Press release

Rand Capital Announces First Quarter 2019 Results

Sponsored by Businesswire

Capital Corporation
(Nasdaq:RAND) (“Rand”), a business development
company, announced its results for the quarter ended March 31, 2019.

Allen F. (“Pete”) Grum, President and Chief Executive Officer of Rand
Capital, commented, “We filed the definitive proxy statement and
associated materials with the Securities and Exchange Commission that
provides significant detail regarding the planned transformation of Rand
Capital made possible by the proposed $25 million investment by East
Asset Management. The proxy statement details the thorough process
followed by our Board of Directors to advance this opportunity to drive
future value for our shareholders.”

First Quarter 2019 Financial Highlights

  • Reported $5.06 net asset value (NAV) per share at March 31, 2019,
    compared with $4.99 at December 31, 2018. The increase was primarily
    due to net appreciation in portfolio investments, mostly related to
    Rand’s investment in Tilson Technology Management, Inc.
  • Received the repayment of a $3.5 million loan by eHealth Global
    Technologies, Inc.
  • Supported two current portfolio companies with $650,012 of follow-on
    equity investments:

    • Tilson Technology Management, Inc. $500,012
    • KnowledgeVision Systems, Inc. $150,000
  • Investment income nearly doubled over the prior-year first quarter
    driven by both higher interest and nonrecurring loan repayment fee
  • Drew down $2.25 million of new SBA leverage commitment to fund
    investment activity and operations; new debt carries 3.2% annual fixed
    rate interest through its maturity in 2029
  • At March 31, 2019, portfolio fair value was $32.5 million and
    consolidated cash was $8.7 million, of which $1.9 million was
    available for corporate purposes and $6.8 million is restricted to the

During the quarter, Rand’s portfolio company, eHealth Global
Technologies, Inc., repaid its $3.5 million loan from Rand with proceeds
from its $41 million recapitalization.

Daniel P. Penberthy, Rand’s Executive Vice President, stated, “In 2016,
we were introduced to eHealth by a co-investor with whom we had
partnered on previous transactions. We made an initial investment of
$1.5 million in eHealth to support the company’s strategic growth,
including expansion of its electronic medical record retrieval business
into additional health network systems. We invested an additional $2
million during this short investment period as the company continued its
growth trajectory. eHealth grew its employee count by over 30% during
Rand’s investment tenure, while Rand benefited from a strong yield on
its investment.”

Total investment income in the first quarter of 2019 nearly doubled to
$719,000 from $363,000 in the same period last year. The increase
included higher interest as well as approximately $225,000 of
nonrecurring fee income associated with the loan repayment by eHealth.
Total expenses in the 2019 and 2018 first quarters were $690,000 and
$589,000, respectively. Higher expenses reflected a $125,000 increase in
professional fees related mostly to the proposed strategic investment by

The net change in unrealized appreciation/depreciation on investments
was approximately $402,000 of net appreciation in the first quarter of
2019 compared with $347,000 of net depreciation in the 2018 first
quarter. The net appreciation in the 2019 quarter was driven by an
increase in the valuation of the Company’s investment in Tilson,
partially offset by decreases in valuations of other portfolio companies.

Selected Portfolio Highlights

  • Tilson
    Technology Management, Inc.
    , which has been recognized for
    eight consecutive years on the Inc. 5000 list of fastest growing
    companies, provides network deployment and information system
    professional services to telecom, construction, utility and government
    clients. Tilson recently announced that it raised up to $100 million
    in funding commitment to support the expansion of its nationwide
    network of infrastructure design-build services and to enable the
    spin-out and capitalization of its asset ownership affiliate, SQF,
    LLC. SQF maintains authority to own and develop telecommunications
    assets in public rights-of-way throughout the United States and is a
    leading pole owner and solutions provider for 5G. Supported by
    Tilson’s real-estate entitlement, engineering, construction and
    operational capabilities, SQF provides customers with a range of
    infrastructure options, from single site design-build services to
    fully outsourced deployment and management nationwide. Including its
    additional investment and market value appreciation recorded in the
    first quarter, Rand’s total investment in Tilson was valued at
    approximately $5.0 million at March 31, 2019.
  • KnowledgeVision
    Systems, Inc.
    is a leader in smart media creation, hosting and
    tracking technology. Its Knovio® video platform is used by
    more than 300,000 people worldwide in more than 2,000 companies and
    campuses to create, host, share, organize, collaborate around, and
    measure online media and presentation content. The company recently
    announced the launch of Knovio AutoNarrate, a feature for online
    presentations that virtually eliminates searching for voice-over
    talent and time-consuming scheduling to help content creators deliver
    narrated presentations in multiple languages in seconds. The company
    believes that this feature represents an evolution in how training,
    human resources and corporate communications professionals deliver
    audio presentations. It gives companies an effective and flexible
    option to reach global audiences with translated content. Including
    its first quarter investment, at March 31, 2019, Rand’s investment in
    KnowledgeVision was valued at approximately $1.2 million.

As of March 31, 2019, Rand’s portfolio consisted of 29 active companies.
At that date, the portfolio was comprised of approximately 66% in equity
investments and 34% in debt investments, compared with 60% in equity
investments and 40% in debt investments at March 31, 2018.

Webcast and Conference Call

Rand will host a conference call and live webcast today, May 2, 2019, at
3:30 p.m. Eastern Time to review its financial condition and results for
the 2019 first quarter, as well as its strategy and outlook. The review
will be accompanied by a slide presentation, which will be available on
Rand’s website at
under the “Investor Relations” heading. A question-and-answer session
will follow the formal presentation.

Rand’s conference call can be accessed by calling (201) 689-8263.
Alternatively, the webcast can be monitored on Rand’s website at
under the “Investor Relations” heading.

A telephonic replay will be available from 6:30 p.m. ET on the day of
the call through Thursday, May 9, 2019. To listen to the archived call,
dial (412) 317-6671 and enter replay pin number 13689533. The webcast
replay will be available in the Investors section at,
where a transcript will also be posted once available.


Rand Capital (Nasdaq:RAND) is a Business Development Company (BDC) with
a wholly-owned subsidiary licensed by the U.S. Small Business
Administration (SBA) as a Small Business Investment Company (SBIC). Rand
focuses its equity investments in early or expansion stage companies and
generally lends to more mature companies. Additional information can be
found at the Company’s website where it regularly posts information:

Safe Harbor Statement

This press release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements, other than historical facts, including but not limited to
statements regarding the expected timing of the closing of the proposed
transactions; the ability of the parties to complete the proposed
transactions considering the various closing conditions, including
receipt of necessary shareholder approvals and approval from the U.S.
Small Business Administration (“SBA”); the intention of Rand Capital
Corporation (“Rand Capital”, “Rand” or the “Company”) and Rand Capital
SBIC, Inc. (“Rand SBIC”) to elect to be taxed as a regulated investment
companies for U.S. federal tax purposes; the intention to declare and
pay a special cash and stock dividend after the closing of the proposed
transactions; the intention to pay a regular cash dividend after the
completion of the proposed transactions; the expected benefits of the
proposed transactions such as a lower expense-to-asset ratio for Rand
Capital, increased net investment income, availability of additional
resources, expanded access to and sourcing platform for new investments
and streamlining of operations under the external management structure;
the business strategy of originating additional income producing
investments; the competitive ability and position of Rand Capital
following completion of the proposed transactions; and any assumptions
underlying any of the foregoing, are forward-looking statements.
Forward-looking statements concern future circumstances and results and
other statements that are not historical facts and are sometimes
identified by the words “may,” “will,” “should,” “potential,” “intend,”
“expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,”
“underestimate,” “believe,” “could,” “project,” “predict,” “continue,”
“target” or other similar words or expressions. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove to be incorrect, actual results may vary materially
from those indicated or anticipated by such forward-looking statements.
The inclusion of such statements should not be regarded as a
representation that such plans, estimates or expectations will be
achieved. Important factors that could cause actual results to differ
materially from such plans, estimates or expectations include, among
others, (1) that one or more closing conditions to the stock purchase
may not be satisfied or waived, on a timely basis or otherwise,
including that the SBA may not approve the proposed transactions or that
the required approvals by the shareholders of Rand Capital may not be
obtained; (2) the risk that the proposed transactions may not be
completed in the time frame expected by parties, or at all; (3) the risk
that Rand Capital and/or Rand SBIC may be unable to fulfill the
conditions required in order to elect to be treated as a regulated
investment company for U.S. tax purposes; (4) uncertainty of the
expected financial performance of Rand Capital following completion of
the proposed transactions; (5) failure to realize the anticipated
benefits of the proposed transactions, including as a result of delay in
completing the proposed transactions; (6) the risk that the board of
directors of Rand Capital is unable or unwilling to declare and pay the
special cash and stock dividend or pay quarterly dividends on a going
forward basis; (7) the occurrence of any event that could give rise to
termination of the stock purchase agreement; (8) the risk that
shareholder litigation in connection with the proposed transactions may
affect the timing or occurrence of the contemplated transactions or
result in significant costs of defense, indemnification and liability;
(9) evolving legal, regulatory and tax regimes; (10) changes in general
economic and/or industry specific conditions; and (11) other risk
factors as detailed from time to time in Rand Capital’s reports filed
with the Securities and Exchange Commission (“SEC”), including Rand
Capital’s annual report on Form 10-K for the year ended December 31,
2018, later filed quarterly reports on Form 10-Q, the definitive proxy
statement for the proposed transactions and other documents filed with
the SEC. Consequently, such forward-looking statements should be
regarded as Rand Capital’s current plans, estimates and beliefs. Except
as required by applicable law, Rand Capital assumes no obligation to
update the forward-looking information contained in this release.

Additional Information and Where to Find It

This communication may be deemed to be solicitation material in respect
of solicitation of proxies from shareholders of Rand Capital in respect
of the proposed transactions. Rand Capital has filed the definitive
proxy statement in respect of the proposed transactions, which was first
sent or made available to shareholders on or about April 18, 2019.
TRANSACTIONS AND RELATED MATTERS. Investors may obtain the definitive
proxy statement and other documents filed by Rand Capital with the SEC
from the SEC’s website at
or from Rand Capital’s website at
Investors and security holders may also obtain free copies of the
definitive proxy statement and other documents filed with the SEC from
Rand Capital by calling Investor Relations at 716-843-3908.

Participants in the Solicitation

Rand Capital and its directors, executive officers, employees and other
persons may be deemed to be participants in the solicitation of proxies
from the shareholders of Rand Capital in respect of the proposed
transactions. Information regarding the persons who may, under the rules
of the SEC, be considered participants in the solicitation of Rand
Capital shareholders in connection with the proposed transactions is set
forth in the definitive proxy statement filed with the SEC, which can be
obtained free of charge from the sources indicated above.


Rand Capital Corporation and Subsidiary
Consolidated Statements of Financial Position
March 31,
2019 December 31,
(Unaudited)     2018


Investments at fair value:
Control investments (cost of $0 and $99,500) $ $ 99,500
Affiliate investments (cost of $21,442,998 and $20,708,659,
18,804,026 17,026,091
Non-Control/Non-Affiliate investments (cost of $14,151,246 and
$17,483,984, respectively)
  13,687,175   17,541,213
Total investments, at fair value (cost of $35,594,244 and
$38,292,143, respectively)
32,491,201 34,666,804
Cash and cash equivalents 8,694,705 4,033,792
Interest receivable (net of allowance: $161,000) 137,214 145,532
Deferred tax asset 425,461 525,198
Prepaid income taxes 846,120 1,138,708
Other assets   338,507   11,690
Total assets $ 42,933,208 $ 40,521,724


Debentures guaranteed by the SBA (net of debt issuance costs) $ 10,758,657 $ 8,554,443
Profit sharing and bonus payable 125,000
Accounts payable and accrued expenses 154,082 245,758
Deferred revenue   40,867   72,336
Total liabilities 10,953,606 8,997,537
Stockholders’ equity (net assets):
Common stock, $0.10 par; shares authorized 10,000,000; shares issued
shares outstanding of 6,321,988 at 3/31/19 and 12/31/18 686,304 686,304
Capital in excess of par value 10,581,789 10,581,789
Accumulated net investment loss (1,642,785) (1,665,552)
Undistributed net realized gain on investments 26,252,574 26,221,443
Net unrealized depreciation on investments (2,429,175) (2,830,692)
Treasury stock, at cost: 541,046 shares   (1,469,105)   (1,469,105)
Total stockholders’ equity (net assets) (per share – 3/31/19: $5.06;
12/31/18: $4.99)
  31,979,602   31,524,187
Total liabilities and stockholders’ equity (net assets) $ 42,933,208 $ 40,521,724

Rand Capital Corporation and Subsidiaries

Consolidated Statements of Operations


For the Quarter Ended
March 31,
2019     2018
Investment income:    
Interest from portfolio companies:
Affiliate investments $ 208,715 $ 147,036
Non-Control/Non-Affiliate investments   197,250       150,312

Total interest from portfolio companies

  405,965       297,348
Interest from other investments:
Non-Control/Non-Affiliate investments   17,811       5,110

Total interest from other investments

  17,811       5,110
Dividend and other investment income:
Affiliate investments 34,625 50,783
Non-Control/Non-Affiliate investments         3,382

Total dividend and other investment income

  34,625       54,165
Fee income:
Affiliate investments 4,247 3,167
Non-Control/Non-Affiliate investments   256,722       3,019

Total fee income

  260,969       6,186
Total investment income   719,370       362,809
Salaries 181,500 169,874
Employee benefits 62,932 63,745
Directors’ fees 28,624 34,875
Professional fees 226,655 101,687
Stockholders and office operating 61,255 64,439
Insurance 9,601 11,988
Corporate development 18,460 15,796
Other operating   1,584       2,691
590,611 465,095
Interest on SBA obligations 99,124 77,569
Bad debt expense         45,900
Total expenses   689,735       588,564
Net investment gain (loss) before income taxes 29,635 (225,755)
Income tax expense (benefit)   6,868       (52,426)
Net investment gain (loss)   22,767       (173,329)
Net realized gain on sales and dispositions of investments:
Control investments 40,500
Income tax expense   9,369      
Net realized gain on sales and dispositions of investments 31,131
Net change in unrealized depreciation or appreciation on
Affiliate investments 1,043,595 (250,000)
Non-Control/Non-Affiliate investments   (521,300)       (201,489)
Change in unrealized depreciation or appreciation before income tax
expense (benefit)
522,296 (451,489)
Deferred income tax expense (benefit)   120,779       (104,405)
Net change in unrealized depreciation or appreciation on investments   401,517       (347,084)
Net realized and unrealized gain (loss) on investments   432,648       (347,084)
Net increase (decrease) in net assets from operations $ 455,415     $ (520,413)
Weighted average shares outstanding 6,321,988 6,321,988
Basic and diluted net increase (decrease) in net assets from
operations per share
$ 0.07     $ (0.08)