Document




1152 Fifteenth Street, NW, Suite 850 Washington, DC 20005 202.729.7470 202.730.4520 fax
John Mahon 202.729.7477	Writer's E-mail Address John.Mahon@srz.com

February 6, 2017

VIA EDGAR

Dominic Minore, Senior Counsel

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re: Harris & Harris Group, Inc.

Preliminary Proxy Statement on Schedule 14A

Filed on January 23, 2017 (File No. 0-11576)

Dear Mr. Minore:

On behalf of Harris & Harris Group, Inc. ("Harris & Harris" or the "Company"), set forth below are the Company's responses to the oral comments provided by the staff of the Division of Investment Management (the "Staff") of the Securities and Exchange Commission (the "Commission") to the Company on February 1, 2017 with respect to the preliminary proxy statement on Schedule 14A (the "Preliminary Proxy Statement") filed by the Company with the Commission on January 23, 2017. The Staff's comments are set forth below in italics and are followed by the Company's responses. Where revisions to the Preliminary Proxy Statement are referenced in the below responses, such revisions are indicated by proposed marked pages from the Preliminary Proxy Statement attached hereto.

General

Comment: We note the disclosure included in the Preliminary Proxy Statement regarding the intention of the Company's current Chairman and Chief Executive Officer, Mr. Jamison, to resign from such positions in order to assume similar roles at HALE.life Corporation ("HALE"), a controlled portfolio company of Harris & Harris. Please revise the Q&A section of the Preliminary Proxy Statement to provide a more detailed explanation regarding the expected business activities and purpose of HALE subsequent to completion of the proposed transactions referenced in the Preliminary Proxy Materials (collectively, the "Proposed Restructuring").

Response: The Company has revised the Q&A section of the Preliminary Proxy Statement in response to the Staff's comment.


2.	Comment: Please confirm to the Staff whether any portfolio assets will be transferred by the Company to HALE in connection with the Proposed Restructuring.

Response: The Company advises the Staff on a supplemental basis that, with the exception of seed capital it expects to provide to HALE, no portfolio securities will be transferred by the Company to HALE in connection with the Proposed Restructuring.


3.	Comment: Please confirm to the Staff whether the Company has any present intention to spin out its equity stake in HALE subsequent to completion of the Proposed Restructuring.

Response: The Company advises the Staff on a supplemental basis that it has no present intent to spin-off its equity stake in HALE subsequent to the Proposed Restructuring, though its Board of Directors may revisit doing so in the future to the extent HALE achieves sufficient growth to justify operating as a stand-alone public company.


4.	Comment: Please advise the Staff on a supplemental basis whether HALE intends to operate as a "C" corporation for federal income tax purposes subsequent to the Proposed Restructuring.

Response: The Company advises the Staff on a supplemental basis that it expects HALE to operate as a "C" corporation for federal income tax purposes subsequent to the Proposed Restructuring, but that any final determinations with respect to HALE's tax treatment will be subject to the determination of HALE's board of directors, a majority of whom will be independent of both HALE and the Company subsequent to the Proposed Restructuring.


5.	Comment: Please advise the Staff on a supplemental basis whether the Company intends to dispose of portfolio assets that do not conform to its new investment objective subsequent to the Proposed Restructuring.

Response: The Company advises the Staff on a supplemental basis that it does not intend to undertake specific efforts to dispose of its current portfolio assets subsequent to the Proposed Restructuring.


6.	Comment: Please advise the Staff on a supplemental basis whether HALE is expected to fall within the definition of "significant subsidiary", as such term is defined in Rule 1-02(w) of Regulation S-X, subsequent to the Proposed Restructuring. If so, please confirm that the Company will provide the disclosure required by Rule 3.09 or Rule 4.08(g), as applicable, with respect to HALE.

Response: The Company advises the Staff on a supplemental basis that it does not expect HALE to fall within the definition of "significant subsidiary" subsequent to the Proposed Restructuring. To the extent HALE becomes a "significant subsidiary" in the future, the Company confirms that it will provide the disclosure required by Rule 3.09 or Rule 4.08(g), as applicable.


7.	Comment: Please revise the Q&A section of the Preliminary Proxy Statement to provide an aggregate, all inclusive, estimate of expenses the Company expects to incur in connection with the special meeting, including legal, accounting and printing costs, in addition to providing the amounts the Company expects to pay for proxy solicitation and related services.

Response: The Company has revised the Q&A section of the Preliminary Proxy Statement in response to the Staff's comment.


8.	Comment: Please revise the disclosure under Proposal 1 in the Preliminary Proxy Statement to include a comparative fees and expenses table, showing the estimated impact of any anticipated changes in fees and expenses as a result of the Proposed Restructuring.

Response: The Company has revised the disclosure under Proposal 1 in the Preliminary Proxy Statement in response to the Staff's comment.


9.	Comment: Under the sub-heading "Comparison of Material Features …" in Proposal 1 of the Preliminary Proxy Statement, please revise the tabular disclosure to explain the differences between business development companies and registered closed-end investment companies using more "plain English" language.

Response: The Company has revised the above-referenced tabular disclosure in response to the Staff's comment.


10.	Comment: Under the sub-heading "Registration as a Registered Closed-End Fund" in Proposal 1 of the Preliminary Proxy Statement, we note the reference to outstanding but unexercised options. Please advise the Staff whether any such outstanding options are presently "in-the-money", and if so, whether any that are unvested will become vested and exercisable as a result of the Proposed Restructuring.

Response: The Company advises the Staff on a supplemental basis that none of its currently outstanding options are "in-the-money" based on the Company's current stock price.

11.

Comment: Under the sub-heading "Registration as a Registered Closed-End Fund" in Proposal 1 of the Preliminary Proxy Statement, we note the reference to the automatic vesting of certain restricted stock awards. Please provide tabular disclosure noting the number of restricted shares each current executive officers and directors will have vest as a result of the Proposed Restructuring. In addition, please advise the Staff on a supplemental basis whether the Company expects to incur any compensation expense as a result of the vesting of such restricted shares. If so, please revise the disclosure set forth in the above-referenced sub-heading to detail the aggregate compensation expense the Company anticipates incurring as a result of such vesting.

Response: The Company has revised the disclosure set forth under the above-referenced sub-heading in response to the Staff's comment. In addition, the Company advises the Staff on a supplemental basis that while it expects to incur a compensation expense of approximately $169,000 in connection with the vesting of the outstanding restricted stock awards, it anticipates that such expense will be fully offset by a corresponding credit of approximately $749,000 relating to previously incurred expenses relating to the restricted stock that will be forfeited.


12.	Please describe the tax consequences to the Company of the Proposed Restructuring, including whether the Proposed Restructuring will result in the loss of any tax loss carry-forwards to which the Company may presently be entitled.

Response: The Company advises the Staff on a supplemental basis that it does not expect there to be any material change in ownership of the Company as a result of the Proposed Restructuring, and similarly expects to remain a "regulated investment company" for federal income tax purposes subsequent to the Proposed Restructuring. As a result, it does not expect that the Proposed Restructuring will have any tax consequences to the Company, or result the loss of any tax loss carry-forwards to which the Company may presently be entitled.


13.	Comment: Please revise the disclosure set forth under the sub-heading "Proposed Fundamental Investment Policies …" in Proposal 1 of the Preliminary Proxy Statement to ensure that each of the policies referenced in Section 8(b) of the Investment Company Act of 1940, as amended, have been addressed in accordance with the Staff's interpretive positions with respect thereto.

Response: The Company has revised the disclosure set forth under the above-referenced sub-heading in response to the Staff's comment.

14.

Comment: Under the sub-heading "Expected Management Team" in Proposal 1 of the Preliminary Proxy Statement, we note the reference to the appointment of Mr. Wolfe as a new director of the Company in connection with the Proposed Restructuring. Please confirm to the Staff that the Board of Directors of the Company has the authority to appoint Mr. Wolfe without a shareholder vote. In addition, please confirm that Mr. Wolfe will be submitted for election as a director at the Company's 2017 annual meeting of stockholders.

Response: The Company confirms to the Staff that the Company's Board of Directors has the authority, pursuant to the New York General Corporation Law, to appoint Mr. Wolfe to fill a vacancy on the Board of Directors. In addition, Mr. Wolfe, along with each of the other members of the Company's Board of Directors, will be subject to election at the Company's 2017 annual meeting of stockholders, which is expected to occur shortly after completion of the Proposed Restructuring.

15.

Comment: Under the sub-heading "Expected Management Team" in Proposal 1 of the Preliminary Proxy Statement, we note that Mr. Jamison will be resigning as Chairman and Chief Executive Officer of the Company to take on similar roles at HALE. Please provide disclosure under the above-referenced sub-heading regarding the expected compensation of Mr. Jamison for his service to HALE subsequent to the Proposed Restructuring.

Response: The Company has revised the disclosure set forth in the above-referenced section in response to the Staff's comment.

* * *

If you have any questions or additional comments concerning the foregoing, please contact the undersigned at (202) 729-7477.

Sincerely,

/s/ John J. Mahon

John J. Mahon

cc: Daniel B. Wolfe / Harris & Harris Group, Inc.