Market Overview

Rand Capital Announces First Quarter 2018 Results

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  • Invested $450,000 in two follow-on transactions during the first
    quarter
  • Net Asset Value per share was $4.97 at March 31
  • Progress with expanding relationship with Small Business
    Administration (SBA)

Rand
Capital Corporation
(NASDAQ:RAND) ("Rand"), a venture capital
company which invests in growth businesses with unique product, service
or technology concepts, announced its results for the quarter ended
March 31, 2018.

Allen F. ("Pete") Grum, President and Chief Executive Officer of Rand
Capital, commented, "In the quarter we made two follow-on investments
totaling $450,000. The first was in one of our newer portfolio
companies, Centivo, which we started investing in last year. The other
was in one of our long-standing holdings, SciAps, in which we have been
investing since 2013. Both investments were part of capital raises to
support these companies' growth."

During the quarter, Rand consolidated the majority of its investments
and cash of its newly formed Small Business Investment Company (SBIC)
applicant fund, Rand SBIC II, into its original SBIC fund.

Mr. Grum noted, "We have finalized our strategy with the SBA and have
consolidated our SBIC funds as the first step. We can now begin the
application process for $6 million minimum of additional leverage in
2018. We are excited to expand our longstanding relationship with the
SBA."

First Quarter 2018 Financial Highlights

  • Reported $4.97 net asset value (NAV) per share at March 31, 2018,
    compared with $5.05 at December 31, 2017.
  • Supported two current portfolio companies with $450,000 of investments
    during the quarter:
    • Centivo Corporation $200,000
    • SciAps, Inc. $250,000
  • Investment income increased 10.4% over the prior-year first quarter.
  • At March 31, 2018, portfolio fair value was $32.2 million and
    consolidated cash was $5.5 million.

Total investment income in the first quarter of 2018 grew to
approximately $363,000, up from approximately $329,000 in the first
quarter of 2017. The $34,000 increase was driven by the Company's
success with focusing investments in income producing instruments. Total
expenses in the 2018 and 2017 first quarters were approximately $589,000
and $516,000, respectively.

Selected Portfolio Highlights

  • ACV
    Auctions, Inc.
    , the leading dealer-to-dealer full-service
    wholesale online auction platform, reached a major milestone in March
    selling more than 5,000 units online for a total of more than $35
    million in vehicle inventory sold. The rapidly growing automotive
    company is increasing vehicle sales at a rate of 400 percent per year,
    including over 500 new dealer sign-ups per month. ACV Auctions
    operates and sells vehicles in 52 markets throughout the East Coast
    and Midwest. By the end of 2018, the company expects to be in over 70
    markets by expanding to the West Coast. ACV Auctions' world-class
    technology modernizes the wholesale auction operation, including title
    management, floor plan purchasing, arbitration and facilitating the
    transportation of the vehicles. Rand's initial $163,000 investment in
    2016 has a fair market value of $282,000 at March 31, 2018.
  • SciAps,
    Inc.
    develops portable analytical instruments that identify
    virtually any compound, mineral or element on earth. The company
    recently introduced a new Scrapper X-250, which is an X-ray analyzer
    designed from the ground up to be the fastest scrap sorter in
    existence. It measures magnesium up to 10 times faster than any other
    X-ray gun, which is one of the keys to highly accurate aluminum alloy
    testing. SciAps recently completed a Series D $10 million financing
    round, in which Rand invested $250,000 during the first quarter. This
    represents Rand's tenth investment in SciAps. At March 31, 2018,
    Rand's investment in SciAps was valued at approximately $2.0 million.
  • OutMatch
    Holdings, LLC
    is a leader in delivering actionable
    predictive analytics to build world-class workforces and is
    transforming the world of work by helping companies hire, retain and
    develop great talent. The company experienced a breakthrough year in
    2017, fueled by the acquisition of a leading culture analytics firm
    and the launch of its robust new platform. Outmatch gained 60 new
    clients and its client retention rate was 98% which drove double-digit
    year-over-year recurring revenue growth. For 2018, the company is
    developing enhancements to expand its candidate assessment platform,
    broadening its OutMatch Impact. They recently announced the launch of
    two new solutions, which include the industry's fastest pre-hire
    assessment and OutMatch Bridge, an exclusive solution that allows
    point-and-click integration of assessments into applicant tracking
    systems. At March 31, 2018, Rand's investment in OutMatch was valued
    at approximately $2.1 million.

As of March 31, 2018, Rand's portfolio consisted of 30 active companies.
At that date, the portfolio was comprised of approximately 60% in equity
investments and 40% in debt investments, compared with 63% in equity
investments and 37% in debt investments at March 31, 2017. The change in
investment mix reflects Rand's goal to generate sufficient investment
income to cover operating expenses.

Webcast and Conference Call

Rand will host a conference call and live webcast today, May 2, 2018, at
1:30 p.m. Eastern Time to review its financial condition and results for
the 2018 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 www.randcapital.com
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 www.randcapital.com
under the "Investor Relations" heading.

A telephonic replay will be available from approximately 4:30 p.m.
Eastern Time today through Wednesday, May 9, 2018. To listen to the
archived call, dial (412) 317-6671, and enter conference ID number
13679104. A transcript of the call will be placed on Rand's website,
once available.

ABOUT RAND CAPITAL

Rand Capital (NASDAQ:RAND) provides investors the ability to
participate in venture capital opportunities through an investment in
the Company's stock. 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. The Company seeks investment
opportunities in businesses with strong leaders who are bringing to
market new or unique products, technologies or services that have a high
potential for growth. Additional information can be found at the
Company's website where it regularly posts information: http://www.randcapital.com/.

Safe Harbor Statement

This news release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, statements concerning future
net asset value growth, investment returns and opportunities as well as
Rand's plans for utilizing proceeds from sales of portfolio companies
when and if received.
These statements involve known and unknown
risks, uncertainties and other factors that could cause the actual
results to differ materially from the results expressed or implied by
such statements, including general economic and business conditions,
conditions affecting the portfolio companies' markets, competitor
responses, and market acceptance of their products and services and
other factors disclosed in the Corporation's periodic reports filed with
the Securities and Exchange Commission.
Consequently, such
forward-looking statements should be regarded as the Corporation's
current plans, estimates and beliefs.
The Corporation assumes no
obligation to update the forward-looking information contained in this
release.

FINANCIAL TABLES FOLLOW

       
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Financial Position
 
March 31,
2018 December 31,
(Unaudited) 2017

ASSETS

Investments at fair value:
Control investments (cost of $99,500) $ 99,500 $ 99,500
Affiliate investments (cost of $21,086,529 and $20,871,129,
respectively)
16,982,195 17,016,795
Non-Control/Non-Affiliate investments (cost of $15,900,940 and
$15,718,690, respectively)
  15,148,528     15,167,767  
Total investments, at fair value (cost of $37,086,969 and
$36,689,319, respectively)
32,230,223 32,284,062
Cash 5,499,266 6,262,039
Interest receivable (net of allowance: $206,900 at 3/31/18;$161,000
at 12/31/)
168,129 231,048
Deferred tax asset 656,268 551,863
Prepaid income taxes 797,422 762,047
Other assets   82,247     42,854  
Total assets $ 39,433,555   $ 40,133,913  
 

LIABILITIES AND STOCKHOLDERS' EQUITY (NET
ASSETS)

Liabilities:
Debentures guaranteed by the SBA (net of debt issuance costs) $ 7,862,023 $ 7,855,173
Profit sharing and bonus payable - 144,000
Accounts payable and accrued expenses 119,739 178,348
Deferred revenue   53,521     37,707  
Total liabilities 8,035,283 8,215,228
 
Stockholders' equity (net assets):
Common stock, $.10 par; shares authorized 10,000,000; shares issued
6,863,034;
shares outstanding of 6,321,988 at 3/31/18 and 12/31/17 686,304 686,304
Capital in excess of par value 10,581,789 10,581,789
Accumulated net investment loss (1,770,475 ) (1,597,146 )
Undistributed net realized gain on investments 27,215,738 27,215,738
Net unrealized depreciation on investments (3,845,979 ) (3,498,895 )
Treasury stock, at cost; 541,046 shares   (1,469,105 )   (1,469,105 )
Total stockholders' equity (net assets) (per share $4.97 at 3/31/18;
$5.05 at 12/31/17)
  31,398,272     31,918,685  
Total liabilities and stockholders' equity (net assets) $ 39,433,555   $ 40,133,913  
 
       
Rand Capital Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
 
     

For the Quarter Ended
March 31,

2018 2017
Investment income:
Interest from portfolio companies:
Affiliate investments $ 147,036 $ 136,757
Non-Control/Non-Affiliate investments   150,312     109,334  
Total interest from portfolio companies   297,348     246,091  
 
Interest from other investments:
Non-Control/Non-Affiliate investments   5,110     10,975  
Total interest from other investments   5,110     10,975  
 
Dividend and other investment income:
Affiliate investments 50,783 62,373
Non-Control/Non-Affiliate investments   3,382     2,512  
Total dividend and other investment income   54,165     64,885  
 
Fee income:
Affiliate investments 3,167 917
Non-Control/Non-Affiliate investments   3,019     5,769  
Total fee income   6,186     6,686  
Total investment income   362,809     328,637  
 
Expenses:
Salaries 169,874 165,413
Employee benefits 63,745 52,370
Directors' fees 34,875 34,875
Professional fees 101,687 84,002
Stockholders and office operating 64,439 67,210
Insurance 11,988 11,302
Corporate development 15,796 21,708
Other operating   2,691     1,960  
465,095 438,840
Interest on SBA obligations 77,569 77,569
Bad debt expense   45,900     -  
Total expenses   588,564     516,409  
Net investment loss before income taxes (225,755 ) (187,772 )
Income tax (benefit)   (52,426 )   (72,508 )
Net investment (loss)   (173,329 )   (115,264 )
 
 
Net change in unrealized depreciation on investments:
Affiliate investments (250,000 ) -
Non-Control/Non-Affiliate investments   (201,489 )   (380,644 )
Change in unrealized depreciation before income tax expense (benefit) (451,489 ) (380,644 )
Deferred income tax (benefit)   (104,405 )   (136,427 )
Net change in unrealized depreciation on investments   (347,084 )   (244,217 )
 
Net realized and unrealized (loss) on investments   (347,084 )   (244,217 )
Net (decrease) in net assets from operations $ (520,413 ) $ (359,481 )
Weighted average shares outstanding 6,321,988 6,321,988
Basic and diluted net (decrease) in net assets from operations
per share
$ (0.08 ) $ (0.06 )

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