UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

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



(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 (August 8, 2002): 5,760,534





RAND CAPITAL CORPORATION
TABLE OF CONTENTS FOR FORM 10-Q

PART I. - FINANCIAL INFORMATION

Item 1.     FINANCIAL STATEMENTS



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



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

Item 3.     Quantitative and Qualitative Disclosures about Market Risk

PART II - OTHER INFORMATION



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 June 30, 2002 and December 31, 2001 (Unaudited)

|                                                                                                                                         | June 30,
    2002 |         | December 31,
    2001
|---------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | ------- | ---------------------
|ASSETS                                                                                                                                  
|Investments at fair value (identified cost:
         
    at 6/30/2002 - $3,768,686, at 12/31/2001 - $3,157,017)                         | $4,057,382        |         | $4,010,891           
|Cash and cash equivalents                                                                                                                | 5,809,770         |         | 5,941,517            
|Interest receivable (net of allowance of $13,167
      at 6/30/2002 and 12/31/2001)                                                      |                   |         |                      
|211,351                                                                                                                                  |                   | 167,844
|Promissory notes receivable                                                                                                              | 131,200           |         | 150,605              
|Other assets                                                                                                                             | 33,532            |         | 11,636               
|TOTAL ASSETS                                                                                                                             | $10,243,235       |         | $10,282,493          
|                                                                                                                                         |                   |         |                      
|LIABILITIES AND STOCKHOLDERS' EQUITY (NET ASSETS)                                                                                       
|                                                                                                                                        
|LIABILITIES:                                                                                                                             |                   |         |                      
|Accounts payable and accrued expenses                                                                                                    | $61,147           |         | $33,679              
|Income taxes payable                                                                                                                     | 22,869            |         | 40,530               
|Deferred tax liability                                                                                                                   | 120,000           |         | 150,000              
|                                                                                                                                         |                   |         |                      
|Total liabilities                                                                                                                        | 204,016           |         | 224,209              
|                                                                                                                                         |                   |         |                      
|STOCKHOLDERS' EQUITY (NET ASSETS)                                                                                                        |                   |         |                      
|Common stock, $.10 par - shares authorized 10,000,000, issued and
     
    outstanding 5,763,034 at June 30, 2002 and December 31, 2001
|576,304                                                                                                                                  |                   | 576,304
|Capital in excess of par value                                                                                                           | 6,973,454         |         | 6,973,454            
|Accumulated net investment (loss)                                                                                                        | (4,250,603)       |         | (3,616,673)          
|Undistributed net realized gain on investments                                                                                           | 6,624,710         |         | 5,686,311            
|Net unrealized appreciation on investments                                                                                               | 115,354           |         | 438,888              
|                                                                                                                                         |                   |         |                      
|Net assets (per share 6/30/02-$1.74, 12/31/01-$1.75)                                                                                     | 10,039,219        |         | 10,058,284           
|                                                                                                                                         |                   |         |                      
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                               | $10,243,235       |         | $10,282,493          
|                                                                                                                                         |                   |         |                      
|See notes to the condensed consolidated financial statements.                                                                            |                   |         |                      

Condensed Consolidated Statements of Operations
For The Three Months And Six Months Ended June 30, 2002 And
June 30, 2001
(Unaudited



|                                                                                      | Three months ended 
    June 30, 2002                                    | Three months ended
    June 30, 2001 | Six months ended 
    June 30, 2002 | Six months ended 
    June 30, 2001
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ------------------------------------ | ----------------------------------- | -----------------------------------
|Investment income:                                                                    |                                                                          |                                      |                                     |                                    
|                                                                                      | Interest from portfolio companies                                        | $ 29,050                             | $ 29,493                            | $ 59,506                           
|                                                                                      | Interest from other investments                                          | 28,271                               | 1,709                               | 58,951                             
|                                                                                      | Other income                                                             | 0                                    | 10                                  | 5,540                              
|                                                                                      |                                                                          | 57,321                               | 31,212                              | 123,997                            
|Expenses:                                                                             |                                                                          |                                      |                                     |                                    
|                                                                                      | Salaries                                                                 | 67,494                               | 60,093                              | 179,963                            
|                                                                                      | Employee benefits                                                        | 15,620                               | 11,659                              | 48,884                             
|                                                                                      | Directors'fees                                                           | 9,500                                | 4,500                               | 16,250                             
|                                                                                      | Professional fees                                                        | 26,263                               | 18,169                              | 39,203                             
|                                                                                      | Shareholders and office                                                  | 30,177                               | 24,669                              | 61,331                             
|                                                                                      | Insurance                                                                | 11,250                               | 6,750                               | 22,500                             
|                                                                                      | Corporate development                                                    | 12,595                               | 9,359                               | 20,326                             
|                                                                                      | Other operating expenses                                                 | 6,030                                | 66,660                              | 10,716                             
|                                                                                      |                                                                          | 178,929                              | 201,859                             | 399,173                            
|                                                                                      | Organizational costs                                                     | 48,516                               | -                                   | 116,110                            
|                                                                                      | Total expenses                                                           | 227,445                              | 201,859                             | 515,283                            
|Investment (loss) before income taxes                                                 | (170,124)                                                                | (170,646)                            | (391,286)                           | (388,216)                          
|                                                                                      | Income tax provision                                                     | (22,197)                             | 12,588                              | 31,000                             
|                                                                                      | Deferred income tax expense                                              | (42,732)                             | -                                   | 211,644                            
|Net investment (loss)                                                                 | (105,195)                                                                | (183,234)                            | (633,930)                           | (401,623)                          
|                                                                                      |                                                                          |                                      |                                     |                                    
|Realized and unrealized gain (loss) on
    investments:                               |                                                                          |                                      |                                     |                                    
|                                                                                      | Net gain (loss) on sales and dispositions                                | (9,490)                              | -                                   | 938,399                            
|Unrealized appreciation (depreciation) on
    investments:                            |                                                                          |                                      |                                     |                                    
|                                                                                      | Beginning of period                                                      | 205,704                              | 581,259                             | 853,874                            
|                                                                                      | End of period                                                            | 288,696                              | 2,065,764                           | 288,696                            
|                                                                                      | Change in unrealized appreciation (depreciation)
    before income taxes | 82,992                               | 1,484,505                           | (565,178)                          
|                                                                                      | Deferred income tax provision (benefit)                                  | 34,732                               | 365,239                             | (241,644)                          
|Net increase (decrease) in unrealized
    appreciation                                | 48,260                                                                   | 1,119,266                            | (323,534)                           | 942,928                            
|                                                                                      |                                                                          |                                      |                                     |                                    
|Net realized and unrealized gain on
    investments                                   | 38,770                                                                   | 1,119,266                            | 614,865                             | 943,621                            
|                                                                                      |                                                                          |                                      |                                     |                                    
|Net increase (decrease) in net assets from
    operations                             | $(66,425)                                                                | $ 936,031                            | $ (19,065)                          | $ 541,998                          
|Weighted average shares outstanding                                                   | 5,763,034                                                                | 5,763,034                            | 5,763,034                           | $ 5,761,542                        
|Basic and diluted net increase (decrease) in
    net assets from operations per share | $ (0.01)                                                                 | $ 0.16                               | $ (0.00)                            | $ 0.09                             

See notes to the condensed consolidated financial statements.



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



|                                                                                                         | Six MonthsEnded
  June 30, 2002 | Six MonthsEnded
  June 30, 2001
|-------------------------------------------------------------------------------------------------------- | ------------------------------- | -------------------------------
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                                    | $(19,065)                       |                                
|Net increase (decrease) in net
  assets from operations                                                  |                                 |                                
|                                                                                                         |                                 |                                
|Adjustments to reconcile net increase (decrease) in net assets to net cash used in operating activities: |                                 |                                
|Depreciation and amortization                                                                            | 7,800                           |                                
|Interest receivable allowance                                                                            | -                               |                                
|Decrease (Increase) in unrealized appreciation
          of investments                                  |                                 |                                
|565,178                                                                                                  |                                 | (1,091,167)                    
|Change in deferred taxes                                                                                 | (30,000)                        |                                
|Net realized (gain) on portfolio investments                                                             | (938,399)                       |                                
|Non cash conversion of debentures                                                                        |                                 |                                
|Changes in operating assets and liabilities:                                                             |                                 |                                
|(Increase) in interest receivable                                                                        | (43,506)                        |                                
|(Increase) in other assets                                                                               | (39,699)                        |                                
|Increase (decrease) in accounts payable and other
               accrued liabilities                     |                                 |                                
|9,809                                                                                                    |                                 | 46,930                         
|                                                                                                         |                                 |                                
|Total adjustments                                                                                        | (468,817)                       |                                
|                                                                                                         |                                 |                                
|Net cash used in operating activities                                                                    | (487,882)                       |                                
|                                                                                                         |                                 |                                
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                    |                                 |                                
|Proceeds from sale of portfolio investments 0                                                            | 1,086,730                       |                                
|Proceeds from loan repayments                                                                            | 19,405                          |                                
|New portfolio investments                                                                                | (750,000)                       |                                
|                                                                                                         |                                 |                                
|Net cash provided by investing activities                                                                | 356,135                         |                                
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                    |                                 |                                
|Proceeds from issuance of stock                                                                          | -                               |                                
|                                                                                                         |                                 |                                
|NET (DECREASE) IN CASH AND
     CASH EQUIVALENTS                                                         |                                 |                                
|(131,747)                                                                                                |                                 | (172,022)                      
|                                                                                                         |                                 |                                
|CASH AND CASH EQUIVALENTS, 
     BEGINNING OF PERIOD                                                     |                                 |                                
|5,941,517                                                                                                |                                 | 304,152                        
|                                                                                                         |                                 |                                
|CASH AND CASH EQUIVALENTS, 
     END OF PERIOD                                                           | $5,809,770                      |                                

See notes to condensed consolidated financial statements.





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



|                                                                                | Three months ended 
    June 30, 2002 | Three months ended 
    June 30, 2001 | Six months ended 
    June 30, 2002 | Six months ended 
    June 30, 2001
|------------------------------------------------------------------------------- | ------------------------------------- | ------------------------------------- | ----------------------------------- | -----------------------------------
|                                                                               
|Net
    assets at beginning of period                                           | $10,105,644                           | $8,023,538                            | $10,058,284                         | $8,385,697                         
|                                                                                |                                       |                                       |                                     |                                    
|Operations:                                                                     |                                       |                                       |                                     |                                    
|Net
    investment loss                                                         | (105,195)                             | (183,234)                             | (633,930)                           | (401,623)                          
|                                                                                |                                       |                                       |                                     |                                    
|Net
    realized gain (loss) on investments                                     | (9,490)                               | -                                     | 938,399                             | 693                                
|                                                                                |                                       |                                       |                                     |                                    
|Net
    increase (decrease) in unrealized
          appreciation of investments | 48,260                                | 1,119,266                             | (323,534)                           | 942,928                            
|                                                                                |                                      
|Net
    increase (decrease) in net assets 
          from operations            | (66,425)                              | 936,032                               | (19,065)                            | 541,998                            
|Net
    proceeds of private offerings                                           | -                                     | -                                     | -                                   | 31,875                             
|                                                                                |                                      
|Net
    assets at end of period                                                 | $10,039,219                           | $8,959,570                            | $10,039,219                         | $8,959,570                         

See notes to condensed consolidated financial statements

Schedule Of Portfolio Investments June 30, 2002

|Company and Business                                                                                                                                                                   | Type of Investment                                                                                                                                   | (b)
Date
Acquired | (c)
    Equity | Cost | (d)
    Value
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | -------------- | ---- | -------------
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|ADIC (NASDAQ:ADIC) * ^Redmond, WA. Manufactures data storage   
    systems and storage management software. 
    www.adic.com.                                                        | 9,502 common shares to be  released 3Q-02.                                                                                                           |                   | 5/11/01        | <1%  |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|American Tactile CorporationMedina, NY. Develops equipment and systems 
    to produce commercial signage. 
    www.americantactile.com                                                | Convertible debentures at 8%
    due June 2000 and April 2001
    with detachable warrants                                                           |                   | 6/23/95        | <1%  |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|BioWorks, Inc.Geneva, NY. Develops and manufactures   
    biological alternative to chemical pesticides.
    www.bioworksbiocontrol.com                                               | Series A convertible preferred
    
    stock - 32,000 shares                                                                                        |                   | 11/6/95        | <1%  |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|Clearview Cable TV, Inc.   
    New Providence, NJ. Cable television operator.                                                                                                         | Common stock - 400 shares                                                                                                                            |                   | 2/23/96        | 5%   |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|Contract StaffingBuffalo, NY. PEO providing human resource   
    administration for small businesses. 
    www.contract-staffing.com                                                  | Series A 8% Cumulative  
    
 preferred stock - 10,000 shares                                                                                       |                   | 11/8/99        | 10%  |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|DataView, LLCMt. Kisco, NY. Designs, develops and
    markets
    browser based software for investment professionals.
    www.marketgauge.com                                         | 5% Membership interest                                                                                                                               |                   | 10/1/98        | 5%   |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|G-TEC Natural Gas Systems   
    Buffalo, NY. Manufactures and distributes   
    systems that allow natural gas to be used 
    as an alternative fuel to gases. 
    www.gas-tec.com | 41.67% Class A Membership  
    
 interest. 8% cumulative dividend                                                                                   |                   | 8/31/99        | 42%  |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|INRAD, Inc. (OTC: INRD.OB) * 
    Northvale, NJ. Develops and manufactures   
    products for laser photonics industry.   
    www.inrad.com                                          | Series B Preferred Stock -  
    
 100 shares. 10% dividend. 
 Common stock - 6,000 shares                                                           |                   | 10/31/00       | 2%   |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|Kionix, Inc. **   
    Ithaca, NY. Develops innovative MEMS   
    based technology applications.
    www.kionix.com                                                                   | Series A Preferred Stock,  
    
    882,352 shares.                                                                                                 |                   | 5/17/02        | <1%  |              
|MemberWare Technologies, Inc.Pittsford, NY. Internet company engaged in   
    web related consulting services.   
    www.memberware.com                                              | Promissory Note at prime rate 
    + 4.5% due September 2004.
    Common stock - 40,000
 34,000 warrants for shares of stock                         |                   | 9/16/99        | 2%   |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|MINRAD, Inc.   
    Buffalo, NY. Developer of laser guided medical   
    devices. www.minrad.com                                                                                      | 608,193 Common shares.
 56,020 Preferred Series A shares. 
 13,767 Preferred Series B                                                                |                   | 8/4/97         | 5%   |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|Ultra - Scan CorporationAmherst, NY. Biometrics application   
    developer of ultrasonic fingerprint technology.   
    www.ultra-scan.com                                           | 394,320 Common shares,   
 32,000 warrants for Common
 shares. Two Bridge Loans each for 
 $100,000 at 12%, due on demand 
    after March 31, 2002. |                   | 12/11/92       | 4%   |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|UStec, Inc. (e)   
    Victor, NY. Markets digital wiring systems   
    for new home construction.   
    www.ustecnet.com                                                            | Promissory
    Note at 12%   
 due January 2003 
 50,000 Common Shares.
 8,200 Warrants for Common Shares                                            |                   | 12/17/98       | <1%  |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|Vanguard Modular Building Systems   
    Philadelphia, PA. Leases and sells high-end   
    modular space solutions.
    www.vanguardmodular.com                                       | Preferred Units - 2,673
    Units with   
 warrants, 14% interest rate.                                                                              |                   | 12/16/99       | <1%  |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|Other Investment                                                                                                                                                                       | Other                                                                                                                                                |                   | Various        | -    |              
|                                                                                                                                                                                       |                                                                                                                                                      |                   |                |      |              
|                                                                                                                                                                                       | Total portfolio investments                                                                                                                          |                   |                |      |              

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 June 30, 2002 restricted securities
    represented 98% 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 Six Months Ended June 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 six months ended June 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 & 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                             
|NSAR-A       | Semi-Annual filing as closed end investment company                               
|NSAR-B       | Semi-Annual filing as closed end investment company                               
|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 quarter ended March 31, 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 an authorized vote of the shareholders 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 February 1, 2002,
Rand received notification that its Small Business Investment Company (SBIC)
application for the subsidiary had been received by the Small Business
Administration. The Corporation estimates official licensing in August 2002.
Once approved and licensed by the SBA, this new subsidiary will be able to
obtain up to two times its initial $5,000,000 of "regulatory capital" from the
SBA for purposes of new investment. The first investment by Rand SBIC, L.P. was
in Kionix, Inc. in May 2002.

Investments - Investments are stated at fair value as determined in good
faith by the Board of Directors. Certain investment valuations have been
determined by the Board of Directors 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 United States Small Business Administration (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.

Subsequent Events - On July 10, 2002 Rand made a $500,000 bridge loan to
Somerset Gas Transmission Company LLC.

During the period July 1 through August 7, 2002 Rand repurchased 2,500 shares
of its stock under the stock buy back program that was previously disclosed in
the company's Form 10-K at December 31, 2001 and described below in the
"Stockholder Equity(Net Assets) section. The program will continue to repurchase
shares through October 18, 2002 when market conditions are appropriate.

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 liabilities (assets) at June 30, 2002
and December 31, 2001 are as follows:

|                                                  | June 30, 2002 |        | December 31, 2001
|------------------------------------------------- | ------------- | ------ | -----------------
|Operations                                        | ($82,900)     |        | $(113,000)       
|Investments                                       | (121,200)     |        | (362,900)        
|Net operating loss carry-forwards                 | 43,100        |        | 291,900          
|Alternative Minimum tax credit
     carry-forward |               |        |                  
|41,000                                            |               | 34,000
|Deferred tax (liabilities), net                   | $(120,000)    |        | $(150,000)       

At June 30, 2002, the Corporation had a federal net operating loss
carry-forward of approximately $127,000 which expires commencing in 2012.

Stockholders Equity (Net Assets)

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

On January 18, 2001, January 21, 2000 and October 2, 2000, Rand sold 15,000,
15,000 and 25,000 shares of common stock through a private stock offering at
$2.125, $1.33 and $1.51 per share, respectively. There was no common stock
issued in 2002.

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. As of June 30, 2002 no stock
repurchases had occurred. During July and August 2002, 2,500 shares were
repurchased on the open market.

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 June 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.

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 licensing process is expected to be completed
in August 2002. Rand intends to operate Rand SBIC for the same purposes, with
investments in the same kinds of securities, as Rand. Rand SBIC's operations
will be consolidated with those of Rand for both financial reporting and tax
purposes. Rand filed an application with the 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 includes 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 the investment of $750,000
in Kionix on May 17, 2002.

Rand's total assets decreased by ($39,258) or (0.4%) to $10,243,235 and its
net assets decreased by ($19,065) or (0.2%) to $10,039,219 at June 30, 2002,
versus $10,282,493 and $10,058,284 at December 31, 2001, respectively. The minor
decreases in assets and net assets can be attributed to operating losses
experienced during the six months ended June 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.

|                             | June 30, 2002 |  | December 31, 2001
|---------------------------- | ------------- |  | -----------------
|Investments at cost          | 3,768,686     |  | $3,157,017       
|Unrealized appreciation, net | 288,696       |  | 853,874          
|Investments at fair value    | $4,057,382    |  | $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 and the May 2002 investment that Rand SBIC made in Kionix,
Inc. for $750,000.

The decrease in unrealized appreciation 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 six month period ended June 30,
2002: Ultra-Scan Inc. $239,805, Memberware ($50,000), and the valuation of the
ADIC escrow shares for approximately $80,000.

On June 27, 2002 Rand was notified that ADIC's/Pathlight's escrow litigation
claims regarding the 13,683 ADIC escrow shares was settled and the Corporation
will be entitled to receive 9,502 shares of ADIC stock. The remaining 4,181
shares were forfeited and written off in June 2002. The ADIC Escrow Settlement
Agreement was completed on June 27, 2002.

The sole investment during the second quarter of 2002 was Rand SBIC's
investment in Kionix, Inc. Rand SBIC invested $750,000 in Series A Preferred
stock of Kionix. This was Rand's first investment through Rand Capital SBIC,
L.P., a wholly owned subsidiary of Rand Capital Corporation.

Kionix was founded to commercialize an advanced micromachining technology
developed at Cornell University. Kionix's competitive advantage is found in
proprietary methods for high volume micromachining of silicon substrate to
produce top quality microelectomechanical systems or MEMS devices. Kionix has
the tools and patented technology to build mechanical structures that will
enable the next generation of MEMS based applications.

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

Rand did not fund any new investments during the six month period ended June
30, 2002.

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 is $2.27. As stated previously Rand is entitled to receive
9,502 of ADIC shares previously held in escrow.

Investment Income and Expenses

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

Total investment income for the three months ended June 30, 2002 and 2001 was
$57,321 and $31,212 respectively, of which $29,050 (51%) and $29,493 (94%)
consisted of interest from portfolio companies during the quarter. For the six
months ended June 30, 2002 and 2001, the total investment income was $123,997
and $76,349, respectively, of which $59,506 (48%) and $62,529 (82%) 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 June 30, 2002 was $28,271 versus $1,709 for the same
period in 2001. This interest income is higher for the three months and six
months period ended June 30, 2002 due to higher idle cash balance of $5,809,770
at June 30, 2002 versus $132,133 at June 30, 2001.

Operating expenses for the three months ended June 30, 2002 and 2001 were
$227,444 and $201,859, respectively. The operating expenses predominately
consist of employee compensation and benefits, shareholder related costs, office
expenses, expenses related to identifying and reviewing investment opportunities
and professional fees. The expense for the three month period ended June 30,
2002 included approximately $48,500 of professional costs (consulting and
advisory fees) incurred for matters relating to Rand SBIC. Total operating
expenses for the six months ended June 30, 2002 and 2001 were $515,283 and
$464,565 respectively. The six month period ended June 30, 2002 included
$116,110 of Rand SBIC professional fees. The six month period ended June 30,
2001 contained $46,627 in 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" at June 30,2001. At June 30, 2001 the "Other
operating expenses" category also contained $ 36,371 in write-offs of certain
portfolio related receivables.

Net investment losses from operations for the three month period ended June
30, 2002 and 2001 were ($105,195) and ($183,234), respectively. Net investment
losses from operations for the six month period ended June 30, 2002 and 2001
were ($633,930) and ($401,623), respectively. The fluctuations from year to year
are partly due to the increase in interest revenue in 2002 generated by higher
idle cash balances than the prior year and the deferred income tax expense of
$211,644 for the six months ended June 30, 2002. The deferred income tax expense
in the three-months ended June 30, 2001 was $0.

Net Realized Gains and Losses on Investments:

During the three months ended June 30, 2002 Rand recognized a ($9,490)
realized loss on the forfeiture of 4,181 ADIC shares from escrow. There were no
realized losses for the same period in 2001.

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 June 30, 2002, the net (decrease) in net assets from operations
was ($66,425) as compared to a net increase in net assets from operations of
$936,031 for the same period in 2001. The decrease in net assets from operations
during the second quarter of 2002 is primarily attributable to the net
investment loss of approximately ($105,000). The loss includes $48,516 in
organizational (legal) costs associated with the several matters related to Rand
SBIC. The second quarter 2001 net increase is due to the increase (decrease) in
appreciation of investments of: ADIC $2,900,000, Fertility Acoustics, Inc.,
($1,900,000), 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 June 30, 2002, 58% of the Corporation's net assets are held in cash and
cash equivalents, which compares to 58% at December 31, 2001.

As of June 30, 2002 and December 31, 2001, the Corporation's total liquidity,
consisting of cash and cash equivalents, was $5,809,770 and $5,941,517,
respectively. Included in the June 30, 2002 cash balance was $4,287,290
($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 second 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 $750,000 investment by Rand SBIC in Kionix in
May 2002.

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

Investing in The Corporation's Shares May be Inappropriate for the Investor's
Risk Tolerance

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

Competition

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

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 make, or are 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 June 30, 2002, the Corporation did not have any off-balance sheet
investments or hedging investments.



PART II.
    OTHER INFORMATION

Item 1.      Legal Proceedings

None

Item 2.      Changes in Securities and Use of Proceeds

None

Item 3.      Defaults upon Senior Securities

None

Item 4.      Submission of Matters to a Vote of Security Holders

At the Annual Meeting of Shareholders of Rand Capital Corporation, Buffalo,
New York, on the 24th day of April 2002, the following represents the results of
balloting:

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

|                      | VOTES FOR | VOTES WITHHELD
|--------------------- | --------- | --------------
|Allen F. Grum         | 5,069,574 | 6,556         
|Luiz F. Kahl          | 5,069,574 | 6,556         
|Erland E. Kailbourne  | 5,067,974 | 8,156         
|Ross B. Kenzie        | 5,068,474 | 7,656         
|Willis S. McLeese     | 5,069,574 | 6,566         
|Reginald B. Newman II | 5,069,574 | 6,556         
|Jayne K. Rand         | 5,069,574 | 6,556         

2.     RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS: The proposal to
ratify the appointment of Deloitte & Touche LLP as the independent auditors of
the Corporation for the 2002 fiscal year received the following votes:

|FOR       | AGAINST | ABSTAIN
|--------- | ------- | -------
|5,063,007 | 9,145   | 3,978  

Item 5.     Other Information

None

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)                                                                                                                                                                                                        
|   
|    | (11)                                                                                                                                                                                                          
|    | (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 June 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: August 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