<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q



[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934 For the quarter ended June 30, 2003

[ ] 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: 811-1825



                            RAND CAPITAL CORPORATION
             (Exact Name of Registrant as specified in its Charter)

                    NEW YORK                                   16-0961359
 (State or Other Jurisdiction of Incorporation               (IRS Employer
                Or organization)                           Identification No.)

         2200 RAND BUILDING, BUFFALO, NY                          14203
    (Address of Principal executive offices)                   (Zip Code)

                                 (716) 853-0802
                (Registrant's Telephone No. Including Area Code)




Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act 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:  X           No
     ---             ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12B-2 of the Exchange Act)
Yes:              No  X
     ---             ---

Number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date (August 4, 2003): 5,719,434



<PAGE>




RAND CAPITAL CORPORATION
TABLE OF CONTENTS FOR FORM 10-Q

PART I. - FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS

          Condensed Consolidated Statements of Financial Position as of June 30,
          2003 and December 31, 2002

          Condensed Consolidated Statements of Operations for the Three Months
          and Six Months Ended June 30, 2003 and 2002

          Condensed Consolidated Statements of Cash Flows for the Six Months
          Ended June 30, 2003 and 2002

          Condensed Consolidated Statements of Changes in Net Assets for the
          Three Months and Six Months Ended June 30, 2003 and 2002

          Consolidated Schedule of Portfolio Investments as of June 30, 2003

          Notes to Condensed Consolidated Financial Statements

     ITEM 2. Management's Discussion and Analysis of Financial Condition and
             Results of Operations

     ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

     ITEM 4. Controls and Procedures


PART II - OTHER INFORMATION

     ITEM 1. Legal Proceedings

     ITEM 2. Changes in Securities and Use of Proceeds

     ITEM 3. Defaults Upon Senior Securities

     ITEM 4. Submission of Matters To a Vote of Security Holders

     ITEM 5. Other Information

     ITEM 6. Exhibits and Reports on Form 8-K


<PAGE>


                                     PART I.
                              FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                            RAND CAPITAL CORPORATION
             CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                    AS OF JUNE 30, 2003 AND DECEMBER 31, 2002
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                           JUNE 30,        DECEMBER 31,
                                                                             2003              2002
-------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                <C>
ASSETS
Investments at fair value (identified cost:
     at 6/30/2003 - $6,856,984, at 12/31/2002 - $6,225,453)               $6,705,629         $6,076,187
Cash and cash equivalents                                                  2,133,555          3,092,189
Interest receivable (net of allowance of $13,167
     at 6/30/2003 and 12/31/2002)                                            402,886            275,672
Deferred tax asset                                                           180,000            112,000
Promissory notes receivable                                                   93,940            113,470
Other assets                                                                  49,854             16,155
                                                                          ----------         ----------
TOTAL ASSETS                                                              $9,565,864         $9,685,673
                                                                          ==========         ==========

LIABILITIES AND STOCKHOLDERS' EQUITY (NET ASSETS)

LIABILITIES:
Accounts payable and accrued expenses                                        $27,439            $42,384
Income taxes payable                                                          37,462              1,989
Deferred revenue                                                              41,720             36,666
                                                                          ----------         ----------
              Total liabilities                                              106,621             81,039
                                                                          ----------         ----------

STOCKHOLDERS' EQUITY (NET ASSETS)

Common stock, $.10 par - shares authorized 10,000,000;
     shares issued 5,763,034                                                 576,304            576,304
Capital in excess of par value                                             6,973,454          6,973,454
Accumulated net investment (loss)                                         (4,487,690)        (4,354,719)
Undistributed net realized gain on investments                             6,583,275          6,574,710
Net unrealized (depreciation) on investments                                (140,633)          (139,411)
Treasury stock at cost, 42,600 and 24,400 shares at 6/30/2003
     and 12/31/2002                                                          (45,467)           (25,704)
                                                                          ----------         ----------
         Net assets (per share 6/30/2003-$1.65, 12/31/2002-$1.67)          9,459,243          9,604,634
                                                                          ----------         ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $9,565,864         $9,685,673
                                                                          ==========         ==========
</TABLE>

See notes to the condensed consolidated financial statements.


<PAGE>


                            RAND CAPITAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2003 AND JUNE 30, 2002
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                        THREE MONTHS    THREE MONTHS   SIX MONTHS     SIX MONTHS
                                                            ENDED           ENDED         ENDED          ENDED
                                                        JUNE 30, 2003  JUNE 30, 2002  JUNE 30, 2003  JUNE 30, 2002
                                                        -------------  -------------  -------------  -------------
<S>                                                      <C>            <C>            <C>            <C>
INVESTMENT INCOME:
       Interest from portfolio                           $   101,054    $    29,050    $   202,963    $    59,506
       companies
       Interest from other investments                         6,329         28,271         14,174         58,951
       Other income                                            2,357              0          4,616          5,540
                                                         -----------    -----------    -----------    -----------
                                                             109,740         57,321        221,753        123,997
                                                         -----------    -----------    -----------    -----------
EXPENSES:
       Salaries                                               71,969         67,494        188,384        179,963
       Employee benefits                                      15,821         15,620         41,170         48,884
       Directors' fees                                        15,000          9,500         20,500         16,250
       Professional fees                                      42,316         26,263         63,102         39,203
       Shareholders and office                                28,603         30,177         54,082         61,331
       Insurance                                              10,800         11,250         21,600         22,500
       Corporate development                                   8,855         12,595         18,162         20,326
       Other operating expenses                                2,275          6,030          6,562         10,716
                                                         -----------    -----------    -----------    -----------
                                                             195,639        178,929        413,562        399,173
                                                         -----------    -----------    -----------    -----------
       Organizational costs                                     --           48,516           --          116,110
                                                         -----------    -----------    -----------    -----------
       Total expenses                                        195,639        227,445        413,562        515,283
                                                         -----------    -----------    -----------    -----------
INVESTMENT (LOSS) BEFORE INCOME TAXES                        (85,899)      (170,646)      (191,809)      (391,286)
       Income tax expense (benefit)                            4,301        (22,197)         8,295         31,000
       Deferred income tax (benefit) expense                 (28,799)       (42,732)       (67,133)       211,644
                                                         -----------    -----------    -----------    -----------
NET INVESTMENT (LOSS)                                        (61,401)      (105,195)      (132,971)      (633,930)
                                                         -----------    -----------    -----------    -----------

REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
       Net gain (loss) on sales and dispositions               8,565         (9,490)         8,565        938,399
                                                         -----------    -----------    -----------    -----------
Unrealized appreciation (depreciation) on investments:
       Beginning of period                                  (177,376)       205,704       (149,266)       853,874
       End of period                                        (151,355)       288,696       (151,355)       288,696
                                                         -----------    -----------    -----------    -----------
       Change in unrealized appreciation                      26,021         82,992         (2,089)      (565,178)
       (depreciation) before income taxes

       Deferred income tax expense (benefit)                  10,799         34,732           (867)      (241,644)
                                                         -----------    -----------    -----------    -----------

NET INCREASE (DECREASE) IN UNREALIZED
APPRECIATION                                                  15,222         48,260         (1,222)      (323,534)
                                                         -----------    -----------    -----------    -----------

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
                                                              23,787         38,770          7,343        614,865
                                                         -----------    -----------    -----------    -----------

NET (DECREASE) IN NET ASSETS FROM OPERATIONS             $   (37,614)   $   (66,425)   $  (125,628)   $   (19,065)
                                                         ===========    ===========    ===========    ===========
WEIGHTED AVERAGE SHARES OUTSTANDING                        5,722,737      5,763,034      5,726,284      5,763,034
BASIC AND DILUTED NET (DECREASE) IN NET ASSETS           $     (0.01)   $     (0.01)   $     (0.02)   $     (0.00)
FROM OPERATIONS PER SHARE
</TABLE>

See notes to the condensed consolidated financial statements.


<PAGE>


                            RAND CAPITAL CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             SIX MONTHS    SIX MONTHS
                                                                                ENDED         ENDED
                                                                           JUNE 30, 2003  JUNE 30, 2002
                                                                           -------------  -------------
<S>                                                                         <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (decrease) in net assets from operations                                $  (125,628)   $   (19,065)
                                                                            -----------    -----------

Adjustments to reconcile net (decrease) in net assets
   to net cash used in operating activities:
     Depreciation and amortization                                                3,000          7,800
     Change in unrealized appreciation
       of investments                                                             2,089        565,178
     Change in deferred taxes                                                   (68,000)       (30,000)
     Increase in deferred revenue                                                 5,054           --
     Net realized gain on portfolio investments                                  (8,565)      (938,399)
     Non cash conversion of debentures                                          (24,811)          --
Changes in operating assets and liabilities:
     (Increase) in interest receivable                                         (127,214)       (43,506)
     (Increase) in other assets                                                 (36,698)       (39,699)
     Increase in accounts payable and other
       accrued liabilities                                                       20,528          9,809
                                                                            -----------    -----------

         Total adjustments                                                     (234,617)      (468,817)
                                                                            -----------    -----------

         Net cash used in operating activities                                 (360,245)      (487,882)
                                                                            -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds from sale of portfolio investments                                 10,844      1,086,730
     Proceeds from loan repayments                                               19,530         19,405
     New portfolio investments                                                 (609,000)      (750,000)
                                                                            -----------    -----------

         Net cash (used in) provided by investing activities                   (578,626)       356,135
                                                                            -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Purchase of treasury shares                                                (19,763)          --
                                                                            -----------    -----------

NET (DECREASE) IN CASH AND CASH EQUIVALENTS                                    (958,634)      (131,747)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                3,092,189      5,941,517
                                                                            -----------    -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                    $ 2,133,555    $ 5,809,770
                                                                            ===========    ===========
</TABLE>

See notes to condensed consolidated financial statements.


<PAGE>


                            RAND CAPITAL CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
        FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                     THREE MONTHS     THREE MONTHS       SIX MONTHS       SIX MONTHS
                                                        ENDED             ENDED             ENDED            ENDED
                                                     JUNE 30, 2003    JUNE 30, 2002     JUNE 30, 2003    JUNE 30, 2002
                                                     -------------    -------------     -------------    -------------

<S>                                                    <C>             <C>                <C>             <C>
NET ASSETS AT BEGINNING OF PERIOD                      $9,502,974      $10,105,644        $9,604,634      $10,058,284

Operations:
     Net investment loss                                  (61,401)        (105,195)         (132,971)        (633,930)

     Net realized gain (loss) on investments                8,565          (9,490)             8,565          938,399

     Net increase (decrease) in unrealized
       appreciation of investments                         15,222           48,260           (1,222)         (323,534)
                                                       ----------      -----------        ----------      -----------

Net (decrease) increase in net assets
  from operations                                         (37,614)         (66,425)         (125,628)         (19,065)

Purchase of treasury shares
                                                           (6,117)              --           (19,763)              --
                                                       ----------      -----------        ----------      -----------

NET ASSETS AT END OF PERIOD                             $9,459,243      $10,039,219        $9,459,243     $10,039,219
                                                        ==========      ===========        ==========     ===========
</TABLE>


See notes to condensed consolidated financial statements


<PAGE>


RAND CAPITAL CORPORATION
Schedule Of Portfolio Investments June 30, 2003 (unaudited)

<TABLE>
<CAPTION>
                                                               (e)                            (a)      (b)                 (c)
                                                                                              DATE
COMPANY AND BUSINESS                                    TYPE OF INVESTMENT                  ACQUIRED  EQUITY    COST      VALUE
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                                     <C>                                 <C>        <C>   <C>          <C>
CONTRACT STAFFING                                       Series A 8% Cumulative              11/8/99    10%   $100,000     $100,000
Buffalo, NY. PEO providing human resource               preferred stock - 10,000 shares
administration for small businesses.
www.contract-staffing.com

DATAVIEW, LLC                                           5% Membership interest              10/1/98     5%    310,357      155,179
Mt. Kisco, NY. Designs, develops and markets
browser based software for investment professionals.
www.marketgauge.com

G-TEC NATURAL GAS SYSTEMS                               41.67% Class A Membership           8/31/99    42%    300,000      300,000
Buffalo, NY. Manufactures and distributes               interest. 8% cumulative dividend
systems that allow natural gas to be used
as an alternative fuel to gases.
www.gas-tec.com

INRAD, INC. (OTC: INRD.OB)*                             Series B Preferred Stock -         10/31/00     2%    115,000      102,460
Northvale, NJ.  Develops and manufactures               100 shares. 10% dividend.
products for laser photonics industry.                  Common stock - 6,000 shares
www.inrad.com

+KIONIX, INC.                                           Series A Preferred Stock,           5/17/02   2.2%    750,000      750,000
Ithaca, NY.  Develops innovative MEMS                   882,352 shares.
based technology applications.
www.kionix.com

MINRAD, INC.                                            608,193 Common shares.               8/4/97     5%    919,422      508,500
Buffalo, NY. Developer of laser guided medical          56,020 Preferred Series A shares.
devices. www.minrad.com                                 13,767 Preferred Series B
                                                        Stock Option - 10,000 shares
                                                        common

+RAMSCO(d)                                              Promissory Note $750,000 at        11/19/02   6.5%    750,000      750,000
Albany, NY. Distributor of water, sanitary and          13% due November 18, 2007.
storm sewer materials to the contractor, highway        Warrant to purchase common shares.
and municipal construction markets.
www.ramsco.com

SOMERSET GAS TRANSMISSION COMPANY, LLC                  Convertible Promissory Note         7/10/02   less    900,000    1,083,333
Buffalo, NY. Natural gas transportation company.        $900,000 at 14%. due on demand                than
                                                        after January 15, 2003                          1%
                                                        .89 Membership Units

+SYNACOR, INC.                                          Convertible Promissory Note        11/18/02   4.6%    350,000      350,000
Buffalo, NY. Develops provisioning platforms            $350,000 at 10%. due
for aggregation and delivery of content for broadband   November 18, 2007.  Warrant
access providers.                                       149,573 common shares.
www.synacor.com

+TOPPS MEAT COMPANY, LLC                                Preferred A and Class A              4/3/03    3%     259,000      259,000
Elizabeth, NJ - Producer and supplier of                Common Membership
premium branded frozen hamburgers and other             Interest
portion controlled meat products.

ULTRA - SCAN CORPORATION                                611,700 Common shares,             12/11/92    3%     734,164    1,072,174
Amherst, NY.  Biometrics application                    142,276 warrants for Common
developer of ultrasonic fingerprint technology.         shares.
www.ultra-scan.com
</TABLE>


<PAGE>





<TABLE>
<S>                                                     <C>                                <C>        <C>     <C>          <C>
USTEC, INC.(d)                                          $100,000 Promissory Note at        12/17/98   less    300,500      325,000
Victor, NY.  Markets digital wiring systems             5% due February 1, 2006                       than
for new home construction.                              50,000 Common Shares.                          1%
www.ustecnet.com                                        139,395 Warrants for Common Shares
                                                        +$200,000 Senior Subordinated
                                                        Convertible Debenture at 6% due
                                                        February 2, 2008.

VANGUARD MODULAR BUILDING SYSTEMS                       Preferred Units - 2,673 Units      12/16/99   less    270,000      270,000
Philadelphia, PA. Leases and sells high-end             with warrants, 14% interest rate.             than
modular space solutions.                                                                               1%
www.vanguardmodular.com

+WINEISIT.COM, CORP.                                    Senior Subordinated Promissory     12/18/02    2%     500,000      500,000
Amherst, NY.  Marketing company specializing            Note $500,000 at 10%. due
in customer loyalty programs supporting the wine        December 17, 2009.  Warrant
and spirit industry.                                    to purchase 100,000 shares
www.wineisit.com                                        common stock.

Other Investments                                       Other                              Various    --      298,541      179,983
                                                                                                           ----------   ----------
(Includes:  ADIC*, American Tactile, Appro,
            BioWorks, Inc., Clearview Cable)

                                                        Total portfolio investments                        $6,856,984   $6,705,629
                                                                                                           ==========   ==========
</TABLE>


<PAGE>


NOTES TO SCHEDULE OF PORTFOLIO INVESTMENTS

(a)  The date acquired column indicates the year in which the Corporation
     acquired its first investment in the company or a predecessor company.

(b)  The equity percentages estimate the Corporation's ownership interest in the
     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 its warrants or conversion of debentures; or other available
     data. The symbol "less than 1%" indicates that the Corporation holds equity
     interest of less than one percent.

(c)  Under the valuation policy of the Corporation, unrestricted securities are
     valued at the closing price for publicly held securities for the last three
     days of the month. Restricted securities, including securities of
     publicly-owned companies, which are subject to restrictions on resale, are
     valued at fair value as determined by the Board of Directors. Fair value is
     considered to be the amount which the Corporation may reasonably expect to
     receive for portfolio securities if such securities were 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 by the Board of Directors 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.

(d)  These investments are income producing. All other investments are
     non-income producing.

(e)  Approximately 98% of the portfolio represents investments in private
     businesses. Therefore the securities are restricted and are subject to one
     or more restrictions on resale and are not freely marketable.

*    Publicly-owned Company

+    Rand Capital SBIC, L.P. Investment, all other investments are held by the
     Parent, Rand Capital Corporation.

See notes to condensed consolidated financial statements.

<PAGE>



                            RAND CAPITAL CORPORATION
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND 2002
                                   (UNAUDITED)

NOTE 1. ORGANIZATION

     Rand Capital Corporation ("Rand") was incorporated under the laws of the
state of New York on February 24, 1969. From 1971 to August 16, 2001, Rand
operated as a publicly traded, closed-end, diversified management company that
was registered under Section 8(b) of the Investment Company Act of 1940 (the
"1940 Act"). On August 16, 2001, Rand filed an election to be treated as a
business development company ("BDC") under the 1940 Act, which became effective
on the date of filing. A BDC is a specialized type of investment company that is
primarily engaged in the business of furnishing capital and managerial expertise
to companies that do not have ready access to capital through conventional
finance channels. There was no impact on the corporate structure as a result of
the change to a BDC. Rand continues to operate as a publicly held venture
capital company, listed on the NASDAQ Small Cap Market under the symbol "RAND."

FORMATION OF SBIC SUBSIDIARY

     On January 16, 2002, Rand formed a wholly owned subsidiary, Rand Capital
SBIC, L.P., ("Rand SBIC") for the purpose of operating it as a small business
investment company. At the same time, Rand organized another wholly owned
subsidiary, Rand Capital Management, LLC ("Rand Management"), as a Delaware
limited liability company, to act as the general partner of Rand SBIC. Rand
transferred $5 million in cash to Rand SBIC to serve as "regulatory capital" in
January 2002 and on August 16, 2002, Rand received notification that its Small
Business Investment Company (SBIC) application had been approved and licensed by
the Small Business Administration (SBA). The approval allows Rand SBIC to obtain
loans up to two times its initial $5 million of "regulatory capital" from the
SBA for purposes of making new investments in portfolio companies. As of June
30, 2003 Rand SBIC had not drawn any leverage from the SBA.

The condensed consolidated financial statements include the accounts of Rand,
Rand SBIC and Rand Management (collectively, the "Corporation").

     The Company formed Rand SBIC as a subsidiary for the purpose of causing it
to be licensed as a SBIC under the Small Business Investment Act of 1958 (the
"SBA Act") by the SBA, in order to have access to various forms of leverage
provided by the SBA to SBIC's. On May 28, 2002, the Corporation filed an
Exemption Application with the Securities and Exchange Commission ("SEC")
seeking an order under Sections 6(c), 12(d)(1)(J), 57(c), and 57(i) of, and Rule
17d-1 under, the 1940 Act for exemptions from the application of Sections
2(a)(3), 2(a)(19), 12(d)(1), 18(a), 21(b), 57(a)(1), (2), (3), and (4), and
61(a) of the 1940 Act to certain aspects of its operations. The application also
seeks an order under Section 12(h) of the Securities Exchange Act of 1934 Act
(the "Exchange Act") for an exemption from separate reporting requirements under
Section 13(a) of the Exchange Act. In general, the Corporation applications seek
orders that would permit:


<PAGE>



     -    A BDC (Rand) to operate a BDC/small business investment company (Rand
          SBIC) as its wholly owned subsidiary in limited partnership form;

     -    Rand, Rand Management and Rand SBIC to engage in certain transactions
          that the Corporation would otherwise be permitted to engage in as a
          BDC if its component parts were organized as a single corporation;

     -    Rand, as a BDC, and Rand SBIC, as its BDC/SBIC subsidiary, to meet
          asset coverage requirements for senior securities on a consolidated
          basis and;

     -    Rand SBIC, as a BDC/SBIC subsidiary of Rand , as a BDC, to file
          Exchange Act reports on a consolidated basis as part of Rand's
          reports.

     The Corporation has not identified from among the similar exemption
applications on file with the SEC an example of a specific grouping of all of
the exemptions requested by the Corporation in its application, but the SEC has
commonly granted applications to other companies for orders applicable to each
of the exemptions requested and for orders applicable to various combinations of
those exemptions, and the Corporation's applications do not appear to raise any
specific policy issues that have not also been raised by applications for which
exemptions have been granted.

     Rand operates Rand SBIC through Rand Management for the same investment
purposes, and with investments in similar kinds of securities, as Rand. Rand
SBIC's operations are consolidated with those of Rand for both financial
reporting and tax purposes.


NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

     In Management's opinion, the accompanying condensed consolidated financial
statements include all adjustments necessary for a fair presentation of the
consolidated financial position, results of operations, and cash flows for the
interim periods presented. Certain information and note disclosures normally
included in audited annual financial statements prepared in accordance with
accounting principles generally accepted in the United States of America, have
been omitted; however, the Corporation believes that the disclosures made are
adequate to make the information presented not misleading. The interim results
for the period ending June 30, 2003 are not necessarily indicative of the
results for the full year.

     These statements should be read in conjunction with the financial
statements and the notes included in the Corporation's Annual Report on Form
10-K for the year ended December 31, 2002. Information contained in this filing
should also be reviewed in conjunction with the Corporation's related filings
with the SEC during the period of time covered by the Form 10-K. Those filings
include, but are not limited to the following:

     N-30-B2/ARS       Quarterly & Annual Reports to Shareholders
     N-54A             Election to Adopt Business Development Company status
     DEF-14A           Definitive Proxy Statement submitted to shareholders
     Form 10-K         Annual Report on Form 10-K for the year ended
                       December 31, 2002
     Form 10-Q         Quarterly Report on Form 10-Q for the quarters ended
                       March 31, 2002, June 30, 2002, September 30, 2002 and
                       March 31, 2003
     Form N-23C-1      Reports by closed-end investment companies of purchase
                       of their own securities


<PAGE>


BASIS OF CONSOLIDATION - The condensed consolidated financial statements include
the accounts of the Corporation. All significant intercompany balances and
transactions have been eliminated in consolidation. Prior to the formation of
Rand SBIC and Rand Management, Rand Capital Corporation was a stand-alone
entity.

INVESTMENTS - Investments are stated at fair value as determined in good faith
by the Corporation's management and both reviewed and approved on a quarterly
basis by the Board of Directors. In 2002, Rand SBIC adopted a model valuation
policy as established by the SBA. At the same time the Board of Directors of
Rand also adopted a new valuation policy that mirrored the Rand SBIC policy and
is not materially different from the prior Rand valuation policy.
In accordance with its valuation policy, the Board of Directors has determined
certain investment valuations in the absence of readily ascertainable fair
values. The estimated valuations 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.
Amounts reported as realized gains and losses are measured by the difference
between the proceeds of sale or exchange and the cost basis of the investment
without regard to unrealized gains or losses reported in prior periods. The cost
of securities that have, in the Board of Directors' judgment, become worthless,
are written off and reported as realized losses.

CASH AND CASH EQUIVALENTS - Temporary cash investments having a maturity of
three months or less when purchased are considered to be cash equivalents.

INTEREST INCOME - Interest income generally is recorded on the accrual basis
except where the investment is valued at less than cost to reflect risk of loss.
In such cases, interest is recorded at the time of receipt. Interest income
cannot be recognized if collection is doubtful. A reserve for possible losses on
an interest receivable is maintained when collection is in doubt.

The Rand SBIC interest accrual is mandated by the SBA's "Accounting Standards
and Financial Reporting Requirements for Small Business Investments Companies".
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 the
loan is in default more than 120 days.

NET ASSETS PER SHARE - Net assets per share are based on the number of shares of
common stock outstanding.

USE OF ESTIMATES - The preparation of the financial statements in conformity
with accounting principles generally accepted in the United States of America
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.

INCOME TAXES - Rand has not elected pass-through tax treatment as a regulated
investment company under Subchapter M of the Internal Revenue Code for Income
tax purposes. Therefore, Rand is taxed as a corporation under regulation C.

The tax effect of the major temporary difference and carry-forwards that give
rise to the Corporation's net deferred tax assets as of June 30, 2003 and
December 31, 2002 are as follows:
                                          June 30, 2003  December 31, 2002
                                          -------------  -----------------

        Operations                          $ (63,012)      $ (79,194)
        Investments                            62,812          61,945
        Net operating loss carry-forwards     180,200            --
        Capital loss carryforwards               --           129,249
                                            ---------       ---------
        Deferred tax assets, net            $ 180,000       $ 112,000
                                            =========       =========



<PAGE>



     As of June 30, 2003, the Corporation had a federal net operating loss
carry-forward of approximately $530,000 which expires commencing in 2019.

     The deferred tax asset at June 30, 2003 was $180,000 and represented a
$68,000 increase in this account from December 31, 2002

     The Corporation's has filed its Federal and New York State tax returns for
the Year ended December 31, 2002.

     The Corporation is also required to file multi-state tax and information
returns due to the operations of one its portfolio holdings, Vanguard Modular
Building Systems (Vanguard) which is a limited liability corporation (LLC). Rand
has requested filing extensions for the 2002 year and has paid the required
state filing fees, totaling less than $2,700. The Vanguard related multi-state
filings for 2001 and 2000 have not yet been filed by the Corporation, pending
further research into Vanguard operational structure, and are expected to be
completed within six months.

STOCKHOLDERS EQUITY (NET ASSETS)

     At June 30, 2003 and December 31, 2002, there were 500,000 shares of $10.00
par value preferred stock authorized and unissued.

     On October 18, 2001, the Board of Directors authorized the repurchase of up
to 5% of Rand's outstanding stock through purchases on the open market during
the one-year period ending October 18, 2002. This buy-back was extended through
October 16, 2003 by the Board of Directors. During the six month period ending
June 30, 2003 18,200 shares of treasury stock were repurchased. During the three
months ended June 30, 2003, 5,600 shares were repurchased for the treasury.
During the period July 1, 2003 through August 4, 2003, 1,000 shares were
repurchased on the open market.

STOCK OPTION PLANS

     In July 2001, the shareholders of the Corporation authorized the
establishment of two stock option plans - the Employee Plan and the Non-Employee
Director Plan. The Plans provide for an aggregate of 200,000 and 100,000 shares,
respectively, to be awarded to eligible employees and non-officer directors. The
Employee Plan became effective in 2001, and the Non-Employee Director plan will
not take effect, if at all, until a SEC exemption is obtained from restrictions
under the Investment Company Act of 1940. In 2002 the Corporation elected to
place both the Employee plan and the Non-Employee Director Plan on inactive
status as it developed a new profit sharing plan for the Corporation's employees
in conjunction with the establishment of its SBIC subsidiary. As of June 30,
2003, no stock options have been awarded from either plan.


<PAGE>


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 our financial statements
and related notes included elsewhere in this report.

FORWARD LOOKING STATEMENTS

     Statements included in this Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this document
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, and in Section 21F of the Securities Exchange Act of 1934. Additional
oral or written forward-looking statements may be made by the Corporation from
time to time, and those statements may be included in documents that are filed
with the Securities and Exchange Commission. Such forward-looking statements
involve risks and uncertainties that could cause results or outcomes to differ
materially from those expressed in the forward-looking statements.
Forward-looking statements may include, without limitation, statements relating
to the Corporation's 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 national economy and the local markets
in which the Corporation's portfolio companies operate, the state of the
securities markets in which the securities of the Corporation's portfolio
company trade or could be traded, liquidity within the national financial
markets, and inflation. Forward-looking statements are also subject to the risks
and uncertainties described under the caption "Risk Factors and Other
considerations" below.

OVERVIEW

FINANCIAL CONDITION

     The following discussion will include Rand Capital Corporation ("Rand"),
Rand Capital SBIC, L.P., (Rand SBIC), and Rand Capital Management, LLC ("Rand
Management"), (collectively, the "Corporation") financial position and results
of operations.

     The Corporation's total assets decreased by ($119,809) or (1.2%) to
$9,565,864 and its net assets decreased by ($145,391) or (1.5%) to $9,459,243 at
June 30, 2003, versus $9,685,673 and $9,604,634 at December 31, 2002,
respectively. The decrease in net assets can be attributed to operating losses
and the repurchase of treasury shares during the six months ended June 30, 2003.

     The Corporation's financial condition is dependent on the success of its
holdings. The Corporation has invested a substantial portion of its assets in
early stage or start-up companies. These private businesses tend to be thinly
capitalized small companies that may lack experienced management. The following
summarizes the Corporation's investment portfolio at the periods indicated.

<TABLE>
<CAPTION>
                                        JUNE 30, 2003         DECEMBER 31, 2002
-------------------------------------------------------------------------------
<S>                                      <C>                     <C>
Investments at cost                      $6,856,984              $6,225,453
Unrealized (depreciation), net            (151,355)               (149,266)
                                         ----------              ----------
Investments at fair value                $6,705,629              $6,076,187
                                         ==========              ==========
</TABLE>

<PAGE>
     The increase in investments is due to the effect of Rand SBIC's investment
in UStec, Inc. (UStec) of $200,000, an additional investment in Rexford Albany
Municipal Supply Company Inc. (RAMSCO) of $150,000 and an investment in Topps
Meat Company, LLC (Topps) of $259,000.

     The minor decrease in unrealized (depreciation) of the investments is
primarily attributable to the devaluation of the UStec common shares. The
Corporation made its original investment in UStec in December 1998 and
subsequently exercised warrants for 50,000 common shares, (valued by the
Corporation at $50,000). During the first quarter of 2003 UStec received a new
round of financing from an unrelated SBIC lead investor at a lower valuation
than Rand's prior UStec equity investments were valued. Accordingly, Rand has
reduced the valuation of its common shares to $25,000 as per the Corporation's
valuation policy. This decrease in the UStec investment was offset by the
increase in the Corporation's investment in Advanced Digital Information
Corporation (ADIC). ADIC is a publicly traded stock and is marked up at each
quarter end to the closing market price, as stipulated in the Corporation's
valuation policy.

     The Corporation's total investments at fair value approximated 71% of net
assets at June 30, 2003 and 63% of net assets at December 31, 2002.

RESULTS OF OPERATIONS

INVESTMENT INCOME AND EXPENSES

     The Corporation's primary investment objective is to achieve long-term
capital appreciation on its portfolio investments. Therefore, a considerable
portion of the investment portfolio is structured to realize capital
appreciation over the long-term and not necessarily generate income in the form
of dividends or interest. The Corporation does earn interest income from
investing its idle funds in money market instruments.

     Total investment income for the three months ended June 30, 2003 and 2002
was $109,740 and $57,321 respectively, of which $101,054 (92%) and $29,050 (51%)
consisted of interest from portfolio companies during the quarter. For the six
months ended June 30, 2003 and 2002, the total investment income was $221,753
and $123,997, respectively, of which $202,963 (92%) and $59,506 (48%) consisted
of interest from portfolio companies. This income includes investments that have
interest accruals and often do not pay a current yield. The portfolio interest
income for the six months ending June 30, 2003 includes $62,000 in accrued
interest on a $900,000 convertible note from Somerset Gas Transmission, LLC
("Somerset"). The Somerset note matured on January 15, 2003, and accrues
interest at a 14% rate subsequent to that date. The Corporation has had
continuing communications with Somerset, and it has not chosen to demand payment
on the note because it believes that Somerset will successfully obtain
additional financing from third parties that will enable the Corporation to
negotiate the note into a more favorable debt or equity investment. Somerset has
advised Rand that its pipeline operations have begun to generate positive cash
flows and that projected short supplies and higher prices for natural gas should
continue to improve its financial outlook.

     The remaining investment income is comprised of interest on idle cash
balances. The interest income for the three months ending June 30, 2003 was
$6,329 versus $28,271 for the same period in 2002. This interest income is lower
for the three month and six month ended June 30, 2003 due to lower idle cash
balance during 2003.

     Operating expenses for the three months ended June 30, 2003 and 2002 were
$195,639 and $227,445, respectively. The operating expenses predominately
consist of employee compensation and benefits, shareholder related costs, office
expenses, expenses related to identifying and reviewing investment opportunities
and professional fees. The expense for the three months ended June 30, 2002
included $48,516 of professional costs (consulting and

<PAGE>

advisory fees) incurred for preparing an application for the Small Business
Administration (SBA) for participation in the SBIC program. Total operating
expenses for the six months ended June 30, 2003 and 2002 were $413,562 and
$515,283 respectively. The six month period ended June 30, 2002 included
$116,110 of Rand SBIC organizational fees.

     Net investment losses from operations for the three months ended June 30,
2003 and 2002 were ($61,401) and ($105,195), respectively. Net investment losses
from operations for the six months ended June 30, 2003 and 2002 were ($132,971)
and ($633,930), respectively. The fluctuations from year to year are due, in
part, to the fluctuation in the deferred income tax expense. For the six months
ending June 31, 2003 there was a deferred tax (benefit) of ($67,133) whereas
there was a deferred income tax expense of $211,644 for the six months ended
June 30, 2002. In addition, the investment income for the six months ending June
30, 2003 is higher than the same period in 2002 due to the high interest income
yield associated with Somerset.

NET REALIZED GAINS AND LOSSES ON INVESTMENTS:

     During the three months ended June 30, 2003 the Corporation realized a
$8,565 gain on the sale of ADIC stock. During the three months ended June 30,
2002 the Corporation realized a ($9,490) loss on the forfeiture of 4,181 ADIC
shares from escrow.

NET (DECREASE) IN NET ASSETS FROM OPERATIONS:

     The Corporation accounts for its operations under accounting principles
generally accepted in the United States of America for investment companies. The
principal measure of its financial performance is "net (decrease) increase in
net assets from operations" on its consolidated statements of operations. For
the three months ended June 30, 2003, the net (decrease) in net assets from
operations was ($37,614) as compared to a net (decrease) in net assets from
operations of ($66,425) for the same period in 2002. The net (decrease) in net
assets from operations for the six months ended June 30, 2003 was ($125,628) and
($19,065) for the six months ended June 30, 2002.

     The (decrease) in net assets from operations for the six months ended June
30, 2003 was primarily attributable to the net investment loss of ($132,971) and
the net realized and unrealized gain on investments of $7,343. The largest
components of the unrealized depreciation were the following: ADIC $25,755,
UStec ($25,000) and American Tactile ($5,000). The net (decrease) in net assets
from operations for the period ended June 30, 2002 was due primarily to the net
investment loss of ($633,930) which included $116,110 in organizational costs
associated with the formation of Rand SBIC and $211,644 in deferred income tax
expense.

LIQUIDITY AND CAPITAL RESOURCES

     The Corporation's principal objective is to achieve capital appreciation.
Therefore, a significant portion of the investment portfolio is structured to
maximize the potential for capital appreciation and certain portfolio
investments may be structured to provide little or no current yield in the form
of dividends or interest payments. The Corporation does earn interest income on
idle cash balances. It has historically relied on and continues to rely to a
large extent upon proceeds from sales of investments rather than investment
income to defray a significant portion of its operating expenses. Because such
sales cannot be predicted with certainty, the Corporation attempts to maintain
adequate working capital necessary for short-term needs.

     At June 30, 2003, 23% of the Corporation's net assets are held in cash and
cash equivalents, which compares to 32% at December 31, 2002.

     As of June 30, 2003 and December 31, 2002, the Corporation's total
liquidity, consisting of cash and cash equivalents, was $2,133,555 and
$3,092,189, respectively. Included in the June


<PAGE>

30, 2003 cash balance was $1,769,568 of Rand SBIC cash. Management believes that
these cash and cash equivalents will provide the Corporation with the liquidity
necessary to fund operations over the next twelve (12) months; however, an
increase in the size or quantity of new investment opportunities during this
time may require the corporation to draw down leverage from the SBA in order to
fund such investments.

RISK FACTORS AND OTHER CONSIDERATIONS

INVESTING IN THE CORPORATION'S STOCK IS HIGHLY SPECULATIVE AND AN INVESTOR COULD
LOSE SOME OR ALL OF THE AMOUNT INVESTED

     The value of the Corporation's common stock may decline and may be affected
by numerous market conditions, which could result in the loss of some or the
entire amount invested in the Corporation's shares. The securities markets
frequently experience extreme price and volume fluctuations, which affect market
prices for securities of companies generally, and technology and very small
capitalization companies in particular. General economic conditions, and general
conditions in the Internet and information technology, life sciences, material
sciences and other high technology industries, will also affect the
Corporation's stock price.

INVESTING IN THE CORPORATION'S SHARES MAY BE INAPPROPRIATE FOR THE INVESTOR'S
RISK TOLERANCE

     The Corporation's investments, in accordance with its investment objective
and principal strategies, result in a far above average amount of risk and
volatility and may well result in loss of principal. The Corporation's
investments in portfolio companies are highly speculative and aggressive and,
therefore, an investment in its shares may not be suitable for investors for
whom such risk is inappropriate.

COMPETITION

     The Corporation faces competition in its investing activities from private
venture capital funds, investment affiliates of large industrial, technology,
service and financial companies, small business investment companies, wealthy
individuals and foreign investors. As a regulated Business Development Company
("BDC"), the Corporation is required to disclose quarterly the name and business
description of portfolio companies and value of any portfolio securities. Most
competitors are not subject to this disclosure requirement and the Corporation's
obligation to disclose this information could hinder its ability to invest in
certain portfolio companies. Additionally, other regulations, current and
future, may make the Corporation less attractive as a potential investor to a
given portfolio company than a private venture capital fund.



<PAGE>


THE CORPORATION IS SUBJECT TO RISKS CREATED BY ITS REGULATED ENVIRONMENT

     The Corporation is subject to regulation as BDC's, and Rand SBIC is also
subject to regulation as an SBIC. The loans and other investments that the
Corporation makes, or is expected to make, in small business concerns are
extremely speculative. Substantially all of these concerns are and will be
privately held. Even if a public market for their securities later develops, the
debt obligations and other securities purchased by the Corporation are likely to
be restricted from sale or other transfer for significant periods of time. These
securities will be very illiquid.

     The Corporation's capital may include large amounts of debt securities
issued to the SBA, and all of the debentures issued to the SBA will have fixed
interest rates. Until and unless Rand SBIC is able to invest substantially all
of the proceeds from debentures that it sells to the SBA at annualized interest
or other rates of return that substantially exceed annualized interest rates
that Rand SBIC must pay the SBA under debentures sold to it, the Corporation's
operating results will be adversely affected which may, in turn, depress the
market price of its common stock.

THE CORPORATION IS DEPENDENT UPON KEY MANAGEMENT PERSONNEL FOR FUTURE SUCCESS

     The Corporation is dependent for the selection, structuring, closing and
monitoring of its investments on the diligence and skill of its two senior
officers, Allen F. Grum and Daniel P. Penberthy. The future success of the
Corporation depends to a significant extent on the continued service and
coordination of its senior management team. The departure of either of its
executive officers could materially adversely affect the Corporation's ability
to implement its business strategy. The Corporation does not maintain key man
life insurance on any of its officers or employees.

INVESTMENT IN SMALL, PRIVATE COMPANIES

     There are significant risks inherent in the venture capital business. The
Corporation typically invests a substantial portion of its assets in early stage
or start-up companies. These private businesses tend to be thinly capitalized,
small companies with risky technologies that lack management depth and have not
attained profitability or may have no history of operations. Because of the
speculative nature and the lack of a public market for these investments, there
is significantly greater risk of loss than is the case with traditional
investment securities. The Corporation expects that some of its venture capital
investments will be a complete loss or will be unprofitable and that some will
appear to be likely to become successful but never realize their potential. The
Corporation has been risk seeking rather than risk averse in its approach to
venture capital and other investments. Neither the Corporation's investments nor
an investment in the Corporation is intended to constitute a balanced investment
program. The Corporation has in the past relied, and continues to rely to a
large extent, upon proceeds from sales of investments rather than investment
income to defray a significant portion of its operating expenses. Such sales are
unpredictable and may not occur.

ILLIQUIDITY OF PORTFOLIO INVESTMENTS

     Most of the investments of the Corporation's are or will be either equity
securities acquired directly from small companies or below investment grade
subordinated debt securities. The Corporation's portfolio of equity securities
is and will usually be subject to restrictions on resale or otherwise have no
established trading market. The illiquidity of most of the Corporation's
portfolio may adversely affect the ability of the Corporation to dispose of such
securities at times when it may be advantageous to liquidate such investments.



<PAGE>


     Even if the Corporation's portfolio companies are able to develop
commercially viable products, the market for new products and services is highly
competitive and rapidly changing. Commercial success is difficult to predict and
the marketing efforts of the portfolio companies may not be successful.

VALUATION OF PORTFOLIO INVESTMENTS

     There is typically no public market for equity securities of the small
privately held companies in which the Corporation invests. As a result, the
valuation of the equity securities in the portfolio are stated at fair value as
determined by the good faith estimate of the Board of Directors in accordance
with the Corporation's established valuation policies. In the absence of a
readily ascertainable market value, the estimated value of the portfolio of
securities may differ significantly, favorably or unfavorably, from the values
that would be placed on the portfolio if a ready market for the equity
securities existed. Any changes in estimated net asset value are recorded in the
statement of operations as "Change in unrealized appreciation on investments."

FLUCTUATIONS OF QUARTERLY RESULTS

     The Corporation's quarterly operating results could fluctuate as a result
of a number of factors. These factors include, among others, variations in and
the timing of the recognition of realized and unrealized gains or losses, the
degree to which portfolio companies encounter competition in their markets and
general economic conditions. As a result of these factors, results for any
one-quarter should not be relied upon as being indicative of performance in
future quarters.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Corporation's investment activities contain elements of risk. The
portion of the investment portfolio consisting of equity and equity-linked debt
securities in private companies is subject to valuation risk. Because there is
typically no public market for the equity and equity-linked debt securities in
which the Corporation invests, the valuation of the equity interests in the
portfolio is stated at "fair value" as determined in good faith by the Board of
Directors in accordance with the Corporation's investment valuation policy. In
the absence of a readily ascertainable market value, the estimated value of the
Corporation's 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 in the Corporation's statement of operations
as "Unrealized appreciation (depreciation) on investments."

     At times a portion of the Corporation's portfolio may include marketable
securities traded in the over-the-counter market. In addition, there may be a
portion of the Corporation's 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 the
markets to trade in an orderly fashion, the Corporation may not be able to
realize the fair value of its marketable investments or other investments in a
timely manner.

     As of June 30, 2003, the Corporation did not have any off-balance sheet
investments or hedging investments.



<PAGE>


ITEM 4. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures. The Corporation's chief
executive officer and chief financial officer, after evaluating the
effectiveness of the Corporation's "disclosure controls and procedures" (as
defined in rule 13a-14(c) under the Securities Exchange Act of 1934) as of a
date (the "Evaluation Date") within 90 days before the filing date of this
quarterly report, concluded that as of the Evaluation Date the Corporation's
disclosure controls and procedures were effective to ensure that material
information relating to the Corporation was being made known to them by others
within the Corporation, particularly including during the period when this
quarterly report was being prepared.

(b) Changes in internal controls. There were no significant changes in the
Corporation's internal controls or, to the knowledge of the Corporation's chief
executive officer and chief financial officer, in other factors that could
significantly affect the Corporation's disclosure controls and procedures
subsequent to the Evaluation Date.



<PAGE>



                                    PART II.
                                OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         None

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         At the Annual Meeting of Shareholders of Rand Capital Corporation,
         Buffalo, New York, on the 24th day of April, 2003, the following
         represents the results of balloting:

         ELECTION OF DIRECTORS: The following nominees received the number of
         votes set opposite their respective names:

<TABLE>
<CAPTION>
                                       VOTES FOR              VOTES WITHHELD
                                       ---------              --------------
         <S>                           <C>                         <C>
         Allen F. Grum                 5,145,611                   17,206
         Luiz F. Kahl                  5,145,611                   17,206
         Erland E. Kailbourne          5,145,611                   17,260
         Ross B. Kenzie                5,143,933                   18,884
         Willis S. McLeese             5,145,611                   17,206
         Reginald B. Newman II         5,145,511                   17,306
         Jayne K. Rand                 5,145,611                   17,206
</TABLE>


ITEM 5. OTHER INFORMATION

         The Company's chief executive officer and chief financial officer have
         furnished to the SEC the certification with respect to this Form 10-Q
         that is required by Section 906 of the Sarbanes-Oxley Act of 2002.



<PAGE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

     The following exhibits are filed with this report or are incorporated
     herein by reference to a prior filing, in accordance with Rule 12b-32 under
     the Securities Exchange Act of 1934.

(2)      N/A
(3)(i)   Certificate of Incorporation of the Corporation, incorporated by
         reference to Exhibit (a)(1) of Form N-2 filed with the Securities
         Exchange Commission on April 22, 1997.
(3)(ii)  By-laws of the Corporation incorporated by reference to Exhibit (b)
         of Form N-2 filed with the Securities Exchange Commission on
         April 22, 1997.
(4)      Specimen certificate of common stock certificate, incorporated by
         reference to Exhibit (b) of Form N-2 filed with the Securities
         Exchange Commission on April 22, 1997.
(10.1)   Employee Stock Option Plan - incorporated by reference to Appendix B
         to the Corporation's definitive Proxy Statement filed on June 1, 2002.*
(10.2)   Director Stock Option Plan - incorporated by reference to Appendix C
         to the Corporation's definitive Proxy Statement filed on June 1, 2002.*
(10.3)   Agreement of Limited Partnership for Rand Capital SBIC, L.P. -
         incorporated by reference to Exhibit 10.3 to the Corporation's
         Form 10-K filed for the year ended December 31, 2001.
(10.4)   Certificate of Limited Partnership of Rand Capital SBIC, L.P. -
         incorporated by reference to Exhibit 10.4 to the Corporation's
         Form 10-K filed for the year ended December 31, 2001.
(10.5)   Limited Liability Corporation Agreement of Rand Capital Management,
         LLC - incorporated by reference to Exhibit 10.5 to the Corporation's
         Form 10-K Report filed for the year ended December 31, 2001.
(10.6)   Certificate of Formation of Rand Capital Management, LLC-
         incorporated by reference to Exhibit 10.6 to the Corporation's Form
         10-K Report filed for the year ended December 31, 2001.
(10.7)   N/A
(10.8)   Profit Sharing Plan - incorporated by reference to Exhibit 10.8 to the
         Corporation's Form 10-K Report filed for the year ended
         December 31, 2002.*
(15)     N/A
(18)     N/A
(19)     N/A
(20)     N/A
(21)     Subsidiaries of the Corporation - incorporated by reference to
         Exhibit 21 to the Corporation's Form 10-K Report filed for
         the year ended December 31, 2001.
(22)     N/A
(23)     N/A
(24)     N/A
(31.1)   Certification of Chief Executive Officer Pursuant to Rules 13a-14(a)/
         15d-14(a) under the Securities Exchange Act of 1934, as amended.
(31.2)   Certification of Chief Financial Officer Pursuant to Rules 13a-14(a)/
         15d-14(a) under the Securities Exchange Act of 1934, as amended.
(32.1)   Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002 - Rand Capital Corporation - filed herewith
(32.2)   Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
         2002 - Rand Capital SBIC, L.P. - filed herewith


*Management contract or compensatory plan.


<PAGE>

(b)  REPORTS ON FORM 8-K

     A report was filed on April 24, 2003 regarding the issuance of a press
     release relating to the Corporation's first quarter 2003 earnings.



<PAGE>




                                   SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT
OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT ON FORM 10-Q TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED.

Dated: August 6, 2003
                                    RAND CAPITAL CORPORATION



                                         By: /s/ ALLEN F. GRUM
                                             -----------------------------
                                             Allen F. Grum, President



                                         By: /s/ DANIEL P. PENBERTHY
                                             -----------------------------
                                             Daniel P. Penberthy, Treasurer

                                    RAND CAPITAL SBIC, L.P.

                                    By:  RAND CAPITAL MANAGEMENT LLC
                                           General Partner
                                    By:  RAND CAPITAL CORPORATION
                                           Member


                                         By: /s/ ALLEN F. GRUM
                                             -----------------------------
                                             Allen F. Grum, President



                                         By: /s/ DANIEL P. PENBERTHY
                                             -----------------------------
                                             Daniel P. Penberthy, Treasurer