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 September 30, 2002



[ ] 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(State or Other Jurisdiction of Incorporation
    Or Organization)         | 16-0961359(IRS Employer
    Identification No.)
|---------------------------------------------------------------------------------- | -----------------------------------------------
|2200 Rand Building, Buffalo, NY 14203
    (Address of Principal executive offices) | 14203(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 ___

Number of shares outstanding of each of the issuer's classes of common stock,
as of the latest practicable date (November 8, 2002): 5,751,834





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
        September 30, 2002 and December 31, 2001                           
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | Condensed Consolidated Statements of Operations for the Three Months
        and Nine Months Ended September 30, 2002 and 2001           
| | Condensed Consolidated Statements of Cash Flows for the Nine Months
        Ended September 30, 2002 and 2001                            
| | Condensed Consolidated Statements of Changes in Net Assets for the
        Three Months and Nine Months Ended September 30, 2002 and 2001
| | Schedule of Portfolio Investments as of September 30, 2002                                                                               
| | Notes to Condensed Consolidated Financial Statement                                                                                      

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.



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



PART I.
FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data



Condensed Consolidated Statements of Financial Position 
As of September 30, 2002 and December 31, 2001
(Unaudited)

|                                                       | September 30,
    2002 |  | December 31,
    2001
|------------------------------------------------------ | ---------------------- |  | ---------------------
|ASSETS                                                
|Investments at fair value (identified cost:           
|at 9/30/2002 - $4,275,453, at 12/31/2001 - $3,157,017) | $3,957,622             |  | $4,010,891           
|Cash and cash equivalents                              | 5,155,124              |  | 5,941,517            
|Interest receivable (net of allowance of
    $13,167   |                        |  |                      
|at 9/30/2002 and 12/31/2001)                           | 225,496                |  | 167,844              
|Promissory notes receivable                            | 121,550                |  | 150,605              
|Income taxes receivable                                | 20,764                 |  | -                    
|Deferred tax asset                                     | 133,000                |  | -                    
|Other assets                                           | 39,132                 |  | 11,636               
|TOTAL ASSETS                                           | $9,652,688             |  | $10,282,493          

LIABILITIES AND STOCKHOLDERS' EQUITY (NET ASSETS)

LIABILITIES:

|Accounts payable and accrued expenses | $41,521 |  | $33,679 | 
|------------------------------------- | ------- |  | ------- | 
|Income taxes payable                  | -       |  | 40,530  | 
|Deferred tax liability                | -       |  | 150,000 | 
|Total liabilities                     | 41,521  |  | 224,209 | 

STOCKHOLDERS' EQUITY (NET ASSETS)

|Common stock, $.10 par - shares authorized 10,000,000; shares issued
|--------------------------------------------------------------------
|5,763,034                                                           
|Capital in excess of par value                                      
|Accumulated net investment (loss)                                   
|Undistributed net realized gain on investments                      
|Net unrealized (depreciation) appreciation on investments           
|Treasury stock at cost, 5,400 shares                                
|Net assets (per share 9/30/2002-$1.67, 12/31/2001-$1.75)            
|                                                                    
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          

See notes to the condensed consolidated financial statements.



Condensed Consolidated Statements of Operations
For The Three Months And Nine Months Ended September 30, 2002
and 2001
(Unaudited



|                                                                                      | Three months ended 
    September 30, 2002                               |          | Three months ended 
    September 30, 2001 |           | Nine months ended
    September 30, 2002 |            | Nine months ended 
    September 30, 2001 |          
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | -------- | ------------------------------------------ | --------- | ---------------------------------------- | ---------- | ----------------------------------------- | ---------
|Investment income:                                                                    |                                                                          |          |                                            |           |                                          |            |                                           |          
|                                                                                      | Interest from portfolio companies                                        | $ 23,913 |                                            | $ 25,769  |                                          | $ 83,419   |                                           | $ 88,298 
|                                                                                      | Interest from other investments                                          | 23,408   |                                            | 1,209     |                                          | 82,359     |                                           | 6,931    
|                                                                                      | Other income                                                             | 10,000   |                                            | 600       |                                          | 15,540     |                                           | 8,698    
|                                                                                      |                                                                          | 57,321   |                                            | 27,578    |                                          | 181,318    |                                           | 103,927  
|Expenses:                                                                             |                                                                          |          |                                            |           |                                          |            |                                           |          
|                                                                                      | Salaries                                                                 | 68,575   |                                            | 59,176    |                                          | 248,538    |                                           | 247,395  
|                                                                                      | Employee benefits                                                        | 13,814   |                                            | 12,054    |                                          | 62,698     |                                           | 53,248   
|                                                                                      | Directors' fees                                                          | 4,500    |                                            | 10,250    |                                          | 20,750     |                                           | 19,750   
|                                                                                      | Professional fees                                                        | 15,890   |                                            | (2,100)   |                                          | 55,093     |                                           | 33,091   
|                                                                                      | Shareholders and office                                                  | 21,468   |                                            | 17,509    |                                          | 82,799     |                                           | 54,594   
|                                                                                      | Insurance                                                                | 11,250   |                                            | 6,750     |                                          | 33,750     |                                           | 20,250   
|                                                                                      | Corporate development                                                    | 10,795   |                                            | 4,627     |                                          | 31,121     |                                           | 15,552   
|                                                                                      | Other operating expenses                                                 | 6,021    |                                            | 53,464    |                                          | 16,737     |                                           | 182,414  
|                                                                                      |                                                                          | 152,313  |                                            | 161,730   |                                          | 551,486    |                                           | 626,294  
|                                                                                      | Organizational costs                                                     | 13,919   |                                            | -         |                                          | 130,029    |                                           | -        
|                                                                                      | Total expenses                                                           | 166,232  |                                            | 161,730   |                                          | 681,515    |                                           | 626,294  
|Investment (loss) before income taxes                                                 | (108,911                                                                 | )        | (134,152                                   | )         | (500,197                                 | )          | (522,367                                  | )        
|                                                                                      | Income tax (benefit) provision                                           | (40,280  | )                                          | 2,580     |                                          | (9,280     | )                                         | 15,987   
|                                                                                      | Deferred income taxes                                                    | (248,147 | )                                          | 73,000    |                                          | (36,503    | )                                         | 73,000   
|Net investment income (loss)                                                          | 179,517                                                                  |          | (209,732                                   | )         | (454,413                                 | )          | (611,354                                  | )        
|                                                                                      |                                                                          |          |                                            |           |                                          |            |                                           |          
|Realized and unrealized gain (loss) on
    investments:                               |                                                                          |          |                                            |           |                                          |            |                                           |          
|                                                                                      | Net realized gain on sales and                                           |          |                                            |           |                                          |            |                                           |          
|                                                                                      | dispositions                                                             | -        |                                            | 660,332   |                                          | 938,399    |                                           | 661,025  
|Unrealized appreciation (depreciation) on
    investments:                            |                                                                          |          |                                            |           |                                          |            |                                           |          
|                                                                                      | Beginning of period                                                      | 288,696  |                                            | 2,065,764 |                                          | 853,874    |                                           | 974,597  
|                                                                                      | End of period                                                            | (317,831 | )                                          | 1,745,483 |                                          | (317,831   | )                                         | 1,745,483
|                                                                                      | Change in unrealized (depreciation) appreciation
    before income taxes | (606,527 | )                                          | (320,281  | )                                        | (1,171,705 | )                                         | 770,886  
|                                                                                      | Deferred income tax (benefit)                                            |          |                                            |           |                                          |            |                                           |          
|                                                                                      | provision                                                                | (4,853   | )                                          | -         |                                          | (246,497   | )                                         | 148,239  
|Net (decrease) increase in unrealized
    appreciation                                | (601,674                                                                 | )        | (320,281                                   | )         | (925,208                                 | )          | 622,647                                   |          
|                                                                                      |                                                                          |          |                                            |           |                                          |            |                                           |          
|Net realized and unrealized (loss) gain on
    investments                            | (601,673                                                                 | )        | 340,051                                    |           | 13,191                                   |            | 1,283,672                                 |          
|                                                                                      |                                                                          |          |                                            |           |                                          |            |                                           |          
|Net (decrease) increase in net assets from
    operations                             | $(422,157                                                                | )        | $ 130,319                                  |           | $ (441,222                               | )          | $ 672,318                                 |          
|Weighted average shares outstanding                                                   | 5,760,523                                                                |          | 5,763,034                                  |           | 5,762,191                                |            | 5,762,045                                 |          
|Basic and diluted net (decrease) increase in
    net assets from operations per share | $ (0.07                                                                  | )        | $ 0.02                                     |           | $ (0.08                                  | )          | $ 0.12                                    |          

See notes to the condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2002 and 2001
(Unaudited)



|                                                                                                              | Nine Months
    Ended
    September 30, 2002                 |            | Nine Months
    Ended
    September 30, 2001 |           
|------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ---------- | -------------------------------------------- | ----------
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                         |                                                              |            |                                              |           
|Net (decrease) increase in net assets from operations                                                         | $(441,222                                                    | )          | $672,318                                     |           
|Adjustments to reconcile net (decrease) increase in net 
    assets to net cash used in operating activities: |                                                              |           
|                                                                                                              | Depreciation and amortization                                | 10,400     |                                              | 9,750     
|                                                                                                              | Interest receivable allowance                                | -          |                                              | 36,372    
|                                                                                                              | Change in unrealized appreciation of investments             | 925,208    |                                              | (622,647  
|                                                                                                              | Change in deferred taxes                                     | (36,503    | )                                            | 73,000    
|                                                                                                              | Net realized (gain) on portfolio investments                 | (938,399   | )                                            | (661,025  
|                                                                                                              | Non cash conversion of investments                           | (16,766    | )                                            | -         
|                                                                                                              | Changes in operating assets and liabilities:                
|                                                                                                              | (Increase) in interest receivable                            | (57,652    | )                                            | (50,885   
|                                                                                                              | (Increase) decrease in other assets                          | (24,649    | )                                            | 10,609    
|                                                                                                              | (Decrease) in accounts payable and other accrued liabilities | (53,450    | )                                            | (2,782    
|                                                                                                              | Total adjustments                                            | (191,811   | )                                            | (1,207,608
|                                                                                                              | Net cash (used in) operating activities                      | (633,033   | )                                            | (535,290  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                        
|                                                                                                              | Proceeds from sale of portfolio investments                  | 1,086,730  |                                              | 1,084,054 
|                                                                                                              | Proceeds from loan repayments                                | 29,055     |                                              | -         
|                                                                                                              | New portfolio investments                                    | (1,250,000 | )                                            | (170,465  
|                                                                                                              | Capital expenditures                                         | (13,250    | )                                            | -         
|                                                                                                              | Net cash (used in) provided by investing activities          | (147,465   | )                                            | 913,589   
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                        
|                                                                                                              | Proceeds from issuance of stock                              | -          |                                              | 31,875    
|                                                                                                              | Purchase of Treasury Stock                                   | (5,895     | )                                            | -         
|                                                                                                              | Net cash (used in) provided by financing activities          | (5,895     | )                                            | 31,875    
|NET (DECREASE) INCREASE IN CASH AND                                                                          
|CASH EQUIVALENTS                                                                                              | (786,393                                                     | )          | 410,174                                      |           
|CASH AND CASH EQUIVALENTS,                                                                                   
|BEGINNING OF PERIOD                                                                                           | 5,941,517                                                    |            | 304,152                                      |           
|CASH AND CASH EQUIVALENTS,                                                                                   
|END OF PERIOD                                                                                                 | $5,155,124                                                   |            | $714,326                                     |           

See notes to condensed consolidated financial statements.



Condensed Consolidated Statements of Changes In Net
      Assets
      For The Three Months And Nine Months Ended September 30, 2002
and 2001
      (Unaudited

|                                                                                    | Three months ended September 30, 2002 |   | Three months ended September 30, 2001 |   | Nine months ended September 30, 2002 |   | Nine months ended September 30, 2001 |  
|----------------------------------------------------------------------------------- | ------------------------------------- | - | ------------------------------------- | - | ------------------------------------ | - | ------------------------------------ | -
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  
|Net
    assets at beginning of period                                               | $10,039,219                           |   | $8,959,570                            |   | $10,058,284                          |   | $8,385,697                           |  
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  
|Operations:                                                                         |                                       |   |                                       |   |                                      |   |                                      |  
|Net
    investment income (loss)                                                    | 179,517                               |   | (209,732                              | ) | (454,413                             | ) | (611,354                             | )
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  
|Net
    realized gain on investments                                                | -                                     |   | 660,332                               |   | 938,399                              |   | 661,025                              |  
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  
|Net
    (decrease) increase in unrealized
              appreciation of investments | (601,674                              | ) | (320,281                              | ) | (925,208                             | ) | 622,647                              |  
|Other                                                                               |                                       |   |                                       |   |                                      |   | (1)                                  |  
|Net
    (decrease) increase in net assets
               from operations            | (422,157                              | ) | 130,319                               |   | (441,222                             | ) | 672,317                              |  
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  
|Purchase of Treasury stock                                                          | (5,895                                | ) | -                                     |   | (5,895                               | ) | -                                    |  
|Net
    proceeds of private offering                                                | -                                     |   | -                                     |   | -                                    |   | 31,875                               |  
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  
|Net
    assets at end of period                                                     | $9,611,167                            |   | $9,089,889                            |   | $9,611,167                           |   | $9,089,889                           |  
|                                                                                    |                                       |   |                                       |   |                                      |   |                                      |  

See notes to condensed consolidated financial statements

Schedule Of Portfolio Investments as of September 30, 2002 (unaudited)

|                                                     |                                    | (b)      | (c)    |            | (d)       
|---------------------------------------------------- | ---------------------------------- | -------- | ------ | ---------- | ----------
|                                                     |                                    | Date     |        |            | Fair      
|Company and Business                                 | Type of Investment                 | Acquired | Equity | Cost       | Value     
|ADIC (NASDAQ:ADIC)* ^                                | Common stock - 9,500 shares        | 5/11/01  | <1%    | $21,627    | $45,600   
|Redmond, WA. Manufactures data storage              
|systems and storage management software.            
|www.adic.com.                                       
|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    | 102,100   
|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  | <1%    | 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                            
|Somerset Gas Transmission Company, LLC               | Convertible Promissory Note        | 7/10/02  | <1%    | 500,000    | 583,333   
|Buffalo, NY. Natural gas transportation company.     | $500,000 at 10%. due on
demand    
|                                                     | after September 30, 2002.         
|                                                     | .40 Units                         
|Ultra - Scan Corporation                             | 504,596 Common shares,             | 12/11/92 | 4%     | 509,353    | 842,247   
|Amherst, NY. Biometrics application                  | 142,276 warrants for Common       
|developer of ultrasonic fingerprint technology.      | shares.                           
|www.ultra-scan.com                                  
|                                                    
|UStec, Inc. (e)                                      | Promissory Note at 12%             | 12/17/98 | <1%    | 100,500    | 150,000   
|Victor, NY. Markets digital wiring systems           | due January 2003                  
|for new home construction.                           | 50,000 Common Shares.             
|www.ustecnet.com                                     | 36,259 Warrants for Common Shares 
|Vanguard Modular Building Systems                    | Preferred Units - 2,673 Units with | 12/16/99 | <1%    | 270,000    | 270,000   
|Philadelphia, PA. Leases and sells high-end          | warrants, 14% interest rate.      
|modular space solutions.                            
|www.vanguardmodular.com                             
|Other Investments                                    | Other                              | Various  | -      | 379,194    | 150,663   
|(Includes:                                           | American Tactile, Appro,           |          |        |            |           
|                                                     | BioWorks, Inc., Clearview Cable    |          |        |            |           
|                                                     | And MemberWare                     |          |        |            |           
|                                                     | Total portfolio investments        |          |        | $4,275,453 | $3,957,622

See notes to condensed consolidated financial statements.

Notes to Schedule of Portfolio Investments

|(a) | Unrestricted securities (indicated by ^) are freely marketable securities
    having readily available market quotations. All other securities are
    restricted securities, which are subject to one or more restrictions on
    resale and are not freely marketable. At September 30, 2002 restricted
    securities represented 99% of the value of the investment portfolio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The date acquired column indicates the year in which the Corporation
    acquired its first investment in the company or a predecessor company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(c) | 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 "<1%" indicates that the Corporation holds equity interest
    of less than one percent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(d) | 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.
|(e) | These investments are income producing. All other investments are non-income
    producing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

*Publicly-owned Company

∆ Rand Capital SBIC, L.P. Investment

See notes to condensed consolidated financial statements.



Rand Capital Corporation
Notes to the Condensed Consolidated Financial Statements
For the Nine Months Ended September 30, 2002 and 2001
(Unaudited)



1.    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 nine months ended September 30, 2002 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, 2001. Information contained in this filing should also
be reviewed in conjunction with Rand Capital Corporation's related filings with
the Securities and Exchange Commission ("SEC") during the period of time covered
by this filing. These 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, 2001                          
| | Form 10 Q    | Quarterly Report on Form 10-Q for the quarters ended March 31, 2002 and June
    30, 2002
| | Form N-23C-1 | Reports by closed-end
investment companies of purchase of their own securities           

2. THE ENTITY AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation - The condensed consolidated Financial Statements
include the accounts of Rand Capital Corporation ("Rand"), and Rand Capital SBIC,
L.P. ("Rand SBIC")(collectively, the "Corporation"). All significant
intercompany balances and transactions have been eliminated in consolidation.

Nature of the Business - Effective August 16, 2001, Rand made an
election, following a vote of the shareholders, authorizing Rand, to become a
Business Development Company, or "BDC." Generally, 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. Prior to this election,
Rand operated as a diversified closed-end management investment company
registered under the Investment Company Act of 1940. Rand continues to operate
as a publicly held venture capital company, listed on the NASDAQ Small Cap
Market under the symbol "RAND." Rand was founded in 1969 and is headquartered in
Buffalo, New York. Its investment strategy is to seek capital appreciation
through venture capital investments in small, unseasoned, developing companies,
primarily in Upstate New York.

During the first quarter of 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. On January 25, 2002, Rand transferred $5 million in
cash to this subsidiary to serve as "regulatory capital." 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 will allow Rand SBIC to obtain loans up to two times its
initial $5,000,000 of "regulatory capital" from the SBA for purposes of making
new investment's in portfolio companies. The first investment by Rand SBIC, L.P.
was during the pre-licensing phase and was in Kionix, Inc. in May 2002.

Investments - Investments are stated at fair value as determined in good
faith by Rand management and both reviewed and approved on a quarterly basis by
the Board of Directors. In accordance with Rand's valuation policies, 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.

In April 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.

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. A reserve for
possible losses on interest receivable is maintained when appropriate.

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 (liabilities) as of September
30, 2002 and December 31, 2001 are as follows:

| |                                        | September 30, 2002 | December 31, 2001
| | -------------------------------------- | ------------------ | -----------------
| | Operations                             | ($100,000)         | $(113,000)       
| | Investments                            | 168,500            | (362,900)        
| | Net operating loss carry-forwards      | 64,500             | 291,900          
| | Alternative Minimum tax credit        
| | carry-forward                          | -                  | 34,000           
| | Deferred tax assets (liabilities), net | $133,000           | $(150,000)       

As of September 30, 2002, the Corporation had a federal net operating loss
carry-forward of approximately $190,000 which expires commencing in 2019.

The deferred tax asset at September 30, 2002 was $133,000 and represented a
$283,000 increase in this account from December 31, 2001. This increase is
primarily attributable to the unrealized loss write down of approximately
($690,000) in the third quarter of 2002. See further discussion of this write
down in the "Net Increase(Decrease) in Net Assets from Operations" section
below.

Stockholders Equity (Net Assets)

At September 30, 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 three months ended
September 30, 2002, 5,400 shares were repurchased for the treasury. During the
period October 1, 2002 through November 8, 2002

In July 2001, the shareholders of Rand authorized the establishment of two
stock option plans - the Employee Plan and the 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. As of September 30, 2002, no stock
options have been awarded from either plan. The Director Plan will not take
effect, if at all, until a SEC exemption is obtained from restrictions under the
Investment Company Act of 1940. The corporation has elected to place both the
Employee plan and the Director Plan on inactive status as it develops a new
profit sharing plan for the corporation's employees.

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.

Formation of SBIC Subsidiary

On January 14, 2002, Rand Capital Corporation ("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 (SBIC). On January 25,
2002, Rand transferred $5.0 million in cash to Rand SBIC to serve a "regulatory
capital" for purposes of Small Business Administration (SBA) regulation. On
February 1, 2002, Rand SBIC's application for a license to operate as an SBIC
was submitted to the SBA. The SBA approved and licensed Rand SBIC on August 16,
2002. Rand intends to operate Rand SBIC for the same purposes, with investments
in the same types of securities as Rand. Rand SBIC's operations are consolidated
with those of Rand for both financial reporting and tax purposes. Rand filed an
application with the Securities and Exchange Commission (SEC) on May 28, 2002
for exemptions from certain restrictions under the Investment Company Act of
1940 on the operation of subsidiaries that the SEC has commonly granted to
Business Development Companies with wholly-owned SBIC subsidiaries.

Financial Condition



The following financial discussion will include Rand's and Rand SBIC's,
(collectively, the "Corporation"), financial position and results of operations.
The only financial activity that occurred in 2002 with respect to Rand SBIC was
the transfer of $5.0 million on January 25, 2002 from Rand to a Rand SBIC bank
account and the resulting earned interest revenue and Rand SBIC's investment of
$750,000 in Kionix on May 17, 2002.



Rand's total assets decreased by ($629,805) or (6.1%) to $9,652,688 and its
net assets decreased by ($447,117) or (4.4%) to $9,611,167 at September 30,
2002, versus $10,282,493 and $10,058,284 at December 31, 2001, respectively. The
decrease in net assets can be attributed to operating losses during the nine
months ended September 30, 2002.

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 generally tend to be
unproven, thinly capitalized small companies that may lack experienced
management and may have no history of operations. The following summarizes the
Corporation's investment portfolio at the periods indicated.



|                                            | September 30, 2002 | December 31, 2001
|------------------------------------------- | ------------------ | -----------------
|Investments at cost                         | $4,275,453         | $3,157,017       
|Unrealized (depreciation) appreciation, net | (317,831)          | 853,874          
|Investments at fair value                   | $3,957,622         | $4,010,891       

The increase in investment at cost is due to the net effect of the January
2002 sale of the Advanced Digital Information Corporation ("ADIC") stock with a
cost basis of $138,841, the May 2002 investment that Rand SBIC made in Kionix,
Inc. for $750,000 and the July 2002 investment in Somerset Gas Transmission
Company, LLC for $500,000.

The decrease in unrealized appreciation (depreciation) of the investments is
primarily attributable to the realized gain recognized on the sale of ADIC stock
for $838,000 in January 2002 and the net effect of portfolio valuation
adjustments to the following portfolio companies during the nine month period
ended September 30, 2002: Minrad ($652,058), Ultra-Scan Inc. $239,805,
Memberware ($50,000), and the valuation of the ADIC escrow shares.

The sole investment during the third quarter of 2002 was Rand's investment in
Somerset Gas Transmission Company, LLC ("Somerset") on July 10, 2002. Rand
invested $500,000 in a Convertible Promissory Note as part of a $3 million
private placement bridge loan. The note had .40 equity units attached to it
which were are at $83,333. The note is short term and due on demand after
September 30, 2002.

Somerset is a natural gas transportation company formed to move natural gas
from Appalachian and Mid-western sources to the Northeast and Atlantic markets.
Somerset is headquartered in Buffalo, NY.

Rand SBIC did not fund any investment during the third quarter of 2002.

Rand's total investments at fair value approximated 41% of net assets at
September 30, 2002 and 40% of net assets at December 31, 2001.

Results of Operations

On January 3rd and 4th, 2002, Rand sold a total of 61,051 shares of ADIC
stock at a price range of $17.30 to $18.45 with gross proceeds of $1.1 million
and a realized gain of approximately $948,000. Rand's average cost basis per
share for the ADIC securities was $2.27.

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 September 30, 2002 and
2001 was $57,321 and $27,578 respectively, of which $23,913 (42%) and $25,769
(93%) consisted of interest from portfolio companies during the quarter. For the
nine months ended September 30, 2002 and 2001, the total investment income was
$181,318 and $103,927, respectively, of which $83,419 (46%) and $88,298 (85%)
consisted of interest from portfolio companies. This income includes investments
that have interest accruals and often do not pay a current yield. See the
Schedule of Portfolio Investments footnote (e) to identify the investments that
pay a current yield. The remaining investment income is comprised of interest on
idle cash balances and other temporary short-term investments. The interest
income for the three months ending September 30, 2002 was $23,408 versus $1,209
for the same period in 2001. The interest income for the nine month period
ending September 30, 2002 and 2001 was $82,359 and $6,931. This interest income
is higher for the three months and nine months period ended September 30, 2002
due to an increase in idle cash during the three months ended September 30, 2002
versus the three months ended September 30, 2001.

The portfolio interest for the three months ended September 30, 2002 included
the earned interest from the Somerset debenture of approximately $11,100 for the
quarter.



Operating expenses for the three months ended September 30, 2002 and 2001
were $166,232 and $161,730, 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 operating expenses for the three month period ended
September 30, 2002 included approximately $14,000 of organizational costs
(consulting and advisory fees) incurred for matters relating to Rand SBIC. Total
operating expenses for the nine months ended September 30, 2002 and 2001 were
$681,515 and $626,294 respectively. The total operating expenses for the nine
month period ended September 30, 2002 included approximately $130,000 of
organizational expenses related to Rand SBIC professional fees. The nine month
period ended September 30, 2001 contained approximately $71,000 in
organizational expenses incurred for restructuring the Corporation to a Business
Development Company ("BDC") status, and research into stock option plans as well
as other corporate matters. These expenses were categorized in "Other operating
expenses" for the period ended September 30, 2001. At September 30, 2001 the
"Other operating expenses" category also contained $36,371 in write-offs of
certain portfolio related receivables.

Net investment income (loss) from operations for the three month period ended
September 30, 2002 and 2001 were $179,517 and ($209,732), respectively. Net
investment losses from operations for the nine month period ended September 30,
2002 and 2001 were ($454,413) and ($611,354), respectively. The investment
income in the third quarter 2002 is higher due to income associated with
Somerset transaction and the higher earned interest on idle funds. The current
income tax expense was negative due to an approximate $31,000 tax adjustment. In
addition due to the large unrealized loss write down in the third quarter of
2002, the associated deferred taxes resulted in a $248,000 tax benefit. The
deferred income tax (expense) in the three-months ended September 30, 2001 was
($73,000).

Net Realized Gains and Losses on Investments:

During the three months ended September 30, 2002 the Corporation did not have
any realized gains or losses. During the three-months ended September 30, 2001,
Rand sold 70,000 shares of its ADIC holdings, generating a realized gain of
approximately $720,000. Also during the third quarter of 2001, ADIC settled its
patent litigation with Pathlight, which resulted in a release from escrow of an
additional 26,417 ADIC shares to Rand, and a forfeiture of 28,313 shares
previously held in escrow (with an average cost basis of $60,024).



Net Increase (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 increase (decrease) in
net assets from operations" on its statements of operations. For the three month
period ending September 30, 2002, the net (decrease) in net assets from
operations was ($422,157) as compared to a net increase in net assets from
operations of $130,319 for the same period in 2001. The decrease in net assets
from operations during the third quarter of 2002 is primarily attributable to
the unrealized loss write down of approximately ($690,000). This unrealized
write down consisted of the following adjustments: Minrad ($652,000), ADIC
($35,000). The third quarter 2001 net increase is due primarily to the increase
(decrease) in appreciation of investments of: ADIC $2,400,000, Fertility
Acoustics, Inc., ($1,100,000), BNKR.com, ($400,000), Aria Wireless Systems,
Inc,. ($100,000), and Platform Technology Holding, LLC, ($100,000).

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 September 30, 2002, 54% of the Corporation's net assets are held in cash
and cash equivalents, which compares to 59% at December 31, 2001.

As of September 30, 2002 and December 31, 2001, the Corporation's total
liquidity, consisting of cash and cash equivalents, was $5,155,124 and
$5,941,517, respectively. Included in the September 30, 2002 cash balance was
$4,306,327 ($5,000,000 initial investment plus interest revenue less Kionix
investment) of Rand SBIC, L.P. 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.

The decrease in liquidity in the third quarter 2002 was due to the net impact
of ADIC stock sale in January 2002 with net proceeds of $1,086,730, normal
operating losses, and the $1,250,000 in Rand and Rand SBIC's 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

Rand 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.

Rand 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,
unproven small companies with risky technologies that lack management depth and
have not attained profitability or 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. The terrorist acts in the United States of
September 11, 2001 are the type of events that could severely impact a small
company that does not have as many resources to ride out market downturns and
would need immediate investment capital that might be temporarily unavailable.

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.

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 corporations 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 for 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 September 30, 2002, the Corporation did not have any off-balance sheet
investments or hedging investments.

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.

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                                                                                                                                                                
|None                                                                                                                                                                                                                       
|                                                                                                                                                                                                                           
|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.
|                                                                                                                                                                                                                           
|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)                                                                                                                                                                                                   
| |     | (3)(i)                                                                                                                                                                                                
| |     | (3)(ii)                                                                                                                                                                                               
| |     | (4)                                                                                                                                                                                                   
| |     | (10.1)                                                                                                                                                                                                
| |     | (10.2)                                                                                                                                                                                                
| |     | (10.3)                                                                                                                                                                                                
| |     | (10.4)                                                                                                                                                                                                
| |     | (10.5)                                                                                                                                                                                                
| |     | (10.6)                                                                                                                                                                                                
| |     | (10.7)                                                                                                                                                                                                
| |     | (15)                                                                                                                                                                                                  
| |     | (18)                                                                                                                                                                                                  
| |     | (19)                                                                                                                                                                                                  
| |     | (22)                                                                                                                                                                                                  
| |     | (23)                                                                                                                                                                                                  
| |     | (24)                                                                                                                                                                                                  
| |     | (99.1)                                                                                                                                                                                                
| |     | (99.2)                                                                                                                                                                                                
| |     | *Management contract or compensatory plan.                                                                                                                                                            
| | (b) | Reports on Form 8-K                                                                                                                                                                                   
| |     | No Form 8-K reports were filed during the quarter ended September 30,
        2002.                                                                                                                   









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: November 8, 2002

| | 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 



I, Allen F. Grum, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Rand Capital
Corporation and Rand Capital SBIC, L.P.;

2.    Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.    The registrant's other certifying officer and I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)    designed such disclosure controls and procedures to ensure that
material information relating to the registrant including its consolidating
subsidiary, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b)    evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c)    Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.    The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a)    all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b)    Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6.    The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



|Dated: November 8, 2002 | /s/ Allen F. Grum
    Allen F. Grum, President 
    (Chief Executive Officer of Rand Capital Corporation and equivalent of Chief
    Executive Officer of Rand Capital SBIC, L.P.)
|----------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



I, Daniel P. Penberthy, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Rand Capital
Corporation and Rand Capital SBIC, L.P.;

2.    Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects, the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.    The registrant's other certifying officer and I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)    designed such disclosure controls and procedures to ensure that
material information relating to the registrant including its consolidating
subsidiary, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b)    evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c)    Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.    The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

a)    all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b)    Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6.    The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.



|Dated: November 8, 2002 | /s/ Daniel P. Penberthy
    Daniel P. Penberthy, Treasurer
    (Chief Financial Officer of Rand Capital Corporation and equivalent of Chief
    Financial Officer of Rand Capital SBIC, L.P.)
|----------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------