Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. HARRIS & HARRIS GROUP INC /NY/ (893739) 10-Q published on Nov 08, 2016 at 5:35 pm
Reporting Period: Sep 29, 2016
On May 28, 2014, the FASB and the International Accounting Standards Board ("IASB") issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," their final converged standard on revenue recognition. This ASU provides a single, comprehensive revenue recognition model for all contracts with customers and supersedes current revenue recognition guidance. The guidance contains principles that an entity will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. This ASU also includes enhanced disclosures that are significantly more comprehensive than those in existing revenue standards. ASU 2014-09 was to be effective for the Company beginning on January 1, 2017, but, on July 9, 2015, the FASB voted to approve a one-year deferral of the effective date. This new guidance is now expected to be effective for the Company beginning on January 1, 2018. The guidance allows for either "full retrospective" adoption, meaning the standard is applied to all of the periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most current period presented in the financial statements. The impact of this ASU on the Company's Consolidated Financial Statements is currently being evaluated.
As of September 30, 2016, we have sold 1,093,461 shares of our position in OpGen, Inc., in open market transactions, for net proceeds, after commission, of $1,843,175 or an average sale price of $1.69 per share. Our average cost basis in OpGen is $4.02 per share. As of September 30, 2016, we have sold 98,465 shares of our position in Champions Oncology, Inc., in open market transactions for net proceeds, after commission, of $164,805 or an average sale price of $1.67 per share. Our average cost basis in Champions Oncology is $6.66 per share.
Our secondary liquidity is comprised of the stock of unrestricted publicly traded companies. Although these companies are publicly traded, their stock may not trade at high volumes and prices may be volatile, which may restrict our ability to sell our positions at any given time. As of September 30, 2016, our secondary liquidity was $6,133,535. Adesto Technologies Corporation, Champions Oncology, Inc., Enumeral Biomedical Holdings, Inc., and OpGen, Inc., account for $3,929,107, $243,726, $1,441,913 and $518,789, respectively, of the total amount of secondary liquidity based on the closing price of their common stock as of September 30, 2016. We were subject to a lock-up agreement restricting our ability to trade our securities of OpGen as of June 30, 2016. The lock-up period on our securities of OpGen expired on August 18, 2016. We were subject to lock-up agreements restricting our ability to trade our securities of Enumeral Biomedical and Adesto Technologies, exclusive of the general restriction on the transfer of unregistered securities, as of December 31, 2015. The lock-up period on our 7,966,368 shares and warrants for the purchase of 1,755,120 shares of common stock of Enumeral Biomedical expired on January 31, 2016. The lock-up period on our 1,769,868 shares of common stock of Adesto Technologies expired on April 25, 2016.
Salaries, benefits and stock-based compensation expense decreased by $1,172,501, or 38.9 percent, for the nine months ended September 30, 2016, as compared with September 30, 2015, primarily as a result of a decrease in salaries and benefits owing primarily to a decrease in our employee headcount, a decrease in employee bonus expense of $137,500 and a decrease in compensation cost of $570,945 for restricted stock awards associated with the Stock Plan. At September 30, 2016, we had seven full-time employees and one part-time employee as compared with nine full-time employees and one part-time employee at September 30, 2015. Administration and operations expense decreased by $23,039, or 6.8 percent, for the nine months ended September 30, 2016, as compared with September 30, 2015, primarily as a result of decreases in travel-related expenses, offset by increases in general office and administration expenses and costs associated with a portfolio company presentation event. Professional fees decreased by $230,178, or 19.7 percent, for the nine months ended September 30, 2016, as compared with September 30, 2015, primarily as a result of decreases in certain legal, accounting and consulting fees. Rent expense decreased by $29,065, or 13.3 percent, for the nine months ended September 30, 2016, as compared with September 30, 2015. Our rent expense of $189,707 for the nine months ended September 30, 2016, includes $233,719 of rent paid in cash, net of $44,012 non-cash rent expense, credits and abatements that we recognize on a straight-line basis over the lease term. Our rent paid in cash of $233,719 includes $18,046 of real estate tax escalation charges on our corporate headquarters located at1450 Broadway in New York City. Insurance expense decreased by $21,806, or 10.1 percent, for the nine months ended September 30, 2016, as compared with September 30, 2015. Directors' fees and expenses decreased by $62,464, or 21.8 percent, for the nine months ended September 30, 2016, as compared with September 30, 2015, primarily owing to less meetings held by the Board of Directors than were held in the comparable period in 2015. Custody fees decreased by $12,619, or 26.7 percent, for the nine months ended September 30, 2016, as compared with September 30, 2015.
Significant developments in the nine months ended September 30, 2016, included a decrease in the holdings of our portfolio company investments of $9,156,317 and a decrease in our cash of $4,537,810. The decrease in our portfolio company investments from $77,152,904 at December 31, 2015, to $67,996,587 at September 30, 2016, resulted primarily from a decrease in the net value of our portfolio company investments held of $15,625,349, offset by new and follow-on investments of $6,469,032. The decrease in our cash from $17,922,630 at December 31, 2015, to $13,384,820 at September 30, 2016, is primarily owing to new and follow-on portfolio company investments totaling $6,469,032 and the payment of cash for operating expenses of $4,453,661, offset by proceeds of $1,932,229 from the sale of our investment in Bridgelux, Inc., proceeds of $1,843,175 from the sale of certain of our shares of OpGen, Inc., proceeds of $750,000 from the repayment of certain bridge notes in SynGlyco, Inc., proceeds of $685,103 in fees for providing managerial assistance to certain portfolio companies, proceeds of $640,928 from the sale of our shares of Magic Leap, Inc., proceeds of $390,492 from the release of a portion of the funds held in escrow from the sale of Molecular Imprints, Inc.'s semiconductor lithography equipment business to Canon, Inc., proceeds of $164,805 from the sale of certain of our shares of Champions Oncology, Inc., proceeds of $130,522 from the release of the funds held in escrow from the sale of Molecular Imprints' non-semiconductor business to Magic Leap, proceeds of $119,242 from the repayment of certain bridge note principal and interest of Black Silicon Holdings, Inc., and proceeds of $113,950 from the repayment of a bridge note in EchoPixel, Inc.