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 ~~June~~September 30, 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)

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

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 ~~August 6,~~November 7, 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	1

Item 1.	Financial Statements and Supplementary Data	1

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

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

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

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

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

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

	Notes to the Consolidated Financial Statements (Unaudited)	2117

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44

Item 4.	Controls and Procedures	44

	PART II. – OTHER INFORMATION	45

Item 1.	Legal Proceedings	4645

Item 1A.	Risk Factors	4645

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4645

Item 3.	Defaults upon Senior Securities	4645

Item 4.	Mine Safety Disclosures	4645

Item 5.	Other Information	4645

Item 6.	Exhibits	4746

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


		June 30, 2019 (Unaudited)			December 31, 2018				September 30, 2019 (Unaudited)			December 31, 2018
ASSETS
Investments at fair value:
Control investments (cost of $0 and $99,500, respectively)		$	—		$	99,500			$	—		$	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
Affiliate investments (cost of $20,427,536 and $20,708,659, respectively)										15,568,648			17,026,091
Non-Control/Non-Affiliate investments (cost of $14,182,282 and $17,483,984, respectively)										11,218,550			17,541,213

Total investments, at fair value (cost of $35,467,536 and $38,292,143, respectively)			31,242,045			34,666,804
Total investments, at fair value (cost of $34,609,818 and $38,292,143, respectively)										26,787,198			34,666,804
Cash and cash equivalents			8,646,007			4,033,792				9,288,502			4,033,792
Interest receivable (net of allowance of $166,413 and $161,000, respectively)			119,717			145,532				125,808			145,532
Deferred tax asset			842,218			525,198				1,653,395			525,198
Prepaid income taxes			503,067			1,138,708				488,768			1,138,708
Other assets			346,010			11,690				317,668			11,690

Total assets		$	41,699,064		$	40,521,724			$	38,661,339		$	40,521,724


LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)	LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)							LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Debentures guaranteed by the SBA (net of debt issuance costs)		$	10,768,075		$	8,554,443			$	10,777,493		$	8,554,443
Profit sharing and bonus payable			—			125,000				—			125,000
Accounts payable and accrued expenses			264,529			245,758				102,733			245,758
Deferred revenue			34,407			72,336				27,948			72,336

Total liabilities			11,067,011			8,997,537				10,908,174			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
Common stock, $0.10 par; shares authorized 10,000,000; shares issued 6,863,034; shares outstanding of 6,321,988 as of 9/30/19 and 12/31/18										686,304			686,304
Capital in excess of par value			10,581,789			10,581,789				10,581,789			10,581,789
Accumulated net investment loss			(1,786,085	)		(1,665,552	)			(1,851,634	)		(1,665,552	)
Undistributed net realized gain on investments			25,920,065			26,221,443				25,920,065			26,221,443
Net unrealized depreciation on investments			(3,300,915	)		(2,830,692	)			(6,114,254	)		(2,830,692	)
Treasury stock, at cost: 541,046 shares			(1,469,105	)		(1,469,105	)			(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 stockholders’ equity (net assets) (per share- 9/30/19: $4.39,12/31/18: $4.99)										27,753,165			31,524,187

Total liabilities and stockholders’ equity (net assets)		$	41,699,064		$	40,521,724			$	38,661,339		$	40,521,724

See accompanying notes

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

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			Three months ended September 30, 2019			Three months ended September 30, 2018			Nine months ended September 30, 2019			Nine months ended September 30, 2018
Investment income:
Interest from portfolio companies:
Affiliate investments	$	206,036		$	175,990		$	414,751		$	323,026		$	217,953		$	192,758		$	632,705		$	515,784
Non-Control/Non-Affiliate investments		109,453			139,710			306,703			290,022			110,150			257,531			416,852			547,553

Total interest from portfolio companies		315,489			315,700			721,454			613,048			328,103			450,289			1,049,557			1,063,337

Interest from other investments:
Non-Control/Non-Affiliate investments		53,538			7,735			71,349			12,845			36,797			7,872			108,146			20,717

Total interest from other investments		53,538			7,735			71,349			12,845			36,797			7,872			108,146			20,717

Dividend and other investment income:
Affiliate investments		207,060			76,266			241,685			127,049			65,996			48,856			307,681			175,905
Non-Control/Non-Affiliate investments		—			2,676			—			6,058			—			—			—			6,058

Total dividend and other investment income		207,060			78,942			241,685			133,107			65,996			48,856			307,681			181,963

Fee income:
Affiliate investments		3,606			4,416			7,853			7,583			3,607			4,042			11,460			11,625
Non-Control/Non-Affiliate investments		3,353			6,725			260,075			9,744			2,852			151,243			262,927			160,987

Total fee income		6,959			11,141			267,928			17,327			6,459			155,285			274,387			172,612

Total investment income		583,046			413,518			1,302,416			776,327			437,355			662,302			1,739,771			1,438,629

Expenses:
Salaries		181,500			169,875			363,000			339,749			181,500			169,875			544,500			509,624
Employee benefits		40,167			45,251			103,099			108,996			40,606			39,845			143,705			148,841
Directors’ fees		28,624			28,624			57,248			63,499			30,124			28,624			87,372			92,123
Professional fees		111,273			37,341			337,928			139,028			68,931			81,745			406,859			220,773
Stockholders and office operating		319,506			64,599			380,761			129,038			85,782			47,839			466,543			176,877
Insurance		10,969			6,900			20,570			18,888			10,500			8,700			31,070			27,588
Corporate development		14,866			10,646			33,326			26,442			18,301			15,028			51,627			41,470
Other operating		1,225			2,424			2,809			5,115			604			4,875			3,413			9,990

		708,130			365,660			1,298,741			830,755			436,348			396,531			1,735,089			1,227,286
Interest on SBA obligations		110,534			77,269			209,658			154,838			94,191			77,568			303,849			232,406
Bad debt expense		5,413			30,741			5,413			76,641
Bad debt (recovery) expense														—			(26,299	)		5,413			50,342

Total expenses		824,077			473,670			1,513,812			1,062,234			530,539			447,800			2,044,351			1,510,034

Net investment loss before income taxes		(241,031	)		(60,152	)		(211,396	)		(285,907	)
Net investment (loss) gain before income taxes														(93,184	)		214,502			(304,580	)		(71,405	)
Income tax (benefit) expense														(27,635	)		50,003			(118,498	)		(24,807	)

Income tax benefit		(97,731	)		(22,384	)		(90,863	)		(74,810	)
Net investment (loss) gain														(65,549	)		164,499			(186,082	)		(46,598	)

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


Net realized gain (loss) on sales and dispositions of investments:
Net realized (loss) gain on sales and dispositions of investments:
Control investments		39,893			—			80,393			—			—			—			80,393			—
Affiliate investments		(472,632	)		—			(472,632	)		—			—			(1,125,673	)		(472,632	)		(1,125,673	)

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, before income taxes														—			(1,125,673	)		(392,239	)		(1,125,673	)
Income tax (benefit)														—			(406,739	)		(90,861	)		(406,739	)

Net realized loss on sales and dispositions of investments		(332,509	)		—			(301,378	)		—			—			(718,934	)		(301,378	)		(718,934	)
Net change in unrealized depreciation on investments:
Affiliate investments		(372,448	)		(306,441	)		671,148			(556,441	)		(1,847,468	)		725,673			(1,176,320	)		169,232
Non-Control/Non-Affiliate investments		(750,000	)		(450,000	)		(1,271,300	)		(651,489	)		(1,749,661	)		(249,871	)		(3,020,961	)		(901,360	)

Change in unrealized depreciation before income tax benefit		(1,122,448	)		(756,441	)		(600,152	)		(1,207,930	)		(3,597,129	)		475,802			(4,197,281	)		(732,128	)
Deferred income tax benefit		(250,708	)		(162,915	)		(129,929	)		(267,320	)
Deferred income tax (benefit) expense														(783,790	)		100,669			(913,719	)		(166,651	)

Net change in unrealized depreciation on investments		(871,740	)		(593,526	)		(470,223	)		(940,610	)		(2,813,339	)		375,133			(3,283,562	)		(565,477	)

Net realized and unrealized loss on investments		(1,204,249	)		(593,526	)		(771,601	)		(940,610	)		(2,813,339	)		(343,801	)		(3,584,940	)		(1,284,411	)

Net decrease in net assets from operations	($	1,347,549	)	($	631,294	)	($	892,134	)	($	1,151,707	)	($	2,878,888	)	($	179,302	)	($	3,771,022	)	($	1,331,009	)

Weighted average shares outstanding		6,321,988			6,321,988			6,321,988			6,321,988			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	)	($	0.46	)	($	0.03	)	($	0.60	)	($	0.21	)

See accompanying notes

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

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			Three months ended September 30, 2019			Three months ended September 30, 2018			Nine months ended September 30, 2019			Nine months ended September 30, 2018
Net assets at beginning of period	$	31,979,602		$	31,398,272		$	31,524,187		$	31,918,685		$	30,632,053		$	30,766,978		$	31,524,187		$	31,918,685
Net investment loss		(143,300	)		(37,768	)		(120,533	)		(211,097	)
Net investment (loss) gain														(65,549	)		164,499			(186,082	)		(46,598	)
Net realized loss on sales and dispositions of investments		(332,509	)		—			(301,378	)		—			—			(718,934	)		(301,378	)		(718,934	)
Net change in unrealized depreciation on investments		(871,740	)		(593,526	)		(470,223	)		(940,610	)		(2,813,339	)		375,133			(3,283,562	)		(565,477	)

Net decrease in net assets from operations		(1,347,549	)		(631,294	)		(892,134	)		(1,151,707	)		(2,878,888	)		(179,302	)		(3,771,022	)		(1,331,009	)

Net assets at end of period	$	30,632,053		$	30,766,978		$	30,632,053		$	30,766,978		$	27,753,165		$	30,587,676		$	27,753,165		$	30,587,676

Accumulated net investment loss	($	1,786,085	)	($	1,808,243	)	($	1,786,085	)	($	1,808,243	)	($	1,851,634	)	($	1,643,744	)	($	1,851,634	)	($	1,643,744	)

See accompanying notes

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six months ended June 30, 2019			Six months ended June 30, 2018			Nine months ended September 30, 2019			Nine months ended September 30, 2018
Cash flows from operating activities:
Net decrease in net assets from operations	($	892,134	)	($	1,151,707	)	($	3,771,022	)	($	1,331,009	)
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	)		(900,012	)		(1,365,000	)
Proceeds from sale of portfolio investments		39,893			—			39,893			—
Proceeds from loan repayments		3,525,000			70,131			4,525,000			70,131
Net realized loss on portfolio investments		392,239			—			392,239			1,125,673
Change in unrealized depreciation on investments before income taxes		600,152			1,207,930			4,197,281			732,128
Deferred tax benefit		(317,020	)		(347,040	)		(1,128,197	)		(220,412	)
Depreciation and amortization		18,325			14,800			27,809			22,200
Original issue discount amortization		(20,382	)		(19,271	)		(30,573	)		(29,462	)
Non-cash conversion of debenture interest		(212,131	)		(77,154	)		(344,222	)		(421,665	)
Change in interest receivable allowance		5,413			76,641			5,413			50,342
Changes in operating assets and liabilities:
Decrease in interest receivable		20,402			26,510			14,311			32,772
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	)
(Increase) decrease in other assets								(306,174	)		2,844
Decrease (increase) in prepaid income taxes								649,940			(360,779	)
Decrease in accounts payable and accrued expenses								(143,025	)		(69,462	)
Decrease in profit sharing and bonus payable		(125,000	)		(132,000	)		(125,000	)		(132,000	)
(Decrease) increase in deferred revenue		(37,928	)		28,173			(44,388	)		36,234

Total adjustments		3,308,912			(389,951	)		6,830,295			(526,456	)

Net cash provided by (used in) operating activities		2,416,778			(1,541,658	)		3,059,273			(1,857,465	)

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

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

Net increase (decrease) in cash and cash equivalents		4,612,215			(1,541,658	)		5,254,710			(1,857,465	)
Cash and cash equivalents:
Beginning of period		4,033,792			6,262,039			4,033,792			6,262,039

End of period	$	8,646,007		$	4,720,381		$	9,288,502		$	4,404,574

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~June~~September 30, 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 – 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%

(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

Non-Control/Non-Affiliate Investments – 40.4% of net assets: (j)

ACV Auctions, Inc. (e)(g)

1,181,160 Series A Preferred.

8/12/16

<1%

$163,000

$2,776,907

10.0%

Buffalo, NY. Live mobile wholesale auctions for new and used car dealers. (Software)

www.acvauctions.com

Advantage 24/7 LLC (g)(h)

$140,000 Term Note at 7% due

12/30/10

0.4%

Williamsville, NY. Marketing program for wine and

January 1, 2022

115,000

spirits dealers. (Marketing Company)www.advantage24-7.com

Centivo Corporation (e)(g)

190,967 SeriesA-1 Preferred.

7/5/17

<1%

200,000

1.1%

New York, NY. Tech-enabled health solutions

337,808 SeriesA-2 Preferred.

101,342

company that helps self-insured employers and their

employees save money and have a better experience.

(Health Care)

www.centivo.com

Total Centivo

301,342

Empire Genomics, LLC (g)(l)

$1,209,014 Senior Secured

6/13/14

2.1%

Buffalo, NY. Molecular diagnostics company that

Convertible Term Notes at 10%

offers a comprehensive menu of assay services for

(8% PIK through September 30,

diagnosing and guiding patient therapeutic treatments.

2019) due December 31, 2020.

1,308,675

300,000

(Health Care)

$444,915 Promissory Note at 9%

www.empiregenomics.com

(4% PIK) due December 31, 2020.

444,915

302,569

Total Empire

1,753,590

602,569

GiveGab, Inc. (e)(g)

5,084,329 Series Seed Preferred.

3/13/13

616,221

2.2%

Ithaca, NY. Online fundraising, day of giving supporter engagement software fornon-profit organizations. (Software)

www.givegab.com

GoNoodle, Inc. (g)(l)

$1,000,000 Secured Note at 12%

2/6/15

<1%

3.8%

Nashville, TN. Student engagement education

due January 31, 2020, (1% PIK).

1,047,481

software providing core aligned physical activity

Warrant for 47,324 Series C

breaks. (Software)

Preferred.

www.gonoodle.com

Total GoNoodle

1,047,506

Mercantile Adjustment Bureau, LLC (g)

$1,199,039 Subordinated Secured

10/22/12

1.8%

Williamsville, NY. Full service accounts receivable

Note at 13% (3% for the calendar

management and collections company. (Contact

year 2019) due January 31, 2022.

1,199,040

500,000

Center)

www.mercantilesolutions.com

(e)$150,000 Subordinated

Debenture at 8% due January 31,

2022.

150,000

—

Warrant for 3.29% Membership

Interests. Option for 1.5%

Membership Interests.

197,625

—

Total Mercantile

1,446,665

500,000

Outmatch Holdings, LLC (e)(g)

3,022,799 Class P1 Units.

11/18/10

2,140,007

7.8%

(Chequed Holdings, LLC)

109,788 Class C1 Units.

5,489

Dallas, TX. Web based predictive employee selection

and reference checking. (Software)

www.outmatch.com

Total Outmatch

2,145,496

PostProcess Technologies, Inc. (e)(g)

$300,000 Convertible Promissory

7/25/16

1.1%

Buffalo, NY. Provides innovative solutions for the

Note at 5% due July 28, 2020.

300,000

post-processing of additive manufactured 3D parts.

(Manufacturing)

www.postprocess.com

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~June~~September 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%


		(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

Rheonix, Inc. (e)	9,676 Common.		10/29/09	4%		—		—		2.5%
Ithaca, NY. Developer of fully automated	(g)1,839,422 Series A Preferred.					2,099,999		—
microfluidic based molecular assay and diagnostic	(g)50,593 Common.					—		—
testing devices. (Health Care)	(g)589,420 Series B Preferred.					702,732		702,732
www.rheonix.com

	Total Rheonix					2,802,731		702,732


SocialFlow, Inc. (e)(g)	1,049,538 Series B Preferred.		4/5/13	4%		500,000		279,156		3.6%
New York, NY. Provides instant analysis of social	1,204,819 SeriesB-1 Preferred.					750,000		433,735
networks using a proprietary, predictive analytic	717,772 Series C Preferred.					500,000		287,109
algorithm to optimize advertising and publishing.
(Software) www.socialflow.com

	Total Social Flow					1,750,000		1,000,000


Somerset Gas Transmission Company, LLC (e)	26.5337 Units.		7/10/02	3%		719,097		500,000		1.8%
Columbus, OH. Natural gas transportation.
(Oil and Gas) www.somersetgas.com

Tech 2000, Inc. (g)	$600,000 Term Note at 14% due		11/16/18	0%						2.2%
Herndon, VA. Develops and delivers IT training.	November 15, 2021.					610,777		610,777
(Software) www.t2000inc.com

OtherNon-Control/Non-Affiliate Investments:

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

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

SubtotalNon-Control/Non-Affiliate Investments					$	14,182,282	$	11,218,550


Affiliate Investments – 56.1% of net assets (k)

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

	Total BeetNPath					882,904		—


Carolina Skiff LLC (g)	6.0825% Class A Common		1/30/04	7%						6.3%
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%		200,000		200,000		0.7%
Buffalo, NY. Social media publishing tool for law,
CPA and professional firms. (Software) www.clearviewsocial.com

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

Genicon, Inc. (e)(g)(l)	1,586,902 Series B Preferred.		4/10/15	6%		1,000,000		—		9.9%
Winter Park, FL. Designs, produces and	$3,250,000 Promissory Notes at 10%
distributes patented surgical instrumentation.	due June 12, 2022, (10% PIK).					3,654,750		2,500,000
(Health Care)	$250,000 Promissory Note at 10% due
www.geniconendo.com	June 12, 2021 (10% PIK).					257,797		250,000
	Warrants for Common.					120,000		—

	Total Genicon					5,032,547		2,750,000

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~June~~September 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%


		(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

Knoa Software, Inc. (e)(g)	973,533 SeriesA-1 Convertible		11/20/12	7%						4.4%
New York, NY. End user experience	Preferred.					750,000		750,000
management and performance (EMP) solutions	1,876,922 Series B Preferred.					479,155		479,155
utilizing enterprise applications. (Software)
www.knoa.com

	Total Knoa					1,229,155		1,229,155


KnowledgeVision Systems, Inc. (g)	200,000 SeriesA-1 Preferred.		11/13/13	7%		250,000		—		3.5%
Lincoln, MA. Online presentation and training	214,285 SeriesA-2 Preferred.					300,000		—
software. (Software)	129,033 SeriesA-3 Preferred.					165,001		—
www.knowledgevision.com	Warrant for 46,743 SeriesA-3.					35,000		—
	(e)$75,000 Subordinated Promissory
	Notes at 8% payable on demand of
	majority of holders after August 31, 2019.					75,000		75,000
	$900,000 Term Note at 13% due April 30, 2021.					900,000		900,000

	Total KnowledgeVision					1,725,001		975,000


Mezmeriz, Inc. (e)(g)	1,554,565 Series Seed Preferred.		1/9/08	12%		742,850		351,477		1.3%
Ithaca, NY. Technology company developing novel reality capture tools for 3D mapping, reality modeling, object tracking and classification.
(Electronics Developer) www.mezmeriz.com

Microcision LLC (g)(l)	$1,500,000 Subordinated Promissory		9/24/09	15%						9.2%
Pennsauken Township, NJ. Manufacturer of	Note at 12% (1% PIK) due December
precision machined medical implants,	31, 2024.					1,947,889		1,947,889
components and assemblies. (Manufacturing)	15% Class A Common Membership
www.microcision.com	Interest.					—		610,000

	Total Microcision					1,947,889		2,557,889


New Monarch Machine Tool, Inc. (g)	22.84 Common.		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)	300,483 Preferred AA.		12/31/14	8%		752,712		300,000		1.1%
Buffalo, NY. Patented and proprietary golf balls utilizing technology and innovation.
(Consumer Product) www.oncoregolf.com

SciAps, Inc. (e)(g)	187,500 Series A Preferred.		7/12/13	6%		1,500,000		223,000		5.2%
Woburn, MA. Instrumentation company	274,299 SeriesA-1 Convertible
producing portable analytical devices using XRF,	Preferred.					504,710		142,000
LIBS and RAMAN spectroscopy to identify	117,371 Series B Convertible Preferred.					250,000		250,000
compounds, minerals, and elements.	113,636 Series C Convertible Preferred.					175,000		175,000
(Manufacturing)	369,698 SeriesC-1 Convertible
www.sciaps.com	Preferred.					399,274		399,274
	147,059 Series D Convertible Preferred.					250,000		250,000

	Total SciAps					3,078,984		1,439,274


Teleservices Solutions Holdings, LLC (e) (g)(l)	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		—

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~June~~September 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

(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

Tilson Technology Management, Inc. (g)(h)

120,000 Series B Preferred.

1/20/15

600,000

1,950,000

14.3%

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

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)

www.tilsontech.com

Total Tilson

2,100,012

3,960,012

Other Affiliate Investments:

G-TEC Natural Gas Systems(e)

Membership Interest

8/31/99

17%

400,000

—

0.0%

(Manufacturing)

Subtotal Affiliate Investments

$20,427,536

$15,568,648

TOTAL INVESTMENTS – 96.5%

$34,609,818

$26,787,198

OTHER ASSETS IN EXCESS OF

LIABILITIES – 3.5%

965,967

NET ASSETS – 100%

$27,753,165

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

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

(Unaudited)

Notes to the Consolidated Schedule of Portfolio Investments

(a) At ~~June~~September 30, 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 ~~June~~September 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~~September 30, 2019, the total cost of investment securities was approximately ~~$35.5~~$34.6 million. Net unrealized depreciation was approximately ($~~4.2)~~7.8) million, which was comprised of $6.8 million of unrealized appreciation of investment securities and ($~~11.0)~~14.6) million of unrealized depreciation of investment securities. At ~~June~~September 30, 2019, the aggregate gross unrealized gain for federal income tax purposes was ~~$6.4~~$6.5 million and the aggregate gross unrealized loss for federal income tax purposes was ($~~7.6)~~10.6) million. The net unrealized loss for federal income tax purposes was ($~~1.2)~~4.1) million based on a tax cost of ~~$32.9~~$31.9 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~~September 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~~SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~June~~September 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)		Type of Investment	December 31, 2018 Fair Value		Gross Additions (1)		Gross Reductions (2)			September 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		$-	$140,000 Term Note at 7%.	$	99,500	$	—	($	99,500	)	$	—	$	40,500	$	—
Gemcor II, LLC			-		-		-			-		39,893		-			—		—		—			—		39,893		—

	Total Control Investments		$99,500		$-		($99,500)			$-		$80,393		$-	Total Control Investments	$	99,500	$	—	($	99,500	)	$	—	$	80,393	$	—
Affiliate Investments: BeetNPath, LLC	1,119,024 SeriesA-2 Preferred Membership Units.		$ -		$ -		$ -			$ -		$ -		$-

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

Carolina Skiff LLC	6.0825% Class A Common Membership interest.		1,750,000		-		-			1,750,000		-		24,043	6.0825% Class A Common Membership interest.		1,750,000		—		—			1,750,000		—		76,914

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

First Wave Technologies, Inc.	670,443.2 Class A Common.		33,000		-		-			33,000		-		-	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		-		-	1,586,902 Series B Preferred.		1,000,000		—		(1,000,000	)		—		—		—
	$3,250,000 Promissory Notes at 10%.		3,385,586		166,490		(215,080	)		3,336,996		-		201,472	$3,250,000 Promissory Notes at 10%.		3,385,586		269,164		(1,154,750	)		2,500,000		—		305,397
	$250,000 Promissory Note at 10%.		-		251,319		-			251,319		-		1,319	$250,000 Promissory Note at 10%		—		257,797		(7,797	)		250,000		—		7,797
	Warrant for Common.		37,500		-		(37,500	)		-		-		-	Warrant for Common.		37,500		—		(37,500	)		—		—		—
	Total Genicon		4,423,086		417,809		(752,580	)		4,088,315		-		202,791
															Total Genicon		4,423,086		526,961		(2,200,047	)		2,750,000		—		313,194

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

Knoa Software, Inc.	973,533 SeriesA-1 Convertible Preferred.		750,000		-		-			750,000		-		193,934	973,533 SeriesA-1 Convertible Preferred.		750,000		—		—			750,000		—		193,934
	1,876,922 Series B Preferred.		479,155		-		-			479,155		-		-	1,876,922 Series B Preferred.		479,155		—		—			479,155		—		—
	Total Knoa		1,229,155		-		-			1,229,155		-		193,934
															Total Knoa		1,229,155		—		—			1,229,155		—		193,934
KnowledgeVision Systems, Inc.	200,000 SeriesA-1 Preferred.		-		-		-			-		-		-

KnowledgeVision															200,000 SeriesA-1 Preferred.		—		—		—			—		—		—
Systems, Inc.															214,285 SeriesA-2 Preferred.		—		—		—			—		—		—
	214,285 SeriesA-2 Preferred.		-		-		-			-		-		-	129,033 SeriesA-3 Preferred.		165,001		—		(165,001	)		—		—		—
	129,033 SeriesA-3 Preferred.		165,001		-		-			165,001		-		-	$75,000 Subordinated Promissory Notes at 8%.		75,000		—		—			75,000		—		4,488
	$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		—		92,879
	$900,000 Term Note at 13%.		750,000		150,000		-			900,000		-		61,032	Warrant for 46,743 SeriesA-3.		35,000		—		( 35,000	)		—		—		—
	Warrant for 46,743 SeriesA-3.		35,000		-		-			35,000		-		-
	Total KnowledgeVision		1,025,001		150,000		-			1,175,001		-		64,007	Total KnowledgeVision		1,025,001		150,000		(200,001	)		975,000		—		97,367

Mezmeriz, Inc.	1,554,565 Series Seed Preferred.		351,477		-		-			351,477		-		-	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	$1,500,000 Subordinated Promissory Note at 12% (1% PIK).		1,933,353		14,536		—			1,947,889		—		174,437
	15% Class A Common Membership Interest.		610,000		-		-			610,000		-		-	15% Class A Common Membership Interest.		610,000		—		—			610,000		—		—
	Total Microcision		2,543,353		9,678		-			2,553,031		-		116,146
															Total Microcision		2,543,353		14,536		—			2,557,889		—		174,437

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

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

RAND CAPITAL CORPORATION AND ~~SUBSIDIARIES~~SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

~~June~~September 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

Investments in and Advances to Affiliates


Company	Type of Investment	December 31, 2018 Fair Value		Gross Additions (1)		Gross Reductions (2)			September 30, 2019 Fair Value		Net Realized Gains (Losses)			Amount of Interest/ Dividend/ Fee Income (3)
SciAps, Inc.	187,500 Series A Preferred.		700,000		—		(477,000	)		223,000		—			—
	274,299 SeriesA-1 Convertible Preferred.		250,000		—		(108,000	)		142,000		—			—
	117,371 Series B Convertible Preferred.		250,000		—		—			250,000		—			—
	113,636 Series C Convertible Preferred.		175,000		—		—			175,000		—			—
	369,698 SeriesC-1 Convertible Preferred.		399,274		—		—			399,274		—			—
	147,059 Series D Convertible Preferred.		250,000		—		—			250,000		—			—

	Total SciAps		2,024,274		—		(585,000	)		1,439,274		—			—

SOMS	5,959,490 Series B membership Interests.		—		—		—			—		(472,632	)		—
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.		600,000		1,350,000		—			1,950,000		—			36,833
Management, Inc.	21,391 Series C Preferred.		200,000		147,604		—			347,604		—			—
	70,176 Series D Preferred.		800,000		340,360		—			1,140,360		—			—
	15,385 Series E Preferred.		—		500,012		—			500,012		—			—
	211,567 SQF Hold Co. Common.		—		22,036					22,036		—
	$200,000 Subordinated Promissory Note at 8%.		200,000		—		(200,000	)		—		—			11,835
	$800,000 Subordinated Promissory Note at 8%.		800,000		—		(800,000	)		—		—			47,332

	Total Tilson		2,600,000		2,360,012		(1,000,000	)		3,960,012		—			96,000

	Total Affiliate Investments	$	17,026,091	$	3,051,509	($	4,508,952	)	$	15,568,648	($	472,632	)	$	951,846

	Total Control and Affiliate Investments	$	17,125,591	$	3,051,509	($	4,608,452	)	$	15,568,648	($	392,239	)	$	951,846

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~~September 30, 2019 (Continued)

(Unaudited)


Industry Classification	Percentage of Total Investments (at fair value) as of ~~June~~September 30, 2019
Software	~~34.6%~~	39.6	%

~~Healthcare~~ Manufacturing	~~23.8~~	22.6

~~Manufacturing~~ Healthcare	~~20.0~~	16.4

Professional Services	~~15.9~~	14.8

Contact Center	~~1.6~~	1.9

Oil and Gas	~~1.6~~	1.9
Electronics		1.3
~~Electronics~~ Consumer Product		1.1

~~Consumer Product Electronics~~ Marketing	~~1.0~~

~~Marketing~~	0.4



Total Investments	~~100%~~	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%


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)	1,181,160 Series A Preferred.		8/12/16		<1	%	$	163,000	$	2,776,907		8.8	%
Buffalo, NY. Live mobile wholesale auctions for new and used car dealers. (Software) www.acvauctions.com
Centivo Corporation (e)(g)	190,967 SeriesA-1 Preferred.		7/5/17		<1	%		200,000		200,000		1.0	%
New York, NY. Tech-enabled health solutions	337,808 SeriesA-2 Preferred.							101,342		101,342
company that helps self-insured employers and their employees save money and have a better experience. (Health Care) www.centivo.com

	Total Centivo							301,342		301,342

eHealth Global Technologies, Inc. (g)	$3,500,000 Term Note at 13% due		6/28/16		0	%						11.1	%
Henrietta, NY. eHealth Connect^® improves health care delivery through intelligently aggregated clinical record and images for patient referrals. (Health Care) www.ehealthtechnologies.com	December 31, 2020.							3,500,000		3,500,000
Empire Genomics, LLC (g)(m)	$1,209,014 Senior Secured		6/13/14		0	%						2.4	%
Buffalo, NY. Molecular diagnostics company that offers a comprehensive menu of assay services for diagnosing and guiding patient therapeutic treatments.	Convertible Term Notes at 10% (8% PIK through September 30, 2019) due December 31, 2020.							1,233,195		474,181
(Health Care)	$444,915 Promissory Note at 9%
www.empiregenomics.com	(4% PIK) due December 31, 2020.							444,915		302,569

	Total Empire							1,678,110		776,750

GiveGab, Inc. (e)(g)	5,084,329 Series Seed Preferred.		3/13/13		4	%		616,221		616,221		2.0	%
Ithaca, NY. Online fundraising, day of giving supporter engagement software fornon-profit organizations. (Software) www.givegab.com
GoNoodle, Inc. (g)(m)	$1,000,000 Secured Note at 12%		2/6/15		<1	%						3.3	%
Nashville, TN. Student engagement education	due January 31, 2020, (1% PIK).							1,039,663		1,039,663
software providing core aligned physical activity breaks. (Software) www.gonoodle.com	Warrant for 47,324 Series C Preferred.							25		25

	Total GoNoodle							1,039,688		1,039,688

Mercantile Adjustment Bureau, LLC (g)	$1,199,039 Subordinated Secured		10/22/12		4	%						2.2	%
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		700,000
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.(i)Interest receivable $50,254.							97,625		—

	Total Mercantile							1,446,665		700,000

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

	Total Outmatch							2,145,496		2,145,496

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

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 %


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

	Total Rheonix							2,802,731		2,202,732

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

	Total Social Flow							1,750,000		2,071,300

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
Tech 2000, Inc. (g)(m)	$600,000 Term Note at 14% (PIK		11/16/18		0	%
Herndon, VA. Develops and delivers IT training. (Software) www.t2000inc.com	through December 31, 2018) due November 15, 2021.							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)	1,119,024 SeriesA-2 Preferred		10/20/14		9	%						1.7	%
Ithaca, NY. Frozen entrées made from 100%	Membership Units.						$	359,000	$	—
whole grain steel cut oats under Grainful brand name. (Consumer Product)	1,032,918 Series B Preferred Membership Units.							261,277		261,277
www.grainful.com	$262,626.64 Convertible Secured
	Notes at 8% due December 21, 2019.							262,627		262,627

	Total BeetNPath							882,904		523,904

Carolina Skiff LLC (g)	6.0825% Class A Common		1/30/04		7	%						5.6	%
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	%		200,000		200,000		0.6	%
Buffalo, NY. Social media publishing tool for law, CPA and professional firms. (Software) www.clearviewsocial.com
First Wave Technologies, Inc. (e)(g)	670,443.2 Class A Common.		4/19/12		5	%		661,563		33,000		0.1	%
Batavia, NY. Sells First Crush automated pill crusher that crushes and grinds pills for nursing homes and medical institutions. (Health Care) www.firstwaveproducts.com

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 %


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

	Total Genicon							4,505,586		4,423,086

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

	Total Knoa							1,229,155		1,229,155

KnowledgeVision Systems, Inc. (g)	200,000 SeriesA-1 Preferred.		11/13/13		7	%		250,000		—		3.2	%
Lincoln, MA. Online presentation and training	214,285 SeriesA-2 Preferred.							300,000		—
software. (Software)	129,033 SeriesA-3 Preferred.							165,001		165,001
www.knowledgevision.com	Warrant for 46,743 SeriesA-3.							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 Term Note at 11% due April 30, 2021.							750,000		750,000

	Total KnowledgeVision							1,575,001		1,025,001

Mezmeriz, Inc. (e)(g)	1,554,565 Series Seed Preferred.		1/9/08		12	%		742,850		351,477		1.1	%
Ithaca, NY. Technology company developing novel reality capture tools for 3D mapping, reality modeling, object tracking and classification. (Electronics Developer) www.mezmeriz.com
Microcision LLC (g)(m)	$1,500,000 Subordinated Promissory		9/24/09		15	%						8.1	%
Pennsauken Township, NJ. Manufacturer of precision machined medical implants,	Note at 12% (1% PIK) due December 31, 2024.							1,933,353		1,933,353
components and assemblies. (Manufacturing) www.microcision.com	15% Class A Common Membership Interest.							—		610,000

	Total Microcision							1,933,353		2,543,353

New Monarch Machine Tool, Inc. (g)	22.84 Common.		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)	300,483 Preferred AA.		12/31/14		8	%		752,712		300,000		1.0	%
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
SciAps, Inc. (e)(g)	187,500 Series A Preferred.		7/12/13		6	%		1,500,000		700,000		6.4	%
Woburn, MA. Instrumentation company producing portable analytical devices using XRF,	274,299 SeriesA-1 Convertible Preferred.							504,710		250,000
LIBS and RAMAN spectroscopy to identify	117,371 Series B Convertible Preferred.							250,000		250,000
compounds, minerals, and elements.	113,636 Series C Convertible Preferred.							175,000		175,000
(Manufacturing) www.sciaps.com	369,698 SeriesC-1 Convertible Preferred.							399,274		399,274
	147,059 Series D Convertible Preferred.							250,000		250,000

	Total SciAps							3,078,984		2,024,274

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		(a) Type of Investment	(b) Date Acquired		(c) Equity			Cost		(d)(f) Fair Value			Percent of Net Assets
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		—

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%
for selected industries. (Contact Center) 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) 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%

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

												Total Tilson							2,600,000		2,600,000

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	%

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										$	20,708,659	$	17,026,091

Control Investments – 0.3% of net assets (l)
Advantage 24/7 LLC (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

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										$	99,500	$	99,500

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

LIABILITIES IN EXCESS OF OTHER
ASSETS – (10%)																					(3,142,617	)

NET ASSETS – 100%								$31,524,187												$	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 December 31, 2018, the total cost of investment securities was approximately $38.3 million. Net unrealized depreciation was approximately ($3.6) million, which was comprised of $5.3 million of unrealized appreciation of investment securities and ($8.9) million of unrealized depreciation of investment securities. At December 31, 2018, the aggregate gross unrealized gain for federal income tax purposes was $5.2 million and the aggregate gross unrealized loss for federal income tax purposes was ($5.9) million. The net unrealized loss for federal income tax purposes was ($0.7) million based on a tax cost of $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 Consolidated Statements of Financial Position.

(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 SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2018 (Continued)

  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

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.	$	359,000	$	—	($	359,000	)	$	—	$	—		$	—
	1,032,918 Series B Preferred Membership Units.		291,000		—		(29,723	)		261,277		—			—
	$262,626.64 Convertible Secured Note at 8%		—		262,627		—			262,627		—			5,413

	Total BeetNPath		650,000		262,627		(388,723	)		523,904		—			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%.		250,000		—		(250,000	)		—		(316,469	)		—
	$280,000 junior term notes at 10%.		—		—		—			—		—			—
	Warrant for 41,619 capital securities.		—		—		—			—		(22,000	)		—
	670,443.2 Class A Common.		—		33,000		—			33,000		—			—

	Total First Wave		250,000		33,000		(250,000	)		33,000		(338,469	)		—

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

	Total Genicon		4,023,779		481,807		(82,500	)		4,423,086		—			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.		750,000		—		—			750,000		—			—
	1,876,922 Series B Preferred.		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 Systems, Inc.	200,000 SeriesA-1 Preferred.		—		—		—			—		—			—
	214,285 SeriesA-2 Preferred.		300,000		—		(300,000	)		—		—			—
	129,033 SeriesA-3 Preferred.		165,001		—		—			165,001		—			—
	$75,000 Subordinated Promissory Notes at 8%.		50,000		25,000		—			75,000		—			5,408
	$750,000 term note at 11%		—		750,000		—			750,000		—			60,241
	Warrant for 46,743 SeriesA-3.		35,000		—		—			35,000		—			—

	Total KnowledgeVision		550,001		775,000		(300,000	)		1,025,001		—			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.		1,914,140		19,213		—			1,933,353		—			230,559
	15% Class A Common Membership Interest.		—		610,000		—			610,000		—			—

	Total Microcision		1,914,140		629,213		—			2,543,353		—			230,559

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

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2018 (Continued)

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

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	150,000 Series AA Preferred.		—		300,000		—			300,000		—			—
Technology, Inc.	$300,000 Subordinated Convertible Promissory notes at 6%.		300,000		—		(300,000	)		—		—			27,370

	Total OnCore		300,000		300,000		(300,000	)		300,000		—			27,370

SciAps, Inc.	187,500 Series A Convertible Preferred.		700,000		—		—			700,000		—			—
	274,299 SeriesA-1 Convertible Preferred.		250,000		—		—			250,000		—			—
	117,371 Series B Convertible Preferred.		250,000		—		—			250,000		—			—
	113,636 Series C Preferred.		175,000		—		—			175,000		—			—
	369,698 SeriesC-1 Preferred.		399,274		—		—			399,274		—			—
	147,059 Series D Convertible Preferred		—		250,000		—			250,000		—			—

	Total SciAps		1,774,274		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.		600,000		—		—			600,000		—			20,000
	21,391 Series C Convertible Preferred.		200,000		—		—			200,000		—			—
	70,176 Series D Preferred.		750,000		50,000		—			800,000		—			19,003
	$200,000 Subordinated Promissory Note at 8%.		200,000		—		—			200,000		—			16,000
	$800,000 Subordinated Promissory Note at 8%.		750,000		50,000		—			800,000		—			60,822

	Total Tilson		2,500,000		100,000		—			2,600,000		—			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 SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2018 (Continued)


Industry Classification	Percentage of Total Investments (at fair value) as of December 31, 2018
Software	~~33.8%~~	33.8	%
Healthcare
~~Healthcare~~	32.4

Manufacturing		19.2

Professional Services		7.5

Consumer Product		2.4

Contact Center		2.0

Oil and Gas		1.4

Electronics		1.0

Marketing		0.3


Total Investments	~~100%~~	100	%

Rand Capital Corporation and 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, investment 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, 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 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.

We currently 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 currently elected to qualify to be taxed as a regulated investment company as defined under Subchapter M of the Internal Revenue Code. See Recent ~~Developments.~~Developments for a discussion of our pending Transaction.

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 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.~~fee, provided certain performance measures are met. 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 going forward, that may include regular cash dividends to shareholders.

Rand’s wholly-owned subsidiary, Rand Capital SBIC, Inc., received approval from the SBA in October 2019 for Rand to proceed with the pending Transaction with East. Rand expects the ~~Transactions~~Transaction to close ~~in the second half of 2019, subject to receipt of required regulatory approvals.~~during November 2019.

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 ~~six~~nine months ended ~~June~~September 30, 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, 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

~~10-Q Quarterly~~ ~~Report on Form10-Q~~ ~~for the quarter~~

10-Q

Quarterly Report on Form10-Q for the quarters ended June 30, 2019 and March 31, 2019

Principles of Consolidation –- The consolidated financial statements include the accounts of Rand and its wholly-owned 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 ~~March~~September 2019, the SBIC Funding Corporation completed a pooling of SBA debentures that have a coupon rate of ~~3.113%~~2.283%, excluding a mandatory SBA annual charge estimated to be 0.094%, resulting in a total estimated fixed rate for ten years of ~~3.207%~~2.377%. 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) 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 ~~$42,428~~$48,887 and ~~$15,327~~$28,266 for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. ~~In addition,~~During the nine months ended September 30, 2019, the Corporation recognized aone-time fee of $225,000 in conjunction with the repayment of the eHealth loan instrument. During the nine months ended September 30, 2018 the Corporation recorded aone-time debt modification fee of approximately $142,000 in connection with the Empire Genomics debt modification. The board fees were $500 and $2,000 for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

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 ~~$20,382~~$30,573 and ~~$19,271~~$29,462 in OID income for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. OID income is estimated to be approximately ~~$20,000~~$10,000 for the remainder of 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 ~~$18,195~~$27,614 and ~~$13,700~~$20,550 for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. Amortization expense on currently outstanding debentures for the next five years is estimated to average approximately ~~$31,000~~$30,000 per year.

SBA Debentures –-The Corporation had $11,000,000 and $8,750,000 in outstanding SBA debentures at ~~June~~September 30, 2019 and December 31, 2018, respectively, with a weighted average interest rate, including the SBA annual fee, of 3.45% at ~~June~~September 30, 2019. The debentures are presented net of deferred debenture costs (See Note 6 “SBA Debentures”). The $11,000,000 in outstanding SBA leverage matures from 2022 through 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 during the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 were ~~$630,274~~$644,821 and ~~$17,051,~~$17,006, respectively. Interest paid during each of the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018 was ~~$153,513~~$339,605 and ~~$140,275,~~$282,875, respectively. The Corporation converted ~~$232,513~~$344,222 and ~~$77,154~~$279,319 of interest receivable into investments during the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. In addition, a debt modification fee of $142,346 was capitalized during the nine months ended September 30, 2018.

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 ~~June~~September 30, 2019 and December 31, 2018, there were 500,000 shares of $10.00 par value preferred stock authorized and unissued.

On October ~~25, 2018,~~24, 2019, the Board of Directors extended the repurchase authorization for up to ~~1,000,000~~an aggregate of 1,541,056 shares of the Corporation’s outstanding common stock on the open market through October 25, ~~2019~~2020 at prices no greater than the then current net asset value. No shares were repurchased during the ~~six~~nine months ended ~~June~~September 30, 2019. At ~~June~~September 30, 2019 and 2018, respectively, 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 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 ~~June~~September 30, 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 ~~six~~nine months ended ~~June~~September 30, 2019 and 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 ~~June~~September 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 ~~six~~nine months ended ~~June~~September 30, 2019 or 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:


	As of September 30, ~~June 30,~~ 2019
Tilson Technology Management, Inc. (Tilson)		16	%
~~Genicon, Inc. (Genicon)~~		1315	%
ACV Auctions, Inc. (ACV)		910	%
Genicon, Inc. (Genicon)		10	%
Microcision, LLC. (Microcision)		810	%
~~Rheonix, Inc. (Rheonix)~~Outmatch Holdings, LLC (Outmatch)		78	%


	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 ~~June~~September 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 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 ~~June~~September 30, 2019:


Investment Type	Market Approach EBITDA Multiple		Market Approach Liquidation Seniority		Market Approach Revenue Multiple		Market Approach Transaction Pricing		Asset Value Liquidation Seniority		Totals		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	$	—	$	1,702,757	$	2,645,496	$	3,694,470	$	—	$	8,042,723
Non-Control/Non-Affiliate Loan and Debt		500,000		1,871,439		—		1,025,777		—		3,339,216		500,000		1,650,050		—		1,025,777		—		3,175,827

TotalNon-Control/Non-Affiliate	$	500,000	$	5,074,196	$	2,645,496	$	4,720,247		—	$	12,939,939	$	500,000	$	3,352,807	$	2,645,496	$	4,720,247		—	$	11,218,550

Affiliate Equity	$	—	$	22,841	$	3,768,430	$	7,004,489	$	1,943,031	$	10,795,760	$	—	$	22,841	$	2,868,429	$	7,004,489	$	—	$	9,895,759
Affiliate Loan and Debt		—		—		3,588,315		1,975,000		—		7,506,346		—		975,000		2,750,000		—		1,947,889		5,672,889

Total Affiliate	$	—	$	22,841	$	7,356,745	$	8,979,489	$	1,943,031	$	18,302,106	$	—	$	997,841	$	5,518,429	$	7,004,489	$	1,947,889	$	15,568,648

Total Level 3 Investments	$	500,000	$	5,097,037	$	10,002,241	$	13,699,736	$	1,943,031	$	31,242,045	$	500,000	$	4,350,648	$	8,263,925	$	11,724,736	$	1,947,889	$	26,787,198


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

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

Weighted Average		6.0X		1X		2.6X		Not Applicable		Not Applicable				6.0X		1X		2.7X		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 ~~June~~September 30, 2019:


			Fair Value Measurements at Reported Date Using								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)		September 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	$	2,145,692	$	—	$	—	$	2,145,692
Debt investments		8,757,870		—		—		8,757,870		6,703,024		—		—		6,703,024
Equity investments		20,338,483		—		—		20,338,483		17,938,482		—		—		17,938,482

Total	$	31,242,045	$	—	$	—	$	31,242,045	$	26,787,198	$	—	$	—	$	26,787,198

The following table provides a summary of the components of Level 1, 2 and 3 Assets Measured at Fair Value at December 31, 2018:


			Fair Value Measurements at Reported Date Using								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)		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	$	4,935,777	$	—	$	—	$	4,935,777
Debt investments		9,397,979		—		—		9,397,979		9,397,979		—		—		9,397,979
Equity investments		20,330,048		—		—		20,330,048		20,330,048		—		—		20,330,048

Total	$	34,666,804	$	—	$	—	$	34,666,804	$	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 ~~six~~nine months ended ~~June~~September 30, 2019:

   Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Venture Capital Investments
Description

Loan
Investments

Debt
Investments

Equity
Investments

Total

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:

BeetNPath, LLC (Beetnpath)
   —      (262,627 )    (261,277 )    (523,904 )
Genicon, Inc. (Genicon)
   —      (215,080 )    (537,500 )    (752,580 )
Mercantile Adjustment Bureau, LLC (Mercantile)
   —      (200,000 )    —      (200,000 )
SciAps, Inc. (Sciaps)
   —      —      (385,000 )    (385,000 )
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
   —      (677,707 )    77,555    (600,152 )
Purchases of Securities/Changes toSecurities/Non-cash conversions:

Advantage 24/7
   140,000    —      —      140,000
Empire Genomics, LLC (Empire Genomics)
   —      49,821    —      49,821
Genicon
   —      417,809    —      417,809
GoNoodle, Inc. (GoNoodle)
   —      5,205    —      5,205
KnowledgeVision Systems, Inc. (Knowledge Vision)
   150,000    —      —      150,000
Microcision LLC (Microcision)
   —      9,678    —      9,678
Tilson
   —      —      500,012    500,012








Total Purchases of Securities/Changes toSecurities/Non-cash conversions
   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
   444,915    (444,915 )    —      —








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~~	($	~~600,152~~	)

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


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Venture Capital Investments
Description	Loan Investments			Debt Investments			Equity Investments			Total
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:
BeetNPath, LLC (Beetnpath)		—			(262,627	)		(261,277	)		(523,904	)
Empire Genomics, LLC (Empire Genomics)		—			(249,661	)		—			(249,661	)
Genicon, Inc. (Genicon)		—			(1,162,547	)		(1,037,500	)		(2,200,047	)
KnowledgeVision Systems, Inc. (Knowledge Vision)		—			—			(200,001	)		(200,001	)
Mercantile Adjustment Bureau, LLC (Mercantile)		—			(200,000	)		—			(200,000	)
Rheonix, Inc. (Rheonix)		—			—			(1,500,000	)		(1,500,000	)
SciAps, Inc. (Sciaps)		—			—			(585,000	)		(585,000	)
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*		—			(1,874,835	)		(2,322,446	)		(4,197,281	)
Purchases of Securities/Changes toSecurities/Non-cash conversions:
Advantage 24/7		140,000			—			—			140,000
Empire Genomics		—			75,481			—			75,481
Genicon		—			526,961			—			526,961
GoNoodle, Inc. (GoNoodle)		—			7,817			—			7,817
Knowledge Vision		150,000			—			—			150,000
Microcision LLC (Microcision)		—			14,536			—			14,536
Tilson		—			—			500,012			500,012

*Total Purchases of Securities/Changes toSecurities/Non-cash conversions*		290,000			624,795			500,012			1,414,807
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	)
Tilson		—			(1,000,000	)		—			(1,000,000	)

*Total Repayments and Sale of Securities*		(3,525,000	)		(1,000,000	)		(179,893	)		(4,704,893	)
Transfers within Level 3		444,915			(444,915	)		—			—

Ending Balance, September 30, 2019, of Level 3 Assets	$	2,145,692		$	6,703,024		$	17,938,482		$	26,787,198

Change in unrealized depreciation on investments for the period included in changes in net assets										($	4,197,281	)

Net realized loss on investments for the period included in changes in net assets										($	392,239	)

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


	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, 2017, of Level 3 Assets	$	3,550,000	$	10,096,244		$	18,637,818		$	32,284,062		$	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)		—		(651,489	)		—			(651,489	)		—		(901,360	)		—			(901,360	)
First Wave Products Group, LLC (First Wave)		—		(250,000	)		—			(250,000	)		—		(250,000	)		—			(250,000	)
GiveGab, Inc. (Givegab)		—		—			191,907			191,907			—		—			191,907			191,907
Intrinsiq													—		—			725,673			725,673
SOMS Technologies, LLC (SOMS)		—		—			(498,348	)		(498,348	)		—		—			(498,348	)		(498,348	)

*Total Unrealized Losses*		—		(901,489	)		(306,441	)		(1,207,930	)		—		(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			—		—			201,342			201,342
Empire Genomics													—		274,106			—			274,106
Genicon, Inc. (Genicon)		—		80,348			—			80,348			—		153,548			—			153,548
GoNoodle, Inc. (GoNoodle)		—		5,153			—			5,153			—		7,739			—			7,739
KnowledgeVision Systems, Inc. (Knowledgevision)		—		775,000			—			775,000
KnowledgeVision Systems, Inc. (KnowledgeVision)													775,000		—			—			775,000
Microcision LLC (Microcision)		—		9,582			—			9,582			—		14,392			—			14,392
SciAps, Inc. (Sciaps)		—		—			250,000			250,000			—		—			250,000			250,000

*Total Purchases of Securities/Changes toSecurities/Non-cash conversions*		—		870,083			451,342			1,321,425			775,000		589,785			451,342			1,816,127
Repayments and Sale of Securities:
Empire Genomics		—		(21,665	)		—			(21,665	)		—		(21,665	)		—			(21,665	)
Knoa Software, Inc. (Knoa)		—		(48,466	)		—			(48,466	)		—		(48,466	)		—			(48,466	)

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


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

~~NOTE~~Note 4. OTHER ASSETS

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

   June 30,
2019    December 31,
2018
Prepaid expenses
   $ 334,359    $     —
Operating receivables
   11,519    11,428
Equipment (net)
   132    262




Total other assets
   $ 346,010    $11,690


	September 30, 2019		December 31, 2018
Prepaid expenses	$	311,940	$	—
Operating receivables		5,660		11,428
Equipment (net)		68		262

Total other assets	$	317,668	$	11,690

Included in other assets at September 30, 2019 is $266,000 in stock issuance costs attributable to the Transactions. These expenses were deferred and will be offset against the equity capital raise when the Transactions close, or expensed if the Transactions are not completed.

Note 5. COMMITMENTS AND CONTINGENCIES

The Corporation had no commitments at ~~June~~September 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 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.


	June 30, 2019			December 31, 2018			September 30, 2019			December 31, 2018
Debentures guaranteed by the SBA	$	11,000,000		$	8,750,000		$	11,000,000		$	8,750,000
Less unamortized issue costs		(231,925	)		(195,557	)		(222,507	)		(195,557	)

Debentures guaranteed by the SBA, net	$	10,768,075		$	8,554,443		$	10,777,493		$	8,554,443

Note 7. CHANGES IN STOCKHOLDERS’ EQUITY (NET ASSETS)

The following schedule analyzes the changes in stockholders’ equity (net assets) section of the Consolidated Statement of Financial Position for the three months and ~~six~~nine months ended ~~June~~September 30, 2019 and ~~June 30, 2018:~~2018, respectively:

   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 (Net Assets)
July 1, 2019	$	686,304	$	10,581,789	($	1,786,085	)	$	25,920,065	($	3,300,915	)	($	1,469,105	)	$	30,632,053
Net investment loss		—		—		(65,549	)		—		—			—			(65,549	)
Net realized loss on sales and dispositions of investments		—		—		—			—		—			—			—
Net change in unrealized depreciation on investments		—		—		—			—		(2,813,339	)		—			(2,813,339	)

September 30, 2019	$	686,304	$	10,581,789	($	1,851,634	)	$	25,920,065	($	6,114,254	)	($	1,469,105	)	$	27,753,165

   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


	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 (Net Assets)
July 1, 2018	$	686,304	$	10,581,789	($	1,808,243	)	$	27,215,738		($	4,439,505	)	($	1,469,105	)	$	30,766,978
Net investment gain		—		—		164,499			—			—			—			164,499
Net realized loss on sales and dispositions of investments		—		—					(718,934	)		—			—			(718,934	)
Net change in unrealized depreciation on investments		—		—		—			—			375,133			—			375,133

September 30, 2018	$	686,304	$	10,581,789	($	1,643,744	)	$	26,496,804		($	4,064,372	)	($	1,469,105	)	$	30,587,676


	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 (Net Assets)
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		—		—		(186,082	)		—			—			—			(186,082	)
Net realized loss on sales and dispositions of investments		—		—		—			(301,378	)		—			—			(301,378	)
Net change in unrealized depreciation on investments		—		—		—			—			(3,283,562	)		—			(3,283,562	)

September 30, 2019	$	686,304	$	10,581,789	($	1,851,634	)	$	25,920,065		($	6,114,254	)	($	1,469,105	)	$	27,753,165


	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 (Net Assets)
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		—		—		(46,598	)		—			—			—			(46,598	)
Net realized loss on sales and dispositions of investments									(718,934	)								(718,934	)
Net change in unrealized depreciation on investments		—		—		—			—			(565,477	)		—			(565,477	)

September 30, 2018	$	686,304	$	10,581,789	($	1,643,744	)	$	26,496,804		($	4,064,372	)	($	1,469,105	)	$	30,587,676

Note 8. FINANCIAL HIGHLIGHTS

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


	Six months ended June 30, 2019 (Unaudited)			Six months ended June 30, 2018 (Unaudited)			Nine months ended September 30, 2019 (Unaudited)			Nine months ended September 30, 2018 (Unaudited)
Income from investment operations (1):
Investment income	$	0.21		$	0.12		$	0.27		$	0.23
Operating expenses		0.24			0.16			0.32			0.24

Investment loss before income taxes		(0.03	)		(0.04	)		(0.05	)		(0.01	)
Income tax benefit		(0.01	)		(0.01	)		(0.02	)		0.00

Net investment loss		(0.02	)		(0.03	)		(0.03	)		(0.01	)
Net realized and unrealized loss on investments		(0.12	)		(0.15	)		(0.57	)		(0.20	)

Decrease in net asset value		(0.14	)		(0.18	)		(0.60	)		(0.21	)
Net asset value, beginning of period		4.99			5.05			4.99			5.05

Net asset value, end of period	$	4.85		$	4.87		$	4.39		$	4.84

Per share market price, end of period	$	2.62		$	2.69		$	2.50		$	2.40

Total return based on market value		4.80	%		(10.93	%)		0.0	%		(20.5	%)
Total return based on net asset value		(2.83	%)		(3.61	%)		(12.0	%)		(4.2	%)
Supplemental data:
Ratio of operating expenses before income taxes to average net assets		4.87	%		3.39	%		6.9	%		4.8	%
Ratio of operating expenses including income taxes to average net assets		3.87	%		2.30	%		3.1	%		2.9	%
Ratio of net investment loss to average net assets		(0.39	%)		(0.67	%)		(0.6	%)		(0.2	%)
Portfolio turnover		3.2	%		3.8	%		3.4	%		4.2	%
Net assets, end of period	$	30,632,053		$	30,766,978		$	27,753,165		$	30,587,676
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. 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, 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. Rand SBIC was approved for an additional $6.0 million in new SBA leverage commitments during 2018 and has drawn down $3.0 million of that leverage as of ~~June~~September 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 at Rand. Rand’s shareholders approved all proposals related to the Transactions at a special meeting of shareholders that was held on May 16, 2019. Rand’s wholly-owned subsidiary, Rand Capital SBIC, Inc., received approval from the SBA for Rand to proceed with the pending Transaction with East. Rand expects the Transaction to close during November 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 ~~second~~third quarter of 2019, we had ~~$8.6~~$9.3 million in cash and cash equivalents available for future investments and expenses, an increase of ~~$4.6~~$5.3 million as compared to the end of 2018. The increase was primarily due to ~~proceeds from a $3.5~~$4.5 million ~~loan payoff~~in loans repaid by atwo portfolio ~~company~~companies and $2.25 million of additional SBA leverage drawn down during the ~~six~~nine months ended ~~June~~September 30, 2019.

We believe the combination of cash on hand, proceeds from portfolio exits, 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.~~concepts, regardless of the macroeconomic environment.

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

We are 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 repurchase shares. At period end, we had authorization to repurchase an additional ~~458,954~~1,000,000 shares of our ~~Common Stock. However, our prioritized use of cash continues to be growing our portfolio.~~common stock.

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, 2018 under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Financial Condition


Overview:	June 30, 2019		December 31, 2018		Increase (Decrease)			% Increase (Decrease)			September 30, 2019		December 31, 2018		(Decrease) Increase			% (Decrease) Increase
Total assets	$	41,699,064	$	40,521,724	$	1,177,340			2.9	%	$	38,661,339	$	40,521,724	($	1,860,385	)		(4.6	%)
Total liabilities		11,067,011		8,997,537		2,069,474			23.0	%		10,908,174		8,997,537		1,910,637			21.2	%

Net assets	$	30,632,053	$	31,524,187	($	892,134	)		(2.8	%)	$	27,753,165	$	31,524,187	($	3,771,022	)		(12.0	%)

Net asset value per share (NAV) was ~~$4.85~~$4.39 at ~~June~~September 30, 2019 and $4.99 at December 31, 2018.

Our gross outstanding SBA debentures at ~~June~~September 30, 2019 were $11,000,000 and will mature from 2022 through 2029. Cash and cash equivalents approximated ~~28%~~33% of net assets at ~~June~~September 30, 2019, as compared to 13% at December 31, 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.


	June 30, 2019			December 31, 2018			(Decrease) Increase			% (Decrease) Increase			September 30, 2019			December 31, 2018			(Decrease)			% Decrease
Investments, at cost	$	35,467,536		$	38,292,143		($	2,824,607	)		(7.4	%)	$	34,609,818		$	38,292,143		($	3,682,325	)		(9.6	%)
Unrealized depreciation, net		(4,225,491	)		(3,625,339	)		600,152			16.6	%		(7,822,620	)		(3,625,339	)		(4,197,281	)		115.8	%

Investments at fair value	$	31,242,045		$	34,666,804		($	3,424,759	)		(9.9	%)	$	26,787,198		$	34,666,804		($	7,879,606	)		(22.7	%)

Our total investments at fair value, as estimated by management and approved by our Board of Directors, approximated ~~102%~~97% of net assets at ~~June~~September 30, 2019 versus 110% of net assets at December 31, 2018.

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


				Cost Increase (Decrease)
New investments:	Cost Increase (Decrease)
Tilson Technology Management, Inc. (Tilson)	$	500,012		$	500,012
Genicon Inc. (Genicon)		250,000			250,000
KnowledgeVision Systems, Inc. (Knowledgevision)		150,000			150,000
Advantage 24/7 LLC (Advantage 24/7)		140,000			140,000

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

Other changes to investments:
Genicon interest conversion and OID amortization		167,809			276,961
Empire Genomics, LLC (Empire Genomics) capitalized fee income and interest conversion		49,821			75,481
Microcision LLC (Microcision) interest conversion		9,678			14,536
GoNoodle, Inc. (GoNoodle) interest conversion		5,205			7,817

Total of other changes to investments		232,513			374,795

Investments repaid, sold, liquidated or converted:
eHealth Global Technologies, Inc. (eHealth) loan repayment		(3,500,000	)		(3,500,000	)
Tilson loan repayment					(1,000,000	)
SOMS Technologies, LLC (SOMS) realized loss		(472,632	)		(472,632	)
Advantage 24/7 investment conversion and loan repayment		(124,500	)		(124,500	)

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

Total of investments repaid, sold, liquidated or converted					(5,097,132	)

Net change in investments, at cost	($	2,824,607	)	($	3,682,325	)

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

Investment Income


	Three months ended June 30, 2019		Three months ended June 30, 2018		(Decrease) Increase			% (Decrease) Increase			Three months ended September 30, 2019		Three months ended September 30, 2018		(Decrease) Increase			% (Decrease) Increase
Interest from portfolio companies	$	315,489	$	315,700	($	211	)		(0.1	%)	$	328,103	$	450,289	($	122,186	)		(27.1	%)
Interest from other investments		53,538		7,735		45,803			592.2	%		36,797		7,872		28,925			367.4	%
Dividend and other investment income		207,060		78,942		128,118			162.3	%		65,996		48,856		17,140			35.1	%
Fee income		6,959		11,141		(4,182	)		(37.5	%)		6,459		155,285		(148,826	)		(95.8	%)

Total investment income	$	583,046	$	413,518	$	169,528			41.0	%	$	437,355	$	662,302	($	224,947	)		(34.0	%)

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

Interest from portfolio companies – Interest from portfolio companies ~~remained approximately the same~~decreased during the three months ended ~~June~~September 30, 2019 versus the same period in ~~2018.~~2018 due to the fact that the debt instrument from eHealth Global Technologies, Inc. (eHealth) was repaid during the first quarter of 2019. In addition, during the third quarter of 2018, loans to Empire Genomics were modified and resulted in the recording of interest that had previously not been accrued of approximately $91,000. 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 three months ended ~~June~~September 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:

   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
New Monarch Machine Tool, Inc. (New Monarch)
   —      27,409
Empire Genomics LLC (Empire Genomics)
   —      2,677




Total dividend and other investment income
   $ 207,060    $ 78,942


	Three months ended September 30, 2019		Three months ended September 30, 2018
Carolina Skiff LLC (Carolina Skiff)	$	52,871	$	39,169
Tilson Technology Management, Inc. (Tilson)		13,125		9,687

Total dividend and other investment income	$	65,996	$	48,856

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 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~~$12,939 for the three months ended ~~June~~September 30, 2019 and 2018, respectively. ~~The board fees were $500 and $1,000 for~~In addition, we recorded aone-time debt modification fee of approximately $142,000 during the three ~~months~~month ended ~~June~~September 30, ~~2019~~2018. We charged the fee to Empire Genomics and ~~2018, respectively.~~the fee was capitalized into the Empire Genomics loan balances as part of the debt modification.

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 %


	Three months ended September 30, 2019		Three months ended September 30, 2018		Increase		% Increase
Total expenses	$	530,539	$	447,800	$	82,739		18.5	%

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

The increase in expenses during the three months ended ~~June~~September 30, 2019 versus the same period in 2018 was primarily caused by a ~~395%~~79%, or ~~$254,907,~~$37,973, increase in ~~shareholder expenses~~stockholders expense and a ~~198%~~21%, or ~~$73,932,~~$16,623, increase in ~~professional fees. During the three months ended June 30, 2019, we held a special meeting of shareholders to approve all proposals~~interest expense. We incurred additional stockholders expense related to the ~~Transactions. We incurred additional shareholder expenses and professional fees related to this~~ aforementioned ~~special shareholder meeting,~~Transactions with East Asset Management and the regulatory procedures that are required ~~with~~to effect such ~~a meeting.~~

~~In addition, we deferred an additional $25,000 in stock issuance costs attributable~~Transactions. Our interest expense increased due 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.”higher outstanding SBA debt.

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 )


	Three months ended September 30, 2019		Three months ended September 30, 2018			Change
Realized loss on investments before income taxes	$	—	($	1,125,673	)	($	1,125,673	)

During the three months ended ~~June~~September 30, ~~2019,~~2018, we recognized a ~~realized~~ loss on our investment in ~~SOMS Technologies, LLC as~~Intrinsiq Material, Inc. (Intrinsiq) when the company ~~ceased doing business. In addition,~~was sold and we ~~received a final distribution of proceeds from an investment we exited in 2016, Gemcor LLC (Gemcor) of $39,893.~~did not receive any proceeds. There were no realized gains or losses during the three months ended September 30, 2019.

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 )


	Three months ended September 30, 2019			Three months ended September 30, 2018		Change
Change in unrealized depreciation of investments before income taxes	($	3,597,129	)	$	475,802	($	4,072,931	)

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


	Three months ended ~~June~~September 30, 2019
~~SocialFlow,~~Rheonix, Inc. ~~(Socialflow)~~(Rheonix)	($	~~750,000~~1,500,000	)
Genicon, Inc. (Genicon)		(~~715,080~~1,447,467	)
~~BeetNPath,~~Empire Genomics, LLC ~~(Beetnpath)~~(Empire Genomics)		(~~130,000~~249,661	)
~~SOMS Technologies, LLC (SOMS)~~KnowledgeVision Systems, Inc. (KnowledgeVision)		~~472,632~~(200,001	)
SciAps, Inc. (Sciaps)		(200,000	)

Total change in net unrealized depreciation of investments, before income taxes ~~during the three months ended June 30, 2019~~	($	~~1,122,448~~3,597,129	)

The valuations of our investments in ~~Beetnpath~~Empire Genomics, Genicon, KnowledgeVision, Rheonix and ~~Socialflow~~Sciaps 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~~ Some of ~~Genicon was decreased during~~these decreases in value may be recoverable following the ~~three months ended June 30, 2019 to revalue our holdings based upon the liquidation preferences~~completion 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.~~their respective future financings.

The change in unrealized depreciation, before income taxes, for the three months ended ~~June~~September 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~~	)


	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	$	475,802

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

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

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~~September 30, 2019 and 2018, the net decrease in net assets from operations was ($~~1,347,549)~~2,878,888) and ($~~631,294)~~179,302), respectively.

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

Investment Income


	Six months ended June 30, 2019		Six months ended June 30, 2018		Increase		% Increase			Nine months ended September 30, 2019		Nine months ended September 30, 2018		(Decrease) Increase			% (Decrease) Increase
Interest from portfolio companies	$	721,454	$	613,048	$	108,406		17.7	%	$	1,049,557	$	1,063,337	($	13,780	)		(1.3	%)
Interest from other investments		71,349		12,845		58,504		455.5	%		108,146		20,717		87,429			422.0	%
Dividend and other investment income		241,685		133,107		108,578		81.6	%		307,681		181,963		125,718			69.1	%
Fee income		267,928		17,327		250,601		1,446.3	%		274,387		172,612		101,775			58.9	%

Total investment income	$	1,302,416	$	776,327	$	526,089		67.8	%	$	1,739,771	$	1,438,629	$	301,142			20.9	%

Interest from portfolio companies – Interest from portfolio companies was approximately ~~18% higher~~the same during the ~~six~~nine months ended ~~June~~September 30, 2019 ~~versus~~when compared to the same nine month 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.~~2018.

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~~nine months ended ~~June~~September 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		Nine months ended September 30, 2019		Nine months ended September 30, 2018
Knoa Software, Inc. (Knoa)	$	193,934	$	—	$	193,934	$	—
Carolina Skiff LLC (Carolina Skiff)		24,043		80,264		76,914		119,433
Tilson Technology Management, Inc. (Tilson)		23,708		19,376		36,833		29,063
New Monarch Machine Tool, Inc. (New Monarch)		—		27,409		—		27,409
Empire Genomics LLC (Empire Genomics)		—		6,058		—		6,058

Total dividend and other investment income	$	241,685	$	133,107	$	307,681	$	181,963

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 ~~$42,428~~$48,887 and ~~$15,327~~$28,266 for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively. ~~In addition,~~During the ~~Corporation~~nine months ended September 30, 2019 we recognized aone-time fee of $225,000 in conjunction with the repayment of the eHealth loan instrument. During the nine months ended September 30, 2018 we recorded aone-time debt modification fee of approximately $142,000 that was charged to Empire Genomics and capitalized into the Empire Genomics loan balance. The board fees were $500 and $2,000 for the ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, respectively.

Expenses

   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 %


	Nine months ended September 30, 2019		Nine months ended September 30, 2018		Increase		% Increase
Total expenses	$	2,044,351	$	1,510,034	$	534,317		35.4	%

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 ~~six~~nine months ended ~~June~~September 30, 2019 versus the same period in 2018 was primarily caused by a ~~195%~~164%, or ~~$251,723,~~$289,666, increase in shareholder expense and ~~a 143%~~an 84%, or ~~$198,900,~~$186,086, increase in professional fees. Shareholder expense and professional fees were higher during the ~~six~~nine months ended ~~June~~September 30, 2019 because we incurred expenses in connection with aforementioned Transactions with East Asset Management, the special shareholder meeting held in May 2019 and the regulatory procedures that are required ~~with~~to effect such ~~Transactions.~~transactions. These expenses also included external shareholder, legal, tax consulting and other advisory expenses to support the complex regulatory environment in which we operate.

In addition, we deferred $266,000 in stock issuance costs attributable to the Transactions. 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~~September 30, 2019 in the line item “Other assets.”

Net Realized Loss on Investments

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


	Nine months ended September 30, 2019			Nine months ended September 30, 2018			Change
Realized loss on investments before income taxes	($	392,239	)	($	1,125,673	)	$	733,434

During the ~~six~~nine months ended ~~June~~September 30, 2019, we recognized a realized loss on our investment in SOMS Technologies, LLC after the company 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 received a final proceeds distribution of $39,893 from Gemcor II, LLC, a portfolio company we exited in 2016.

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

   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


	Nine months ended September 30, 2019			Nine months ended September 30, 2018			Change
Change in unrealized depreciation of investments before income taxes	($	4,197,281	)	($	732,128	)	($	3,465,153	)

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


	~~Six~~Nine months ended ~~June~~September 30, 2019
Genicon	($	2,200,047	)
Rheonix		(1,500,000	)
SocialFlow, Inc. (Socialflow)	($	(1,071,300	)
~~Genicon, Inc. (Genicon)~~Sciaps		(~~752,580~~585,000	)
BeetNPath, LLC (Beetnpath)		(523,904	)
~~SciAps, Inc. (Sciaps)~~Empire Genomics		(~~385,000~~249,661	)
KnowledgeVision		(200,001	)
Mercantile Adjustment Bureau, LLC (Mercantile)		(200,000	)
SOMS Technologies, LLC realized loss		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~~4,197,281	)

The valuations of our investments in ~~Socialflow,~~ Beetnpath, Empire Genomics, KnowledgeVision, Mercantile, Rheonix, Sciaps, and ~~Mercantile~~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 six months ended June 30, 2019~~due to ~~revalue our holdings based upon the liquidation preferences of our securities and as a result of~~ a recent round of ~~financing.~~financing and after a review of their financial condition.

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 2019 with a sophisticated newnon-strategic outside investor at a higher valuation than their prior financing round valuation.

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

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


	~~Six~~Nine months ended ~~June~~September 30, 2018
Empire Genomics, LLC (Empire Genomics)	($	~~651,489~~901,360	)
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 six months ended June 30, 2018~~	($	~~1,207,930~~732,128	)

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.

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 ~~third~~fourth 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.

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 ~~six~~nine months ended ~~June~~September 30, 2019 and 2018, the net decrease in net assets from operations was ($~~892,134)~~3,771,022) and ($~~1,151,707)~~1,331,009), respectively.

Liquidity and Capital Resources

Historically, our principal objective has been to achieve capital appreciation. Therefore, a significant portion of the investment portfolio is structured to maximize the potential for capital appreciation and may 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 ~~June~~September 30, 2019, our total liquidity consisted of approximately ~~$8.6~~$9.3 million in cash and cash equivalents on hand and the availability of $3.0 million under our SBA leverage commitment.

Net cash used by operating activities has averaged approximately ~~$1,200,000~~$1.6 million over the last three years. The average cash used for investment in portfolio companies over the last three years was approximately ~~$1,980,000.~~$2.1 million. 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 ~~June~~September 30, 2019, we had the availability to borrow 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, the scheduled interest payments on our portfolio investments and 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. 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 ~~June~~September 30, 2019, we did not have anyoff-balance sheet arrangements or hedging or similar derivative financial instrument investments.

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 of ~~June~~September 30, 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 ~~June~~September 30, 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

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.None

Item 1A. Risk Factors

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

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
4/7/1/2019 – 4/7/31/2019		—		—		—		1,000,000
8/1/2019 – 8/31/19		—		—		—		1,000,000
9/1/2019 – 9/30/2019		—		—		—		~~458,954~~
~~5/1/2019 – 5/31/19~~		—		—		—		~~458,954~~
~~6/1/2019 – 6/30/2019~~		—		—		—		~~458,954~~1,000,000

(1)	There were no shares repurchased during the three months ending ~~June~~September 30, 2019.

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

(3)	On October ~~25, 2018,~~24, 2019, the Board of Directors extended the repurchase authorization of up to ~~1,000,000~~1,541,056 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.~~2020.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

~~None.~~The Corporation intends to hold its 2019 annual meeting of shareholders (the “2019 Annual Meeting”) on Monday, December 30, 2019 at 10:30 a.m., Eastern Standard Time, at the Buffalo Club, the Millard Fillmore Room, 388 Delaware Avenue, Buffalo, NY 14202 (Business Attire Required). Because the 2019 Annual Meeting will be held more than 30 days from the anniversary date of the annual meeting of shareholders for 2018, the Corporation is informing its shareholders of the revised deadlines for proposals and other related matters for consideration at the 2019 Annual Meeting. Shareholder proposals intended to be presented at the 2019 Annual Meeting pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must be received by the Corporation not later than 5:00 p.m. Eastern Standard Time on November 16, 2019, in order to be considered for inclusion in the Corporation’s proxy statement for the 2019 Annual Meeting. For a shareholder to bring business before the 2019 Annual Meeting outside of Rule 14a-8 or to nominate a director, it must provide timely written notice to the Corporation in accordance with the advance notice provisions of the Corporation’s by-laws on or prior to November 16, 2019. All shareholder proposals, director nominations and other related matters must comply, as applicable, with New York Business Corporation Law, the rules and regulations under the Exchange Act and the Corporation’s by-laws in order to be considered.

Item 6. 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) of Form~~Form~~ N-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: ~~August 6,~~November 7, 2019


RAND CAPITAL CORPORATION

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


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


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%


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%


	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


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


	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	%

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