,922,630 | |||||
Funds held in escrow from sales of investments at value (Note 3) | 116,872 | 374,565 | |||||
Receivable from portfolio companies | 26,081 | 13,032 | |||||
Receivable from sale of investments (Note 3) | 53,162 | 0 | |||||
Interest receivable | 189,512 | 10,333 | |||||
Prepaid expenses | 274,586 | 563,699 | |||||
Other assets | 381,054 | 424,123 | |||||
Total assets | $ | 82,422,674 | $ | 96,461,286 | |||
LIABILITIES & NET ASSETS | |||||||
Term loan credit facility (Note 5) | $ | 5,000,000 | $ | 5,000,000 | |||
Post retirement plan liabilities (Note 8) | 1,231,910 | 1,202,148 | |||||
Accounts payable and accrued liabilities | 632,715 | 1,268,355 | |||||
Deferred rent | 235,100 | 279,112 | |||||
Total liabilities | $ | 7,099,725 | $ | 7,749,615 | |||
Commitments and contingencies (Note 11) | |||||||
Net assets | $ | 75,322,949 | $ | 88,711,671 | |||
Net assets are comprised of: | |||||||
Preferred stock, $0.10 par value, 2,000,000 shares authorized; none issued | $ | 0 | $ | 0 | |||
Common stock, $0.01 par value, 45,000,000 shares authorized at 9/30/16 and 12/31/15; 33,218,651 and 33,183,576 issued at 9/30/16 and 12/31/15, respectively | 332,186 | 331,836 | |||||
Additional paid in capital (Note 9) | 215,787,335 | 215,762,973 | |||||
Accumulated net operating and realized loss | (96,757,129 | ) | (83,377,629 | ) | |||
Accumulated unrealized depreciation of investments | (39,786,400 | ) | (39,909,204 | ) | |||
Accumulated other comprehensive income (Note 8) | 352,482 | 509,220 | |||||
Treasury stock, at cost (2,337,822 shares at 9/30/16 and 12/31/15) (Note 12) | (4,605,525 | ) | (4,605,525 | ) | |||
Net assets | $ | 75,322,949 | $ | 88,711,671 | |||
Shares outstanding | 30,880,829 | 30,845,754 | |||||
Net asset value per outstanding share | $ | 2.44 | $ | 2.88 |
HARRIS & HARRIS GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015 | ||||||||||||
Investment income: | |||||||||||||||
Interest from: | |||||||||||||||
Unaffiliated companies | $ | 5,319 | $ | 6,785 | $ | 11,629 | $ | 27,561 | |||||||
Non-controlled affiliated companies | 105,572 | 44,886 | 258,444 | 299,208 | |||||||||||
Controlled affiliated companies | 103,558 | 72,759 | 289,700 | 164,392 | |||||||||||
Cash and U.S. Treasury securities and other | 478 | 4,599 | 2,827 | 9,347 | |||||||||||
Fees for providing managerial assistance to portfolio companies (Note 14) | 315,250 | 71,359 | 685,103 | 84,859 | |||||||||||
Yield-enhancing fees on debt securities | 35,975 | 44,014 | 80,533 | 90,062 | |||||||||||
Total investment income | 566,152 | 244,402 | 1,328,236 | 675,429 | |||||||||||
Expenses: | |||||||||||||||
Salaries, benefits and stock-based compensation (Note 9) | 618,070 | 955,900 | 1,839,577 | 3,012,078 | |||||||||||
Administration and operations | 65,763 | 105,120 | 318,175 | 341,214 | |||||||||||
Professional fees | 286,930 | 278,654 | 935,495 | 1,165,673 | |||||||||||
Rent (Note 3) | 75,266 | 83,308 | 189,707 | 218,772 | |||||||||||
Insurance expense | 66,184 | 73,768 | 193,297 | 215,103 | |||||||||||
Directors' fees and expenses | 79,519 | 98,218 | 224,279 | 286,743 | |||||||||||
Interest and other debt expenses | 209,831 | 209,831 | 625,882 | 561,577 | |||||||||||
Custody fees | 10,008 | 15,701 | 34,698 | 47,317 | |||||||||||
Depreciation | 11,346 | 11,710 | 34,123 | 36,412 | |||||||||||
Total expenses | 1,422,917 | 1,832,210 | 4,395,233 | 5,884,889 | |||||||||||
Net operating loss | (856,765 | ) | (1,587,808 | ) | (3,066,997 | ) | (5,209,460 | ) | |||||||
Net realized (loss) gain: | |||||||||||||||
Realized (loss) gain from investments: | |||||||||||||||
Unaffiliated companies | (2,926,711 | ) | (294,797 | ) | (5,852,173 | ) | 3,005,039 | ||||||||
Controlled affiliated companies | 0 | 1,559,235 | 0 | 1,559,235 | |||||||||||
Non-controlled affiliated companies | 0 | 0 | (1,244,955 | ) | (392,430 | ) | |||||||||
Publicly traded companies | (3,042,478 | ) | 11,158 | (3,042,463 | ) | 52,569 | |||||||||
Realized (loss) gain from investments | (5,969,189 | ) | 1,275,596 | (10,139,591 | ) | 4,224,413 | |||||||||
Income tax expense (Note 10) | 50 | 376 | 4,541 | 2,081 | |||||||||||
Net realized (loss) gain from investments | (5,969,239 | ) | 1,275,220 | (10,144,132 | ) | 4,222,332 | |||||||||
Net decrease (increase) in unrealized depreciation on investments: | |||||||||||||||
Unaffiliated companies | 2,947,500 | (1,371,570 | ) | 7,317,270 | (5,777,416 | ) | |||||||||
Controlled affiliated companies | 249,748 | (2,057,974 | ) | (940,313 | ) | 951,492 | |||||||||
Unaffiliated rights to milestone payments | 448,888 | 1,876,900 | 80,694 | 1,864,218 | |||||||||||
Non-controlled affiliated companies | (3,923,811 | ) | (11,672,922 | ) | 1,588,925 | (14,472,165 | ) | ||||||||
Publicly traded non-controlled affiliated companies | (2,027,026 | ) | (3,409,275 | ) | (10,710,083 | ) | (4,011,079 | ) | |||||||
Publicly traded unaffiliated companies | 3,191,640 | 102,816 | 2,786,311 | 325,767 | |||||||||||
Net decrease (increase) in unrealized depreciation on investments | 886,939 | (16,532,025 | ) | 122,804 | (21,119,183 | ) | |||||||||
Net realized and unrealized (loss) gain on investments | (5,082,300 | ) | (15,256,805 | ) | (10,021,328 | ) | (16,896,851 | ) | |||||||
Share of loss on equity method investments | (82,972 | ) | (60,012 | ) | (168,371 | ) | (249,848 | ) | |||||||
Net decrease in net assets resulting from operations: | |||||||||||||||
Total | $ | (6,022,037 | ) | $ | (16,904,625 | ) | $ | (13,256,696 | ) | $ | (22,356,159 | ) | |||
Per average basic and diluted outstanding share | $ | (0.20 | ) | $ | (0.54 | ) | $ | (0.43 | ) | $ | (0.71 | ) | |||
Average outstanding shares - basic and diluted | 30,880,829 | 31,251,950 | 30,859,267 | 31,272,790 |
HARRIS & HARRIS GROUP, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) |
Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||||||||
Net decrease in net assets resulting from operations | $ | (6,022,037 | ) | $ | (16,904,625 | ) | $ | (13,256,696 | ) | $ | (22,356,159 | ) | |||
Other comprehensive loss: | |||||||||||||||
Amortization of prior service (benefit) | (52,246 | ) | (52,246 | ) | (156,738 | ) | (156,738 | ) | |||||||
Other comprehensive loss | (52,246 | ) | (52,246 | ) | (156,738 | ) | (156,738 | ) | |||||||
Comprehensive loss | $ | (6,074,283 | ) | $ | (16,956,871 | ) | $ | (13,413,434 | ) | $ | (22,512,897 | ) |
HARRIS & HARRIS GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | ||||||
Cash flows used in operating activities: | |||||||
Net decrease in net assets resulting from operations | $ | (13,256,696 | ) | $ | (22,356,159 | ) | |
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities: | |||||||
Net realized loss and change in unrealized depreciation on investments | 10,016,787 | 16,894,770 | |||||
Depreciation of fixed assets, amortization of prepaid assets and accretion of bridge note interest | (353,331 | ) | (381,204 | ) | |||
Share of loss on equity method investments | 168,371 | 249,848 | |||||
Stock-based compensation expense | 47,027 | 617,972 | |||||
Amortization of prior service (benefit) | (156,738 | ) | (156,738 | ) | |||
Funding of operating commitment to equity method investments | (253,680 | ) | (262,215 | ) | |||
Purchase of affiliated portfolio companies | (5,517,052 | ) | (6,690,532 | ) | |||
Purchase of unaffiliated portfolio companies | (698,300 | ) | (509,824 | ) | |||
Payments received on debt investments | 0 | 783,418 | |||||
Proceeds from repayment of bridge notes of affiliated portfolio companies | 113,950 | 39,757 | |||||
Proceeds from repayment of bridge notes of controlled affiliated portfolio companies | 869,242 | 0 | |||||
Proceeds from repayment of bridge notes of non-controlled affiliated portfolio companies | 0 | 2,415,188 | |||||
Proceeds from sale of investments of unaffiliated portfolio companies | 3,094,171 | 5,557,846 | |||||
Proceeds from sale of investments of publicly traded unaffiliated portfolio companies | 2,007,980 | 170,662 | |||||
Changes in assets and liabilities: | |||||||
Receivable from portfolio companies | (13,049 | ) | 160,877 | ||||
Receivable from sale of investments | (53,162 | ) | 0 | ||||
Interest receivable | (179,179 | ) | 51,462 | ||||
Prepaid expenses | 289,113 | 334,202 | |||||
Other assets | 10,379 | (191,891 | ) | ||||
Post retirement plan liabilities | 29,762 | 40,065 | |||||
Accounts payable and accrued liabilities | (635,640 | ) | (257,935 | ) | |||
Deferred rent | (44,012 | ) | (38,752 | ) | |||
Net cash used in operating activities | (4,514,057 | ) | (3,529,183 | ) | |||
Cash flows from investing activities: | |||||||
Purchase of fixed assets | (1,438 | ) | (6,806 | ) | |||
Net cash used in investing activities | (1,438 | ) | (6,806 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from drawdown of loan facility | 0 | 5,000,000 | |||||
Purchase of treasury stock | 0 | (737,662 | ) | ||||
Payment of withholdings related to net settlement of restricted stock | (22,315 | ) | (47,644 | ) | |||
Net cash (used in) provided by financing activities | (22,315 | ) | 4,214,694 | ||||
Net (decrease) increase in cash | $ | (4,537,810 | ) | $ | 678,705 | ||
Cash at beginning of the period | 17,922,630 | 20,748,314 | |||||
Cash at end of the period | $ | 13,384,820 | $ | 21,427,019 | |||
Supplemental disclosures of cash flow information: | |||||||
Income taxes paid | $ | 4,541 | $ | 2,081 | |||
Interest paid | $ | 380,556 | $ | 304,167 |
HARRIS & HARRIS GROUP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Unaudited) |
Nine Months Ended September 30, 2016 | Year Ended December 31, 2015 | ||||||
Changes in net assets from operations: | |||||||
Net operating loss | $ | (3,066,997 | ) | $ | (7,162,510 | ) | |
Net realized (loss) gain on investments | (10,144,132 | ) | 4,531,700 | ||||
Net decrease (increase) in unrealized depreciation on investments | 122,804 | (17,302,729 | ) | ||||
Share of loss on equity method investments | (168,371 | ) | (312,291 | ) | |||
Net decrease in net assets resulting from operations | (13,256,696 | ) | (20,245,830 | ) | |||
Changes in net assets from capital stock transactions: | |||||||
Purchase of treasury stock | 0 | (1,199,994 | ) | ||||
Acquisition of vested restricted stock awards to pay required employee withholding tax | (22,315 | ) | (86,914 | ) | |||
Stock-based compensation expense | 47,027 | 798,965 | |||||
Net increase (decrease) in net assets resulting from capital stock transactions | 24,712 | (487,943 | ) | ||||
Changes in net assets from accumulated other comprehensive loss: | |||||||
Other comprehensive loss | (156,738 | ) | (208,983 | ) | |||
Net decrease in net assets resulting from accumulated other comprehensive loss | (156,738 | ) | (208,983 | ) | |||
Net decrease in net assets: | (13,388,722 | ) | (20,942,756 | ) | |||
Net Assets: | |||||||
Beginning of the period | 88,711,671 | 109,654,427 | |||||
End of the period | $ | 75,322,949 | $ | 88,711,671 |
HARRIS & HARRIS GROUP, INC. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2016 (Unaudited) | |||||||||
Method of Valuation (1) | Primary Industry (2) | Cost | Shares/ Principal | Value |
Investments in Unaffiliated Companies (3) - | |||||||||||||||
12.1% of net assets at value | |||||||||||||||
Private Placement Portfolio (Illiquid) (4) - | |||||||||||||||
6.3% of net assets at value | |||||||||||||||
Fleet Health Alliance, LLC (5)(8)(9)(10) | Life Sciences | ||||||||||||||
Developing software for information transfer amongst healthcare providers and consumers | |||||||||||||||
Unsecured Convertible Bridge Note, 0%, (acquired 4/22/16) | (M) | $ | 225,000 | $ | 225,000 | $ | 225,000 | ||||||||
Mersana Therapeutics, Inc. (5)(8)(9) | Life Sciences | ||||||||||||||
Developing antibody drug conjugates for cancer therapy | |||||||||||||||
Common Stock (acquired 7/27/12) | (H) | 3,875,395 | 350,539 | 717,186 | |||||||||||
Series A-1 Convertible Preferred Stock (acquired 7/27/12-4/2/14) | (H) | 683,538 | 635,081 | 1,336,199 | |||||||||||
Series B-1 Convertible Preferred Stock (acquired 2/20/15-6/14/16) | (H) | 365,820 | 339,887 | 731,555 | |||||||||||
4,924,753 | 2,784,940 | ||||||||||||||
Muses Labs, Inc. (5)(8)(10) | Life Sciences | ||||||||||||||
Developing a data analytics platform for precision medicine | |||||||||||||||
Unsecured Convertible Bridge Note, 5%, (acquired 5/25/16) | (M) | 215,746 | $ | 212,000 | 215,746 | ||||||||||
Nanosys, Inc. (5)(8)(9) | Energy | ||||||||||||||
Developing inorganic nanowires and quantum dots for use in LED-backlit devices | |||||||||||||||
Series C Convertible Preferred Stock (acquired 4/10/03) | (M) | 1,500,000 | 803,428 | 128,149 | |||||||||||
Series D Convertible Preferred Stock (acquired 11/7/05) | (M) | 3,000,003 | 1,016,950 | 436,897 | |||||||||||
Series E Convertible Preferred Stock (acquired 8/13/10) | (M) | 496,573 | 433,688 | 323,784 | |||||||||||
4,996,576 | 888,830 | ||||||||||||||
Nano Terra, Inc. (5)(8) | Energy | ||||||||||||||
Developing surface chemistry and nano-manufacturing solutions | |||||||||||||||
Warrants for Common Stock expiring on 2/22/21 (acquired 2/22/11) | (I) | 69,168 | 4,462 | 407 | |||||||||||
Warrants for Series A-3 Preferred Stock expiring on 11/15/22 (acquired 11/15/12) | (I) | 35,403 | 47,508 | 97,345 | |||||||||||
104,571 | 97,752 | ||||||||||||||
HARRIS & HARRIS GROUP, INC. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2016 (Unaudited) | |||||||||
Method of Valuation (1) | Primary Industry (2) | Cost | Shares/ Principal | Value |
Investments in Unaffiliated Companies (3) - | |||||||||||||||
12.1% of net assets at value (Cont.) | |||||||||||||||
Private Placement Portfolio (Illiquid) (4) - | |||||||||||||||
6.3% of net assets at value (Cont.) | |||||||||||||||
Phylagen, Inc. (5)(8) | Life Sciences | ||||||||||||||
Developing technology to improve human health and business productivity | |||||||||||||||
Secured Convertible Bridge Note, 5%, (acquired 2/5/15) | (M) | $ | 216,548 | $ | 200,000 | $ | 303,167 | ||||||||
Secured Convertible Bridge Note, 5%, (acquired 6/5/15) | (M) | 10,663 | $ | 10,000 | 14,928 | ||||||||||
227,211 | 318,095 | ||||||||||||||
Xenio Corp. (5)(8)(11) | Electronics | ||||||||||||||
Developing a smart platform for LED lighting that enables local intelligence and communication capabilities | |||||||||||||||
Common Stock (acquired 8/1/16) | (M) | 184,653 | 221,938 | 184,653 | |||||||||||
Total Unaffiliated Private Portfolio (cost: $10,878,510) | $ | 4,715,016 | |||||||||||||
Rights to Milestone Payments (Illiquid) (6) - | |||||||||||||||
4.6% of net assets at value | |||||||||||||||
Amgen, Inc. (8)(9) | Life Sciences | ||||||||||||||
Rights to Milestone Payments from Acquisition of BioVex Group, Inc. (acquired 3/4/11) | (I) | $ | 548,998 | $ | 548,998 | $ | 2,975,353 | ||||||||
Canon, Inc. (8)(9) | Electronics | ||||||||||||||
Rights to Milestone Payments from Acquisition of Molecular Imprints, Inc. (acquired 4/18/14) | (I) | 232,865 | $ | 232,865 | 467,392 | ||||||||||
Laird Technologies, Inc. (8)(9) | Energy | ||||||||||||||
Rights to Milestone Payments from Merger & Acquisition of Nextreme Thermal Solutions, Inc. (acquired 2/13/13) | (I) | 0 | $ | 0 | 0 | ||||||||||
Total Unaffiliated Rights to Milestone Payments (cost: $781,863) | $ | 3,442,745 | |||||||||||||
HARRIS & HARRIS GROUP, INC. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2016 (Unaudited) | |||||||||
Method of Valuation (1) | Primary Industry (2) | Cost | Shares/ Principal | Value |
Publicly Traded Portfolio (7) - | |||||||||||||||
1.2% of net assets at value | |||||||||||||||
Champions Oncology, Inc. (5)(9) | Life Sciences | ||||||||||||||
Developing its TumorGraftTM platform for personalized medicine and drug development | |||||||||||||||
Common Stock (acquired 3/24/11-3/11/15) | (M) | $ | 966,588 | 145,075 | $ | 243,726 | |||||||||
Warrants for Common Stock expiring 1/28/19 (acquired 1/28/13) | (I) | 400 | 5,500 | 2,281 | |||||||||||
966,988 | 246,007 | ||||||||||||||
OpGen, Inc. (5)(9)(12) | Life Sciences | ||||||||||||||
Developing tools for genomic sequence assembly and analysis | |||||||||||||||
Common Stock (acquired 5/5/15) | (M) | 1,271,292 | 316,335 | 518,789 | |||||||||||
Warrants for the Purchase of Common Stock expiring 5/8/20 (acquired 5/5/15) | (M) | 425,579 | 300,833 | 118,197 | |||||||||||
Warrants for the Purchase of Common Stock expiring 2/17/25 (acquired 5/5/15) | (I) | 785 | 31,206 | 39,612 | |||||||||||
1,697,656 | 676,598 | ||||||||||||||
Total Unaffiliated Publicly Traded Portfolio (cost: $2,664,644) | $ | 922,605 | |||||||||||||
Total Investments in Unaffiliated Companies (cost: $14,325,017) | $ | 9,080,366 | |||||||||||||
Investments in Non-Controlled Affiliated Companies (3) - | |||||||||||||||
68.3% of net assets at value | |||||||||||||||
Private Placement Portfolio (Illiquid) (13) - | |||||||||||||||
61.1% of net assets at value | |||||||||||||||
ABSMaterials, Inc. (5)(8) | Energy | ||||||||||||||
Developing nano-structured absorbent materials for water remediation and consumer applications | |||||||||||||||
Series A Convertible Preferred Stock (acquired 2/17/10-10/24/11) | (I) | $ | 435,000 | 390,000 | $ | 240,482 | |||||||||
Series B Convertible Preferred Stock (acquired 11/8/13-6/25/14) | (I) | 1,217,644 | 1,037,751 | 852,557 | |||||||||||
Secured Convertible Bridge Note, 8%, (acquired 1/20/16) | (M) | 105,589 | $ | 100,000 | 105,589 | ||||||||||
1,758,233 | 1,198,628 | ||||||||||||||
HARRIS & HARRIS GROUP, INC. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2016 (Unaudited) | |||||||||
Method of Valuation (1) | Primary Industry (2) | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (3) - | |||||||||||||||
68.3% of net assets at value (Cont.) | |||||||||||||||
Private Placement Portfolio (Illiquid) (13) - | |||||||||||||||
61.1% of net assets at value (Cont.) | |||||||||||||||
AgBiome, LLC (5)(8)(9) | Life Sciences | ||||||||||||||
Providing early-stage research and discovery for agriculture and utilizing the crop microbiome to identify products that reduce risk and improve yield | |||||||||||||||
Series A-1 Convertible Preferred Stock (acquired 1/30/13) | (I) | $ | 2,000,000 | 2,000,000 | $ | 5,877,743 | |||||||||
Series A-2 Convertible Preferred Stock (acquired 4/9/13-10/15/13) | (I) | 521,740 | 417,392 | 1,273,672 | |||||||||||
Series B Convertible Preferred Stock (acquired 8/7/15) | (I) | 500,006 | 160,526 | 686,576 | |||||||||||
3,021,746 | 7,837,991 | ||||||||||||||
D-Wave Systems, Inc. (5)(8)(9)(14) | Electronics | ||||||||||||||
Developing high-performance quantum computing systems | |||||||||||||||
Series 1 Class B Convertible Preferred Stock (acquired 9/30/08) | (H) | 1,002,074 | 1,144,869 | 2,520,573 | |||||||||||
Series 1 Class C Convertible Preferred Stock (acquired 9/30/08) | (H) | 487,804 | 450,450 | 995,955 | |||||||||||
Series 1 Class D Convertible Preferred Stock (acquired 9/30/08) | (H) | 748,473 | 855,131 | 1,890,714 | |||||||||||
Series 1 Class E Convertible Preferred Stock (acquired 11/24/10) | (H) | 248,049 | 269,280 | 603,580 | |||||||||||
Series 1 Class F Convertible Preferred Stock (acquired 11/24/10) | (H) | 238,323 | 258,721 | 579,913 | |||||||||||
Series 1 Class H Convertible Preferred Stock (acquired 6/27/14) | (H) | 909,088 | 460,866 | 1,119,022 | |||||||||||
Series 2 Class D Convertible Preferred Stock (acquired 9/30/08) | (H) | 736,019 | 678,264 | 1,499,657 | |||||||||||
Series 2 Class E Convertible Preferred Stock (acquired 6/1/12-3/22/13) | (H) | 659,493 | 513,900 | 1,159,038 | |||||||||||
Series 2 Class F Convertible Preferred Stock (acquired 6/1/12-3/22/13) | (H) | 633,631 | 493,747 | 1,113,585 | |||||||||||
Warrants for Common Stock expiring 5/12/19 (acquired 5/12/14) | (I) | 26,357 | 20,415 | 16,154 | |||||||||||
5,689,311 | 11,498,191 | ||||||||||||||
HARRIS & HARRIS GROUP, INC. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2016 (Unaudited) | |||||||||
Method of Valuation (1) | Primary Industry (2) | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (3) - | |||||||||||||||
68.3% of net assets at value (Cont.) | |||||||||||||||
Private Placement Portfolio (Illiquid) (13) - | |||||||||||||||
61.1% of net assets at value (Cont.) | |||||||||||||||
EchoPixel, Inc. (5)(8) | Life Sciences | ||||||||||||||
Developing virtual reality 3-D visualization software for life sciences and health care applications | |||||||||||||||
Series Seed Convertible Preferred Stock (acquired 6/21/13-6/30/14) | (I) | $ | 1,250,000 | 4,194,630 | $ | 920,842 | |||||||||
Series Seed-2 Convertible Preferred Stock (acquired 1/22/16) | (I) | 500,000 | 1,476,668 | 329,089 | |||||||||||
Unsecured Convertible Bridge Note, 0%, (acquired 7/12/16) | (M) | 350,000 | $ | 350,000 | 437,500 | ||||||||||
2,100,000 | 1,687,431 | ||||||||||||||
Ensemble Therapeutics Corporation (5)(8)(9) | Life Sciences | ||||||||||||||
Developing DNA-Programmed ChemistryTM for the discovery of new classes of therapeutics | |||||||||||||||
Series B Convertible Preferred Stock (acquired 6/6/07) | (I) | 2,000,000 | 1,449,275 | 0 | |||||||||||
Series B-1 Convertible Preferred Stock (acquired 4/21/14) | (I) | 679,754 | 492,575 | 1,201,610 | |||||||||||
2,679,754 | 1,201,610 | ||||||||||||||
Genome Profiling, LLC (5)(8)(10) | Life Sciences | ||||||||||||||
Developing a platform to analyze and understand the epigenome | |||||||||||||||
Unsecured Convertible Bridge Note, 8%, (acquired 8/4/16) | (M) | 230,000 | $ | 230,000 | 230,000 | ||||||||||
HZO, Inc. (5)(8) | Electronics | ||||||||||||||
Developing novel industrial coatings that protect electronics against damage from liquids | |||||||||||||||
Common Stock (acquired 6/23/14) | (M) | 666,667 | 405,729 | 378,952 | |||||||||||
Series I Convertible Preferred Stock (acquired 6/23/14) | (M) | 5,709,835 | 2,266,894 | 3,538,876 | |||||||||||
Series II Convertible Preferred Stock (acquired 6/23/14-8/3/15) | (M) | 2,500,006 | 674,638 | 1,568,988 | |||||||||||
Series II-A Convertible Preferred Stock (acquired 9/9/16) | (M) | 226,070 | 69,053 | 245,009 | |||||||||||
Warrants for Series II-A Convertible Preferred Stock expiring 7/15/23 (acquired 7/15/16) | (I) | 29,820 | 6,577 | 23,274 | |||||||||||
9,132,398 | 5,755,099 | ||||||||||||||
HARRIS & HARRIS GROUP, INC. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2016 (Unaudited) | |||||||||
Method of Valuation (1) | Primary Industry (2) | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (3) - | |||||||||||||||
68.3% of net assets at value (Cont.) | |||||||||||||||
Private Placement Portfolio (Illiquid) (13) - | |||||||||||||||
61.1% of net assets at value (Cont.) | |||||||||||||||
Laser Light Engines, Inc. (8)(9)(15) | Energy | ||||||||||||||
Manufactured solid-state light sources for digital cinema and large-venue projection displays | |||||||||||||||
Series A Convertible Preferred Stock (acquired 5/6/08) | (M) | $ | 2,000,000 | 7,499,062 | $ | 0 | |||||||||
Series B Convertible Preferred Stock (acquired 9/17/10) | (M) | 3,095,802 | 13,571,848 | 0 | |||||||||||
Secured Convertible Bridge Note, 12%, (acquired 10/7/2011) | (M) | 200,000 | $ | 200,000 | 0 | ||||||||||
Secured Convertible Bridge Note, 12%, (acquired 11/17/2011) | (M) | 95,652 | $ | 95,652 | 0 | ||||||||||
Secured Convertible Bridge Note, 12%, (acquired 12/21/2011) | (M) | 82,609 | $ | 82,609 | 0 | ||||||||||
Secured Convertible Bridge Note, 12%, (acquired 3/5/2012) | (M) | 434,784 | $ | 434,784 | 0 | ||||||||||
Secured Convertible Bridge Note, 12%, (acquired 7/26/2012) | (M) | 186,955 | $ | 186,955 | 0 | ||||||||||
Secured Convertible Bridge Note, 20%, (acquired 4/29/2013) | (M) | 166,667 | $ | 166,667 | 0 | ||||||||||
Secured Convertible Bridge Note, 20%, (acquired 7/22/2013) | (M) | 166,667 | $ | 166,667 | 0 | ||||||||||
Secured Convertible Bridge Note, 10%, (acquired 10/30/2013) | (M) | 80,669 | $ | 80,669 | 0 | ||||||||||
Secured Convertible Bridge Note, 10%, (acquired 2/5/2014) | (M) | 19,331 | $ | 19,331 | 0 | ||||||||||
Secured Convertible Bridge Note, 10%, (acquired 6/24/2014) | (M) | 13,745 | $ | 13,745 | 0 | ||||||||||
6,542,881 | 0 | ||||||||||||||
Lodo Therapeutics Corporation (5)(8)(9) | Life Sciences | ||||||||||||||
Developing and commercializing novel therapeutics derived from a metagenome-based Natural Product Discovery Platform | |||||||||||||||
Series A Convertible Preferred Stock (acquired 12/21/15-4/22/16) | (I) | 658,190 | 658,190 | 658,993 | |||||||||||
HARRIS & HARRIS GROUP, INC. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2016 (Unaudited) | |||||||||
Method of Valuation (1) | Primary Industry (2) | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (3) - | |||||||||||||||
68.3% of net assets at value (Cont.) | |||||||||||||||
Private Placement Portfolio (Illiquid) (13) - | |||||||||||||||
61.1% of net assets at value (Cont.) | |||||||||||||||
Metabolon, Inc. (5)(8)(9) | Life Sciences | ||||||||||||||
Developing a biochemical profiling platform for precision medicine | |||||||||||||||
Series B Convertible Preferred Stock (acquired 6/29/09) | (M) | $ | 2,500,000 | 371,739 | $ | 2,924,040 | |||||||||
Series B-1 Convertible Preferred Stock (acquired 6/29/09) | (M) | 706,214 | 148,696 | 1,169,615 | |||||||||||
Series C Convertible Preferred Stock (acquired 4/30/09) | (M) | 1,000,000 | 1,000,000 | 2,678,510 | |||||||||||
Series D Convertible Preferred Stock (acquired 8/25/11) | (M) | 1,499,999 | 835,882 | 2,272,335 | |||||||||||
Series E-1 Convertible Preferred Stock (acquired 3/2/15) | (M) | 1,225,000 | 444,404 | 1,439,068 | |||||||||||
Series E-2 Convertible Preferred Stock (acquired 3/2/15) | (M) | 299,999 | 103,277 | 312,755 | |||||||||||
7,231,212 | 10,796,323 | ||||||||||||||
ORIG3N, Inc. (5)(8)(9) | Life Sciences | ||||||||||||||
Developing precision medicine applications for induced pluripotent stems cells | |||||||||||||||
Series 1 Convertible Preferred Stock (acquired 2/5/15-8/5/15) | (I) | 500,000 | 1,195,315 | 1,165,150 | |||||||||||
Series A Convertible Preferred Stock (acquired 11/25/15-9/7/16) | (I) | 1,500,000 | 1,364,666 | 1,504,222 | |||||||||||
2,000,000 | 2,669,372 | ||||||||||||||
Petra Pharma Corporation (5)(8)(9) | Life Sciences | ||||||||||||||
Developing small molecule inhibitors for treatment of cancer and metabolic diseases | |||||||||||||||
Series A Convertible Preferred Stock (acquired 12/23/15) | (I) | 1,025,050 | 1,025,050 | 1,027,353 | |||||||||||
HARRIS & HARRIS GROUP, INC. CONSOLIDATED SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 2016 (Unaudited) | |||||||||
Method of Valuation (1) | Primary Industry (2) | Cost | Shares/ Principal | Value |
Investments in Non-Controlled Affiliated Companies (3) - | |||||||||||||||
68.3% of net assets at value (Cont.) | |||||||||||||||
Private Placement Portfolio (Illiquid) (13) - | |||||||||||||||
61.1% of net assets at value (Cont.) | |||||||||||||||
Produced Water Absorbents, Inc. (5)(8)(16) | Energy | ||||||||||||||
Providing integrated process separation solutions to the global oil and gas industries, enabling onsite treatment of produced and flowback water | |||||||||||||||
Common Stock (acquired 4/30/16) | (M) | $ | 7,670,281 | 50,243,350 | $ | 0 | |||||||||
Warrants for Common Stock expiring upon liquidation event (acquired 4/30/16) | (I) | 65,250 | 450,000 | 0 | |||||||||||
Senior Secured Debt, 15% commencing on 4/1/16, maturing on 12/31/19 (acquired 4/1/16) | (I) | 1,946,167 | $ | 2,533,766 | 1,424,750 | ||||||||||
9,681,698 | 1,424,750 | ||||||||||||||
Total Non-Controlled Affiliated Private Portfolio (cost: $51,750,473) | $ | 45,985,741 | |||||||||||||
Publicly Traded Portfolio (17) - | |||||||||||||||
7.2% of net assets at value | |||||||||||||||
Adesto Technologies Corporation (5)(9)(18) | Electronics | ||||||||||||||
Developing low-power, high-performance memory devices | |||||||||||||||
Common Stock (acquired 10/27/15) | (M) | $ | 11,482,417 | 1,769,868 | $ | 3,929,107 | |||||||||
Enumeral Biomedical Holdings, Inc. (5)(9) | Life Sciences | ||||||||||||||
Developing therapeutics and diagnostics through functional assaying of single cells | |||||||||||||||
Common Stock (acquired 7/31/14) | (M) | 4,993,357 | 7,966,368 | 1,441,913 | |||||||||||
Warrants to purchase Common Stock expiring 2/2/2024 (acquired 7/31/14) | (I) | 57,567 | 255,120 | 34,631 | |||||||||||
Warrants to purchase Common Stock expiring 7/30/2019 (acquired 7/31/14) | (I) | 540,375 | 1,500,000 | 26,164 | |||||||||||
5,591,299 | 1,502,708 | ||||||||||||||