Rand Capital Invests $2.2 Million in Second Quarter of 2016

BUFFALO, NY--(Marketwired - August 02, 2016) -

• Net Asset Value per share of $5.28 at quarter end

• Added eHealth Global Technologies to portfolio with $1.5 million debt investment

• Provided $0.7 million in loans as follow-on funding to support growth of five portfolio companies

• Strong cash position with $14.4 million on hand; current priority to build investment income

Rand Capital Corporation (RAND) ("Rand"), a venture capital company that makes primarily equity investments in companies with emerging product, service or technology concepts, announced its results for the quarter ended June 30, 2016.

Allen F. ("Pete") Grum, President and Chief Executive Officer of Rand Capital, commented, "While we have a strong balance sheet and sufficient capital, we are currently prioritizing debt instrument investments to generate interest income. Our goal is to replace the income previously generated from investments exited in the trailing first quarter. All of the follow-on and initial investments we made in the second quarter were loans."

He added, "We believe we have a straight-forward portfolio strategy:

• Identify investments with strong growth potential to drive capital appreciation,

• Balance the maturities of our investments to allow for staging of exits,

• And, make investments that provide dividend or interest income to support operating costs.

Our pipeline of investment opportunities is strong. And, we believe that with this approach, we can repeat the levels of growth and success we have had over the last five and ten year periods."

Second Quarter Highlights

• Reported $5.28 net asset value (NAV) per share at June 30, 2016, up $0.12 per share, or 2%, over June 30, 2015.

• Invested $1.5 million in eHealth Global Technologies, Inc. during the quarter, a new addition to the Rand portfolio.

• Supported existing portfolio companies with approximately $748,000 of loans during the quarter:

  • Empire Genomics, LLC: $250,000

  • SciAps, Inc.: $200,000

  • BeetNPath, LLC: $150,000

  • Genicon, Inc.: $100,000

  • Knoa Software, Inc.: $ 48,466

• Made investments in the first half of 2016 that are expected to generate approximately $375,000 in annualized interest income.

• Portfolio fair value was $27.7 million and cash was $14.4 million at the end of the 2016 second quarter.

Compared with the prior-year period, dividend and interest income was down $0.5 million in the second quarter of 2016. The decline was the result of the sale in the first quarter of Gemcor, a large dividend and interest generating asset. Additionally, operating expenses in the current quarter were up $104,723 compared with last year's second quarter, primarily due to higher professional fees related to evaluation of strategic options.

Selected portfolio highlights:

• eHealth Global Technologies, Inc. (http://ehealthtechnologies.com/), a new investment this quarter, is an industry-leading provider of clinically-informed referral services. The company's eHealth Connect^® solution enhances patient and physician satisfaction by intelligently aggregating patients' clinical records to streamline referrals. The company's eHealth Connect^® Image Exchange enables automated access to full diagnostic quality medical images within the context of an aggregated patient record. Rand provided $1.5 million in a senior subordinated secured term loan.

• SciAps, Inc. (http://sciaps.com/), is a leading provider of handheld analytical instruments used in industrial, service/security, and mining markets to identify and analyze compounds, minerals and elements. Rand provided a $200,000 subordinated convertible note in the second quarter, supporting the company's investments in new products and market penetration initiatives. This is the third follow-on since the initial investment in July 2013, and brings Rand's total investment in SciAps to approximately $2.45 million at June 30, 2016.

• Tilson Technology Management, Inc. (http://www.tilsontech.com/). Another rapidly growing company within the Rand portfolio, Tilson is an information technology professional services and network construction company. Tilson recently announced that it was selected to manage the construction of security, communications and other elements for the final construction stages of a new US Embassy near Oslo, Norway. Tilson's headcount has approximately doubled in each of the past two years to support its growth initiatives. As of June 30, 2016, Rand's investment in Tilson was valued at $0.6 million in series B preferred shares issued in January 2015.

As of June 30, 2016, Rand's portfolio consisted of 31 active businesses. The portfolio is comprised of approximately 68% in equity investments and 32% in debt investments, compared with 77% in equity investments and 23% in debt investments at the same time last year.

Capital Allocation Priorities and Growth Strategy
Rand's priority for its capital is investment in its portfolio. However, the Company also maintains a share repurchase program which was authorized by the Board of Directors in October 2015. Under the program, the Company may repurchase up to approximately 465,000 shares through October 22, 2016. Rand will opportunistically use its capital to repurchase shares as a means of returning capital to shareholders.

Rand's growth strategy is to increase net asset value by capitalizing on maturing investments and leveraging those returns for further investment. Rand invests in companies at various stages of maturity with new or unique products or services that offer competitive advantage and compelling future potential.

ABOUT RAND CAPITAL
Rand Capital (RAND) provides investors the ability to participate in venture capital opportunities through an investment in the Company's stock. Rand is a Business Development Company (BDC), and its wholly-owned subsidiary is licensed by the U.S. Small Business Administration (SBA) as a Small Business Investment Company (SBIC). Rand focuses its equity investments in early or expansion stage companies and generally lends to more mature companies. Rand looks for strong leadership who is bringing to market new or unique products, technologies or services that have a high potential for growth. Additional information can be found at the Company's website where it regularly posts information: www.randcapital.com.

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

FINANCIAL TABLES FOLLOW

Rand Capital Corporation and Subsidiary
Consolidated Statements of Financial Position
					June 30,
					2016				December 31,
					(Unaudited)				2015
ASSETS
	Investments at fair value:
		Control investments (cost of $99,500 and $1,141,472, respectively)			$	1,512,000			$	13,916,472
		Affiliate investments (cost of $16,708,952 and $17,663,217, respectively)				12,824,154				14,662,219
		Non-Control/Non-affiliate investments (cost of $13,468,832 and $8,606,053, respectively).				13,321,933				8,253,709
	Total investments, at fair value (cost of $30,277,284 and $27,410,742, respectively					27,658,087				36,832,400
	Cash					14,376,673				5,844,795
	Interest receivable (net of allowance: $122,000 at 6/30/16 and 12/31/15)					254,801				215,224
	Deferred tax asset					633,086				-
	Prepaid income taxes					-				65,228
	Other assets					1,650,534				1,604,413
			Total assets		$	44,573,181			$	44,562,060
LIABILITIES AND STOCKHOLDERS' EQUITY (NET ASSETS)
	Liabilities:
	Debentures guaranteed by the SBA (net of debt issuance costs)				$	7,814,073			$	7,800,373
	Income tax payable					1,417,888				-
	Deferred tax liability					-				2,361,186
	Profit sharing and bonus payable					1,593,659				282,000
	Accounts payable and accrued expenses					249,177				238,911
	Deferred revenue					60,336				25,930
			Total liabilities			11,135,133				10,708,400
	Stockholders' equity (net assets):
	Common stock, $.10 par; shares authorized 10,000,000; shares issued 6,863,034; shares outstanding of 6,328,538 as of 6/30/16 and 12/31/15					686,304				686,304
	Capital in excess of par value					10,581,789				10,581,789
	Accumulated net investment loss					(1,261,104	)			(24,580	)
	Undistributed net realized gain on investments					26,629,373				18,262,401
	Net unrealized (depreciation) appreciation on investments					(1,750,823	)			5,795,237
	Treasury stock, at cost; 534,496 shares as of 6/30/16 and 12/31/15					(1,447,491	)			(1,447,491	)
			Total stockholders' equity (net assets) (per share 6/30/16: $5.28, 12/31/15: $5.35)			33,438,048				33,853,660
			Total liabilities and stockholders' equity		$	44,573,181			$	44,562,060

Rand Capital Corporation and Subsidiary
Consolidated Statements of Operations
(Unaudited)
					For the Quarter Ended June 30,								For the Six Months Ended June 30,
					2016				2015				2016				2015
Investment income:
	Interest from portfolio companies:
		Control investments			$	-			$	20,275			$	11,828			$	42,420
		Affiliate investments				94,614				96,522				159,575				211,651
		Non-Control/Non-Affiliate investments				68,527				66,422				129,632				115,222
			Total interest from portfolio companies			163,141				183,219				301,035				369,293
	Interest from other investments:
		Non-Control/Non-Affiliate investments				18,648				8,369				21,709				15,190
			Total interest from other investments			18,648				8,369				21,709				15,190
	Dividend and other investment income:
		Control investments				-				491,208				-				903,359
		Affiliate investments				33,232				29,061				80,797				58,429
			Total dividend and other investment income			33,232				520,269				80,797				961,788
	Fee income:
		Control investments				-				2,000				2,000				4,000
		Affiliate investments				1,167				416				1,862				1,833
		Non-Control/Non-Affiliate investments				4,318				4,251				7,234				8,167
			Total fee income			5,485				6,667				11,096				14,000
Total investment income						220,506				718,524				414,637				1,360,271
Operating expenses:
	Salaries					155,437				149,555				310,875				299,110
	Bonus and profit sharing					-				-				1,411,659				-
	Employee benefits					36,711				29,394				126,222				59,801
	Directors' fees					47,380				29,300				94,755				51,050
	Professional fees					86,288				20,433				151,048				93,502
	Stockholders and office operating					61,542				55,717				124,036				115,114
	Insurance					6,258				6,300				17,518				17,554
	Corporate development					16,055				14,400				31,525				31,381
	Other operating					2,375				2,224				5,975				5,874
						412,046				307,323				2,273,613				673,386
	Interest on SBA obligations					77,570				77,569				155,139				151,891
	Total operating expenses					489,616				384,892				2,428,752				825,277
Net investment (loss) income before income taxes						(269,110	)			333,632				(2,014,115	)			534,994
	Income tax (benefit) expense					(114,564	)			101,920				(777,591	)			173,987
Net investment (loss) income						(154,546	)			231,712				(1,236,524	)			361,007
Net realized gain on investments:
	Control investments					-				-				13,176,313				-
	Non-Control/Non-Affiliate investments					168,140				131,181				168,140				262,925
	Net realized gain before income taxes					168,140				131,181				13,344,453				262,925
	Income tax expense					34,520				42,591				4,977,481				89,742
	Net realized gain on investments					133,620				88,590				8,366,972				173,183
Net change in unrealized depreciation or appreciation on investments:
	Control investments					-				-				(11,362,500	)			-
	Affiliate investments					(325,000	)			(193,436	)			(747,800	)			(193,436	)
	Non-Control/Non-Affiliate investments					69,444				(73,219	)			69,444				(127,728	)
	Change in unrealized depreciation or appreciation before income taxes					(255,556	)			(266,655	)			(12,040,856	)			(321,164	)
	Deferred income tax benefit					(78,390	)			(89,449	)			(4,494,796	)			(109,618	)
	Net decrease in unrealized depreciation or appreciation on investments					(177,166	)			(177,206	)			(7,546,060	)			(211,546	)
Net realized and unrealized (loss) gain on investments						(43,546	)			(88,616	)			820,912				(38,363	)
Net (decrease) increase in net assets from operations					$	(198,092	)		$	143,096			$	(415,612	)		$	322,644
Weighted average shares outstanding						6,328,538				6,328,538				6,328,538				6,328,538
Basic and diluted net (decrease) increase in net assets from operations per share					$	(0.03	)		$	0.02			$	(0.07	)		$	0.05