The increase of $7,001,851 in the second quarter in our net asset value reflected, among other things, the increase of $11,921,734 in the value of our shares in NeuroMetrix, Inc. (Nasdaq: NURO), which went public in July 2004. Because our 1,137,570 shares of NURO are currently our most highly valued holding, the volatility of NURO's stock price is now a significant influence on our net asset value and net asset value per share. NURO closed on March 31, 2005, at $9.55 per share, versus $20.03 per share on June 30, 2005.
The increase in the value of NURO also caused an offsetting increase in our reserve for employee profit sharing in the amount of $2,012,465. We calculate 20 percent of qualifying income pursuant to the terms of the profit-sharing plan and estimate the effect on qualifying income of selling all the portfolio investments that are valued above cost (i.e., are in an unrealized appreciation position). While the accrual will fluctuate as a result of changes in qualifying income and changes in unrealized appreciation, actual payments are made only to the extent that qualifying income exists.
Harris & Harris Group is a publicly traded venture capital company that now makes initial investments exclusively in tiny technology, including nanotechnology, microsystems and microelectromechanical systems (MEMS). The Company's last 24 initial private equity investments have been in tiny-technology enabled companies. The Company has 17,248,845 common shares outstanding.
Detailed information about Harris & Harris Group, Inc. and its holdings can be found on its website at http://www.TinyTechVC.com.
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