UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2018~~2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number:814-00235

Rand Capital Corporation

(Exact Name of Registrant as specified in its Charter)


New York		16-0961359
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

2200 Rand Building, Buffalo, NY		14203
(Address of Principal executive offices)		(Zip Code)

(716)853-0802

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” inRule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined inRule 12b-2 of the Act). Yes ☐ No ☑☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 par value	RAND	Nasdaq Capital Market

As of ~~November 5, 2018,~~August 6, 2019, there were 6,321,988 shares of the registrant’s common stock outstanding.

RAND CAPITAL CORPORATION

TABLE OF CONTENTS FOR FORM10-Q

~~PART I. – FINANCIAL INFORMATION~~


~~Item 1.~~ PART I. – FINANCIAL INFORMATION

Item 1.	Financial Statements and Supplementary Data	1

	Consolidated Statements of Financial Position as of ~~September~~June 30, ~~2018~~2019 (Unaudited) and December 31, ~~2017~~2018	1

	Consolidated Statements of Operations for the Three Months and ~~Nine~~Six Months Ended ~~September~~June 30, 2019 and 2018 ~~and 2017~~ (Unaudited)	2

	Consolidated Statements of Changes in Net Assets for the Three Months and ~~Nine~~Six Months Ended ~~September~~June 30, 2019 and 2018 ~~and 2017~~ (Unaudited)	3

	Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, 2019 and 2018 ~~and 2017~~ (Unaudited)	4

	Consolidated Schedule of Portfolio Investments as of ~~September~~June 30, ~~2018~~2019 (Unaudited)	5

	Consolidated Schedule of Portfolio Investments as of December 31, ~~2017~~2018	13

	Notes to the Consolidated Financial Statements (Unaudited)	21

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3335

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4244

Item 4.	Controls and Procedures	4244

PART II. – OTHER INFORMATION

Item 1.	Legal Proceedings	4346

Item 1A.	Risk Factors	4346

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4346

Item 3.	Defaults upon Senior Securities	4346

Item 4.	Mine Safety Disclosures	4346

Item 5.	Other Information	4346

Item 6.	Exhibits	4447

PART I. FINANCIAL INFORMATION

~~Item 1.~~

Item 1. Financial Statements and Supplementary Data

~~Financial Statements and Supplementary Data~~

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

   September 30,
2018
(Unaudited) December 31,
2017
ASSETS

Investments at fair value:

Control investments (cost of $99,500)
   $ 99,500 $ 99,500
Affiliate investments (cost of $20,413,709 and $20,871,129, respectively)
   16,728,607 17,016,795
NonControl/Non-Affiliate investments (cost of $16,796,433 and $15,718,690, respectively)
   15,344,150 15,167,767


Total investments, at fair value (cost of $37,309,642 and $36,689,319, respectively)
   32,172,257 32,284,062
Cash and cash equivalents
   4,404,574 6,262,039
Interest receivable (net of allowance: $211,342 at 9/30/18; $161,000 at 12/31/17)
   147,934 231,048
Deferred tax asset
   772,275 551,863
Prepaid income taxes
   1,122,826 762,047
Other assets
   38,360 42,854


Total assets
   $ 38,658,226 $ 40,133,913


LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)

Liabilities:

Debentures guaranteed by the SBA (net of debt issuance costs)
   $ 7,875,723 $ 7,855,173
Profit sharing and bonus payable
   —   144,000
Accounts payable and accrued expenses
   120,886 178,348
Deferred revenue
   73,941 37,707


Total liabilities
   8,070,550 8,215,228
Commitments and contingencies (See Note 5)

Stockholders’ equity (net assets):

Common stock, $.10 par; shares authorized 10,000,000; shares issued 6,863,034; shares outstanding of 6,321,988
   686,304 686,304
Capital in excess of par value
   10,581,789 10,581,789
Accumulated net investment loss
   (1,643,744 ) (1,597,146 )
Undistributed net realized gain on investments
   26,496,804 27,215,738
Net unrealized depreciation on investments
   (4,064,372 ) (3,498,895 )
Treasury stock, at cost: 541,046 shares
   (1,469,105 ) (1,469,105 )


��

Total stockholders’ equity (net assets) (per share $4.84 at 9/30/18; $5.05 at 12/31/17)
   30,587,676 31,918,685


Total liabilities and stockholders’ equity (net assets)
   $ 38,658,226 $ 40,133,913

~~See accompanying notes~~

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Unaudited)~~

   Three months
ended
September 30,
2018 Three months
ended
September 30,
2017 Nine months
ended
September 30,
2018 Nine months
ended
September 30,
2017
Investment income:

Interest from portfolio companies:

Affiliate investments
   $ 192,758 $ 142,247 $ 515,784 $ 416,247
Non-Control/Non-Affiliate investments
   257,531 167,675 547,553 417,406


Total interest from portfolio companies
   450,289 309,922 1,063,337 833,653
Interest from other investments:

Non-Control/Non-Affiliate investments
   7,872 6,348 20,717 24,182


Total interest from other investments
   7,872 6,348 20,717 24,182
Dividend and other investment income:

Affiliate investments
   48,856 74,408 175,905 189,805
Non-Control/Non-Affiliate investments
   —   2,405 6,058 7,598


Total dividend and other investment income
   48,856 76,813 181,963 197,403
Fee income:

Affiliate investments
   4,042 2,166 11,625 6,250
Non-Control/Non-Affiliate investments
   151,243 1,770 160,987 13,307


Total fee income
   155,285 3,936 172,612 19,557


Total investment income
   662,302 397,019 1,438,629 1,074,795


Expenses:

Salaries
   169,875 165,413 509,624 496,239
Employee benefits
   39,845 38,454 148,841 138,523
Directors’ fees
   28,624 36,374 92,123 107,623
Professional fees
   81,745 48,433 220,773 310,628
Stockholders and office operating
   47,839 45,355 176,877 193,290
Insurance
   8,700 8,058 27,588 25,618
Corporate development
   15,028 16,621 41,470 49,938
Other operating
   4,875 2,772 9,990 8,055


   396,531 361,480 1,227,286 1,329,914
Interest on SBA obligations
   77,568 77,568 232,406 232,706
Bad debt (recovery) expense
   (26,299 ) —   50,342 —


Total expenses
   447,800 439,048 1,510,034 1,562,620


Net investment gain (loss) before income taxes
   214,502 (42,029 ) (71,405 ) (487,825 )
Income tax expense (benefit)
   50,003 (17,050 ) (24,807 ) (188,961 )


Net investment gain (loss)
   164,499 (24,979 ) (46,598 ) (298,864 )


Net realized loss on sales and dispositions of investments:

Affiliate investments
   (1,125,673 ) —   (1,125,673 ) —


Net realized loss before income tax benefit
   (1,125,673 ) —   (1,125,673 ) —
Income tax benefit
   406,739 —   406,739 —


Net realized loss on investments
   (718,934 ) —   (718,934 ) —
Change in unrealized depreciation on investments:

Affiliate investments
   725,673 —   169,232 (665,675 )
Non-Control/Non-Affiliate investments
   (249,871 ) 111,000 (901,360 ) (322,308 )


Change in unrealized depreciation before income tax expense (benefit)
   475,802 111,000 (732,128 ) (987,983 )
Deferred income tax expense (benefit)
   100,669 28,090 (166,651 ) (349,960 )


Net change in unrealized depreciation on investments
   375,133 82,910 (565,477 ) (638,023 )


Net realized and unrealized (loss) gain on investments
   (343,801 ) 82,910 (1,284,411 ) (638,023 )


Net (decrease) increase in net assets from operations
   ($ 179,302 ) $ 57,931 ($ 1,331,009 ) ($ 936,887 )


Weighted average shares outstanding
   6,321,988 6,321,988 6,321,988 6,321,988
Basic and diluted net (decrease) increase in net assets from operations per share
   ($ 0.03 ) $ 0.01 ($ 0.21 ) ($ 0.15 )

~~See accompanying notes~~

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS~~

~~(Unaudited)~~

   Three months
ended
September 30,
2018 Three months
ended
September 30,
2017 Nine months
ended
September 30,
2018 Nine months
ended
September 30,
2017
Net assets at beginning of period
   $ 30,766,978 $ 31,634,545 $ 31,918,685 $ 32,629,363
Net investment gain (loss)
   164,499 (24,979 ) (46,598 ) (298,864 )
Net realized loss on investment
   (718,934 ) —   (718,934 ) —
Net change in unrealized depreciation on investments
   375,133 82,910 (565,477 ) (638,023 )


Net (decrease) increase in net assets from operations
   (179,302 ) 57,931 (1,331,009 ) (936,887 )


Total (decrease) increase in net assets
   (179,302 ) 57,931 (1,331,009 ) (936,887 )


Net assets at end of period
   $ 30,587,676 $ 31,692,476 $ 30,587,676 $ 31,692,476


Accumulated net investment loss
   ($ 1,643,744 ) ($ 1,876,712 ) ($ 1,643,744 ) ($ 1,876,712 )

~~See accompanying notes~~

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

   Nine months
ended
September 30,
2018 Nine months
ended
September 30,
2017
Cash flows from operating activities:

Net decrease in net assets from operations
   ($ 1,331,009 ) ($ 936,887 )
Adjustments to reconcile net decrease in net assets to net cash and cash equivalents used in operating activities:

Investments in portfolio companies
   (1,365,000 ) (3,900,000 )
Proceeds from loan repayments
   70,131 —
Change in unrealized depreciation on investments
   732,128 987,983
Deferred tax benefit
   (220,412 ) (542,917 )
Realized loss on portfolio investments
   1,125,673 —
Depreciation and amortization
   22,200 23,550
Original issue discount amortization
   (29,462 ) (21,085 )
Non-cash conversion of debenture interest
   (421,665 ) (262,105 )
Change in interest receivable allowance
   50,342 —
Changes in operating assets and liabilities:

Decrease in interest receivable
   32,772 121,675
Decrease in other assets
   2,844 561,499
Increase in prepaid income taxes
   (360,779 ) (266,935 )
Decrease in income tax payable
   —   (320,008 )
Decrease in accounts payable and accrued expenses
   (69,462 ) (210,173 )
Decrease in profit sharing and bonus payable
   (132,000 ) (1,138,052 )
Increase (decrease) in deferred revenue
   36,234 (3,557 )


Total adjustments
   (526,456 ) (4,970,125 )


Net cash and cash equivalents used in operating activities
   (1,857,465 ) (5,907,012 )


Net decrease in cash and cash and cash equivalents
   (1,857,465 ) (5,907,012 )
Cash and cash equivalents:

Beginning of period
   6,262,039 12,280,140


End of period
   $ 4,404,574 $ 6,373,128


	June 30, 2019 (Unaudited)			December 31, 2018
ASSETS
Investments at fair value:
Control investments (cost of $0 and $99,500, respectively)	$	—		$	99,500
Affiliate investments (cost of $21,313,526 and $20,708,659, respectively)		18,302,106			17,026,091
Non-Control/Non-Affiliate investments (cost of $14,154,010 and $17,483,984, respectively)		12,939,939			17,541,213

Total investments, at fair value (cost of $35,467,536 and $38,292,143, respectively)		31,242,045			34,666,804
Cash and cash equivalents		8,646,007			4,033,792
Interest receivable (net of allowance of $166,413 and $161,000, respectively)		119,717			145,532
Deferred tax asset		842,218			525,198
Prepaid income taxes		503,067			1,138,708
Other assets		346,010			11,690

Total assets	$	41,699,064		$	40,521,724


LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Debentures guaranteed by the SBA (net of debt issuance costs)	$	10,768,075		$	8,554,443
Profit sharing and bonus payable		—			125,000
Accounts payable and accrued expenses		264,529			245,758
Deferred revenue		34,407			72,336

Total liabilities		11,067,011			8,997,537
Commitments and contingencies (See Note 5)
Stockholders’ equity (net assets):
Common stock, $0.10 par; shares authorized 10,000,000; shares issued 6,863,034; shares outstanding of 6,321,988 as of 6/30/19 and 12/31/18		686,304			686,304
Capital in excess of par value		10,581,789			10,581,789
Accumulated net investment loss		(1,786,085	)		(1,665,552	)
Undistributed net realized gain on investments		25,920,065			26,221,443
Net unrealized depreciation on investments		(3,300,915	)		(2,830,692	)
Treasury stock, at cost: 541,046 shares		(1,469,105	)		(1,469,105	)

Total stockholders’ equity (net assets) (per share- 6/30/19: $4.85,12/31/18: $4.99)		30,632,053			31,524,187

Total liabilities and stockholders’ equity (net assets)	$	41,699,064		$	40,521,724

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended June 30, 2019			Three months ended June 30, 2018			Six months ended June 30, 2019			Six months ended June 30, 2018
Investment income:
Interest from portfolio companies:
Affiliate investments	$	206,036		$	175,990		$	414,751		$	323,026
Non-Control/Non-Affiliate investments		109,453			139,710			306,703			290,022

Total interest from portfolio companies		315,489			315,700			721,454			613,048

Interest from other investments:
Non-Control/Non-Affiliate investments		53,538			7,735			71,349			12,845

Total interest from other investments		53,538			7,735			71,349			12,845

Dividend and other investment income:
Affiliate investments		207,060			76,266			241,685			127,049
Non-Control/Non-Affiliate investments		—			2,676			—			6,058

Total dividend and other investment income		207,060			78,942			241,685			133,107

Fee income:
Affiliate investments		3,606			4,416			7,853			7,583
Non-Control/Non-Affiliate investments		3,353			6,725			260,075			9,744

Total fee income		6,959			11,141			267,928			17,327

Total investment income		583,046			413,518			1,302,416			776,327

Expenses:
Salaries		181,500			169,875			363,000			339,749
Employee benefits		40,167			45,251			103,099			108,996
Directors’ fees		28,624			28,624			57,248			63,499
Professional fees		111,273			37,341			337,928			139,028
Stockholders and office operating		319,506			64,599			380,761			129,038
Insurance		10,969			6,900			20,570			18,888
Corporate development		14,866			10,646			33,326			26,442
Other operating		1,225			2,424			2,809			5,115

		708,130			365,660			1,298,741			830,755
Interest on SBA obligations		110,534			77,269			209,658			154,838
Bad debt expense		5,413			30,741			5,413			76,641

Total expenses		824,077			473,670			1,513,812			1,062,234

Net investment loss before income taxes		(241,031	)		(60,152	)		(211,396	)		(285,907	)

Income tax benefit		(97,731	)		(22,384	)		(90,863	)		(74,810	)

Net investment loss		(143,300	)		(37,768	)		(120,533	)		(211,097	)


Net realized gain (loss) on sales and dispositions of investments:
Control investments		39,893			—			80,393			—
Affiliate investments		(472,632	)		—			(472,632	)		—

Net realized gain (loss) on sales and dispositions, before income taxes		(432,739	)		—			(392,239	)		—
Income tax benefit		(100,230	)		—			(90,861	)		—

Net realized loss on sales and dispositions of investments		(332,509	)		—			(301,378	)		—
Net change in unrealized depreciation on investments:
Affiliate investments		(372,448	)		(306,441	)		671,148			(556,441	)
Non-Control/Non-Affiliate investments		(750,000	)		(450,000	)		(1,271,300	)		(651,489	)

Change in unrealized depreciation before income tax benefit		(1,122,448	)		(756,441	)		(600,152	)		(1,207,930	)
Deferred income tax benefit		(250,708	)		(162,915	)		(129,929	)		(267,320	)

Net change in unrealized depreciation on investments		(871,740	)		(593,526	)		(470,223	)		(940,610	)

Net realized and unrealized loss on investments		(1,204,249	)		(593,526	)		(771,601	)		(940,610	)

Net decrease in net assets from operations	($	1,347,549	)	($	631,294	)	($	892,134	)	($	1,151,707	)

Weighted average shares outstanding		6,321,988			6,321,988			6,321,988			6,321,988
Basic and diluted net decrease in net assets from operations per share	($	0.21	)	($	0.10	)	($	0.14	)	($	0.18	)

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)


	Three months ended June 30, 2019			Three months ended June 30, 2018			Six months ended June 30, 2019			Six months ended June 30, 2018
Net assets at beginning of period	$	31,979,602		$	31,398,272		$	31,524,187		$	31,918,685
Net investment loss		(143,300	)		(37,768	)		(120,533	)		(211,097	)
Net realized loss on sales and dispositions of investments		(332,509	)		—			(301,378	)		—
Net change in unrealized depreciation on investments		(871,740	)		(593,526	)		(470,223	)		(940,610	)

Net decrease in net assets from operations		(1,347,549	)		(631,294	)		(892,134	)		(1,151,707	)

Net assets at end of period	$	30,632,053		$	30,766,978		$	30,632,053		$	30,766,978

Accumulated net investment loss	($	1,786,085	)	($	1,808,243	)	($	1,786,085	)	($	1,808,243	)

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended June 30, 2019			Six months ended June 30, 2018
Cash flows from operating activities:
Net decrease in net assets from operations	($	892,134	)	($	1,151,707	)
Adjustments to reconcile net decrease in net assets to net cash provided by (used in) operating activities:
Investments in portfolio companies		(900,012	)		(1,225,000	)
Proceeds from sale of portfolio investments		39,893			—
Proceeds from loan repayments		3,525,000			70,131
Net realized loss on portfolio investments		392,239			—
Change in unrealized depreciation on investments before income taxes		600,152			1,207,930
Deferred tax benefit		(317,020	)		(347,040	)
Depreciation and amortization		18,325			14,800
Original issue discount amortization		(20,382	)		(19,271	)
Non-cash conversion of debenture interest		(212,131	)		(77,154	)
Change in interest receivable allowance		5,413			76,641
Changes in operating assets and liabilities:
Decrease in interest receivable		20,402			26,510
Increase in other assets		(334,451	)		(14,202	)
Decrease in prepaid income taxes		635,641			21,961
Increase (decrease) in accounts payable and accrued expenses		18,771			(21,430	)
Decrease in profit sharing and bonus payable		(125,000	)		(132,000	)
(Decrease) increase in deferred revenue		(37,928	)		28,173

Total adjustments		3,308,912			(389,951	)

Net cash provided by (used in) operating activities		2,416,778			(1,541,658	)

Cash flows from financing activities:
Proceeds from SBA debentures		2,250,000			—
Origination costs to SBA		(54,563	)		—

Net cash provided by financing activities		2,195,437			—

Net increase (decrease) in cash and cash equivalents		4,612,215			(1,541,658	)
Cash and cash equivalents:
Beginning of period		4,033,792			6,262,039

End of period	$	8,646,007		$	4,720,381

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~September~~June 30, ~~2018~~2019

(Unaudited)

Company, Geographic Location, Business
Description, (Industry) and Website
(a)
Type of Investment

(b)
      Date
Acquired

(c)
Equity
         Cost
    (d)(f)
Fair
Value
     Percent
of Net
Assets
Non-Control/Non-Affiliate Investments – 50.2% of
net assets: (j)

ACV Auctions, Inc. (e)(g)    1,181,160 Series A Preferred    8/12/16    <1%          0.9%
Buffalo, NY. Live mobile wholesale auctions for new    shares.          $163,000    $282,356
and used car dealers. (Software)
www.acvauctions.com

Centivo Corporation (e)(g)    190,967 SeriesA-1 Preferred    7/5/17    <1%          1.0%
New York, NY. Tech-enabled health solutions    shares.          200,000    200,000
company that helps self-insured employers and their    337,808 SeriesA-2 Preferred
employees save money and have a better experience.    shares.          101,342    101,342
(Health Care)    Total Centivo                  301,342    301,342
www.centivo.com
eHealth Global Technologies, Inc. (g)    $3,500,000 Replacement Term    6/28/16    0%          11.5%
Henrietta, NY. eHealth Connect® improves health    Note at 13% due December 31, 2020.          3,500,000    3,500,000
care delivery through intelligently aggregated clinical record and images for patient referrals.
(Health Care) www.ehealthtechnologies.com
Empire Genomics, LLC (g)(m)    $1,209,014 Senior Secured    6/13/14    0%          2.3%
Buffalo, NY. Molecular diagnostics company that    Convertible Term Notes at 10%
offers a comprehensive menu of assay services for    (8% Payment in Kind (PIK)) due
diagnosing and guiding patient therapeutic treatments.    December 31, 2020.          1,209,014    450,000
(Health Care)    $444,916 Promissory Note at 9%
www.empiregenomics.com    due December 31, 2020.            394,915    252,569
   Total Empire                  1,603,929    702,569
GiveGab, Inc. (e)(g)    5,084,329 Series Seed Preferred    3/13/13    4%          2.0%
Ithaca, NY. Online fundraising, day of giving    shares.          616,221    616,221
supporter engagement software for non-profit
organizations. (Software)
www.givegab.com
GoNoodle, Inc. (g)(m)    $1,000,000 Secured Note at 12%    2/6/15    <1%          3.4%
Nashville, TN. Student engagement education    due January 31, 2020, (1%
software providing core aligned physical activity    Payment in Kind (PIK)).          1,037,070    1,037,070
breaks. (Software)    Warrant for 47,324 Series C
www.gonoodle.com    Preferred shares.                      25                25
   Total GoNoodle                  1,037,095    1,037,095
Mercantile Adjustment Bureau, LLC (g)    $1,199,039 Subordinated Secured    10/22/12    4%          3.1%
Williamsville, NY. Full service accounts receivable    Note at 13% (3% for the calendar
management and collections company. (Contact    year 2018) due January 31, 2019.          1,199,040    949,040
Center) www.mercantilesolutions.com    (e)$150,000 Subordinated
   Debenture at 8% due June 30,
   2018.          150,000    -
   Warrant for 3.29% Membership
   Interests. Option for 1.5%
   Membership Interests.              97,625                -
   (i)Interest receivable $51,761.
   Total Mercantile                  1,446,665    949,040
Outmatch Holdings, LLC (e)(g)    2,745,545 Class P1 Units.    11/18/10    4%    2,140,007    2,140,007    7.0%
(Chequed Holdings, LLC)    109,788 Class C1 Units.                  5,489            5,489
Dallas, TX. Web based predictive employee selection    Total Outmatch                  2,145,496    2,145,496
and reference checking. (Software)
www.outmatch.com
PostProcess Technologies LLC (e)(g)    $300,000 Convertible Promissory    7/25/16    0%          1.0%
Buffalo, NY. Provides innovative solutions for the    Note at 5% due July 28, 2020.          300,000    300,000
post-processing of additive manufactured 3D parts.
(Manufacturing)
www.postprocess.com


Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity	Cost		(d)(f) Fair Value		Percent of Net Assets

Non-Control/Non-Affiliate Investments – 42.3% of net assets: (j)

ACV Auctions, Inc. (e)(g) Buffalo, NY. Live mobile wholesale auctions for new and used car dealers. (Software) www.acvauctions.com	1,181,160 Series A Preferred.	8/12/16	<1%	$	163,000	$	2,776,907		9.1%

Advantage 24/7 LLC (g)(h) Williamsville, NY. Marketing program for wine and spirits dealers. (Marketing Company) www.advantage24-7.com	$140,000 Term Note at 7% due January 1, 2022.	12/30/10	0%		115,000		115,000		0.4%

Centivo Corporation (e)(g) New York, NY. Tech-enabled health solutions company that helps self-insured employers and their employees save money and have a better experience. (Health Care) www.centivo.com	190,967 SeriesA-1 Preferred. 337,808 SeriesA-2 Preferred. Total Centivo	7/5/17	<1%		200,000 101,342 301,342		200,000 101,342 301,342		1.0%

Empire Genomics, LLC (g)(l) Buffalo, NY. Molecular diagnostics company that offers a comprehensive menu of assay services for diagnosing and guiding patient therapeutic treatments. (Health Care) www.empiregenomics.com	$1,209,014 Senior Secured Convertible Term Notes at 10% (8% PIK through September 30, 2019) due December 31, 2020. $444,915 Promissory Note at 9% (4% PIK) due December 31, 2020. Total Empire	6/13/14	0%		1,283,016 444,915 1,727,931		524,002 302,569 826,571		2.7%

GiveGab, Inc. (e)(g) Ithaca, NY. Online fundraising, day of giving supporter engagement software fornon-profit organizations. (Software) www.givegab.com	5,084,329 Series Seed Preferred.	3/13/13	4%		616,221		616,221		2.0%

GoNoodle, Inc. (g)(l) Nashville, TN. Student engagement education software providing core aligned physical activity breaks. (Software) www.gonoodle.com	$1,000,000 Secured Note at 12% due January 31, 2020, (1% PIK). Warrant for 47,324 Series C Preferred. Total GoNoodle	2/6/15	<1%		1,044,868 25 1,044,893		1,044,868 25 1,044,893		3.4%

Mercantile Adjustment Bureau, LLC (g) Williamsville, NY. Full service accounts receivable management and collections company. (Contact Center) www.mercantilesolutions.com	$1,199,039 Subordinated Secured Note at 13% (3% for the calendar year 2019) due January 31, 2020. (e)$150,000 Subordinated Debenture at 8% due June 30, 2018. Warrant for 3.29% Membership Interests. Option for 1.5% Membership Interests. Total Mercantile	10/22/12	4%		1,199,040 150,000 97,625 1,446,665		500,000 - - 500,000		1.7%

Outmatch Holdings, LLC (e)(g) (Chequed Holdings, LLC) Dallas, TX. Web based predictive employee selection and reference checking. (Software) www.outmatch.com	2,908,686.55 Class P1 Units. 109,788 Class C1 Units. Total Outmatch	11/18/10	4%		2,140,007 5,489 2,145,496		2,140,007 5,489 2,145,496		7.0%

PostProcess Technologies LLC (e)(g) Buffalo, NY. Provides innovative solutions for the post-processing of additive manufactured 3D parts. (Manufacturing) www.postprocess.com	$300,000 Convertible Promissory Note at 5% due July 28, 2020.	7/25/16	0%		300,000		300,000		1.0%

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

June 30, 2019 (Continued)

(Unaudited)


Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity	Cost		(d)(f) Fair Value		Percent of Net Assets

Rheonix, Inc. (e) Ithaca, NY. Developer of fully automated microfluidic based molecular assay and diagnostic testing devices. (Health Care) www.rheonix.com	9,676 Common. (g)1,839,422 Series A Preferred. (g) 50,593 Common. (g) 589,420 Series B Preferred. Total Rheonix	10/29/09	4%		- 2,099,999 - 702,732 2,802,731		- 1,500,000 - 702,732 2,202,732		7.1%

SocialFlow, Inc. (e)(g) New York, NY. Provides instant analysis of social networks using a proprietary, predictive analytic algorithm to optimize advertising and publishing. (Software) www.socialflow.com	1,049,538 Series B Preferred. 1,204,819 SeriesB-1 Preferred. 717,772 Series C Preferred. Total Social Flow	4/5/13	4%		500,000 750,000 500,000 1,750,000		279,156 433,735 287,109 1,000,000		3.3%

Somerset Gas Transmission Company, LLC (e) Columbus, OH. Natural gas transportation. (Oil and Gas) www.somersetgas.com	26.5337 Units.	7/10/02	3%		719,097		500,000		1.6%

Tech 2000, Inc. (g) Herndon, VA. Develops and delivers IT training. (Software) www.t2000inc.com	$600,000 Term Note at 14% due November 15, 2021.	11/16/18	0%		610,777		610,777		2.0%

OtherNon-Control/Non-Affiliate Investments:

DataView, LLC (e) (Software)	Membership Interest.	10/1/98	5%		310,357		-		0.0%

UStec/Wi3 (e) (Manufacturing)	Common stock.	12/17/98	<1%		100,500		-		0.0%


SubtotalNon-Control/Non-Affiliate Investments					$14,154,010		$12,939,939


Affiliate Investments – 59.7% of net assets (k)

BeetNPath, LLC (Grainful) (e)(g) Ithaca, NY. Frozen entrées made from 100% whole grain steel cut oats under Grainful brand name. (Consumer Product) www.grainful.com	1,119,024 SeriesA-2 Preferred Membership Units. 1,032,918 Series B Preferred Membership Units. $262,626.64 Convertible Secured Notes at 8% due December 21, 2019. Total BeetNPath	10/20/14	9%		$359,000 261,277 262,627 882,904		$- - - -		0.0%

Carolina Skiff LLC (g) Waycross, GA. Manufacturer of ocean fishing and pleasure boats. (Manufacturing) www.carolinaskiff.com	6.0825% Class A Common Membership Interest.	1/30/04	7%		15,000		1,750,000		5.7%

ClearView Social, Inc. (e)(g) Buffalo, NY. Social media publishing tool for law, CPA and professional firms. (Software) www.clearviewsocial.com	312,500 Series Seed Plus Preferred.	1/4/16	6%		200,000		200,000		0.7%

First Wave Technologies, Inc. (e)(g) Batavia, NY. Sells First Crush automated pill crusher that crushes and grinds pills for nursing homes and medical institutions. (Health Care) www.firstwavetechnologies.com	670,443.2 Class A Common.	4/19/12	5%		661,563		33,000		0.1%

Genicon, Inc. (e)(g)(l) Winter Park, FL. Designs, produces and distributes patented surgical instrumentation. (Health Care) www.geniconendo.com	1,586,902 Series B Preferred. $3,250,000 Promissory Notes at 10% due June 12, 2022, (10% PIK). $250,000 Promissory Note at 10% due June 12, 2021 (10% PIK). Warrants for Common. Total Genicon	4/10/15	6%		1,000,000 3,552,076 251,319 120,000 4,923,395		500,000 3,336,996 251,319 - 4,088,315		13.4%

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

June 30, 2019 (Continued)

(Unaudited)


Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity	Cost		(d)(f) Fair Value		Percent of Net Assets

Knoa Software, Inc. (e)(g) New York, NY. End user experience management and performance (EMP) solutions utilizing enterprise applications. (Software) www.knoa.com	973,533 SeriesA-1 Convertible Preferred. 1,876,922 Series B Preferred. Total Knoa	11/20/12	7%		750,000 479,155 1,229,155		750,000 479,155 1,229,155	4.0%

KnowledgeVision Systems, Inc. (g) Lincoln, MA. Online presentation and training software. (Software) www.knowledgevision.com	200,000 SeriesA-1 Preferred. 214,285 SeriesA-2 Preferred. 129,033 SeriesA-3 Preferred. Warrant for 46,743 SeriesA-3. (e) $75,000 Subordinated Promissory Notes at 8% payable on demand of majority of holders after August 31, 2019. $900,000 Term Note at 13% due April 30, 2021. Total KnowledgeVision	11/13/13	7%		250,000 300,000 165,001 35,000 75,000 900,000 1,725,001		- - 165,001 35,000 75,000 900,000 1,175,001	3.8%

Mezmeriz, Inc. (e)(g) Ithaca, NY. Technology company developing novel reality capture tools for 3D mapping, reality modeling, object tracking and classification. (Electronics Developer) www.mezmeriz.com	1,554,565 Series Seed Preferred.	1/9/08	12%		742,850		351,477	1.1%

Microcision LLC (g)(l) Pennsauken Township, NJ. Manufacturer of precision machined medical implants, components and assemblies. (Manufacturing) www.microcision.com	$1,500,000 Subordinated Promissory Note at 12% (1% PIK) due December 31, 2024. 15% Class A Common Membership Interest. Total Microcision	9/24/09	15%		1,943,031 - 1,943,031		1,943,031 610,000 2,553,031	8.3%

New Monarch Machine Tool, Inc. (g) Cortland, NY. Manufactures and services vertical/horizontal machining centers. (Manufacturing) www.monarchmt.com	22.84 Common.	9/24/03	15%		22,841		22,841	0.1%

OnCore Golf Technology, Inc. (e)(g) Buffalo, NY. Patented and Proprietary Golf Balls utilizing breakthrough technology and innovation, inspiring golfers at all skill levels and abilities. (Consumer Product) www.oncoregolf.com	300,483 Preferred AA.	12/31/14	8%		752,712		300,000	1.0%

SciAps, Inc. (e)(g) Woburn, MA. Instrumentation company producing portable analytical devices using XRF, LIBS and RAMAN spectroscopy to identify compounds, minerals, and elements. (Manufacturing) www.sciaps.com	187,500 Series A Preferred. 274,299 SeriesA-1 Convertible Preferred. 117,371 Series B Convertible Preferred. 113,636 Series C Convertible Preferred. 369,698 SeriesC-1 Convertible Preferred. 147,059 Series D Convertible Preferred. Total SciAps	7/12/13	6%		1,500,000 504,710 250,000 175,000 399,274 250,000 3,078,984		423,000 142,000 250,000 175,000 399,274 250,000 1,639,274	5.4%

Teleservices Solutions Holdings, LLC (e) (g)(l) Montvale, NJ. Customer contact center specializing in customer acquisition and retention for selected industries. (Contact Center) www.ipacesetters.com	250,000 Class B Preferred Units. 1,000,000 Class C Preferred Units. 80,000 Class D Preferred Units. 104,198 Class E Preferred Units. PIK dividend for Series C and D at 12% and 14%, respectively. Total Teleservices	5/30/14	6%		250,000 1,190,680 91,200 104,198 1,636,078		- - - - -	0.0%

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

June 30, 2019 (Continued)

(Unaudited)


Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired		(c) Equity		Cost		(d)(f) Fair Value		Percent of Net Assets

Tilson Technology Management, Inc. (g)	120,000 Series B Preferred.		1/20/15		9%		600,000		1,950,000		16.1%
Portland, ME. Provides network deployment	21,391 Series C Preferred.						200,000		347,604
construction and information system services	70,176 Series D Preferred.						800,000		1,140,360
management for Cellular, fiber optic and wireless	15,385 Series E Preferred.						500,012		500,012
systems providers. Its affiliated entity, SQF, LLC	211,567 SQF Hold Co. Common.						-		22,036
is a CLEC supporting small cell 5G deployment. (Professional Services)	$800,000 Subordinated Promissory Notes at 8% due December 1, 2022.						800,000		800,000
www.tilsontech.com	$200,000 Subordinated Promissory Note at 8% due September 28, 2021.						200,000		200,000
	Total Tilson						3,100,012		4,960,012

Other Affiliate Investments:

G-TEC Natural Gas Systems(e) (Manufacturing)	Membership Interest		8/31/99		17%		400,000		-		0.0%
Subtotal Affiliate Investments						$	21,313,526		$18,302,106

TOTAL INVESTMENTS – 102%						$	35,467,536		$31,242,045
LIABILITIES IN EXCESS OF OTHER ASSETS – (2%)									(609,992)


NET ASSETS – 100%									$30,632,053

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~September~~June 30, ~~2018 (Continued)~~

~~(Unaudited)~~

Company, Geographic Location, Business
Description, (Industry) and Website
(a)
Type of Investment

(b)
      Date
Acquired

(c)

Equity
      Cost
    (d)(f)
Fair
Value
     Percent
of Net
Assets
Rheonix, Inc. (e)    9,676 Common shares.    10/29/09    4% -    11,000    9.6%
Ithaca, NY. Developer of fully automated    (g)1,839,422 Series A preferred
microfluidic based molecular assay and diagnostic    shares.       2,099,999    2,165,999
testing devices. (Health Care)    (g)50,593 Common shares.       -    59,000
www.rheonix.com    (g)589,420 Series B Preferred shares.             702,732         702,732
   Total Rheonix         2,802,731      2,938,731
SocialFlow, Inc. (e)(g)    1,049,538 Series B Preferred shares.    4/5/13    4% 500,000    731,431    6.8%
New York, NY. Provides instant analysis of social    1,204,819 Series B-1 Preferred shares.       750,000    839,648
networks using a proprietary, predictive analytic    717,772 Series C Preferred shares.            500,000         500,221
algorithm to optimize advertising and publishing.    Total Social Flow         1,750,000      2,071,300
(Software)
www.socialflow.com
Somerset Gas Transmission Company, LLC (e)    26.5337 Units.    7/10/02    3% 719,097    500,000    1.6%
Columbus, OH. Natural gas transportation.
(Oil and Gas)
www.somersetgas.com
Other Non-Control/Non-Affiliate Investments:
DataView, LLC(Software) (e)    Membership Interest.    -    - 310,357    -    0.0%
UStec/Wi3(Manufacturing) (e)    Common stock.    -    - 100,500    -    0.0%
Subtotal Non-Control/Non-Affiliate Investments

         $16,796,433    $15,344,150
Affiliate Investments – 54.7% of net assets (k)
BeetNPath, LLC (Grainful) (e)(g)    1,119,024 Series A-2 Preferred    10/20/14    9%       2.6%
Ithaca, NY. Frozen entrées made from 100%    Membership Units.       $359,000    $359,000
whole grain steel cut oats under Grainful brand    1,032,918 Series B Preferred
name. (Consumer Product)    Membership Units.       261,277    291,000
www.grainful.com    $140,000 Convertible Secured Note at
   8% due December 21, 2019       140,000    140,000
   Total BeetNPath       760,277    790,000
Carolina Skiff LLC (g)    6.0825% Class A Common    1/30/04    7%       5.8%
Waycross, GA. Manufacturer of ocean fishing and    Membership Interest.       15,000    1,750,000
pleasure boats.
(Manufacturing)
www.carolinaskiff.com
ClearView Social, Inc. (e)(g)    312,500 Series Seed Plus Preferred    1/4/16    6%       0.6%
Buffalo, NY. Social media publishing tool for law,    shares.       200,000    200,000
CPA and professional firms. (Software)
www.clearviewsocial.com
First Wave Products Group, LLC (e)(g)    $500,000 Senior Term Notes at 10%    4/19/12    7%       0.0%
Batavia, NY. Sells First Crush automated pill    due July 31, 2017.       661,563    -
crusher that crushes and grinds pills for nursing    $280,000 Junior Term Notes at 10%
homes and medical institutions. (Health Care)    due July 31, 2017.       316,469    -
www.firstwaveproducts.com    Warrant for 41,619 Capital Securities.            22,000    -
   Total First Wave       1,000,032    -

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~September 30, 2018 (Continued)~~

~~(Unaudited)~~

   (b)    (c)             (d)(f)          Percent
Company, Geographic Location, Business     (a)          Date                                       Fair    of Net
Description, (Industry) and Website     Type of Investment    Acquired    Equity    Cost      Value    Assets
Genicon, Inc. (g) (m) 1,586,902 Series B Preferred shares.    4/10/15    6%    1,000,000      1,000,000    13.7%
Winter Park, FL. Designs, produces and $3,000,000 Promissory Notes at 10%
distributes patented surgical instrumentation. due May 1, 2020, (8% Payment in Kind
(Health Care) (PIK)).          3,057,327      3,057,327
www.geniconendo.com Warrant for 250,000 Common shares.          80,000      80,000
Warrant for 125,000 Common shares.               40,000           40,000
Total Genicon          4,177,327      4,177,327
G-TEC Natural Gas Systems (e) 16.639% Class A Membership Interest.    8/31/99    17%            0.3%
Buffalo, NY. Manufactures and distributes 8% cumulative dividend.          400,000      100,000
systems that allow natural gas to be used as an
alternative fuel to gases. (Manufacturing)
www.gas-tec.com
Knoa Software, Inc. (e)(g)(h) 973,533 Series A-1 Convertible    11/20/12    7%            4.0%
New York, NY. End user experience Preferred shares.          750,000      750,000
management and performance (EMP) solutions 1,876,922 Series B Preferred shares.             479,155         479,155
utilizing enterprise applications. (Software) Total Knoa          1,229,155      1,229,155
www.knoa.com
KnowledgeVision Systems, Inc. (g) 200,000 Series A-1 Preferred shares.    11/13/13    7%    250,000      -    4.3%
Lincoln, MA. Online presentation and training 214,285 Series A-2 Preferred shares.          300,000      300,000
software. (Software) 129,033 Series A-3 Preferred shares.          165,001      165,001
www.knowledgevision.com Warrant for 46,743 Series A-3 shares.          35,000      35,000
$75,000 Subordinated Promissory Notes
at 8% payable on demand of majority of
holders after August 31, 2019.(e)          75,000      75,000
$750,000 Replacement Term Note at
11% due April 30, 2021.             750,000         750,000
Total KnowledgeVision          1,575,001      1,325,001
Mezmeriz, Inc. (e)(g) 1,554,565 Series Seed Preferred shares.    1/9/08    14%    742,850      351,477    1.1%
Ithaca, NY. Micro-electronic mechanical systems
(MEMS) developer of carbon fiber MEMS mirror
modules for gesture recognition and 3D scanning.
(Electronics Developer)
www.mezmeriz.com
Microcision LLC (g)(m) $1,500,000 Subordinated Promissory    9/24/09    15%            6.3%
Pennsauken Township, NJ. Manufacturer of Note at 12% (1% Payment in Kind
precision machined medical implants, (PIK)) due December 31, 2024.          1,928,532      1,928,532
components and assemblies. (Manufacturing) 15% Class A Common Membership
www.microcision.com Interest.                        -                    -
Total Microcision          1,928,532      1,928,532
New Monarch Machine Tool, Inc. (g) 22.84 Common shares.    9/24/03    15%    22,841      22,841    0.1%
Cortland, NY. Manufactures and services
vertical/horizontal machining centers.
(Manufacturing)
www.monarchmt.com
OnCore Golf Technology, Inc. (e)(g) 150,000 Series AA Preferred shares.    12/31/14    9%    375,000      -    1.0%
Buffalo, NY. Maker of patented golf balls. $300,000 Subordinated Convertible
(Consumer Product) Promissory Notes at 10% due January
www.oncoregolf.com 24, 2018.          300,000      300,000
(i)Interest receivable $50,342.
Total OnCore          675,000      300,000

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~September 30, 2018 (Continued)~~

~~(Unaudited)~~

(a)    (b)    (c)           (d)(f)          Percent
Company, Geographic Location, Business              Date                                     Fair    of Net
Description, (Industry) and Website     Type of Investment    Acquired    Equity    Cost    Value    Assets
SciAps, Inc. (e)(g) 187,500 Series A Preferred shares.    7/12/13    6%    1,500,000    700,000    6.6%
Woburn, MA. Instrumentation company producing 274,299 Series A-1 Convertible
portable analytical devices using XRF, LIBS and Preferred shares.          504,710    250,000
RAMAN spectroscopy to identify compounds, 117,371 Series B Convertible
minerals, and elements. (Manufacturing) Preferred shares.          250,000    250,000
www.sciaps.com 113,636 Series C Convertible
Preferred shares.          175,000    175,000
369,698 Series C-1 Convertible
Preferred shares.          399,274    399,274
147,059 Series D Convertible
Preferred shares.             250,000       250,000
Total SciAps          3,078,984    2,024,274
SOMS Technologies, LLC (e)(g) 5,959,490 Series B Membership    12/2/08    9%          0.1%
Valhalla, NY. Produces and markets the Interests.          472,632    30,000
microGreen Extended Performance Oil Filter.
(Consumer Products)
www.microgreenfilter.com
Teleservices Solutions Holdings, LLC (e) (g)(m) 250,000 Class B Preferred Units.    5/30/14    6%    250,000    -    0.0%
Montvale, NJ. Customer contact center 1,000,000 Class C Preferred Units.          1,190,680    -
specializing in customer acquisition and retention 80,000 Class D Preferred Units.          91,200    -
for selected industries. (Contact Center) 104,198 Class E Preferred Units.              104,198    -
www.ipacesetters.com PIK dividend for Series C and D at
12% and 14%, respectively.
Total Teleservices          1,636,078    -
Tilson Technology Management, Inc. (g) 120,000 Series B Preferred shares.    1/20/15    11%    600,000    600,000    8.2%
Portland, ME. Cellular, fiber optic and wireless 21,391 Series C Convertible Preferred
information systems, construction, and shares.          200,000    200,000
management. (Professional Services) 65,790 Series D Preferred shares.          750,000    750,000
www.tilsontech.com $750,000 Subordinated Promissory
Note at 8% due December 1, 2022.          750,000    750,000
$200,000 Subordinated Promissory
Note at 8% due September 28, 2021.             200,000       200,000
Total Tilson          2,500,000    2,500,000


Subtotal Affiliate Investments          $20,413,709    $16,728,607
Control Investments – 0.3% of net assets (l)
Advantage 24/7 LLC (e)(g) 45% Membership Interest.    12/30/10    45%    $99,500    $99,500    0.3%
Williamsville, NY. Marketing program for wine
and spirits dealers. (Marketing Company)
www.advantage24-7.com


Subtotal Control Investments


$99,500
   $99,500

TOTAL INVESTMENTS –105.2%          $37,309,642    $32,172,257
OTHER ASSETS IN EXCESS OF
LIABILITIES – (5.2%)                   (1,584,581)

NET ASSETS – 100%                   $30,587,676

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~September 30, 2018~~2019 (Continued)

(Unaudited)

Notes to the Consolidated Schedule of Portfolio Investments

(a) At ~~September~~June 30, ~~2018,~~2019, restricted securities represented 100% of the fair value of the investment portfolio. Restricted securities are subject to one or more restrictions on resale and are not freely marketable. Type of investment for equity position is in form of shares unless otherwise noted as units or interests, i.e., preferred shares, common shares.

(b) The Date Acquired column indicates the date in which the Corporation first acquired an investment in the company or a predecessor company.

(c) Each equity percentage estimates the Corporation’s ownership interest in the applicable portfolio investment. The estimated ownership is calculated based on the percent of outstanding voting securities held by the Corporation or the potential percentage of voting securities held by the Corporation upon exercise of warrants or conversion of debentures, or other available data. If applicable, the symbol “<1%” indicates that the Corporation holds an equity interest of less than one percent.

(d) The Corporation’s investments are carried at fair value in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures,” which defines fair value and establishes guidelines for measuring fair value. At ~~September~~June 30, 2019, ASC 820 designates 100% of the Corporation’s investments as “Level 3” assets. Under the valuation policy of the Corporation, unrestricted publicly held securities are valued at the average closing bid price for these securities for the last three trading days of the reporting period. Restricted securities are subject to restrictions on resale, and are valued at fair value as determined by the management of the Corporation and submitted to the Board of Directors for approval. Fair value is considered to be the amount that the Corporation may reasonably expect to receive for portfolio securities when sold on the valuation date. Valuations as of any particular date, however, are not necessarily indicative of amounts which may ultimately be realized as a result of future sales or other dispositions of securities and these favorable or unfavorable differences could be material. Among the factors considered in determining the fair value of restricted securities are the financial condition and operating results, projected operations, and other analytical data relating to the investment. Also considered are the market prices for unrestricted securities of the same class (if applicable) and other matters which may have an impact on the value of the portfolio company (see Note 3. “Investments” to the Consolidated Financial Statements).

(e) These investments arenon-income producing. All other investments are income producing.Non-income producing investments have not generated cash payments of interest or dividends including LLCtax-related distributions within the last twelve months, or are not expected to do so going forward. However, if a debt or a preferred equity fails to make its most recent payment, then the investment will also be classified asnon-income producing.

(f) As of June 30, 2019, the total cost of investment securities was approximately $35.5 million. Net unrealized depreciation was approximately ($4.2) million, which was comprised of $6.8 million of unrealized appreciation of investment securities and ($11.0) million of unrealized depreciation of investment securities. At June 30, 2019, the aggregate gross unrealized gain for federal income tax purposes was $6.4 million and the aggregate gross unrealized loss for federal income tax purposes was ($7.6) million. The net unrealized loss for federal income tax purposes was ($1.2) million based on a tax cost of $32.9 million.

(g) Rand Capital SBIC, Inc. investment.

(h) Reduction in cost and value from previously reported balances reflects current principal repayment.

(i) Represents interest due (amounts over $50,000) from investments included as interest receivable on the Corporation’s Consolidated Statements of Financial Position. (None at June 30, 2019)

(j)Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.

(k) Affiliate Investments are defined by the Investment Company Act of 1940, as amended (“1940 Act”), as thoseNon-Control investments in companies in which between 5% and 25% of the voting securities are owned by the Corporation.

(l) Payment in kind (PIK) represents earned interest that is added to the cost basis of the investment.

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

June 30, 2019 (Continued)

(Unaudited)

Investments in and Advances to Affiliates


Company	Type of Investment	December 31, 2018 Fair Value		Gross Additions (1)		Gross Reductions (2)			June 30, 2019 Fair Value		Net Realized Gains (Losses)		Amount of Interest/ Dividend/ Fee Income (3)
Control Investments:
Advantage 24/7 LLC	$140,000 Term Note at 7%.		$99,500		$-		($99,500)			$-		$40,500		$-
Gemcor II, LLC			-		-		-			-		39,893		-

	Total Control Investments		$99,500		$-		($99,500)			$-		$80,393		$-
Affiliate Investments: BeetNPath, LLC	1,119,024 SeriesA-2 Preferred Membership Units.		$ -		$ -		$ -			$ -		$ -		$-
	1,032,918 Series B Preferred Membership Units.		261,277		-		(261,277	)		-		-		-
	$262,626.64 Convertible Secured Notes at 8%.		262,627		-		(262,627	)		-		-		-
	Total BeetNPath		523,904		-		(523,904	)		-		-		-

Carolina Skiff LLC	6.0825% Class A Common Membership interest.		1,750,000		-		-			1,750,000		-		24,043

ClearView Social, Inc.	312,500 Series Seed Plus Preferred.		200,000		-		-			200,000		-		-

First Wave Technologies, Inc.	670,443.2 Class A Common.		33,000		-		-			33,000		-		-

Genicon, Inc.	1,586,902 Series B Preferred.		1,000,000		-		(500,000	)		500,000		-		-
	$3,250,000 Promissory Notes at 10%.		3,385,586		166,490		(215,080	)		3,336,996		-		201,472
	$250,000 Promissory Note at 10%.		-		251,319		-			251,319		-		1,319
	Warrant for Common.		37,500		-		(37,500	)		-		-		-
	Total Genicon		4,423,086		417,809		(752,580	)		4,088,315		-		202,791

G-TEC Natural Gas Systems	16.639% Class A Membership Interest. 8% cumulative dividend.		-		-		-			-		-		-

Knoa Software, Inc.	973,533 SeriesA-1 Convertible Preferred.		750,000		-		-			750,000		-		193,934
	1,876,922 Series B Preferred.		479,155		-		-			479,155		-		-
	Total Knoa		1,229,155		-		-			1,229,155		-		193,934

KnowledgeVision Systems, Inc.	200,000 SeriesA-1 Preferred.		-		-		-			-		-		-
	214,285 SeriesA-2 Preferred.		-		-		-			-		-		-
	129,033 SeriesA-3 Preferred.		165,001		-		-			165,001		-		-
	$75,000 Subordinated Promissory Notes at 8%.		75,000		-		-			75,000		-		2,975
	$900,000 Term Note at 13%.		750,000		150,000		-			900,000		-		61,032
	Warrant for 46,743 SeriesA-3.		35,000		-		-			35,000		-		-
	Total KnowledgeVision		1,025,001		150,000		-			1,175,001		-		64,007

Mezmeriz, Inc.	1,554,565 Series Seed Preferred.		351,477		-		-			351,477		-		-

Microcision LLC	$1,500,000 Subordinated Promissory Note at 12% (1% PIK).		1,933,353		9,678		-			1,943,031		-		116,146
	15% Class A Common Membership Interest.		610,000		-		-			610,000		-		-
	Total Microcision		2,543,353		9,678		-			2,553,031		-		116,146

New Monarch Machine Tool, Inc.	22.84 Common.		22,841		-		-			22,841		-

OnCore Golf Technology, Inc.	300,483 Series AA Preferred.		300,000		-		-			300,000		-		-

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

June 30, 2019 (Continued)

(Unaudited)


Investments in and Advances to Affiliates
Company	Type of Investment	December 31, 2018 Fair Value		Gross Additions (1)		Gross Reductions (2)		June 30, 2019 Fair Value		Net Realized Gains (Losses)		Amount of Interest/ Dividend/ Fee Income (3)
SciAps, Inc.	187,500 Series A Preferred. 274,299 SeriesA-1 Convertible Preferred. 117,371 Series B Convertible Preferred. 113,636 Series C Convertible Preferred. 369,698 SeriesC-1 Convertible Preferred. 147,059 Series D Convertible Preferred. Total SciAps		700,000 250,000 250,000 175,000 399,274 250,000 2,024,274		- - - - - - -		(277,000) (108,000) - - - - (385,000)		423,000 142,000 250,000 175,000 399,274 250,000 1,639,274		- - - - - - -		- - - - - - -

SOMS Technologies, LLC	5,959,490 Series B membership Interests.		-		-		-		-		(472,632)		-

Teleservices Solutions Holdings, LLC	250,000 Class B Preferred Units. 1,000,000 Class C Preferred Units. 80,000 Class D Preferred Units. 104,198 Class E Preferred Units. Total Teleservices		- - - - -		- - - - -		- - - - -		- - - - -		- - - - -		- - - - -

Tilson Technology Management, Inc.	120,000 Series B Preferred. 21,391 Series C Preferred. 70,176 Series D Preferred. 15,385 Series E Preferred. 211,567 SQF Hold Co. Common. $200,000 Subordinated Promissory Note at 8%. $800,000 Subordinated Promissory Note at 8%. Total Tilson		600,000 200,000 800,000 - - 200,000 800,000 2,600,000		1,350,000 147,604 340,360 500,012 22,036 - - 2,360,012		- - - - - - -		1,950,000 347,604 1,140,360 500,012 22,036 200,000 800,000 4,960,012		- - - - - - - -		23,708 - - - 7,934 31,726 63,368



	Total Affiliate Investments		$17,026,091		$2,937,499		($1,661,484)		$18,302,106		($472,632)		$664,289


	Total Control and Affiliate Investments		$17,125,591		$2,937,499		($1,760,984)		$18,302,106		($392,239)		$664,289

This schedule should be read in conjunction with the Corporation’s Consolidated Financial Statements, including the Consolidated Schedule of Portfolio Investments and Notes to the Consolidated Financial Statements.

(1) Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow on investments, capitalized interest and the accretion of discounts. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation, and the movement of an existing portfolio company into this category and out of another category.

(2) Gross reductions include decreases in the cost basis of investments resulting from principal repayments, sales, note conversions, net increases in unrealized depreciation, net decreases in unrealized appreciation, the exchange of existing securities for new securities and the movement of an existing portfolio company out of this category and into another category.

(3) Represents the total amount of interest, fees or dividends credited to income for the portion of the period an investment was included in Control or Affiliate categories, respectively.

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

June 30, 2019 (Continued)

(Unaudited)


Industry Classification		Percentage of Total Investments (at fair value) as of June 30, 2019
Software		34.6%

Healthcare		23.8

Manufacturing		20.0

Professional Services		15.9

Contact Center		1.6

Oil and Gas		1.6

Electronics		1.1

Consumer Product Electronics		1.0

Marketing		0.4



Total Investments		100%

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2018


Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity	Cost		(d)(f) Fair Value		Percent of Net Assets

Non-Control/Non-Affiliate Investments – 55.7% of net assets: (j)

ACV Auctions, Inc. (e)(g) Buffalo, NY. Live mobile wholesale auctions for new and used car dealers. (Software) www.acvauctions.com	1,181,160 Series A Preferred.	8/12/16	<1%		$163,000		$2,776,907		8.8%

Centivo Corporation (e)(g) New York, NY. Tech-enabled health solutions company that helps self-insured employers and their employees save money and have a better experience. (Health Care) www.centivo.com	190,967 SeriesA-1 Preferred. 337,808 SeriesA-2 Preferred. Total Centivo	7/5/17	<1%		200,000 101,342 301,342		200,000 101,342 301,342		1.0%

eHealth Global Technologies, Inc. (g) Henrietta, NY. eHealth Connect® improves health care delivery through intelligently aggregated clinical record and images for patient referrals. (Health Care) www.ehealthtechnologies.com	$3,500,000 Term Note at 13% due December 31, 2020.	6/28/16	0%		3,500,000		3,500,000		11.1%

Empire Genomics, LLC (g)(m) Buffalo, NY. Molecular diagnostics company that offers a comprehensive menu of assay services for diagnosing and guiding patient therapeutic treatments. (Health Care) www.empiregenomics.com	$1,209,014 Senior Secured Convertible Term Notes at 10% (8% PIK through September 30, 2019) due December 31, 2020. $444,915 Promissory Note at 9% (4% PIK) due December 31, 2020. Total Empire	6/13/14	0%		1,233,195 444,915 1,678,110		474,181 302,569 776,750		2.4%

GiveGab, Inc. (e)(g) Ithaca, NY. Online fundraising, day of giving supporter engagement software fornon-profit organizations. (Software) www.givegab.com	5,084,329 Series Seed Preferred.	3/13/13	4%		616,221		616,221		2.0%

GoNoodle, Inc. (g)(m) Nashville, TN. Student engagement education software providing core aligned physical activity breaks. (Software) www.gonoodle.com	$1,000,000 Secured Note at 12% due January 31, 2020, (1% PIK). Warrant for 47,324 Series C Preferred. Total GoNoodle	2/6/15	<1%		1,039,663 25 1,039,688		1,039,663 25 1,039,688		3.3%

Mercantile Adjustment Bureau, LLC (g) Williamsville, NY. Full service accounts receivable management and collections company. (Contact Center) www.mercantilesolutions.com	$1,199,039 Subordinated Secured Note at 13% (3% for the calendar year 2018) due January 31, 2019. (e)$150,000 Subordinated Debenture at 8% due June 30, 2018. Warrant for 3.29% Membership Interests. Option for 1.5% Membership Interests. (i) Interest receivable $50,254. Total Mercantile	10/22/12	4%		1,199,040 150,000 97,625 1,446,665		700,000 - - 700,000		2.2%

Outmatch Holdings, LLC (e)(g) (Chequed Holdings, LLC) Dallas, TX. Web based predictive employee selection and reference checking. (Software) www.outmatch.com	2,798,883 Class P1 Units. 109,788 Class C1 Units. Total Outmatch	11/18/10	4%		2,140,007 5,489 2,145,496		2,140,007 5,489 2,145,496		6.8%

PostProcess Technologies LLC (e)(g) Buffalo, NY. Provides innovative solutions for the post-processing of additive manufactured 3D parts. (Manufacturing) www.postprocess.com	$300,000 Convertible Promissory Note at 5% due July 28, 2020.	7/25/16	0%		300,000		300,000		1.0%

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2018 (Continued)


Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity	Cost		(d)(f) Fair Value		Percent of Net Assets

Rheonix, Inc. (e) Ithaca, NY. Developer of fully automated microfluidic based molecular assay and diagnostic testing devices. (Health Care) www.rheonix.com	9,676 Common. (g)1,839,422 Series A Preferred. (g) 50,593 Common. (g) 589,420 Series B Preferred. Total Rheonix	10/29/09	4%		- 2,099,999 - 702,732 2,802,731		- 1,500,000 - 702,732 2,202,732		7.0%

SocialFlow, Inc. (e)(g) New York, NY. Provides instant analysis of social networks using a proprietary, predictive analytic algorithm to optimize advertising and publishing. (Software) www.socialflow.com	1,049,538 Series B Preferred. 1,204,819 SeriesB-1 Preferred. 717,772 Series C Preferred. Total Social Flow	4/5/13	4%		500,000 750,000 500,000 1,750,000		731,431 839,648 500,221 2,071,300		6.6%

Somerset Gas Transmission Company, LLC (e) Columbus, OH. Natural gas transportation. (Oil and Gas) www.somersetgas.com	26.5337 Units.	7/10/02	3%		719,097		500,000		1.6%

Tech 2000, Inc. (g)(m) Herndon, VA. Develops and delivers IT training. (Software) www.t2000inc.com	$600,000 Term Note at 14% (PIK through December 31, 2018) due November 15, 2021.	11/16/18	0%		610,777		610,777		1.9%

OtherNon-Control/Non-Affiliate Investments:

DataView, LLC (e)(Software)	Membership Interest.	10/1/98	5%		310,357		-		0.0%

UStec/Wi3(e) (Manufacturing)	Common stock.	12/17/98	<1%		100,500		-		0.0%


SubtotalNon-Control/Non-Affiliate Investments					$17,483,984		$17,541,213


Affiliate Investments – 54.0% of net assets (k)

BeetNPath, LLC (Grainful) (e)(g) Ithaca, NY. Frozen entrées made from 100% whole grain steel cut oats under Grainful brand name. (Consumer Product) www.grainful.com	1,119,024 SeriesA-2 Preferred Membership Units. 1,032,918 Series B Preferred Membership Units. $262,626.64 Convertible Secured Notes at 8% due December 21, 2019. Total BeetNPath	10/20/14	9%		$359,000 261,277 262,627 882,904		$- 261,277 262,627 523,904		1.7%

Carolina Skiff LLC (g) Waycross, GA. Manufacturer of ocean fishing and pleasure boats. (Manufacturing) www.carolinaskiff.com	6.0825% Class A Common Membership Interest.	1/30/04	7%		15,000		1,750,000		5.6%

ClearView Social, Inc. (e)(g) Buffalo, NY. Social media publishing tool for law, CPA and professional firms. (Software) www.clearviewsocial.com	312,500 Series Seed Plus Preferred.	1/4/16	6%		200,000		200,000		0.6	%

First Wave Technologies, Inc. (e)(g) Batavia, NY. Sells First Crush automated pill crusher that crushes and grinds pills for nursing homes and medical institutions. (Health Care) www.firstwaveproducts.com	670,443.2 Class A Common.	4/19/12	5%		661,563		33,000		0.1	%

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2018 (Continued)


Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity	Cost		(d)(f) Fair Value		Percent of Net Assets

Genicon, Inc. (g) (m) Winter Park, FL. Designs, produces and distributes patented surgical instrumentation. (Health Care) www.geniconendo.com	1,586,902 Series B Preferred. $3,250,000 Promissory Notes at 10% due May 1, 2020, (8% PIK). Warrants for 500,000 Common. Total Genicon	4/10/15	6%		1,000,000 3,385,586 120,000 4,505,586		1,000,000 3,385,586 37,500 4,423,086		14.0	%

Knoa Software, Inc. (e)(g) New York, NY. End user experience management and performance (EMP) solutions utilizing enterprise applications. (Software) www.knoa.com	973,533 SeriesA-1 Convertible Preferred. 1,876,922 Series B Preferred. Total Knoa	11/20/12	7%		750,000 479,155 1,229,155		750,000 479,155 1,229,155		3.9	%

KnowledgeVision Systems, Inc. (g) Lincoln, MA. Online presentation and training software. (Software) www.knowledgevision.com	200,000 SeriesA-1 Preferred. 214,285 SeriesA-2 Preferred. 129,033 SeriesA-3 Preferred. Warrant for 46,743 SeriesA-3. $75,000 Subordinated Promissory Notes at 8% payable on demand of majority of holders after August 31, 2019.(e) $750,000 Term Note at 11% due April 30, 2021. Total KnowledgeVision	11/13/13	7%		250,000 300,000 165,001 35,000 75,000 750,000 1,575,001		- - 165,001 35,000 75,000 750,000 1,025,001		3.2	%

Mezmeriz, Inc. (e)(g) Ithaca, NY. Technology company developing novel reality capture tools for 3D mapping, reality modeling, object tracking and classification. (Electronics Developer) www.mezmeriz.com	1,554,565 Series Seed Preferred.	1/9/08	12%		742,850		351,477		1.1	%

Microcision LLC (g)(m) Pennsauken Township, NJ. Manufacturer of precision machined medical implants, components and assemblies. (Manufacturing) www.microcision.com	$1,500,000 Subordinated Promissory Note at 12% (1% PIK) due December 31, 2024. 15% Class A Common Membership Interest. Total Microcision	9/24/09	15%		1,933,353 - 1,933,353		1,933,353 610,000 2,543,353		8.1	%

New Monarch Machine Tool, Inc. (g) Cortland, NY. Manufactures and services vertical/horizontal machining centers. (Manufacturing) www.monarchmt.com	22.84 Common.	9/24/03	15%		22,841		22,841		0.1	%

OnCore Golf Technology, Inc. (e)(g) Buffalo, NY. Patented and Proprietary Golf Balls utilizing breakthrough technology and innovation, inspiring golfers at all skill levels and abilities. (Consumer Product) www.oncoregolf.com	300,483 Preferred AA.	12/31/14	8%		752,712		300,000		1.0	%

SciAps, Inc. (e)(g) Woburn, MA. Instrumentation company producing portable analytical devices using XRF, LIBS and RAMAN spectroscopy to identify compounds, minerals, and elements. (Manufacturing) www.sciaps.com	187,500 Series A Preferred. 274,299 SeriesA-1 Convertible Preferred. 117,371 Series B Convertible Preferred. 113,636 Series C Convertible Preferred. 369,698 SeriesC-1 Convertible Preferred. 147,059 Series D Convertible Preferred. Total SciAps	7/12/13	6%		1,500,000 504,710 250,000 175,000 399,274 250,000 3,078,984		700,000 250,000 250,000 175,000 399,274 250,000 2,024,274		6.4	%

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2018 (Continued)


Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity		Cost		(d)(f) Fair Value			Percent of Net Assets

Teleservices Solutions Holdings, LLC (e) (g)(m) Montvale, NJ. Customer contact center specializing in customer acquisition and retention for selected industries. (Contact Center) www.ipacesetters.com	250,000 Class B Preferred Units. 1,000,000 Class C Preferred Units. 80,000 Class D Preferred Units. 104,198 Class E Preferred Units. PIK dividend for Series C and D at 12% and 14%, respectively. Total Teleservices	5/30/14		6%		250,000 1,190,680 91,200 104,198 1,636,078		- - - - -			0.0%

Tilson Technology Management, Inc. (g) Portland, ME. Cellular, fiber optic and wireless information systems, construction, and management. (Professional Services) www.tilsontech.com	120,000 Series B Preferred. 21,391 Series C Preferred. 70,176 Series D Preferred. $800,000 Subordinated Promissory Notes at 8% due December 1, 2022. $200,000 Subordinated Promissory Note at 8% due September 28, 2021. Total Tilson	1/20/15		11%		600,000 200,000 800,000 800,000 200,000 2,600,000		600,000 200,000 800,000 800,000 200,000 2,600,000			8.2%

Other Affiliate Investments:

G-TEC Natural Gas Systems(e) (Manufacturing)	Membership Interest	8/31/99		17%		400,000		-			0.0%

SOMS Technologies, LLC (e)(g) (Consumer Products)	Membership Interest	12/2/08		9%		472,632		-			0.0%
Subtotal Affiliate Investments						$20,708,659		$17,026,091

Control Investments – 0.3% of net assets (l)

Advantage 24/7 LLC (g) Williamsville, NY. Marketing program for wine and spirits dealers. (Marketing Company) www.advantage24-7.com	45% Membership Interest.	12/30/10		45%		$99,500		$99,500			0.3%
Subtotal Control Investments						$99,500		$99,500

TOTAL INVESTMENTS – 110%						$38,292,143		$34,666,804
LIABILITIES IN EXCESS OF OTHER ASSETS – (10%)								(3,142,617	)

NET ASSETS – 100%								$31,524,187

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2018 (Continued)

Notes to the Consolidated Schedule of Portfolio Investments

(a) At December 31, 2018, restricted securities represented 100% of the fair value of the investment portfolio. Restricted securities are subject to one or more restrictions on resale and are not freely marketable. Type of investment for equity position is in form of shares unless otherwise noted as units or interests, i.e., preferred shares, common shares.

(b) The Date Acquired column indicates the date in which the Corporation first acquired an investment in the company or a predecessor company.

(d) The Corporation’s investments are carried at fair value in accordance with FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures,” which defines fair value and establishes guidelines for measuring fair value. At December 31, 2018, ASC 820 designates 100% of the Corporation’s investments as “Level 3” assets. Under the valuation policy of the Corporation, unrestricted publicly held securities are valued at the average closing bid price for these securities for the last three trading days of the reporting period. Restricted securities are subject to restrictions on resale, and are valued at fair value as determined by the management of the Corporation and submitted to the Board of Directors for approval. Fair value is considered to be the amount that the Corporation may reasonably expect to receive for portfolio securities when sold on the valuation date. Valuations as of any particular date, however, are not necessarily indicative of amounts which may ultimately be realized as a result of future sales or other dispositions of securities and these favorable or unfavorable differences could be material. Among the factors considered in determining the fair value of restricted securities are the financial condition and operating results, projected operations, and other analytical data relating to the investment. Also considered are the market prices for unrestricted securities of the same class (if applicable) and other matters which may have an impact on the value of the portfolio company (see Note 3 “Investments” to the Consolidated Financial Statements).

(f) As of ~~September 30,~~December 31, 2018, the total cost of investment securities was approximately ~~$37.3~~$38.3 million. Net unrealized depreciation was approximately ($~~5.1)~~3.6) million, which was comprised of ~~$2.3~~$5.3 million of unrealized appreciation of investment securities and ($~~7.4)~~8.9) million of unrealized depreciation of investment securities. At ~~September 30,~~December 31, 2018, the aggregate gross unrealized gain for federal income tax purposes was ~~$2.6~~$5.2 million and the aggregate gross unrealized loss for federal income tax purposes was ($~~6.5)~~5.9) million. The net unrealized loss for federal income tax purposes was ($~~3.9)~~0.7) million based on a tax cost of ~~$36.1~~$35.4 million.

(g) Rand Capital SBIC, Inc. investment.

(h) Reduction in cost and value from previously reported balances reflects current principal repayment.

(i) Represents interest due (amounts over $50,000) from investments included as interest receivable on the Corporation’s ~~Statement~~Consolidated Statements of Financial Position.

(j)~~(j)~~ Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.

(l) Control Investments are defined by the 1940 Act as investments in companies in which more than 25% of the voting securities are owned by the Corporation or where greater than 50% of the board representation is maintained.

(m) Payment in kind (PIK) represents earned interest that is added to the cost basis of the investment.

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~September 30,~~December 31, 2018 (Continued)

~~(Unaudited)~~

~~Investments in and Advances to Affiliates~~

                       Amount of
                  Net    Interest/
      December       Gross    September      Realized      Dividend/
Company    Type of Investment    31, 2017
  Fair Value      Gross
  Additions (1)
  Reductions
(2)
     30, 2018
Fair Value    Gains
(Losses)
Fee
Income (3)

Control Investments:

Advantage 24/7 LLC    45% Membership interest.    $99,500    $-    $-    $99,500    $-    $-
   Total Control Investments      $99,500    $-    $-    $99,500    $-    $-
Affiliate Investments:
BeetNPath, LLC    1,119,024 Series A-2 Preferred Membership
   Units.    $359,000    $-    $-    $359,000    $-    $-
   1,032,918 Series B Preferred Membership                -
   Units.    291,000    -    -    291,000    -    -
   $140,000 convertible secured note at 8%                 -    140,000    -    140,000    -    2,551
   Total BeetNPath      650,000    140,000    -    790,000       2,551
Carolina Skiff LLC    6.0825% Class A common membership
   interest.    1,750,000    -    -    1,750,000    -    119,433
ClearView Social, Inc.    312,500 Series seed plus preferred shares.    200,000    -    -    200,000    -    -
First Wave Products    $500,000 senior term notes at 10%.    250,000    -    (250,000)    -    -    -
Group, LLC    $280,000 junior term notes at 10%.    -    -    -    -    -    -
   Warrant for 41,619 capital securities.                 -    -                 -    -    -    -
   Total First Wave    250,000    -    (250,000)    -    -    -
Genicon, Inc.    1,586,902 Series B preferred shares.    1,000,000    -    -    1,000,000    -    -
   $3,000,000 promissory notes at 8%.    2,903,779    153,548    -    3,057,327    -    251,069
   Warrant for 250,000 common shares    80,000    -    -    80,000    -    -
   Warrant for 125,000 common shares         40,000                -    -         40,000    -                -
   Total Genicon    4,023,779    153,548    -    4,177,327    -    251,069
GiveGab, Inc.    5,084,329 Series Seed preferred shares.    424,314    191,907    (616,221)    -    -    -
G-TEC Natural Gas    16.639% Class A membership interest. 8%
Systems    cumulative dividend.    100,000    -    -    100,000    -    -
Intrinsiq Materials,    4,161,747 Series A preferred shares.    400,000    -    (400,000)    -    (1,125,673)    -
Inc.
Knoa Software, Inc.    973,533 Series A-1 convertible preferred
   shares.    750,000    -    -    750,000    -    -
   1,876,922 Series B preferred shares.    479,155    -    -    479,155    -    -
   $48,466 convertible promissory note at 8%.         48,466    -    (48,466)                   -    -    773
   Total Knoa    1,277,621    -    (48,466)    1,229,155    -    773
KnowledgeVision    200,000 Series A-1 preferred shares.    -    -    -    -    -    -
Systems, Inc.    214,285 Series A-2 preferred shares.    300,000    -    -    300,000    -    -
   129,033 Series A-3 preferred shares.    165,001    -    -    165,001    -    -
   $75,000 subordinated promissory notes at 8%    50,000    25,000    -    75,000    -    3,896
   $750,000 replacement term note at 11%    -    750,000    -    750,000    -    37,571
   Warrant for 46,743 Series A-3 shares.      35,000                -    -         35,000    -              -
   Total Knowledge    550,001    775,000    -    1,325,001    -    41,467
   Vision
Mezmeriz, Inc.    1,554,565 Series seed preferred shares.    351,477    -    -    351,477    -    -
Microcision LLC    $1,500,000 subordinated promissory note at
   12% (1% PIK).    1,914,140    14,392    -    1,928,532    -    172,704
New Monarch    22.84 common shares.    22,841    -    -    22,841    -    29,409
Machine Tool, Inc.


Investments in and Advances to Affiliates
Company	Type of Investment	December 31, 2017 Fair Value		Gross Additions (1)		Gross Reductions (2)			December 31, 2018 Fair Value		Net Realized (Losses)			Amount of Interest/ Dividend/ Fee Income (3)
Control Investments:
Advantage 24/7 LLC	45% Membership Interest.		$99,500		$ -		$ -			$99,500		$ -			$60,000
Total Control Investments			$99,500		$ -		$ -			$99,500		$ -			$60,000

Affiliate Investments: BeetNPath, LLC	1,119,024 SeriesA-2 Preferred Membership Units. 1,032,918 Series B Preferred Membership Units. $262,626.64 Convertible Secured Note at 8% Total BeetNPath		$359,000 291,000 - 650,000		$ - - 262,627 262,627		($359,000 (29,723 - (388,723	) ) )		$ - 261,277 262,627 523,904		$ - - - -			$ - - 5,413 5,413

Carolina Skiff LLC	6.0825% Class A Common Membership interest.		1,750,000		-		-			1,750,000		-			251,913

ClearView Social, Inc.	312,500 Series Seed Plus Preferred.		200,000		-		-			200,000		-			-

First Wave Technologies, Inc.	$500,000 senior term notes at 10%. $280,000 junior term notes at 10%. Warrant for 41,619 capital securities. 670,443.2 Class A Common. Total First Wave		250,000 - - - 250,000		- - - 33,000 33,000		(250,000 - - - (250,000	) )		- - - 33,000 33,000		(316,469 - (22,000 - (338,469	) ) )		- - - - -

Genicon, Inc.	1,586,902 Series B Preferred. $3,250,000 Promissory Notes at 8%. Warrant for 250,000 Common. Total Genicon		1,000,000 2,903,779 120,000 4,023,779		- 481,807 - 481,807		- - (82,500 (82,500	) )		1,000,000 3,385,586 37,500 4,423,086		- - - -			- 348,512 - 348,512

GiveGab, Inc.	5,084,329 Series Seed Preferred.		424,314		191,907		(616,221	)		-		-			-

G-TEC Natural Gas Systems	16.639% Class A Membership Interest. 8% cumulative dividend.		100,000		-		(100,000	)		-		(1,125,673	)		-

Intrinsiq Materials, Inc.	4,161,747 Series A Preferred.		400,000		-		(400,000	)		-		-			-

Knoa Software, Inc.	973,533 SeriesA-1 Convertible Preferred. 1,876,922 Series B Preferred. $48,466 Convertible Promissory Note at 8%. Total Knoa		750,000 479,155 48,466 1,277,621		- - - -		- - (48,466 (48,466	) )		750,000 479,155 - 1,229,155		- - - -			- - 773 773

KnowledgeVision Systems, Inc.	200,000 SeriesA-1 Preferred. 214,285 SeriesA-2 Preferred. 129,033 SeriesA-3 Preferred. $75,000 Subordinated Promissory Notes at 8%. $750,000 term note at 11% Warrant for 46,743 SeriesA-3. Total KnowledgeVision		- 300,000 165,001 50,000 - 35,000 550,001		- - - 25,000 750,000 - 775,000		- (300,000 - - - - (300,000	) )		- - 165,001 75,000 750,000 35,000 1,025,001		- - - - - - -			- - - 5,408 60,241 - 65,649

Mezmeriz, Inc.	1,554,565 Series Seed Preferred.		351,477		-		-			351,477		-			-

Microcision LLC	$1,500,000 Subordinated Promissory Note at 12% (1% PIK) due December 31, 2024. 15% Class A Common Membership Interest. Total Microcision		1,914,140 - 1,914,140		19,213 610,000 629,213		- - -			1,933,353 610,000 2,543,353		- - -			230,559 - 230,559

New Monarch Machine Tool, Inc.	22.84 Common.		22,841		-		-			22,841		-			29,409

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~September 30,~~December 31, 2018 (Continued)

~~(Unaudited)~~

~~Investments in and Advances to Affiliates~~

Company

Type of Investment

December 31,
  2017 Fair
Value

Gross
  Additions
(1)

Gross
  Reductions
(2)

September
  30, 2018
Fair Value

Net
  Realized
Gains
(Losses)
     Amount of
Interest/
Dividend/
Fee Income
(3)
  OnCore Golf
   150,000 Series AA preferred shares.    -    -    - -    -    -
  Technology, Inc.
   $300,000 subordinated convertible
   promissory notes at 6%.    300,000    -    - 300,000    -    -
   Total OnCore        300,000    -    - 300,000    -    -
  SciAps, Inc.
   187,500 Series A convertible preferred
   shares.    700,000    -    - 700,000    -    -
   274,299 Series A-1 convertible preferred
   shares.    250,000    -    - 250,000    -    -
   117,371 Series B convertible preferred
   shares.    250,000    -    - 250,000    -    -
   113,636 Series C preferred shares.    175,000    -    - 175,000    -    -
   369,698 Series C-1 preferred shares.    399,274    -    - 399,274    -    -
   147,059 Series D shares                   -    250,000    -    250,000    -    -
   Total SciAps        1,774,274    250,000    - 2,024,274    -    -
  SOMS
   5,959,490 Series B membership interests.    528,348    -    (498,348 ) 30,000    -    -
  Technologies, LLC

  Teleservices
   250,000 Class B preferred units.    -    -    - -    -    -
  Solutions
   1,000,000 Class C preferred units.    -    -    - -    -    -
  Holdings, LLC
   80,000 Class D preferred units.    -    -    - -    -    -
   104,198 Class E preferred units.    -    -    - -    -    -
   Total Teleservices        -    -    - -    -    -
  Tilson Technology
   120,000 Series B preferred shares.    600,000    -    - 600,000    -    15,000
  Management, Inc.
   21,391 Series C convertible preferred
   shares.    200,000    -    - 200,000    -    -
   $200,000 subordinated promissory note at
   8%.    200,000    -    - 200,000    -    11,967
   65,790 Series D preferred shares.    750,000    -    - 750,000    -    14,064
   $750,000 subordinated promissory note at
   8%.      750,000    -    -    750,000    -    44,877
   Total Tilson        2,500,000    -    - 2,500,000    -    85,908
   Total Affiliate Investments        $17,016,795    $1,524,847    ($1,813,035) $16,728,607    ($1,125,673)    $703,314
   Total Control and Affiliate Investments        $17,116,295    $1,524,847    ($1,813,035) $16,828,107    ($1,125,673)    $703,314


Investments in and Advances to Affiliates
Company	Type of Investment	December 31, 2017 Fair Value		Gross Additions (1)		Gross Reductions (2)		December 31, 2018 Fair Value		Net Realized (Losses)		Amount of Interest/ Dividend/ Fee Income (3)
OnCore Golf Technology, Inc.	150,000 Series AA Preferred. $300,000 Subordinated Convertible Promissory notes at 6%. Total OnCore		- 300,000 300,000		300,000 - 300,000		- (300,000) (300,000)		300,000 - 300,000		- - -		- 27,370 27,370

SciAps, Inc.	187,500 Series A Convertible Preferred. 274,299 SeriesA-1 Convertible Preferred. 117,371 Series B Convertible Preferred. 113,636 Series C Preferred. 369,698 SeriesC-1 Preferred. 147,059 Series D Convertible Preferred Total SciAps		700,000 250,000 250,000 175,000 399,274 - 1,774,274		- - - - - 250,000 250,000		- - - - - - -		700,000 250,000 250,000 175,000 399,274 250,000 2,024,274		- - - - - - -		- - - - - - -
SOMS Technologies, LLC	5,959,490 Series B membership Interests.		528,348		-		(528,348)		-		-		-

Teleservices Solutions Holdings, LLC	250,000 Class B Preferred Units. 1,000,000 Class C Preferred Units. 80,000 Class D Preferred Units. 104,198 Class E Preferred Units. Total Teleservices		- - - - -		- - - - -		- - - - -		- - - - -		- - - - -		- - - - -

Tilson Technology Management, Inc.	120,000 Series B Preferred. 21,391 Series C Convertible Preferred. 70,176 Series D Preferred. $200,000 Subordinated Promissory Note at 8%. $800,000 Subordinated Promissory Note at 8%. Total Tilson		600,000 200,000 750,000 200,000 750,000 2,500,000		- - 50,000 - 50,000 100,000		- - - - - -		600,000 200,000 800,000 200,000 800,000 2,600,000		- - - - - -		20,000 - 19,003 16,000 60,822 115,825



	Total Affiliate Investments		$17,016,795		$3,023,554		($3,014,258)		$17,026,091		($1,464,142)		$1,075,423


	Total Control and Affiliate Investments		$17,116,295		$3,023,554		($3,014,258)		$17,125,591		($1,464,142)		$1,135,423

(3) Represents the total amount of interest, fees or dividends credited to income for the portion of the period an investment was included in Control or Affiliate categories, respectively.

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~September 30,~~December 31, 2018 (Continued)

~~(Unaudited)~~


Industry Classification		Percentage of Total Investments (at fair value) as of ~~September 30,~~December 31, 2018
Software		33.8%

Healthcare		~~36.1%~~32.4

~~Software~~ Manufacturing		~~27.7~~ 19.2

~~Manufacturing~~ Professional Services		~~19.0~~ 7.5

~~Professional Services~~ Consumer Product		~~7.8~~ 2.4

~~Consumer Product~~ Contact Center		~~3.5~~ 2.0

~~Contact Center~~ Oil and Gas		~~2.9~~ 1.4

~~Oil and Gas~~ Electronics		~~1.6~~ 1.0

~~Electronics~~ Marketing		~~1.1~~

~~Marketing~~		0.3


Total Investments		100%

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~December 31, 2017~~

Company, Geographic Location, Business
Description, (Industry) and Website

(a)

Type of Investment

(b)
      Date
Acquired

(c)

Equity
      Cost
    (d)(f)
Fair
Value

  Percent
of Net
Assets
Non-Control/Non-Affiliate Investments – 47.5%
ofnet assets: (j)
ACV Auctions, Inc. (e)(g)    1,181,160 Series A preferred    8/12/16    <1%       0.9%
Buffalo, NY. Live mobile wholesale auctions for new    shares.       $163,000    $282,356
and used car dealers. (Software)
www.acvauctions.com
Centivo Corporation (e)(n)    $100,000 convertible unsecured    7/5/17    0%       0.3%
New York, NY. Tech-enabled health solutions    note at 2% due February 1, 2019.       100,000    100,000
company that helps self-insured employers and their
employees save money and have a better experience.
(Health Care)
eHealth Global Technologies, Inc.    (g)$1,500,000 term note at 10%    6/28/16    0%       11.0%
Henrietta, NY. eHealth Connect® improves health    due September 2, 2019.       1,500,000    1,500,000
care delivery through intelligently aggregated clinical    (n)$2,000,000 term note at 10%
record and images for patient referrals.    due September 2, 2019.       2,000,000    2,000,000
(Health Care)    Total eHealth       3,500,000    3,500,000
www.ehealthtechnologies.com
Empire Genomics, LLC (g)    $1,101,489 senior secured    6/13/14    0%       4.2%
Buffalo, NY. Molecular diagnostics company that    convertible term notes at 10% due
offers a comprehensive menu of assay services for    April 30, 2018.       1,101,489    1,101,489
diagnosing and guiding patient therapeutic treatments.    $250,000 promissory note at 12%
(Health Care)    due December 31, 2019.          250,000       250,000
www.empiregenomics.com    (i)Interest receivable $65,906.
   Total Empire       1,351,489    1,351,489
GoNoodle, Inc. (g)(m)    $1,000,000 secured note at 12%    2/6/15    <1%       3.2%
(Formerly HealthTeacher, Inc.)    due January 31, 2020, (1%
Nashville, TN. Student engagement education    Payment in Kind (PIK)).       1,029,330    1,029,330
software providing core aligned physical activity    Warrant for 47,324 Series C
breaks. (Software)    Preferred shares.                   25                25
www.gonoodle.com    Total GoNoodle       1,029,355    1,029,355
Mercantile Adjustment Bureau, LLC (g)    $1,199,039 subordinated secured    10/22/12    4%       3.0%
Williamsville, NY. Full service accounts receivable    note at 13% (3% for the calendar
management and collections company.    year 2017) due January 31, 2018.       1,199,040    949,040
(Contact Center)    (e)$150,000 subordinated
www.mercantilesolutions.com    debenture at 8% due June 30,
   2018.       150,000    -
   Warrant for 3.29% membership
   interests. Option for 1.5%
   membership interests.            97,625                -
   (i)Interest receivable $55,983.
   Total Mercantile       1,446,665    949,040
Outmatch Holdings, LLC (e)(g)    2,641,899 Class P1 Units.    11/18/10    4% 2,140,007    2,140,007    6.7%
(Chequed Holdings, LLC)    109,788 Class C1 Units.              5,489           5,489
Dallas, TX. Web based predictive employee selection    Total Outmatch       2,145,496    2,145,496
and reference checking. (Software)
www.outmatch.com
PostProcess Technologies LLC (e)(g)    $300,000 convertible promissory    7/25/16    0%       0.9%
Buffalo, NY. Provides innovative solutions for the    note at 5% due July 28, 2018.       300,000    300,000
post-processing of additive manufactured 3D parts.
(Manufacturing)
www.postprocess.com

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~December 31, 2017 (Continued)~~

Company, Geographic Location, Business
Description, (Industry) and Website

(a)

Type of Investment

(b)
      Date
Acquired

(c)

Equity
      Cost
    (d)(f)
Fair
Value

  Percent
of Net
Assets
Rheonix, Inc. (e)    9,676 common shares.    10/29/09    4% -    11,000    9.2%
Ithaca, NY. Developer of fully automated    (g)1,839,422 Series A preferred
microfluidic based molecular assay and diagnostic    shares.       2,099,999    2,165,999
testing devices. (Health Care)    (g)50,593 common shares.       -    59,000
www.rheonix.com    (g)589,420 Series B preferred shares.          702,732       702,732
   Total Rheonix       2,802,731    2,938,731
SocialFlow, Inc. (e)(g)    1,049,538 Series B preferred shares.    4/5/13    4% 500,000    731,431    6.5%
New York, NY. Provides instant analysis of social    1,204,819 Series B-1 preferred shares.       750,000    839,648
networks using a proprietary, predictive analytic    717,772 Series C preferred shares.          500,000       500,221
algorithm to optimize advertising and publishing.    Total Social Flow       1,750,000    2,071,300
(Software)
www.socialflow.com
Somerset Gas Transmission Company, LLC (e)    26.5337 units.    7/10/02    3% 719,097    500,000    1.6%
Columbus, OH. Natural gas transportation.
(Oil and Gas)
www.somersetgas.com
Other Non-Control/Non-Affiliate Investments:
DataView, LLC(Software)(e)    Membership Interest.    -    - 310,357    -    0.0%
UStec/Wi3(Manufacturing)(e)    Common Stock.    -    - 100,500    -    0.0%
Subtotal Non-Control/Non-Affiliate Investments
         $15,718,690    $15,167,767
Affiliate Investments – 53.3% of net assets (k)
BeetNPath, LLC (Grainful) (e)(g)    1,119,024 Series A-2 Preferred    10/20/14    9%       2.0%
Ithaca, NY. Frozen entrées and packaged dry side    Membership Units.       $359,000    $359,000
dishes made from 100% whole grain steel cut oats    1,032,918 Series B Preferred
under Grainful brand name. (Consumer Product)    Membership Units.       261,277    291,000
www.grainful.com    Total BeetNPath       620,277    650,000
Carolina Skiff LLC (g)    6.0825% Class A common    1/30/04    7%       5.5%
Waycross, GA. Manufacturer of fresh water,    membership interest.       15,000    1,750,000
ocean fishing and pleasure boats.
(Manufacturing)
www.carolinaskiff.com
ClearView Social, Inc. (e)(g)    312,500 Series seed plus preferred    1/4/16    6%       0.6%
Buffalo, NY. Social media publishing tool for law,    shares.       200,000    200,000
CPA and professional firms. (Software)
www.clearviewsocial.com
First Wave Products Group, LLC (e)(g)    $500,000 senior term notes at 10% due    4/19/12    7%       0.8%
Batavia, NY. Sells First Crush automated pill    July 31, 2017.       661,563    250,000
crusher that crushes and grinds medical pills for    $280,000 junior term notes at 10% due
nursing homes and medical institutions. (Health    July 31, 2017.       316,469                -
Care)    Warrant for 41,619 capital securities.            22,000                -
www.firstwaveproducts.com    Total First Wave       1,000,032    250,000
Genicon, Inc.    (g)1,586,902 Series B preferred shares.    4/10/15    6% 1,000,000    1,000,000    12.6%
Winter Park, FL. Designs, produces and    (g)$2,000,000 promissory note at 8%
distributes patented surgical instrumentation.    due May 1, 2020.       1,936,002    1,936,002
(Health Care)    (g)Warrant for 250,000 common
www.geniconendo.com    shares.       80,000    80,000
   (n)$1,000,000 promissory note at 8%
   due May 1, 2020.       967,777    967,777
   (n)Warrant for 125,000 common
   shares.            40,000         40,000
   Total Genicon       4,023,779    4,023,779

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~December 31, 2017 (Continued)~~

Company, Geographic Location, Business
Description, (Industry) and Website

(a)

Type of Investment

(b)
      Date
Acquired

(c)

Equity
      Cost
    (d)(f)
Fair
Value

  Percent
of Net
Assets
GiveGab, Inc. (e)(g)    5,084,329 Series Seed preferred shares.    3/13/13    6% 616,221    424,314    1.3%
Ithaca, NY. Online fundraising, day of giving
supporter engagement software for non-profit
organizations. (Software)
www.givegab.com
G-TEC Natural Gas Systems (e)    16.639% Class A membership interest.    8/31/99    17%       0.3%
Buffalo, NY. Manufactures and distributes    8% cumulative dividend.       400,000    100,000
systems that allow natural gas to be used as an
alternative fuel to gases. (Manufacturing)
www.gas-tec.com
Intrinsiq Materials, Inc. (e)(g)    4,161,747 Series A preferred shares.    9/19/13    12% 1,125,673    400,000    1.3%
Rochester, NY. Produces printable electronics
utilizing a unique process of nanomaterial based
ink in a room-temperature environment.
(Manufacturing)
www.intrinsiqmaterials.com
Knoa Software, Inc. (g)    973,533 Series A-1 convertible    11/20/12    7%       4.0%
New York, NY. End user experience    preferred shares.       750,000    750,000
management and performance (EMP) solutions    1,876,922 Series B preferred shares.       479,155    479,155
utilizing enterprise applications. (Software)    $48,466 convertible promissory note at
www.knoa.com    8% due May 9, 2018.            48,466         48,466
   Total Knoa       1,277,621    1,277,621
KnowledgeVision Systems, Inc. (e)(g)    200,000 Series A-1 preferred shares.    11/13/13    7% 250,000    -    1.7%
Lincoln, MA. Online presentation and training    214,285 Series A-2 preferred shares.       300,000    300,000
software. (Software)    129,033 Series A-3 preferred shares.       165,001    165,001
www.knowledgevision.com    Warrant for 46,743 Series A-3 shares.       35,000    35,000
   $50,000 subordinated promissory note
   at 8% payable on demand of majority of
   noteholders after August 31, 2017.         50,000      50,000
   Total KnowledgeVision       800,001    550,001
Mezmeriz, Inc. (e)(g)    1,554,565 Series Seed preferred shares.    1/9/08    14% 742,850    351,477    1.1%
Ithaca, NY. Micro-electronic mechanical systems
(MEMS) developer of carbon fiber MEMS mirror
modules for gesture recognition and 3D scanning.
(Electronics Developer)
www.mezmeriz.com
Microcision LLC (g)(m)    $1,500,000 subordinated promissory    9/24/09    15%       6.0%
Pennsauken Township, NJ. Manufacturer of    note at 12% (1% PIK) due December
precision machined medical implants,    31, 2024.       1,914,140    1,914,140
components and assemblies. (Manufacturing)    15% Class A common membership
www.microcision.com    interest.                     -                  -
   Total Microcision       1,914,140    1,914,140
New Monarch Machine Tool, Inc. (g)    22.84 common shares.    9/24/03    15% 22,841    22,841    0.1%
Cortland, NY. Manufactures and services
vertical/horizontal machining centers.
(Manufacturing)
www.monarchmt.com

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~December 31, 2017 (Continued)~~

Company, Geographic Location, Business
Description, (Industry) and Website

(a)

Type of Investment

(b)
      Date
Acquired

(c)

Equity
      Cost
    (d)(f)
Fair
Value

  Percent
of Net
Assets
OnCore Golf Technology, Inc. (e)(g)    150,000 Series AA preferred shares.    12/31/14    9% 375,000    -    0.9%
Buffalo, NY. Maker of patented golf balls.    $300,000 subordinated convertible
(Consumer Product)    promissory notes at 6% (10% for
www.oncoregolf.com    calendar year 2017) due January 24,
   2018.
   (i)Interest receivable $50,342.       300,000    300,000
   Total OnCore       675,000    300,000
SciAps, Inc. (e)(g)    187,500 Series A convertible preferred    7/12/13    8%       5.6%
Woburn, MA. Instrumentation company    shares.       1,500,000    700,000
producing portable analytical devices using XRF,    274,299 Series A-1 convertible
LIBS and RAMAN spectroscopy to identify    preferred shares.       504,710    250,000
compounds, minerals, and elements.    117,371 Series B convertible preferred
(Manufacturing)    shares.       250,000    250,000
www.sciaps.com    113,636 Series C preferred shares.       175,000    175,000
   369,698 Series C-1 preferred shares.           399,274        399,274
   Total SciAps       2,828,984    1,774,274
SOMS Technologies, LLC (e)(g)    5,959,490 Series B membership    12/2/08    9%       1.7%
Valhalla, NY. Produces and markets the    interests.       472,632    528,348
microGreen Extended Performance Oil Filter.
(Consumer Products)
www.microgreenfilter.com
Teleservices Solutions Holdings, LLC (e)    250,000 Class B preferred units.    5/30/14    6% 250,000    -    0.0%
(g)(m)    1,000,000 Class C preferred units.       1,190,680    -
Montvale, NJ. Customer contact center    80,000 Class D preferred units.       91,200    -
specializing in customer acquisition and retention    104,198 Class E preferred units.          104,198    -
for selected industries. (Contact Center)    PIK dividend for Series C and D at 12%
www.ipacesetters.com    and 14%, respectively.
   Total Teleservices       1,636,078    -
Tilson Technology Management, Inc.    (g)120,000 Series B preferred shares.    1/20/15    11% 600,000    600,000    7.8%
Portland, ME. Cellular, fiber optic and wireless    21,391 Series C convertible preferred
information systems, construction, and    shares.       200,000    200,000
management. (Professional Services)    (g)$200,000 subordinated promissory
www.tilsontech.com    note at 8% due September 28, 2021.       200,000    200,000
   (n)65,790 Series D preferred shares.       750,000    750,000
   (n)$750,000 subordinated promissory
   note at 8% due December 1, 2022.          750,000       750,000
   Total Tilson       2,500,000    2,500,000

Subtotal Affiliate Investments          $20,871,129    $17,016,795
Control Investments – 0.3% of net assets (l)
Advantage 24/7 LLC (e)(g)    53% Membership interest.    12/30/10    53% $99,500    $99,500    0.3%
Williamsville, NY. Marketing program for wine
and spirits dealers. (Marketing Company)
www.advantage24-7.com
Subtotal Control Investments          $99,500    $99,500
TOTAL INVESTMENTS – 101.1%          $36,689,319    $32,284,062
OTHER ASSETS IN EXCESS OFLIABILITIES – (1.1%)                     (365,377)



NET ASSETS – 100%                 $31,918,685

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~December 31, 2017 (Continued)~~

~~Notes to the Consolidated Schedule of Portfolio Investments~~

(a) At December 31, 2017, restricted securities represented 100% of the fair value of the investment portfolio. Restricted securities are subject to one or more restrictions on resale and are not freely marketable.

~~(b) The Date Acquired column indicates the date in which the Corporation first acquired an investment in the company or a predecessor company.~~

(d) The Corporation’s investments are carried at fair value in accordance with Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures,” which defines fair value and establishes guidelines for measuring fair value. At December 31, 2017, ASC 820 designates 100% of the Corporation’s investments as “Level 3” assets. Under the valuation policy of the Corporation, unrestricted publicly held securities are valued at the average closing bid price for these securities for the last three trading days of the reporting period. Restricted securities are subject to restrictions on resale, and are valued at fair value as determined by the management of the Corporation and submitted to the Board of Directors for approval. Fair value is considered to be the amount that the Corporation may reasonably expect to receive for portfolio securities when sold on the valuation date. Valuations as of any particular date, however, are not necessarily indicative of amounts which may ultimately be realized as a result of future sales or other dispositions of securities and these favorable or unfavorable differences could be material. Among the factors considered in determining the fair value of restricted securities are the financial condition and operating results, projected operations, and other analytical data relating to the investment. Also considered are the market prices for unrestricted securities of the same class (if applicable) and other matters which may have an impact on the value of the portfolio company (see Note 3 “Investments” to the Consolidated Financial Statements).

~~(e) These investments arenon-income~~ ~~producing. All other investments are income producing.Non-income~~ ~~producing investments have not generated cash payments of interest or dividends including LLCtax-related~~ ~~distributions within the last twelve months, or are not expected to do so going forward.~~

(f) As of December 31, 2017, the total cost of investment securities was approximately $36.7 million. Net unrealized depreciation was approximately ($4.4) million, which was comprised of $2.4 million of unrealized appreciation of investment securities and ($6.8) million of unrealized depreciation of investment securities. At December 31, 2017, the aggregate gross unrealized gain for federal income tax purposes was $2.8 million and the aggregate gross unrealized loss for federal income tax purposes was ($4.4) million. The net unrealized loss for federal income tax purposes was ($1.6) million based on a tax cost of $33.9 million.

~~(g) Rand Capital SBIC, Inc. investment.~~

~~(h) Reduction in cost and value from previously reported balances reflects current principal repayment. There were no principal repayments during the year ended December 31, 2017.~~

~~(i) Represents interest due (amounts over $50,000) from investments included as interest receivable on the Corporation’s Statement of Financial Position.~~

~~(j)Non-Control/Non-Affiliate~~ ~~Investments are investments that are neither Control Investments nor Affiliate Investments.~~

~~(k) Affiliate Investments are defined by the Investment Company Act of 1940, as amended (“1940 Act”), as thoseNon-Control~~ ~~investments in companies in which between 5% and 25% of the voting securities are owned by the Corporation.~~

~~(m) Payment in kind (PIK) represents earned interest that is added to the cost basis of the investment.~~

~~(n) Rand Capital SBIC II, L.P. investment.~~

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~December 31, 2017 (Continued)~~

~~Investments in and Advances to Affiliates~~

Company    Type of Investment    December
31, 2016
  Fair Value      Gross
  Additions
(1)    Gross
  Reductions
(2)    December
31, 2017 Fair
Value    Net
Realized
Gains
(Losses)    Amount of
Interest/
Dividend/
Fee Income (3)
Control Investments:

Advantage 24/7 LLC    53% Membership interest.    $99,500    $-    $-    $99,500    $-    $-
   Total Control Investments    $99,500    $-    $-    $99,500    -    $-
Affiliate Investments:
BeetNPath, LLC    1,119,024 Series A-2 Preferred Membership
   Units.    $359,000       $-    $359,000    -    $-
   1,032,918 Series B Preferred Membership                -
   Units    -    $291,000    -    291,000    -    -
   $150,000 convertible promissory note at 8%.    150,000                -    (150,000)                -    -    4,800
   Total BeetNPath    509,000    291,000    (150,000)    650,000    -    4,800
Carolina Skiff LLC    6.0825% Class A common membership interest.    1,100,000    650,000    -    1,750,000    -    178,532
ClearView Social, Inc.    312,500 Series seed plus preferred shares.    200,000    -    -    200,000    -    -
First Wave Products    $500,000 senior term notes at 10%.    250,000    -    -    250,000    -    -
Group, LLC    $280,000 junior term notes at 10%.    -    -    -    -    -    -
   Warrant for 41,619 capital securities.                -    -    -                -    -    -
   Total First Wave    250,000    -    -    250,000    -    -
Genicon, Inc.    1,586,902 Series B preferred shares.    1,000,000    -    -    1,000,000    -    -
   $1,100,000 senior term loans at 12%.    1,100,000    -    (1,100,000)    -    -    50,234
   $600,000 term loan at 14%.    600,000    -    (600,000)    -    -    32,200
   $2,000,000 promissory note at 8%    -    2,016,002    (80,000)    1,936,002    -    129,752
   $1,000,000 promissory note at 8%    -    1,007,777    (40,000)    967,777    -    60,860
   Warrant for 250,000 common shares    -    80,000    -    80,000    -
   Warrant for 125,000 common shares                   -         40,000                     -         40,000    -                -
   Total Genicon    2,700,000    3,143,779    (1,820,000)    4,023,779    -    273,046
GiveGab, Inc.    5,084,329 Series Seed preferred shares.    424,314    -    -    424,314    -    -
G-TEC Natural Gas Systems    16.639% Class A membership interest. 8% cumulative dividend    100,000    -    -    100,000    -    -
Intrinsiq Materials, Inc.    4,161,747 Series A preferred shares.    780,000    -    (380,000)    400,000    -    -
Knoa Software, Inc.    973,533 Series A-1 convertible preferred    -    750,000    -    750,000    -    -
   shares. 1,876,922 Series B preferred shares.    449,455    29,700    -    479,155    -    -
   $48,466 convertible promissory note at 8%.      48,466                -    -         48,466    -    3,877
   Total Knoa    497,921    779,700    -    1,277,621    -    3,877
KnowledgeVision    200,000 Series A-1 preferred shares.    -    -    -    -    -    -
Systems, Inc.    214,285 Series A-2 preferred shares.    300,000    -    -    300,000    -    -
   129,033 Series A-3 preferred shares.    165,001    -    -    165,001    -    -
   $50,000 subordinated promissory note at 8%    -    50,000    -    50,000    -    3,748
   Warrant for 46,743 Series A-3 shares.    35,000                -    -    35,000    -            -
   Total Knowledge Vision    500,001    50,000    -    550,001    -    3,748
Mezmeriz, Inc.    1,554,565 Series seed preferred shares.    351,477    -    -    351,477    -    -
Microcision LLC    $1,500,000 subordinated promissory note at 12% (1% PIK).    1,891,964    22,176    -    1,914,140    -    228,239
New Monarch
Machine Tool, Inc.    22.84 common shares.    22,841    -    -    22,841    -    28,409

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~December 31, 2017 (Continued)~~

~~Investments in and Advances to Affiliates~~

Company    Type of Investment    December
31, 2016
  Fair Value      Gross
  Additions
(1)    Gross
  Reductions
(2)    December
  31, 2017 Fair
Value    Net
Realized
Gains
(Losses)    Amount of
Interest/
Dividend/
  Fee Income (3)
  OnCore Golf    150,000 Series AA preferred shares.    -    -    -    -    -    -
  Technology, Inc.    $300,000 subordinated convertible
   promissory notes at 6%.    300,000    -    -    300,000    -    29,211
   Total OnCore    300,000    -    -    300,000    -    29,211
  SciAps, Inc.    187,500 Series A convertible preferred
   shares.    1,000,000    -    (300,000)    700,000    -    -
   274,299 Series A-1 convertible preferred
   shares.    504,710    -    (254,710)    250,000    -    -
   117,371 Series B convertible preferred
   shares.    250,000    -    -    250,000    -    -
   113,636 Series C preferred shares.    -    175,000    -    175,000    -    -
   369,698 Series C-1 preferred shares.    -    399,274    -    399,274    -    -
   $200,000 subordinated promissory note at
   10%.    200,000    -    (200,000)    -    -    4,731
   $100,000 secured subordinated convertible
   note at 10%.      100,000                -    (100,000)                  -    -    2,376
   Total SciAps        2,054,710    574,274    (854,710)    1,774,274    -    7,107
  SOMS    5,959,490 Series B membership interests.    528,348    -    -    528,348    -    6,024
  Technologies, LLC
  Teleservices    250,000 Class B preferred units.    -    -    -    -    -    -
  Solutions    1,000,000 Class C preferred units.    200,000    -    (200,000)    -    -    -
  Holdings, LLC    80,000 Class D preferred units.    91,200    -    ( 91,200)    -    -    -
   104,198 Class E preferred units.    104,198    -    (104,198)    -    -    -
   Total Teleservices        395,398    -    (395,398)    -    -    -
  Tilson Technology    120,000 Series B preferred shares.    600,000    -    -    600,000    -    20,000
  Management, Inc.    21,391 Series C convertible preferred    200,000    -       200,000    -    -
   shares.          -
   $200,000 subordinated promissory note at    200,000    -       200,000    -    16,000
   8%.    -    750,000       750,000       1,579
   65,790 Series D preferred shares.
   $750,000 subordinated promissory note at                  -       750,000    -       750,000    -      5,096
   8%.    1,000,000    1,500,000    -    2,500,000    -    42,675
   Total Tilson
   Total Affiliate Investments        $13,605,974    $7,010,929    ($3,600,108)    $17,016,795    $-    $805,668
   Total Control and Affiliate     Investments        $13,705,474    $7,010,929    ($3,600,108)    $17,116,295    $-    $805,668

~~(3) Represents the total amount of interest, fees or dividends credited to income for the portion of the period an investment was included in Control or Affiliate categories, respectively.~~

~~RAND CAPITAL CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS~~

~~December 31, 2017 (Continued)~~


~~Industry Classification~~		~~Percentage of Total~~ ~~Investments (at fair value)~~ ~~as of December 31, 2017~~

~~Healthcare~~		~~37.7%~~

~~Software~~		~~24.7~~

~~Manufacturing~~		~~19.4~~

~~Professional Services~~		~~7.7~~

~~Consumer Product~~		~~4.6~~

~~Contact Center~~		~~2.9~~

~~Oil and Gas~~		~~1.6~~

~~Electronics~~		~~1.1~~

~~Marketing~~		~~0.3~~


~~Total Investments~~		~~100%~~

Rand Capital Corporation and ~~Subsidiaries~~Subsidiary

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1. ORGANIZATION

Rand Capital Corporation (“Rand”, “we”, “us” and “our”) was incorporated under the laws of New York in February 1969. We completed our initial public offering in 1971 as an internally managed,closed-end, diversified, management investment company. We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets” and provide managerial assistance to the portfolio companies in which we invest. See Item 1. Business – Regulation, Regulation as a Business Development Company in our Annual Report on Form10-K for the year ended December 31, ~~2017.~~2018.

Throughout our history, our principal business has been to make venture capital investments in early or expansion stage companies, often in upstate New York and regions in close proximity. In accordance with our strategic growth plan, we look for companies with strong leadership that are bringing to market new or unique products, technologies or services and have a high potential for growth. We invest in a mixture of debt and equity instruments. The debt securities typically have an equity component in the form of warrants or options to acquire stock or the right to convert the debt securities into equity securities.

We established our first small business investment company (“SBIC”) in 2002, Rand Capital SBIC, Inc. (“Rand SBIC”), whereby we utilized funds borrowed from the Small Business Administration (“SBA”) combined with our capital to invest in our portfolio companies. We historically made the majority of our venture capital investments through Rand SBIC. Rand SBIC’s predecessor was organized as a Delaware limited partnership and was converted into a New York corporation on December 31, 2008, at which time our operations as a licensed SBIC were continued. Although Rand SBIC was operated as if it were a BDC, it was registered as an investment company under the 1940 Act. In 2012, the SEC granted an Order of Exemption for Rand with respect to the operations of Rand SBIC, and then Rand SBIC filed an election to be regulated as a BDC under the 1940 Act. Rand SBIC’s board of directors is comprised of the directors of Rand, a majority of whom are not “interested persons” of Rand or Rand SBIC.

During 2017 we established a second SBIC subsidiary, Rand Capital SBIC II, L.P. (“Rand SBIC II”), and began making investments through this SBIC subsidiary. During ~~the first quarter of~~ 2018, together with the SBA, we determined that the optimal structure was to revert back to investing in small businesses through our original SBIC, Rand SBIC, and the assets of Rand SBIC II were transferred to Rand SBIC. ~~Rand SBIC has applied for $6 million in new SBA leverage commitment and is currently undergoing the review and approval process.~~

We operate as an internally managed investment company whereby our officers and employees conduct the business of the Corporation under the general supervision of our Board of Directors. We have not elected to qualify to be taxed as a regulated investment company as defined under Subchapter M of the Internal Revenue Code. See Recent Developments.

In this Quarterly Report on Form10-Q, unless the context otherwise requires, “we”, the “Corporation”, “us”, and “our” refer to Rand Capital Corporation and Rand SBIC.

Our corporate office is located in Buffalo, NY and our website address is www.randcapital.com. We make available free of charge on our website our annual and periodic reports, proxy statements and other information as soon as reasonably practicable after such material is filed with the Securities and Exchange Commission (“SEC”). Our shares are traded on the ~~NASDAQ~~Nasdaq Capital Market under the ticker symbol “RAND”.

Recent Developments

As previously announced, on January 24, 2019, Rand entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and among Rand, East Asset Management, LLC (“East”), and, solely for purposes of being bound by Sections 7.10 and 10.9(a) and (b) thereof, Rand Capital Management LLC (“RCM”). Pursuant to the terms of the Stock Purchase Agreement, at the closing of the transaction (the “Closing”), East will purchase 8,333,333.33 shares (the “Shares”) of Rand’s common stock, par value $0.10 per share, at a purchase price of $3.00 per Share for an aggregate purchase price of $25,000,000 (the “Stock Purchase”), which consideration is to be paid to Rand partially in cash and partially through the contribution of existing loans and other securities (the “Contributed Assets”). As a condition to Closing, Rand will enter into a Shareholder Agreement with East (the “Shareholder Agreement”), which provides East with the right to designate two or three persons, depending upon the size of Rand’s board of directors (the “Board”), but in no case a majority, for nomination for election to Rand’s board of directors.

The Stock Purchase Agreement also contemplates that, at the Closing, Rand will enter into an investment advisory and management agreement (the “Advisory Agreement”) with RCM pursuant to which RCM will serve as Rand’s external investment adviser. Pursuant to the terms of the Advisory Agreement, Rand will pay RCM a base management fee and an incentive fee. At the Closing, Rand will also enter into an administration agreement (the “Administration Agreement”) with RCM pursuant to which RCM will serve as Rand’s administrator.

The transactions contemplated by the Stock Purchase Agreement, including the entry into the Advisory Agreement with RCM (which we refer to as the “Transactions”), required receipt of shareholder approval. Rand’s shareholders approved all proposals related to the Transactions at a special meeting of shareholders that was held on May 16, 2019.

In connection with the completion of the Transactions, Rand intends to accelerate its shift to an investment strategy focused on higher yielding debt investments, to elect tax treatment as a regulated investment company (“RIC”), and in connection with such RIC election intends to pay a special dividend to shareholders, and intends to adopt a new dividend policy that may include regular cash dividends to shareholders.

Rand expects the Transactions to close in the second half of 2019, subject to receipt of required regulatory approvals.

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation –It is our opinion that the accompanying consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair presentation in accordance with United States generally accepted accounting principles (“GAAP”) of the consolidated financial position, results of operations, cash flows and statement of changes in net assets for the interim periods presented. Certain information and note disclosures normally included in audited annual consolidated financial statements prepared in accordance with GAAP have been omitted; however, we believe that the disclosures made are adequate to make the information presented herein not misleading. Our interim results for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 are not necessarily indicative of the results to be expected for the full year.

These statements should be read in conjunction with the consolidated financial statements and the notes included in our Annual Report on Form10-K for the year ended December 31, ~~2017.~~2018. Information contained in this filing should also be reviewed in conjunction with our related filings with the SEC prior to the date of this report. Those filings include, but are not limited to, the following:

N-54A Election to Adopt Business Development Company status

~~N-54A~~

~~Election to Adopt Business Development Company status~~

~~DEF-14A~~

~~2018 Definitive Proxy Statement submitted to shareholders~~

10-Q Quarterly Report on Form10-Q for the quarter ended March 31, 2019

Principles of Consolidation – The consolidated financial statements include the accounts of Rand and its ~~two~~ wholly-owned ~~subsidiaries.~~subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

Fair Value of Financial Instruments – The carrying amounts reported in the consolidated statement of financial position of cash, interest receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term nature of these financial instruments.

Fair Value of SBA Debentures –In ~~September 2018,~~March 2019, the SBIC Funding Corporation completed a pooling of SBA debentures that have a coupon rate of ~~3.548%~~3.113%, excluding a mandatory SBA annual charge estimated to be ~~0.804%~~0.094%, resulting in a total estimated fixed rate for ten years of ~~4.352%~~3.207%. The carrying value of Rand’s SBA debentures is a reasonable estimate of fair value because their stated interest rates approximate current interest rates that are available for debt with similar terms.

Investment Classification –In accordance with the provisions of the 1940 Act, the Corporation classifies its investments by level of control. Under the 1940 Act, “Control Investments” are investments in companies that the Corporation is deemed to “Control” because it owns more than 25% of the voting securities of the company or has greater than 50% representation on the company’s board. “Affiliate Investments” are companies in which the Corporation owns between 5% and 25% of the voting securities.“Non-Control/Non-Affiliate Investments” are those companies that are neither Control Investments nor Affiliate Investments.

Investments – Investments are valued at fair value as determined in good faith by the management of the Corporation and approved by the Board of Directors. The Corporation invests in loan instruments, debt instruments, and equity instruments. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistent valuation process. The Corporation analyzes and values each investment quarterly, and records unrealized depreciation for an investment that it believes has become impaired, including where collection of a loan or debt security or realization of the recorded value of an equity security is doubtful. Conversely, the Corporation will record unrealized appreciation if it believes that an underlying portfolio company has appreciated in value and, therefore, its equity securities have also appreciated in value. These estimated fair values may differ from the values that would have been used had a ready market for the investments existed and these differences could be material if the Corporation’s assumptions and judgments differ from results of actual liquidation events.

Qualifying Assets– All of the Corporation’s investments were made in privately held small business enterprises, that were not investment companies, were principally based in the United States, and represent qualifying assets as defined by Section 55(a) of the 1940 Act.

Cash and Cash Equivalents – Temporary cash investments having a maturity of less than a year when purchased are considered to be cash equivalents.

Revenue Recognition - –Interest Income – Interest income is recognized on the accrual basis except where the investment is in default or otherwise presumed to be in doubt. In such cases, interest is recognized at the time of receipt. A reserve for possible losses on interest receivable is maintained when appropriate.

Rand SBIC’s interest accrual is also regulated by the SBA’s “Accounting Standards and Financial Reporting Requirements for Small Business Investment Companies.” Under these rules, interest income cannot be recognized if collection is doubtful, and a 100% reserve must be established. The collection of interest is presumed to be in doubt when there is substantial doubt about a portfolio company’s ability to continue as a going concern or a loan is in default for more than 120 days. Management also uses other qualitative and quantitative measures to determine the value of a portfolio investment and the collectability of any accrued interest.

The following investments are onnon-accrual status: BeetNPath, LLC (Beetnpath),G-TEC Natural Gas Systems(G-Tec), ~~First Wave Products Group, LLC (First Wave), OnCore Golf Technology, Inc. (Oncore)~~ and a portion of the Mercantile Adjustment Bureau, LLC (Mercantile) outstanding loan balance.

The Corporation holds debt securities in its investment portfolio that containpayment-in-kind (“PIK”) interest provisions. PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment.

Revenue Recognition – Dividend Income –The Corporation may receive cash distributions from portfolio companies that are limited liability companies or corporations and these distributions are classified as dividend income on the consolidated statement of operations. Dividend income is recognized on an accrual basis when it can be reasonably estimated.

The Corporation may hold preferred equity securities that contain cumulative dividend provisions. Cumulative dividends are recorded as dividend income, if declared and deemed collectible, and any dividends in arrears are recognized into income and added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed.

Revenue Recognition – Fee Income– Consists of the revenue associated with the amortization of financing fees charged to the portfolio companies upon successful closing of SBIC financings and income associated with portfolio company board attendance fees. The income associated with the amortization of financing fees was ~~$28,266~~$42,428 and ~~$18,557~~$15,327 for the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018, ~~and 2017,~~ respectively. In addition, the Corporation recognized aone-time fee of $225,000 in conjunction with the repayment of the eHealth loan instrument. The board fees were ~~$2,000~~$500 and ~~$1,000~~$2,000 for the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018, ~~and 2017,~~ respectively. ~~In addition, we recorded a fee of approximately $142,000 for modifying a debt instrument during the nine months ended September 30, 2018.~~

Realized Gain or Loss and Unrealized Appreciation or Depreciation of Investments –Amounts reported as realized gains and losses are measured by the difference between the proceeds from the sale or exchange and the cost basis of the investment without regard to unrealized gains or losses recorded in prior periods. The cost of securities that have, in management’s judgment, become worthless are written off and reported as realized losses when appropriate. Unrealized appreciation or depreciation reflects the difference between the fair value of the investments and the cost basis of the investments.

Original Issue Discount – Investments may include “original issue discount” or OID income. This occurs when the Corporation purchases a warrant and a note from a portfolio company simultaneously, which requires an allocation of a portion of the purchase price to the warrant and reduces the note or debt instrument by an equal amount in the form of a note discount or OID. The note is reported net of the OID and the OID is accreted into interest income over the life of the loan. The Corporation recognized ~~$29,462~~$20,382 and ~~$21,085~~$19,271 in OID income for ~~nine~~the six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, respectively. OID income is estimated to be approximately ~~$10,000~~$20,000 for the remainder of ~~2018.~~2019.

Deferred Debenture Costs – SBA debenture origination and commitment costs, which are netted against the debenture obligation (See Note 6 “SBA Debentures”), will be amortized ratably over the terms of the SBA debentures. Amortization expense was ~~$20,550~~$18,195 and $13,700 for ~~each of~~ the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018, ~~and 2017.~~respectively. Amortization expense on currently outstanding debentures for the next five years is estimated to average approximately ~~$23,000~~$31,000 per year.

SBA Debentures –The Corporation had ~~$8,000,000~~$11,000,000 and $8,750,000 in outstanding SBA debentures at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017~~2018, respectively, with a weighted average interest rate, including the SBA annual fee, of ~~3.54%.~~3.45% at June 30, 2019. The debentures are presented net of deferred debenture costs (See Note 6 “SBA Debentures”). The ~~$8,000,000~~$11,000,000 in outstanding SBA leverage matures from 2022 through ~~2025.~~2029.

In the event of a future default of such SBA obligations, the Corporation has consented to the exercise, by the SBA, of all rights of the SBA under 13 C.F.R. 107.1810(i) “SBA remedies for automatic events of default” and has agreed to take all actions that the SBA may so require. These actions may include the Corporation’s automatic consent to the appointment of the SBA, or its designee, as receiver under Section 311(c) of the Small Business Investment Act of 1958.

Net Assets per Share – Net assets per share are based on the number of shares of common stock outstanding. The Corporation does not have any common stock equivalents outstanding.

Supplemental Cash Flow Information – Income taxes ~~(refunded) paid~~refunded during the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 were $630,274 and ~~2017 were ($17,006) and $590,940,~~$17,051, respectively. Interest paid during each of the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018 was $153,513 and ~~2017 was $282,875.~~$140,275, respectively. The Corporation converted ~~$279,319~~$232,513 and ~~$262,105~~$77,154 of interest receivable into investments during the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, respectively.

Accounting Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Stockholders’ Equity (Net Assets) –At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, there were 500,000 shares of $10.00 par value preferred stock authorized and unissued.

On October 25, 2018, the Board of Directors extended the repurchase authorization for up to 1,000,000 shares of the Corporation’s outstanding common stock on the open market through October 25, 2019 at prices no greater than the then current net asset value. No shares were repurchased during the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. At ~~September~~June 30, ~~2018,~~2019, the total treasury shares held was 541,046 shares with a total cost of $1,469,105.

Profit Sharing and Stock Option Plan –In 2001, the ~~stockholders~~shareholders of the Corporation authorized the establishment of an Employee Stock Option Plan (the “Option Plan”), that provides for the award of stock options to purchase up to 200,000 common shares to eligible employees. In 2002, the Corporation placed the Option Plan on inactive status as it developed a new profit sharing plan for the Corporation’s employees in connection with the formation of its SBIC subsidiary. As of ~~September~~June 30, ~~2018,~~2019, no stock options had been

awarded under the Option Plan. Because Section 57(n) of the 1940 Act prohibits maintenance of a profit sharing plan for the officers and employees of a BDC where any option, warrant or right is outstanding under an executive compensation plan, no stock options will be granted under the Option Plan while any profit sharing plan is in effect with respect to the Corporation.

In 2002, the Corporation established a Profit Sharing Plan (the “Plan”) for its executive officers in accordance with Section 57(n) of the 1940 Act. Under the Plan, the Corporation will pay its executive officers aggregate profit sharing payments equal to 12% of the net realized capital gains of its SBIC subsidiary, net of all realized capital losses and unrealized depreciation of the SBIC subsidiary, for the fiscal year, computed in accordance with the Plan and the Corporation’s interpretation of the Plan. Any profit sharing paid or accrued cannot exceed 20% of the Corporation’s net income, as defined in the Plan. For purposes of the 20% profit sharing test, the Corporation interprets net income to be the total of the Corporation’s net investment gain (loss) and its net realized gain (loss) on investments, prior to inclusion of the estimated profit sharing obligation. The profit sharing payments are split equally between the Corporation’s two executive officers, each of whom is fully vested in the Plan.

The Corporation did not record any expense pursuant to the Plan for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and 2017, respectively. Included in the profit sharing and bonus payable line on the Consolidated Statement of Financial Position at December 31, 2017 was $132,000 that was paid during the first quarter of 2018.

Income Taxes –The Corporation reviews the tax positions it has taken to determine if they meet a “more likely than not threshold” for the benefit of the tax position to be recognized in the consolidated financial statements. A tax position that fails to meet the more likely than not recognition threshold will result in either a reduction of a current or deferred tax asset or receivable, or the recording of a current or deferred tax liability. There were no uncertain tax positions recorded at ~~September~~June 30, 2019 or December 31, 2018.

It is the Corporation’s policy to include interest and penalties related to income tax liabilities in income tax expense. There were no amounts recognized for interest or penalties for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 or ~~2017.~~2018.

Concentration of Credit and Market Risk – The Corporation’s financial instruments potentially subject it to concentrations of credit risk. Cash is invested with banks in amounts which, at times, exceed insurable limits. Management does not anticipatenon-performance by such banks.

The following are the concentrations of the top five portfolio company values to the fair value of the Corporation’s total investment portfolio:

   September 30,
2018 December 31,
2017
Genicon, Inc. (Genicon)
   13 % 12 %
eHealth Global Technologies, Inc. (eHealth),
   11 % 11 %
Rheonix, Inc. (Rheonix)
   9 % 9 %
Tilson Technology Management, Inc. (Tilson)
   8 % 8 %
Outmatch (Outmatch)
   7 % 7 %


	As of June 30, 2019
Tilson Technology Management, Inc. (Tilson)		16	%
Genicon, Inc. (Genicon)		13	%
ACV Auctions, Inc. (ACV)		9	%
Microcision, LLC. (Microcision)		8	%
Rheonix, Inc. (Rheonix)		7	%

	As of December 31, 2018
Genicon, Inc. (Genicon)		13	%
eHealth Global Technologies, Inc. (eHealth)		10	%
ACV Auctions, Inc. (ACV)		8	%
Tilson Technology Management, Inc. (Tilson)		7	%
Microcision, LLC. (Microcision)		7	%

Note 3. INVESTMENTS

The Corporation’s investments are carried at fair value in accordance with FASB Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures”, which defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements.

Loan investments are defined as traditional loan financings with no equity features. Debt investments are defined as debt financings that include one or more equity features such as conversion rights, stock purchase warrants, and/or stock purchase options. A financing may also be categorized as a debt financing if it is accompanied by the direct purchase of an equity interest in the company.

The Corporation uses several approaches to determine the fair value of an investment. The main approaches are:

Loan and debt securities are valued at cost when it is representative of the fair value of the investment or sufficient assets or liquidation proceeds are expected to exist from a sale of a portfolio company at its estimated fair value. However, they may be valued at an amount other than cost given the carrying interest rate versus the related inherent portfolio risk of the investment. A loan or debt instrument may be reduced in value if it is judged to be of poor quality, collection is in doubt or insufficient liquidation proceeds exist.

Equity securities may be valued using the “asset approach”, “market approach” or “income approach.” The asset approach involves estimating the liquidation value of the portfolio company’s assets. To the extent the value exceeds the remaining principal amount of the debt or loan securities of the portfolio company, the fair value of such securities is generally estimated to be their cost. However, where value is less than the remaining principal amount of the loan and debt securities, the Corporation may discount the value of an equity security. The market approach uses observable prices and other relevant information generated by similar market transactions. It may include the use of market multiples derived from a set of comparables to assist in pricing the investment. Additionally, the Corporation adjusts valuations if a subsequent significant equity financing has occurred that includes a meaningful portion of the financing by a sophisticated, unrelated new investor. The income approach employs a cash flow and discounting methodology to value an investment.

ASC 820 classifies the inputs used to measure fair value into the following hierarchy:

Level 1: Quoted prices in active markets for identical assets or liabilities, used in the Corporation’s valuation at the measurement date. Under the valuation policy, the Corporation values unrestricted publicly traded companies, categorized as Level 1 investments, at the average closing bid price for the last three trading days of the reporting period.

Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Level 3: Unobservable and significant inputs to determining the fair value.

Financial assets are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Any changes in estimated fair value are recorded in the statement of operations.

There were no Level 1 or 2 investments as of ~~September~~June 30, 2019 or December 31, 2018.

In the valuation process, the Corporation values restricted securities, categorized as Level 3 investments, using information from these portfolio companies, which may include:

Audited and unaudited statements of operations, balance sheets and operating budgets;

Current and projected financial, operational and technological developments of the portfolio company;

Current and projected ability of the portfolio company to service its debt obligations;

The current capital structure of the business and the seniority of the various classes of equity if a deemed liquidation event were to occur;

Pending debt or capital restructuring of the portfolio company;

Current information regarding any offers to purchase the investment, or recent fundraising transactions;

Current ability of the portfolio company to raise additional financing if needed;

Changes in the economic environment which may have a material impact on the operating results of the portfolio company;

Internal circumstances and events that may have an impact (both positive and negative) on the operating performance of the portfolio company;

Qualitative assessment of key management;

Contractual rights, obligations or restrictions associated with the investment; and

Other factors deemed relevant by the Corporation’s management to assess valuation.

The valuation may be reduced if a portfolio company’s performance and potential have deteriorated significantly. If the factors that led to a reduction in valuation are overcome, the valuation may be readjusted.

Equity Securities

Equity securities may include preferred stock, common stock, warrants and limited liability company membership interests.

The significant unobservable inputs used in the fair value measurement of the Corporation’s equity investments are earnings before interest, tax and depreciation and amortization (EBITDA) and revenue multiples, where applicable, the financial and operational performance of the business, and the debt and senior equity preferences that may exist in a deemed liquidation event. Standard industry multiples may be used when available; however, the Corporation’s portfolio companies are typically small and in early stages of development and these industry standards may be adjusted to more closely match the specific financial and operational performance of the portfolio company. Due to the nature of certain investments, fair value measurements may be based on other criteria, which may include third party appraisals. Significant changes in any of these unobservable inputs may result in a significantly higher or lower fair value estimate.

Another key factor used in valuing equity investments is a significant recent arms-length equity transaction entered into by the portfolio company with a sophisticated,non-strategic, unrelated, new investor. The terms of these equity transactions may not be identical to the equity transactions between the portfolio company and the Corporation, and the impact of the difference in transaction terms on the market value of the portfolio company may be difficult or impossible to quantify.

When appropriate the Black-Scholes pricing model is used to estimate the fair value of warrants for accounting purposes. This model requires the use of highly subjective inputs including expected volatility and expected life, in addition to variables for the valuation of minority equity positions in small private and early stage companies. Significant changes in any of these unobservable inputs may result in a significantly higher or lower fair value estimate.

For recent investments of less than one year old, the Corporation generally relies on the cost basis, which is deemed to represent the fair value, unless other fair value inputs are identified causing the Corporation to depart from this basis.

Loan and Debt Securities

The significant unobservable inputs used in the fair value measurement of the Corporation’s loan and debt securities are the financial and operational performance of the portfolio company, similar debt with similar terms with other portfolio companies, as well as the market acceptance for the portfolio company’s products or services. These inputs will likely provide an indicator as to the probability of principal recovery of the investment. The Corporation’s loan and debt investments are often junior secured or unsecured ~~debt~~ securities. Fair value may also be determined based on other criteria where appropriate. Significant changes to the unobservable inputs may result in a change in fair value. For recent investments, the Corporation generally relies on the cost basis, which is deemed to represent the fair value, unless other fair value inputs are identified causing the Corporation to depart from this basis.

The following table provides a summary of the significant unobservable inputs used to determine the fair value of the Corporation’s Level 3 portfolio investments as of ~~September~~June 30, ~~2018:~~2019:

Investment Type
   Market
Approach
EBITDA
Multiple    Market
Approach
Liquidation
Seniority    Market
Approach
Revenue
Multiple    Market
Approach
Transaction
Pricing    Totals
Non-Control/Non-Affiliate Equity
   $ —      $ 25    $ 2,645,496    $ 6,209,950    $ 8,855,471










Non-Control/Non-Affiliate Debt
   $ 949,040    1,739,639    3,500,000    300,000    6,488,679










TotalNon-Control/Non-Affiliate
   $ 949,040    $ 1,739,664    $ 6,145,496    $ 6,509,950    $ 15,344,150










Affiliate Equity
   $ 4,420,000    $ 22,841    $ 4,053,430    $ 1,031,477    $ 9,527,748










Affiliate Debt
   5,935,859    —      —      1,265,000    7,200,859










Total Affiliate
   $ 10,355,859    $ 22,841    $ 4,053,430    $ 2,296,477    $ 16,728,607










Control Equity
   $ —      $ —      $ 99,500    $ —      $ 99,500










Total Control
   $ —      $ —      $ 99,500    $ —      $ 99,500










Total Level 3 Investments
   $ 11,304,899    $ 1,762,505    $ 10,298,426    $ 8,806,427    $ 32,172,257










Range
   4X-9X    1X    1X-3.3X    Not Applicable
Unobservable Input
   EBITDA Multiple    Asset Value    Revenue Multiple    Transaction Price
Weighted Average
   5.6X    1X    2.1X    Not Applicable


Investment Type	Market Approach EBITDA Multiple		Market Approach Liquidation Seniority		Market Approach Revenue Multiple		Market Approach Transaction Pricing		Asset Value Liquidation Seniority		Totals
Non-Control/Non-Affiliate Equity	$	—	$	3,202,757	$	2,645,496	$	3,694,470	$	—	$	9,542,723
Non-Control/Non-Affiliate Loan and Debt		500,000		1,871,439		—		1,025,777		—		3,339,216

TotalNon-Control/Non-Affiliate	$	500,000	$	5,074,196	$	2,645,496	$	4,720,247		—	$	12,939,939

Affiliate Equity	$	—	$	22,841	$	3,768,430	$	7,004,489	$	1,943,031	$	10,795,760
Affiliate Loan and Debt		—		—		3,588,315		1,975,000		—		7,506,346

Total Affiliate	$	—	$	22,841	$	7,356,745	$	8,979,489	$	1,943,031	$	18,302,106

Total Level 3 Investments	$	500,000	$	5,097,037	$	10,002,241	$	13,699,736	$	1,943,031	$	31,242,045


Range		6.0X		1X		1X-4X		Not Applicable		Not Applicable

Unobservable Input		EBITDA Multiple		Asset Value		Revenue Multiple		Transaction Price		Asset Value

Weighted Average		6.0X		1X		2.6X		Not Applicable		Not Applicable

The following table provides a summary of the components of Level 1, 2 and 3 Assets Measured at Fair Value at ~~September~~June 30, ~~2018:~~2019:

   Fair Value Measurements at Reported Date Using
Description
   September 30,
2018    Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable Inputs
(Level 2)    Other Significant
Unobservable
Inputs
(Level 3)
Loan investments
   $ 4,325,000    $ —      $ —      $ 4,325,000
Debt investments
   9,364,538    —      —      9,364,538
Equity investments
   18,482,719    —      —      18,482,719








Total
   $ 32,172,257    $ —      $ —      $ 32,172,257


			Fair Value Measurements at Reported Date Using
Description	June 30, 2019		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Other Significant Unobservable Inputs (Level 3)
Loan investments	$	2,145,692	$	—	$	—	$	2,145,692
Debt investments		8,757,870		—		—		8,757,870
Equity investments		20,338,483		—		—		20,338,483

Total	$	31,242,045	$	—	$	—	$	31,242,045

The following table provides a summary of the components of Level 1, 2 and 3 Assets Measured at Fair Value ~~on a Recurring Basis~~ at December 31, ~~2017:~~

   Fair Value Measurements at Reported Date Using
Description
   December 31,
2017    Quoted Prices in
Active Markets for
Identical Assets
(Level 1)    Significant
Observable Inputs
(Level 2)    Other Significant
Unobservable
Inputs
(Level 3)
Loan investments
   $ 3,550,000    $ —      $ —      $ 3,550,000
Debt investments
   10,096,244    —      —      10,096,244
Equity investments
   18,637,818    —      —      18,637,818








Total
   $ 32,284,062    $ —      $ —      $ 32,284,062

~~The following table provides a summary of changes in Assets Measured at Fair Value Using Significant Unobservable Inputs (Level 3) for the nine months ended September 30,~~ 2018:

   Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Venture Capital Investments
Description
   Loan
Investments    Debt
Investments    Equity
Investments    Total
Ending Balance, December 31, 2017, of Level 3 Assets
   $ 3,550,000    $ 10,096,244    $ 18,637,818    $ 32,284,062
Realized loss included in net change in net assets from operations:

Intrinsiq Material, Inc. (Intrinsiq)
   —      —      (1,125,673 )    (1,125,673 )








Total Realized Losses
   —      —      (1,125,673 )    (1,125,673 )
Unrealized Losses included in net change in net assets from operations:

Empire Genomics, LLC (Empire Genomics)
   —      (901,360 )    —      (901,360 )
First Wave Products Group, LLC (First Wave)
   —      (250,000 )    —      (250,000 )
GiveGab, Inc. (Givegab)
   —      —      191,907    191,907
Intrinsiq
   —      —      725,673    725,673
SOMS Technologies, LLC (SOMS)
   —      —      (498,348 )    (498,348 )








Total Unrealized Losses    —      (1,151,360 )    419,232    (732,128 )
Purchases of Securities/Changes toSecurities/Non-cash conversions:

BeetNPath, LLC (Beetnpath)
   —      140,000    —      140,000
Centivo Corporation (Centivo)
   —      —      201,342    201,342
Empire Genomics
   —      274,106    —      274,106
Genicon, Inc. (Genicon)
   —      153,548    —      153,548
GoNoodle, Inc. (GoNoodle)
   —      7,739    —      7,739
KnowledgeVision Systems, Inc. (Knowledgevision)
   775,000    —      —      775,000
Microcision LLC (Microcision)
   —      14,392    —      14,392
SciAps, Inc. (Sciaps)
   —      —      250,000    250,000








Total Purchases of Securities/Changes toSecurities/Non-cash conversions
   775,000    589,785    451,342    1,816,127
Repayments and Sale of Securities:

Empire Genomics
   —      (21,665 )    —      (21,665 )
Knoa Software, Inc. (Knoa)
   —      (48,466 )    —      (48,466 )








Total Repayments and Sale of Securities
   —      (70,131 )    —      (70,131 )
Transfers within Level 3
   —      (100,000 )    100,000    —








Ending Balance, September 30, 2018, of Level 3 Assets
   $ 4,325,000    $ 9,364,538    $ 18,482,719    $ 32,172,257








Change in unrealized depreciation on investments for the period included in changes in net assets

   ($ 732,128 )


Net realized loss on investments for the period included in changes in net assets

      ($ 1,125,673 )


			Fair Value Measurements at Reported Date Using
Description	December 31, 2018		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Other Significant Unobservable Inputs (Level 3)
Loan investments	$	4,935,777	$	—	$	—	$	4,935,777
Debt investments		9,397,979		—		—		9,397,979
Equity investments		20,330,048		—		—		20,330,048

Total	$	34,666,804	$	—	$	—	$	34,666,804

The following table provides a summary of changes in Assets Measured at Fair Value Using Significant Unobservable Inputs (Level 3) for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2019:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Venture Capital Investments												Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Venture Capital Investments
Description	Loan Investments			Debt Investments			Equity Investments			Total			Loan Investments			Debt Investments			Equity Investments			Total
Ending Balance, December 31, 2016, of Level 3 Assets	$	3,200,000		$	6,700,221		$	17,600,260		$	27,500,481
Ending Balance, December 31, 2018, of Level 3 Assets													$	4,935,777		$	9,397,979		$	20,333,048		$	34,666,804
Realized gain included in net change in net assets from operations:
Advantage 24/7 LLC (Advantage 24/7)														—			—			(40,500	)		(40,500	)
Gemcor II LLC (Gemcor)														—			—			39,893			39,893
SOMS Technologies, LLC (SOMS)														—			—			(472,632	)		(472,632	)

*Total Realized Gains and Losses*														—			—			(392,239	)		(392,239	)

Unrealized Gains and Losses included in net change in net assets from operations:
ACV Auctions, Inc. (ACV Auctions)		—			—			119,356			119,356
Athenex, Inc. (Athenex)		—			—			308,336			308,336
BeetNPath, LLC (Beetnpath)		—			—			29,723			29,723			—			(262,627	)		(261,277	)		(523,904	)
City Dining Cards, Inc. (Loupe)		—			—			(500,000	)		(500,000	)
Genicon, Inc. (Genicon)														—			(215,080	)		(537,500	)		(752,580	)
Mercantile Adjustment Bureau, LLC (Mercantile)		—			(250,000	)		—			(250,000	)		—			(200,000	)		—			(200,000	)
SciAps, Inc. (Sciaps)		—						(300,000	)		(300,000	)		—			—			(385,000	)		(385,000	)
Teleservices Solutions Holdings, LLC (Teleservices)		—						(395,398	)		(395,398	)
SocialFlow, Inc. (Socialflow)														—			—			(1,071,300	)		(1,071,300	)
SOMS														—			—			472,632			472,632
Tilson Technology Management, Inc. (Tilson)														—			—			1,860,000			1,860,000

*Total Unrealized Gains and Losses*		—			(250,000	)		(737,983	)		(987,983	)		—			(677,707	)		77,555			(600,152	)

Purchases of Securities/Changes toSecurities/Non-cash conversions:
Beetnpath		—			100,000			11,277			111,277
Centivo Corporation (Centivo)		—			100,000			—			100,000
eHealth Global Technologies, Inc. (eHealth)		2,000,000			—			—			2,000,000
Advantage 24/7														140,000			—			—			140,000
Empire Genomics, LLC (Empire Genomics)		—			201,489			—			201,489			—			49,821			—			49,821
Genicon, Inc. (Genicon)		300,000			893,588			120,000			1,313,588
Genicon														—			417,809			—			417,809
GoNoodle, Inc. (GoNoodle)		—			7,662			—			7,662			—			5,205			—			5,205
KnowledgeVision Systems, Inc. (Knowledge Vision)		50,000			—			—			50,000			150,000			—			—			150,000
Mercantile		—			107,497			—			107,497
Microcision LLC (Microcision)		—			17,403			—			17,403			—			9,678			—			9,678
Sciaps		—			—			274,274			274,274
Tilson														—			—			500,012			500,012

*Total Purchases of Securities/Changes toSecurities/Non-cash conversions*		2,350,000			1,427,639			405,551			4,183,190			290,000			482,513			500,012			1,272,525

Repayments and Sale of Securities:
Advantage 24/7														(25,000	)		—			(140,000	)		(165,000	)
eHealth Global Technologies, Inc. (eHealth)														(3,500,000	)		—			—			(3,500,000	)
Gemcor														—			—			(39,893	)		(39,893	)

*Total Repayments and Sale of Securities*														(3,525,000	)		—			(39,893	)		(3,704,893	)
Transfers within Level 3		(2,000,000	)		1,450,000			550,000			—			444,915			(444,915	)		—			—
Transfers out of Level 3		—			—			(725,000	)		(725,000	)

Ending Balance, September 30, 2017, of Level 3 Assets	$	3,550,000		$	9,327,860		$	17,092,828		$	29,970,688
Ending Balance, June 30, 2019, of Level 3 Assets													$	2,145,692		$	8,757,870		$	20,338,483		$	31,242,045

Change in unrealized depreciation on investments for the period included in changes in net assets										($	987,983	)
Net realized gain on investments for the period included in changes in net assets										$	—


Change in unrealized depreciation on investments for the period included in changes in net assets	($	600,152	)

Net realized loss on investments for the period included in changes in net assets	($	301,378	)

The following table provides a summary of changes in Assets Measured at Fair Value Using Significant Unobservable Inputs (Level 3) for the six months ended June 30, 2018:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Venture Capital Investments
Description	Loan Investments		Debt Investments			Equity Investments			Total
Ending Balance, December 31, 2017, of Level 3 Assets	$	3,550,000	$	10,096,244		$	18,637,818		$	32,284,062
Unrealized Losses included in net change in net assets from operations:
Empire Genomics, LLC (Empire Genomics)		—		(651,489	)		—			(651,489	)
First Wave Products Group, LLC (First Wave)		—		(250,000	)		—			(250,000	)
GiveGab, Inc. (Givegab)		—		—			191,907			191,907
SOMS Technologies, LLC (SOMS)		—		—			(498,348	)		(498,348	)

*Total Unrealized Losses*		—		(901,489	)		(306,441	)		(1,207,930	)
Purchases of Securities/Changes toSecurities/Non-cash conversions:
Centivo Corporation (Centivo)		—		—			201,342			201,342
Genicon, Inc. (Genicon)		—		80,348			—			80,348
GoNoodle, Inc. (GoNoodle)		—		5,153			—			5,153
KnowledgeVision Systems, Inc. (Knowledgevision)		—		775,000			—			775,000
Microcision LLC (Microcision)		—		9,582			—			9,582
SciAps, Inc. (Sciaps)		—		—			250,000			250,000

*Total Purchases of Securities/Changes toSecurities/Non-cash conversions*		—		870,083			451,342			1,321,425
Repayments and Sale of Securities:
Empire Genomics		—		(21,665	)		—			(21,665	)
Knoa Software, Inc. (Knoa)		—		(48,466	)		—			(48,466	)

*Total Repayments and Sale of Securities*		—		(70,131	)		—			(70,131	)
Transfers within Level 3		—		(100,000	)		100,000			—

Ending Balance, June 30, 2018, of Level 3 Assets	$	3,550,000	$	9,894,707		$	18,882,719		$	32,327,426


Change in unrealized depreciation on investments for the period included in changes in net assets	($	1,207,930	)

NOTE 4. OTHER ASSETS

At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, other assets was comprised of the following:


	September 30, 2018		December 31, 2017		June 30, 2019		December 31, 2018
Prepaid expenses	$	34,621	$	—	$	334,359		$ —
Operating receivables		2,899		3,204		11,519		11,428
Equipment (net)		840		2,490		132		262
Dividend receivable		—		37,160

Total other assets	$	38,360	$	42,854	$	346,010		$11,690

Note 5. COMMITMENTS AND CONTINGENCIES

The Corporation had ~~one commitment~~no commitments at June 30, 2019.

In addition, the Corporation analyzed the new Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 842 standard, Leases, and deemed the effect on the Corporation’s consolidated financial statements to ~~fund a $50,000 investment at September 30, 2018.~~be immaterial.

Note 6. SBA DEBENTURES

Pursuant to FASB Accounting Standard Update (ASU)2015-03, the debt origination costs associated with the SBA debt obligations are presented as a direct deduction of the related debt obligation.


	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
Debentures guaranteed by the SBA	$	8,000,000		$	8,000,000		$	11,000,000		$	8,750,000
Less unamortized issue costs		(124,277	)		(144,827	)		(231,925	)		(195,557	)

Debentures guaranteed by the SBA, net	$	7,875,723		$	7,855,173		$	10,768,075		$	8,554,443

Note 7. CHANGES IN STOCKHOLDERS’ EQUITY

The following schedule analyzes the changes in stockholders’ equity section of the Consolidated Statement of Financial Position for the three months and six months ended June 30, 2019 and June 30, 2018:


	Common Stock		Capital in excess of par value		Accumulated Net Investment Loss			Undistributed Net Realized Gain on Investments			Net Unrealized Depreciation on Investments			Treasury Stock, at cost			Total Stockholders’ Equity
April 1, 2019	$	686,304	$	10,581,789	($	1,642,785	)	$	26,252,574		($	2,429,175	)	($	1,469,105	)	$	31,979,602
Net investment loss		—		—		(143,300	)		—			—			—			(143,300	)
Net realized loss on sales and dispositions of investments		—		—		—			(332,509	)		—			—			(332,509	)
Change in unrealized depreciation on investments		—		—		—			—			(871,740	)		—			(871,740	)

June 30, 2019	$	686,304	$	10,581,789	($	1,786,085	)	$	25,920,065		($	3,300,915	)	($	1,469,105	)	$	30,632,053


	Common Stock		Capital in excess of par value		Accumulated Net Investment Loss			Undistributed Net Realized Gain on Investments			Net Unrealized Depreciation on Investments			Treasury Stock, at cost			Total Stockholders’ Equity
April 1, 2018	$	686,304	$	10,581,789	($	1,770,475	)	$	27,215,738		($	3,845,979	)	($	1,469,105	)	$	31,398,272
Net investment loss		—		—		(37,768	)		—			—			—			(37,768	)
Change in unrealized depreciation on investments		—		—		—			—			(593,526	)		—			(593,526	)

June 30, 2018	$	686,304	$	10,581,789	($	1,808,243	)	$	27,215,738		($	4,439,505	)	($	1,469,105	)	$	30,766,978


	Common Stock		Capital in excess of par value		Accumulated Net Investment Loss			Undistributed Net Realized Gain on Investments			Net Unrealized Depreciation on Investments			Treasury Stock, at cost			Total Stockholders’ Equity
January 1, 2019	$	686,304	$	10,581,789	($	1,665,552	)	$	26,221,443		($	2,830,692	)	($	1,469,105	)	$	31,524,187
Net investment loss		—		—		(120,533	)		—			—			—			(120,533	)
Net realized loss on sales and dispositions of investments		—		—		—			(301,378	)		—			—			(301,378	)
Change in unrealized depreciation on investments		—		—		—			—			(470,223	)		—			(470,223	)

June 30, 2019	$	686,304	$	10,581,789	($	1,786,085	)	$	25,920,065		($	3,300,915	)	($	1,469,105	)	$	30,632,053


	Common Stock		Capital in excess of par value		Accumulated Net Investment Loss			Undistributed Net Realized Gain on Investments			Net Unrealized Depreciation on Investments			Treasury Stock, at cost			Total Stockholders’ Equity
January 1, 2018	$	686,304	$	10,581,789	($	1,597,146	)	$	27,215,738		($	3,498,895	)	($	1,469,105	)	$	31,918,685
Net investment loss		—		—		(211,097	)		—			—			—			(211,097	)
Change in unrealized depreciation on investments		—		—		—			—			(940,610	)		—			(940,610	)

June 30, 2018	$	686,304	$	10,581,789	($	1,808,243	)	$	27,215,738		($	4,439,505	)	($	1,469,105	)	$	30,766,978

Note 7.8. FINANCIAL HIGHLIGHTS

The following schedule provides the financial highlights, calculated based on weighted average shares outstanding, for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017:~~2018:


	Nine months ended September 30, 2018 (Unaudited)			Nine months ended September 30, 2017 (Unaudited)			Six months ended June 30, 2019 (Unaudited)			Six months ended June 30, 2018 (Unaudited)
Income from investment operations (1):
Investment income	$	0.23		$	0.17		$	0.21		$	0.12
Operating expenses		0.24			0.25			0.24			0.16

Investment loss before income taxes		(0.01	)		(0.08	)		(0.03	)		(0.04	)
Income tax benefit		0.00			(0.03	)		(0.01	)		(0.01	)

Net investment loss		(0.01	)		(0.05	)		(0.02	)		(0.03	)
Net realized and unrealized loss on investments		(0.20	)		(0.10	)		(0.12	)		(0.15	)

Decrease in net asset value		(0.21	)		(0.15	)		(0.14	)		(0.18	)
Net asset value, beginning of period		5.05			5.16			4.99			5.05

Net asset value, end of period	$	4.84		$	5.01		$	4.85		$	4.87

Per share market price, end of period	$	2.40		$	2.96		$	2.62		$	2.69

Total return based on market value		(20.5	%)		(6.3	%)		4.80	%		(10.93	%)
Total return based on net asset value		(4.2	%)		(2.9	%)		(2.83	%)		(3.61	%)
Supplemental data:
Ratio of operating expenses before income taxes to average net assets		4.8	%		4.9	%		4.87	%		3.39	%
Ratio of operating expenses including income taxes to average net assets		2.9	%		3.2	%		3.87	%		2.30	%
Ratio of net investment loss to average net assets		(0.2	%)		(0.9	%)		(0.39	%)		(0.67	%)
Portfolio turnover		4.2	%		13.4	%		3.2	%		3.8	%
Net assets, end of period	$	30,587,676		$	31,692,476		$	30,632,053		$	30,766,978
Weighted shares outstanding, end of period		6,321,988			6,321,988			6,321,988			6,321,988

(1)	Per share data are based on weighted average shares outstanding and the results are rounded to the nearest cent.

The Corporation’s interim period results could fluctuate as a result of a number of factors; therefore results for any interim period should not be relied upon as being indicative of performance for the full year or in future periods.

~~Item 2.~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes included elsewhere in this report. Historical results and percentage relationships among any amounts in the consolidated financial statements are not necessarily indicative of trends in operating results for any future periods.

FORWARD LOOKING STATEMENTS

Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report that do not relate to present or historical conditions are “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21E of the Securities Exchange Act of 1934, as amended. Additional oral or written forward-looking statements may be made by us from time to time, and forward-looking statements may be included in documents that are filed with the Securities and Exchange Commission. Forward-looking statements involve risks and uncertainties that could cause our results or outcomes to differ materially from those expressed in the forward-looking statements. Forward-looking statements may include, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “forecasts,” “intends,” “possible,” “expects,” “estimates,” “anticipates,” or “plans” and similar expressions are intended to identify forward-looking statements. Among the important factors on which such statements are based are assumptions concerning the state of the United States economy and the local markets in which our portfolio companies operate, the state of the securities markets in which the securities of our portfolio companies could be traded, liquidity within the United States financial markets, and inflation. Forward-looking statements are also subject to the risks and uncertainties described under the caption “Risk Factors” contained in Part II, Item 1A of this report and in Part I, Item 1A of our Annual Report on Form10-K for the year ended December 31, ~~2017.~~2018.

There may be other factors not identified that affect the accuracy of our forward-looking statements. Further, any forward-looking statement speaks only as of the date when it is made and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time that may cause our business not to develop as we expect, and we cannot predict all of them.

Overview

We are currently an internally managed investment company that lends to and invests in small companies, often concurrently with other investors. We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). As a BDC, we are required to comply with certain regulatory requirements. We have historically made the majority of our investments through our wholly-owned subsidiary, Rand Capital SBIC, Inc. (“Rand SBIC”), which operates as a small business investment company (“SBIC”) and has been licensed by the U.S. Small Business Administration (“SBA”) since 2002. ~~During 2017 we established a second SBIC subsidiary, Rand Capital SBIC II, L.P. (“~~Rand SBIC ~~II”) and began making investments through this SBIC subsidiary. During the first quarter of 2018, together with the SBA, we determined that the optimal structure~~ was ~~to revert back to investing in small businesses through our original SBIC, Rand SBIC, and the assets of Rand SBIC II were transferred to Rand SBIC. Rand SBIC has applied~~approved for an additional $6$6.0 million in new SBA leverage commitments during 2018 and has drawn down $3.0 million of that leverage as of June 30, 2019.

In January 2019, we entered into a stock purchase agreement to sell approximately 8.3 million shares of our common stock to East Asset Management, LLC (“East”) for $25 million in cash and portfolio assets, which will be income-producing instruments. Additionally, upon closing of the pending Transactions (the “Transactions”), a new entity, Rand Capital Management LLC (“RCM”) will be retained by Rand to be its investment advisor as an external management company. RCM will have the same management team that is currently ~~undergoing~~at Rand. Rand’s shareholders approved all proposals related to the ~~review and approval process.~~Transactions at a special meeting of shareholders that was held on May 16, 2019.

The closing of the sale and issuance of common stock pursuant to the stock purchase agreement, as well as the externalization of the management structure, remains conditioned upon receipt of required regulatory approvals. Rand expects the Transactions to close in the second half of 2019, subject to receipt of required regulatory approval.

Following the closing of the above-described Transactions and contingent upon meeting certaintax-related conditions, we intend to elect to become a regulated investment company (“RIC”) for U.S. federal tax purposes. This will enable the pass through of capital gains and investment income to shareholders without payment of corporate-level U.S. federal income tax by Rand.

Outlook

At the end of the ~~third~~second quarter of ~~2018,~~2019, we had ~~approximately $4.4~~$8.6 million in cash and cash equivalents available for future investments and ~~expenses.~~ expenses, an increase of $4.6 million as compared to the end of 2018. The increase was primarily due to proceeds from a $3.5 million loan payoff by a portfolio company and $2.25 million of additional SBA leverage drawn down during the six months ended June 30, 2019.

We believe the combination of cash ~~and cash equivalents~~ on hand, proceeds from portfolio exits, ~~anticipated additional~~ SBA leverage, and prospective investment income provide sufficient capital for us to continue to add new investments to our portfolio while reinvesting in existing portfolio companies that demonstrate continued growth potential. Additionally, upon the anticipated closing of the Transactions described above, we will have additional investments in our portfolio and additional cash to invest. The following short and long-term trends provide us confidence in our ability to grow Rand:

We expect that well run businesses will require capital to grow and should be able to compete effectively given the strong macroeconomic environment and eager reception of new technologies and service concepts.

We continue to manage risk by investing with other investors, when possible.

We are ~~actively~~ involved with the governance and management of a majority of our portfolio companies, which enables us to support their operating and marketing efforts and facilitate their growth.

As our portfolio expands, we are able to better leverage our infrastructure.

We believe the anticipated receipt of cash and portfolio assets from East, as well as the establishment of RCM as an external management company, will broaden our potential pipeline of investment opportunities in order to build our portfolio and grow further. Strategically, we expect to advance our efforts to increase our income-producing investments that can support a regular cash dividend for shareholders and complement our equity investments that drive capital appreciation.

We have sufficient cash to invest in new opportunities and to ~~opportunistically~~ repurchase shares. At ~~the~~period end, ~~of the third quarter of 2018,~~ we had authorization to repurchase an additional 458,954 shares of our ~~common stock.~~Common Stock. However, our prioritized use of cash continues to be growing our portfolio.

~~When our portfolio expands, we are able to better leverage our infrastructure.~~

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles (GAAP), which require the use of estimates and assumptions that affect the reported amounts of assets and liabilities. A summary of our critical accounting policies can be found in our Annual Report on Form10-K for the year ended December 31, ~~2017~~2018 under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Financial Condition


	September 30, 2018		December 31, 2017		Decrease			% Decrease
Overview:											June 30, 2019		December 31, 2018		Increase (Decrease)			% Increase (Decrease)
Total assets	$	38,658,226	$	40,133,913	($	1,475,687	)		(3.7	%)	$	41,699,064	$	40,521,724	$	1,177,340			2.9	%
Total liabilities		8,070,550		8,215,228		(144,678	)		(1.8	%)		11,067,011		8,997,537		2,069,474			23.0	%

Net assets	$	30,587,676	$	31,918,685	($	1,331,009	)		(4.2	%)	$	30,632,053	$	31,524,187	($	892,134	)		(2.8	%)

Net asset value per share (NAV) was ~~$4.84~~$4.85 at ~~September~~June 30, ~~2018~~2019 and ~~$5.05~~$4.99 at December 31, ~~2017.~~2018.

Our gross outstanding SBA debentures at ~~September~~June 30, ~~2018~~2019 were ~~$8,000,000~~$11,000,000 and will mature from 2022 through ~~2025.~~2029. Cash and cash equivalents approximated ~~14%~~28% of net assets at ~~September~~June 30, ~~2018,~~2019, as compared to ~~20%~~13% at December 31, ~~2017.~~2018.

Composition of Our Investment Portfolio

Our financial condition is dependent on the success of our portfolio holdings. We have invested substantially all of our assets in small tomedium-sized companies. The following summarizes our investment portfolio at the dates indicated.


	September 30, 2018			December 31, 2017			Increase (Decrease)			% Increase (Decrease)			June 30, 2019			December 31, 2018			(Decrease) Increase			% (Decrease) Increase
Investments, at cost	$	37,309,642		$	36,689,319		$	620,323			1.7	%	$	35,467,536		$	38,292,143		($	2,824,607	)		(7.4	%)
Unrealized depreciation, net		(5,137,385	)		(4,405,257	)		(732,128	)		16.6	%		(4,225,491	)		(3,625,339	)		600,152			16.6	%

Investments at fair value	$	32,172,257		$	32,284,062		($	111,805	)		(0.3	%)	$	31,242,045		$	34,666,804		($	3,424,759	)		(9.9	%)

Our total investments at fair value, as estimated by management and approved by our Board of Directors, approximated ~~105%~~102% of net assets at ~~September~~June 30, ~~2018~~2019 versus ~~101%~~110% of net assets at December 31, ~~2017.~~2018.

The change in investments during the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, at cost, is comprised of the following:


	Cost Increase (Decrease)
New investments:				Cost Increase (Decrease)
Tilson Technology Management, Inc. (Tilson)				$	500,012
Genicon Inc. (Genicon)					250,000
KnowledgeVision Systems, Inc. (Knowledgevision)	$	775,000			150,000
SciAps, Inc. (Sciaps)		250,000
Centivo Corporation (Centivo)		200,000
BeetNPath, LLC (Beetnpath)		140,000
Advantage 24/7 LLC (Advantage 24/7)					140,000

Total of new investments		1,365,000			1,040,012

Other changes to investments:
Genicon interest conversion and OID amortization					167,809
Empire Genomics, LLC (Empire Genomics) capitalized fee income and interest conversion		274,106			49,821
Genicon Inc. (Genicon) interest conversion and OID amortization		153,548
Microcision LLC (Microcision) interest conversion		14,392			9,678
GoNoodle, Inc. (GoNoodle) interest conversion		7,740			5,205
Centivo interest conversion		1,342

Total of other changes to investments		451,128			232,513
Investments repaid, sold or liquidated:
Intrinsiq Material, Inc. (Intrinsiq) realized loss		(1,125,673	)
Knoa Software Inc. (Knoa) repayment		(48,466	)
Empire Genomics repayment		(21,666	)

Investments repaid, sold, liquidated or converted:
eHealth Global Technologies, Inc. (eHealth) loan repayment					(3,500,000	)
SOMS Technologies, LLC (SOMS) realized loss					(472,632	)
Advantage 24/7 investment conversion and loan repayment					(124,500	)

Total of investments repaid, sold or liquidated		(1,195,808	)		(4,097,132	)


Net change in investments, at cost	$	620,323		($	2,824,607	)

Results of Operations

Our principal investment objective is to achieve long-term capital appreciation on our equity investments while maintaining a current cash flow from our debt instruments and pass-through equity instruments to fund expenses. Therefore, we invest in a variety of financial instruments to provide a current return on a portion of the investment portfolio.

Comparison of the three months ended ~~September~~June 30, ~~2018~~2019 to the three months ended ~~September~~June 30, ~~2017~~2018

Investment Income


	Three months ended September 30, 2018		Three months ended September 30, 2017		Increase			% Increase			Three months ended June 30, 2019		Three months ended June 30, 2018		(Decrease) Increase			% (Decrease) Increase
Interest from portfolio companies	$	450,289	$	309,922	$	140,367			45.3	%	$	315,489	$	315,700	($	211	)		(0.1	%)
Interest from other investments		7,872		6,348		1,524			24.0	%		53,538		7,735		45,803			592.2	%
Dividend and other investment income		48,856		76,813		(27,957	)		(36.4	%)		207,060		78,942		128,118			162.3	%
Fee income		155,285		3,936		151,349			3,845.2	%		6,959		11,141		(4,182	)		(37.5	%)

Total investment income	$	662,302	$	397,019	$	265,283			66.8	%	$	583,046	$	413,518	$	169,528			41.0	%

The total investment income that iswas received on a current basis for the three months ended ~~September~~June 30, ~~2018 is~~2019 was received from ~~ten~~nine portfolio companies. This contrasts with the ~~nine~~eight portfolio companies generating current income for the three months ended ~~September~~June 30, ~~2017.~~2018.

Interest from portfolio companies – Interest from portfolio companies ~~was~~remained approximately ~~45% higher~~the same during the three months ended ~~September~~June 30, ~~2018~~2019 versus the same period in 2017 due to the fact that we have originated more income-producing debt investments in the last year. The new debt instruments were originated from Genicon Inc. (Genicon), eHealth Global Technologies, Inc. (eHealth) and several other portfolio companies. In addition, during the third quarter of 2018 the Empire Genomics loans were modified and resulted in a recording of interest that had previously not been accrued of approximately $91,000. This amount was capitalized into the loan balance as part of the debt modification and is~~non-recurring.~~

2018. The following investments are onnon-accrual status: BeetnPath, LLC (Beetnpath),G-TEC Natural Gas Systems(G-Tec), ~~First Wave Products Group, LLC (First Wave), OnCore Golf Technology, Inc. (Oncore)~~ and a portion of the Mercantile Adjustment Bureau, LLC (Mercantile) outstanding loan balances.

Interest from other investments— – The increase in interest from other investments is primarily due to higher interest rates and higher average cash balance during the three months ended ~~September~~June 30, ~~2018~~2019 versus the same period in ~~2017.~~2018.

Dividend and other investment income— – Dividend income is comprised of cash distributions from limited liability companies (LLCs) and corporations in which we have invested. Our investment agreements with certain LLCs require those LLCs to distribute funds to us for payment of income taxes on our allocable share of the LLC’s profits. These portfolio companies may also elect to make additional discretionary distributions. Dividend income will fluctuate based upon the profitability of these LLCs and corporations and the timing of the distributions or the impact of new investments or divestitures. The dividend distributions for the respective periods were:


	Three months ended September 30, 2018		Three months ended September 30, 2017		Three months ended June 30, 2019		Three months ended June 30, 2018
Knoa Software, Inc. (Knoa)					$	193,934	$	—
Tilson Technology Management, Inc. (Tilson)						13,126		9,687
Carolina Skiff LLC (Carolina Skiff)	$	39,169	$	41,999		—		39,169
Tilson Technology Management, Inc. (Tilson)		9,687		5,000
New Monarch Machine Tool, Inc. (New Monarch)		—		27,409		—		27,409
Empire Genomics LLC (Empire Genomics)		—		2,405		—		2,677

Total dividend and other investment income	$	48,856	$	76,813	$	207,060	$	78,942

Fee income— – Fee income generally consists of the revenue associated with the amortization of financing fees charged to the portfolio companies upon successful closing of SBIC financings, ~~and~~ income from portfolio company board attendance fees and other miscellaneous fees. The financing fees are amortized ratably over the life of the instrument associated with the fees. The unamortized fees are carried on the Consolidated Statement of Financial Position in the line item “Deferred revenue.”

The income associated with the amortization of financing fees was $6,459 and $10,141 for the three months ended June 30, 2019 and 2018, respectively. The board fees were $500 and $1,000 for the three months ended June 30, 2019 and 2018, respectively.

Expenses


	Three months ended June 30, 2019		Three months ended June 30, 2018		Increase		% Increase
Total expenses	$	824,077	$	473,670	$	350,407		74.0	%

Expenses predominately consist of interest expense on outstanding SBA borrowings, compensation expense, and general and administrative expenses, including stockholder and office operating expenses and professional fees.

The increase in expenses during the three months ended June 30, 2019 versus the same period in 2018 was primarily caused by a 395%, or $254,907, increase in shareholder expenses and a 198%, or $73,932, increase in professional fees. During the three months ended June 30, 2019, we held a special meeting of shareholders to approve all proposals related to the Transactions. We incurred additional shareholder expenses and professional fees related to this aforementioned special shareholder meeting, and the regulatory procedures that are required with such a meeting.

In addition, we deferred an additional $25,000 in stock issuance costs attributable to the Transactions during the three months ended June 30, 2019. These expenses are intended to be offset against the equity capital raise when the Transactions close, or expensed if the Transactions are not completed. The deferred expenses are included on our Consolidated Statement of Financial Position at June 30, 2019 in the line item “Other assets.”

Net Realized Loss on Investments


	Three months ended June 30, 2019			Three months ended June 30, 2018		Change
Realized loss on investments before income taxes	($	432,739	)	$	—	($	432,739	)

During the three months ended June 30, 2019, we recognized a realized loss on our investment in SOMS Technologies, LLC as the company ceased doing business. In addition, we received a final distribution of proceeds from an investment we exited in 2016, Gemcor LLC (Gemcor) of $39,893.

Change in Unrealized Depreciation of Investments


	Three months ended June 30, 2019			Three months ended June 30, 2018			Change
Change in unrealized depreciation of investments before income taxes	($	1,122,448	)	($	756,441	)	($	366,007	)

The change in unrealized depreciation, before income taxes, for the three months ended June 30, 2019 was comprised of the following:


	Three months ended June 30, 2019
SocialFlow, Inc. (Socialflow)	($	750,000	)
Genicon, Inc. (Genicon)		(715,080	)
BeetNPath, LLC (Beetnpath)		(130,000	)
SOMS Technologies, LLC (SOMS)		472,632

Total change in net unrealized depreciation of investments before income taxes during the three months ended June 30, 2019	($	1,122,448	)

The valuations of our investments in Beetnpath and Socialflow were decreased after we reviewed each of the portfolio company’s operations, commercial progress against their business plan, and past and projected financial condition and determined that a valuation adjustment was necessary.

Our valuation of Genicon was decreased during the three months ended June 30, 2019 to revalue our holdings based upon the liquidation preferences of our securities and as a result of a recent round of financing.

We recognized a realized loss on our investment in SOMS during the three months ended June 30, 2019.

The change in unrealized depreciation, before income taxes, for the three months ended June 30, 2018 was comprised of the following:


	Three months ended June 30, 2018
Empire Genomics, LLC (Empire Genomics)	($	450,000	)
SOMS Technologies, LLC (SOMS)		(498,348	)
GiveGab, Inc. (Givegab)		191,907

Total change in net unrealized depreciation of investments before income taxes during the three months ended June 30, 2018	($	756,441	)

The valuations of our investments in Empire Genomics and SOMS were decreased after we reviewed each of the portfolio company’s operations and current and projected financial condition and determined that a valuation adjustment was necessary.

Givegab’s value was increased to the cost basis of the investment after a financial analysis of the portfolio company indicating continued improved performance.

All of these value adjustments resulted from a review by our management using the guidance set forth by ASC 820 and our established valuation policy.

Net Increase (Decrease) in Net Assets from Operations

We account for our operations under GAAP for investment companies. The principal measure of our financial performance is “net increase (decrease) in net assets from operations” on our consolidated statements of operations. For the three months ended June 30, 2019 and 2018, the net decrease in net assets from operations was ($1,347,549) and ($631,294), respectively.

Comparison of the six months ended June 30, 2019 to the six months ended June 30, 2018

Investment Income


	Six months ended June 30, 2019		Six months ended June 30, 2018		Increase		% Increase
Interest from portfolio companies	$	721,454	$	613,048	$	108,406		17.7	%
Interest from other investments		71,349		12,845		58,504		455.5	%
Dividend and other investment income		241,685		133,107		108,578		81.6	%
Fee income		267,928		17,327		250,601		1,446.3	%

Total investment income	$	1,302,416	$	776,327	$	526,089		67.8	%

Interest from portfolio companies – Interest from portfolio companies was approximately 18% higher during the six months ended June 30, 2019 versus the same period in 2018 due to the fact that we have originated more income-producing debt investments in the last year. The new debt instruments were originated from KnowledgeVision Systems, Inc. and Tech 2000, Inc.

The following investments are onnon-accrual status: BeetNPath, LLC (Beetnpath),G-TEC Natural Gas Systems(G-Tec) and a portion of the Mercantile Adjustment Bureau, LLC (Mercantile) outstanding loan balances.

Interest from other investments – The increase in interest from other investments is primarily due to higher interest rates and higher average cash balance during the six months ended June 30, 2019 versus the same period in 2018.

Dividend and other investment income – Dividend income is comprised of cash distributions from limited liability companies (LLCs) and corporations in which we have invested. Our investment agreements with certain LLCs require those LLCs to distribute funds to us for payment of income taxes on our allocable share of the LLC’s profits. These portfolio companies may also elect to make additional discretionary distributions. Dividend income will fluctuate based upon the profitability of these LLCs and corporations and the timing of the distributions or the impact of new investments or divestitures. The dividend distributions for the respective periods were:


	Six months ended June 30, 2019		Six months ended June 30, 2018
Knoa Software, Inc. (Knoa)	$	193,934	$	—
Carolina Skiff LLC (Carolina Skiff)		24,043		80,264
Tilson Technology Management, Inc. (Tilson)		23,708		19,376
New Monarch Machine Tool, Inc. (New Monarch)		—		27,409
Empire Genomics LLC (Empire Genomics)		—		6,058

Total dividend and other investment income	$	241,685	$	133,107

Fee income – Fee income generally consists of the revenue associated with the amortization of financing fees charged to the portfolio companies upon successful closing of SBIC financings, income from portfolio company board attendance fees and other miscellaneous fees. The financing fees are amortized ratably over the life of the instrument associated with the fees. The unamortized fees are carried on the balance sheet under the line item “Deferred revenue.”

The income associated with the amortization of financing fees was ~~$12,939~~$42,428 and ~~$3,936~~$15,327 for the ~~three~~six months ended ~~September~~June 30, 2019 and 2018, ~~and 2017,~~ respectively.

In addition, ~~we recorded~~the Corporation recognized aone-time ~~debt modification~~ fee of ~~approximately $142,000 during~~$225,000 in conjunction with the ~~three month ended September 30, 2018. We charged the fee to Empire Genomics and the fee was capitalized into the Empire Genomics loan balances as part~~repayment of the ~~debt modification.~~

eHealth loan instrument. The ~~portion of total investment income that is received in cash, on a current basis, is received from nine portfolio companies.~~board fees were $500 and $2,000 for the six months ended June 30, 2019 and 2018, respectively.

Expenses

   Three months ended
September 30, 2018    Three months ended
September 30, 2017    Increase    % Increase
Total expenses
   $ 447,800    $ 439,048    $ 8,752    2.0 %


	Six months ended June 30, 2019		Six months ended June 30, 2018		Increase		% Increase
Total expenses	$	1,513,812	$	1,062,234	$	451,578		42.5	%

The increase in expenses during the ~~three~~six months ended ~~September~~June 30, ~~2018~~2019 versus the same period in ~~2017~~2018 was primarily caused by a ~~69%~~195%, or ~~$33,312,~~$251,723, increase in shareholder expense and a 143%, or $198,900, increase in professional fees. ~~Professional~~Shareholder expense and professional fees ~~are~~were higher during the ~~third quarter of 2018~~six months ended June 30, 2019 because we ~~continue to incur~~incurred expenses in connection with ~~developing~~aforementioned Transactions, the special shareholder meeting held in May 2019 and ~~implementing our long-term growth strategy.~~the regulatory procedures that are required with such Transactions. These expenses also included external shareholder, legal, tax consulting and other advisory expenses to support ~~refinement of our strategy, which involved assessing options relative to~~ the complex regulatory environment in which we operate.

~~This increase was~~In addition, we deferred $266,000 in stock issuance costs attributable to the Transactions. These expenses are intended to be offset ~~by a $26,299 recovery~~against the equity capital raise when the Transactions close, or expensed if the Transactions are not completed. The deferred expenses are included on our Consolidated Statement of ~~bad debt expense associated with~~Financial Position at June 30, 2019 in the ~~Empire Genomics loan modification for the three months ended September 30, 2018. There was no bad debt expense (recovery) for the three months ended September 30, 2017.~~line item “Other assets.”

Net Realized ~~Losses~~Loss on Investments

   Three months ended
September 30, 2018    Three months ended
September 30, 2017    Change
Realized loss on investments before income taxes
   ($ 1,125,673 )    $ —      ($ 1,125,673 )


	Six months ended June 30, 2019			Six months ended June 30, 2018		Change
Realized loss on investments before income taxes	($	392,239	)	$	—	($	392,239	)

During the ~~three~~six months ended ~~September~~June 30, ~~2018,~~2019, we recognized a realized loss on our investment in ~~Intrinsiq Material, Inc. (Intrinsiq) when~~SOMS Technologies, LLC after the company ~~was sold~~ceased doing business and a $40,500 gain on our investment in Advantage 24/7 LLC after the company converted their equity into a debt instrument. In addition, we ~~did not receive any proceeds. There were no realized gains or losses during the three months ended September 30, 2017.~~received a final proceeds distribution of $39,893 from Gemcor II, LLC, a portfolio company we exited in 2016.

Change in Unrealized Depreciation of Investments

   Three months ended
September 30, 2018    Three months ended
September 30, 2017    Change
Change in unrealized depreciation of investments before income taxes
   $ 475,802    $ 111,000    $ 364,802


	Six months ended June 30, 2019			Six months ended June 30, 2018			Change
Change in unrealized depreciation of investments before income taxes	($	600,152	)	($	1,207,930	)	$	607,778

The change in unrealized depreciation, before income taxes, for the ~~three~~six months ended ~~September~~June 30, ~~2018~~2019 was comprised of the following:

   Three months ended
September 30,
2018
Empire Genomics, LLC (Empire Genomics)
   ($ 249,871 )
Intrinsiq Material, Inc. (Intrinsiq) realized loss
   725,673


Total change in net unrealized depreciation of investments before income taxes during the three months ended September 30, 2018
   $ 475,802


	Six months ended June 30, 2019
SocialFlow, Inc. (Socialflow)	($	1,071,300	)
Genicon, Inc. (Genicon)		(752,580	)
BeetNPath, LLC (Beetnpath)		(523,904	)
SciAps, Inc. (Sciaps)		(385,000	)
Mercantile Adjustment Bureau, LLC (Mercantile)		(200,000	)
SOMS Technologies, LLC		472,632
Tilson Technology Management, Inc. (Tilson)		1,860,000

Total change in net unrealized depreciation of investments before income taxes during the six months ended June 30, 2019	($	600,152	)

The ~~valuation~~valuations of our ~~investment~~investments in ~~Empire Genomics was~~Socialflow, Beetnpath, Sciaps and Mercantile were decreased after we reviewed each of the portfolio company’s operations, commercial progress against their business plan, and ~~current~~past and projected financial condition ~~after the debt modification,~~ and determined that a valuation adjustment was necessary.

~~Intrinsiq~~Our valuation of Genicon was ~~sold~~decreased during the ~~third~~six months ended June 30, 2019 to revalue our holdings based upon the liquidation preferences of our securities and as a result of a recent round of financing.

In accordance with our valuation policy, we increased the value of our holdings in Tilson based on a significant equity financing during the first quarter of ~~2018 and~~2019 with a sophisticated newnon-strategic outside investor at a higher valuation than their prior financing round valuation.

We recognized a realized loss ~~was recorded.~~on our investment in SOMS during the six months ended June 30, 2019.

The change in unrealized depreciation, before income taxes, for the ~~three~~six months ended ~~September 30, 2017 was comprised of the following:~~

   Three months ended
September 30,
2017
Athenex, Inc. (Athenex)
   $ 111,000


Total change in net unrealized depreciation of investments before income taxes during the three months ended September 30, 2017
   $ 111,000

Athenex completed an initial public offering (IPO) during the second quarter of 2017 and its shares of common stock are now publicly traded on the NASDAQ Global Select Market under the symbol “ATNX”. At September 30, 2017 we held 46,296 shares of the common stock of Athenex and valued these shares using the average bid price for the last three trading days of the reporting period, which was then discounted 10% due to restrictions on the sale of the shares. Subsequent to quarter end, the sale restrictions on our shares in Athenex common stock were removed and these shares became freely tradable.

~~All of these value adjustments resulted from a review by our management using the guidance set forth by ASC 820 and our established valuation policy.~~

~~Net (Decrease) Increase in Net Assets from Operations~~

We account for our operations under GAAP for investment companies. The principal measure of our financial performance is “net (decrease) increase in net assets from operations” on our consolidated statements of operations. For the three months ended September 30, 2018 and 2017, the net (decrease) increase in net assets from operations was ($179,302) and $57,931, respectively.

~~Comparison of the nine months ended September 30, 2018 to the nine months ended September 30, 2017~~

~~Investment Income~~

   Nine months ended
September 30,
2018    Nine months ended
September 30,
2017    Increase
(Decrease)    % Increase
(Decrease)
Interest from portfolio companies
   $ 1,063,337    $ 833,653    $ 229,684    27.6 %
Interest from other investments
   20,717    24,182    (3,465 )    (14.3 %)
Dividend and other investment income
   181,963    197,403    (15,440 )    (7.8 %)
Fee income
   172,612    19,557    153,055    782.6 %







Total investment income
   $ 1,438,629    $ 1,074,795    $ 363,834    33.9 %

The total investment income that is received on a current basis for the nine months ended September 30, 2018 is received from ten portfolio companies. This contrasts with the nine portfolio companies generating current income for the nine months ended September 30, 2017.

~~Interest from portfolio companies~~ – Interest from portfolio companies was approximately 28% higher during the nine months ended September 30, 2018 versus the same period in 2017 due to the fact that we have originated more income-producing debt investments in the last year. These new debt instruments were originated from Genicon Inc. (Genicon), eHealth Global Technologies, Inc. and several other portfolio companies. In addition, during the third quarter of 2018 the Empire Genomics loans were modified and resulted in a recording of interest that had previously not been accrued of approximately $91,000. This amount was capitalized into the loan balance as part of the debt modification.

~~The following investments are onnon-accrual~~ ~~status:G-TEC~~ ~~Natural Gas Systems(G-Tec),~~ ~~First Wave Products Group, LLC (First Wave), OnCore Golf Technology, Inc. (Oncore) and a portion of the Mercantile Adjustment Bureau, LLC (Mercantile) outstanding loan balance.~~

~~Interest from other investments—The decrease in interest from other investments is primarily due to lower average cash balances during the nine months ended September 30, 2018 versus the same period in 2017.~~

~~Dividend and other investment income—The dividend distributions for the respective periods were:~~

   Nine months ended
September 30, 2018    Nine months ended
September 30, 2017
Carolina Skiff LLC (Carolina Skiff)
   $ 119,433    $ 141,372
Tilson Technology Management, Inc. (Tilson)
   29,063    15,000
New Monarch Machine Tool, Inc. (New Monarch)
   27,409    27,409
Empire Genomics LLC (Empire Genomics)
   6,058    7,598
SOMS Technologies, LLC (SOMS)
   —      6,024




Total dividend and other investment income
   $ 181,963    $ 197,403

~~Fee income~~—The income associated with the amortization of financing fees was $28,266 and $18,557 for the nine months ended September 30, 2018 and 2017, respectively. The income from board fees was $2,000 and $1,000 for the nine months ended September 30, 2018 and 2017, respectively.

~~In addition, we recorded aone-time~~ debt modification fee of approximately $142,000 during the nine month ended September 30, 2018. We charged the fee to Empire Genomics and the fee was capitalized into the Empire Genomics loan balances as part of the debt modification.

~~Expenses~~

   Nine months ended
September 30, 2018    Nine months ended
September 30, 2017    Decrease    % Decrease
Total expenses
   $ 1,510,034    $ 1,562,620    ($ 52,586 )    (3.4 %)

The decrease in expenses during the nine months ended September 30, 2018 is due to an overall decrease of 29%, or $89,855, in professional fees as compared to the same period in 2017. This decrease was offset by a $50,342 charge to bad debt expense for the nine months ended September 30, 2018 while there was no bad debt expense for the nine months ended September 30, 2017.

~~Realized Losses on Investments~~

   Nine months ended
September 30, 2018    Nine months ended
September 30, 2017    Change
Realized loss on investments before income taxes
   ($ 1,125,673 )    $ —      ($ 1,125,673 )

~~During the nine months ended September 30, 2018, we recognized a loss on our investment in Intrinsiq Material, Inc. (Intrinsiq) when the company was sold and we did not receive any proceeds.~~

~~Change in Unrealized Depreciation of Investments~~

   Nine months ended
September 30, 2018    Nine months ended
September 30, 2017    Change
Change in unrealized depreciation of investments before income taxes
   ($ 732,128 )    ($ 987,983 )    ($ 255,855 )

~~The change in unrealized depreciation, before income taxes, for the nine months ended September~~June 30, 2018 was comprised of the following:


	~~Nine~~Six months ended ~~September~~June 30, 2018
Empire Genomics, LLC (Empire Genomics)	($	~~901,360~~651,489	)
SOMS Technologies, LLC (SOMS)		(498,348	)
First Wave Products Group (First Wave)		(250,000	)
GiveGab, Inc. (Givegab)		191,907
~~Intrinsiq Material, Inc. (Intrinsiq) realized loss~~		~~725,673~~

Total change in net unrealized depreciation of investments before income taxes during the ~~nine~~six months ended ~~September~~June 30, 2018	($	~~732,128~~1,207,930	)

Our valuation of First Wave was decreased to reflect an anticipated round of financing that was expected to be completed by First Wave in the ~~fourth~~third quarter of 2018.

Givegab’s value was increased to the cost basis of the investment after a financial analysis of the portfolio company indicating continued improved performance. ~~Intrinsiq was sold during the third quarter of 2018 and a realized loss was recorded.~~

~~The change in unrealized depreciation, before income taxes, for the nine months ended September 30, 2017 was comprised of the following:~~


	~~Nine months ended~~ ~~September 30, 2017~~
~~City Dining Cards, Inc. (Loupe)~~	($	~~500,000~~	)
~~Teleservices Solutions Holdings, LLC (Teleservices)~~		~~(395,398~~	)
~~SciAps, Inc. (Sciaps)~~		~~(300,000~~	)
~~Mercantile Adjustment Bureau, LLC (Mercantile)~~		~~(250,000~~	)
~~Athenex, Inc. (Athenex)~~		~~308,336~~
~~ACV Auctions, Inc. (ACV)~~		~~119,356~~
~~BeetNPath, LLC (Beetnpath)~~		~~29,723~~

~~Total change in net unrealized depreciation of investments before income taxes during the nine months ended September 30, 2017~~	($	~~987,983~~	)

The valuations of our investments in Loupe, Mercantile and Teleservices were decreased after we reviewed each portfolio company and its current and projected financial condition and determined that a valuation adjustment was necessary.

The valuation of Sciaps was decreased to revalue our equity holdings based upon the liquidation preferences of our securities as compared to the most recent equity round of financing completed by Sciaps.

~~In accordance with our valuation policy, we increased the value of our investments in ACV and Beetnpath based on a significant equity financing by a newnon-strategic~~ ~~outside entity.~~

Athenex completed an initial public offering (IPO) during the second quarter of 2017 and its shares of common stock were publicly traded on the NASDAQ Global Select Market under the symbol “ATNX”. At September 30 2017 we held 46,296 shares of the common stock of Athenex and valued the shares using the average bid price for the last three trading days of the reporting period, which was then discounted due to restrictions on the sale of the shares.

All of these value adjustments resulted from a review by our management using the guidance set forth by ASC 820 and our established valuation policy.

Net ~~Decrease~~Increase (Decrease) in Net Assets from Operations

We account for our operations under GAAP for investment companies. The principal measure of our financial performance is “net ~~decrease~~increase (decrease) in net assets from operations” on our consolidated statements of operations. For the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, the net decrease in net assets from operations was ($~~1,331,009)~~892,134) and ($~~936,887)~~1,151,707), respectively.

Liquidity and Capital Resources

~~Our~~Historically, our principal ~~long-term~~ objective ishas been to achieve ~~growth in net asset value per share through~~ capital appreciation. Therefore, a significant portion of ~~our~~the investment portfolio is structured to maximize the potential for capital appreciation and ~~certain portfolio investments~~ may ~~be structured to~~ provide little or no current yield in the form of dividends or interest payments. As discussed above, on closing of the Transactions contemplated by the stock purchase agreement with East, we expect to receive interest bearing investments and subsequently to position the portfolio to earn a current yield.

As of ~~September~~June 30, ~~2018,~~2019, our total liquidity consisted of approximately ~~$4.4~~$8.6 million in cash and cash equivalents on ~~hand.~~hand and the availability of $3.0 million under our SBA leverage commitment.

Net cash used by operating activities has averaged approximately ~~$626,000~~$1,200,000 over the last three years. The average cash used for investment in portfolio companies over the last three years was approximately ~~$3,700,000.~~$1,980,000. Our cash flow from operations may fluctuate based on the timing of the receipt of dividend income and realized gains and the associated income taxes paid. We will generally use cash to fund our operating expenses and also to invest in companies, as we seek to build our portfolio utilizing our available cash and proceeds from liquidations of portfolio investments. We anticipate that we will continue to exit investments. However, the timing of liquidation events within the portfolio is difficult to project with any certainty. As of ~~September~~June 30, ~~2018,~~2019, we ~~did not have any outstanding commitments~~had the availability to borrow ~~funds~~an additional $3.0 million from the SBA. Starting in 2022, our SBA debt begins to reach maturity, and this will require us to identify sources of future funding if liquidation of investments is not sufficient to fund operations and repay the SBA debt obligation.

We believe that the cash on hand, ~~at September 30, 2018,~~ the scheduled interest payments on our portfolio investments and ~~the anticipated additional~~our SBA leverage commitment will be sufficient to meet our cash needs for the next twelve months. We continue to seek potential exits from portfolio companies to increase the amount of liquidity available for new investments, operating activities and future SBA debenture repayment obligations.

~~Item 3.~~

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our investment activities contain elements of risk. Our investment portfolio consists of equity and debt securities in private companies and is subject to valuation risk. Because there is typically no public market for the equity and debt securities in which we invest, the valuation of the equity interests in the portfolio is stated at “fair value” as determined in good faith by our management and approved by our Board of Directors. This is in accordance with our investment valuation policy (see the discussion of valuation policy contained in “Note 3. Investments” in the consolidated financial statements contained in Item 1 of this report, which is hereby incorporated herein by reference.) In the absence of readily ascertainable market values, the estimated value of the portfolio may differ significantly from the values that would be placed on the portfolio if a ready market for the investments existed. Any changes in valuation are recorded on the consolidated statement of operations as “Net change in unrealized depreciation on investments.”

At times, a portion of our portfolio may include marketable securities traded in theover-the-counter market. In addition, there may be a portion of the portfolio for which no regular trading market exists. In order to realize the full value of a security, the market must trade in an orderly fashion or a willing purchaser must be available when a sale is to be made. Should an economic or other event occur that would not allow markets to trade in an orderly fashion, we may not be able to realize the fair value of our marketable investments or other investments in a timely manner.

As of ~~September~~June 30, ~~2018~~2019 we did not have anyoff-balance sheet arrangements or hedging or similar derivative financial instrument investments.

~~Item 4.~~

Item 4. Controls and Procedures

Disclosure Controls and Procedures.The Corporation maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that this information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Chief Executive Officer and the Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures as ~~September~~of June 30, ~~2018.~~ 2019.

Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s controls and procedures were effective as of ~~September~~June 30, ~~2018.~~2019.

Changes in Internal Control over Financial Reporting.There have been no changes in our internal control over financial reporting during the Corporation’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings

~~Legal Proceedings~~

~~None.~~

We and each of our directors were named as defendants in a complaint that was filed in the United States District Court for the Western District of New York on April 29, 2019, captioned George Assad v. Rand Capital Corporation, et al., Case No.1:19-cv-00557. The complaint alleged violations of Section 14(a) of the Securities Exchange Act of 1934, as amended and Rule14a-9 promulgated under the Securities Exchange Act of 1934, as amended, in Rand’s definitive proxy statement prepared for purposes of seeking to obtain shareholder approval of the Transactions. This action was voluntarily dismissed with prejudice on June 5, 2019.

~~Item 1A.~~

Item 1A. Risk Factors

See Part I, Item 1A, “Risk Factors,” of the Annual Report on Form10-K for the year ended December 31, ~~2017.~~2018.

~~Item 2.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities


~~Issuer Purchases of Equity Securities~~

Period	Total number of shares purchased (1)		Average price paid per share (2)		Total number of shares purchased as part of publicly announced plan (3)		Maximum number of shares that may yet be purchased under the share repurchase program
7/4/1/~~2018~~2019 – ~~7/31/2018~~4/30/2019		—		—		—		458,954
8/5/1/~~2018~~2019 – 8/5/31/1819		—		—		—		458,954
9/6/1/~~2018~~2019 – 9/6/30/~~2018~~2019		—		—		—		458,954

(1)	There were no shares repurchased during the ~~third quarter of 2018.~~three months ending June 30, 2019.

(2)	The average price paid per share is calculated on a settlement basis and includes commission.

(3)	On October 25, 2018, the Board of Directors extended the repurchase authorization of up to 1,000,000 shares of the Corporation’s common stock on the open market at prices no greater than the then current net asset value through October 25, 2019.

~~Item 3.~~

Item 3. Defaults upon Senior Securities

None.

~~Item 4.~~

Item 4. Mine Safety Disclosures

Not Applicable.

~~Item 5.~~

Item 5. Other Information

None.

Item 6. Exhibits

~~Item 6.~~

(a)

Exhibits

~~(a)~~

~~Exhibits~~

The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule12b-32 under the Securities Exchange Act of 1934.



(3.1)(i)		Certificate of Incorporation of the Corporation, incorporated by reference to Exhibit (a)(1) ofFormN-2 filed with the Securities Exchange Commission onApril 22, 1997. (FileNo. 333-25617).

(3.1)(ii)		By-laws of the Corporation, incorporated by reference to Exhibit 3(ii) to the Corporation’s Quarterly Report on Form10-Q for the period ended September 30, 2016 filed with the Securities Exchange Commission on November 2, 2016. (FileNo. 814-00235).

(4)		Specimen certificate of common stock certificate, incorporated by reference to Exhibit (b) of FormN-2 filed with the Securities Exchange Commission on April 22, 1997. (FileNo. 333-25617).

(31.1)		Certification of Principal Executive Officer Pursuant to Rules13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended – filed herewith.

(31.2)		Certification of Principal Financial Officer Pursuant to Rules13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended – filed herewith.

(32.1)		Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – Rand Capital Corporation – filed herewith.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: ~~November 7, 2018~~August 6, 2019


RAND CAPITAL CORPORATION



By:		/s/ Allen F. Grum
		Allen F. Grum, President



By:		/s/ Daniel P. Penberthy
		Daniel P. Penberthy, Treasurer


	September 30, 2018 (Unaudited)			December 31, 2017
ASSETS
Investments at fair value:
Control investments (cost of $99,500)	$	99,500		$	99,500
Affiliate investments (cost of $20,413,709 and $20,871,129, respectively)		16,728,607			17,016,795
NonControl/Non-Affiliate investments (cost of $16,796,433 and $15,718,690, respectively)		15,344,150			15,167,767

Total investments, at fair value (cost of $37,309,642 and $36,689,319, respectively)		32,172,257			32,284,062
Cash and cash equivalents		4,404,574			6,262,039
Interest receivable (net of allowance: $211,342 at 9/30/18; $161,000 at 12/31/17)		147,934			231,048
Deferred tax asset		772,275			551,863
Prepaid income taxes		1,122,826			762,047
Other assets		38,360			42,854

Total assets	$	38,658,226		$	40,133,913

LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Debentures guaranteed by the SBA (net of debt issuance costs)	$	7,875,723		$	7,855,173
Profit sharing and bonus payable		—			144,000
Accounts payable and accrued expenses		120,886			178,348
Deferred revenue		73,941			37,707

Total liabilities		8,070,550			8,215,228
Commitments and contingencies (See Note 5)
Stockholders’ equity (net assets):
Common stock, $.10 par; shares authorized 10,000,000; shares issued 6,863,034; shares outstanding of 6,321,988		686,304			686,304
Capital in excess of par value		10,581,789			10,581,789
Accumulated net investment loss		(1,643,744	)		(1,597,146	)
Undistributed net realized gain on investments		26,496,804			27,215,738
Net unrealized depreciation on investments		(4,064,372	)		(3,498,895	)
Treasury stock, at cost: 541,046 shares		(1,469,105	)		(1,469,105	)
				��
Total stockholders’ equity (net assets) (per share $4.84 at 9/30/18; $5.05 at 12/31/17)		30,587,676			31,918,685

Total liabilities and stockholders’ equity (net assets)	$	38,658,226		$	40,133,913


	Three months ended September 30, 2018			Three months ended September 30, 2017			Nine months ended September 30, 2018			Nine months ended September 30, 2017
Investment income:
Interest from portfolio companies:
Affiliate investments	$	192,758		$	142,247		$	515,784		$	416,247
Non-Control/Non-Affiliate investments		257,531			167,675			547,553			417,406

Total interest from portfolio companies		450,289			309,922			1,063,337			833,653
Interest from other investments:
Non-Control/Non-Affiliate investments		7,872			6,348			20,717			24,182

Total interest from other investments		7,872			6,348			20,717			24,182
Dividend and other investment income:
Affiliate investments		48,856			74,408			175,905			189,805
Non-Control/Non-Affiliate investments		—			2,405			6,058			7,598

Total dividend and other investment income		48,856			76,813			181,963			197,403
Fee income:
Affiliate investments		4,042			2,166			11,625			6,250
Non-Control/Non-Affiliate investments		151,243			1,770			160,987			13,307

Total fee income		155,285			3,936			172,612			19,557

Total investment income		662,302			397,019			1,438,629			1,074,795

Expenses:
Salaries		169,875			165,413			509,624			496,239
Employee benefits		39,845			38,454			148,841			138,523
Directors’ fees		28,624			36,374			92,123			107,623
Professional fees		81,745			48,433			220,773			310,628
Stockholders and office operating		47,839			45,355			176,877			193,290
Insurance		8,700			8,058			27,588			25,618
Corporate development		15,028			16,621			41,470			49,938
Other operating		4,875			2,772			9,990			8,055

		396,531			361,480			1,227,286			1,329,914
Interest on SBA obligations		77,568			77,568			232,406			232,706
Bad debt (recovery) expense		(26,299	)		—			50,342			—

Total expenses		447,800			439,048			1,510,034			1,562,620

Net investment gain (loss) before income taxes		214,502			(42,029	)		(71,405	)		(487,825	)
Income tax expense (benefit)		50,003			(17,050	)		(24,807	)		(188,961	)

Net investment gain (loss)		164,499			(24,979	)		(46,598	)		(298,864	)

Net realized loss on sales and dispositions of investments:
Affiliate investments		(1,125,673	)		—			(1,125,673	)		—

Net realized loss before income tax benefit		(1,125,673	)		—			(1,125,673	)		—
Income tax benefit		406,739			—			406,739			—

Net realized loss on investments		(718,934	)		—			(718,934	)		—
Change in unrealized depreciation on investments:
Affiliate investments		725,673			—			169,232			(665,675	)
Non-Control/Non-Affiliate investments		(249,871	)		111,000			(901,360	)		(322,308	)

Change in unrealized depreciation before income tax expense (benefit)		475,802			111,000			(732,128	)		(987,983	)
Deferred income tax expense (benefit)		100,669			28,090			(166,651	)		(349,960	)

Net change in unrealized depreciation on investments		375,133			82,910			(565,477	)		(638,023	)

Net realized and unrealized (loss) gain on investments		(343,801	)		82,910			(1,284,411	)		(638,023	)

Net (decrease) increase in net assets from operations	($	179,302	)	$	57,931		($	1,331,009	)	($	936,887	)

Weighted average shares outstanding		6,321,988			6,321,988			6,321,988			6,321,988
Basic and diluted net (decrease) increase in net assets from operations per share	($	0.03	)	$	0.01		($	0.21	)	($	0.15	)


	(a)	(b)	(c)		(d)(f)		Percent
Company, Geographic Location, Business		Date			Fair		of Net
Description, (Industry) and Website	Type of Investment	Acquired	Equity	Cost	Value		Assets

SciAps, Inc. (e)(g)	187,500 Series A Preferred shares.	7/12/13	6%	1,500,000		700,000	6.6%
Woburn, MA. Instrumentation company producing	274,299 Series A-1 Convertible
portable analytical devices using XRF, LIBS and	Preferred shares.			504,710		250,000
RAMAN spectroscopy to identify compounds,	117,371 Series B Convertible
minerals, and elements. (Manufacturing)	Preferred shares.			250,000		250,000
www.sciaps.com	113,636 Series C Convertible
	Preferred shares.			175,000		175,000
	369,698 Series C-1 Convertible
	Preferred shares.			399,274		399,274
	147,059 Series D Convertible
	Preferred shares.			250,000		250,000
	Total SciAps			3,078,984		2,024,274

SOMS Technologies, LLC (e)(g)	5,959,490 Series B Membership	12/2/08	9%				0.1%
Valhalla, NY. Produces and markets the	Interests.			472,632		30,000
microGreen Extended Performance Oil Filter.
(Consumer Products)
www.microgreenfilter.com

Teleservices Solutions Holdings, LLC (e) (g)(m)	250,000 Class B Preferred Units.	5/30/14	6%	250,000		-	0.0%
Montvale, NJ. Customer contact center	1,000,000 Class C Preferred Units.			1,190,680		-
specializing in customer acquisition and retention	80,000 Class D Preferred Units.			91,200		-
for selected industries. (Contact Center)	104,198 Class E Preferred Units.			104,198		-
www.ipacesetters.com	PIK dividend for Series C and D at
	12% and 14%, respectively.
	Total Teleservices			1,636,078		-

Tilson Technology Management, Inc. (g)	120,000 Series B Preferred shares.	1/20/15	11%	600,000		600,000	8.2%
Portland, ME. Cellular, fiber optic and wireless	21,391 Series C Convertible Preferred
information systems, construction, and	shares.			200,000		200,000
management. (Professional Services)	65,790 Series D Preferred shares.			750,000		750,000
www.tilsontech.com	$750,000 Subordinated Promissory
	Note at 8% due December 1, 2022.			750,000		750,000
	$200,000 Subordinated Promissory
	Note at 8% due September 28, 2021.			200,000		200,000
	Total Tilson			2,500,000		2,500,000


Subtotal Affiliate Investments				$20,413,709		$16,728,607

Control Investments – 0.3% of net assets (l)

Advantage 24/7 LLC (e)(g)	45% Membership Interest.	12/30/10	45%	$99,500		$99,500	0.3%
Williamsville, NY. Marketing program for wine
and spirits dealers. (Marketing Company)
www.advantage24-7.com

Subtotal Control Investments				$99,500		$99,500

TOTAL INVESTMENTS –105.2%				$37,309,642		$32,172,257
OTHER ASSETS IN EXCESS OF LIABILITIES – (5.2%)						(1,584,581)


NET ASSETS – 100%						$30,587,676


												Amount of
										Net		Interest/
		December				Gross		September		Realized		Dividend/
Company	Type of Investment	31, 2017 Fair Value		Gross Additions (1)		Reductions (2)		30, 2018 Fair Value		Gains (Losses)		Fee Income (3)
Control Investments:
Advantage 24/7 LLC	45% Membership interest.		$99,500		$-		$-		$99,500		$-		$-

	Total Control Investments		$99,500		$-		$-		$99,500		$-		$-
Affiliate Investments:
BeetNPath, LLC	1,119,024 Series A-2 Preferred Membership
	Units.		$359,000		$-		$-		$359,000		$-		$-
	1,032,918 Series B Preferred Membership										-
	Units.		291,000		-		-		291,000		-		-
	$140,000 convertible secured note at 8%		-		140,000		-		140,000		-		2,551
	Total BeetNPath		650,000		140,000		-		790,000				2,551

Carolina Skiff LLC	6.0825% Class A common membership
	interest.		1,750,000		-		-		1,750,000		-		119,433

ClearView Social, Inc.	312,500 Series seed plus preferred shares.		200,000		-		-		200,000		-		-

First Wave Products	$500,000 senior term notes at 10%.		250,000		-		(250,000)		-		-		-
Group, LLC	$280,000 junior term notes at 10%.		-		-		-		-		-		-
	Warrant for 41,619 capital securities.		-		-		-		-		-		-
	Total First Wave		250,000		-		(250,000)		-		-		-

Genicon, Inc.	1,586,902 Series B preferred shares.		1,000,000		-		-		1,000,000		-		-
	$3,000,000 promissory notes at 8%.		2,903,779		153,548		-		3,057,327		-		251,069
	Warrant for 250,000 common shares		80,000		-		-		80,000		-		-
	Warrant for 125,000 common shares		40,000		-		-		40,000		-		-
	Total Genicon		4,023,779		153,548		-		4,177,327		-		251,069

GiveGab, Inc.	5,084,329 Series Seed preferred shares.		424,314		191,907		(616,221)		-		-		-

G-TEC Natural Gas	16.639% Class A membership interest. 8%
Systems	cumulative dividend.		100,000		-		-		100,000		-		-

Intrinsiq Materials,	4,161,747 Series A preferred shares.		400,000		-		(400,000)		-		(1,125,673)		-
Inc.

Knoa Software, Inc.	973,533 Series A-1 convertible preferred
	shares.		750,000		-		-		750,000		-		-
	1,876,922 Series B preferred shares.		479,155		-		-		479,155		-		-
	$48,466 convertible promissory note at 8%.		48,466		-		(48,466)		-		-		773
	Total Knoa		1,277,621		-		(48,466)		1,229,155		-		773

KnowledgeVision	200,000 Series A-1 preferred shares.		-		-		-		-		-		-
Systems, Inc.	214,285 Series A-2 preferred shares.		300,000		-		-		300,000		-		-
	129,033 Series A-3 preferred shares.		165,001		-		-		165,001		-		-
	$75,000 subordinated promissory notes at 8%		50,000		25,000		-		75,000		-		3,896
	$750,000 replacement term note at 11%		-		750,000		-		750,000		-		37,571
	Warrant for 46,743 Series A-3 shares.		35,000		-		-		35,000		-		-
	Total Knowledge		550,001		775,000		-		1,325,001		-		41,467
	Vision

Mezmeriz, Inc.	1,554,565 Series seed preferred shares.		351,477		-		-		351,477		-		-

Microcision LLC	$1,500,000 subordinated promissory note at
	12% (1% PIK).		1,914,140		14,392		-		1,928,532		-		172,704

New Monarch	22.84 common shares.		22,841		-		-		22,841		-		29,409
Machine Tool, Inc.


Company	Type of Investment	December 31, 2016 Fair Value		Gross Additions (1)		Gross Reductions (2)		December 31, 2017 Fair Value		Net Realized Gains (Losses)		Amount of Interest/ Dividend/ Fee Income (3)
Control Investments:
Advantage 24/7 LLC	53% Membership interest.		$99,500		$-		$-		$99,500		$-		$-

	Total Control Investments		$99,500		$-		$-		$99,500		-		$-

Affiliate Investments:
BeetNPath, LLC	1,119,024 Series A-2 Preferred Membership
	Units.		$359,000				$-		$359,000		-		$-
	1,032,918 Series B Preferred Membership										-
	Units		-		$291,000		-		291,000		-		-
	$150,000 convertible promissory note at 8%.		150,000		-		(150,000)		-		-		4,800
	Total BeetNPath		509,000		291,000		(150,000)		650,000		-		4,800

Carolina Skiff LLC	6.0825% Class A common membership interest.		1,100,000		650,000		-		1,750,000		-		178,532

ClearView Social, Inc.	312,500 Series seed plus preferred shares.		200,000		-		-		200,000		-		-
First Wave Products	$500,000 senior term notes at 10%.		250,000		-		-		250,000		-		-
Group, LLC	$280,000 junior term notes at 10%.		-		-		-		-		-		-
	Warrant for 41,619 capital securities.		-		-		-		-		-		-
	Total First Wave		250,000		-		-		250,000		-		-

Genicon, Inc.	1,586,902 Series B preferred shares.		1,000,000		-		-		1,000,000		-		-
	$1,100,000 senior term loans at 12%.		1,100,000		-		(1,100,000)		-		-		50,234
	$600,000 term loan at 14%.		600,000		-		(600,000)		-		-		32,200
	$2,000,000 promissory note at 8%		-		2,016,002		(80,000)		1,936,002		-		129,752
	$1,000,000 promissory note at 8%		-		1,007,777		(40,000)		967,777		-		60,860
	Warrant for 250,000 common shares		-		80,000		-		80,000		-
	Warrant for 125,000 common shares		-		40,000		-		40,000		-		-
	Total Genicon		2,700,000		3,143,779		(1,820,000)		4,023,779		-		273,046

GiveGab, Inc.	5,084,329 Series Seed preferred shares.		424,314		-		-		424,314		-		-

G-TEC Natural Gas Systems	16.639% Class A membership interest. 8% cumulative dividend		100,000		-		-		100,000		-		-

Intrinsiq Materials, Inc.	4,161,747 Series A preferred shares.		780,000		-		(380,000)		400,000		-		-

Knoa Software, Inc.	973,533 Series A-1 convertible preferred		-		750,000		-		750,000		-		-
	shares. 1,876,922 Series B preferred shares.		449,455		29,700		-		479,155		-		-
	$48,466 convertible promissory note at 8%.		48,466		-		-		48,466		-		3,877
	Total Knoa		497,921		779,700		-		1,277,621		-		3,877

KnowledgeVision	200,000 Series A-1 preferred shares.		-		-		-		-		-		-
Systems, Inc.	214,285 Series A-2 preferred shares.		300,000		-		-		300,000		-		-
	129,033 Series A-3 preferred shares.		165,001		-		-		165,001		-		-
	$50,000 subordinated promissory note at 8%		-		50,000		-		50,000		-		3,748
	Warrant for 46,743 Series A-3 shares.		35,000		-		-		35,000		-		-
	Total Knowledge Vision		500,001		50,000		-		550,001		-		3,748

Mezmeriz, Inc.	1,554,565 Series seed preferred shares.		351,477		-		-		351,477		-		-

Microcision LLC	$1,500,000 subordinated promissory note at 12% (1% PIK).		1,891,964		22,176		-		1,914,140		-		228,239

New Monarch Machine Tool, Inc.	22.84 common shares.		22,841		-		-		22,841		-		28,409


	September 30, 2018			December 31, 2017
Genicon, Inc. (Genicon)		13	%		12	%
eHealth Global Technologies, Inc. (eHealth),		11	%		11	%
Rheonix, Inc. (Rheonix)		9	%		9	%
Tilson Technology Management, Inc. (Tilson)		8	%		8	%
Outmatch (Outmatch)		7	%		7	%


Investment Type	Market Approach EBITDA Multiple		Market Approach Liquidation Seniority		Market Approach Revenue Multiple		Market Approach Transaction Pricing		Totals
Non-Control/Non-Affiliate Equity	$	—	$	25	$	2,645,496	$	6,209,950	$	8,855,471

Non-Control/Non-Affiliate Debt	$	949,040		1,739,639		3,500,000		300,000		6,488,679

TotalNon-Control/Non-Affiliate	$	949,040	$	1,739,664	$	6,145,496	$	6,509,950	$	15,344,150

Affiliate Equity	$	4,420,000	$	22,841	$	4,053,430	$	1,031,477	$	9,527,748

Affiliate Debt		5,935,859		—		—		1,265,000		7,200,859

Total Affiliate	$	10,355,859	$	22,841	$	4,053,430	$	2,296,477	$	16,728,607

Control Equity	$	—	$	—	$	99,500	$	—	$	99,500

Total Control	$	—	$	—	$	99,500	$	—	$	99,500

Total Level 3 Investments	$	11,304,899	$	1,762,505	$	10,298,426	$	8,806,427	$	32,172,257


Range		4X-9X		1X		1X-3.3X		Not Applicable
Unobservable Input		EBITDA Multiple		Asset Value		Revenue Multiple		Transaction Price
Weighted Average		5.6X		1X		2.1X		Not Applicable


	Three months ended September 30, 2018
Empire Genomics, LLC (Empire Genomics)	($	249,871	)
Intrinsiq Material, Inc. (Intrinsiq) realized loss		725,673

Total change in net unrealized depreciation of investments before income taxes during the three months ended September 30, 2018	$	475,802


	Nine months ended September 30, 2018		Nine months ended September 30, 2017		Increase (Decrease)			% Increase (Decrease)
Interest from portfolio companies	$	1,063,337	$	833,653	$	229,684			27.6	%
Interest from other investments		20,717		24,182		(3,465	)		(14.3	%)
Dividend and other investment income		181,963		197,403		(15,440	)		(7.8	%)
Fee income		172,612		19,557		153,055			782.6	%

Total investment income	$	1,438,629	$	1,074,795	$	363,834			33.9	%


	Nine months ended September 30, 2018		Nine months ended September 30, 2017
Carolina Skiff LLC (Carolina Skiff)	$	119,433	$	141,372
Tilson Technology Management, Inc. (Tilson)		29,063		15,000
New Monarch Machine Tool, Inc. (New Monarch)		27,409		27,409
Empire Genomics LLC (Empire Genomics)		6,058		7,598
SOMS Technologies, LLC (SOMS)		—		6,024

Total dividend and other investment income	$	181,963	$	197,403

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company