Securities
Act Registration No. 333-
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Investment
Company Act File
No. 814-176
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Registration
Statement Under
The Securities Act Of 1933:
|
T
|
|
Pre-Effective
Amendment No.
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¨
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|
Post-Effective
Amendment No.
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¨
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Copies
to:
|
|
Sandra
M. Forman, Esq.
|
Richard
T. Prins, Esq.
|
General
Counsel
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Skadden,
Arps, Slate, Meagher & Flom LLP
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Harris
& Harris Group, Inc.
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Four
Times Square
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111
West 57th
Street, Suite 1100
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New
York, New York 10036
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New
York, NY 10019
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(212)
735-3000
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(212)
582-0900
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Title of
Securities
Being
Registered
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Amount Being
Registered
|
Proposed
Maximum
Offering Price
Per
Share(1)
|
Proposed
Maximum
Aggregate
Offering
Price
|
Amount of
Registration
Fee
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Common Stock, $0.01 par value
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7,000,000
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$5.59
|
$39,130,000
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$2,183.45
(2)
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(1)
|
Estimated
solely for the purpose of determining the registration fee pursuant to
Rule 457(c) under the Securities Act of 1933 and based on the average of
the high and low prices as reported on the Nasdaq Global Market of the
registrant's Common Stock on July 21,
2009.
|
(2)
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$1,186.43
previously paid in connection with this Registration Statement filed on
November 29, 2006.
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Items in Part A of Form N-2
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Location in Prospectus
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||
Item
1.
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Outside
Front Cover
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Front
Cover Page
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Item
2.
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Cover
Pages; Other Offering Information
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Front
Cover Page; Inside Front Cover Page; Available
Information
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Item
3.
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Fee
Table and Synopsis
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Prospectus
Summary; Table of Fees and Expenses
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Item
4.
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Financial
Highlights
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Selected
Condensed Consolidated Financial Data; Management's Discussion and
Analysis of Financial Condition and Results of
Operations
|
|
Item
5.
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Plan
of Distribution
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Plan
of Distribution
|
|
Item
6.
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Selling
Shareholders
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Not
Applicable
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Item
7.
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Use
of Proceeds
|
Prospectus
Summary; Use of Proceeds
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Item
8.
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General
Description of the Registrant
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Outside
Front Cover; Business; Risk Factors; Investment Policies; Price Range of
Common Stock; General Description of our Portfolio
Companies
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Item
9.
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Management
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Management
of the Company
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Item
10.
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Capital
Stock, Long-Term Debt and Other Securities
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Prospectus
Summary; Capitalization; Dividends and Distributions; Taxation; Risk
Factors
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Item
11.
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Defaults
and Arrears on Senior Securities
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Not
Applicable
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Item
12.
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Legal
Proceedings
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Management
of the Company
|
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Item
13.
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Table
of Contents of the Statement of Additional Information
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Not
Applicable
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Items in Part B of Form N-2(1)
|
Location in Prospectus
|
||
Item
14.
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Cover
Page
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Not
Applicable
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|
Item
15.
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Table
of Contents
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Not
Applicable
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Item
16.
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General
Information and History
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Not
Applicable
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Item
17.
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Investment
Objective and Policies
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Business;
Investment Policies
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Item
18.
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Management
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Management
of the Company; Certain Government Regulations
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Item
19.
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Control
Persons and Principal Holders of Securities
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Management
of the Company
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Item
20.
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Investment
Advisory and Other Services
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Management
of the Company; Experts
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Item
21.
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Portfolio
Managers
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Management
of the Company
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Item
22.
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Brokerage
Allocation and Other Practices
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Brokerage
|
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Item
23.
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Tax
Status
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Taxation
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Item
24.
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Financial
Statements
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Consolidated
Financial
Statements
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(1)
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Pursuant
to General Instructions to Form N-2, all information required by Part B:
Statement of Additional Information has been incorporated into Part A: The
Prospectus of the Registration
Statement.
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Page
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||
PROSPECTUS
SUMMARY
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1
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AVAILABLE
INFORMATION
|
7
|
|
TABLE
OF FEES AND EXPENSES
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7
|
|
SELECTED
CONDENSED CONSOLIDATED FINANCIAL DATA
|
8
|
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SELECTED
QUARTERLY DATA (UNAUDITED)
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9
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MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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11
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RISK
FACTORS
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28
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FORWARD-LOOKING
INFORMATION
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38
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USE
OF PROCEEDS
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38
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PRICE
RANGE OF COMMON STOCK
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39
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BUSINESS
|
40
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GENERAL
DESCRIPTION OF OUR PORTFOLIO COMPANIES
|
50
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DETERMINATION
OF NET ASSET VALUE
|
57
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INVESTMENT
POLICIES
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59
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MANAGEMENT
OF THE COMPANY
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64
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BOARD
OF DIRECTORS AND EXECUTIVE OFFICERS
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64
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EXECUTIVE
COMPENSATION
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70
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OTHER
INFORMATION
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86
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BROKERAGE
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86
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DIVIDENDS
AND DISTRIBUTIONS
|
86
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TAXATION
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86
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CERTAIN
GOVERNMENT REGULATIONS
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90
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CAPITALIZATION
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91
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PLAN
OF DISTRIBUTION
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92
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LEGAL
MATTERS
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93
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|
EXPERTS
|
93
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FURTHER
INFORMATION
|
93
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PRIVACY
POLICY
|
93
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|
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-1
|
|
·
|
a
portfolio consisting of investments that are generally available only to a
small, highly specialized group of professional venture capital firms as
investors;
|
|
·
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a
team of professionals, including five full-time members of management,
four of whom are designated as Managing Directors: Douglas W. Jamison,
Alexei A. Andreev, Michael A. Janse and Daniel B. Wolfe, and a Vice
President, Misti Ushio, to evaluate and monitor
investments. One of our directors is also a consultant to us,
Lori D. Pressman. These six professionals collectively have
expertise in venture capital investing, intellectual property and
nanotechnology and microsystems;
|
|
·
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the
opportunity to benefit from our experience in a new field expected to
permeate a variety of industries;
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|
·
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through
the ownership of our publicly traded shares, a measure of liquidity not
typically available in underlying venture capital portfolio investments;
and
|
|
·
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transparency
resulting from requirements to make certain public disclosures about our
investments.
|
|
·
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our
involvement in the field of nanotechnology and
microsystems;
|
|
·
|
research
institutions, universities, and corporations that seek to transfer their
scientific discoveries to the private
sector;
|
|
·
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other
venture capital companies seeking co-investors or referring deals to
us;
|
|
·
|
referrals
from our portfolio companies; and
|
|
·
|
direct
calls and business plan submissions by companies, business incubators and
individuals seeking venture
capital.
|
|
·
|
about
30 percent will qualify for an initial
presentation;
|
|
·
|
about
10 percent will become the subject of formal due diligence;
and
|
|
·
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less
than 3 percent will be voted upon by our investment
team.
|
|
·
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increase
our capital in order to take advantage of new investment opportunities and
follow-on investment opportunities in our existing portfolio
companies;
|
|
·
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increase
our operating efficiency, as our costs are primarily fixed and will
represent a smaller percentage of our total assets after giving effect to
this offering; and
|
|
·
|
pay
operating expenses, including due diligence expenses on potential
investments.
|
|
·
|
The
recent financial crisis could increase the non-performance risk for our
portfolio companies.
|
|
·
|
A
continuing lack of initial public offering opportunities and a decrease in
merger and acquisition transactions may cause companies to stay in our
portfolio longer, leading to lower returns, write-downs and
write-offs.
|
|
·
|
Investing
in small, private companies involves a high degree of risk and is highly
speculative.
|
|
·
|
We
may invest in companies working with technologies or intellectual property
that currently have few or no proven commercial
applications.
|
|
·
|
Our
portfolio companies may not successfully develop, manufacture or market
their products.
|
|
·
|
Our
portfolio companies working with nanotechnology and microsystems may be
particularly susceptible to intellectual property
litigation.
|
|
·
|
The
value of our portfolio could be adversely affected if the technologies
utilized by our portfolio companies are found, or even rumored or feared,
to cause health or environmental risks, or if legislation is passed that
limits the commercialization of any of these
technologies.
|
|
·
|
Our
Nanotech for CleantechSM
and Nanotech for ElectronicsSM
portfolios are currently the largest portions of our venture capital
portfolio, and, therefore, fluctuations in the value of the companies in
these portfolios may adversely affect our net asset value per share to a
greater degree than other sectors of our
portfolio.
|
|
·
|
Our
portfolio companies may generate revenues from the sale of products that
are not enabled by nanotechnology.
|
|
·
|
Our
portfolio companies may incur debt that ranks senior to our investments in
such companies.
|
|
·
|
We
invest in illiquid securities and may not be able to dispose of them when
it is advantageous to do so, or
ever.
|
|
·
|
Unfavorable
regulatory changes could impair our ability to engage in liquidity
events.
|
|
·
|
Even
if some of our portfolio companies complete initial public offerings, the
returns on our investments in those companies would be
uncertain.
|
|
·
|
Our
business may be adversely affected by the recent financial crisis and our
ability to access the capital
markets.
|
|
·
|
Because
there is generally no established market in which to value our
investments, our Valuation Committee's value determinations may differ
materially from the values that a ready market or third party would
attribute to these investments.
|
|
·
|
Changes
in valuations of our privately held, early stage companies tend to be more
volatile than changes in prices of publicly traded
securities.
|
|
·
|
We
may continue to experience material write-downs of securities of portfolio
companies.
|
|
·
|
Because
we do not choose investments based on a strategy of diversification, nor
do we rebalance the portfolio should one or more investments increase in
value substantially relative to the rest of the portfolio, the value of
our portfolio is subject to greater volatility than the value of companies
with more broadly diversified investments.
|
·
|
We are dependent upon key management personnel for future success and may not be able to retain them. | |
|
·
|
The
market for venture capital investments, including nanotechnology
investments, is highly competitive.
|
|
·
|
In
addition to the difficulty of finding attractive investment opportunities,
our status as a regulated business development company may hinder our
ability to participate in investment opportunities or to protect the value
of existing investments.
|
|
·
|
Our
failure to make follow-on investments in our portfolio companies could
impair the value of our portfolio.
|
|
·
|
Bank
borrowing or the issuance of debt securities or preferred stock by us, to
fund investments in portfolio companies or to fund our operating expenses,
would make our total return to common shareholders more
volatile.
|
|
·
|
We
are authorized to issue preferred stock, which would convey special rights
and privileges to its owners senior to those of Common Stock
shareholders.
|
|
·
|
Loss
of status as a regulated investment company would reduce our net asset
value and distributable income.
|
|
·
|
We
operate in a heavily regulated environment, and changes to, or
non-compliance with, regulations and laws could harm our
business.
|
|
·
|
Market
prices of our Common Stock will continue to be
volatile.
|
|
·
|
Quarterly
results fluctuate and are not indicative of future quarterly
performance.
|
|
·
|
To
the extent that we do not realize income or choose not to retain after-tax
realized capital gains, we will have a greater need for additional capital
to fund our investments and operating
expenses.
|
|
·
|
Investment
in foreign securities could result in additional
risks.
|
|
·
|
Investing
in our stock is highly speculative and an investor could lose some or all
of the amount invested.
|
|
·
|
We
will have discretion over the use of proceeds of this
offering.
|
|
·
|
Our
shares might trade at discounts from net asset value or at premiums that
are unsustainable over the long
term.
|
|
·
|
The
Board of Directors intends to grant stock options to our employees
pursuant to the Company's Equity Incentive Plan. When
exercised, these options may have a dilutive effect on existing
shareholders.
|
|
·
|
You
have no right to require us to repurchase your
shares.
|
|
·
|
our
annual report on Form 10-K;
|
|
·
|
our
quarterly reports on Form 10-Q;
|
|
·
|
our
current reports on Form 8-K; and
|
|
·
|
amendments
to those reports.
|
Common
Stock offered
|
We
may offer, from time to time, up to a total of 7,000,000 shares of our
Common Stock available under this Prospectus on terms to be determined at
the time of the offering. Our Common Stock may be offered at prices and on
terms to be set forth in one or more Prospectus
Supplements. The offering price per share of our Common Stock
will not be less than the net asset value per share of our Common Stock at
the time we make the offering exclusive of any underwriting commissions or
discounts, unless we have shareholder approval.
|
|
Use
of proceeds
|
We
estimate the total net proceeds of the offering to be up to $36,199,500
based on the last reported price for our Common Stock on July 21, 2009, of
$5.55.
We
expect to invest or reserve for potential follow-on investment the net
proceeds of any offering within two years from the completion of such
offering. The net proceeds of this offering invested after two
years will only be used for follow-on investments. Pending
investment in portfolio companies, we intend to invest the net proceeds of
any offering of our Common Stock in time deposits and/or income-producing
securities that are issued or guaranteed by the federal government or an
agency of the federal government or a government-owned corporation, which
may yield less than our operating expense ratio. We may also
use the proceeds of this offering for operating expenses, including due
diligence expenses on potential investments. Our portfolio
companies rarely pay us dividends or interest, and we do not generate
enough income from fixed income investments to meet all of our operating
expenses. If we pay operating expenses from the proceeds, it
will reduce the net proceeds of the offering that we will have available
for investment.
|
|
Dividends
and distributions
|
To
the extent that we retain any net capital gain, we may make deemed capital
gain dividends. If we do make a deemed capital gain dividend,
you will not receive a cash distribution, but instead you will receive a
tax credit and increase in basis equal to your proportionate share of the
tax paid by us on your behalf. We currently intend to retain
our net capital gains for investment and pay the associated federal
corporate income tax. We may change this policy in the
future. See "Taxation."
|
|
Nasdaq
Global Market symbol
|
TINY
|
|
Offering
methods
|
|
Our
Common Stock may be offered directly to one or more purchasers, through
agents designated from time to time by us, including in transactions that
are deemed to be "at the market" as defined in Rule 415 under the
Securities Act of 1933, to or through underwriters or dealers or through a
combination of any such methods of sale. See "Plan of
Distribution."
|
Shareholder
Transaction Expenses
|
||||
Sales
Load(1)
(as a percentage of offering price)
|
N/A | |||
Offering
Expenses (as a percentage of offering price)
|
0.82 | % | ||
Annual
Expenses (as a percentage of net assets attributable to Common
Stock)
|
||||
Management
Fees(2)
|
N/A | |||
Other
Expenses(3)
|
||||
Salaries
and Benefits(4)
|
3.90 | % | ||
Administration
and Operations(5)
|
1.64 | % | ||
Professional
Fees
|
0.59 | % | ||
Total
Annual Expenses(6)
|
6.13 | % |
(1)
|
The
actual amounts in connection with any offering will be set forth in the
Prospectus Supplement, if
applicable.
|
(2)
|
The
Company has no external management fees because it is internally
managed.
|
(3)
|
"Other
Expenses" are based on projected amounts for the fiscal year ended
December 31, 2009.
|
(4)
|
"Salaries
and Benefits" includes non-cash stock-based compensation expense of
$2,705,726. The Company accounts for stock-based compensation
expense pursuant to SFAS No. 123(R) "Share-Based Payment," which requires
that we determine the fair value of all share-based payments to employees,
including the fair value of grants of employee stock options, and record
these amounts as an expense in the Statement of Operations over the
vesting period with a corresponding increase to our additional paid-in
capital. There is no effect on net asset value from stock-based
compensation expense at the time of grant. If options are
exercised, net asset value per share will be decreased if the net asset
value per share at the time of exercise is higher than the exercise price
and net asset value per share will be increased if the net asset value per
share at the time of exercise is lower than the exercise
price. Excluding the non-cash, stock-based compensation
expense, "Salaries and benefits" totals $2,958,744 or 2.03 percent of net
assets attributable to Common
Stock.
|
(5)
|
"Administration
and Operations" includes expenses incurred for administration, operations,
rent, directors' fees and expenses, depreciation and custodian
fees.
|
(6)
|
"Total
Annual Expenses" includes non-cash compensation expense of
$2,705,726. See Footnote (4) above. Cash-based total
annual expenses as a percentage of net assets attributable to Common Stock
is 4.26 percent.
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
$686
|
$1,873
|
$3,033
|
$5,823
|
|
*
|
This
example includes non-cash, stock-based compensation. Excluding
the non-cash, stock-based compensation, you would pay expenses of $506 in
1 year, $1,364 in 3 years, $2,235 in 5 years and $4,468 in 10 years, on a
$10,000 investment, assuming a five percent
return.
|
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Total
assets
|
$ | 111,627,601 | $ | 142,893,332 | $ | 118,328,590 | $ | 132,938,120 | $ | 79,361,451 | ||||||||||
Total
liabilities
|
$ | 2,096,488 | $ | 4,529,988 | $ | 4,398,287 | $ | 14,950,378 | $ | 4,616,652 | ||||||||||
Net
assets
|
$ | 109,531,113 | $ | 138,363,344 | $ | 113,930,303 | $ | 117,987,742 | $ | 74,744,799 | ||||||||||
Net
asset value per outstanding share
|
$ | 4.24 | $ | 5.93 | $ | 5.42 | $ | 5.68 | $ | 4.33 | ||||||||||
Cash
dividends paid
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||
Cash
dividends paid per outstanding share
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||
Shares
outstanding, end of year
|
25,859,573 | 23,314,573 | 21,015,017 | 20,756,345 | 17,248,845 |
2008
|
2007
|
2006
|
2005
|
2004
|
||||||||||||||||
Total
investment income
|
$ | 1,987,347 | $ | 2,705,636 | $ | 3,028,761 | $ | 1,540,862 | $ | 637,562 | ||||||||||
Total
expenses1
|
$ | 12,674,498 | $ | 14,533,179 | $ | 10,641,696 | $ | 7,006,623 | $ | 4,046,341 | ||||||||||
Net
operating loss
|
$ | (10,687,151 | ) | $ | (11,827,543 | ) | $ | (7,612,935 | ) | $ | (5,465,761 | ) | $ | (3,408,779 | ) | |||||
Total
tax expense (benefit)2
|
$ | 34,121 | $ | 87,975 | $ | (227,355 | ) | $ | 8,288,778 | $ | 650,617 | |||||||||
Net
realized (loss) income from investments
|
$ | (8,323,634 | ) | $ | 30,162 | $ | 258,693 | $ | 14,208,789 | $ | 858,503 | |||||||||
Net
(increase) decrease in unrealized depreciation on
investments
|
$ | (30,170,712 | ) | $ | 5,080,936 | $ | (4,418,870 | ) | $ | (2,026,652 | ) | $ | 484,162 | |||||||
Net
(decrease) increase in net assets resulting from
operations
|
$ | (49,181,497 | ) | $ | (6,716,445 | ) | $ | (11,773,112 | ) | $ | 6,716,376 | $ | (2,066,114 | ) | ||||||
(Decrease)
increase in net assets resulting from operations per average outstanding
share
|
$ | (1.99 | ) | $ | (0.30 | ) | $ | (0.57 | ) | $ | 0.36 | $ | (0.13 | ) |
2009
|
||||
1st Quarter
|
||||
Total
investment loss
|
$ | (23,561 | ) | |
Net
operating loss
|
$ | (2,098,879 | ) | |
Net
decrease in net assets resulting from operations
|
$ | (951,424 | ) | |
Net
decrease in net assets resulting from operations per average outstanding
share
|
$ | (0.04 | ) |
2008
|
||||||||||||||||
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|||||||||||||
Total
investment income
|
$ | 576,302 | $ | 467,625 | $ | 587,918 | $ | 355,502 | ||||||||
Net
operating loss
|
$ | (2,480,618 | ) | $ | (2,638,283 | ) | $ | (2,196,739 | ) | $ | (3,371,511 | ) | ||||
Net
(decrease) increase in net assets resulting from
operations
|
$ | (3,289,035 | ) | $ | 1,354,709 | $ | (34,032,747 | ) | $ | (13,214,424 | ) | |||||
Net
(decrease) increase in net assets resulting from operations per average
outstanding share
|
$ | (0.14 | ) | $ | 0.06 | $ | (1.32 | ) | $ | (0.51 | ) |
2007
|
||||||||||||||||
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|||||||||||||
Total
investment income
|
$ | 652,498 | $ | 637,701 | $ | 743,414 | $ | 672,023 | ||||||||
Net
operating loss
|
$ | (2,667,118 | ) | $ | (2,891,667 | ) | $ | (3,117,595 | ) | $ | (3,151,163 | ) | ||||
Net
(decrease) increase in net assets resulting from
operations
|
$ | (6,390,160 | ) | $ | (4,093,644 | ) | $ | 604,237 | $ | 3,163,122 | ||||||
Net
(decrease) increase in net assets resulting from operations per
average outstanding share |
$ | (0.30 | ) | $ | (0.19 | ) | $ | 0.03 | $ | 0.16 |
2006
|
||||||||||||||||
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|||||||||||||
Total
investment income
|
$ | 804,862 | $ | 785,265 | $ | 719,619 | $ | 719,015 | ||||||||
Net
operating loss
|
$ | (767,743 | ) | $ | (693,887 | ) | $ | (2,988,790 | ) | $ | (3,162,515 | ) | ||||
Net
decrease in net assets resulting from operations
|
$ | (1,653,990 | ) | $ | (1,282,997 | ) | $ | (2,588,092 | ) | $ | (6,248,033 | ) | ||||
Net
decrease in net assets resulting from operations per average
outstanding share |
$ | (0.08 | ) | $ | (0.06 | ) | $ | (0.12 | ) | $ | (0.31 | ) |
Three Months Ending
|
||||||||||||||||||||
2005
|
2006
|
2007
|
2008
|
March 31, 2009
|
||||||||||||||||
Total
Incremental Investments
|
$ | 16,251,339 | $ | 24,408,187 | $ | 20,595,161 | $ | 17,779,462 | $ | 723,176 | ||||||||||
No.
of New Investments
|
4 | 6 | 7 | 4 | 0 | |||||||||||||||
No.
of Follow-On Investment Rounds
|
13 | 14 | 20 | 25 | 4 | |||||||||||||||
No.
of Rounds Led
|
0 | 7 | 3 | 4 | 0 | |||||||||||||||
Average
Dollar Amount – Initial
|
$ | 1,575,000 | $ | 2,383,424 | $ | 1,086,441 | $ | 683,625 | $ | 0 | ||||||||||
Average
Dollar Amount – Follow- On
|
$ | 765,488 | $ | 721,974 | $ | 649,504 | $ | 601,799 | $ | 180,794 |
2005
|
2006
|
2007
|
2008
|
March 31, 2009
|
||||||||||||||||
Net
Asset Value, BOY
|
$ | 74,744,799 | $ | 117,987,742 | $ | 113,930,303 | $ | 138,363,344 | $ | 109,531,113 | ||||||||||
Gross
Write-Downs During Year
|
$ | (3,450,236 | ) | $ | (4,211,323 | ) | $ | (7,810,794 | ) | $ | (39,671,588 | ) | $ | (4,204,060 | ) | |||||
Gross
Write-Ups During Year
|
$ | 23,485,176 | $ | 279,363 | $ | 11,694,618 | $ | 820,559 | $ | 5,382,829 | ||||||||||
Gross
Write-Downs as a Percentage of Net Asset Value,
BOY
|
-4.62 | % | -3.57 | % | -6.86 | % | -28.67 | % | -3.83 | % | ||||||||||
Gross
Write-Ups as a Percentage of Net Asset Value,
BOY
|
31.42 | % | 0.24 | % | 10.26 | % | 0.59 | % | 4.91 | % | ||||||||||
Net
Write-Downs/Write-Ups as a Percentage of Net Asset Value,
BOY
|
26.8 | % | -3.33 | % | 3.40 | % | -28.08 | % | 1.08 | % |
Q4 2008
|
Q1 2009
|
Change From 52-Week
High to 3/31/09
|
|
9/30/08 - 12/31/08
|
12/31/08 - 3/31/09
|
||
Dow
Jones Industrial Avg.
|
-19.12%
|
-13.3%
|
-42.32%
|
Nasdaq
Composite
|
-24.61%
|
-3.07%
|
-40.09%
|
S&P
500 Composite
|
-22.45%
|
-11.67%
|
-44.60%
|
Russell
2000
|
-26.51%
|
-15.36%
|
-44.69%
|
Harris
& Harris Group
|
-38.09%
|
-6.33%
|
-57.62%
|
Investment
|
Amount of Write-Down
|
|||
Ancora
Pharmaceuticals, Inc.
|
$400,000 | |||
BridgeLux,
Inc.
|
983 | |||
Crystal
IS, Inc.
|
332,238 | |||
CSwitch
Corporation
|
20,286 | |||
Exponential
Business Development Company
|
366 | |||
Kovio,
Inc.
|
5,729 | |||
Laser
Light Engines, Inc.
|
500,000 | |||
Mersana
Therapeutics, Inc.
|
3,757 | |||
Metabolon,
Inc.
|
362,831 | |||
Molecular
Imprints, Inc.
|
4,000 | |||
Nanosys,
Inc.
|
1,342,530 | |||
NeoPhotonics
Corporation
|
58,651 | |||
Questech
Corporation
|
29,189 | |||
SiOnyx,
Inc.
|
1,076,155 |
Investment
|
Amount of Write-Down
|
|||
Adesto
Technologies Corporation
|
$1,100,000 | |||
Ancora
Pharmaceuticals, Inc.
|
299,439 | |||
BioVex
Group, Inc.
|
2,439,250 | |||
BridgeLux,
Inc.
|
3,624,553 | |||
Cambrios
Technologies Corporation
|
1,297,012 | |||
Cobalt
Technologies, Inc.
|
187,499 | |||
Crystal
IS, Inc.
|
1,001,300 | |||
CSwitch
Corporation
|
5,177,946 | |||
D-Wave
Systems, Inc.
|
22,670 | |||
Ensemble
Discovery Corporation
|
1,000,000 | |||
Innovalight,
Inc.
|
1,927,946 | |||
Kereos,
Inc.
|
159,743 | |||
Kovio,
Inc.
|
761,497 | |||
Mersana
Therapeutics, Inc.
|
1,019,613 | |||
Metabolon,
Inc.
|
2,136,734 | |||
Molecular
Imprints, Inc.
|
2,365,417 | |||
NanoGram
Corporation
|
4,415,417 | |||
Nanomix,
Inc.
|
980,418 | |||
NeoPhotonics
Corporation
|
4,024,305 | |||
Nextreme
Thermal Solutions, Inc.
|
2,182,133 | |||
Polatis,
Inc.
|
276,526 | |||
PolyRemedy,
Inc.
|
122,250 | |||
Questech
Corporation
|
463,968 | |||
Siluria
Technologies, Inc.
|
160,723 | |||
SiOnyx,
Inc.
|
1,076,153 | |||
Starfire
Systems, Inc.
|
750,000 | |||
TetraVitae
Bioscience, Inc.
|
125,000 |
Follow-On Investments
|
Amount
|
|||
BioVex
Group, Inc.
|
$ | 111,111 | ||
CFX
Battery, Inc.
|
$ | 3,492 | ||
Crystal
IS, Inc.
|
$ | 408,573 | ||
Mersana
Therapeutics, Inc.
|
$ | 200,000 | ||
Total
|
$ | 723,176 |
March 31, 2009
|
December 31, 2008
|
|||||||
Venture
capital investments, at cost
|
$ | 91,736,479 | $ | 91,090,001 | ||||
Net
unrealized depreciation(1)
|
32,942,791 | 34,124,848 | ||||||
Venture
capital investments, at value
|
$ | 58,793,688 | $ | 56,965,153 |
March 31, 2009
|
December 31, 2008
|
|||||||
U.S.
government obligations, at cost
|
$ | 51,343,768 | $ | 52,956,288 | ||||
Net
unrealized (depreciation) appreciation(1)
|
(2,957 | ) | 27,652 | |||||
U.S.
government obligations, at value
|
$ | 51,340,811 | $ | 52,983,940 |
New Investments
|
Amount
|
|||
Cobalt
Technologies, Inc.
|
$ | 240,000 | ||
Laser
Light Engines, Inc.
|
$ | 2,000,000 | ||
PolyRemedy,
Inc.
|
$ | 244,500 | ||
TetraVitae
Bioscience, Inc.
|
$ | 250,000 | ||
Follow-on Investments
|
||||
Adesto
Technologies Corporation
|
$ | 1,052,174 | ||
Ancora
Pharmaceuticals Inc.
|
$ | 800,000 | ||
BioVex
Group, Inc.
|
$ | 200,000 | ||
BridgeLux,
Inc.
|
$ | 1,000,001 | ||
Cobalt
Technologies, Inc.
|
$ | 134,999 | ||
CFX
Battery, Inc.
|
$ | 526,736 | ||
CSwitch
Corporation
|
$ | 986,821 |
Follow-on Investments
|
Amount
|
|||
CSwitch
Corporation
|
$ | 250,000 | ||
D-Wave
Systems, Inc.
|
$ | 736,019 | ||
D-Wave
Systems, Inc.
|
$ | 487,804 | ||
Ensemble
Discovery Corporation
|
$ | 250,286 | ||
Kovio,
Inc.
|
$ | 1,500,000 | ||
Mersana
Therapeutics, Inc.
|
$ | 200,000 | ||
Metabolon,
Inc.
|
$ | 1,000,000 | ||
NeoPhotonics
Corporation
|
$ | 200,000 | ||
Nextreme
Thermal Solutions, Inc.
|
$ | 377,580 | ||
Nextreme
Thermal Solutions, Inc.
|
$ | 200,000 | ||
Nextreme
Thermal Solutions, Inc.
|
$ | 200,000 | ||
Nextreme
Thermal Solutions, Inc.
|
$ | 800,000 | ||
Nextreme
Thermal Solutions, Inc.
|
$ | 1,050,000 | ||
Phoenix
Molecular Corporation
|
$ | 25,000 | ||
Phoenix
Molecular Corporation
|
$ | 25,000 | ||
Siluria
Technologies, Inc.
|
$ | 42,542 | ||
Solazyme,
Inc.
|
$ | 2,000,000 | ||
Solazyme,
Inc.
|
$ | 1,000,000 | ||
Total
|
$ | 17,779,462 |
December 31,
|
||||||||
2008
|
2007
|
|||||||
Venture
capital investments, at cost
|
$ | 91,090,001 | $ | 82,677,528 | ||||
Net
unrealized depreciation (1)
|
34,124,848 | 4,567,144 | ||||||
Venture
capital investments, at value
|
$ | 56,965,153 | $ | 78,110,384 |
December 31,
|
||||||||
2008
|
2007
|
|||||||
U.S.
government obligations, at cost
|
$ | 52,956,288 | $ | 59,552,933 | ||||
Net
unrealized appreciation(1)
|
27,652 | 640,660 | ||||||
U.S.
government obligations, at value
|
$ | 52,983,940 | $ | 60,193,593 |
New Investments
|
Amount
|
|||
Adesto
Technologies Corporation
|
$ | 1,147,826 | ||
Ancora
Pharmaceuticals, Inc.
|
$ | 800,000 | ||
BioVex
Group, Inc.
|
$ | 2,500,000 | ||
Ensemble
Discovery Corporation
|
$ | 2,000,000 | ||
Lifco,
Inc.
|
$ | 946,528 | ||
Phoenix
Molecular Corporation
|
$ | 50,010 | ||
Siluria
Technologies, Inc.
|
$ | 160,723 | ||
Follow-on Investments
|
||||
BridgeLux,
Inc.
|
$ | 350,877 | ||
BridgeLux,
Inc.
|
$ | 233,918 | ||
BridgeLux,
Inc.
|
$ | 916,928 | ||
Cambrios
Technologies Corporation
|
$ | 1,300,000 | ||
Chlorogen,
Inc.
|
$ | 7,042 | ||
CSwitch
Corporation
|
$ | 32,624 | ||
CSwitch
Corporation
|
$ | 529,852 | ||
Innovalight,
Inc.
|
$ | 1,993,568 | ||
Kereos,
Inc.
|
$ | 540,000 | ||
Kovio,
Inc.
|
$ | 1,000,000 | ||
NanoGram
Corporation
|
$ | 851,393 | ||
Mersana
Therapeutics, Inc.
|
$ | 500,000 | ||
Nanomix,
Inc.
|
$ | 680,240 | ||
NanoOpto
Corporation
|
$ | 268,654 | ||
Nextreme
Thermal Solutions, Inc.
|
$ | 750,000 | ||
Polatis,
Inc.
|
$ | 17,942 | ||
Polatis,
Inc.
|
$ | 13,454 | ||
Polatis,
Inc.
|
$ | 58,582 | ||
SiOnyx,
Inc.
|
$ | 2,445,000 | ||
Solazyme,
Inc.
|
$ | 500,000 | ||
Total
|
$ | 20,595,161 |
|
•
|
stock
market and capital markets
conditions;
|
|
•
|
internal
developments in our Company with respect to our personnel, financial
condition and compliance with all
applicable regulations;
|
|
•
|
announcements
regarding any of our portfolio
companies;
|
|
•
|
announcements
regarding developments in the nanotechnology or cleantech-related
fields in general;
|
|
•
|
environmental
and health concerns regarding nanotechnology, whether real or
perceptual;
|
|
•
|
announcements
regarding government funding and initiatives related to the development of
nanotechnology or cleantech-related
products;
|
|
•
|
general
economic conditions and trends;
and/or
|
|
•
|
additions
or departures of key personnel.
|
Net
Asset Value
|
Premium
or (Discount) as a
|
|||||||||||||||||||
Market
Price
|
("NAV")
Per Share
|
%
of NAV
|
||||||||||||||||||
Quarter
Ended
|
High
|
Low
|
at
End of Period
|
High
|
Low
|
|||||||||||||||
March
31, 2007
|
13.58 | 11.00 | 5.27 | 157.7 | 108.7 | |||||||||||||||
June
30, 2007
|
14.32 | 11.01 | 5.54 | 158.5 | 98.7 | |||||||||||||||
September
30, 2007
|
11.79 | 9.51 | 5.69 | 107.2 | 67.1 | |||||||||||||||
December
31, 2007
|
11.10 | 8.00 | 5.93 | 87.2 | 34.9 | |||||||||||||||
March
31, 2008
|
8.98 | 5.76 | 5.86 | 53.2 | (1.7 | ) | ||||||||||||||
June
30, 2008
|
8.73 | 6.00 | 5.95 | 46.7 | 0.8 | |||||||||||||||
September
30, 2008
|
8.50 | 4.97 | 4.68 | 81.6 | 6.2 | |||||||||||||||
December
31, 2008
|
6.58 | 3.10 | 4.24 | 55.2 | (26.9 | ) | ||||||||||||||
March
31, 2009
|
4.48 | 2.65 | 4.22 | 6.2 | (37.2 | ) | ||||||||||||||
June
30, 2009
|
5.99 | 3.57 | — | — | — | |||||||||||||||
Through
July 21, 2009
|
6.09 | 5.01 | — | — | — |
|
·
|
a
portfolio consisting of investments that are generally available only to a
small, highly specialized group of professional venture capital firms as
investors;
|
|
·
|
a
team of professionals, including five full-time members of management,
four of whom are designated as Managing Directors: Douglas W. Jamison,
Alexei A. Andreev, Michael A. Janse and Daniel B. Wolfe, and a Vice
President, Misti Ushio, to evaluate and monitor
investments. One of our directors is also a consultant to us,
Lori D. Pressman. These six professionals collectively have
expertise in venture capital investing, intellectual property and
nanotechnology and microsystems;
|
|
·
|
the
opportunity to benefit from our experience in a new field expected to
permeate a variety of industries;
|
|
·
|
through
the ownership of our publicly traded shares, a measure of liquidity not
typically available in underlying venture capital portfolio investments;
and
|
|
·
|
transparency
resulting from requirements to make certain public disclosures about our
investments.
|
|
·
|
our
involvement in the field of nanotechnology and
microsystems;
|
|
·
|
research
institutions, universities and corporations that seek to transfer their
scientific discoveries to the private
sector;
|
|
·
|
other
venture capital companies seeking co-investors or referring deals to
us;
|
|
·
|
referrals
from our portfolio companies; and
|
|
·
|
direct
calls and business plan submissions by companies, business incubators and
individuals seeking venture
capital.
|
|
·
|
equity,
equity-related securities (including warrants) and debt with equity
features from either private or public issuers, whether in corporate,
partnership or other form, including development stage or start-up
entities;
|
|
·
|
debt
obligations of all types having varying terms with respect to security or
credit support, subordination, purchase price, interest payments and
maturity; and
|
|
·
|
to
a limited extent, intellectual property, including patents, research and
development in technology or product development that may lead to patents
or other marketable technology.
|
Historical IPOs
|
Holding Period to IPO
(years)
|
|||
Alliance
Pharmaceutical Corporation
|
6.39 | |||
Ag
Services of America, Inc.
|
1.39 | |||
Molten
Metal Technology, Inc.
|
3.25 | |||
Nanophase
Technologies Corporation
|
3.07 | |||
Princeton
Video Image, Inc. (formerly Princeton Electronic
Billboard)
|
6.63 | |||
SciQuest,
Inc. (formerly BioSupplyNet)
|
3.09 | |||
Genomica
Corporation
|
4.52 | |||
NeuroMetrix,
Inc.
|
8.14 | |||
Average
|
4.56 | |||
Median
|
3.88 |
Tiny
Technology Companies in Our Active Portfolio
as
of March 31, 2009
|
Holding
Period (years)
|
||
Adesto
Technologies Corporation
|
2.11
|
||
Ancora
Pharmaceuticals Inc.
|
1.91
|
||
BioVex
Group, Inc.
|
1.51
|
||
BridgeLux,
Inc. (formerly eLite Optoelectronics, Inc.)
|
3.87
|
||
Cambrios
Technologies Corporation
|
4.39
|
||
CFX
Battery, Inc. (formerly Lifco, Inc.)
|
1.78
|
||
Cobalt
Technologies, Inc.
|
0.48
|
||
Crystal
IS, Inc.
|
4.53
|
||
CSwitch
Corporation
|
4.85
|
||
D-Wave
Systems, Inc.
|
2.95
|
||
Ensemble
Discovery Corporation
|
1.82
|
||
Innovalight,
Inc.
|
2.95
|
||
Kereos,
Inc.
|
3.87
|
||
Kovio,
Inc.
|
3.39
|
||
Laser
Light Engines, Inc.
|
0.90
|
||
Mersana
Therapeutics, Inc. (formerly Nanopharma Corporation)
|
7.13
|
||
Metabolon,
Inc.
|
3.22
|
||
Molecular
Imprints, Inc.
|
5.01
|
||
NanoGram
Corporation
|
5.92
|
||
Nanomix,
Inc.
|
4.28
|
||
Nanosys,
Inc.
|
5.99
|
||
Nantero,
Inc.
|
7.65
|
||
NeoPhotonics
Corporation 2004
|
5.32
|
||
Nextreme
Thermal Solutions, Inc.
|
4.32
|
||
Polatis,
Inc. (formerly Continuum Photonics, Inc.)
|
6.77
|
||
PolyRemedy,
Inc.
|
1.14
|
||
Questech
Corporation (formerly Intaglio, Ltd.)
|
14.86
|
||
Siluria
Technologies, Inc.
|
1.45
|
||
SiOnyx,
Inc.
|
2.89
|
||
Solazyme,
Inc.
|
4.35
|
||
Starfire
Systems, Inc.
|
4.90
|
||
TetraVitae
Bioscience, Inc.
|
0.48
|
||
Xradia,
Inc.
|
2.25
|
||
Average
|
3.92
|
||
Median
|
3.87
|
Level
of
Integration
|
Examples
from our Portfolio
|
Positives
and Negatives
|
||
Cleantech
|
Electronics,
Photonics
and
Tools
|
Healthcare
|
||
System-Level
Solutions / Therapeutics
|
NanoGram
|
D-Wave
Systems
Kovio
Polatis
|
PolyRemedy
BioVex
Mersana
|
(+)
Vertically integrated; capture most value; formidable IP
barriers
(-)
High capital intensity, significant technical and execution risks due to
high-complexity and long time-to-market
|
Components
/ IP / Platforms
|
BridgeLux
CFX
Battery
Cobalt
Biofuels
Crystal
IS
Innovalight
Laser
Light Engines
Nextreme
Solazyme
TetraVitae
|
Adesto
CSwitch
Cambrios
Nantero
NeoPhotonics
Nanosys
|
Ensemble
Nanomix
Ancora
|
(+)
Proven markets with defined standards; opportunity for plug-and-play
replacement of inferior products
(-)
Moderate/high capital intensity; technical and execution risk; dependence
on partners for manufacturing and integration
|
Tools
/ Service
|
Molecular
Imprints
Xradia
|
Metabolon
|
(+)
Quick revenues with positive margins on R&D products; fast track to
profitability
(-)
Scalability of business may be limited; slow adoption for mainstream
applications
|
|
Chemicals
and Coatings
|
Starfire
Systems
Siluria
Technologies
|
(+)
Quick revenues; potential for low capital
requirements
(-)
Potential for low gross margins, rapid ASP decline and overall
commoditization.
|
Portfolio
Company as of
March
31, 2009
|
Product
Focus
|
Example
of Publicly Announced
Partners,
Customers and Collaborators
|
Adesto
Technologies Corporation
|
Semiconductor
products
|
No
Publicly Announced Partners or Customers.
|
Ancora
Pharmaceuticals Inc.
|
Synthetic
carbohydrates for
pharmaceutical
markets
|
Partners
and customers include several pharmaceutical and biotechnology
companies.
|
BioVex
Group, Inc.
|
Novel
biologics for treatment of cancer and infectious disease
|
No
publicly announced partners or customers.
|
BridgeLux,
Inc.
(formerly
eLite Optoelectronics, Inc.)
|
LED
chips and arrays for solid-state lighting
|
Cree
– Supply and licensing agreement for LED
chips.
|
Portfolio
Company as of
March
31, 2009
|
Product
Focus
|
Example
of Publicly Announced
Partners,
Customers and Collaborators
|
Cambrios
Technologies Corporation
|
Transparent
conductors
|
Nissha
Printing Company – Development and application of transparent conductive
materials and films for touch panel applications.
Chisso
and Sumitomo – Commercialization of transparent conductive materials and
films for liquid crystal displays.
|
CFX
Battery, Inc.
(formerly
Lifco, Inc.)
|
Primary
and rechargeable batteries
|
No
publicly announced partners or customers.
|
Cobalt
Biofuels, Inc.
|
Renewable
fuels and chemicals
|
No
publicly announced partners or customers.
|
Crystal
IS, Inc.
|
Aluminum
nitride substrates and UV light-emitting diodes for water
purification
|
Sanan
Optoelectronics Co. Ltd. - Pilot manufacturing of UV
LEDs.
|
CSwitch
Corporation
|
High-bandwidth
configurable switches
|
No
publicly announced partners or customers.
|
D-Wave
Systems, Inc.
|
High-performance
quantum computing
|
Google
– Collaboration to develop image recognition with an adiabatic quantum
computer.
|
Ensemble
Discovery Corporation
|
DNA
Programmed chemistry for discovery of new therapeutics
|
Bristol-Myers
Squibb Company – Strategic alliance to discover and develop drug
candidates against a number of pharmaceutical targets.
Roche
– Product development program for cancer diagnostics.
|
Innovalight,
Inc.
|
Thin-film
photovoltaics modules
|
OTB
– Supplied first high-throughput system for solar.
Roth
& Rau – Installed first ink-jet-based solar production
line.
|
Kereos,
Inc.
|
Emulsion-based
targeted therapeutics and molecular imaging agents
|
No
publicly announced partners or customers.
|
Kovio,
Inc.
|
Semiconductor
products using printed electronics
|
Panasonic
and Toppan Forms – End applications using printed RFID
tags.
|
Laser
Light Engines, Inc.
|
Solid-state
light source for digital cinema and other projection-based
displays
|
No
publicly announced partners or customers.
|
Mersana
Therapeutics, Inc.
(formerly
Nanopharma Corporation)
|
Oncology-focused
therapeutic products
|
No
publicly announced partners or customers.
|
Metabolon,
Inc.
|
Metabolomic
profiling services, biomarker discovery and diagnostic
tools
|
Syngenta
- Use Metabolon's biochemical profiling technology for use in agricultural
applications. Customers include 8 of the top 10 pharmaceutical
firms.
|
Portfolio
Company as of
March
31, 2009
|
Product
Focus
|
Example
of Publicly Announced
Partners,
Customers and Collaborators
|
Molecular
Imprints, Inc.
|
Tools
for nano-imprint lithography
|
Dai
Nippon Printing - Strategic collaboration agreement to speed the
commercialization of nanoimprint lithography for high-volume semiconductor
device manufacturing.
Customers
include SEMATECH, Motorola, HP and Hitachi.
|
NanoGram
Corporation
|
Silicon-based,
thin-film solar cells
|
Teijin
Limited - Extending NanoGram's printed silicon ink technology to use with
Teijin's flexible substrates.
|
Nanomix,
Inc.
|
Carbon-nanotube
based sensors
|
No
publicly announced partners or customers.
|
Nanosys,
Inc.
|
Electronic,
medical and optical devices enabled by nanomaterials
|
Life
Technologies Corporation – License agreement for commercialization of
nanotechnology-enabled anti-counterfeiting solutions.
Sharp,
Hynix and Intel – Development programs for nanotechnology-enabled
electronic devices.
|
Nantero,
Inc.
|
Carbon-nanotube
based non-volatile memory
|
ON
Semiconductor, Hewlett Packard, Brewer Science and SVTC – Partnerships to
develop carbon nanotube-enabled devices.
|
NeoPhotonics
Corporation
|
Active
and passive optical components for optical networking
|
Huawei
and other Tier 1 telecommunications companies - Large purchaser of access,
metro and long-haul optical network equipment.
|
Nextreme
Thermal Solutions, Inc.
|
Thermoelectric
devices for thermal management of integrated circuits and for power
generation
|
Nucletron
Technologies GmbH – Partnership to sell Nextreme's products in
Europe.
|
Polatis,
Inc.
(formerly
Continuum Photonics, Inc.)
|
Microelectromechanical
systems for optical networks
|
Partnered
with EdenTree Technologies, JDSU Corporation, QuikCycle and
Crestron.
|
PolyRemedy,
Inc.
|
Robotic
manufacturing platform for wound treatment patches
|
No
publicly announced partners or customers.
|
Questech
Corporation
(formerly
Intaglio, Ltd.)
|
Decorative
tiles and switch plates made of stone and microscale-metal
materials
|
Home
Depot – Distribution agreement for switch plates.
|
Siluria
Technologies, Inc.
|
Nanomaterial-enabled
products for a diverse set of markets
|
No
publicly announced partners or customers.
|
SiOnyx,
Inc.
|
Black
Silicon-enabled optical detectors and image arrays
|
No
publicly announced partners or
customers.
|
Portfolio
Company as of
March
31, 2009
|
Product
Focus
|
Example
of Publicly Announced
Partners,
Customers and Collaborators
|
Solazyme,
Inc.
|
Algae-produced
products including nutraceuticals, industrial chemicals and
energy
|
Chevron
Technology Ventures – Agreement for biodiesel feedstock development and
testing.
|
Starfire
Systems, Inc.
|
Ceramic-based
parts for applications in electronics, aerospace and automotive
industries
|
General
Motors – Partnership for development and commercialization of silicon
carbide break parts.
|
TetraVitae
Bioscience, Inc.
|
Renewable
fuels and chemicals
|
No
publicly announced partners or customers.
|
Xradia,
Inc.
|
X-ray
imaging tools
|
Customers
include Argonne National Laboratory and University of
Texas.
|
|
·
|
Equity-related
securities;
|
|
·
|
Investments
in intellectual property, patents, research and development in technology
or product development;
|
|
·
|
Long-term
fixed-income securities;
|
|
·
|
Short-term
fixed-income securities; and
|
|
·
|
All
other securities.
|
|
·
|
Market
Approach: The market approach uses prices and other relevant
information generated by market transactions involving identical or
comparable assets or liabilities. For example, the market approach often
uses market multiples derived from a set of comparables. Multiples might
lie in ranges with a different multiple for each comparable. The selection
of where within the range each appropriate multiple falls requires
judgment considering factors specific to the measurement (qualitative and
quantitative).
|
|
·
|
Income
Approach: The income approach uses valuation techniques to convert
future amounts (for example, cash flows or earnings) to a single present
value amount (discounted). The measurement is based on the value indicated
by current market expectations about those future amounts. Those valuation
techniques include present value techniques; option-pricing models, such
as the Black-Scholes-Merton formula (a closed-form model) and a binomial
model (a lattice model), which incorporate present value techniques; and
the multi-period excess earnings method, which is used to measure the fair
value of certain assets.
|
|
·
|
Level 1:
Unadjusted quoted prices in active markets for identical assets or
liabilities.
|
·
|
Level 2: Quoted
prices in active markets for similar assets or liabilities, or quoted
prices for identical or similar assets or liabilities in markets that are
not active, or inputs other than quoted prices that are observable for the
asset or liability.
|
·
|
Level 3:
Unobservable inputs for the asset or
liability.
|
•
|
the net asset value of our Common
Stock disclosed in the most recent periodic report we filed with the
SEC;
|
•
|
our Management's assessment of
whether any material change in the net asset value of our Common Stock has
occurred (including through the realization of gains on the sale of our
portfolio securities) from the period beginning on the date of the most
recently disclosed net asset value of our Common Stock to the period
ending two days prior to the date of the sale of our Common Stock;
and
|
•
|
the magnitude of the difference
between the net asset value of our Common Stock disclosed in the most
recent periodic report we filed with the SEC and our Management's
assessment of any material change in the net asset value of our Common
Stock since the date of the most recently disclosed net asset value of our
Common Stock, and the offering price of our Common Stock in the proposed
offering.
|
|
·
|
recruiting
management;
|
|
·
|
formulating
operating strategies;
|
|
·
|
formulating
intellectual property strategies;
|
|
·
|
assisting
in financial planning;
|
|
·
|
providing
management in the initial start-up stages;
and
|
|
·
|
establishing
corporate goals.
|
|
·
|
funding
research and development in the development of a
technology;
|
|
·
|
obtaining
licensing rights to intellectual property or
patents;
|
|
·
|
acquiring
intellectual property or patents;
or
|
|
·
|
forming
and funding companies or joint ventures to further commercialize
intellectual property.
|
|
•
|
The
name of the shareholder and evidence of the person's ownership of shares
of the Company, including the number of shares owned and the length of
time of ownership;
|
|
•
|
The
name of the candidate, the candidate's resume or a listing of his or her
qualifications to be a Director of the Company and the person's consent to
be named as a Director if selected by the Nominating Committee and
nominated by the Board and consent to serve if elected;
and
|
|
•
|
If
requested by the Nominating Committee, a completed and signed director's
questionnaire.
|
Name
of Director
|
Dollar
Range of Equity Securities
Beneficially
Owned (1)(2)(3)
|
Interested Directors
|
|
Douglas
W. Jamison (4)
|
Over
$100,000
|
Lori
D. Pressman (5)
|
$50,001
- $100,000
|
|
|
Independent Directors
|
|
W.
Dillaway Ayres, Jr.
|
$10,001
- $50,000
|
Dr.
C. Wayne Bardin
|
Over
$100,000
|
Dr.
Phillip A. Bauman
|
Over
$100,000
|
G.
Morgan Browne
|
Over
$100,000
|
Dugald
A. Fletcher
|
Over
$100,000
|
Charles
E. Ramsey
|
Over
$100,000
|
James
E. Roberts
|
Over
$100,000
|
Richard
P. Shanley
|
$10,001
-
$50,000
|
(1)
|
Beneficial
ownership has been determined in accordance with Rule 16a-1(a)(2) under
the Exchange Act.
|
(2)
|
The
dollar ranges are: none, $1-$10,000, $10,001-$50,000,
$50,001-$100,000 and over $100,000.
|
(3)
|
The
dollar ranges are based on the price of the equity securities as of
December 31, 2008.
|
(4)
|
Denotes
an individual who is an "interested person" as defined in the 1940
Act.
|
(5)
|
Denotes
an individual who may be considered an "interested person" because of
consulting work performed for us.
|
Name and Address of Beneficial Owner
|
Amount and Nature of
Beneficial Ownership(1)
|
Percentage of Outstanding
Common Shares Owned(2)
|
||||||
Independent
Directors:
|
||||||||
W.
Dillaway Ayres, Jr.
|
10,633 | * | ||||||
Dr.
C. Wayne Bardin
|
33,341 | * | ||||||
Dr.
Phillip A. Bauman
|
36,042 |
(3)
|
* | |||||
G.
Morgan Browne
|
37,726 | * | ||||||
Dugald
A. Fletcher
|
31,302 | * | ||||||
Charles
E. Ramsey
|
45,870 | * | ||||||
James
E. Roberts
|
31,491 | * | ||||||
Richard
P. Shanley
|
12,830 | * | ||||||
Interested
Directors:
|
||||||||
Douglas
W. Jamison
|
230,766 |
(4)
|
* | |||||
Lori
D. Pressman
|
12,752 | * | ||||||
Named
Executive Officers:
|
||||||||
Alexei
A. Andreev
|
198,953 |
(5)
|
* | |||||
Charles
E. Harris
|
2,213,086 |
(6)
|
8.2 | |||||
Michael
A. Janse
|
345,840 |
(7)
|
* | |||||
Daniel
B. Wolfe
|
146,866 |
(8)
|
* | |||||
All
directors and executive officers as a
group (18 persons)
|
3,649,306 |
(9)
|
12.97 | |||||
5%
Shareholder:
|
||||||||
Dimensional
Fund Advisors LP Building
one, 6300 Bee Cave Road Austin,
TX 78746
|
1,296,292 |
(10)
|
5.01 |
(1)
|
Beneficial
ownership has been determined in accordance with Rule 13d-3 of the Act
1934.
|
(2)
|
The
percentage of ownership is based on 25,859,573 shares of Common Stock
outstanding as of June 30, 2009, together with the exercisable options of
such shareholder, as applicable. In computing the percentage ownership of
a shareholder, shares that can be acquired upon the exercise of
outstanding options are not deemed outstanding for purposes of computing
the percentage ownership of any other
person.
|
(3)
|
Includes
5,637 shares owned by Ms. Milbry C. Polk, Dr. Bauman's wife; 100 shares
owned by Adelaide Polk-Bauman, Dr. Bauman's daughter; 100 shares owned by
Milbry Polk-Bauman, Dr. Bauman's daughter; and 100 shares owned by Mary
Polk-Bauman, Dr. Bauman's daughter. Ms. Milbry C. Polk is the
custodian for the accounts of the three
children.
|
(4)
|
Includes
206,623 shares that can be acquired upon the exercise of outstanding
options.
|
(5)
|
Includes
188,684 shares that can be acquired upon the exercise of outstanding
options.
|
(6)
|
Includes
1,039,559 shares owned and 1,128,261 shares that can be acquired upon the
exercise of outstanding options by Mr. Harris. Mr. Harris
retired from the Company on December 31, 2008, pursuant to the Company's
Executive Mandatory Retirement Benefit
Plan.
|
(7)
|
Includes
345,840 shares that can be acquired upon the exercise of outstanding
options.
|
(8)
|
Includes
140,269 shares that can be acquired upon the exercise of outstanding
options.
|
(9)
|
Includes
2,256,573 shares that can be acquired upon the exercise of outstanding
options.
|
(10)
|
Pursuant
to a Form 13F filed on May 8, 2009, as of March 31, 2009, Dimensional Fund
Advisors LP is the advisor for 1,296,292 shares; 1,257,708 of which is
held by Dimensional Fund Advisors Ltd. and 38,584 of which is held by DFA
Australia Limited.
|
|
·
|
Charles
E. Harris, Chairman, Chief Executive Officer and a Managing
Director;
|
|
·
|
Douglas
W. Jamison, President, Chief Operating Officer and a Managing
Director;
|
|
·
|
Daniel
B. Wolfe, Chief Financial Officer and a Managing
Director;
|
|
·
|
Alexei
A. Andreev, an Executive Vice President and a Managing Director;
and
|
|
·
|
Michael
A. Janse, an Executive Vice President and a Managing
Director.
|
|
·
|
attract,
motivate and retain employees by providing market-competitive compensation
while preserving company resources;
|
|
·
|
maintain
our leadership position as a venture capital firm specializing in
nanotechnology and microsystems;
and
|
|
·
|
align
management's interests with shareholders'
interests.
|
Expiration Date
|
Year of
Vesting
|
Exercise
|
|||||
of Options
|
2008
|
Price
|
|||||
9.4
Yr NQSO (vest 100% on 12/31/08)
|
12/27/2017
|
187,039
|
$6.92
|
Name of Managing Director
|
Dollar Range of Equity Securities
Beneficially Owned (1)(2)(3)
|
|
Douglas
W. Jamison
|
Over
$1,000,000(4)
|
|
Alexei
A. Andreev
|
Over
$1,000,000(5)
|
|
Michael
A. Janse
|
Over
$1,000,000(6)
|
|
Daniel
B. Wolfe
|
Over
$1,000,000(7)
|
(1)
|
Beneficial
ownership has been determined in accordance with Rule 16a-1(a)(2) of the
Exchange Act.
|
(2)
|
The
dollar ranges are: none, $1-$10,000, $10,001-$50,000,
$50,001-$100,000, $100,001-$500,000, $500,001-$1,000,000 and over
$1,000,000.
|
(3)
|
The
dollar ranges are based on the price of the equity securities as of
December 31, 2008.
|
(4)
|
Includes
712,616 shares that can be acquired upon the exercise of outstanding
options.
|
(5)
|
Includes
676,204 shares that can be acquired upon the exercise of outstanding
options.
|
(6)
|
Includes
673,360 shares that can be acquired upon the exercise of outstanding
options.
|
(7)
|
Includes
476,788 shares that can be acquired upon the exercise of outstanding
options.
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards(1)
($)
|
Non-Equity
Incentive Plan Compensation (2)
($)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings(3)
($)
|
All
Other Compensation
($)(4)(6)(7)
|
Total
($)
|
Charles
E. Harris
Chairman
of the Board,
Chief
Executive Officer, Managing Director(5)
|
2008
2007
2006
|
314,623
306,187
300,000
|
0
0
0
|
2,225,350
3,374,224
2,034,482
|
0
0
29,067
|
4,141
42,063
54,692
|
432,590
418,479
405,628
|
2,976,704
4,140,953
2,823,869
|
Douglas
W. Jamison
President,
Chief Operating Officer, Chief Financial Officer (2007),
Managing Director
|
2008
2007
2006
|
274,770
267,403
262,000
|
75,000
0
0
|
795,931
953,931
668,677
|
0
0
3,957
|
0
0
0
|
15,500
15,500
15,000
|
1,161,201
1,236,834
949,634
|
Daniel
B. Wolfe
Chief
Financial Officer and Managing Director (2008)
Former
Vice President
|
2008
2007
2006
|
274,770
210,000
175,000
|
75,000
0
0
|
401,956
438,159
322,130
|
0
7,849
56,416
|
0
0
0
|
15,500
15,500
15,000
|
767,226
663,661
576,393
|
Alexei
A. Andreev
Managing
Director, Executive Vice President
|
2008
2007
2006
|
274,770
267,403
262,000
|
75,000
0
0
|
724,448
897,250
668,677
|
0
0
0
|
0
0
0
|
15,500
15,500
15,000
|
1,089,718
1,180,153
945,677
|
Michael
A. Janse
Managing
Director, Executive Vice President(8)
|
2008
2007
2006
|
274,770
184,211
0
|
75,000
0
0
|
792,957
873,201
0
|
0
0
0
|
0
0
0
|
15,500
45,500
0
|
1,158,227
1,102,912
0
|
(1)
|
The
figures in this column do not represent amounts actually paid to the named
executive officers, but represent the aggregate dollar amount of
compensation cost recognized by us in 2008, 2007 and 2006 under FAS 123(R)
for options granted in 2008 and prior years. We use the
Black-Scholes model to calculate compensation cost under FAS
123(R). You may find more information about the assumptions we
use in the Black-Scholes model under "Fair Valuation of Option
Awards." During the period from January 1, 2006 through June
30, 2009, a total of 1,110,539 options, or 19.5 percent, of those granted
to the named executive officers expired unexercised. The
expired options had an aggregate fair value of $3,219,048. Options which
expire unexercised do not generate any compensation to the
employee.
|
(2)
|
In
2006, these amounts represent the actual amounts earned as a result of
realized gains during the year ended December 31, 2005, and paid out in
2006 and 2007, under the Harris & Harris Group Employee Profit-Sharing
Plan. These 2006 amounts are in addition to the $1,107,088 for
Mr. Harris and $165,308 for Mr. Jamison reported in the 2005 proxy and
were determined in 2006 based on the finalization of our 2005 tax
returns.
|
(3)
|
Represents
increase in pension obligation. There were no preferential or
above market earnings on Mr. Harris's deferred
compensation.
|
(4)
|
The
amounts reported for Mr. Harris for 2008 represent actual amounts of
benefits paid or payable including personal use of an automobile,
membership in a private club totaling $11,569, membership in a health club
and use of a trainer totaling $10,601, medical care reimbursement,
consultation with a financial planner totaling $20,214, long-term
disability insurance, group term-life insurance, long-term care insurance
for him and his wife and $20,500 in employer contributions to the Harris
& Harris Group, Inc. 401(k) Plan. It also includes the
employer contribution to his SERP totaling
$314,623.
|
(5)
|
In
2008, 2007 and 2006, Mr. Harris's wife received compensation of $24,000,
$25,000 and $21,000, respectively, for serving as our
Secretary.
|
(6)
|
The
amounts reported for Mr. Janse for 2007 represent qualified moving
expenses paid totaling $30,000 and $15,500 in employer contributions to
the Harris & Harris Group 401(k)
Plan.
|
(7)
|
Except
for Mr. Harris (see footnote 4 above) and Mr. Janse (see footnote 6
above), amounts reported for 2008 represent our contributions on behalf of
the named executive to the Harris & Harris Group, Inc. 401(k)
Plan. The named executive did not earn any other compensation
reportable in this column for 2008 that met the threshold reporting
requirements.
|
(8)
|
Mr.
Janse joined the Company in April
2007.
|
Type of Award
|
Contractual
Term
|
Number
of
Options
Granted
|
Expected
Term
in Yrs
|
Expected
Volatility
Factor
|
Expected
Dividend
Yield
|
Risk-free
Interest
Rate
|
Fair
Value
Per Share
|
||
Non-qualified
stock
options
|
9.78
Years
|
348,032
|
6.14
|
57.1%
|
0%
|
2.62%
|
$3.45
|
||
Non-qualified
stock
options
|
9.38
Years
|
1,163,724
|
Ranging
from
4.88
to
5.94
|
Ranging
from
50.6%
to
55.1%
|
0%
|
Ranging
from
3.24%
to
3.40%
|
Ranging
from
$3.25
to
$3.79
|
||
Total
|
1,511,756
|
Name
|
Grant
Date
|
All
Other Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
Exercise
or
Base
Price
of
Option
Awards*
($/Share)
|
Closing
Price
on
Grant Date
($)
|
Grant
Date Fair
Value
of Option
Awards
|
Charles
E. Harris
|
August
13, 2008
|
187,039
|
$6.92
|
$7.14
|
$607,877
|
Douglas
W. Jamison
|
March
19, 2008
|
72,550
|
$6.18
|
$6.20
|
$250,298
|
August
13, 2008
|
199,682
|
$6.92
|
$7.14
|
$756,795
|
|
Daniel
B. Wolfe
|
March
19, 2008
|
72,550
|
$6.18
|
$6.20
|
$250,298
|
August
13, 2008
|
199,682
|
$6.92
|
$7.14
|
$756,795
|
|
Alexei
A. Andreev
|
March
19, 2008
|
72,550
|
$6.18
|
$6.20
|
$250,298
|
August
13, 2008
|
199,682
|
$6.92
|
$7.14
|
$756,795
|
|
Michael
A. Janse
|
March
19, 2008
|
72,550
|
$6.18
|
$6.20
|
$250,298
|
August
13, 2008
|
199,682
|
$6.92
|
$7.14
|
$756,795
|
Option Awards
|
||||
Name
|
Number of Securities
Underlying
Unexercised Options
(#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option Expiration
Date
|
Charles
E. Harris
|
681,530
|
0
|
$10.11
|
June
26, 2016
|
18,711
|
0
|
$10.11
|
June
26, 2016
|
|
26,666
|
0
|
$10.11
|
June
26, 2009
|
|
240,981
|
0
|
$11.11
|
June
26, 2016
|
|
187,039
|
0
|
$6.92
|
Dec.
27, 2017
|
|
Douglas
W. Jamison
|
18,538
|
59,346(1)
|
$10.11
|
June
26, 2016
|
160,000
|
0
|
$10.11
|
June
26, 2009
|
|
0
|
92,365(2)
|
$11.11
|
Dec.
27, 2010
|
|
110,135
|
0
|
$11.11
|
Dec.
27, 2009
|
|
0
|
72,550(3)
|
$6.18
|
Dec.
27, 2017
|
|
0
|
199,682(4)
|
$6.92
|
Dec.
27, 2017
|
|
Daniel
B. Wolfe
|
27,076
|
59,346(1)
|
$10.11
|
June
26, 2016
|
53,334
|
0
|
$10.11
|
June
26, 2009
|
|
0
|
29,557(2)
|
$11.11
|
Dec.
27, 2010
|
|
35,243
|
0
|
$11.11
|
Dec.
27, 2009
|
|
0
|
72,550(3)
|
$6.18
|
Dec.
27, 2017
|
|
0
|
199,682(4)
|
$6.92
|
Dec.
27, 2017
|
|
Alexei
A. Andreev
|
22,626
|
59,346(1)
|
$10.11
|
June
26, 2016
|
160,000
|
0
|
$10.11
|
June
26, 2009
|
|
88,108
|
0
|
$11.11
|
Dec.
27, 2009
|
|
0
|
73,892(2)
|
$11.11
|
Dec.
27, 2010
|
|
0
|
72,550(3)
|
$6.18
|
Dec.
27, 2017
|
|
0
|
199,682(4)
|
$6.92
|
Dec.
27, 2017
|
|
Michael
A. Janse
|
248,108
|
0
|
$11.11
|
Dec.
27, 2009
|
0
|
73,892(2)
|
$11.11
|
Dec.
27, 2010
|
|
19,782
|
59,346(5)
|
$11.11
|
June
26, 2016
|
|
0
|
72,550(4)
|
$6.18
|
Dec.
27, 2017
|
|
0
|
199,682(4)
|
6.92
|
Dec.
27,
2017
|
(1)
|
Options
vest in six equal installments on June 26, 2009, June 26, 2010, June 26,
2011, June 26, 2012, June 26, 2013, and June 26,
2014.
|
(2)
|
Options
vest 100% on December 27, 2009.
|
(3)
|
Options
vest in four equal installments on March 19, 2009, March 19, 2010, March
19, 2011, and March 19, 2012.
|
(4)
|
Options
vest in four equal installments on August 13, 2009, August 13, 2010,
August 13, 2011 and August 13,
2012.
|
(5)
|
Options
vest in six equal installments on June 27, 2009, June 27, 2010, June 27,
2011, June 27, 2012, June 27, 2013, and June 27,
2014.
|
Option
Awards
|
||
Name
|
Number
of Shares
Acquired
on Exercise
(#)
|
Value
Realized on
Exercise
($)
|
Charles
E. Harris
|
0
|
0
|
Douglas
W. Jamison
|
0
|
0
|
Daniel
B. Wolfe
|
0
|
0
|
Alexei
A. Andreev
|
0
|
0
|
Michael
A. Janse
|
0
|
0
|
Name
|
Plan Name
|
Number of Years
Credited Service
(#)
|
Present Value of
Accumulated
Benefits
($)
|
Payments During
Last Fiscal Year
($)
|
Charles
E. Harris
|
Executive
|
25
|
151,443
|
0
|
Mandatory
|
||||
Retirement
Plan
|
||||
Douglas
W. Jamison
|
Executive
|
4
|
0
|
0
|
Mandatory
|
||||
Retirement
Plan
|
||||
Daniel
B. Wolfe
|
Executive
|
1
|
0
|
0
|
Mandatory
|
||||
Retirement
Plan
|
Executive
Contributions
in Last FY
($)
|
Registrant
Contribution in
Last FY
($)(1)
|
Aggregate
Earnings in
Last FY
($)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance at Last
FYE
($)
|
|
Charles
E. Harris
|
0
|
314,623
|
96,528
|
2,889,717
|
188,454
|
(1)
|
This
amount is included in the Summary Compensation Table under "All Other
Compensation."
|
Name
of Director
|
Fees
Earned or Paid
in
Cash ($)
|
All
Other
Compensation
($)
|
Total
($)
|
|||||||||
Independent
Directors:
|
||||||||||||
W.
Dillaway Ayres, Jr.
|
40,500 | 0 | 40,500 | |||||||||
Dr.
C. Wayne Bardin
|
39,000 | 0 | 39,000 | |||||||||
Dr.
Phillip A. Bauman
|
42,000 | 0 | 42,000 | |||||||||
G.
Morgan Browne
|
43,500 | 0 | 43,500 | |||||||||
Dugald
A. Fletcher
|
52,500 | 0 | 52,500 | |||||||||
Charles
E. Ramsey
|
37,500 | 0 | 37,500 | |||||||||
James
E. Roberts
|
51,000 | 0 | 51,000 | |||||||||
Richard
P. Shanley
|
41,750 | 0 | 41,750 | |||||||||
Interested
Directors:
|
||||||||||||
Charles
E. Harris(1)(2)
|
0 | 0 | 0 | |||||||||
Douglas
W. Jamison(1)
|
0 | 0 | 0 | |||||||||
Kelly
S. Kirkpatrick
|
6,025 | 3,000 |
(3)
|
9,025 | ||||||||
Lori
D. Pressman
|
21,000 | 41,863 |
(4)
|
62,863 |
(1)
|
Mr.
Harris and Mr. Jamison do not receive additional compensation as
Directors. Refer to the "2008 Summary Compensation Table" for
details of Mr. Harris's and Mr. Jamison's compensation for
2008.
|
(2)
|
Mr.
Harris retired pursuant to the Company's Mandatory Retirement Benefit Plan
on December 31, 2008.
|
(3)
|
Represents
$3,000 for consulting services. Kelly S. Kirkpatrick did not
stand for re-election at the Annual Meeting held on May 1,
2008.
|
(4)
|
Represents
$41,863 for consulting services. Ms. Pressman may be considered
an "interested person" because of consulting work performed for
us. Additionally, Ms. Pressman was paid $22,413 and $3,438 in
2008 for consulting work for two of our portfolio companies, Ancora
Pharmaceuticals and Phoenix Molecular, respectively. Ms.
Pressman's total compensation paid by us and our portfolio companies for
the last two fiscal years is
$153,777.
|
|
(a)
|
at
least 98 percent of our ordinary income (not taking into account any
capital gains or losses) for the calendar
year;
|
|
(b)
|
at
least 98 percent of our capital gains in excess of our capital losses
(adjusted for certain ordinary losses) for a one-year period generally
ending on October 31 of the calendar year (unless an election is made by a
company with a November or December year-end to use the company's fiscal
year); and
|
|
(c)
|
any
undistributed amounts from previous years on which we paid no U.S. federal
income tax.
|
|
·
|
securities
purchased in transactions not involving any public offering, the issuer of
which is an eligible portfolio
company;
|
|
·
|
securities
received in exchange for or distributed with respect to securities
described in the bullet above or pursuant to the exercise of options,
warrants or rights relating to the securities;
and
|
|
·
|
cash,
cash items, government securities or high quality debt securities (within
the meaning of the 1940 Act), maturing in one year or less from the time
of investment.
|
|
·
|
either
has a market capitalization of less than $250 million or does not have a
class of securities registered on a national
securities exchange;
|
|
·
|
is
actively controlled by the business development company and has an
affiliate of a business development company on its Board of Directors;
or
|
|
·
|
meets
other criteria as may be established by the
SEC.
|
Title of Class
|
Amount
Authorized
|
Amount Held by
Company or for its
Own Account
|
Amount
Outstanding
|
|||||||||
Common
Stock
|
45,000,000
|
1,828,740
|
25,859,573
|
|||||||||
Preferred
Stock
|
2,000,000
|
0
|
0
|
Documents
|
Page
|
Management's
Report on Internal Control Over Financial Reporting
|
F-2
|
Report
of Independent Registered Public Accounting Firm
|
F-3
|
Audited Consolidated Financial
Statements
|
|
Consolidated
Statements of Assets and Liabilities as of December 31, 2008, and
2007
|
F-4
|
Consolidated
Statements of Operations for the years ended December 31, 2008, 2007, and
2006
|
F-5
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2008, 2007, and
2006
|
F-6
|
Consolidated
Statements of Changes in Net Assets for the years ended December 31, 2008,
2007, and 2006
|
F-7
|
Consolidated
Schedule of Investments as of December 31, 2008
|
F-8
|
Consolidated
Schedule of Investments as of December 31, 2007
|
F-17
|
Footnote
to Consolidated Schedule of Investments
|
F-27
|
Notes
to Consolidated Financial Statements
|
F-30
|
Financial
Highlights for the years ended December 31, 2008, 2007, and
2006
|
F-44
|
Unaudited Consolidated Financial
Statements
|
|
Consolidated
Statements of Assets and Liabilities as of March 31, 2009, and December
31, 2008
|
F-45
|
Consolidated
Statements of Operations for the three months ended March 31, 2009, and
2008
|
F-46
|
Consolidated
Statements of Cash Flows for the three months ended March 31, 2009, and
2008
|
F-47
|
Consolidated
Statements of Changes in Net Assets for the three months ended March 31,
2009, and
|
|
year
ended December 31, 2008
|
F-48
|
Consolidated
Schedule of Investments as of March 31, 2009
|
F-49
|
Footnote
to Consolidated Schedule of Investments
|
F-59
|
Notes
to Consolidated Financial Statements
|
F-62
|
Financial
Highlights for the three months ended March 31, 2009, and
2008
|
F-70
|
|
•
|
pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
Company;
|
|
•
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and
directors of the Company; and
|
|
•
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the Company's assets that
could have a material effect on the financial
statements.
|
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
STATEMENTS OF ASSETS AND
LIABILITIES
|
ASSETS
|
||||||||
December
31, 2008
|
December
31, 2007
|
|||||||
Investments,
in portfolio securities at value:
|
||||||||
Unaffiliated
companies (cost: $24,208,281 and $21,435,392,
respectively)
|
$ | 12,086,503 | $ | 21,103,836 | ||||
Non-controlled
affiliated companies (cost: $60,796,720 and $54,306,393,
respectively)
|
39,650,187 | 52,651,189 | ||||||
Controlled
affiliated companies (cost: $6,085,000 and $6,935,743,
respectively)
|
5,228,463 | 4,355,359 | ||||||
Total,
investments in private portfolio companies at value
(cost: $91,090,001 and $82,677,528, respectively) |
$ | 56,965,153 | $ | 78,110,384 | ||||
Investments,
in U.S. Treasury obligations at value
(cost: $52,956,288 and $59,552,933, respectively) |
52,983,940 | 60,193,593 | ||||||
Cash
and cash equivalents
|
692,309 | 330,009 | ||||||
Restricted
funds (Note 7)
|
191,955 | 2,667,020 | ||||||
Receivable
from portfolio company
|
0 | 524 | ||||||
Interest
receivable
|
56 | 647,337 | ||||||
Prepaid
expenses
|
484,567 | 488,667 | ||||||
Other
assets
|
309,621 | 455,798 | ||||||
Total
assets
|
$ | 111,627,601 | $ | 142,893,332 | ||||
LIABILITIES & NET
ASSETS
|
||||||||
|
||||||||
Accounts
payable and accrued liabilities (Note 7)
|
$ | 2,088,348 | $ | 4,515,463 | ||||
Deferred
rent
|
8,140 | 14,525 | ||||||
Total
liabilities
|
2,096,488 | 4,529,988 | ||||||
Net
assets
|
$ | 109,531,113 | $ | 138,363,344 | ||||
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 12/31/08 and
12/31/07; 27,688,313 issued at 12/31/08 and 25,143,313 issued at
12/31/07
|
276,884 | 251,434 | ||||||
Additional
paid in capital (Note 10)
|
181,251,507 | 160,927,691 | ||||||
Accumulated
net operating and realized loss
|
(34,494,551 | ) | (15,483,766 | ) | ||||
Accumulated
unrealized depreciation of investments
|
(34,097,196 | ) | (3,926,484 | ) | ||||
Treasury
stock, at cost (1,828,740 shares at 12/31/08 and 12/31/07)
|
(3,405,531 | ) | (3,405,531 | ) | ||||
Net
assets
|
$ | 109,531,113 | $ | 138,363,344 | ||||
Shares
outstanding
|
25,859,573 | 23,314,573 | ||||||
Net
asset value per outstanding share
|
$ | 4.24 | $ | 5.93 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
December
31, 2008
|
December
31, 2007
|
December
31, 2006
|
||||||||||
Investment
income:
|
||||||||||||
Interest
from:
|
||||||||||||
Fixed-income
securities
|
$ | 1,971,178 | $ | 2,705,597 | $ | 2,991,261 | ||||||
Miscellaneous
income
|
16,169 | 39 | 37,500 | |||||||||
Total
investment income
|
1,987,347 | 2,705,636 | 3,028,761 | |||||||||
Expenses:
|
||||||||||||
Salaries,
benefits and stock-based compensation (Note 5)
|
10,090,658 | 11,435,329 | 7,933,276 | |||||||||
Administration
and operations
|
1,160,025 | 1,432,653 | 1,250,080 | |||||||||
Profit-sharing
provision
|
0 | 0 | 50,875 | |||||||||
Professional
fees
|
694,007 | 902,911 | 737,828 | |||||||||
Rent
|
276,023 | 235,998 | 239,846 | |||||||||
Directors'
fees and expenses
|
367,383 | 435,060 | 340,750 | |||||||||
Depreciation
|
54,795 | 63,113 | 64,916 | |||||||||
Custodian
fees
|
31,607 | 28,115 | 24,125 | |||||||||
Total
expenses
|
12,674,498 | 14,533,179 | 10,641,696 | |||||||||
Net
operating loss
|
(10,687,151 | ) | (11,827,543 | ) | (7,612,935 | ) | ||||||
Net
realized (loss) gain from investments:
|
||||||||||||
Realized
gain (loss) from:
|
||||||||||||
Unaffiliated
companies
|
3,588 | 119,082 | 32,484 | |||||||||
Non-controlled
affiliated companies
|
(6,509,404 | ) | 0 | 0 | ||||||||
Controlled
affiliated companies
|
(2,893,487 | ) | 0 | 0 | ||||||||
U.S.
Treasury obligations/other
|
1,109,790 | (945 | ) | (1,146 | ) | |||||||
Realized
(loss) gain from investments
|
(8,289,513 | ) | 118,137 | 31,338 | ||||||||
Income
tax expense (benefit) (Note 8)
|
34,121 | 87,975 | (227,355 | ) | ||||||||
Net
realized (loss) gain from investments
|
(8,323,634 | ) | 30,162 | 258,693 | ||||||||
Net
(increase) decrease in unrealized depreciation on
investments:
|
||||||||||||
Change
as a result of investment sales
|
8,292,072 | 0 | 0 | |||||||||
Change
on investments held
|
(38,462,784 | ) | 5,080,936 | (4,418,870 | ) | |||||||
Net
(increase) decrease in unrealized depreciation on
investments
|
(30,170,712 | ) | 5,080,936 | (4,418,870 | ) | |||||||
Net
decrease in net assets resulting from operations:
|
||||||||||||
Total
|
$ | (49,181,497 | ) | $ | (6,716,445 | ) | $ | (11,773,112 | ) | |||
Per
average basic and diluted outstanding share
|
$ | (1.99 | ) | $ | (0.30 | ) | $ | (0.57 | ) | |||
Average
outstanding shares
|
24,670.516 | 22,393,030 | 20,759,547 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
December
31, 2008
|
December
31, 2007
|
December
31, 2006
|
||||||||||
Cash
flows used in operating activities:
|
||||||||||||
Net
decrease in net assets resulting from operations
|
$ | (49,181,497 | ) | $ | (6,716,445 | ) | $ | (11,773,112 | ) | |||
Adjustments
to reconcile net decrease in net assets resulting from operations to net
cash used in operating activities:
|
||||||||||||
Net
realized and unrealized loss (gain) on investments
|
38,460,225 | (5,199,073 | ) | 4,420,619 | ||||||||
Depreciation
of fixed assets, amortization of premium or discount on U.S. government
securities, and bridge note interest
|
(179,809 | ) | (60,009 | ) | (426,168 | ) | ||||||
Stock-based
compensation expense
|
5,965,769 | 8,050,807 | 5,038,956 | |||||||||
Changes
in assets and liabilities:
|
||||||||||||
Restricted
funds
|
2,475,065 | (517,235 | ) | (419,351 | ) | |||||||
Receivable
from portfolio company
|
524 | (524 | ) | 75,000 | ||||||||
Interest
receivable
|
621,856 | (21,965 | ) | (376,808 | ) | |||||||
Prepaid
expenses
|
4,100 | (477,722 | ) | (7,951 | ) | |||||||
Other
receivables
|
0 | 819,905 | (819,905 | ) | ||||||||
Other
assets
|
111,828 | (152,012 | ) | (176,325 | ) | |||||||
Accounts
payable and accrued liabilities
|
(2,427,115 | ) | 400,163 | 1,002,643 | ||||||||
Accrued
profit sharing
|
0 | (261,661 | ) | (1,846,197 | ) | |||||||
Deferred
rent
|
(6,385 | ) | (6,801 | ) | (9,677 | ) | ||||||
Current
income tax liability
|
0 | 0 | (9,637,026 | ) | ||||||||
Net
cash used in operating activities
|
(4,155,439 | ) | (4,142,572 | ) | (14,955,302 | ) | ||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of U.S. government securities
|
(133,032,933 | ) | (60,744,292 | ) | (70,030,872 | ) | ||||||
Sale
of U.S. government securities
|
140,831,769 | 60,508,538 | 107,624,461 | |||||||||
Investment
in private placements and notes
|
(17,779,462 | ) | (20,595,161 | ) | (24,408,187 | ) | ||||||
Proceeds
from sale of private placements and notes
|
136,837 | 174,669 | 28,295 | |||||||||
Purchase
of fixed assets
|
(21,969 | ) | (41,640 | ) | (15,086 | ) | ||||||
Net
cash (used in) provided by investing activities
|
(9,865,758 | ) | (20,697,886 | ) | 13,198,611 | |||||||
Cash
flows from financing activities:
|
||||||||||||
Gross
proceeds from public offering (Note 10)
|
15,651,750 | 14,027,000 | 0 | |||||||||
Gross
expenses for public offering (Note 10)
|
(1,268,253 | ) | (1,033,832 | ) | 0 | |||||||
Proceeds
from stock option exercises (Note 5)
|
0 | 10,105,511 | 2,615,190 | |||||||||
|
14,383,497 | 23,098,679 | 2,615,190 | |||||||||
Net
(decrease) increase in cash and cash equivalents:
|
||||||||||||
Cash
and cash equivalents at beginning of the year
|
330,009 | 2,071,788 | 1,213,289 | |||||||||
Cash
and cash equivalents at end of the year
|
692,309 | 330,009 | 2,071,788 | |||||||||
Net
increase (decrease) in cash and cash equivalents
|
$ | 362,300 | $ | (1,741,779 | ) | $ | 858,499 | |||||
Supplemental
disclosures of cash flow information:
|
||||||||||||
Income
taxes paid
|
$ | 45,765 | $ | 80,236 | $ | 9,425,922 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN NET
ASSETS
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
December
31, 2008
|
December
31, 2007
|
December
31, 2006
|
||||||||||
Changes
in net assets from operations:
|
||||||||||||
Net
operating loss
|
$ | (10,687,151 | ) | $ | (11,827,543 | ) | $ | (7,612,935 | ) | |||
Net
realized (loss) gain on investments
|
(8,323,634 | ) | 30,162 | 258,693 | ||||||||
Net
decrease in unrealized depreciation on investments as a result of
sales
|
8,292,072 | 0 | 0 | |||||||||
Net
(increase) decrease in unrealized depreciation on investments
held
|
(38,462,784 | ) | 5,080,936 | (4,418,870 | ) | |||||||
Net
decrease in net assets resulting from operations
|
(49,181,497 | ) | (6,716,445 | ) | (11,773,112 | ) | ||||||
Changes
in net assets from capital stock transactions:
|
||||||||||||
Issuance
of common stock upon the exercise of stock
options
|
0 | 9,996 | 2,587 | |||||||||
Issuance
of common stock on offering
|
25,450 | 13,000 | 0 | |||||||||
Additional
paid in capital on common stock issued
|
14,358,047 | 23,075,683 | 2,612,603 | |||||||||
Stock-based
compensation expense
|
5,965,769 | 8,050,807 | 5,038,956 | |||||||||
Net
increase in net assets resulting from capital stock
transactions
|
20,349,266 | 31,149,486 | 7,654,146 | |||||||||
Changes
in net assets from adoption of
SFAS No. 158
|
0 | 0 | 61,527 | |||||||||
Net
(decrease) increase in net assets
|
(28,832,231 | ) | 24,433,041 | (4,057,439 | ) | |||||||
Net
Assets:
|
||||||||||||
Beginning
of the year
|
138,363,344 | 113,930,303 | 117,987,742 | |||||||||
End
of the year
|
$ | 109,531,113 | $ | 138,363,344 | $ | 113,930,303 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2008
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Unaffiliated Companies (2)(3) – 11.0% of net assets at
value
|
||||||||||
Private
Placement Portfolio (Illiquid) – 11.0% of net assets at
value
|
||||||||||
BioVex
Group, Inc. (4)(5)(6)(7)(8) — Developing novel biologics for treatment of
cancer and infectious disease
|
||||||||||
Series
E Convertible Preferred Stock
|
(M)
|
2,799,552 | $ | 60,750 | ||||||
Unsecured
Convertible Bridge Note (including interest)
|
(M)
|
$ | 200,000 | 203,222 | ||||||
263,972 | ||||||||||
Cobalt
Technologies, Inc. (4)(5)(6)(9)(10) – Developing biobutanol through
biomass fermentation
|
||||||||||
Series
C Convertible Preferred Stock
|
(M)
|
176,056 | 187,500 | |||||||
Exponential
Business Development Company (4)(5) — Venture capital partnership focused
on early stage companies
|
||||||||||
Limited
Partnership Interest
|
(M)
|
1 | 2,219 | |||||||
Kereos,
Inc. (4)(5)(6) — Developing emulsion-based imaging
agents and targeted therapeutics to image and treat cancer and
cardiovascular disease
|
||||||||||
Common
Stock
|
(M)
|
545,456 | 0 | |||||||
Molecular
Imprints, Inc. (4)(5) — Manufacturing nanoimprint lithography capital
equipment
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,333,333 | 1,083,333 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
1,250,000 | 1,015,625 | |||||||
Warrants
at $2.00 expiring 12/31/11
|
( I
)
|
125,000 | 35,625 | |||||||
2,134,583 | ||||||||||
Nanosys,
Inc. (4)(5) — Developing zero and one-dimensional inorganic
nanometer-scale materials and devices
|
||||||||||
Series
C Convertible Preferred Stock
|
(M)
|
803,428 | 2,370,113 | |||||||
Series
D Convertible Preferred Stock
|
(M)
|
1,016,950 | 3,000,003 | |||||||
5,370,116 | ||||||||||
Nantero,
Inc. (4)(5)(6) — Developing a high-density, nonvolatile, random access
memory chip, enabled by carbon nanotubes
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
345,070 | $ | 1,046,908 | ||||||
Series
B Convertible Preferred Stock
|
(M)
|
207,051 | 628,172 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
188,315 | 571,329 | |||||||
2,246,409 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED SCHEDULE OF
INVESTMENTS AS OF DECEMBER 31,
2008
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Unaffiliated Companies (2)(3) – 11.0% of net assets at value
(cont.)
|
||||||||||
Private
Placement Portfolio (Illiquid) – 11.0% of net assets at value
(cont.)
|
||||||||||
NeoPhotonics
Corporation (4)(5) — Developing and manufacturing optical devices and
components
|
||||||||||
Common
Stock
|
(M)
|
716,195 | 181,262 | |||||||
Series
1 Convertible Preferred Stock
|
(M)
|
|
1,831,256 | 463,472 | ||||||
Series
2 Convertible Preferred Stock
|
(M)
|
|
741,898 | 187,767 | ||||||
Series
3 Convertible Preferred Stock
|
(M)
|
2,750,000 | 695,995 | |||||||
Series
X Convertible Preferred Stock
|
(M)
|
2,000 | 101,236 | |||||||
Warrants
at $0.15 expiring 01/26/10
|
( I
)
|
16,364 | 2,373 | |||||||
Warrants
at $0.15 expiring 12/05/10
|
( I
)
|
14,063 | 2,349 | |||||||
1,634,454 | ||||||||||
Polatis,
Inc. (4)(5)(6)(11) — Developing MEMS-based optical
|
||||||||||
networking
components
|
||||||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
16,775 | 0 | |||||||
Series
A-2 Convertible Preferred Stock
|
(M)
|
71,611 | 0 | |||||||
Series
A-4 Convertible Preferred Stock
|
(M)
|
4,774 | 0 | |||||||
Series
A-5 Convertible Preferred Stock
|
(M)
|
16,438 | 0 | |||||||
0 | ||||||||||
PolyRemedy,
Inc. (4)(5)(6)(9) —Developing a robotic
|
||||||||||
manufacturing
platform for wound treatment patches
|
||||||||||
Series
B-1 Convertible Preferred Stock
|
(M)
|
287,647 | 122,250 | |||||||
Starfire
Systems, Inc. (4)(5) — Producing ceramic-forming polymers
|
||||||||||
Common
Stock
|
(M)
|
375,000 | 0 | |||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
600,000 | 0 | |||||||
0 | ||||||||||
TetraVitae
Bioscience, Inc. (4)(5)(6)(9)(12) — Developing alternative
fuels
|
||||||||||
through
biomass fermentation
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
118,804 | $ | 125,000 | ||||||
Total
Unaffiliated Private Placement Portfolio (cost:
$24,208,281)
|
$ | 12,086,503 | ||||||||
Total
Investments in Unaffiliated Companies (cost: $24,208,281)
|
$ | 12,086,503 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2008
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(13) –
|
||||||||||
36.2%
of net assets at value
|
||||||||||
Private Placement
Portfolio (Illiquid) – 36.2% of net
assets
|
||||||||||
at
value
|
||||||||||
Adesto
Technologies Corporation (4)(5)(6) — Developing
|
||||||||||
semiconductor-related
products enabled at the nanoscale
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
6,547,619 | $ | 1,100,000 | ||||||
Ancora
Pharmaceuticals, Inc. (4)(5)(6) — Developing synthetic
|
||||||||||
carbohydrates
for pharmaceutical applications
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,663,808 | 1,200,000 | |||||||
BridgeLux,
Inc. (4)(5)(14) — Manufacturing high-power light
|
||||||||||
emitting
diodes
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
|
1,861,504 | 1,396,128 | ||||||
Series
C Convertible Preferred Stock
|
(M)
|
2,130,699 | 1,598,025 | |||||||
Series
D Convertible Preferred Stock
|
(M)
|
666,667 | 500,000 | |||||||
Warrants
at $0.7136 expiring 12/31/14
|
( I
)
|
98,340 | 60,774 | |||||||
Warrants
at $0.7136 expiring 12/31/14
|
( I
)
|
65,560 | 40,516 | |||||||
3,595,443 | ||||||||||
Cambrios
Technologies Corporation (4)(5)(6) — Developing
|
||||||||||
nanowire-enabled
electronic materials for the display industry
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,294,025 | 647,013 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
1,300,000 | 650,000 | |||||||
|
1,297,013 | |||||||||
CFX
Battery, Inc. (4)(5)(6)(15) — Developing batteries using
|
||||||||||
nanostructured
materials
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
1,880,651 | 1,473,264 | |||||||
Crystal
IS, Inc. (4)(5) — Developing single-crystal
|
||||||||||
aluminum
nitride substrates for optoelectronic devices
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
391,571 | $ | 76,357 | ||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
1,300,376 | 253,574 | |||||||
Warrants
at $0.78 expiring 05/05/13
|
( I
)
|
15,231 | 1,584 | |||||||
Warrants
at $0.78 expiring 05/12/13
|
( I
)
|
2,350 | 244 | |||||||
Warrants
at $0.78 expiring 08/08/13
|
( I
)
|
4,396 | 479 | |||||||
|
332,238 | |||||||||
CSwitch
Corporation (4)(5)(6)(16) — Developing next-generation,
system-
|
||||||||||
on-a-chip
solutions for communications-based platforms
|
||||||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
6,863,118 | 0 | |||||||
Unsecured
Convertible Bridge Note (including interest)
|
(M)
|
$ | 1,766,673 | 118,624 | ||||||
|
118,624 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2008
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(13) –
|
||||||||||
36.2%
of net assets at value (cont.)
|
||||||||||
Private Placement
Portfolio (Illiquid) – 36.2% of net
assets
|
||||||||||
at
value (cont.)
|
||||||||||
D-Wave
Systems, Inc. (4)(5)(6)(17) — Developing high-
|
||||||||||
performance
quantum computing systems
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,144,869 | 1,038,238 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
450,450 | 408,496 | |||||||
Series
D Convertible Preferred Stock
|
(M)
|
1,533,395 | 1,390,578 | |||||||
2,837,312 | ||||||||||
Ensemble
Discovery Corporation (4)(5)(6)(18) — Developing DNA
|
||||||||||
Programmed
Chemistry for the discovery of new classes of
|
||||||||||
therapeutics
and bioassays
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,449,275 | 1,000,000 | |||||||
Unsecured
Convertible Bridge Note (including interest)
|
(M)
|
$ | 250,286 | 256,375 | ||||||
1,256,375 | ||||||||||
Innovalight,
Inc. (4)(5)(6) — Developing solar power
|
||||||||||
products
enabled by silicon-based nanomaterials
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
16,666,666 | 4,288,662 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
5,810,577 | 1,495,176 | |||||||
5,783,838 | ||||||||||
Kovio,
Inc. (4)(5)(6) — Developing semiconductor
products
|
||||||||||
using
printed electronics and thin-film technologies
|
||||||||||
Series
C Convertible Preferred Stock
|
(M)
|
2,500,000 | $ | 2,561,354 | ||||||
Series
D Convertible Preferred Stock
|
(M)
|
800,000 | 819,633 | |||||||
Series
E Convertible Preferred Stock
|
(M)
|
1,200,000 | 1,229,450 | |||||||
Warrants
at $1.25 expiring 12/31/12
|
( I
)
|
355,880 | 253,066 | |||||||
4,863,503 | ||||||||||
Mersana
Therapeutics, Inc. (4)(5)(6)(19) — Developing advanced
|
||||||||||
polymers
for drug delivery
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
68,451 | 68,451 | |||||||
Series
B Convertible Preferred Stock
|
(M)
|
866,500 | 866,500 | |||||||
Warrants
at $2.00 expiring 10/21/10
|
( I
)
|
91,625 | 33,718 | |||||||
Unsecured
Convertible Bridge Note (including interest)
|
(M)
|
$ | 200,000 | 208,110 | ||||||
1,176,779 | ||||||||||
Metabolon,
Inc. (4)(5) — Discovering biomarkers through
|
||||||||||
the
use of metabolomics
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
2,173,913 | 882,768 | |||||||
Series
B-1 Convertible Preferred Stock
|
(M)
|
869,565 | 353,107 | |||||||
Warrants
at $1.15 expiring 3/25/15
|
( I
)
|
434,783 | 127,391 | |||||||
1,363,266 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2008
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(13) –
|
||||||||||
36.2%
of net assets at value (cont.)
|
||||||||||
Private Placement
Portfolio (Illiquid) – 36.2% of net
assets
|
||||||||||
at
value (cont.)
|
||||||||||
NanoGram
Corporation (4)(5) — Developing solar power products
|
||||||||||
enabled
by silicon-based nanomaterials
|
||||||||||
Series
I Convertible Preferred Stock
|
(M)
|
63,210 | 31,131 | |||||||
Series
II Convertible Preferred Stock
|
(M)
|
1,250,904 | 616,070 | |||||||
Series
III Convertible Preferred Stock
|
(M)
|
1,242,144 | 611,756 | |||||||
Series
IV Convertible Preferred Stock
|
(M)
|
432,179 | 212,848 | |||||||
|
1,471,805 | |||||||||
Nanomix,
Inc. (4)(5) — Producing nanoelectronic sensors that
|
|
|||||||||
integrate
carbon nanotube electronics with silicon microstructures
|
|
|||||||||
Series
C Convertible Preferred Stock
|
(M)
|
977,917 | 23,622 | |||||||
Series
D Convertible Preferred Stock
|
(M)
|
6,802,397 | 6,428 | |||||||
|
30,050 | |||||||||
Nextreme
Thermal Solutions, Inc. (4)(5) — Developing thin-film
|
||||||||||
thermoelectric
devices for cooling and energy conversion
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
17,500 | $ | 875,000 | ||||||
Series
B Convertible Preferred Stock
|
(M)
|
4,870,244 | 1,327,629 | |||||||
2,202,629 | ||||||||||
Questech
Corporation (4)(5) — Manufacturing and marketing
|
||||||||||
proprietary
metal and stone decorative tiles
|
||||||||||
Common
Stock
|
(M)
|
655,454 | 128,266 | |||||||
Warrants
at $1.50 expiring 11/19/09
|
( I
)
|
5,000 | 20 | |||||||
128,286 | ||||||||||
Siluria
Technologies, Inc. (4)(5)(6) — Developing next-generation
|
||||||||||
nanomaterials
|
|
|||||||||
Series
S-2 Convertible Preferred Stock
|
(M)
|
482,218 | 0 | |||||||
Unsecured
Bridge Note (including interest)
|
(M)
|
$ | 42,542 | 42,731 | ||||||
42,731 | ||||||||||
Solazyme,
Inc. (4)(5)(6) — Developing algal biodiesel, industrial
|
||||||||||
chemicals
and special ingredients based on synthetic biology
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
988,204 | 2,489,088 | |||||||
Series
B Convertible Preferred Stock
|
(M)
|
495,246 | 1,247,426 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
651,309 | 1,640,517 | |||||||
5,377,031 | ||||||||||
Xradia,
Inc. (4)(5) — Designing, manufacturing and selling
ultra-high
|
||||||||||
resolution
3D x-ray microscopes and fluorescence imaging systems
|
||||||||||
Series
D Convertible Preferred Stock
|
(M)
|
3,121,099 | 4,000,000 | |||||||
Total
Non-Controlled Private Placement Portfolio (cost:
$60,796,720)
|
$ | 39,650,187 | ||||||||
Total
Investments in Non-Controlled Affiliated Companies (cost:
$60,796,720)
|
$ | 39,650,187 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2008
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Controlled Affiliated Companies (2)(20) –
|
||||||||||
4.8%
of net assets at value
|
||||||||||
Private Placement
Portfolio (Illiquid) – 4.8%
of
|
||||||||||
net
assets at value
|
||||||||||
Laser
Light Engines, Inc. (4)(5)(6)(9) — Manufacturing solid-state
light
|
||||||||||
sources
for digital cinema and large-venue projection displays
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
7,499,062 | $ | 2,000,000 | ||||||
SiOnyx,
Inc. (4)(5)(6) — Developing silicon-based optoelectronic
|
||||||||||
products
enabled by its proprietary "Black Silicon"
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
|
233,499 | 101,765 | ||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
2,966,667 | 1,292,948 | |||||||
Series
A-2 Convertible Preferred Stock
|
(M)
|
4,207,537 | 1,833,750 | |||||||
3,228,463 | ||||||||||
Total
Controlled Private Placement Portfolio (cost: $6,085,000)
|
$ | 5,228,463 | ||||||||
Total
Investments in Controlled Affiliated Companies (cost:
$6,085,000)
|
$ | 5,228,463 | ||||||||
Total
Private Placement Portfolio (cost: $91,090,001)
|
$ | 56,965,153 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2008
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
U.S.
Government Securities (21) – 48.4% of net assets at value
|
||||||||||
U.S.
Treasury Bill — due date 01/29/09
|
(M)
|
$ | 52,985,000 | $ | 52,983,940 | |||||
Total
Investments in U.S. Government Securities (cost:
$52,956,288)
|
$ | 52,983,940 | ||||||||
Total
Investments (cost: $144,046,289)
|
$ | 109,949,093 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2008
|
(1)
|
See
Footnote to Consolidated Schedule of Investments on page 87 for a
description of the Valuation
Procedures.
|
(2)
|
Investments
in unaffiliated companies consist of investments in which we own less than
five percent of the voting shares of the portfolio
company. Investments in non-controlled affiliated companies
consist of investments in which we own five percent or more, but less than
25 percent, of the voting shares of the portfolio company, or where we
hold one or more seats on the portfolio company’s Board of Directors but
do not control the company. Investments in controlled
affiliated companies consist of investments in which we own 25 percent or
more of the voting shares of the portfolio company or otherwise control
the company.
|
(3)
|
The
aggregate cost for federal income tax purposes of investments in
unaffiliated companies is $24,208,281. The gross unrealized
appreciation based on the tax cost for these securities is
$1,732,194. The gross unrealized depreciation based on the tax
cost for these securities is
$13,853,972.
|
(4)
|
Legal
restrictions on sale of investment.
|
(5)
|
Represents
a non-income producing security. Equity investments that have
not paid dividends within the last 12 months are considered to be
non-income producing.
|
(6)
|
These
investments are development stage companies. A development
stage company is defined as a company that is devoting substantially all
of its efforts to establishing a new business, and either it has not yet
commenced its planned principal operations, or it has commenced such
operations but has not realized significant revenue from
them.
|
(7)
|
With
our purchase of Series E Convertible Preferred Stock of BioVex, we
received a warrant to purchase a number of shares of common stock of
BioVex as determined by dividing 624,999.99 by the price per share at
which the common stock is offered and sold to the public in connection
with the initial public offering. The ability to exercise this
warrant is therefore contingent on BioVex completing successfully an
initial public offering before the expiration date of the warrant on
September 27, 2012. The exercise price of this warrant shall be
110 percent of the initial public offering
price.
|
(8)
|
With
our investment in a convertible bridge note issued by BioVex Group, Inc.,
we received a warrant to purchase a number of shares of the class of stock
sold in the next financing of BioVex equal to $60,000 divided by the price
per share of the class of stock sold in the next financing of
BioVex. The ability to exercise this warrant is, therefore,
contingent on BioVex completing successfully a subsequent round of
financing. This warrant shall expire and no longer be
exercisable on November 13, 2015. The cost basis of this
warrant is $200.
|
(9)
|
Initial
investment was made during 2008.
|
(10)
|
Cobalt
Technologies, Inc., does business as Cobalt
Biofuels.
|
(11)
|
Continuum
Photonics, Inc., merged with Polatis, Ltd., to form Polatis,
Inc.
|
(12)
|
With
our purchase of the Series B Convertible Preferred Stock of TetraVitae
Bioscience, Inc., we received the right to purchase, at a price of
$2.63038528 per share, a number of shares in the Series C financing equal
to the number of shares of Series B Preferred Stock purchased. The
ability to exercise this right is contingent on TetraVitae Bioscience
completing successfully a subsequent round of
financing.
|
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2008
|
(13)
|
The
aggregate cost for federal income tax purposes of investments in
non-controlled affiliated companies is $60,796,720. The gross
unrealized appreciation based on the tax cost for these securities is
$2,798,072. The gross unrealized depreciation based on the tax
cost for these securities is
$23,944,605.
|
(14)
|
BridgeLux,
Inc., was previously named eLite Optoelectronics,
Inc.
|
(15)
|
On February 28, 2008, Lifco,
Inc., merged with CFX Battery, Inc. The surviving entity is CFX
Battery, Inc.
|
(16)
|
With
our investments in secured convertible bridge notes issued by CSwitch, we
received three warrants to purchase a number of shares of the class of
stock sold in the next financing of CSwitch equal to $529,322, $985,835
and $249,750, respectively, the principal of the notes, divided by the
lowest price per share of the class of stock sold in the next financing of
CSwitch. The ability to exercise these warrants is, therefore,
contingent on CSwitch completing successfully a subsequent round of
financing. The warrants will expire five years from the date of the
close of the next round of financing. The cost basis of these
warrants is $529, $986 and $250,
respectively.
|
(17)
|
D-Wave
Systems, Inc., is located and is doing business primarily in
Canada. We invested in D-Wave Systems, Inc., through D-Wave
USA, a Delaware company. Our investment is denominated in
Canadian dollars and is subject to foreign currency
translation. See "Note 2. Summary of Significant Accounting
Policies."
|
(18)
|
With
our investment in a convertible bridge note issued by Ensemble Discovery,
we received a warrant to purchase a number of shares of the class of stock
sold in the next financing of Ensemble Discovery equal to $125,105.40
divided by the price per share of the class of stock sold in the next
financing of Ensemble Discovery. The ability to exercise this
warrant is, therefore, contingent on Ensemble Discovery completing
successfully a subsequent round of financing. This warrant
shall expire and no longer be exercisable on September 10,
2015. The cost basis of this warrant is
$75.20.
|
(19)
|
Mersana
Therapeutics, Inc., was previously named Nanopharma
Corp.
|
(20)
|
The
aggregate cost for federal income tax purposes of investments in
controlled affiliated companies is $6,085,000. The gross
unrealized appreciation based on the tax cost for these securities is
$0. The gross unrealized depreciation based on the tax cost for
these securities is $856,537.
|
(21)
|
The
aggregate cost for federal income tax purposes of our U.S. government
securities is $52,956,288. The gross unrealized appreciation on
the tax cost for these securities is $27,652. The gross
unrealized depreciation on the tax cost of these securities is
$0.
|
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Unaffiliated Companies (2)(3) – 15.25% of
|
||||||||||
net
assets at value
|
||||||||||
Private
Placement Portfolio (Illiquid) – 15.25% of net assets
|
||||||||||
at
value
|
||||||||||
BioVex
Group, Inc. (4)(5)(6)(7)(8) – Developing novel biologics
|
||||||||||
for
treatment of cancer and infectious disease
|
||||||||||
Series
E Convertible Preferred Stock
|
(B)
|
2,799,552 | $ | 2,500,000 | ||||||
Exponential
Business Development Company (4)(5) — Venture
|
||||||||||
capital
partnership focused on early stage companies
|
||||||||||
Limited
Partnership Interest
|
(B)
|
1 | 2,026 | |||||||
Molecular
Imprints, Inc. (4)(5) — Manufacturing nanoimprint
|
||||||||||
lithography
capital equipment
|
||||||||||
Series
B Convertible Preferred Stock
|
(B)
|
1,333,333 | 2,000,000 | |||||||
Series
C Convertible Preferred Stock
|
(B)
|
1,250,000 | 2,389,250 | |||||||
Warrants
at $2.00 expiring 12/31/11
|
(B)
|
125,000 | 110,750 | |||||||
4,500,000 | ||||||||||
Nanosys,
Inc. (4)(5)(7) — Developing zero and one-dimensional
|
||||||||||
inorganic
nanometer-scale materials and devices
|
||||||||||
Series
C Convertible Preferred Stock
|
(B)
|
803,428 | 2,370,113 | |||||||
Series
D Convertible Preferred Stock
|
(B)
|
1,016,950 | 3,000,003 | |||||||
5,370,116 | ||||||||||
Nantero,
Inc. (4)(5)(7) — Developing a high-density, nonvolatile,
|
||||||||||
random
access memory chip, enabled by carbon nanotubes
|
||||||||||
Series
A Convertible Preferred Stock
|
(B)
|
345,070 | 1,046,908 | |||||||
Series
B Convertible Preferred Stock
|
(B)
|
207,051 | 628,172 | |||||||
Series
C Convertible Preferred Stock
|
(B)
|
188,315 | 571,329 | |||||||
2,246,409 | ||||||||||
NeoPhotonics
Corporation (4)(5) — Developing and manufacturing
|
||||||||||
optical
devices and components
|
||||||||||
Common
Stock
|
(B)
|
716,195 | $ | 133,141 | ||||||
Series
1 Convertible Preferred Stock
|
(B)
|
1,831,256 | 1,831,256 | |||||||
Series
2 Convertible Preferred Stock
|
(B)
|
741,898 | 741,898 | |||||||
Series
3 Convertible Preferred Stock
|
(B)
|
2,750,000 | 2,750,000 | |||||||
Warrants
at $0.15 expiring 01/26/10
|
(B)
|
16,364 | 1,325 | |||||||
Warrants
at $0.15 expiring 12/05/10
|
(B)
|
14,063 | 1,139 | |||||||
5,458,759 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Unaffiliated Companies (2)(3) – 15.25% of
|
||||||||||
net
assets at value (cont.)
|
||||||||||
Private
Placement Portfolio (Illiquid) – 15.25% of net assets
|
||||||||||
at
value (cont.)
|
||||||||||
Polatis,
Inc. (4)(5)(7)(9) — Developing MEMS-based optical
|
||||||||||
networking
components
|
||||||||||
Series
A-1 Convertible Preferred Stock
|
(B)
|
16,775 | 0 | |||||||
Series
A-2 Convertible Preferred Stock
|
(B)
|
71,611 | 132,653 | |||||||
Series
A-4 Convertible Preferred Stock
|
(B)
|
4,774 | 8,768 | |||||||
Series
A-5 Convertible Preferred Stock
|
(B)
|
16,438 | 135,105 | |||||||
276,526 | ||||||||||
Starfire
Systems, Inc. (4)(5)(7) — Producing ceramic-forming
polymers
|
||||||||||
Common
Stock
|
(B)
|
375,000 | 150,000 | |||||||
Series
A-1 Convertible Preferred Stock
|
(B)
|
600,000 | 600,000 | |||||||
750,000 | ||||||||||
Total
Unaffiliated Private Placement Portfolio (cost:
$21,435,392)
|
|
$ |
21,103,836
|
|||||||
Total
Investments in Unaffiliated Companies (cost: $21,435,392)
|
|
$ |
21,103,836
|
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(10) –
|
||||||||||
38.06%
of net assets at value
|
||||||||||
Private Placement
Portfolio (Illiquid) – 38.06% of net
assets
|
||||||||||
at
value
|
||||||||||
Adesto
Technologies Corporation (4)(5)(6)(7) — Developing
|
||||||||||
semiconductor-related
products enabled at the nanoscale
|
||||||||||
Series
A Convertible Preferred Stock
|
(B)
|
3,416,149 | $ | 1,147,826 | ||||||
Ancora
Pharmaceuticals Inc. (4)(5)(6)(7) – Developing synthetic
|
||||||||||
carbohydrates
for pharmaceutical markets and for internal
|
||||||||||
drug
development programs
|
||||||||||
Series
B Convertible Preferred Stock
|
(B)
|
909,091 | 639,062 | |||||||
Warrants
at $1.06 expiring 05/01/08
|
(B)
|
754,717 | 60,377 | |||||||
699,439 | ||||||||||
BridgeLux,
Inc. (4)(5)(11) — Manufacturing high-power light
|
||||||||||
emitting
diodes
|
||||||||||
Series
B Convertible Preferred Stock
|
(B)
|
1,861,504 | 2,792,256 | |||||||
Series
C Convertible Preferred Stock
|
(B)
|
2,130,699 | 3,196,050 | |||||||
Warrants
at $0.7136 expiring 02/02/2017
|
(B)
|
98,340 | 138,856 | |||||||
Warrants
at $0.7136 expiring 04/26/2017
|
(B)
|
65,560 | 92,833 | |||||||
6,219,995 | ||||||||||
Cambrios
Technologies Corporation (4)(5)(7) — Developing
|
||||||||||
nanowire-enabled
electronic materials for the display industry
|
||||||||||
Series
B Convertible Preferred Stock
|
(B)
|
1,294,025 | 1,294,025 | |||||||
Series
C Convertible Preferred Stock
|
(B)
|
1,300,000 | 1,300,000 | |||||||
2,594,025 | ||||||||||
Chlorogen,
Inc. (4)(5)(12) — Developed patented chloroplast
|
||||||||||
technology
to produce plant-made proteins
|
||||||||||
Series
A Convertible Preferred Stock
|
(B)
|
4,478,038 | 0 | |||||||
Series
B Convertible Preferred Stock
|
(B)
|
2,077,930 | 0 | |||||||
Secured
Convertible Bridge Note (including interest)
|
(B)
|
$ | 176,811 | 0 | ||||||
0 | ||||||||||
Crystal
IS, Inc. (4)(5)(7) — Developing single-crystal
|
||||||||||
aluminum
nitride substrates for optoelectronic devices
|
||||||||||
Series
A Convertible Preferred Stock
|
(B)
|
391,571 | $ | 305,425 | ||||||
Series
A-1 Convertible Preferred Stock
|
(B)
|
1,300,376 | 1,014,294 | |||||||
Warrants
at $0.78 expiring 05/05/2013
|
(B)
|
15,231 | 9,550 | |||||||
Warrants
at $0.78 expiring 05/12/2013
|
(B)
|
2,350 | 1,473 | |||||||
Warrants
at $0.78 expiring 08/08/2013
|
(B)
|
4,396 | 2,796 | |||||||
1,333,538 | ||||||||||
CSwitch
Corporation. (4)(5)(7)(13) — Developing next-generation,
system-on-
|
||||||||||
a-chip
solutions for communications-based platforms
|
||||||||||
Series
A-1 Convertible Preferred Stock
|
(B)
|
6,863,118 | 3,431,559 | |||||||
Secured
Convertible Bridge Note (including interest)
|
(B)
|
$ | 529,852 | 541,581 | ||||||
3,973,140 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(10) – 38.06% of net assets at
value (cont.)
|
||||||||||
Private Placement
Portfolio (Illiquid) – 38.06% of net
assets at value (cont.)
|
||||||||||
D-Wave
Systems, Inc. (4)(5)(7)(14) — Developing high-performance quantum
computing systems
|
||||||||||
Series
B Convertible Preferred Stock
|
(B)
|
2,000,000 | 2,226,488 | |||||||
Ensemble
Discovery Corporation (4)(5)(6)(7) – Developing DNA
|
||||||||||
Programmed
Chemistry for the discovery of new classes of therapeutics and
bioassays
|
||||||||||
Series
B Convertible Preferred Stock
|
(B)
|
1,449,275 | 2,000,000 | |||||||
Innovalight,
Inc. (4)(5)(7) – Developing renewable energy products enabled by
silicon-based nanomaterials
|
||||||||||
Series
B Convertible Preferred Stock
|
(B)
|
16,666,666 | 5,718,216 | |||||||
Series
C Convertible Preferred Stock
|
(B)
|
5,810,577 | 1,993,568 | |||||||
|
7,711,784 | |||||||||
Kereos,
Inc. (4)(5)(7) — Developing emulsion-based imaging
agents and targeted therapeutics to image and treat cancer and
cardiovascular disease
|
|
|||||||||
Series
B Convertible Preferred Stock
|
(B)
|
545,456 | $ | 159,743 | ||||||
|
||||||||||
Kovio,
Inc. (4)(5)(7) — Developing semiconductor products
using printed electronics and thin-film technologies
|
|
|||||||||
Series
C Convertible Preferred Stock
|
(B)
|
2,500,000 | 3,125,000 | |||||||
Series
D Convertible Preferred Stock
|
(B)
|
800,000 | 1,000,000 | |||||||
|
4,125,000 | |||||||||
Lifco,
Inc. (4)(5)(6)(7)(15) — Developing energy solutions using nanostructured
materials
|
|
|||||||||
Series
A Convertible Preferred Stock
|
(B)
|
1,208,262 | 946,528 | |||||||
|
||||||||||
Mersana
Therapeutics, Inc. (4)(5)(7)(16) — Developing advanced polymers for drug
delivery
|
|
|||||||||
Series
A Convertible Preferred Stock
|
(B)
|
68,451 | 136,902 | |||||||
Series
B Convertible Preferred Stock
|
(B)
|
866,500 | 1,733,000 | |||||||
Warrants
at $2.00 expiring 10/21/10
|
(B)
|
91,625 | 118,380 | |||||||
1,988,282 | ||||||||||
Metabolon,
Inc. (4)(5)(7) – Discovering biomarkers through the use of
metabolomics
|
||||||||||
Series
B Convertible Preferred Stock
|
(B)
|
2,173,913 | 2,500,000 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(10) – 38.06% of net assets at
value (cont.)
|
||||||||||
Private Placement
Portfolio (Illiquid) – 38.06% of net
assets at value (cont.)
|
||||||||||
NanoGram
Corporation (4)(5)(7) — Developing a broad suite of intellectual property
utilizing nanoscale materials
|
||||||||||
Series
I Convertible Preferred Stock
|
(B)
|
63,210 | $ | 124,524 | ||||||
Series
II Convertible Preferred Stock
|
(B)
|
1,250,904 | 2,464,281 | |||||||
Series
III Convertible Preferred Stock
|
(B)
|
1,242,144 | 2,447,024 | |||||||
Series
IV Convertible Preferred Stock
|
(B)
|
432,179 | 851,393 | |||||||
5,887,222 | ||||||||||
Nanomix,
Inc. (4)(5)(7) — Producing nanoelectronic sensors that integrate carbon
nanotube electronics with silicon microstructures
|
||||||||||
Series
C Convertible Preferred Stock
|
(B)
|
977,917 | 330,228 | |||||||
Series
D Convertible Preferred Stock
|
(B)
|
6,802,397 | 680,240 | |||||||
1,010,468 | ||||||||||
NanoOpto
Corporation (4)(5)(17) — Manufactured discrete and integrated optical
communications sub-components on a chip by utilizing nano manufacturing
and nano coating technology
|
||||||||||
Series
A-1 Convertible Preferred Stock
|
(B)
|
267,857 | 0 | |||||||
Series
B Convertible Preferred Stock
|
(B)
|
3,819,935 | 0 | |||||||
Series
C Convertible Preferred Stock
|
(B)
|
1,932,789 | 0 | |||||||
Series
D Convertible Preferred Stock
|
(B)
|
1,397,218 | 0 | |||||||
Warrants
at $0.4359 expiring 03/15/10
|
(B)
|
193,279 | 0 | |||||||
Secured
Convertible Bridge Note (including interest)
|
(B)
|
$ | 268,654 | 105,714 | ||||||
105,714 | ||||||||||
Nextreme
Thermal Solutions, Inc. (4)(5)(7) — Developing thin-film thermoelectric
devices for cooling and energy conversion
|
||||||||||
Series
A Convertible Preferred Stock
|
(B)
|
1,750,000 | 1,750,000 | |||||||
Questech
Corporation (4)(5) — Manufacturing and marketing proprietary metal and
stone decorative tiles
|
||||||||||
Common
Stock
|
(B)
|
655,454 | $ | 589,259 | ||||||
Warrants
at $1.50 expiring 11/19/08
|
(B)
|
5,000 | 1,085 | |||||||
Warrants
at $1.50 expiring 11/19/09
|
(B)
|
5,000 | 1,910 | |||||||
592,254 | ||||||||||
Siluria
Technologies, Inc. (4)(5)(6)(7) – Developing new-generation
nanomaterials
|
||||||||||
Series
S-2 Convertible Preferred Stock
|
(B)
|
482,218 | 160,723 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(10) – 38.06% of net assets at
value (cont.)
|
||||||||||
Private Placement
Portfolio (Illiquid) – 38.06% of net
assets at value (cont.)
|
||||||||||
Solazyme,
Inc. (4)(5)(7) — Developing energy-harvesting machinery of photosynthetic
microbes to produce industrial and pharmaceutical
molecules
|
||||||||||
Series
A Convertible Preferred Stock
|
(B)
|
988,204 | 997,691 | |||||||
Series
B Convertible Preferred Stock
|
(B)
|
495,246 | 500,000 | |||||||
1,497,691 | ||||||||||
Xradia,
Inc. (4)(5) – Designing, manufacturing and selling ultra high resolution
3D x-ray microscopes and fluorescence imaging systems
|
||||||||||
Series
D Convertible Preferred Stock
|
(B)
|
3,121,099 | 4,000,000 | |||||||
Zia
Laser, Inc. (4)(5)(18) — Developed quantum dot semiconductor
lasers
|
||||||||||
Series
C Convertible Preferred Stock
|
(B)
|
1,500,000 | 21,329 | |||||||
Total
Non-Controlled Private Placement Portfolio (cost:
$54,306,393)
|
$ | 52,651,189 | ||||||||
Total
Investments in Non-Controlled Affiliated Companies (cost:
$54,306,393)
|
$ | 52,651,189 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Controlled Affiliated Companies (2)(19) – 3.15% of net assets at
value
|
||||||||||
Private Placement
Portfolio (Illiquid) – 3.15% of
net assets at
value
|
||||||||||
Evolved
Nanomaterial Sciences, Inc. (4)(5)(20) — Developed nanoscale-enhanced
approaches for the resolution of chiral molecules
|
||||||||||
Series
A Convertible Preferred Stock
|
(B)
|
5,870,021 | $ | 0 | ||||||
Phoenix
Molecular Corporation (4)(5)(6)(7) – Developing technology to enable the
separation of difficult-to-separate materials.
|
||||||||||
Common
Stock
|
(B)
|
1,000 | 10 | |||||||
Unsecured
Convertible Bridge Note (including interest)
|
(B)
|
$ | 50,000 | 50,733 | ||||||
50,743 | ||||||||||
SiOnyx,
Inc. (4)(5)(7) — Developing silicon-based optoelectronic products enabled
by its proprietary "Black Silicon"
|
||||||||||
Series
A Convertible Preferred Stock
|
(B)
|
233,499 | 135,686 | |||||||
Series
A-1 Convertible Preferred Stock
|
(B)
|
2,966,667 | 1,723,930 | |||||||
Series
A-2 Convertible Preferred Stock
|
(B)
|
4,207,537 | 2,445,000 | |||||||
4,304,616 | ||||||||||
Total
Controlled Private Placement Portfolio (cost: $6,935,743)
|
$ | 4,355,359 | ||||||||
Total
Investments in Controlled Affiliated Companies (cost:
$6,935,743)
|
$ | 4,355,359 | ||||||||
Total
Private Placement Portfolio (cost: $82,677,528)
|
$ | 78,110,384 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
U.S.
Government and Agency Securities – 43.50% of net assets at
value
|
||||||||||
U.S.
Treasury Bill — due date 02/21/08
|
(J)
|
$ | 2,750,000 | $ | 2,738,725 | |||||
U.S.
Treasury Notes — due date 02/15/08, coupon 3.375%
|
(H)
|
15,005,000 | 15,006,200 | |||||||
U.S.
Treasury Notes — due date 05/15/08, coupon 3.75%
|
(H)
|
9,000,000 | 9,010,530 | |||||||
U.S.
Treasury Notes — due date 09/15/08, coupon 3.125%
|
(H)
|
5,000,000 | 4,991,800 | |||||||
U.S.
Treasury Notes — due date 01/15/09, coupon 3.25%
|
(H)
|
3,000,000 | 3,005,160 | |||||||
U.S.
Treasury Notes — due date 02/15/09, coupon 4.50%
|
(H)
|
5,100,000 | 5,176,908 | |||||||
U.S.
Treasury Notes — due date 04/15/09, coupon 3.125%
|
(H)
|
3,000,000 | 3,001,410 | |||||||
U.S.
Treasury Notes — due date 07/15/09, coupon 3.625%
|
(H)
|
3,000,000 | 3,023,910 | |||||||
U.S.
Treasury Notes — due date 10/15/09, coupon 3.375%
|
(H)
|
3,000,000 | 3,018,510 | |||||||
U.S.
Treasury Notes — due date 01/15/10, coupon 3.625%
|
(H)
|
3,000,000 | 3,034,680 | |||||||
U.S.
Treasury Notes — due date 04/15/10, coupon 4.00%
|
(H)
|
3,000,000 | 3,060,930 | |||||||
U.S.
Treasury Notes — due date 07/15/10, coupon 3.875%
|
(H)
|
3,000,000 | 3,060,930 | |||||||
U.S.
Treasury Notes — due date 10/15/10, coupon 4.25%
|
(H)
|
2,000,000 | 2,063,900 | |||||||
Total
Investments in U.S. Government and Agency Securities (cost:
$59,552,933)
|
$ | 60,193,593 | ||||||||
Total
Investments (cost: $142,230,461)
|
$ | 138,303,977 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
(1)
|
See
Footnote to Consolidated Schedule of Investments on page 78 of our
December 31, 2007, Annual Report on Form 10-K for a description of the
Valuation Procedures at December 31,
2007.
|
(2)
|
Investments
in unaffiliated companies consist of investments in which we own less than
five percent of the voting shares of the portfolio
company. Investments in non-controlled affiliated companies
consist of investments in which we own five percent or more, but less than
25 percent, of the voting shares of the portfolio company, or where we
hold one or more seats on the portfolio company’s Board of Directors but
do not control the company. Investments in controlled
affiliated companies consist of investments in which we own 25 percent or
more of the voting shares of the portfolio company or otherwise control
the company.
|
(3)
|
The
aggregate cost for federal income tax purposes of investments in
unaffiliated companies is $21,435,392. The gross unrealized
appreciation based on the tax cost for these securities is
$1,732,194. The gross unrealized depreciation based on the tax
cost for these securities is
$2,063,750.
|
(4)
|
Legal
restrictions on sale of investment.
|
(5)
|
Represents
a non-income producing security. Equity investments that have
not paid dividends within the last 12 months are considered to be
non-income producing.
|
(6)
|
Initial
investment was made during 2007.
|
(7)
|
These
investments are development stage companies. A development
stage company is defined as a company that is devoting substantially all
of its efforts to establishing a new business, and either it has not yet
commenced its planned principal operations, or it has commenced such
operations but has not realized significant revenue from
them.
|
(8)
|
With
our purchase of Series E Convertible Preferred Stock of BioVex, we
received a warrant to purchase a number of shares of common stock of
BioVex as determined by dividing 624,999.99 by the price per share at
which the common stock is offered and sold to the public in connection
with the initial public offering. The ability to exercise this
warrant is therefore contingent on BioVex completing successfully an
initial public offering before the expiration date of the warrant of
September 27, 2012. The exercise price of this warrant shall be
110 percent of the initial public offering
price.
|
(9)
|
Continuum
Photonics, Inc., merged with Polatis, Ltd., to form Polatis,
Inc.
|
(10)
|
The
aggregate cost for federal income tax purposes of investments in
non-controlled affiliated companies is $54,306,393. The gross
unrealized appreciation based on the tax cost for these securities is
$10,915,201. The gross unrealized depreciation based on the tax
cost for these securities is
$12,570,405.
|
(11)
|
BridgeLux,
Inc., was previously named eLite Optoelectronics,
Inc.
|
(12)
|
On
November 30, 2007, Chlorogen filed a Certificate of Dissolution with the
state of Delaware.
|
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31,
2007
|
(13)
|
With
our investment in a secured convertible bridge note issued by CSwitch, we
received a warrant to purchase a number of shares of the class of stock
sold in the next financing of CSwitch equal to $529,322.36, the principal
of the note, divided by the lowest price per share of the class of stock
sold in the next financing of CSwitch. The ability to exercise this
warrant is therefore contingent on CSwitch completing successfully a
subsequent round of financing. The warrant will expire five years
from the date of the close of the next round of financing. The cost
basis of this warrant is $529.32.
|
(14)
|
D-Wave
Systems, Inc., is located and is doing business primarily in
Canada. We invested in D-Wave Systems, Inc., through
D-Wave USA, a Delaware company. Our investment is denominated
in Canadian dollars and is subject to foreign currency
translation. See "Note 2. Summary of Significant
Accounting Policies."
|
(15)
|
On
February 28, 2008, Lifco, Inc., merged with CFX Battery, Inc., to form CFX
Battery, Inc.
|
(16)
|
Mersana
Therapeutics, Inc., was previously named Nanopharma
Corp.
|
(17)
|
On
July 19, 2007, NanoOpto Corporation sold its assets to API Nanotronics,
Inc.
|
(18)
|
On
November 30, 2006, the assets of Zia Laser, Inc., were acquired by
Innolume, Inc.
|
(19)
|
The
aggregate cost for federal income tax purposes of investments in
controlled affiliated companies is $6,935,743. The gross
unrealized appreciation based on the tax cost for these securities is
$219,616. The gross unrealized depreciation based on the tax
cost for these securities is
$2,800,000.
|
(20)
|
On
September 30, 2007, Evolved Nanomaterial Sciences, Inc., filed for Chapter
7 bankruptcy.
|
HARRIS
& HARRIS GROUP, INC.
FOOTNOTE
TO CONSOLIDATED SCHEDULE OF
INVESTMENTS
|
I.
|
Determination
of Net Asset Value
|
II.
|
Approaches
to Determining Fair Value
|
|
·
|
Market Approach
(M): The market approach uses prices and other relevant information
generated by market transactions involving identical or comparable assets
or liabilities. For example, the market approach often uses market
multiples derived from a set of comparables. Multiples might lie in ranges
with a different multiple for each comparable. The selection of where
within the range each appropriate multiple falls requires judgment
considering factors specific to the measurement (qualitative and
quantitative).
|
|
·
|
Income Approach
(I): The income approach uses valuation techniques to convert
future amounts (for example, cash flows or earnings) to a single present
value amount (discounted). The measurement is based on the value indicated
by current market expectations about those future amounts. Those valuation
techniques include present value techniques; option-pricing models, such
as the Black-Scholes-Merton formula (a closed-form model) and a binomial
model (a lattice model), which incorporate present value techniques; and
the multi-period excess earnings method, which is used to measure the fair
value of certain assets.
|
|
·
|
Level
1: Unadjusted quoted prices in active markets for
identical assets or
liabilities.
|
|
·
|
Level
2: Quoted prices in active markets for similar assets or
liabilities, or quoted prices for identical or similar assets or
liabilities in markets that are not active, or inputs other than quoted
prices that are observable for the asset or
liability.
|
|
|
·
|
Level
3: Unobservable inputs for the asset or
liability.
|
III.
|
Investment
Categories
|
|
·
|
Equity-related
securities;
|
|
·
|
Long-term
fixed-income securities;
|
|
·
|
Short-term
fixed-income securities;
|
|
·
|
Investments
in intellectual property, patents, research and development in technology
or product development;
and
|
|
·
|
All
other securities.
|
|
A.
|
EQUITY-RELATED
SECURITIES
|
|
§
|
Readily
available public market quotations;
|
|
§
|
The
cost of the Company’s investment;
|
|
§
|
Transactions
in a company's securities or unconditional firm offers by responsible
parties as a factor in determining
valuation;
|
|
§
|
The
financial condition and operating results of the
company;
|
|
§
|
The
company's progress towards
milestones.
|
|
§
|
The
long-term potential of the business and technology of the
company;
|
|
§
|
The
values of similar securities issued by companies in similar
businesses;
|
|
§
|
Multiples
to revenue, net income or EBITDA that similar securities issued by
companies in similar businesses
receive;
|
|
§
|
The
proportion of the company's securities we own and the nature of any rights
to require the company to register restricted securities under applicable
securities laws; and
|
|
§
|
The
rights and preferences of the class of securities we own as compared to
other classes of securities the portfolio company has
issued.
|
|
B.
|
LONG-TERM
FIXED-INCOME SECURITIES
|
|
·
|
Credit
quality;
|
|
·
|
Interest
rate analysis;
|
|
·
|
Quotations
from broker-dealers;
|
|
·
|
Prices
from independent pricing services that the Board believes are reasonably
reliable; and
|
|
·
|
Reasonable
price discovery procedures and data from other
sources.
|
|
|
|
C.
|
SHORT-TERM
FIXED-INCOME SECURITIES
|
|
D.
|
INVESTMENTS
IN INTELLECTUAL PROPERTY, PATENTS, RESEARCH AND DEVELOPMENT IN TECHNOLOGY
OR PRODUCT DEVELOPMENT
|
|
E.
|
ALL
OTHER SECURITIES
|
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Fair Value Measurement at Reporting Date
Using:
|
||||||||||||||||
Description
|
December 31, 2008
|
Quoted Prices in Active
Markets for Identical
Assets (Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||||||
U.S.
Government Securities
|
$ | 52,983,940 | $ | 52,983,940 | $ | 0 | $ | 0 | ||||||||
Portfolio
Companies
|
$ | 56,965,153 | $ | 0 | $ | 0 | $ | 56,965,153 | ||||||||
Total
|
$ | 109,949,093 | $ | 52,983,940 | $ | 0 | $ | 56,965,153 |
Fair
Value Measurements Using Significant
|
|||||
Unobservable
Inputs (Level 3)
|
|||||
Portfolio Companies
|
|||||
Beginning
Balance, January 1, 2008
|
$ | 78,110,384 | |||
Total
realized losses included in changes in net assets
|
(9,402,893 | ) | |||
Total
unrealized losses included in changes in net assets
|
(29,557,705 | ) | |||
Purchases
and interest on bridge notes
|
17,949,104 | ||||
Disposals
|
(133,737 | ) | |||
Ending
Balance, December 31, 2008
|
$ | 56,965,153 | |||
The
amount of total losses for the period included in
changes
in net assets attributable to the change in unrealized
gains
or losses relating to assets still held at the reporting
date
|
$ | (38,851,029 | ) |
Grant Date
|
No. of Options
Granted
|
Option Type
|
Vesting Period
|
Exercise Price
|
||||
August
13, 2008
|
1,163,724
|
NQSO
|
12/08
to 08/12
|
$6.92
|
||||
March
19, 2008
|
348,032
|
NQSO
|
03/09
to 03/12
|
$6.18
|
||||
June
27, 2007
|
1,700,609
|
NQSO
|
12/07
to 06/14
|
$11.11
|
||||
June
26, 2006
|
|
3,958,283
|
|
NQSO
& ISO
|
|
12/06
to 06/14
|
|
$10.11
|
Weighted
|
||||||||||||||||||||||||||
Average
|
||||||||||||||||||||||||||
Number
|
Expected
|
Expected
|
Expected
|
Risk-free
|
Fair
|
|||||||||||||||||||||
of
Options
|
Term
|
Volatility
|
Dividend
|
Interest
|
Value
|
|||||||||||||||||||||
Type of Award
|
Term
|
Granted
|
in Yrs
|
Factor
|
Yield
|
Rates
|
Per Share
|
|||||||||||||||||||
Non-qualified
stock options
|
1
Year
|
1,001,017
|
0.75
|
37.4%
|
0%
|
5.16%
|
$1.48
|
|||||||||||||||||||
Non-qualified
stock options
|
2
Years
|
815,000
|
1.625
|
45.2%
|
0%
|
5.12%
|
$2.63
|
|||||||||||||||||||
Non-qualified
stock options
|
3
Years
|
659,460
|
2.42
|
55.7%
|
0%
|
5.09%
|
$3.81
|
|||||||||||||||||||
Non-qualified
stock options
|
10
Years
|
690,000
|
5.75
|
75.6%
|
0%
|
5.08%
|
$6.94
|
|||||||||||||||||||
Incentive
stock options
|
10
Years
|
792,806
|
7.03
|
75.6%
|
0%
|
5.08%
|
$7.46
|
|||||||||||||||||||
Total
|
3,958,283
|
$4.25
|
Number
|
Expected
|
Expected
|
Expected
|
Risk-free
|
Fair
|
|||||||||||||||||||||
of
Options
|
Term
|
Volatility
|
Dividend
|
Interest
|
Value
|
|||||||||||||||||||||
Type of Award
|
Term
|
Granted
|
in Yrs
|
Factor
|
Yield
|
Rates
|
Per Share
|
|||||||||||||||||||
Non-qualified
stock options
|
1.5
Years
|
380,000
|
1
|
42.6%
|
0%
|
4.93%
|
$2.11
|
|||||||||||||||||||
Non-qualified
stock options
|
2.5
Years
|
600,540
|
2
|
40.1%
|
0%
|
4.91%
|
$2.92
|
|||||||||||||||||||
Non-qualified
stock options
|
3.5
Years
|
338,403
|
3
|
44.7%
|
0%
|
4.93%
|
$3.94
|
|||||||||||||||||||
Non-qualified
stock options
|
9
Years
|
381,666
|
Ranging
from
4.75-
6.28
|
Ranging
from
57.8%
to
59.9%
|
0%
|
Ranging
from
4.97%
to
5.01%
|
Ranging
from
$5.92
to
$6.85
|
|||||||||||||||||||
Total
|
1,700,609
|
Weighted
|
|||||||||||||||||||||||||
Average
|
|||||||||||||||||||||||||
Number
|
Expected
|
Expected
|
Expected
|
Risk-free
|
Fair
|
||||||||||||||||||||
of
Options
|
Term
|
Volatility
|
Dividend
|
Interest
|
Value
|
||||||||||||||||||||
Type of Award
|
Term
|
Granted
|
in Yrs
|
Factor
|
Yield
|
Rates
|
Per Share
|
||||||||||||||||||
Non-qualified
stock options
|
9.78
Years
|
348,032
|
6.14
|
57.1%
|
0%
|
2.62%
|
$3.45
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
Total
|
348,032
|
$3.45
|
Weighted
|
||||||||||||||||||||||||||
Average
|
||||||||||||||||||||||||||
Number
|
Expected
|
Expected
|
Expected
|
Risk-free
|
Fair
|
|||||||||||||||||||||
of
Options
|
Term
|
Volatility
|
Dividend
|
Interest
|
Value
|
|||||||||||||||||||||
Type of Award
|
Term
|
Granted
|
in Yrs
|
Factor
|
Yield
|
Rates
|
Per Share
|
|||||||||||||||||||
Non-qualified
stock options
|
9.38
Years
|
976,685
|
5.94
|
55.1%
|
0%
|
3.40%
|
$3.79
|
|||||||||||||||||||
Non-qualified
stock options
|
9.38
Years
|
187,039
|
4.88
|
50.6%
|
0%
|
3.24%
|
$3.25
|
|||||||||||||||||||
|
||||||||||||||||||||||||||
Total
|
1,163,724
|
Weighted
|
||||||||||||||||||||
Weighted
|
Weighted
|
Average
|
||||||||||||||||||
Average
|
Average
|
Remaining
|
Aggregate
|
|||||||||||||||||
Exercise
|
Grant
Date
|
Contractual
|
Intrinsic
|
|||||||||||||||||
Shares
|
Price
|
Fair Value
|
Term (Yrs)
|
Value
|
||||||||||||||||
Options
Outstanding at December 31, 2007
|
3,967,744 | $ | 10.54 | $ | 4.77 | |||||||||||||||
Granted
|
1,511,756 | $ | 6.75 | $ | 3.64 | 8.99 | ||||||||||||||
Exercised
|
0 | $ | 0 | $ | 0 | |||||||||||||||
Forfeited
or Expired
|
841,287 | $ | 10.58 | $ | 2.43 | |||||||||||||||
Options
Outstanding at December 31, 2008
|
4,638,213 | $ | 9.30 | $ | 4.83 | 6.03 | $ | 0 | ||||||||||||
Options
Exercisable at December 31, 2008
|
2,467,587 | $ | 10.24 | $ | 5.03 | 4.68 | $ | 0 | ||||||||||||
Options
Exercisable and Expected to be Exercisable at December 31,
2008
|
4,567,402 | $ | 9.28 | $ | 4.79 | 6.00 | $ | 0 |
2008
|
2007
|
|||||||
Accumulated
Postretirement Benefit
|
||||||||
Obligation
at Beginning of Year
|
$ | 628,745 | $ | 696,827 | ||||
Service
Cost
|
86,497 | 102,676 | ||||||
Interest
Cost
|
39,972 | 33,935 | ||||||
Actuarial
(Gain)/Loss
|
109,312 | (196,248 | ) | |||||
Benefits
Paid
|
(10,847 | ) | (8,445 | ) | ||||
Accumulated
Postretirement
|
||||||||
Benefit
Obligation at End of Year
|
$ | 853,679 | $ | 628,745 |
1%
Decrease
|
Assumed
|
1%
Increase
|
||||||||||
in Rates
|
Rates
|
in Rates
|
||||||||||
Aggregated
Service and Interest Cost
|
$ | 98,688 | $ | 126,469 | $ | 164,286 | ||||||
Accumulated
Postretirement Benefit Obligation
|
$ | 700,499 | $ | 853,679 | $ | 1,056,068 |
2008
|
2007
|
2006
|
||||||||||
Service
Cost
|
$ | 86,497 | $ | 102,676 | $ | 79,381 | ||||||
Interest
Cost on Accumulated Postretirement
|
||||||||||||
Benefit
Obligation
|
39,972 | 33,935 | 33,786 | |||||||||
Amortization
of Transition Obligation
|
0 | 0 | 0 | |||||||||
Amortization
of Net (Gain)/Loss
|
(11,215 | ) | (6,234 | ) | 0 | |||||||
Net
Periodic Post Retirement Benefit Cost
|
$ | 115,254 | $ | 130,377 | $ | 113,167 |
2009
|
$ | 23,639 | ||
2010
|
$ | 25,584 | ||
2011
|
$ | 20,213 | ||
2012
|
$ | 21,663 | ||
2013
|
$ | 23,175 | ||
2014
through 2017
|
$ | 146,044 |
2008
|
2007
|
2006
|
||||||||||
Current
|
$ | 34,121 | $ | 87,975 | $ | (227,355 | ) | |||||
Total
income tax (benefit) expense
|
$ | 34,121 | $ | 87,975 | $ | (227,355 | ) |
2008
|
2007
|
2006
|
||||||||||
Numerator
for decrease in net assets per share
|
$ | (49,181,497 | ) | $ | (6,716,445 | ) | $ | (11,773,112 | ) | |||
Denominator
for basic and diluted weighted average shares
|
24,670,516 | 22,393,030 | 20,759,547 | |||||||||
Basic
and diluted net decrease in net assets per share resulting from
operations
|
(1.99 | ) | $ | (0.30 | ) | $ | (0.57 | ) |
2008
|
||||||||||||||||
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|||||||||||||
Total
investment income
|
$ | 576,302 | $ | 467,625 | $ | 587,918 | $ | 355,502 | ||||||||
Net
operating loss
|
$ | (2,480,618 | ) | $ | (2,638,283 | ) | $ | (2,196,739 | ) | $ | (3,371,511 | ) | ||||
Net
(decrease) increase in net
|
||||||||||||||||
assets
resulting from operations
|
$ | (3,289,035 | ) | $ | 1,354,709 | $ | (34,032,747 | ) | $ | (13,214,424 | ) | |||||
Net
(decrease) increase in net
|
||||||||||||||||
assets
resulting from operations
|
||||||||||||||||
per
average outstanding share
|
$ | (0.14 | ) | $ | 0.06 | $ | (1.32 | ) | $ | (0.51 | ) |
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|||||||||||||
Total
investment income
|
$ | 652,498 | $ | 637,701 | $ | 743,414 | $ | 672,023 | ||||||||
Net
operating loss
|
$ | (2,667,118 | ) | $ | (2,891,667 | ) | $ | (3,117,595 | ) | $ | (3,151,163 | ) | ||||
Net
(decrease) increase in net
|
||||||||||||||||
assets
resulting from operations
|
$ | (6,390,160 | ) | $ | (4,093,644 | ) | $ | 604,237 | $ | 3,163,122 | ||||||
Net
(decrease) increase in net
|
||||||||||||||||
assets
resulting from operations
|
||||||||||||||||
per
average outstanding share
|
$ | (0.30 | ) | $ | (0.19 | ) | $ | 0.03 | $ | 0.16 |
HARRIS
& HARRIS GROUP, INC.
FINANCIAL
HIGHLIGHTS
|
Year
Ended
|
Year
Ended
|
Year
Ended
|
||||||||||
December 31, 2008
|
December 31, 2007
|
December 31, 2006
|
||||||||||
Per
Share Operating Performance
|
||||||||||||
Net
asset value per share, beginning of year
|
$ | 5.93 | $ | 5.42 | $ | 5.68 | ||||||
Net
operating loss*
|
(0.43 | ) | (0.53 | ) | (0.37 | ) | ||||||
Net
realized (loss) income on investments*
|
(0.34 | ) | 0.00 | 0.01 | ||||||||
Net
decrease in unrealized depreciation
|
||||||||||||
as
a result of sales*
|
0.34 | 0.00 | 0.00 | |||||||||
Net
(increase) decrease in unrealized
|
||||||||||||
depreciation
on investments held*(1)
|
(1.49 | ) | 0.23 | (0.21 | ) | |||||||
Total
from investment operations*
|
(1.92 | ) | (0.30 | ) | (0.57 | ) | ||||||
Net
increase as a result of stock-
|
||||||||||||
based
compensation expense*
|
0.24 | 0.36 | 0.24 | |||||||||
Net
increase as a result of proceeds
|
||||||||||||
from
exercise of options
|
0.00 | 0.19 | 0.07 | |||||||||
Net
(decrease) increase as a result of stock
|
||||||||||||
offering,
net of offering expenses
|
(0.01 | ) | 0.26 | 0.00 | ||||||||
Total
increase from capital
|
||||||||||||
stock
transactions
|
0.23 | 0.81 | 0.31 | |||||||||
Net
asset value per share, end of year
|
$ | 4.24 | $ | 5.93 | $ | 5.42 | ||||||
Stock
price per share, end of year
|
$ | 3.95 | $ | 8.79 | $ | 12.09 | ||||||
Total
return based on stock price
|
(55.06 | )% | (27.3 | )% | (13.0 | )% | ||||||
Supplemental
Data:
|
||||||||||||
Net
assets, end of year
|
$ | 109,531,113 | $ | 138,363,344 | $ | 113,930,303 | ||||||
Ratio
of expenses to average net assets
|
9.6 | % | 11.6 | % | 9.2 | % | ||||||
Ratio
of net operating loss to
|
||||||||||||
average
net assets
|
(8.1 | )% | (9.5 | )% | (6.6 | )% | ||||||
Cash
dividends paid per share
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
Taxes
payable on behalf of shareholders
|
||||||||||||
on
the deemed dividend per share
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
Number
of shares outstanding, end of year
|
25,859,573 | 23,314,573 | 21,015,017 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
STATEMENTS OF ASSETS AND
LIABILITIES
|
ASSETS
|
||||||||
March
31, 2009
|
December
31, 2008
|
|||||||
(Unaudited)
|
||||||||
Investments,
in portfolio securities at value:
|
||||||||
Unaffiliated
companies (cost: $24,320,940 and
|
||||||||
$24,208,281,
respectively)
|
$ | 10,802,744 | $ | 12,086,503 | ||||
Non-controlled
affiliated companies (cost: $61,330,539
|
||||||||
and
$60,796,720, respectively)
|
44,338,636 | 39,650,187 | ||||||
Controlled
affiliated companies (cost: $6,085,000
|
||||||||
and
$6,085,000, respectively)
|
3,652,308 | 5,228,463 | ||||||
Total,
investments in private portfolio companies at value
|
||||||||
(cost:
$91,736,479 and $91,090,001, respectively)
|
$ | 58,793,688 | $ | 56,965,153 | ||||
Investments,
in U.S. Treasury obligations at value
|
||||||||
(cost:
$51,343,768 and $52,956,288, respectively)
|
51,340,811 | 52,983,940 | ||||||
Cash
and cash equivalents
|
241,402 | 692,309 | ||||||
Restricted
funds (Note 10)
|
192,573 | 191,955 | ||||||
Interest
receivable
|
13 | 56 | ||||||
Prepaid
expenses
|
346,887 | 484,567 | ||||||
Other
assets
|
294,764 | 309,621 | ||||||
Total
assets
|
$ | 111,210,138 | $ | 111,627,601 | ||||
LIABILITIES & NET
ASSETS
|
||||||||
Accounts
payable and accrued liabilities (Note 10)
|
$ | 1,988,247 | $ | 2,088,348 | ||||
Deferred
rent
|
6,564 | 8,140 | ||||||
Total
liabilities
|
1,994,811 | 2,096,488 | ||||||
Net
assets
|
$ | 109,215,327 | $ | 109,531,113 | ||||
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
|
||||||||
3/31/09
and 12/31/08; 27,688,313 issued at
|
||||||||
3/31/09
and 12/31/08
|
276,884 | 276,884 | ||||||
Additional
paid in capital (Note 6)
|
181,887,145 | 181,251,507 | ||||||
Accumulated
net operating and realized loss
|
(36,597,423 | ) | (34,494,551 | ) | ||||
Accumulated
unrealized depreciation of investments
|
(32,945,748 | ) | (34,097,196 | ) | ||||
Treasury
stock, at cost (1,828,740 shares at 3/31/09 and
|
||||||||
12/31/08)
|
(3,405,531 | ) | (3,405,531 | ) | ||||
Net
assets
|
$ | 109,215,327 | $ | 109,531,113 | ||||
Shares
outstanding
|
25,859,573 | 25,859,573 | ||||||
Net
asset value per outstanding share
|
$ | 4.22 | $ | 4.24 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
|
Three
Months Ended
|
Three
Months Ended
|
|||||||
March
31, 2009
|
March
31, 2008
|
|||||||
Investment
income:
|
||||||||
Interest
from:
|
||||||||
Fixed-income
securities and bridge notes (Note 3)
|
$ | (35,899 | ) | $ | 576,302 | |||
Miscellaneous
income
|
12,338 | 0 | ||||||
Total
investment (loss) income
|
(23,561 | ) | 576,302 | |||||
Expenses:
|
||||||||
Salaries,
benefits and stock-based
|
||||||||
compensation
(Note 6)
|
1,387,340 | 2,433,295 | ||||||
Administration
and operations
|
290,435 | 301,855 | ||||||
Professional
fees
|
215,250 | 138,232 | ||||||
Rent
|
78,063 | 57,854 | ||||||
Directors'
fees and expenses
|
84,509 | 105,146 | ||||||
Depreciation
|
12,859 | 13,985 | ||||||
Custodian
fees
|
6,862 | 6,553 | ||||||
Total
expenses
|
2,075,318 | 3,056,920 | ||||||
Net
operating loss
|
(2,098,879 | ) | (2,480,618 | ) | ||||
Net
realized loss from investments:
|
||||||||
Realized
loss from:
|
||||||||
Unaffiliated
companies
|
(3,288 | ) | 0 | |||||
Non-controlled
affiliated companies
|
0 | (5,014,653 | ) | |||||
Controlled
affiliated companies
|
0 | 0 | ||||||
U.S.
Treasury obligations/other
|
(325 | ) | (217 | ) | ||||
Realized
loss from investments
|
(3,613 | ) | (5,014,870 | ) | ||||
Income
tax expense (Note 7)
|
380 | 46,198 | ||||||
Net
realized loss from investments
|
(3,993 | ) | (5,061,068 | ) | ||||
Net
decrease (increase) in unrealized
|
||||||||
depreciation
on investments:
|
||||||||
Change
as a result of investment sales
|
0 | 5,014,653 | ||||||
Change
on investments held
|
1,151,448 | (762,002 | ) | |||||
Net
decrease in unrealized
|
||||||||
depreciation
on investments
|
1,151,448 | 4,252,651 | ||||||
Net
decrease in net assets resulting from operations:
|
||||||||
Total
|
$ | (951,424 | ) | $ | (3,289,035 | ) | ||
Per
average basic and diluted outstanding share
|
$ | (0.04 | ) | $ | (0.14 | ) | ||
Average
outstanding shares
|
25,859,573 | 23,314,573 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
Three
Months Ended
|
Three
Months Ended
|
|||||||
March
31, 2009
|
March
31, 2008
|
|||||||
Cash
flows used in operating activities:
|
||||||||
Net
decrease in net assets resulting from operations
|
$ | (951,424 | ) | $ | (3,289,035 | ) | ||
Adjustments
to reconcile net decrease in net assets
|
||||||||
resulting
from operations to net cash used in
|
||||||||
operating
activities:
|
||||||||
Net
realized and unrealized (gain) loss on investments
|
(1,147,835 | ) | 762,219 | |||||
Depreciation
of fixed assets, amortization of premium or
|
||||||||
discount
on U.S. government securities, and bridge note interest
|
86,269 | (454,332 | ) | |||||
Stock-based
compensation expense
|
635,638 | 1,466,980 | ||||||
Changes
in assets and liabilities:
|
||||||||
Restricted
funds
|
(618 | ) | 146,710 | |||||
Receivable
from portfolio company
|
0 | 524 | ||||||
Interest
receivable
|
54,660 | 149,849 | ||||||
Prepaid
expenses
|
137,680 | 76,078 | ||||||
Other
assets
|
3,312 | (2,492 | ) | |||||
Accounts
payable and accrued liabilities
|
(100,103 | ) | (296,978 | ) | ||||
Deferred
rent
|
(1,576 | ) | (1,659 | ) | ||||
Current
income tax liability
|
0 | 541 | ||||||
Net
cash used in operating activities
|
(1,283,997 | ) | (1,441,595 | ) | ||||
Cash
flows from investing activities:
|
||||||||
Purchase
of U.S. government securities
|
(52,334,768 | ) | (21,230,754 | ) | ||||
Sale
of U.S. government securities
|
53,892,347 | 28,883,642 | ||||||
Investment
in private placements and loans
|
(723,176 | ) | (6,435,274 | ) | ||||
Proceeds
from sale of investments
|
0 | 105,714 | ||||||
Purchase
of fixed assets
|
(1,313 | ) | (1,588 | ) | ||||
Net
cash provided by investing activities
|
833,090 | 1,321,740 | ||||||
Cash
flows from financing activities:
|
||||||||
Net
cash provided by financing activities
|
0 | 0 | ||||||
Net
decrease in cash and cash equivalents:
|
||||||||
Cash
and cash equivalents at beginning of the period
|
692,309 | 330,009 | ||||||
Cash
and cash equivalents at end of the period
|
241,402 | 210,154 | ||||||
Net
decrease in cash and cash equivalents
|
$ | (450,907 | ) | $ | (119,855 | ) | ||
Supplemental
disclosures of cash flow information:
|
||||||||
Income
taxes paid
|
$ | 380 | $ | 45,657 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN NET
ASSETS
|
Three
Months Ended
|
Year
Ended
|
|||||||
March
31, 2009
|
December
31, 2008
|
|||||||
(Unaudited)
|
||||||||
Changes
in net assets from operations:
|
||||||||
Net
operating loss
|
$ | (2,098,879 | ) | $ | (10,687,151 | ) | ||
Net
realized loss on investments
|
(3,993 | ) | (8,323,634 | ) | ||||
Net
decrease in unrealized depreciation
|
||||||||
on
investments as a result of sales
|
0 | 8,292,072 | ||||||
Net
decrease (increase) in unrealized
|
||||||||
depreciation
on investments held
|
1,151,448 | (38,462,784 | ) | |||||
Net
decrease in net assets resulting
|
||||||||
from
operations
|
(951,424 | ) | (49,181,497 | ) | ||||
Changes
in net assets from capital
|
||||||||
stock
transactions:
|
||||||||
Issuance
of common stock on offering
|
0 | 25,450 | ||||||
Additional
paid-in capital on common
|
||||||||
stock
issued
|
0 | 14,358,047 | ||||||
Stock-based
compensation expense
|
635,638 | 5,965,769 | ||||||
Net
increase in net assets resulting from
|
||||||||
capital
stock transactions
|
635,638 | 20,349,266 | ||||||
Net
decrease in net assets
|
(315,786 | ) | (28,832,231 | ) | ||||
Net
assets:
|
||||||||
Beginning
of the period
|
109,531,113 | 138,363,344 | ||||||
End
of the period
|
$ | 109,215,327 | $ | 109,531,113 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
|
Value
|
|||||||
Investments
in Unaffiliated Companies (2)(3) – 9.9% of net assets at
value
|
||||||||||
Private
Placement Portfolio (Illiquid) – 9.9% of net assets at
value
|
||||||||||
BioVex
Group, Inc. (4)(5)(6)(7) — Developing novel biologics
|
||||||||||
for
treatment of cancer and infectious disease
|
||||||||||
Series
E Convertible Preferred Stock
|
(M)
|
2,799,552 | $ | 85,995 | ||||||
Series
F Convertible Preferred Stock
|
(M)
|
1,321,196 | 270,436 | |||||||
Warrants
at $0.241576 expiring 11/13/15
|
( I
)
|
248,120 | 29,329 | |||||||
|
385,760 | |||||||||
Cobalt
Technologies, Inc. (4)(5)(6)(8) – Developing biobutanol
|
|
|||||||||
through
biomass fermentation
|
|
|||||||||
Series
C Convertible Preferred Stock
|
(M)
|
176,056 | 187,500 | |||||||
|
||||||||||
Exponential
Business Development Company (4)(5) — Venture
|
|
|||||||||
capital
partnership focused on early stage companies
|
|
|||||||||
Limited
Partnership Interest
|
(M)
|
1 | 1,853 | |||||||
Kereos,
Inc. (4)(5)(6) — Developing emulsion-based
imaging
|
||||||||||
agents
and targeted therapeutics to image and treat cancer
|
||||||||||
and
cardiovascular disease
|
||||||||||
Common
Stock
|
(M)
|
545,456 | 0 | |||||||
Molecular
Imprints, Inc. (4)(5) — Manufacturing nanoimprint
|
||||||||||
lithography
capital equipment
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,333,333 | 1,083,333 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
1,250,000 | 1,015,625 | |||||||
Warrants
at $2.00 expiring 12/31/11
|
( I
)
|
125,000 | 31,625 | |||||||
2,130,583 | ||||||||||
Nanosys,
Inc. (4)(5) — Developing zero and one-dimensional
|
||||||||||
inorganic
nanometer-scale materials and devices
|
||||||||||
Series
C Convertible Preferred Stock
|
(M)
|
803,428 | 1,777,584 | |||||||
Series
D Convertible Preferred Stock
|
(M)
|
1,016,950 | 2,250,002 | |||||||
4,027,586 | ||||||||||
Nantero,
Inc. (4)(5)(6) — Developing a high-density, nonvolatile,
|
||||||||||
random
access memory chip, enabled by carbon nanotubes
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
345,070 | $ | 1,046,908 | ||||||
Series
B Convertible Preferred Stock
|
(M)
|
207,051 | 628,172 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
188,315 | 571,329 | |||||||
2,246,409 | ||||||||||
NeoPhotonics
Corporation (4)(5) — Developing and manufacturing
|
||||||||||
optical
devices and components
|
||||||||||
Common
Stock
|
(M)
|
716,195 | 174,788 | |||||||
Series
1 Convertible Preferred Stock
|
(M)
|
1,831,256 | 446,920 | |||||||
Series
2 Convertible Preferred Stock
|
(M)
|
741,898 | 181,060 | |||||||
Series
3 Convertible Preferred Stock
|
(M)
|
2,750,000 | 671,138 | |||||||
Series
X Convertible Preferred Stock
|
(M)
|
2,000 | 97,620 | |||||||
Warrants
at $0.15 expiring 01/26/10
|
( I
)
|
16,364 | 2,111 | |||||||
Warrants
at $0.15 expiring 12/05/10
|
( I
)
|
14,063 | 2,166 | |||||||
1,575,803
|
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED SCHEDULE OF
INVESTMENTS AS OF MARCH 31,
2009
(Unaudited)
|
Method of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
|
Value
|
|||||||
Investments
in Unaffiliated Companies (2)(3) – 9.9% of net assets at value
(cont.)
|
||||||||||
Private
Placement Portfolio (Illiquid) – 9.9% of net assets at value
(cont.)
|
||||||||||
Polatis,
Inc. (4)(5)(6)(9) — Developing MEMS-based optical networking
components
|
||||||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
16,775 | 0 | |||||||
Series
A-2 Convertible Preferred Stock
|
(M)
|
71,611 | 0 | |||||||
Series
A-4 Convertible Preferred Stock
|
(M)
|
4,774 | 0 | |||||||
Series
A-5 Convertible Preferred Stock
|
(M)
|
16,438
|
0 | |||||||
|
0 | |||||||||
PolyRemedy,
Inc. (4)(5)(6) —Developing a robotic manufacturing platform for wound
treatment patches
|
||||||||||
Series
B-1 Convertible Preferred Stock
|
(M)
|
287,647
|
122,250 | |||||||
Starfire
Systems, Inc. (4)(5) — Producing ceramic-forming polymers
|
||||||||||
Common
Stock
|
(M)
|
375,000 | 0 | |||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
600,000 | 0 | |||||||
|
0 | |||||||||
TetraVitae
Bioscience, Inc. (4)(5)(6)(10) — Developing alternative chemicals and
fuels through biomass fermentation
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
118,804 | $ | 125,000 | ||||||
Total
Unaffiliated Private Placement Portfolio (cost:
$24,320,940)
|
|
$ | 10,802,744 | |||||||
Total
Investments in Unaffiliated Companies (cost: $24,320,940)
|
|
$ | 10,802,744 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
Method of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
|
Value
|
|||||||
Investments
in Non-Controlled Affiliated Companies (2)(11) – 40.6% of net assets at
value
|
||||||||||
Private Placement
Portfolio (Illiquid) – 40.6% of net
assets at
value
|
||||||||||
Adesto
Technologies Corporation (4)(5)(6) — Developing semiconductor-related
products enabled at the nanoscale
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
6,547,619
|
$ | 1,100,000 | ||||||
Ancora
Pharmaceuticals, Inc. (4)(5)(6) — Developing synthetic carbohydrates for
pharmaceutical applications
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,663,808
|
800,000 | |||||||
BridgeLux,
Inc. (4)(5)(12) — Manufacturing high-power light emitting
diodes
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,861,504 | 1,396,128 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
2,130,699 | 1,598,025 | |||||||
Series
D Convertible Preferred Stock
|
(M)
|
666,667 | 500,000 | |||||||
Warrants
at $0.7136 expiring 12/31/14
|
( I
)
|
98,340 | 60,184 | |||||||
Warrants
at $0.7136 expiring 12/31/14
|
( I
)
|
65,560
|
40,123 | |||||||
|
3,594,460 | |||||||||
Cambrios
Technologies Corporation (4)(5)(6) — Developing nanowire-enabled
electronic materials for the display industry
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,294,025 | 647,013 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
1,300,000
|
650,000 | |||||||
|
1,297,013 | |||||||||
CFX
Battery, Inc. (4)(5)(6)(13) — Developing batteries using nanostructured
materials
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
1,885,108
|
1,476,756 | |||||||
Crystal
IS, Inc. (4)(5) — Developing single-crystal aluminum nitride substrates
for light-emitting diodes
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
391,571 | $ | 0 | ||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
1,300,376 | 0 | |||||||
Unsecured
Convertible Bridge Note (including interest)
|
(M)
|
$ | 408,573 | 415,961 | ||||||
Warrants
at $0.78 expiring 05/05/13
|
( I
)
|
15,231 | 0 | |||||||
Warrants
at $0.78 expiring 05/12/13
|
( I
)
|
2,350 | 0 | |||||||
Warrants
at $0.78 expiring 08/08/13
|
( I
)
|
4,396
|
0 | |||||||
|
|
415,961 | ||||||||
CSwitch
Corporation (4)(5)(6)(14) — Developing system-on-a-chip solutions for
communications-based platforms
|
||||||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
6,863,118 | 0 | |||||||
Unsecured
Convertible Bridge Note (including interest)
|
(M)
|
$ | 1,766,673 | 0 | ||||||
|
0 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(11) – 40.6% of net assets at
value (cont.)
|
||||||||||
Private Placement
Portfolio (Illiquid) – 40.6% of net
assets at value (cont.)
|
||||||||||
D-Wave
Systems, Inc. (4)(5)(6)(15) — Developing high-performance quantum
computing systems
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,144,869 | 1,013,595 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
450,450 | 398,800 | |||||||
Series
D Convertible Preferred Stock
|
(M)
|
1,533,395
|
1,357,572 | |||||||
|
2,769,967 | |||||||||
Ensemble
Discovery Corporation (4)(5)(6)(16) — Developing DNA
|
||||||||||
Programmed
Chemistry for the discovery of new classes of therapeutics and
bioassays
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
1,449,275 | 1,000,000 | |||||||
Unsecured
Convertible Bridge Note (including interest)
|
(M)
|
$ | 250,286 | 261,312 | ||||||
|
|
1,261,312 | ||||||||
Innovalight,
Inc. (4)(5)(6) — Developing solar power products enabled by silicon-based
nanomaterials
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
16,666,666 | 4,288,662 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
5,810,577
|
1,495,176 | |||||||
|
5,783,838 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(11) – 40.6% of net assets at
value (cont.)
|
||||||||||
Private Placement
Portfolio (Illiquid) – 40.6% of net
assets at value (cont.)
|
||||||||||
Kovio,
Inc. (4)(5)(6) — Developing semiconductor products
using printed electronics and thin-film technologies
|
||||||||||
Series
C Convertible Preferred Stock
|
(M)
|
2,500,000 | $ | 2,561,354 | ||||||
Series
D Convertible Preferred Stock
|
(M)
|
800,000 | 819,633 | |||||||
Series
E Convertible Preferred Stock
|
(M)
|
1,200,000 | 1,229,450 | |||||||
Warrants
at $1.25 expiring 12/31/12
|
( I
)
|
355,880
|
247,337 | |||||||
|
|
4,857,774 | ||||||||
Mersana
Therapeutics, Inc. (4)(5)(6)(17) — Developing advanced polymers for drug
delivery
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
68,451 | 68,451 | |||||||
Series
B Convertible Preferred Stock
|
(M)
|
866,500 | 866,500 | |||||||
Unsecured
Convertible Bridge Note (including interest)
|
(M)
|
$ | 400,000 | 415,562 | ||||||
Warrants
at $2.00 expiring 10/21/10
|
( I
)
|
91,625
|
29,961 | |||||||
|
|
1,380,474 | ||||||||
Metabolon,
Inc. (4)(5) — Discovering biomarkers through the use of
metabolomics
|
||||||||||
Series
B Convertible Preferred Stock
|
(M)
|
2,173,913 | 652,174 | |||||||
Series
B-1 Convertible Preferred Stock
|
(M)
|
869,565 | 260,870 | |||||||
Warrants
at $1.15 expiring 3/25/15
|
( I
)
|
434,783
|
87,391 | |||||||
|
1,000,435 | |||||||||
NanoGram
Corporation (4)(5) — Developing solar power products enabled by
silicon-based nanomaterials
|
||||||||||
Series
I Convertible Preferred Stock
|
(M)
|
63,210 | 31,131 | |||||||
Series
II Convertible Preferred Stock
|
(M)
|
1,250,904 | 616,070 | |||||||
Series
III Convertible Preferred Stock
|
(M)
|
1,242,144 | 611,756 | |||||||
Series
IV Convertible Preferred Stock
|
(M)
|
432,179
|
212,848 | |||||||
|
1,471,805 | |||||||||
Nanomix,
Inc. (4)(5) — Producing nanoelectronic sensors that integrate carbon
nanotube electronics with silicon microstructures
|
||||||||||
Series
C Convertible Preferred Stock
|
(M)
|
977,917 | 23,622 | |||||||
Series
D Convertible Preferred Stock
|
(M)
|
6,802,397
|
6,428 | |||||||
|
|
30,050 | ||||||||
Nextreme
Thermal Solutions, Inc. (4)(5) — Developing thin-film thermoelectric
devices for cooling and energy conversion
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
17,500 | $ | 875,000 | ||||||
Series
B Convertible Preferred Stock
|
(M)
|
4,870,244
|
1,327,629 | |||||||
|
2,202,629 | |||||||||
Questech
Corporation (4)(5) — Manufacturing and marketing proprietary metal and
stone decorative tiles
|
||||||||||
Common
Stock
|
(M)
|
655,454 | 99,097 | |||||||
Warrants
at $1.50 expiring 11/19/09
|
( I
)
|
5,000 | 0 | |||||||
|
99,097 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Non-Controlled Affiliated Companies (2)(11) –40.6% of net assets at
value (cont.)
|
||||||||||
Private Placement
Portfolio (Illiquid) – 40.6% of net
assets at value (cont.)
|
||||||||||
Siluria
Technologies, Inc. (4)(5)(6) — Developing next-generation
nanomaterials
|
||||||||||
Series
S-2 Convertible Preferred Stock
|
(M)
|
482,218 | 0 | |||||||
Unsecured
Bridge Note (including interest)
|
(M)
|
$ | 42,542 | 43,046 | ||||||
|
|
43,046 | ||||||||
Solazyme,
Inc. (4)(5)(6) — Developing algal biodiesel, industrial chemicals and
special ingredients based on synthetic biology
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
988,204 | 4,978,157 | |||||||
Series
B Convertible Preferred Stock
|
(M)
|
495,246 | 2,494,841 | |||||||
Series
C Convertible Preferred Stock
|
(M)
|
651,309
|
3,281,021 | |||||||
10,754,019 | ||||||||||
Xradia,
Inc. (4)(5) — Designing, manufacturing and selling ultra-high resolution
3D x-ray microscopes and fluorescence imaging systems
|
||||||||||
Series
D Convertible Preferred Stock
|
(M)
|
3,121,099
|
4,000,000 | |||||||
Total
Non-Controlled Private Placement Portfolio (cost:
$61,330,539)
|
|
$ | 44,338,636 | |||||||
Total
Investments in Non-Controlled Affiliated Companies (cost:
$61,330,539)
|
|
$ | 44,338,636 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
Investments
in Controlled Affiliated Companies (2)(18) –3.3% of net assets at
value
|
||||||||||
Private Placement
Portfolio (Illiquid) – 3.3% of net assets
at value
|
||||||||||
Laser
Light Engines, Inc. (4)(5)(6) — Manufacturing solid-state light sources
for digital cinema and large-venue projection displays
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
7,499,062 | $ | 1,500,000 | ||||||
SiOnyx,
Inc. (4)(5)(6) — Developing silicon-based optoelectronic products enabled
by its proprietary "Black Silicon"
|
||||||||||
Series
A Convertible Preferred Stock
|
(M)
|
233,499 | 67,843 | |||||||
Series
A-1 Convertible Preferred Stock
|
(M)
|
2,966,667 | 861,965 | |||||||
Series
A-2 Convertible Preferred Stock
|
(M)
|
4,207,537
|
1,222,500 | |||||||
|
2,152,308 | |||||||||
Total
Controlled Private Placement Portfolio (cost: $6,085,000)
|
|
$ | 3,652,308 | |||||||
Total
Investments in Controlled Affiliated Companies (cost:
$6,085,000)
|
|
$ | 3,652,308 | |||||||
Total
Private Placement Portfolio (cost: $91,736,479)
|
|
$ | 58,793,688 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
Method
of
|
Shares/
|
|||||||||
Valuation (1)
|
Principal
|
Value
|
||||||||
U.S.
Government Securities (19) – 47.0% of net assets at value
|
||||||||||
U.S.
Treasury Bill — due date 04/30/09
|
(M)
|
$ | 51,348,000 | $ | 51,340,811 | |||||
Total
Investments in U.S. Government Securities (cost:
$51,343,768)
|
|
$ | 51,340,811 | |||||||
Total
Investments (cost: $143,080,247)
|
|
$ | 110,134,499 |
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
|
(1)
|
See
Footnote to Consolidated Schedule of Investments on page 17 for a
description of the Valuation
Procedures.
|
|
(2)
|
Investments
in unaffiliated companies consist of investments in which we own less than
five percent of the voting shares of the portfolio
company. Investments in non-controlled affiliated companies
consist of investments in which we own five percent or more, but less than
25 percent, of the voting shares of the portfolio company, or where we
hold one or more seats on the portfolio company’s Board of Directors but
do not control the company. Investments in controlled
affiliated companies consist of investments in which we own 25 percent or
more of the voting shares of the portfolio company or otherwise control
the company.
|
|
(3)
|
The
aggregate cost for federal income tax purposes of investments in
unaffiliated companies is $24,320,940. The
gross unrealized appreciation based on the tax cost for these securities
is $862,081. The
gross unrealized depreciation based on the tax cost for these securities
is $14,380,277.
|
|
(4)
|
Legal
restrictions on sale of investment.
|
|
(5)
|
Represents
a non-income producing security. Equity investments that have
not paid dividends within the last 12 months are considered to be
non-income producing.
|
|
(6)
|
These
investments are development stage companies. A development
stage company is defined as a company that is devoting substantially all
of its efforts to establishing a new business, and either it has not yet
commenced its planned principal operations, or it has commenced such
operations but has not realized significant revenue from
them.
|
|
(7)
|
With
our purchase of Series E Convertible Preferred Stock of BioVex, we
received a warrant to purchase a number of shares of common stock of
BioVex as determined by dividing 624,999.99 by the price per share at
which the common stock is offered and sold to the public in connection
with the initial public offering. The ability to exercise this
warrant is therefore contingent on BioVex completing successfully an
initial public offering before the expiration date of the warrant on
September 27, 2012. The exercise price of this warrant shall be
110 percent of the initial public offering
price.
|
|
(8)
|
Cobalt
Technologies, Inc., does business as Cobalt
Biofuels.
|
|
(9)
|
Continuum
Photonics, Inc., merged with Polatis, Ltd., to form Polatis,
Inc.
|
|
(10)
|
With
our purchase of the Series B Convertible Preferred Stock of TetraVitae
Bioscience, Inc., we received the right to purchase, at a price of
$2.63038528 per share, a number of shares in the Series C financing equal
to the number of shares of Series B Preferred Stock purchased. The
ability to exercise this right is contingent on TetraVitae Bioscience
completing successfully a subsequent round of
financing.
|
HARRIS
& HARRIS GROUP, INC.
CONSOLIDATED
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2009
(Unaudited)
|
|
(11)
|
The
aggregate cost for federal income tax purposes of investments in
non-controlled affiliated companies is $61,330,539. The
gross unrealized appreciation based on the tax cost for these securities
is $8,174,077. The
gross unrealized depreciation based on the tax cost for these securities
is $25,165,980.
|
|
(12)
|
BridgeLux,
Inc., was previously named eLite Optoelectronics,
Inc.
|
|
(13)
|
On February 28, 2008, Lifco,
Inc., merged with CFX Battery, Inc. The surviving entity is CFX
Battery, Inc.
|
|
(14)
|
With
our investments in secured convertible bridge notes issued by CSwitch, we
received three warrants to purchase a number of shares of the class of
stock sold in the next financing of CSwitch equal to $529,322, $985,835
and $249,750, respectively, the principal of the notes, divided by the
lowest price per share of the class of stock sold in the next financing of
CSwitch. The ability to exercise these warrants is, therefore,
contingent on CSwitch completing successfully a subsequent round of
financing. The warrants will expire five years from the date of the
close of the next round of financing. The cost basis of these
warrants is $529, $986 and $250,
respectively.
|
|
(15)
|
D-Wave
Systems, Inc., is located and is doing business primarily in
Canada. We invested in D-Wave Systems, Inc., through
D-Wave USA, a Delaware company. Our investment is denominated
in Canadian dollars and is subject to foreign currency
translation. See "Note 3. Summary of Significant Accounting
Policies."
|
|
(16)
|
With
our investment in a convertible bridge note issued by Ensemble Discovery,
we received a warrant to purchase a number of shares of the class of stock
sold in the next financing of Ensemble Discovery equal to $125,105.40
divided by the price per share of the class of stock sold in the next
financing of Ensemble Discovery. The ability to exercise this
warrant is, therefore, contingent on Ensemble Discovery completing
successfully a subsequent round of financing. This warrant
shall expire and no longer be exercisable on September 10,
2015. The cost basis of this warrant is
$75.20.
|
|
(17)
|
Mersana
Therapeutics, Inc., was previously named Nanopharma
Corp.
|
|
(18)
|
The
aggregate cost for federal income tax purposes of investments in
controlled affiliated companies is $6,085,000. The
gross unrealized appreciation based on the tax cost for these securities
is $0. The gross
unrealized depreciation based on the tax cost for these securities is
$2,432,692.
|
|
(19)
|
The
aggregate cost for federal income tax purposes of our U.S. government
securities is $51,343,768. The
gross unrealized appreciation on the tax cost for these securities is
$0. The
gross unrealized depreciation on the tax cost of these securities is
$2,957.
|
HARRIS
& HARRIS GROUP, INC.
FOOTNOTE
TO CONSOLIDATED SCHEDULE OF
INVESTMENTS
|
|
·
|
Market Approach
(M): The market approach uses prices and other relevant information
generated by market transactions involving identical or comparable assets
or liabilities. For example, the market approach often uses market
multiples derived from a set of comparables. Multiples might lie in ranges
with a different multiple for each comparable. The selection of where
within the range each appropriate multiple falls requires judgment
considering factors specific to the measurement (qualitative and
quantitative).
|
|
·
|
Income Approach
(I): The income approach uses valuation techniques to convert
future amounts (for example, cash flows or earnings) to a single present
value amount (discounted). The measurement is based on the value indicated
by current market expectations about those future amounts. Those valuation
techniques include present value techniques; option-pricing models, such
as the Black-Scholes-Merton formula (a closed-form model) and a binomial
model (a lattice model), which incorporate present value techniques; and
the multi-period excess earnings method, which is used to measure the fair
value of certain assets.
|
|
·
|
Level
1: Unadjusted quoted prices in active markets for
identical assets or liabilities.
|
·
|
Level
2: Quoted prices in active markets for similar assets or
liabilities, or quoted prices for identical or similar assets or
liabilities in markets that are not active, or inputs other than quoted
prices that are observable for the asset or
liability.
|
·
|
Level
3: Unobservable inputs for the asset or
liability.
|
III.
|
Investment
Categories
|
|
·
|
Equity-related
securities;
|
|
·
|
Long-term
fixed-income securities;
|
|
·
|
Short-term
fixed-income securities;
|
|
·
|
Investments
in intellectual property, patents, research and development in technology
or product development;
and
|
|
·
|
All
other securities.
|
|
·
|
Readily
available public market quotations;
|
|
·
|
The
cost of the Company’s investment;
|
|
·
|
Transactions
in a company's securities or unconditional firm offers by responsible
parties as a factor in determining
valuation;
|
|
·
|
The
financial condition and operating results of the
company;
|
|
·
|
The
company's progress towards
milestones.
|
|
·
|
The
long-term potential of the business and technology of the
company;
|
|
·
|
The
values of similar securities issued by companies in similar
businesses;
|
|
·
|
Multiples
to revenue, net income or EBITDA that similar securities issued by
companies in similar businesses
receive;
|
|
·
|
The
proportion of the company's securities we own and the nature of any rights
to require the company to register restricted securities under applicable
securities laws; and
|
|
·
|
The
rights and preferences of the class of securities we own as compared to
other classes of securities the portfolio company has
issued.
|
|
B.
|
LONG-TERM
FIXED-INCOME SECURITIES
|
|
1.
|
Readily
Marketable: Long-term fixed-income securities for which
market quotations are readily available are valued using the most recent
bid quotations when available.
|
|
2.
|
Not
Readily Marketable: Long-term fixed-income securities
for which market quotations are not readily available are fair valued
using the market approach. The factors that may be considered
when valuing these types of securities by the market approach
include:
|
|
·
|
Credit
quality;
|
|
·
|
Interest
rate analysis;
|
|
·
|
Quotations
from broker-dealers;
|
|
·
|
Prices
from independent pricing services that the Board believes are reasonably
reliable; and
|
|
·
|
Reasonable
price discovery procedures and data from other
sources.
|
C.
|
SHORT-TERM
FIXED-INCOME SECURITIES
|
D.
|
INVESTMENTS
IN INTELLECTUAL PROPERTY, PATENTS, RESEARCH AND DEVELOPMENT IN TECHNOLOGY
OR PRODUCT DEVELOPMENT
|
|
·
|
The
cost of the Company’s investment;
|
|
·
|
Investments
in the same or substantially similar intellectual property or patents or
research and development in technology or product development or offers by
responsible third parties;
|
|
·
|
The
results of research and
development;
|
|
·
|
Product
development and milestone progress;
|
|
·
|
Commercial
prospects;
|
|
·
|
Term
of patent;
|
|
·
|
Projected
markets; and
|
|
·
|
Other
subjective factors.
|
|
E.
|
ALL
OTHER SECURITIES
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
|
Fair Value Measurements Using Significant
|
|||||
Unobservable Inputs (Level 3)
|
|||||
Portfolio Companies
|
|||||
Beginning
Balance, January 1, 2009
|
$ | 56,965,153 | |||
Total
realized (losses) gains included in changes in net assets
|
(3,288 | ) | |||
Total
unrealized gains included in changes in net assets
|
1,182,057 | ||||
Investments
in private placements and interest on bridge notes
|
748,104 | ||||
Disposals
and write-off of interest on bridge notes
|
(98,338 | ) | |||
Ending
Balance, March 31, 2009
|
$ | 58,793,688 | |||
The
amount of total gains for the period included in changes in net assets
attributable to the change in unrealized gains or losses
relating to assets still held at the reporting
date
|
$ | 1,178,769 |
Weighted
|
||||||||||||||||||||||||
Average
|
||||||||||||||||||||||||
Number
|
Expected
|
Expected
|
Expected
|
Risk-free
|
Fair
|
|||||||||||||||||||
of Options
|
Term
|
Volatility
|
Dividend
|
Interest
|
Value
|
|||||||||||||||||||
Type of Award
|
Term
|
Granted
|
in Yrs
|
Factor
|
Yield
|
Rates
|
Per Share
|
|||||||||||||||||
Non-qualified
stock options
|
2 Years
|
245,770
|
1.5
|
71.7%
|
0%
|
0.71%
|
$1.29
|
|||||||||||||||||
|
|
|||||||||||||||||||||||
Total
|
245,770
|
$1.29
|
Weighted
|
||||||||||||||||||||||||
Expected
|
Average
|
|||||||||||||||||||||||
Number
|
Exercise
|
Expected
|
Expected
|
Risk-free
|
Fair
|
|||||||||||||||||||
of Options
|
Behavior
|
Volatility
|
Dividend
|
Interest
|
Value
|
|||||||||||||||||||
Type of Award
|
Term
|
Granted
|
Factor
|
Factor
|
Yield
|
Rates
|
Per Share
|
|||||||||||||||||
Non-qualified
stock options
|
10
Years
|
84,229
|
2
|
73.1%
|
0%
|
2.59%
|
$1.97
|
|||||||||||||||||
|
|
|||||||||||||||||||||||
Total
|
84,229
|
$1.97
|
Weighted
|
||||||||||||||||||||
Weighted
|
Weighted
|
Average
|
||||||||||||||||||
Average
|
Average
|
Remaining
|
Aggregate
|
|||||||||||||||||
Exercise
|
Grant Date
|
Contractual
|
Intrinsic
|
|||||||||||||||||
Shares
|
Price
|
Fair Value
|
Term (Yrs)
|
Value
|
||||||||||||||||
Options Outstanding at
January 1, 2009
|
4,638,213 | $ | 9.30 | $ | 4.83 | 6.03 | $ | 0 | ||||||||||||
Granted
|
329,999 | $ | 3.75 | $ | 1.46 | 4.01 | ||||||||||||||
Exercised
|
0 | $ | 0 | $ | 0 | |||||||||||||||
Forfeited
or Expired
|
- | |||||||||||||||||||
Options
Outstanding at
March
31, 2009
|
4,968,212 | $ | 8.93 | $ | 4.60 | 5.66 | $ | 0 | ||||||||||||
Options
Exercisable at
March
31, 2009
|
2,554,286 | $ | 10.10 | $ | 4.97 | 4.58 | $ | 0 | ||||||||||||
Options
Exercisable and Expected to be
Exercisable
at March 31, 2009
|
4,897,401 | $ | 8.91 | $ | 4.57 | 5.64 | $ | 0 |
For the Three Months Ended March 31
|
||||||||
2009
|
2008
|
|||||||
Numerator
for decrease in net assets per share
|
$ | (951,424 | ) | $ | (3,289,035 | ) | ||
Denominator
for basic and diluted weighted average shares
|
25,859,573 | 23,314,573 | ||||||
Basic
and diluted net decrease in net assets per share resulting from
operations
|
$ | (0.04 | ) | $ | (0.14 | ) |
HARRIS
& HARRIS GROUP, INC.
FINANCIAL
HIGHLIGHTS
(Unaudited)
|
Three Months Ended March 31
|
||||||||
2009
|
2008
|
|||||||
Per
Share Operating Performance
|
||||||||
Net
asset value per share, beginning of period
|
$ | 4.24 | $ | 5.93 | ||||
Net
operating loss*
|
(0.08 | ) | (0.11 | ) | ||||
Net
realized (loss) on investments*
|
0.00 | (0.22 | ) | |||||
Net
decrease in unrealized depreciation as a result of
sales*
|
0.00 | 0.22 | ||||||
Net
decrease (increase) in unrealized depreciation on investments
held*
|
0.04 | (0.03 | ) | |||||
Total
from investment operations*
|
(0.04 | ) | (0.14 | ) | ||||
Net
increase as a result of stock-based compensation expense*
|
0.02 | 0.07 | ||||||
Total
increase from capital stock transactions
|
0.02 | 0.07 | ||||||
Net
asset value per share, end of period
|
$ | 4.22 | $ | 5.86 | ||||
Stock
price per share, end of period
|
$ | 3.70 | $ | 7.13 | ||||
Total
return based on stock price(1)
|
(6.33 | )% | (18.89 | )% | ||||
Supplemental
Data:
|
||||||||
Net
assets, end of period
|
$ | 109,215,327 | $ | 136,541,289 | ||||
Ratio
of expenses to average net assets(1)
|
1.9 | % | 2.2 | % | ||||
Ratio
of net operating loss to average net assets(1)
|
(1.9 | )% | (1.8 | )% | ||||
Number
of shares outstanding, end of period
|
25,859,573 | 23,314,573 |
(a) Annual Report on Form
10-K
|
|
|
|
Report
of Independent Registered Public Accounting Firm
|
|
Consolidated
Statements of Assets and Liabilities as of
December
31, 2008, and 2007
|
|
Consolidated
Statements of Operations for the years ended
December
31, 2008, 2007, and 2006
|
|
Consolidated
Statements of Cash Flows for the years ended
December
31, 2008, 2007, and 2006
|
|
Consolidated
Statements of Changes in Net Assets for the
years
ended December 31, 2008, 2007, and 2006
|
|
|
|
Consolidated
Schedule of Investments as of December 31, 2008,
and
2007
|
|
Notes
to Consolidated Schedule of Investments
|
|
Notes
to Consolidated Financial Statements
|
|
Financial
Highlights for the years ended December 31,
2008,
2007, and 2006
|
|
(b) Quarterly Report on
Form 10-Q
|
|
Consolidated
Statements of Assets and Liabilities as of
March
31, 2009 and December 31, 2008
|
|
Consolidated
Statements of Operations for the quarters ended
March
31, 2009 and 2008
|
|
Consolidated
Statements of Cash Flows for the quarters ended
March
31, 2009 and 2008
|
|
Consolidated
Statements of Changes in Net Assets for the quarter ended
March
31, 2009 and the year ended December 31, 2008
|
|
Consolidated
Schedule of Investments as of March 31, 2009
|
|
Notes
to Consolidated Schedule of Investments
|
|
Notes
to Consolidated Financial Statements
|
|
Financial
Highlights for the quarters ended March 31, 2009 and 2008
|
|
|
(r)
|
Code
of Ethics Pursuant to Rule 17j-1, incorporated by reference as Exhibit 14
to the Company's Form 8-K (File No. 814-00176) filed on March 7,
2008.
|
(s)
|
Power
of Attorney.(2)
|
(1)
|
To
be filed by amendment.
|
(2)
|
Filed
herewith.
|
Registration
fees
|
$ | 5,000 | ||
Nasdaq
listing fee
|
$ | 6,500 | ||
Printing
(other than stock certificates)
|
$ | 0 | ||
Accounting
fees and expenses
|
$ | 52,500 | ||
Legal
fees and expenses
|
$ | 142,000 | ||
Miscellaneous
|
$ | 113,500 | ||
Total
|
$ | 319,500 |
At December 31, 2008
|
Organized
under laws of
|
Percentage of voting
securities owned
by the Registrant
|
|||
Harris
& Harris Enterprises, Inc.
|
Delaware
|
100%
|
Title of class
|
Number of record holders
|
||
Common
Stock, $.01 par value
|
140
|
|
(1)
|
subsequent
to the effective date of this Registration Statement, the net asset value
per share declines more than 10 percent from our net asset
value per share as of the effective date of the Registration Statement;
or
|
|
(2)
|
the
net asset value increases to an amount greater than our net proceeds as
stated in the Prospectus.
|
|
(a)
|
to
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration
Statement:
|
|
(1)
|
to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
|
|
(2)
|
to
reflect in the prospectus any facts or events after the effective date of
the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement;
and
|
|
(3)
|
to
include any material information with respect to the plan of distribution
not previously disclosed in the Registration Statement or any material
change to such information in the Registration
Statement.
|
|
(b)
|
that
for the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof;
|
|
(c)
|
to
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering; and
|
|
(d)
|
that
for the purpose of determining liability under the Securities Act of 1933
to any purchaser, if the Registrant is subject to Rule 430C: Each
prospectus filed pursuant to Rule 497(b), (c),(d) or (e) under the
Securities Act of 1933 as part of a registration statement relating to an
offering, other than prospectuses filed in reliance on Rule 430A under the
Securities Act of 1933, shall be deemed to be part of and included in the
registration statement as of the date it is first used after
effectiveness. Provided, however, that
no statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document
immediately prior to such date of first
use.
|
|
(e)
|
that
for the purpose of determining our liability under the Securities Act of
1933 to any purchaser in the initial distribution of
securities:
|
|
We
undertake that in a primary offering of our securities pursuant to this
registration statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, we will be
a seller to the purchaser and will be considered to offer or sell such
securities to the purchaser:
|
|
(1)
|
any
preliminary prospectus or prospectus of the undersigned relating to the
offering required to be filed pursuant to Rule 497 under the Securities
Act of 1933;
|
|
(2)
|
the
portion of any advertisement pursuant to Rule 482 under the Securities Act
of 1933 relating to the offering containing material information about us
or our securities provided by or on our behalf;
and
|
|
(3)
|
any
other communication that is an offer in the offering made by us to the
purchaser.
|
|
(a)
|
that
for purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of Prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Company pursuant to Rule 497(e) and Rule
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective;
and
|
|
(b)
|
that
for the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
|
HARRIS
& HARRIS GROUP, INC.
|
||
By:
|
/s/ Douglas W.
Jamison
|
|
Name:
|
Douglas
W. Jamison
|
|
Title:
|
Chairman
of the Board and Chief Executive Officer
|
|
(Principal
Executive Officer)
|
Signature
|
Title
|
Date
|
||
/s/ Douglas W. Jamison
|
Chairman
of the Board and
|
July
24, 2009
|
||
Douglas
W. Jamison
|
Chief
Executive Officer
|
|||
(Principal
Executive Officer)
|
||||
/s/ Daniel B. Wolfe
|
Chief
Financial Officer
|
July
24, 2009
|
||
Daniel
B. Wolfe
|
(Principal
Financial Officer)
|
|||
/s/ Patricia N. Egan
|
Chief
Accounting Officer, Senior
|
July
24, 2009
|
||
Patricia
N. Egan
|
Controller
and Vice President
|
|||
*
|
Director
|
July
24, 2009
|
||
W.
Dillaway Ayres, Jr.
|
||||
*
|
Director
|
July
24, 2009
|
||
Dr.
C. Wayne Bardin
|
||||
*
|
Director
|
July
24, 2009
|
||
Dr.
Phillip A. Bauman
|
||||
*
|
Director
|
July
24, 2009
|
||
G.
Morgan Browne
|
||||
*
|
Director
|
July
24, 2009
|
||
Dugald
A. Fletcher
|
||||
*
|
Director
|
July
24, 2009
|
||
Lori
D. Pressman
|
||||
*
|
Director
|
July
24, 2009
|
||
Charles
E. Ramsey
|
||||
*
|
Director
|
July
24, 2009
|
||
James
E. Roberts
|
||||
*
|
Director
|
July
24, 2009
|
||
Richard
P. Shanley
|
(k) (1)
|
Form
of Indemnification Agreement with all Directors and Executive
Officers.
|
|
(n)
|
Consent
of the Independent Registered Public Accounting
Firm.
|
|
(s)
|
Power
of Attorney.
|