Patty Egan - Chief Financial Officer Doug Jamison - Chief Executive Officer Narbeh Derhacobian - Chief Executive Officer, Adesto Daniel Wolfe - President

Tom Bonvissuto - The Financial Consultant Group Daniel Jose - Private Investor

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Harris & Harris Group Fourth Quarter 2015 Shareholder Update. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the meeting over to Patty Egan, Chief Financial Officer. Please go ahead.

Thank you. I will begin by reading our Safe Harbor statement. This presentation may contain statements of a forward-looking nature relating to future events. Statements contained in this presentation that are forward-looking statements are intended to be made pursuant to the Safe Harbor provisions of the Private Securities and Litigation Reform Act of 1995. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the company’s current beliefs, and a number of important factors could cause actual results to differ materially from those expressed herein. Please see the company’s Annual Report on Form 10-K as well as subsequent filings filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the company’s business, including, but not limited to the risks and uncertainties associated with venture capital investing and other significant factors that could affect the company’s actual results. Except as otherwise required by federal securities laws, Harris & Harris Group, Inc. undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties. In response to investor requests, we have invited executives from one of our portfolio companies, Adesto, to provide a brief overview of their company at the conclusion of today’s call. Please note that any opinions or views expressed by the management of Adesto are strictly their own and do not necessarily reflect the opinions, reviews of Harris & Harris Group. Similarly, Adesto and its management are solely responsible for the content of their presentation, including any statements they make or any statistics or financial information they may provide and Harris & Harris Group expressly disclaims any responsibility for the content of such presentation. I will now turn the call over to our CEO, Doug Jamison.

Thank you, Patty. Thank you all for joining us this morning for our shareholder call focusing on year end 2015. In conjunction with this call, we provided a link on our homepage of our website, www.hhvc.com to a short PowerPoint presentation. You can find it on the homepage of our website under resources on the right hand side titled Q4 2015 Shareholder Update Call. We will be referencing a couple of slides from that presentation today. As we have said historically, Harris & Harris Group is really a reflection of our portfolio companies. We try to let them speak for themselves as they are run by impressive management teams, but we are proud to have the opportunity to work with. Beginning today and continuing into the future, we are going to have one of our company’s present to our shareholders at each of our quarterly calls, so you can hear from them regarding their businesses. Additionally, as you will hear today, multiple of our companies will also be presenting at our Annual Shareholder Meeting on June 7. We will begin this new format with the CEO of Adesto, Mr. Narbeh Derhacobian. Narbeh is a Co-Founder, President and CEO of Adesto Technologies. He has over 17 years of industry experience, working on discrete and embedded memory technologies. He has held technical and managerial roles at SST, AMD, Virage Logic and Cswitch Corporations. Adesto invents memory for things. In 2007, the founders of Adesto Technology set out to build a new company focused on developing innovative, low power memory solutions based on a promising type of resistive RAM technology called Conductive Bridging RAM, or CBRAM. Adesto completed its initial public offering or it’s IPO in October of 2015 and trades on the NASDAQ Exchange under the ticker symbol IOTS. As I hand it over to Narbeh in Adesto to begin, please see Slide 3 from the presentation. Good morning, Narbeh and thank you.

Good morning, Doug and good morning to everyone. I would like to talk briefly about Adesto and introduce the company. We have been a Harris & Harris portfolio company since 2007, as Doug mentioned. And we have enjoyed Harris & Harris’ support tremendously over the years. Adesto Technology is a fabless semiconductor company. We built application-specific, feature-rich devices specifically suited for the emerging era of Internet of Things. We have – our devices are specifically focused on providing ultra low-power and ultra low energy storage devices for the edge of IoT. As Doug mentioned, the company went public last fall. We were the first semiconductor IPO, I believe, in the last 2 years. And I think the investor community understood our opportunity, our technology and our growth potential going into what seems to be the largest volume semiconductor market in history as IoT is emerging. Today, Adesto has over 100 products and we have over 500 customers and we enjoy a tremendous momentum in terms of our design win going into 2016 and ‘17. As I mentioned, our solutions are memory devices, yet our solutions are not commodity memory devices. Semiconductor memories for years have been characterized by a commodity afterthought as they have been deployed in devices such as personal computers, laptops or smartphones. Our devices always have some sort of a proprietary feature that brings more value to end system other than storage, the dump storage of coded data. As such, we call our products application-specific memory solutions. They are very well-suited for applications such as Bluetooth low-energy platform, industrial sensors and smart meters, consumer sensor nodes, home automation, medical lighting, wearables and so on. Now, the highlights of our products include very low power consumption and more importantly, very low energy consumption, which is very much important for the edge of IoT sensors, where battery life is driven by how much energy is consumed. Ability to provide these solutions in multiple form factors is also one of our strength. And of course, we embed in integrated intelligence and unique architectures to help end applications solve more problems than storing data. You know we think about IoT as this new era emerging upon us suddenly out of ether. But in reality, if you step back, you realize that IoT really is a continuation and evolution of where we have been. If you go back to 1980s and 90s where personal computing and personal communication started to prevail our lives, we see that trend has always been that more intelligence going into smaller footprint and getting mobile and continuously getting unplugged from the wall socket. And this is what really IoT is. IoT is embedding intelligence in ordinary objects we use daily, collection of data from these objects and analysis of that data and action being taken on that data for some sort of economic or social good. Very similar to eras previous to IoT, the components building up the IoT infrastructure have their own unique requirements. In the era of PCs, we all cared about performance of our processors when we made a buy decision on a personal computer, we always ask how fast is the processor? In the era of personal computing – sorry, personal communication, we ask questions about what’s the bandwidth of my device or we ask how many pictures I can store on my smartphone or what’s the storage capacity of my tab. IoT devices will have their own set of questions and it’s not about gigabits and gigahertz. It’s more about what’s the cost of ownership, how long does the battery of my IoT device last? Is my data secured? These unique questions require unique solutions from a semiconductor perspective that will be the building block of these devices and Adesto is focused on the memory component of that. If you look at IoT, it encompasses a very large spectrum of hierarchies. Initially, IoT starts as data collection at the edge points from the physical work, whether it’s how many steps we have taken during the day or what’s the temperature of a room we are sitting in and what’s my glucose level in my blood as I poke my finger with a pen. This data then is communicated into the cloud and analysis upon this data provides the feedback and the economic group back into the system. Where we focused in is very clear. We are at the edge of the IoT. We are focused in the devices that are actually doing this collection. And the volume there is expected to be very large from a semiconductor perspective and a simple anecdote would explain why that might be. If you think about a typical home, you may have two or three computers. You may have five or seven Internet-connected devices such as smartphones, TVs and game consoles. But if IoT is to become IoT that same home will have hundreds of sensors. So, when you think about the components that go and build those sensors, you can see why the semiconductor suppliers are so excited about this emerging market. So a typical sensor, whether it’s a variable sensor you wear on your arm or it’s a sensor in your building has very simple building block components. Usually, there is a sensor measuring something from the physical work. There is a controller that gives intelligence into the sensor. There is a very low power, low bandwidth radio that communicates this data out to some sort of a hub before the data gets loaded up into the cloud. And then there is memory that holds the intelligence, the code that runs a sensor and also is used for data log whatever information is collected. Our focus is that piece of the puzzle. As I mentioned today, we have over 500 customers and we are very well diversed in many verticals. Our largest customer is about 12% of our revenue and top 25 customers of Adesto constitute roughly about 45% of our revenue. The rest constitutes the remaining 55%. So we don’t rely on a single customer to drive the company and this is very much typical of what IoT characteristics would be going forward. And if I look back and you look at companies providing semiconductor solutions to the smartphone, for example, it was very clear you either have to be an Apple supplier or a Samsung supplier or the rest it’s irrelevant. IoT is not like that. IoT is not going to be that one company or one product that’s going to be 100 million unit a year opportunity, it’s actually going to be thousands of products and applications provided by probably hundreds of companies, but each one in millions of unit opportunities. It’s probably the most fragmented semiconductor market in history. Today, 50% of our business is in industrial application. We are a leading supplier of memory to the industrial smart metering business. And as you know, the industrial IoT is going to have one of the largest impact in terms of bringing efficiencies to manufacturing and industrial applications. We are in consumer applications, communication, we supply in the medical field as well as we still do supply some memory devices to the old paradigms of computing. We supply our customers based on today, four families of product. We will introduce our fifth family in the second half of the year. As I mentioned, our products are designed to always bring some value to the end application, more so than just commodity memory devices. And I will talk a little bit more about that shortly. Typically, a commodity semiconductor supplier the way it serve the market is by really price and availability. There is very little differentiation between commodity devices multiple suppliers. It’s who has the largest economies of scale, who has the lowest cost and who can have products available at distribution and that’s it. Our business is a little bit different, because we bring more value to our end customers we have to work with the customers early on to be part of the solution as they are designing their own systems, so our engagement with the customer happens earlier in the actual product cycle that they are in. So as such, we measure our future growth by what we call our design wins. And design win for us is when a customer has understood our value and has designed us into their system, has actually qualified us into their system and actually put in a minimum order for prototype manufacturing of their end system. So fairly comfortable that this design win is going into production. Now from that point to a full production, we are modeling our consumer markets at six months to nine months. Industrial markets would be 12 months to 15 months. And of course, consumer markets will be characterized more by the choppiness of the consumer market. Industrial markets will be less volatile and more predictable and more slow in terms of how they are going to grow. So if you can see, when you look at our company’s design wins going back to 2013 when we started to introduce some of our new products. In 2013, we finished our 35 design wins. 2014, we had 60-some design wins. And last year, we finished at 135 design wins. And this is a tremendous growth, 90% annual growth rates for our design wins indicating where we are going. And the reason why we are winning these designs is because our solutions are very much suited for the products and the systems and our end customers are building specifically in the IoT area. As I mentioned, roughly about 50% of our business is in industrial and this is reflective of our design wins in 2015, 45% in industrial. And if you really roundup the majority of our business, industrial consumer and communication covers close to 90% of that. Let me talk quickly about couple of our products and why – what we mean by application specific. We have a product family called Data Flash. It’s a non-volatile memory, flash memory just like you have in your USB drives. However, Data Flash is designed architecturally and it’s a proprietary architecture, design architecture to do one function very well and that’s logging of data. And if you think about when you log data whether you are logging footsteps or you are logging temperature, you are changing very little data, you are counting something or frequently measuring something and updating an information. That’s very much different than the use of the memory you have in your USB stick where it’s designed to move large chunks of data like a picture, like a movie, like a large file back and forth very fast. So Data Flash does the data logging function very efficiently, which means its high speed and it can do that at very low power because it’s not moving large pieces of data. This is probably very irrelevant if used in a personal computer or in a server rack, but this is absolutely critical if this device is used in a sensor that’s running on a battery because every joule of that battery needs to be addressed in order to extend the battery life and lower the cost of ownership of the sensors. So Data Flash as an application specific memory is used by fitness trackers like Jawbone. It’s used by smart meters. It’s counting utility use of a home by [indiscernible] giving smart metering providers. And it’s also used by Xiaomi in their drones, it’s not used as part of the system that’s actually storing the images of the drone is flying over, it’s actually used as a flight data recorder very much similar to a block box of an airplane, except in a drone, you can haul around black box, so you need to have these tiny Data Flash devices for your data logging for the drone. Fusion family is another one was designed specifically again to work with systems that are running on a battery. And today, it’s the best-in-class memory solution in the world allowing why does the voltage capability to operate, what that means is that when the battery of a Bluetooth low energy system, for example as the battery is discharging, when the voltage starts to drop, we have taken that flash memory out of the problem of having the consumer go and change the battery because it’s expecting the second voltage and the battery is not delivering it. So solutions like this where you can see our products, our memory devices and yet they offer value at the end system. What that means though financially is that we charge a premium obviously for these features. That premium is reflected in our corporate gross margin, because memory suppliers from Asia have gross margins in their teens. More high end memory suppliers in the U.S. have their gross margin of this product portfolio that we compete against in their 30s, our gross margins is in mid-40s and 45% range. So our customers understand this value. They are able to translate the value we bring to them into their end systems and they pay a premium for us. Finally, let me talk about resistive RAM. And you might have followed in the news if you follow the world of semiconductors that there is a new technology that large companies, such as Intel, Micron, even Samsung 2 years ago have been talking about a completely new way of storing information in a chip called resistive RAM. Adesto is the only company in the world today that sells these great resistive RAM memories. Our flavor of resistive RAM is called Conductive Bridging RAM, CBRAM. We are first to market with this product. We have a huge IP portfolio in this space. The advantages of resistive RAMs are threefold. They are – they can scale, which means that you can make very high density memory devices. This is what the interest for the large memory suppliers to address their technology bottlenecks as they move aggressively scaling their devices. We are interested in the other two features of resistive RAMs, which it allows the operation of a chip to be even extremely low power than we are able to do with today’s technology and it can be done at very high speed. When you combine high speed and low power, you get low energy. Low energies which is as I mentioned is what’s very important for battery life. And these are orders of magnitude improvement. So, today, if you look at even some of our standard devices we have built on our CBRAM platform, it’s able to operate 10 to 100x less energy than industry standard flash memory devices. We have two families of products, one of them we just announced last month called Moneta Family. The first product that’s been in production for the last 1.5 years is the Maverick Family. That’s the product that we used to drive the manufacturing of the technology, maturing of the manufacturing. Moneta was designed in conjunction with key customers designing biometric applications. Moneta is a very interesting product, because it’s built on the CBRAM platform. It actually enables the capability to run our devices even on the energy harvesting levels of energy. So, if you really think about IoT, the ideal IoT node at the edge would be one that doesn’t require any batteries whatsoever. As you can spring to that field with sensors that monitor, for example, the moisture in the soil and then these sensors really harvest energy by using light, wind, motion to power up just enough to measure what they need to do, transmit the information and then go to sleep. From the memory perspective, our CBRAM platform is capable of operating at such low voltage, low energies. Finally, in conclusion, we are very excited about the company. We think the emergence of IoT is creating a huge opportunity for products and solutions as we are very good at designing. And we believe if you look back in the company for 2013, ‘14 and ‘15, where we started to focus in this area and come up with some of our new product families that are specifically designed for that with our access to the vast channel of customers we have, each one designing products in these areas, we are seeing that in our design win momentum. And we believe this new era of IoT, which is really changing the landscape of how suppliers should supply components to this market creates various challenges to the established suppliers, because these current suppliers have been supplying to single one or high-volume products like PC, like smartphones, whereas IoT is completely different and very much requiring a new set of requirements and a new way of approaching solutions or designs to enable IoT become IoT. Doug?

Narbeh, thank you very much. We very much appreciate you taking time out of your schedule to present to our shareholders. I believe you actually had an Investor Conference today, so I am sure you will be telling the story a few more times. So, thank you very much. Daniel, can I now turn it over to you for the presentation?

Yes, absolutely and thank you, Narbeh, as well for presenting. Thank you, Doug. We would like next to summarize some of the accomplishments and some of the challenges to our business in 2015. In 2015, two of our portfolio companies, one you just heard Adesto Technologies Corporation and OpGen, Inc. completed IPOs and are now traded on the NASDAQ stock exchange under the symbol IOTS and OPGN respectively. Molecular Imprints and SiOnyx were sold to undisclosed buyers. We hold shares in the buyer of Molecular Imprints and have an economic interest in future returns from the buyer of SiOnyx. Corden Pharma International thought out SynGlyco’s rights to future payments. We sold our shares of Nantero to an undisclosed current investor in the company at a gain on our investment. We received milestone payments related to the sales of BioVex to Amgen and Molecular Imprints to Canon. We received the final principal payment from our initial set of nonconvertible debt investments made between 2010 and 2012. These investments generated an attractive return on investment, provided us with short-term income and all principal was repaid in full. We repurchased 509,082 shares of our stock for approximately $1.2 million at an average price of $2.36. We decreased our expenses for the third consecutive year. Additionally, in 2016, we are positioned to significantly reduce net operating loss, an additional 20% to 30%. AgBiome, EchoPixel, Magic Leap, Metabolon, NGX Bio and ORIG3N raised rounds of capital from new and current investors at higher prices per share than each company’s respective prior round of financing. A number of our portfolio companies announced significant developments, including: D-Wave secured multiyear agreements with Lockheed Martin and Google and an order from Los Alamos National Laboratory. The company also announced and shipped its first thousand qubit computers. Google announced that D-Wave’s quantum computer was able to find solutions to complicated problems of nearly 1,000 variables up to 100,000,000 times faster than classical computers. AgBiome formed a strategic partnership with Genective, a leading developer of biotech crops, to accelerate the discovery of a new generation of insect control traits. HZO announced partnerships with Dell and Motorola. HZO solutions are incorporated into Dell’s Latitude 12 Rugged Tablet and Motorola’s Moto Surround earbuds. We also faced the following challenges during the year. Even though financings of some of our portfolio companies may have occurred at increases in prices per share from the prior rounds of financing, such increases in value may not be reflected in full in our valuation owing to other rights and preferences afforded to investors in those rounds of financing. This challenge in part led to a decrease in our net asset value per share during 2015. The values of public equities, particularly those of microcapitalization companies, are highly volatile. While Adesto Technologies Corporation is trading above its IPO price, Champions Oncology and Enumeral and OpGen all decreased in value during 2015. Our own stock price has been under considerable pressure from these and other headwinds. The downturn in the oil and gas sector has negatively affected the business operations of at least one of our portfolio companies, Produced Water Absorbance. While Bridgelux agreed to be acquired by consortium of buyers in July 2015, the transaction has yet to close and we are uncertain if and when it will close. I will hand it back to Doug.

Thank you, Daniel. So, as we look forward to 2016, we continue to focus intently on three areas, where we believe we can create value for shareholders now and into the future. The first, we believe major changes are coming to the American healthcare system over the next decade. The promise of precision medicine will be leading many of these challenges. We believe we are in a unique position to build certain of our current and our future portfolio companies addressing precision health and precision medicine as majority-owned subsidiaries or controlled partner companies. Second, we will continue to cultivate our maturing portfolio companies that have the potential to generate substantial returns. When these maturing companies exit, we plan to return to shareholders a much greater portion of future realized gains from these investments in the form of dividends and share repurchases than we have historically. Also, as we announced on March 9, we will begin offering a limited number of accredited investors the opportunity to co-invest with Harris & Harris Group in some of these maturing companies through a newly formed co-investment fund we have been managed by Harris & Harris Group. Daniel will speak more on this in a moment. We will continue to reduce net operating losses, which we define as investment income, less our expenses. We will see a further reduction in net operating losses of 20% to 30% in 2016 after an 11% reduction over the period of time from 2013 through 2015. We believe this will take us to an expense level we believe is at a minimum to operate a publicly traded business development company in the current regulatory environment. We will also seek to increase substantially the short-term income generated from existing and new investments to offset our operating expenses and potentially generate additional cash flows for shareholders of Harris & Harris Group. I would like to now say a few words on our focus on precision health and precision medicine. We discussed this in November as well. Over the past few years, we have been actively building a set of companies in the precision health and precision medicine market space. These include Metabolon, ORIG3N, Echopixel, NGX Bio, TARA Biosystems, Interome, ProMuc and Phylagen. We defined precision health and precision medicine as a focus on health, wellness and medicine at the individual level that includes not just medical technologies, but digital technologies, genetic technologies and big data and data mining technologies. We believe the current healthcare market is right for change. According to the Congressional Budget Office, healthcare expenditures have grown at a level of 2% greater than gross domestic product each year since 1975. Each year, healthcare has taken increasingly more of our economic output in the United States. Healthcare has grown from 8% of GDP in 1975 to just under 18% today. Not only is this trend unsustainable, but it’s escalated while not providing healthcare consumers either one, answers the chronic diseases that are individualized to their illness, nor specific answer that can be used to prolong health and well-being for extended periods of time. Precision health and precision medicine will be increasingly important piece of the changing healthcare market over the next decade. Specifically, we believe the building of bridge between the consumer and the data the consumer presents and the clinical market where large data sets of information can be stored, interrogated and clinically interpreted is an opportunity for Harris & Harris Group to become an impactful leader in the healthcare market. Our portfolio of companies, ORIG3N and NGX Bio are already focused on driving consumer data in the regenerative medicine and genomics areas, respectively. Metabolon, TARA Biosystems and Phylagen each provide precision information at an individualized level. Our newest portfolio company, Interome is focused on gathering and interrogating information, some provided by our own portfolio companies mentioned above to provide clinically actionable information. As we have studied the emergence of new markets and changing industries, as we have looked back and learned from our own venture capital experiences as well as those of others, we have concluded that building a focused set of synergistic companies focused on the emergence of a new market and a changing industry is the best way to create value for our shareholders over the coming years. Precision health and precision medicine provides this opportunity. Dan, I am going to turn it back to you to talk to the co-investment fund opportunity.

Thank you, Doug. We would like to focus for a few minutes on this newly formed co-investment fund that Doug just mentioned. A consistent question we hear from our shareholders and other attendees at our meet the portfolio day events and other conversations is how can I invest directly in your portfolio of companies. As our portfolio of companies grow, we have rights to invest in future rounds of financings if we so choose. These rights are often referred to as preemptive rights. We believe that offering some of these special rights to accredited investors of Harris & Harris Group can be a catalyst to invest in and hold our stock. It permits of accredited investors to invest in the companies within our portfolio that they believe have outside growth potential while the companies are still private and not readily available to a wide group of investors. Having accredited investors of Harris & Harris Group participate where and when they would like in financings of our more mature portfolio of companies is a way that Harris & Harris Group can keep more control and retain greater ownership than we can otherwise achieve alone. And these accredited investors have the opportunity to potentially generate returns on invested capital in individual portfolio companies. These opportunities to invest in maturing companies will be provided through Harris H&H Co-Investment Partners LLC, a newly formed entity that will be managed by Harris & Harris Group. We expect to solicit interest from shareholders in separate series established by H&H Co-Investment Partners to invest specifically in individual portfolio companies ahead of those potential rounds of financing. We expect that accredited investors who have held Harris & Harris Group stock prior to the close of each financing will have priority in the allocation of these limited co-investment opportunities. We will provide more information on how accredited investors may subscribe to our offerings later this month. I will now hand off the call to Patty Egan, our CFO, to discuss the financial statements for the year ending December 31, 2015.

Thank you, Daniel. At December 31, 2015, we had total assets of approximately $96.5 million on our balance sheet. Included in our total assets is our investment portfolio, which was valued at approximately $77.2 million versus its cost basis of $117 million as of the end of the year. Therefore, our portfolio was in a depreciated state of $39.8 million. We also held $17.9 million in cash and $5 million of debt outstanding at year end. At December 31, 2015, our primary and secondary liquidity was $37.1 million. Our net assets at December 31, 2015, were approximately $88.7 million and our net asset value per share was $2.88. This was a decrease from our net asset value per share of $3.51 at December 31, 2014. Turning to our income statement, for 2015 we had investment income of approximately $917,000 compared to approximately $518,000 in investment income in 2014. Our total expenses were approximately $8.1 million for the year compared with approximately $8.4 million during 2014. These expense figures include both cash and non-cash based operating expenses such as a stock-based compensation. Stock-based compensation expense has no impact to NAV. Our total cash base and accrued operating expenses for the year ended December 31, 2015 were approximately $7.5 million, which was comparable to the amounts in 2014. This yielded a net operating loss of $7.2 million for 2015, which is a decrease compared to our net operating loss of $7.9 million for 2014. I will now turn the call back over to Doug.

Thanks, Patty. So, just a couple of things before we head into question-and-answer period, both of which relate to things you can find on our website. So first of all, if you go to our website, right under the picture that announces the Annual Shareholder Meeting, there is a – you can click to go to a short survey. And those that are interested, we would love to have you to go to that survey. It allows you to answer some questions about what companies you are most excited about in the portfolio and whether you would like information about those. It will be very interesting information to us. It will be interesting information as we look forward to some of the things we are doing in the future as well. So please if you have a chance, go take that short survey. The second area is that we would like to conclude by inviting you to our Annual Shareholder Meeting on June 7, 2016, at the New York Genome Center located in New York City. New York Genome Center couldn’t be a more fitting venue to continue our discussion of precision health and precision medicine. It is the leading center for genomic and phenotypic research in New York City. This year, we are going to do something different. We are inviting a few of our most mature companies to present for 15 minutes to 20 minutes with audience questions to follow. Additionally, our portfolio company, ORIG3N, will be present to draw blood, if you so choose, to recreate your own individualized induced pluripotent stem cells to be stored or banked for potential use in the future and to be used to advance the science of precision health and precision medicine. We welcome you to join us and learn more about what our companies are doing to change healthcare and do advanced precision medicine. Please go to our website to register and to learn more about the annual meeting. At this time, we would like to open up the lines to any questions. Thank you for listening to us.

[Operator Instructions] And I do have a question from the line of Tom Bonvissuto from The Financial Consultant Group.

Yes. Doug, can you give us more detail on the $5 million debt outstanding and where – what’s the term of that and so forth, what do you used it for?

Yes. Daniel, why don’t I turn it over to you to talk a little bit about the details of it and then I can add in.

Certainly. Good morning, Tom. So, the debt that we have outstanding from ORIX of $5 million it’s a term loan with the maturity date of September 30, 2017 interest only until that point in time. The interest rate is 10%.

So Tom, philosophically, why do we have this facility? I think there is a couple of reasons. The first one is we are in a very risky asset class, an early stage venture capital. Our company sometimes take more time and more money than we predicted to get to an exit for us or require more capital than we thought on day one when we invested in those companies. And so in a lot of respect, it’s an insurance policy to make sure that as the opportunities arise, maybe in later rounds of capital and things like that, we can have – we have the opportunity to invest if we think it’s the right thing to do and to have that capital available to us. So, I think primarily that’s the largest reason. I will give you plenty of examples of why we think that’s important. D-Wave continues to raise very large rounds of private capital, right. We want to be at the table. In other of our companies, if you looked at BioVex historically and this predates the credit facility that BioVex for last two rounds of capital in that company were extremely dilutive. They were crammed down rounds, right. And so if you did not have the capital to participate in those rounds, you lost tremendously. I mean some of the original investors even though that deal is worth $425 million in the first payment and $1 billion over time, some investors got nothing, because they weren’t there at the end of the day. So, I think we have always thought of it. Our Board thought of it as an insurance policy to make sure if and when necessary we have the capital to put in those companies. As you have seen, I mean, our balance sheet is lower than it has been historically as well. So, if you look at the period of time from ‘03 to ‘09, we went out and raised equity ticket. It was a low cost of capital to do that. Currently, we don’t believe that the cost of capital is worth it to go raise equity capital plus we are trading below NAV per share. So, it’s extremely dilutive to our shareholders to do that even in a rights offering. So, we thought this is a lower cost of capital way to give us the same insurance policy.

It seems to be kind of expensive especially since you just spent million some dollars on buying stock back that didn’t really – hasn’t really done us any benefit. So, that’s why I was asking what your thought process was towards that? Next question is what do you expect on OpGen and Enumeral? You say there is some good news on OpGen, what’s the good news?

Well, first of all, when there is good news that is public we will disclose it. But they are public companies and we certainly can’t disclose anything ahead of them. I think OpGen and Enumeral are very early IPOs, right? By taking them public early, we, in some respects, spread some of the financing risk that we would have otherwise had to bear ourselves. We thought those companies could grow in the public market. We knew they were going to be volatile, right? And again, I am watching the majority of the micro-cap space, it’s been a really difficult time out there, watching even our own private companies. Sometimes looking at them at any one point in time is not a good prediction of their future return. I return to BioVex. Right, I mean, there is a crammed down round 12 months before they get sold for $1 billion. So, it’s a very volatile world privately and publicly. So, they are going to move up and down a little bit. In the case of OpGen, OpGen is run by a gentleman, Evan Jones. He built Digene. He is worth more individually than we are as a firm or most firms in the deal are. He has built a lot of great companies. He sits on the board of foundation medicine. And so I think he is trying to build that company. It’s going to take some time to do that. But I think over the coming months and years, you are going to see that and we believe that there is value. And the wonderful thing about it now is its public and the burden is not entirely on us to build. We have other partners in public market investors.

And just – also just to clarify, we do – we historically had a seat on the Board of Directors of OpGen. And therefore, we historically have had based on public information, which is I can’t go into more detail there. Enumeral, we actually have not been on the board out for a while, but we are very encouraged by – and haven’t had material nonpublic information for a long time, but we are very encouraged by the announcements that they have been making about some of their internal programs and other efforts that in the immunooncology space with potential candidates that have some very interesting activity profiles that could be the basis for potential increases in value in the future.

Tom, we are interested. I mean, it’s like Adesto, right? I mean, happy that the IPO went out much lower than any of the comparables in the market just in a rough time period in Q4. Thank god. They did. I mean, I don’t think they would have gotten out in Q1 2016 had they delayed it. So, getting the capital to build their business was the right direction. It gets pushed down. It comes out of the gate, moves up into the 7 even over 8 range and then drops dramatically down to back into the 5 range and 5.50 range. And all of that time, Adesto keeps operating on its business and meeting its forecast. So again, you see that volatility. But I will be interested. Hopefully, we are going to get a chance to come visit and sit down with you, but I will be really interested in sort of your perspectives as you watch these micro-cap stocks and everything like that, how you are seeing that space and everything like that independent of the progress going on in each of those individual companies.

Alright. Well, we will meet with you when we come up for the Annual Shareholder Meeting and talk more about these things.

Great, thank you.

Thank you. [Operator Instructions] And I do have a question from the line of Daniel Jose, a Private Investor.

Hi, good morning. I was wondering there are two similarly sized BDCs, Full Circle Capital and Crossroads Capital that in the last few months have announced that they are looking to liquidate basically close up shop. And I was wondering if you could talk to issues that might be particular to the BDC industry that might, because I know that one problem for Harris & Harris is lack of scale. And I know you couldn’t speak one way or another even if you were talking to them. Is there something about the BDC industry that makes mergers or acquisitions of another company’s portfolio particularly problematic or are there issues that can be overcome? I was wondering if you could comment on that?

Happy to do so. And Dan, you can follow me and add on anything as well. First of all, if we had to talk about issues in the BDC space, we could probably spend the next 3 or 4 hours doing such. But to your specific question, I think probably – so I agree. I think scale is really important in this space currently. I think you have to be careful when we talk about the BDC space. Daniel, you understand this I think from your question, but others, there are the debt players, mezzanine debt players and there are a few equity players and they are very different businesses. But I think even in the equity side, you need some scale at this point in time, from an expense perspective, from a regulatory perspective and just because I think investors are demanding that type of scale. I think the hardest thing is that unlike us, many of the BDCs are externally managed and so they are not employees of the BDC, their own management company managing those assets. They have 2 and 20. And so doing something they control and they lose some of that control. I think that internally managed from my perspective, if you could bring a couple of the internally managed BDCs together and the portfolios were synergistic and you believe that the quality of the investments were good in each of them, I think you can – I think it’s a good way to reduce expenses, get some scale and be more viable in the space. So I don’t think we have hid this, I mean our Board has spent some time looking for alternatives over the year of – starting in 2014 and 2015. One of the issues we talk about a lot is scale. I can tell you that at least to-date, there hasn’t been an opportunity that we thought really made a lot of sense and from these conversations with for our shareholders, but we continue to be open to those conversations. The other thing I would say, there is just not a lot of equity BDCs, right. So there is GSV capital there is first had FBDC, there was Keating which is this crossroads, which you have talked about before that we had actually done a lot of investments with them, they were still doing equity. They invested in multiple of our portfolio companies at later stage than we did. We introduced them to it. So we like having them as a partner in this space. And I knew Tim Keating very well. So I – it will be interesting. But right now, most of them are externally managed and the interest level and doing something else, I think has not been, has not come to the forefront. But there are some and there are some that are looking both at some of the debt groups that are looking at equity now. So I do think over the coming year, there may be some opportunities and I think there probably will be some consolidation in the BDC space.

That would be good to see. And then just quickly, last summer you filed a self-registration, I assume that’s in effect now?

It’s actually not. So we do a couple of things just to be clear on that and it’s really just because of the regulatory structure and the time necessary to move through the SEC, we do a couple of things. First, we did file an entry registration statement that would give us the ability to raise capital in the future. We trade below NAV per share, so logically that would be a rights offering. We have done that historically. We started doing it again more than anything just to have the option available to us. At this point in time, currently we don’t have any plans to do a rights offering that may change into the future. But we want to be ready because they take a long, long time to get to the SEC. There is a lot of question. And in this market, as you probably know, we got to be nimble, right. When the volatility decreases, you got to be ready. And if you got to wait six months to eight months to get through the SEC, you will lose your opportunity. The second thing we did, which again, if you are reading these things carefully, we also announced again the ability to do a buyback. And again, it’s the same thing. You have to announce that every six months. You have to do it in a filing that goes to all shareholders. You can’t send out an e-mail. You can’t put it up on your website. So the logical thing to do is to put it in your annual shareholder – your annual financials that gets mailed to all the shareholders with the proxy. So we did that as well. So all we are doing is keeping our options open. Again, there is no immediate plans for either at the moment.

Okay, great. Thank you. And then again, I realized that you are limited on what you can say and in terms of D-Wave and the potential for an IPO down the road, I assume that you don’t regard whoever is making that decision, so does Goldman Sachs own the largest share of D-Wave right now or is that…?

Yes. So Goldman Sachs is a large investor in D-Wave. And I mean, again I mean I think we all – we have an adage that says, he who has the gold makes the rules. And so I think, no, they don’t have control to make that decision. They are a member of the Board. Actually Harris & Harris Group sits on the Board of D-Wave. We are the smallest investor that has a Board seat, but we have been involved in that company for a long, long time. And our knowledge of the quantum computing space in that market is I think valuable to the company. So but yes, there are a lot of large investors. There are a lot of large investors in the company. D-Wave has had the ability to raise private capital and so they have taken that opportunity to raise private capital. I think they believe they would be in a better position of being a larger company in the public markets rather than a smaller company in doing that. We certainly believe that their story would resonate very well publicly. There certainly is a conversation going on at the Board about being public and the timing for that and preparing for that, but I can’t speak to the exact time publicly at this point in time.

Of course and then last question, I appreciate you taking the time to answer all these questions. Is it Magic Leap...?

Yes. Magic Leap, we get more phone calls on Magic Leap than we do on anything else in the portfolio.

In their latest round of fundraising about, was it a month or two months ago, did Harris & Harris invest in that or?

We did not invest in that. We weren’t even given the opportunity to invest in that. I think yes, there is not a lot we can say about Magic Leap. We are very, very restricted by the company. In fact, we are probably one of the only groups that can say anything and that’s because we are public, so we have to say – we have to be able to listed in our consolidated schedule of investments and things like that. So it’s very little. We are – we are very – we are pleased to be an investor in or shareholder in Magic Leap, but there is not anything else we can say.

Sure. Okay. Well, thank you very much for your answers and good luck. I appreciate that you are doing your best to increase shareholder value in a very difficult environment for quite a long period now. Okay. Thank you very much.

Thank you. And that concludes our question-and-answer session for today. I would like to turn the conference back over to Doug Jamison for closing comments.

So thank you very much. Thank you all for joining today. Again, please come out to the Annual Shareholder Meeting. It’s going to be different than other than Annual Shareholder Meetings. It’s almost like to meet the portfolio of company. We want to do be able to interact. We certainly want to be able to interact with you. Feel free to give us a call and talk to us about our business. We are trying to be open and transparent. We are trying to do some things that can really grow value for the shareholders. We have a lot of individual shareholders, but we really have, over the last year, we really built a really nice small set of institutional investors that have gotten more interested and active in the company. And just to let you all know, one, we appreciate it. Two, we are always open to conversations. You have information and knowledge and ways of thinking that can certainly help us as well. So I would just – I would like to conclude with a couple of things. There is always a few guiding principles that guide us at Harris & Harris Group. One, we want to work with good people, right, like their short you want to work with good people. Charlie Harris always had an adage that you can’t do good business with bad people. That’s important to us. It’s important with our portfolio of companies, with our CEOs, with the other investors we work with. Two, we tend take the long view. Some would argue that when does the long view end that have been in our stock for a while, but we do take the long view. Three, really interested in best-in-class compliance, right. Compliance is something that can trip you up before you ever get to reach your potential, so we take it seriously. And four, operational excellence, I just wanted to comment on that last point. I have to following that filing on the financials and the audit each year. We have right now a seven-person team at Harris & Harris Group, full-time full time seven people in the company, one part-time. And that’s a small group to file your financial and get them out the door, and it’s a group of operational excellence. So you have people like Patty and Mary on our team that drive that process you have. Patty, Daniel and Blake on the valuation side of it. You have Jackie and Carmen to get this all information out. And they really do a spectacular job for a seven-person firm doing an audit for a public company in this day and age. And they are the force behind Harris & Harris Group, so we are very, very appreciative to them. With that, I will say thank you to you all. Please keep up. Please come to our website, follow what’s happening. And if ever, you have questions, please address them to us. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now log-off and disconnect. Everyone have a good day.