##### Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



|☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2017



|☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the Transition Period from
 to

Commission File Number: 814-00235

Rand Capital Corporation

(Exact Name of Registrant as specified in its Charter)



|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|New York                                                       |  | 16-0961359                       
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (IRS Employer
Identification No.)
|                                                               | 
|2200 Rand Building, Buffalo, NY                                |  | 14203                            
|(Address of Principal executive offices)                       |  | (Zip Code)                       

(716) 853-0802

(Registrants telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes  ☑    No  ☐

Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☐    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in
Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  | ☐                                                |  | Accelerated filer         |  | ☐
|                        |  |                                                  | 
|Non-accelerated filer   |  | ☑  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | ☐
|                        |  |                                                  | 
|                        |  |                                                  |  | Emerging growth company   |  | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ☐    No  ☑

As of April 27, 2017, there were 6,321,988 shares of the registrants common stock outstanding.



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##### Table of Contents

RAND CAPITAL CORPORATION

TABLE OF CONTENTS FOR FORM 10-Q



|                            |  |                                                                                                                  |  |  |    | 
|--------------------------- |  | ---------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|                            |  | PART I.  FINANCIAL INFORMATION                                                                                  |  |  |    | 
|                            |  |                                                                                                                 
|Item 1.                     |  | Financial Statements and Supplementary Data                                                                      |  |  | 3  | 
|                            |  |                                                                                                                 
|                            |  | Consolidated Statements of Financial Position as of March 
31, 2017 (Unaudited) and December 31, 2016            |  |  | 3  | 
|                            |  |                                                                                                                 
|                            |  | Consolidated Statements of Operations for the Three Months Ended March 31,
 2017 and 2016 (Unaudited)            |  |  | 4  | 
|                            |  |                                                                                                                 
|                            |  | Consolidated Statements of Changes in Net Assets for the Three Months Ended
 March 31, 2017 and 2016 (Unaudited) |  |  | 5  | 
|                            |  |                                                                                                                 
|                            |  | Consolidated Statements of Cash Flows for the Three Months Ended March 31,
 2017 and 2016 (Unaudited)            |  |  | 6  | 
|                            |  |                                                                                                                 
|                            |  | Consolidated Schedule of Portfolio Investments as of March 
31, 2017 (Unaudited)                                 |  |  | 7  | 
|                            |  |                                                                                                                 
|                            |  | Consolidated Schedule of Portfolio Investments as of December 
31, 2016                                          |  |  | 15 | 
|                            |  |                                                                                                                 
|                            |  | Notes to the Consolidated Financial Statements (Unaudited)                                                       |  |  | 23 | 
|                            |  |                                                                                                                 
|Item 2.                     |  | Managements Discussion and Analysis of Financial Condition and Results
 of Operations                           |  |  | 35 | 
|                            |  |                                                                                                                 
|Item 3.                     |  | Quantitative and Qualitative Disclosures about Market Risk                                                       |  |  | 41 | 
|                            |  |                                                                                                                 
|Item 4.                     |  | Controls and Procedures                                                                                          |  |  | 41 | 
|                            | 
|PART II  OTHER INFORMATION |  |                                                                                                                  |  | 
|                            |  |                                                                                                                 
|Item 1.                     |  | Legal Proceedings                                                                                                |  |  | 42 | 
|                            |  |                                                                                                                 
|Item 1A.                    |  | Risk Factors                                                                                                     |  |  | 42 | 
|                            |  |                                                                                                                 
|Item 2.                     |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                      |  |  | 42 | 
|                            |  |                                                                                                                 
|Item 3.                     |  | Defaults upon Senior Securities                                                                                  |  |  | 42 | 
|                            |  |                                                                                                                 
|Item 4.                     |  | Mine Safety Disclosures                                                                                          |  |  | 42 | 
|                            |  |                                                                                                                 
|Item 5.                     |  | Other Information                                                                                                |  |  | 42 | 
|                            |  |                                                                                                                 
|Item 6.                     |  | Exhibits                                                                                                         |  |  | 43 | 



2



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##### Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



|                                                                                                                                       |  |                          |            |   |                  |   |            |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                                                       |  | March 31,2017(Unaudited) |            |   | December 31,2016 |  
|ASSETS                                                                                                                                 |  |                          |            |   |                  |   |            |  
|Investments at fair value:                                                                                                             |  |                          |            |   |                  |   |            |  
|Control investments (cost of $99,500 and $99,500, respectively)                                                                        |  | $                        | 99,500     |   |                  | $ | 99,500     |  
|Affiliate investments (cost of $17,947,514 and $17,589,623, respectively)                                                              |  |                          | 13,963,865 |   |                  |   | 13,605,974 |  
|Non-Control/Non-Affiliate
investments (cost of $14,046,954 and $13,941,907, respectively)                                              |  |                          | 13,519,410 |   |                  |   | 13,795,007 |  
|                                                                                                                                       |  |                          |            |   |                  |   |            |  
|Total investments, at fair value (cost of $32,093,968 and $31,631,030, respectively)                                                   |  |                          | 27,582,775 |   |                  |   | 27,500,481 |  
|Cash                                                                                                                                   |  |                          | 10,689,392 |   |                  |   | 12,280,140 |  
|Interest receivable (net of allowance: $161,000 at 3/31/17 and 12/31/16)                                                               |  |                          | 368,140    |   |                  |   | 324,237    |  
|Deferred tax asset                                                                                                                     |  |                          | 1,437,250  |   |                  |   | 1,165,164  |  
|Other assets                                                                                                                           |  |                          | 726,643    |   |                  |   | 1,148,508  |  
|                                                                                                                                       |  |                          |            |   |                  |   |            |  
|Total assets                                                                                                                           |  | $                        | 40,804,200 |   |                  | $ | 42,418,530 |  
|                                                                                                                                       |  |                          |            |   |                  |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY (NET ASSETS)                                                                                      |  |                          |            |   |                  |   |            |  
|Liabilities:                                                                                                                           |  |                          |            |   |                  |   |            |  
|Debentures guaranteed by the SBA, net                                                                                                  |  | $                        | 7,834,623  |   |                  | $ | 7,827,773  |  
|Profit sharing and bonus payable                                                                                                       |  |                          | 132,000    |   |                  |   | 1,270,052  |  
|Income taxes payable                                                                                                                   |  |                          | 391,119    |   |                  |   | 320,008    |  
|Accounts payable and accrued expenses                                                                                                  |  |                          | 136,465    |   |                  |   | 324,537    |  
|Deferred revenue                                                                                                                       |  |                          | 40,111     |   |                  |   | 46,797     |  
|                                                                                                                                       |  |                          |            |   |                  |   |            |  
|Total liabilities                                                                                                                      |  |                          | 8,534,318  |   |                  |   | 9,789,167  |  
|                                                                                                                                       |  |                          |            |   |                  |   |            |  
|Commitments and contingencies (See Note 5)                                                                                             |  |                          |            |   |                  |   |            |  
|Stockholders equity (net assets):                                                                                                     |  |                          |            |   |                  |   |            |  
|Common stock, $.10 par; shares authorized 10,000,000; shares issued 6,863,034; shares outstanding
of 6,321,988 at 3/31/17 and 12/31/16 |  |                          | 686,304    |   |                  |   | 686,304    |  
|Capital in excess of par value                                                                                                         |  |                          | 10,581,789 |   |                  |   | 10,581,789 |  
|Accumulated net investment loss                                                                                                        |  |                          | (1,693,112 | ) |                  |   | (1,577,848 | )
|Undistributed net realized gain on investments                                                                                         |  |                          | 27,127,054 |   |                  |   | 27,127,054 |  
|Net unrealized depreciation on investments                                                                                             |  |                          | (2,963,048 | ) |                  |   | (2,718,831 | )
|Treasury stock, at cost: 541,046 shares at 3/31/17 and 12/31/16                                                                        |  |                          | (1,469,105 | ) |                  |   | (1,469,105 | )
|                                                                                                                                       |  |                          |            |   |                  |   |            |  
|Total stockholders equity (net assets) (per share $5.10 at 3/31/17; $5.16 at
12/31/16)                                                |  |                          | 32,269,882 |   |                  |   | 32,629,363 |  
|                                                                                                                                       |  |                          |            |   |                  |   |            |  
|Total liabilities and stockholders equity (net assets)                                                                                |  | $                        | 40,804,200 |   |                  | $ | 42,418,530 |  
|                                                                                                                                       |  |                          |            |   |                  |   |            |  

See accompanying notes



3



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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                       |  |                                |           |   |                                |    |             |  
|---------------------------------------------------------------------- |  | ------------------------------ | --------- | - | ------------------------------ | -- | ----------- | -
|                                                                       |  | Three monthsendedMarch 31,2017 |           |   | Three monthsendedMarch 31,2016 |   
|Investment income:                                                     |  |                                |           |   |                                |    |             |  
|Interest from portfolio companies:                                     |  |                                |           |   |                                |    |             |  
|Control investments                                                    |  | $                              |          |   |                                | $  | 11,828      |  
|Affiliate investments                                                  |  |                                | 136,757   |   |                                |    | 64,962      |  
|Non-Control/Non-Affiliate
investments                                  |  |                                | 109,334   |   |                                |    | 61,104      |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Total interest from portfolio companies                                |  |                                | 246,091   |   |                                |    | 137,894     |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Interest from other investments:                                       |  |                                |           |   |                                |    |             |  
|Non-Control/Non-Affiliate
investments                                  |  |                                | 10,975    |   |                                |    | 3,061       |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Total interest from other investments                                  |  |                                | 10,975    |   |                                |    | 3,061       |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Dividend and other investment income:                                  |  |                                |           |   |                                |    |             |  
|Affiliate investments                                                  |  |                                | 62,373    |   |                                |    | 47,565      |  
|Non-Control/Non-Affiliate
investments                                  |  |                                | 2,512     |   |                                |    |            |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Total dividend and other investment income                             |  |                                | 64,885    |   |                                |    | 47,565      |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Fee income:                                                            |  |                                |           |   |                                |    |             |  
|Control investments                                                    |  |                                |          |   |                                |    | 2,000       |  
|Affiliate investments                                                  |  |                                | 917       |   |                                |    | 695         |  
|Non-Control/Non-Affiliate
investments                                  |  |                                | 5,769     |   |                                |    | 2,916       |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Total fee income                                                       |  |                                | 6,686     |   |                                |    | 5,611       |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Total investment income                                                |  |                                | 328,637   |   |                                |    | 194,131     |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Expenses:                                                              |  |                                |           |   |                                |    |             |  
|Salaries                                                               |  |                                | 165,413   |   |                                |    | 155,438     |  
|Bonus and profit sharing                                               |  |                                |          |   |                                |    | 1,411,659   |  
|Employee benefits                                                      |  |                                | 52,370    |   |                                |    | 89,511      |  
|Directors fees                                                        |  |                                | 34,875    |   |                                |    | 47,375      |  
|Professional fees                                                      |  |                                | 84,002    |   |                                |    | 64,760      |  
|Stockholders and office operating                                      |  |                                | 67,210    |   |                                |    | 62,494      |  
|Insurance                                                              |  |                                | 11,302    |   |                                |    | 11,260      |  
|Corporate development                                                  |  |                                | 21,708    |   |                                |    | 15,470      |  
|Other operating                                                        |  |                                | 1,960     |   |                                |    | 3,600       |  
|                                                                       |  |                                |           |   |                                |    |             |  
|                                                                       |  |                                | 438,840   |   |                                |    | 1,861,567   |  
|Interest on SBA obligations                                            |  |                                | 77,569    |   |                                |    | 77,569      |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Total expenses                                                         |  |                                | 516,409   |   |                                |    | 1,939,136   |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Net investment loss before income taxes                                |  |                                | (187,772  | ) |                                |    | (1,745,005  | )
|Income tax benefit                                                     |  |                                | (72,508   | ) |                                |    | (663,027    | )
|                                                                       |  |                                |           |   |                                |    |             |  
|Net investment loss                                                    |  |                                | (115,264  | ) |                                |    | (1,081,978  | )
|                                                                       |  |                                |           |   |                                |    |             |  
|Net realized gain on investments:                                      |  |                                |           |   |                                |    |             |  
|Control investments                                                    |  |                                |          |   |                                |    | 13,176,313  |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Net realized gain before income taxes                                  |  |                                |          |   |                                |    | 13,176,313  |  
|Income tax expense                                                     |  |                                |          |   |                                |    | 4,942,961   |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Net realized gain on investments                                       |  |                                |          |   |                                |    | 8,233,352   |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Net change in unrealized depreciation on investments:                  |  |                                |           |   |                                |    |             |  
|Control investments                                                    |  |                                |          |   |                                |    | (11,362,500 | )
|Affiliate investments                                                  |  |                                |          |   |                                |    | (422,800    | )
|Non-Control/Non-Affiliate
investments                                  |  |                                | (380,644  | ) |                                |    |            |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Change in unrealized depreciation before income taxes                  |  |                                | (380,644  | ) |                                |    | (11,785,300 | )
|Deferred income tax benefit                                            |  |                                | (136,427  | ) |                                |    | (4,416,406  | )
|                                                                       |  |                                |           |   |                                |    |             |  
|Net change in unrealized depreciation on investments                   |  |                                | (244,217  | ) |                                |    | (7,368,894  | )
|                                                                       |  |                                |           |   |                                |    |             |  
|Net realized and unrealized (loss) gain on investments                 |  |                                | (244,217  | ) |                                |    | 864,458     |  
|                                                                       |  |                                |           |   |                                |    |             |  
|Net decrease in net assets from operations                             |  | ($                             | 359,481   | ) |                                | ($ | 217,520     | )
|                                                                       |  |                                |           |   |                                |    |             |  
|Weighted average shares
outstanding                                    |  |                                | 6,321,988 |   |                                |    | 6,328,538   |  
|Basic and diluted net decrease in net assets from operations per share |  | ($                             | 0.06      | ) |                                | ($ | 0.04        | )
|                                                                       |  |                                |           |   |                                |    |             |  

See accompanying notes



4



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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)



|                                                     |  |                                |            |   |                                |    |            |  
|---------------------------------------------------- |  | ------------------------------ | ---------- | - | ------------------------------ | -- | ---------- | -
|                                                     |  | Three monthsendedMarch 31,2017 |            |   | Three monthsendedMarch 31,2016 |   
|Net assets at beginning of period                    |  | $                              | 32,629,363 |   |                                | $  | 33,853,660 |  
|Net investment loss                                  |  |                                | (115,264   | ) |                                |    | (1,081,978 | )
|Net realized gain on investments                     |  |                                |           |   |                                |    | 8,233,352  |  
|Net change in unrealized depreciation on investments |  |                                | (244,217   | ) |                                |    | (7,368,894 | )
|                                                     |  |                                |            |   |                                |    |            |  
|Net decrease in net assets from operations           |  |                                | (359,481)  |   |                                |    | (217,520)  |  
|Total decrease in net assets                         |  |                                | (359,481   | ) |                                |    | (217,520   | )
|                                                     |  |                                |            |   |                                |    |            |  
|Net assets at end of period                          |  | $                              | 32,269,882 |   |                                | $  | 33,636,140 |  
|                                                     |  |                                |            |   |                                |    |            |  
|Accumulated net investment loss                      |  | ($                             | 1,693,112  | ) |                                | ($ | 1,106,558  | )
|                                                     |  |                                |            |   |                                |    |            |  

See accompanying notes



5



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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                                            |  |                                |            |   |                                |    |             |  
|----------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ---------- | - | ------------------------------ | -- | ----------- | -
|                                                                                                            |  | Three monthsendedMarch 31,2017 |            |   | Three monthsendedMarch 31,2016 |   
|Cash flows from operating activities:                                                                       |  |                                |            |   |                                |    |             |  
|Net decrease in net assets from operations                                                                  |  | ($                             | 359,481    | ) |                                | ($ | 217,520     | )
|Adjustments to reconcile net decrease in net assets to net cash (used in) provided by operating
activities: |  |                                |            |   |                                |    |             |  
|Investments in portfolio companies                                                                          |  |                                | (450,000   | ) |                                |    | (1,650,000  | )
|Proceeds from sale of investments                                                                           |  |                                |           |   |                                |    | 13,801,313  |  
|Proceeds from loan repayments                                                                               |  |                                |           |   |                                |    | 416,972     |  
|Decrease in unrealized depreciation on investments before income taxes                                      |  |                                | 380,644    |   |                                |    | 11,785,300  |  
|Deferred tax benefit                                                                                        |  |                                | (272,086   | ) |                                |    | (2,888,697  | )
|Realized gain on portfolio investments before income taxes                                                  |  |                                |           |   |                                |    | (13,176,313 | )
|Depreciation and amortization                                                                               |  |                                | 7,850      |   |                                |    | 8,350       |  
|Original issue discount amortization                                                                        |  |                                | (2,499     | ) |                                |    | (2,499      | )
|Non-cash conversion of debenture interest                                                                   |  |                                | (10,439    | ) |                                |    | (2,522      | )
|Changes in operating assets and liabilities:                                                                |  |                                |            |   |                                |    |             |  
|(Increase) decrease in interest receivable                                                                  |  |                                | (43,903    | ) |                                |    | 6,290       |  
|Decrease (increase) in other assets                                                                         |  |                                | 420,866    |   |                                |    | (25,965     | )
|Decrease in prepaid income taxes                                                                            |  |                                |           |   |                                |    | 65,228      |  
|Increase in income taxes payable                                                                            |  |                                | 71,111     |   |                                |    | 2,686,997   |  
|Decrease in accounts payable and accrued expenses                                                           |  |                                | (188,073   | ) |                                |    | (30,192     | )
|(Decrease) increase in profit sharing and bonus payable                                                     |  |                                | (1,138,052 | ) |                                |    | 1,311,659   |  
|(Decrease) increase in deferred revenue                                                                     |  |                                | (6,686     | ) |                                |    | 12,389      |  
|                                                                                                            |  |                                |            |   |                                |    |             |  
|Total adjustments                                                                                           |  |                                | (1,231,267 | ) |                                |    | 12,318,310  |  
|                                                                                                            |  |                                |            |   |                                |    |             |  
|Net cash (used in) provided by operating activities                                                         |  |                                | (1,590,748 | ) |                                |    | 12,100,790  |  
|Net (decrease) increase in cash                                                                             |  |                                | (1,590,748 | ) |                                |    | 12,100,790  |  
|Cash:                                                                                                       |  |                                |            |   |                                |    |             |  
|Beginning of period                                                                                         |  |                                | 12,280,140 |   |                                |    | 5,844,795   |  
|                                                                                                            |  |                                |            |   |                                |    |             |  
|End of period                                                                                               |  | $                              | 10,689,392 |   |                                | $  | 17,945,585  |  
|                                                                                                            |  |                                |            |   |                                |    |             |  

See accompanying notes



6



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2017

(Unaudited)



|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          |  |             |  |     |      |  |           |                          |  |  |                     |                          |  |  |  |      | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | -------- |  | ----------- |  | --- | ---- |  | --------- | ------------------------ |  |  | ------------------- | ------------------------ |  |  |  | ---- | 
|(a)
Company, Geographic Location, Business
Description, (Industry) and Website                                                                                                                                                   |                | Type of Investment                                                                                                                                                                                                                   |  | (b)
Date
Acquired |          |  | (c) 
Equity |  |     | Cost |  |           | (d)(f)
Fair
Value        |  |  | Percentof NetAssets |                         
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|Non-Control/Non-Affiliate Investments  41.9% of net assets: (j)                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          |  |             |  |     |      |  |           |                          |  |  |                     |                          |  |  |  |      | 
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|ACV Auctions, Inc. (e)(g) Buffalo, NY.
Live mobile auctions for new and used car dealers. (Software) www.acvauctions.com                                                                                                         |                | 1,181,160 Series A preferred shares.                                                                                                                                                                                                 |  |                   | 8/12/16  |  |             |  | 1%  |      |  |           | $163,000                 |  |  |                     | $282,356                 |  |  |  | 0.9% | 
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|Athenex, Inc. (e)(g) (Formerly Kinex
Pharmaceuticals, Inc.) Buffalo, NY. Specialty pharmaceutical and drug development. (Health Care)
www.athenex.com                                                                            |                | 46,296 common shares.                                                                                                                                                                                                                |  |                   | 9/8/14   |  |             |  | <1% |      |  |           | 143,285                  |  |  |                     | 416,664                  |  |  |  | 1.3% | 
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|City Dining Cards, Inc. (Loupe) (e)(g)
Buffalo, NY. Customer loyalty technology company for restaurants. (Software)
www.loupeapp.io                                                                                              |                | 9,525.25 Series B preferred shares.                                                                                                                                                                                                  |  |                   | 9/1/15   |  |             |  | 4%  |      |  |           | 500,000                  |  |  |                     | 250,000                  |  |  |  | 0.8% | 
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|eHealth Global Technologies, Inc. (g)
Henrietta, NY. eHealth Connect® improves health care delivery through intelligently aggregated clinical record and images for patient referrals.
(Health Care) www.ehealthtechnologies.com |                | $1,500,000 term note at 9% due September 2, 2019.                                                                                                                                                                                    |  |                   | 6/28/16  |  |             |  | 0%  |      |  |           | 1,500,000                |  |  |                     | 1,500,000                |  |  |  | 4.7% | 
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|Empire Genomics, LLC (g)
Buffalo, NY. Molecular diagnostics company that offers a comprehensive menu of assay services for diagnosing and guiding patient therapeutic treatments. (Health
Care) www.empiregenomics.com           |                | $900,000 senior securedconvertible term notes at 10% dueDecember 31, 2017.
$250,000 promissory note at 12%due December 31, 2019.
(i) Interest receivable $222,736.                                                                   |  |                   | 6/13/14  |  |             |  | 0%  |      |  |           | 900,000 
250,000         |  |  |                     | 900,000 
250,000         |  |  |  | 3.6% | 
|                                                                                                                                                                                                                                 | Total Empire   |                                                                                                                                                                                                                                      |  |                   |          |  |             |  |     |      |  | 1,150,000 |                          |  |  | 1,150,000           |                          |  |  |  |     
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|GoNoodle, Inc. (g)(m)
(Formerly HealthTeacher, Inc.) Nashville, TN. Student
engagement education software providing core aligned physical activity breaks. (Software) www.gonoodle.com                                           |                | $1,000,000 secured note at 12%due January 31, 2020, (1%Payment in Kind (PIK)).
Warrant for 47,324 Series CPreferred shares.                                                                                                          |  |                   | 2/6/15   |  |             |  | <1% |      |  |           | 1,021,649 
25            |  |  |                     | 1,021,649 
25            |  |  |  | 3.2% | 
|                                                                                                                                                                                                                                 | Total GoNoodle |                                                                                                                                                                                                                                      |  |                   |          |  |             |  |     |      |  | 1,021,674 |                          |  |  | 1,021,674           |                          |  |  |  |     
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|Mercantile Adjustment Bureau, LLC (g)
Williamsville, NY. Full service accounts receivable management and collections company.
(Contact Center) www.mercantilesolutions.com                                                       |                | $1,199,039 subordinated securednote at 13% (3% for the calendaryear 2017) due January 31, 2018.(e)$150,000
subordinateddebenture at 8% due June 30,2018. Warrant for 3.29% membershipinterests. Option for 1.5%membership interests. |  |                   | 10/22/12 |  |             |  | 4%  |      |  |           | 1,193,189 
150,000       |  |  |                     | 943,189 
-               |  |  |  | 2.9% | 
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          |  |             |  |     |      |  |           | 97,625                   |  |  |                     | -                        |  |  |  |      | 
|                                                                                                                                                                                                                                 |                | Total Mercantile                                                                                                                                                                                                                     |  |                   |          |  |             |  |     |      |  |           | 1,440,814                |  |  |                     | 943,189                  |  |  |  |      | 
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|Outmatch Holdings, LLC (e)(g) (Chequed
Holdings, LLC) Dallas, TX. Web based predictive employee selection and reference checking. (Software)
www.outmatch.com                                                                    |                | 2,493,721 Class P1 Units. 109,788
Class C1 Units. Total Outmatch                                                                                                                                                                     |  |                   | 11/18/10 |  |             |  | 4%  |      |  |           | 2,140,0075,489
2,145,496 |  |  |                     | 2,140,0075,489
2,145,496 |  |  |  | 6.6% | 
|                                                                                                                                                                                                                                 |                |                                                                                                                                                                                                                                      |  |                   |          | 
|PostProcess Technologies LLC (e)(g)
Buffalo, NY. Provides innovative solutions for the post-processing of additive manufactured 3D parts. (Manufacturing) www.postprocess.com                                                    |                | $300,000 convertible promissory note at 5% due July 28, 2018.                                                                                                                                                                        |  |                   | 7/25/16  |  |             |  | 0%  |      |  |           | 300,000                  |  |  |                     | 300,000                  |  |  |  | 0.9% | 



7



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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2017 (Continued)

(Unaudited)



|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          |  |             |  |    |      |            |  |                                                 |   |            |                     |                                                    |  |  |  |      | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | -------- |  | ----------- |  | -- | ---- | ---------- |  | ----------------------------------------------- | - | ---------- | ------------------- | -------------------------------------------------- |  |  |  | ---- | 
|(a)
Company, Geographic Location, Business
Description, (Industry) and Website                                                                                                                                        |  | Type of Investment                                                                                                                                                                                             |  | (b)
Date
Acquired |          |  | (c) 
Equity |  |    | Cost |            |  | (d)(f)
Fair
Value                               |   |            | Percentof NetAssets |                                                   
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|Rheonix, Inc. (e) Ithaca, NY. Developer of
fully automated microfluidic based molecular assay and diagnostic testing devices. (Health Care) www.rheonix.com                                                           |  | 9,676 common shares. (g)1,839,422 Series
A preferredshares. (g) 50,593 common shares. (g) 589,420 Series B preferred shares.
Total Rheonix                                                                     |  |                   | 10/29/09 |  |             |  | 4% |      |            |  | -2,099,999
-
702,732
2,802,731                  |   |            |                     | 11,000  2,165,999  59,000  702,732
2,938,731       |  |  |  | 9.1% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|SocialFlow, Inc. (e)(g) New York, NY.
Provides instant analysis of social networks using a proprietary, predictive analytic algorithm to optimize advertising and publishing. (Software)
www.socialflow.com           |  | 1,049,538 Series B preferred shares. 1,204,819
Series B-1 preferred shares. 717,772 Series C preferred shares.
Total Social Flow                                                                               |  |                   | 4/5/13   |  |             |  | 4% |      |            |  | 500,000750,000500,0001,750,000                  |   |            |                     | 731,431  839,648  500,221  2,071,300               |  |  |  | 6.4% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|Somerset Gas Transmission Company, LLC (e)
Columbus, OH. Natural gas transportation. (Oil and Gas)
www.somersetgas.com                                                                                                |  | 26.5337 units.                                                                                                                                                                                                 |  |                   | 7/10/02  |  |             |  | 3% |      |            |  | 719,097                                         |   |            |                     | 500,000                                            |  |  |  | 1.5% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|Other Non-Control/Non-Affiliate Investments:                                                                                                                                                                          |  |                                                                                                                                                                                                                |  |                   |          |  |             |  |    |      |            |  |                                                 |   |            |                     |                                                    |  |  |  |      | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|DataView, LLC(Software) (e)                                                                                                                                                                                           |  | Membership Interest.                                                                                                                                                                                           |  |                   | -        |  |             |  | -  |      |            |  | 310,357                                         |   |            |                     | -                                                  |  |  |  | 0.0% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|UStec/Wi3 (Manufacturing) (e)                                                                                                                                                                                         |  | Common Stock.                                                                                                                                                                                                  |  |                   | -        |  |             |  | -  |      |            |  | 100,500                                         |   |            |                     | -                                                  |  |  |  | 0.0% | 
|Subtotal Non-Control/Non-Affiliate Investments                                                                                                                                                                        |  |                                                                                                                                                                                                                |  |                   |          |  |             |  |    |      |            |  |                                                 |   |            |                     |                                                    |  |  |  |      | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          |  |             |  |    |      |            |  |                                                 |   |            |                     |                                                    | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          |  |             |  |    | $    | 14,046,954 |  |                                                 | $ | 13,519,410 |                     |                                                    |  |  | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          |  |             |  |    |      |            |  |                                                 |   |            |                     |                                                    | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|Affiliate Investments  43.3% of net assets (k)                                                                                                                                                                       |  |                                                                                                                                                                                                                |  |                   |          |  |             |  |    |      |            |  |                                                 |   |            |                     |                                                    |  |  |  |      | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|BeetNPath, LLC (Grainful) (e)(g) Ithaca,
NY. Frozen entrées and packaged dry side dishes made from 100% whole grain steel cut oats under Grainful brand name. (Consumer Product)
www.grainful.com                     |  | 1,119,024 Series A-2 PreferredMembership Units.
$150,000 convertible promissory noteat 8% due September 1, 2017.
Total BeetNPath                                                                               |  |                   | 10/20/14 |  |             |  | 9% |      |            |  | $359,000
 150,000
509,000                       |   |            |                     | $359,000
 150,000
509,000                          |  |  |  | 1.5% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|Carolina Skiff LLC (g) Waycross, GA.
Manufacturer of fresh water, ocean fishing and pleasure boats. (Manufacturing)
www.carolinaskiff.com                                                                             |  | 6.0825% Class A commonmembership interest.                                                                                                                                                                     |  |                   | 1/30/04  |  |             |  | 7% |      |            |  | 15,000                                          |   |            |                     | 1,100,000                                          |  |  |  | 3.4% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|ClearView Social, Inc. (e)(g) Buffalo, NY.
Social media publishing tool for law, CPA and professional firms. (Software) www.clearviewsocial.com                                                                       |  | 312,500 Series seed plus preferred shares.                                                                                                                                                                     |  |                   | 1/4/16   |  |             |  | 6% |      |            |  | 200,000                                         |   |            |                     | 200,000                                            |  |  |  | 0.6% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|First Wave Products Group, LLC (e)(g)
Batavia, NY. Sells First Crush automated pill crusher that crushes and grinds medical pills for nursing homes and medical institutions. (Health Care)
www.firstwaveproducts.com |  | $500,000 senior term notes at 10% dueFebruary 28, 2017.
$280,000 junior term notes at 10% dueFebruary 28, 2017.
Warrant for 41,619 capital securities. Total First
Wave                                        |  |                   | 4/19/12  |  |             |  | 7% |      |            |  | 661,563
 316,469
22,000
1,000,032               |   |            |                     | 250,000
 -
-
250,000                               |  |  |  | 0.8% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|Genicon, Inc. (g) Winter Park, FL.
Designs, produces and distributes patented surgical instrumentation. (Health Care)
www.geniconendo.com                                                                             |  | 1,586,902 Series B preferred shares. $1,100,000
promissory note at 12%due April 1, 2019. $600,000 promissory note at 14% due
March 31, 2018. $300,000 promissory note at 14% due
March 15, 2018. Total Genicon |  |                   | 4/10/15  |  |             |  | 6% |      |            |  | 1,000,000 1,100,000
 600,000
 300,000
3,000,000 |   |            |                     | 1,000,000  
1,100,000 
600,000 
300,000  3,000,000 |  |  |  | 9.3% | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                |  |                   |          | 
|GiveGab, Inc. (e)(g)
Ithaca, NY. Online fundraising, day of giving supporter engagement software for non-profit organizations. (Software)
www.givegab.com                                                             |  | 5,084,329 Series Seed preferred shares.                                                                                                                                                                        |  |                   | 3/13/13  |  |             |  | 7% |      |            |  | 616,221                                         |   |            |                     | 424,314                                            |  |  |  | 1.3% | 



8



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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2017 (Continued)

(Unaudited)



|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |             |  |      |                                                       |  |                   |  |                                                       |                     |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ----------- |  | ---- | ----------------------------------------------------- |  | ----------------- |  | ----------------------------------------------------- | ------------------- |  | ----
|(a)
Company, Geographic Location, Business
Description, (Industry) and Website                                                                                                                                     |  | Type of Investment                                                                                                                                                                                                                                                                                  |  | (b)
Date
Acquired |  | (c) 
Equity |  | Cost |                                                       |  | (d)(f)
Fair
Value |  |                                                       | Percentof NetAssets
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|G-TEC Natural Gas Systems (e)
Buffalo, NY. Manufactures and distributes systems that allow natural gas to be used as an alternative fuel to gases. (Manufacturing)
www.gas-tec.com                                 |  | 16.930% Class A membership interest.8% cumulative dividend.                                                                                                                                                                                                                                         |  | 8/31/99           |  | 18%         |  |      | 400,000                                               |  |                   |  | 100,000                                               |                     |  | 0.3%
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|Intrinsiq Materials, Inc. (e)(g)
Rochester, NY. Produces printable electronics utilizing a unique process of nanomaterial based ink in a room-temperature environment. (Manufacturing)
www.intrinsiqmaterials.com  |  | 4,161,747 Series A preferred shares.                                                                                                                                                                                                                                                                |  | 9/19/13           |  | 12%         |  |      | 1,125,673                                             |  |                   |  | 780,000                                               |                     |  | 2.5%
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|Knoa Software, Inc. (g) New York, NY. End
user experience management and performance (EMP) solutions utilizing enterprise applications. (Software) www.knoa.com                                                    |  | 973,533 Series A-1 convertiblepreferred shares.
1,876,922 Series B preferred shares. $48,466 convertible promissory
note at8% due May 9, 2018. Total Knoa                                                                                                                                           |  | 11/20/12          |  | 7%          |  |      | 750,000479,155

48,4661,277,621                       |  |                   |  | -
449,455 
48,466497,921                              |                     |  | 1.6%
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|KnowledgeVision Systems, Inc. (e)(g)
Lincoln, MA. Online presentation and training software. (Software)
www.knowledgevision.com                                                                                    |  | 200,000 Series A-1 preferred shares.214,285 Series A-2
preferred shares. 129,033 Series A-3 preferred shares.
Warrant for 46,743 Series A-3 shares.
$50,000 subordinated promissory noteat 8% due August 31, 2017.
Total KnowledgeVision                                                            |  | 11/13/13          |  | 7%          |  |      | 250,000300,000165,001 35,000
50,000800,001            |  |                   |  | -300,000165,00135,000
 50,000550,001                  |                     |  | 1.7%
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|Mezmeriz, Inc. (e)(g) Ithaca, NY.
Micro-electronic mechanical systems (MEMS) developer of carbon fiber MEMS mirror modules for gesture recognition and 3D scanning. (Electronics Developer)
www.mezmeriz.com       |  | 1,554,565 Series Seed preferred shares.                                                                                                                                                                                                                                                             |  | 1/9/08            |  | 14%         |  |      | 742,850                                               |  |                   |  | 351,477                                               |                     |  | 1.1%
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|Microcision LLC (g)(m) Pennsauken
Township, NJ. Manufacturer of precision machined medical implants, components and assemblies. (Manufacturing) www.microcision.com                                                |  | $1,500,000 subordinated promissorynote at 12% (1% PIK) due December 31,2024.
15% Class A common membershipinterest.
Total Microcision                                                                                                                                                               |  | 9/24/09           |  | 15%         |  |      | 1,899,855 
-1,899,855                                 |  |                   |  | 1,899,855 
-1,899,855                                 |                     |  | 5.9%
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|New Monarch Machine Tool, Inc. (g)
Cortland, NY. Manufactures and services vertical/horizontal machining centers. (Manufacturing)
www.monarchmt.com                                                                |  | 22.84 common shares.                                                                                                                                                                                                                                                                                |  | 9/24/03           |  | 15%         |  |      | 22,841                                                |  |                   |  | 22,841                                                |                     |  | 0.1%
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|OnCore Golf Technology, Inc. (e)(g)
Buffalo, NY. Maker of patented golf balls. (Consumer Product)
www.oncoregolf.com                                                                                               |  | 150,000 Series AA preferred shares. $300,000
subordinated convertiblepromissory notes at 6% due January 24,2018. Total OnCore                                                                                                                                                                       |  | 12/31/14          |  | 7%          |  |      | 375,000 
300,000 675,000                              |  |                   |  | - 
300,000 300,000                                    |                     |  | 0.9%
|                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                     |  |                   |  |            
|SciAps, Inc. (e)(g) Woburn, MA.
Instrumentation company producing portable analytical devices using XRF, LIBS and RAMAN spectroscopy to identify compounds, minerals, and elements. (Manufacturing)
www.sciaps.com |  | 187,500 Series A convertible preferredshares.
274,299 Series A-1 convertiblepreferred shares.
117,371 Series B convertible preferredshares. $200,000
subordinated convertible noteat 10% due April 8, 2017. $100,000 secured subordinatedconvertible note at 10% due December 31,2017.
Total SciAps |  | 7/12/13           |  | 9%          |  |      | 1,500,000
 504,710250,000
 200,000
 
100,0002,554,710 |  |                   |  | 1,000,000
 504,710250,000
 200,000
 
100,0002,054,710 |                     |  | 6.4%



9



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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2017 (Continued)

(Unaudited)



|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   |  |                                      |                     |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ----------- |  | ---- | ----------------------------------------- |  | ----------------- |  | ------------------------------------ | ------------------- |  | ----
|(a)
Company, Geographic Location, Business
Description, (Industry) and Website                                                                                                                          |  | Type of Investment                                                                                                                                                                                                   |  | (b)
Date
Acquired |  | (c) 
Equity |  | Cost |                                           |  | (d)(f)
Fair
Value |  |                                      | Percentof NetAssets
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |            
|SOMS Technologies, LLC (g) Valhalla, NY.
Produces and markets the microGreen Extended Performance Oil Filter. (Consumer Products)
www.microgreenfilter.com                                              |  | 5,959,490 Series B membershipinterests.                                                                                                                                                                              |  | 12/2/08           |  | 9%          |  |      | 472,632                                   |  |                   |  | 528,348                              |                     |  | 1.6%
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |            
|Teleservices Solutions Holdings, LLC (e) (g)(m)
Montvale, NJ. Customer contact center specializing in customer acquisition and retention for selected industries. (Contact Center)
www.ipacesetters.com |  | 250,000 Class B preferred units. 1,000,000
Class C preferred units. 80,000 Class D preferred units.
104,198 Class E preferred units. PIK dividend for Series C and
D at 12%and 14%, respectively. Total Teleservices |  | 5/30/14           |  | 6%          |  |      | 250,0001,190,68091,200104,198  
1,636,078 |  |                   |  | -  200,000
91,200
104,198 
 395,398  |                     |  | 1.2%
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |            
|Tilson Technology Management, Inc.(g)
Portland, ME. Cellular, fiber optic and wireless information systems, construction, and management. (Professional Services)
www.tilsontech.com                    |  | 120,000 Series B preferred shares. 21,391 Series
C convertible preferredshares. $200,000 subordinated promissory noteat 8% due September 28, 2021.
Total Tilson                                                      |  | 1/20/15           |  | 8%          |  |      | 600,000 200,000
 200,000
1,000,000        |  |                   |  | 600,000  
200,000 
200,000
1,000,000 |                     |  | 3.1%
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   | 
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   | 
|Subtotal Affiliate Investments                                                                                                                                                                          |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      | $17,947,514                               |  |                   |  | $13,963,865                          |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   | 
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |            
|Control Investments  0.3% of net assets (l)                                                                                                                                                            |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   |  |                                      |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |            
|Advantage 24/7 LLC (e)(g) Williamsville,
NY. Marketing program for wine and spirits dealers. (Marketing Company) www.advantage24-7.com                                                                  |  | 53% Membership interest.                                                                                                                                                                                             |  | 12/30/10          |  | 53%         |  |      | $99,500                                   |  |                   |  | $99,500                              |                     |  | 0.3%
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   | 
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   | 
|Subtotal Control Investments                                                                                                                                                                            |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      | $99,500                                   |  |                   |  | $99,500                              |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   | 
|TOTAL INVESTMENTS  85.5%                                                                                                                                                                               |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      | $32,093,968                               |  |                   |  | $27,582,775                          |                     |  |     
|OTHER ASSETS IN EXCESS OF LIABILITIES  14.5%                                                                                                                                                           |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  | 4,687,107         |  |                                      |                    
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   |  |                                      |                     |  |     
|NET ASSETS  100%                                                                                                                                                                                       |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   |  | $32,269,882                          |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                      |  |                   |  |             |  |      |                                           |  |                   |  |                                      |                     |  |     



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2017 (Continued)

(Unaudited)



Notes to the Consolidated Schedule of Portfolio Investments



|(a) | At March 31, 2017, restricted securities represented 100% of the fair value of the investment portfolio. Restricted securities are subject to one or more restrictions on resale and are not freely marketable.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The Date Acquired column indicates the year in which the Corporation first acquired an investment in the company or a predecessor company.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Each equity percentage estimates the Corporations ownership interest in the applicable portfolio investment. The estimated ownership is calculated based on the percent of outstanding voting securities held by the
Corporation or the potential percentage of voting securities held by the Corporation upon exercise of warrants or conversion of debentures, or other available data. If applicable, the symbol <1% indicates that the Corporation holds an
equity interest of less than one percent.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | The Corporations investments are carried at fair value in accordance with Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures, which defines fair value and establishes
guidelines for measuring fair value. At March 31, 2017, ASC 820 designates 100% of the Corporations investments as Level 3 assets. Under the valuation policy of the Corporation, unrestricted publicly held securities are
valued at the average closing bid price for these securities for the last three trading days of the month. Restricted securities are subject to restrictions on resale, and are valued at fair value as determined by the management of the Corporation
and submitted to the Board of Directors for approval. Fair value is considered to be the amount that the Corporation may reasonably expect to receive for portfolio securities when sold on the valuation date. Valuations as of any particular date,
however, are not necessarily indicative of amounts which may ultimately be realized as a result of future sales or other dispositions of securities and these favorable or unfavorable differences could be material. Among the factors considered in
determining the fair value of restricted securities are the financial condition and operating results, projected operations, and other analytical data relating to the investment. Also considered are the market prices for unrestricted securities of
the same class (if applicable) and other matters which may have an impact on the value of the portfolio company (see Note 3 Investments to the Consolidated Financial Statements).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | These investments are non-income producing. All other investments are income producing. Non-income producing investments have not generated
cash payments of interest or dividends including LLC tax-related distributions within the last twelve months, or are not expected to do so going forward.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | As of March 31, 2017 the total cost of investment securities was approximately $32.1 million. Net unrealized depreciation was approximately ($4.5) million, which was comprised of $2.0 million of
unrealized appreciation of investment securities and ($6.5) million of unrealized depreciation of investment securities. At March 31, 2017, the aggregate gross unrealized gain for federal income tax purposes was $2.3 million and the
aggregate gross unrealized loss for federal income tax purposes was ($5.9) million. The net unrealized loss for federal income tax purposes was ($3.6) million based on a tax cost of $31.2 million.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) | Rand Capital SBIC, Inc. investment.
|--- | -----------------------------------

|(h) | Reduction in cost and value from previously reported balances reflects current principal repayment. There were no principal repayments during the three months ended March 31, 2017.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(i) | Represents interest due (amounts over $50,000 net of reserves) from investments included as interest receivable on the Corporations Statement of Financial Position.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(j) | Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.
|--- | ---------------------------------------------------------------------------------------------------------------------

|(k) | Affiliate Investments are defined by the Investment Company Act of 1940, as amended (1940 Act), as those Non-Control investments in companies in which between 5% and
25% of the voting securities are owned by the Corporation.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(l) | Control Investments are defined by the 1940 Act as investments in companies in which more than 25% of the voting securities are owned by the Corporation or where greater than 50% of the board representation is
maintained.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(m) | Payment in kind (PIK) represents earned interest that is added to the cost basis of the investment.
|--- | ---------------------------------------------------------------------------------------------------



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2017 (Continued)

(Unaudited)



Investments in and Advances to Affiliates



|                               |  |                                                                                                                                                                                                 |  |                                |                                      |  |                       |  |                    |                        |  |  |                            |  |  |                                                  |                                           |  |  |  |                                    | 
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------------------------------------ |  | --------------------- |  | ------------------ | ---------------------- |  |  | -------------------------- |  |  | ------------------------------------------------ | ----------------------------------------- |  |  |  | ---------------------------------- | 
|Company                        |  | Type of Investment                                                                                                                                                                              |  | December 31,  2016 Fair  Value |                                      |  | Gross  Additions  (1) |  |                    | Gross  Reductions  (2) |  |  | March 31,  2017
Fair Value |  |  | Amount of   Interest/
Dividend/
Fee Income   (3) |                                          
|Control Investments:           |  |                                                                                                                                                                                                 |  |                                |                                      |  |                       |  |                    |                        |  |  |                            |  |  |                                                  |                                           |  |  |  |                                    | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|Advantage 24/7 LLC             |  | 53% Membership interest.                                                                                                                                                                        |  |                                | $99,500                              |  |                       |  | $-                 |                        |  |  | $-                         |  |  |                                                  | $99,500                                   |  |  |  | $-                                 | 
|                               |  | Total Control Investments                                                                                                                                                                       |  |                                | $99,500                              |  |                       |  | $0                 |                        |  |  | $0                         |  |  |                                                  | $99,500                                   |  |  |  | $0                                 | 
|Affiliate Investments:         |  |                                                                                                                                                                                                 |  |                                |                                      |  |                       |  |                    |                        |  |  |                            |  |  |                                                  |                                           |  |  |  |                                    | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|BeetNPath, LLC                 |  | 1,119,024 Series A-2 Preferred Membership Units.
$150,000 convertible promissory note at 8%. Total
BeetNPath                                                                                    |  |                                | $359,000150,000509,000               |  |                       |  | $--
-              |                        |  |  | $--
-                      |  |  |                                                  | $359,000150,000509,000                    |  |  |  | $        -  2,959
2,959            | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|Carolina Skiff LLC             |  | 6.0825% Class A common membership interest.                                                                                                                                                     |  |                                | 1,100,000                            |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 1,100,000                                 |  |  |  | 57,373                             | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|ClearView Social, Inc.         |  | 312,500 Series seed plus preferred shares.                                                                                                                                                      |  |                                | 200,000                              |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 200,000                                   |  |  |  | -                                  | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|First Wave Products Group, LLC |  | $500,000 senior term notes at 10%. $280,000
junior term notes at 10%. Warrant for 41,619 capital securities.
Total First Wave                                                                   |  |                                | 250,000-
-
250,000                   |  |                       |  | --
-
-             |                        |  |  | --
- -                     |  |  |                                                  | 250,000-
-
250,000                        |  |  |  | -  -
-
-                           | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|Genicon, Inc.                  |  | 1,586,902 Series B preferred shares. $1,100,000
senior term loans at 12%. $600,000 term loan at 14%. $300,000
promissory note at 14% Total Genicon                                              |  |                                | 1,000,0001,100,000600,000-
2,700,000 |  |                       |  | --
-300,000300,000 |                        |  |  | --
- -
-                   |  |  |                                                  | 1,000,0001,100,000600,000300,0003,000,000 |  |  |  | 917  33,000  21,000  3,267  58,184 | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|GiveGab, Inc.                  |  | 5,084,329 Series Seed preferred shares.                                                                                                                                                         |  |                                | 424,314                              |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 424,314                                   |  |  |  | -                                  | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|G-TEC Natural Gas Systems      |  | 17.845% Class A membership interest. 8% cumulative dividend.                                                                                                                                    |  |                                | 100,000                              |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 100,000                                   |  |  |  | -                                  | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|Intrinsiq Materials, Inc.      |  | 4,161,747 Series A preferred shares.                                                                                                                                                            |  |                                | 780,000                              |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 780,000                                   |  |  |  | -                                  | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|Knoa Software, Inc.            |  | 973,533 Series A-1 convertible preferred shares.                                                                                                                                                |  |                                | -                                    |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | -                                         |  |  |  | -                                  | 
|                               |  | 1,876,922 Series B preferred shares.                                                                                                                                                            |  |                                | 449,455                              |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 449,455                                   |  |  |  | -                                  | 
|                               |  | $48,466 convertible promissory note at 8%.                                                                                                                                                      |  |                                | 48,466                               |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 48,466                                    |  |  |  | 978                                | 
|                               |  | Total Knoa                                                                                                                                                                                      |  |                                | 497,921                              |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 497,921                                   |  |  |  | 978                                | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|KnowledgeVision Systems, Inc.  |  | 200,000 Series A-1 preferred shares.
214,285 Series A-2 preferred shares.
129,033 Series A-3 preferred shares.
$50,000 subordinated promissory note at 8% Warrant for 46,743
Series A-3 shares. |  |                                | -300,000
165,001 -
35,000            |  |                       |  | --
-
50,000-       |                        |  |  | --
- -
-                   |  |  |                                                  | -300,000165,00150,00035,000               |  |  |  | -  -
- 733
-                       | 
|                               |  | Total Knowledge Vision                                                                                                                                                                          |  |                                | 500,001                              |  |                       |  | 50,000             |                        |  |  | -                          |  |  |                                                  | 550,001                                   |  |  |  | 733                                | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|Mezmeriz, Inc.                 |  | 1,554,565 Series seed preferred shares.                                                                                                                                                         |  |                                | 351,477                              |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 351,477                                   |  |  |  | -                                  | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|Microcision LLC                |  | $1,500,000 subordinated promissory note at 11%.                                                                                                                                                 |  |                                | 1,891,964                            |  |                       |  | 7,891              |                        |  |  | -                          |  |  |                                                  | 1,899,855                                 |  |  |  | 56,767                             | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|New Monarch Machine Tool, Inc. |  | 22.84 common shares.                                                                                                                                                                            |  |                                | 22,841                               |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 22,841                                    |  |  |  | -                                  | 
|                               |  |                                                                                                                                                                                                 |  |                                |                                      | 
|OnCore Golf Technology, Inc.   |  | 150,000 Series AA preferred shares. $300,000
subordinated convertible promissory notes at 6%.                                                                                                   |  |                                | - 300,000                            |  |                       |  | - -                |                        |  |  | - -                        |  |  |                                                  | - 300,000                                 |  |  |  | -  
6,608                          | 
|                               |  | Total OnCore                                                                                                                                                                                    |  |                                | 300,000                              |  |                       |  | -                  |                        |  |  | -                          |  |  |                                                  | 300,000                                   |  |  |  | 6,608                              | 



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2017 (Continued)

(Unaudited)



Investments in and Advances to Affiliates

|                                     |                                                        |                                                |  |                              |             |  |                     |   |          |                      |  |   |                           |  |  |                                              |             |  |  |       |          | 
|------------------------------------ | ------------------------------------------------------ | ---------------------------------------------- |  | ---------------------------- | ----------- |  | ------------------- | - | -------- | -------------------- |  | - | ------------------------- |  |  | -------------------------------------------- | ----------- |  |  | ----- | -------- | 
|Company                              |                                                        | Type of Investment                             |  | December 31,
2016 Fair
Value |             |  | Gross
Additions
(1) |   |          | Gross
Reductions
(2) |  |   | March 31,
2017 Fair
Value |  |  | Amount of
Interest/
Dividend/
Fee
Income (3) |            
|SciAps, Inc.                         |                                                        | 187,500 Series A convertible preferred shares. |  |                              | 1,000,000   |  |                     |   | -        |                      |  |   | -                         |  |  |                                              | 1,000,000   |  |  |       | -        | 
|                                     | 274,299 Series A-1 convertible preferred shares.       |                                                |  | 504,710                      |             |  |                     | - |          |                      |  | - |                           |  |  | 504,710                                      |             |  |  | -     |         
|                                     | 117,371 Series B preferred shares.                     |                                                |  | 250,000                      |             |  |                     | - |          |                      |  | - |                           |  |  | 250,000                                      |             |  |  | -     |         
|                                     | $200,000 subordinated promissory note at 10%.          |                                                |  | 200,000                      |             |  |                     | - |          |                      |  | - |                           |  |  | 200,000                                      |             |  |  | 5,000 |         
|                                     | $100,000 secured subordinated convertible note at 10%. |                                                |  | 100,000                      |             |  |                     | - |          |                      |  | - |                           |  |  | 100,000                                      |             |  |  | 2,500 |         
|                                     |                                                        | Total SciAps                                   |  |                              | 2,054,710   |  |                     |   | -        |                      |  |   | -                         |  |  |                                              | 2,054,710   |  |  |       | 7,500    | 
|                                     |                                                        |                                                |  |                              |             | 
|SOMS Technologies, LLC               |                                                        | 5,959,490 Series B membership interests.       |  |                              | 528,348     |  |                     |   | -        |                      |  |   | -                         |  |  |                                              | 528,348     |  |  |       | -        | 
|                                     |                                                        |                                                |  |                              |             | 
|Teleservices Solutions Holdings, LLC |                                                        | 250,000 Class B shares.                        |  |                              | -           |  |                     |   | -        |                      |  |   | -                         |  |  |                                              | -           |  |  |       | -        | 
|                                     | 1,000,000 Class C shares.                              |                                                |  | 200,000                      |             |  |                     | - |          |                      |  | - |                           |  |  | 200,000                                      |             |  |  | -     |         
|                                     | 80,000 Class D preferred units.                        |                                                |  | 91,200                       |             |  |                     | - |          |                      |  | - |                           |  |  | 91,200                                       |             |  |  | -     |         
|                                     | 104,198 Class E preferred units.                       |                                                |  | 104,198                      |             |  |                     | - |          |                      |  | - |                           |  |  | 104,198                                      |             |  |  | -     |         
|                                     |                                                        | Total Teleservices                             |  |                              | 395,398     |  |                     |   | -        |                      |  |   | -                         |  |  |                                              | 395,398     |  |  |       |          | 
|                                     |                                                        |                                                |  |                              |             | 
|Tilson Technology Management, Inc.   |                                                        | 12 Series B preferred shares.                  |  |                              | 600,000     |  |                     |   | -        |                      |  |   | -                         |  |  |                                              | 600,000     |  |  |       | 5,000    | 
|                                     | 21,390 Series C convertible preferred shares.          |                                                |  | 200,000                      |             |  |                     | - |          |                      |  | - |                           |  |  | 200,000                                      |             |  |  | -     |         
|                                     | $200,000 subordinated promissory note at 8%.           |                                                |  | 200,000                      |             |  |                     | - |          |                      |  | - |                           |  |  | 200,000                                      |             |  |  | 3,945 |         
|                                     |                                                        | Total Tilson                                   |  |                              | 1,000,000   |  |                     |   | -        |                      |  |   | -                         |  |  |                                              | 1,000,000   |  |  |       | 8,945    | 
|                                     |                                                        |                                                |  |                              |             | 
|                                     |                                                        | Total Affiliate Investments                    |  |                              | $13,605,974 |  |                     |   | $357,891 |                      |  |   | $0                        |  |  |                                              | $13,963,865 |  |  |       | $200,047 | 
|                                     |                                                        |                                                |  |                              |             | 
|                                     |                                                        | Total Control and Affiliate Investments        |  |                              | $13,705,474 |  |                     |   | $357,891 |                      |  |   | $0                        |  |  |                                              | $14,063,365 |  |  |       | $200,047 | 
|                                     |                                                        |                                                |  |                              |             |  |                     |   |          |                      |  |   |                           |  |  |                                              |             |  |  |       |          | 

This schedule should be read in conjunction with the Corporations Consolidated Financial Statements, including the
Consolidated Schedule of Portfolio Investments and Notes to the Consolidated Financial Statements.

(1) Gross additions include increases in the cost basis
of investments resulting from new portfolio investment, follow on investments, capitalized interest and the accretion of discounts. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation,
and the movement of an existing portfolio company into this category and out of another category.

(2) Gross reductions include decreases in the cost basis
of investments resulting from principal repayments, sales, note conversions, net increases in unrealized depreciation, net decreases in unrealized appreciation, the exchange of existing securities for new securities and the movement of an existing
portfolio company out of this category and into another category.

(3) Represents the total amount of interest, fees or dividends credited to income for the
portion of the period an investment was included in Control or Affiliate categories, respectively.



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2017 (Continued)

(Unaudited)



|                        |  |                                                                     
|----------------------- |  | --------------------------------------------------------------------
|Industry Classification |  | Percentage of Total
Investments (at fair value)
as of March 31, 2017
|                        | 
|Healthcare              |  | 33.6%                                                               
|                        | 
|Software                |  | 26.9%                                                               
|                        | 
|Manufacturing           |  | 22.7%                                                               
|                        | 
|Contact Center          |  | 4.9%                                                                
|                        | 
|Consumer Product        |  | 4.8%                                                                
|                        | 
|Professional Services   |  | 3.6%                                                                
|                        | 
|Oil and Gas             |  | 1.8%                                                                
|                        | 
|Electronics             |  | 1.3%                                                                
|                        | 
|Marketing               |  | 0.4%                                                                
|                        |  |                                                                     
|                        | 
|Total Investments       |  | 100%                                                                
|                        |  |                                                                     



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2016



|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------- |  | ----------------- |  | ----------- |  | ---- | --------- |  | ----------------- |  | --------- | ------------------- |  | ----
|(a)
Company, Geographic Location, Business
Description, (Industry) and Website                                                                                                                                                   |  | Type of Investment                                            |  | (b)
Date
Acquired |  | (c)

Equity |  | Cost |           |  | (d)(f)
Fair
Value |  |           | Percentof NetAssets
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|Non-Control/Non-Affiliate Investments  42.3%
of net assets: (j)                                                                                                                                                                 |  |                                                               |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|ACV Auctions, Inc. (e)(g)
Buffalo, NY. Live mobile auctions for new and used car dealers.
(Software) www.acvauctions.com                                                                                                         |  | 118,116 Series A preferred shares.                            |  | 8/12/16           |  | 1%          |  |      | $163,000  |  |                   |  | $163,000  |                     |  | 0.5%
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|Athenex, Inc. (e)(g)
(Formerly Kinex Pharmaceuticals, Inc.)
Buffalo, NY. Specialty pharmaceutical and drug development. (Health
Care) www.athenex.com                                                                            |  | 46,296 common shares.                                         |  | 9/8/14            |  | <1%         |  |      | 143,285   |  |                   |  | 416,664   |                     |  | 1.3%
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|City Dining Cards, Inc. (Loupe) (e)(g)
Buffalo, NY. Customer loyalty technology company that helps
businesses attract and retain customers. (Software)
www.loupeapp.io                                                           |  | 9,525.25 Series B preferred shares.                           |  | 9/1/15            |  | 4%          |  |      | 500,000   |  |                   |  | 500,000   |                     |  | 1.5%
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|eHealth Global Technologies, Inc. (g)
Henrietta, NY. eHealth Connect® improves health care delivery
through intelligently aggregated clinical record and images for patient referrals.
(Health Care)
www.ehealthtechnologies.com |  | $1,500,000 term note at 9% due September 2,
2019.             |  | 6/28/16           |  | 0%          |  |      | 1,500,000 |  |                   |  | 1,500,000 |                     |  | 4.6%
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|Empire Genomics, LLC (e)(g)                                                                                                                                                                                                      |  | $900,000 senior secured                                       |  | 6/13/14           |  | 0%          |  |      |           |  |                   |  |           |                     |  | 3.5%
|Buffalo, NY. Molecular diagnostics company that                                                                                                                                                                                  |  | convertible term notes at 10% due                             |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|offers a comprehensive menu of assay services for                                                                                                                                                                                |  | April 1, 2017.                                                |  |                   |  |             |  |      | 900,000   |  |                   |  | 900,000   |                     |  |     
|diagnosing and guiding patient therapeutic treatments.                                                                                                                                                                           |  | $250,000 promissory note at 12%                               |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|(Health Care)                                                                                                                                                                                                                    |  | due December 31, 2019.                                        |  |                   |  |             |  |      | 250,000   |  |                   |  | 250,000   |                     |  |     
|www.empiregenomics.com                                                                                                                                                                                                           |  | (i) Interest receivable $200,339.                             |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|                                                                                                                                                                                                                                 |  | Total Empire                                                  |  |                   |  |             |  |      | 1,150,000 |  |                   |  | 1,150,000 |                     |  |     
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|GoNoodle, Inc. (g)                                                                                                                                                                                                               |  | $1,000,000 secured note at 12%                                |  | 2/6/15            |  | <1%         |  |      |           |  |                   |  |           |                     |  | 3.1%
|(Formerly HealthTeacher, Inc.)                                                                                                                                                                                                   |  | due January 31, 2020, (1%                                     |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|Nashville, TN. Student engagement education                                                                                                                                                                                      |  | Payment in Kind (PIK)).                                       |  |                   |  |             |  |      | 1,019,101 |  |                   |  | 1,019,101 |                     |  |     
|software providing core aligned physical activity                                                                                                                                                                                |  | Warrant for 47,324 Series C                                   |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|breaks. (Software)                                                                                                                                                                                                               |  | Preferred shares.                                             |  |                   |  |             |  |      | 25        |  |                   |  | 25        |                     |  |     
|www.gonoodle.com                                                                                                                                                                                                                 |  | Total GoNoodle                                                |  |                   |  |             |  |      | 1,019,126 |  |                   |  | 1,019,126 |                     |  |     
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|Mercantile Adjustment Bureau, LLC (g)                                                                                                                                                                                            |  | $1,099,039 subordinated secured                               |  | 10/22/12          |  | 4%          |  |      |           |  |                   |  |           |                     |  | 3.3%
|Williamsville, NY. Full service accounts receivable                                                                                                                                                                              |  | note at 13% (3% for the calendar                              |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|management and collections company.                                                                                                                                                                                              |  | year 2016) due October 30, 2017.                              |  |                   |  |             |  |      | 1,090,690 |  |                   |  | 1,090,690 |                     |  |     
|(Contact Center)                                                                                                                                                                                                                 |  | (e)$150,000 subordinated                                      |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|www.mercantilesolutions.com                                                                                                                                                                                                      |  | debenture at 8% due June 30,                                  |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|                                                                                                                                                                                                                                 |  | 2018.                                                         |  |                   |  |             |  |      | 150,000   |  |                   |  | -         |                     |  |     
|                                                                                                                                                                                                                                 |  | Warrant for 3.29% membership                                  |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|                                                                                                                                                                                                                                 |  | interests. Option for 1.5%                                    |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|                                                                                                                                                                                                                                 |  | membership interests.                                         |  |                   |  |             |  |      | 97,625    |  |                   |  | -         |                     |  |     
|                                                                                                                                                                                                                                 |  | Total Mercantile                                              |  |                   |  |             |  |      | 1,338,315 |  |                   |  | 1,090,690 |                     |  |     
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|Outmatch Holdings, LLC (e)(g)                                                                                                                                                                                                    |  | 2,446,199 Class P1 Units.                                     |  | 11/18/10          |  | 4%          |  |      | 2,140,007 |  |                   |  | 2,140,007 |                     |  | 6.6%
|(Chequed Holdings, LLC)                                                                                                                                                                                                          |  | 109,788 Class C1 Units.                                       |  |                   |  |             |  |      | 5,489     |  |                   |  | 5,489     |                     |  |     
|Dallas, TX. Web based predictive employee selection                                                                                                                                                                              |  | Total Outmatch                                                |  |                   |  |             |  |      | 2,145,496 |  |                   |  | 2,145,496 |                     |  |     
|and reference checking. (Software)                                                                                                                                                                                               |  |                                                               |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|www.outmatch.com                                                                                                                                                                                                                 |  |                                                               |  |                   |  |             |  |      |           |  |                   |  |           |                     |  |     
|                                                                                                                                                                                                                                 |  |                                                               |  |                   |  |            
|PostProcess Technologies LLC (e)(g)
Buffalo, NY. Provides innovative solutions for the
post-processing of additive manufactured 3D parts.
(Manufacturing)
www.postprocess.com                                                    |  | $300,000 convertible promissory note at 5% due July 28, 2018. |  | 7/25/16           |  | 0%          |  |      | 300,000   |  |                   |  | 300,000   |                     |  | 0.9%



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2016 (Continued)



|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |             |            |      |                                       |   |                   |  |                                            |                     |  |     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ----------- | ---------- | ---- | ------------------------------------- | - | ----------------- |  | ------------------------------------------ | ------------------- |  | ----
|(a)
Company, Geographic Location, BusinessDescription, (Industry) and Website                                                                                                                                         |  | Type of Investment                                                                                                                                                      |  | (b)
Date
Acquired |  | (c) 
Equity |            | Cost |                                       |   | (d)(f)
Fair
Value |  |                                            | Percentof NetAssets
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|Rheonix, Inc. (e) Ithaca, NY. Developer of
fully automated microfluidic based molecular assay and diagnostic testing devices. (Health Care) www.rheonix.com                                                           |  | 9,676 common shares. (g)1,839,422 Series
A preferredshares. (g) 50,593 common shares. (g) 589,420 Series B preferred shares.
Total Rheonix                              |  | 10/29/09          |  | 4%          |            |      | -2,099,999
-
702,732
2,802,731        |   |                   |  | 11,000  2,165,999
59,000
702,732
2,938,731 |                     |  | 9.0%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|SocialFlow, Inc. (e)(g) New York, NY.
Provides instant analysis of social networks using a proprietary, predictive analytic algorithm to optimize advertising and publishing. (Software)
www.socialflow.com           |  | 1,049,538 Series B preferred shares. 1,204,819
Series B-1 preferred shares. 717,772 Series C preferred shares.
Total Social Flow                                        |  | 4/5/13            |  | 4%          |            |      | 500,000750,000500,0001,750,000        |   |                   |  | 731,431  839,648  500,221  2,071,300       |                     |  | 6.3%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|Somerset Gas Transmission Company, LLC (e)
Columbus, OH. Natural gas transportation. (Oil and Gas)
www.somersetgas.com                                                                                                |  | 26.5337 units.                                                                                                                                                          |  | 7/10/02           |  | 3%          |            |      | 719,097                               |   |                   |  | 500,000                                    |                     |  | 1.5%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|Other Non-Control/Non-Affiliate Investments:                                                                                                                                                                          |  |                                                                                                                                                                         |  |                   |  |             |            |      |                                       |   |                   |  |                                            |                     |  |     
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|DataView, LLC(Software) (e)                                                                                                                                                                                           |  | Membership Interest.                                                                                                                                                    |  | -                 |  | -           |            |      | 310,357                               |   |                   |  | -                                          |                     |  | 0.0%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|UStec/Wi3 (Manufacturing) (e)                                                                                                                                                                                         |  | Common Stock.                                                                                                                                                           |  | -                 |  | -           |            |      | 100,500                               |   |                   |  | -                                          |                     |  | 0.0%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |             |            |      |                                       |   |                   | 
|Subtotal Non-Control/Non-Affiliate Investments                                                                                                                                                                        |  |                                                                                                                                                                         |  |                   |  | $           | 13,941,907 |      |                                       | $ | 13,795,007        |  |                                            |                    
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |             |            |      |                                       |   |                   | 
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|Affiliate Investments  41.7% of net assets (k)                                                                                                                                                                       |  |                                                                                                                                                                         |  |                   |  |             |            |      |                                       |   |                   |  |                                            |                     |  |     
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|BeetNPath, LLC (Grainful) (e)(g) Ithaca,
NY. Frozen entrées and packaged dry side dishes made from 100% whole grain steel cut oats under Grainful brand name. (Consumer Product)
www.grainful.com                     |  | 1,119,024 Series A-2 PreferredMembership Units.
$150,000 convertible promissory noteat 8% due September 1, 2017.
Total BeetNPath                                        |  | 10/20/14          |  | 9%          |            |      | $359,000
 150,000509,000              |   |                   |  | $359,000
 150,000
509,000                  |                     |  | 1.6%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|Carolina Skiff LLC (g) Waycross, GA.
Manufacturer of fresh water, ocean fishing and pleasure boats. (Manufacturing)
www.carolinaskiff.com                                                                             |  | 6.0825% Class A commonmembership interest.                                                                                                                              |  | 1/30/04           |  | 7%          |            |      | 15,000                                |   |                   |  | 1,100,000                                  |                     |  | 3.4%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|ClearView Social, Inc. (e)(g) Buffalo, NY.
Social media publishing tool for law, CPA and professional firms. (Software) www.clearviewsocial.com                                                                       |  | 312,500 Series seed plus preferred shares.                                                                                                                              |  | 1/4/16            |  | 6%          |            |      | 200,000                               |   |                   |  | 200,000                                    |                     |  | 0.6%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|First Wave Products Group, LLC (e)(g)
Batavia, NY. Sells First Crush automated pill crusher that crushes and grinds medical pills for nursing homes and medical institutions. (Health Care)
www.firstwaveproducts.com |  | $500,000 senior term notes at 10% due January 31, 2017.
$280,000 junior term notes at 10% due January 31, 2017.
Warrant for 41,619 capital securities. Total First
Wave |  | 4/19/12           |  | 7%          |            |      | 661,563
 316,469
22,000
1,000,032     |   |                   |  | 250,000
 -
-
250,000                       |                     |  | 0.8%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|Genicon, Inc. (g) Winter Park, FL.
Designs, produces and distributes patented surgical instrumentation. (Health Care) www.geniconendo.com                                                                             |  | 1,586,902 Series B preferred shares. $1,100,000
promissory note at 12% due April 1, 2019. $600,000 promissory note at 14% due March 31, 2018.
Total Genicon             |  | 4/10/15           |  | 6%          |            |      | 1,000,000 1,100,000
 600,0002,700,000 |   |                   |  | 1,000,000  
1,100,000 
600,000  2,700,000  |                     |  | 8.3%
|                                                                                                                                                                                                                      |  |                                                                                                                                                                         |  |                   |  |            
|GiveGab, Inc. (e)(g) Ithaca, NY. Online
fundraising, day of giving supporter engagement software for non-profit organizations. (Software)
www.givegab.com                                                             |  | 5,084,329 Series Seed preferred shares.                                                                                                                                 |  | 3/13/13           |  | 7%          |            |      | 616,221                               |   |                   |  | 424,314                                    |                     |  | 1.3%



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2016 (Continued)



|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |             |  |      |                                                        |  |                   |  |                                                        |                     |  |     
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ----------- |  | ---- | ------------------------------------------------------ |  | ----------------- |  | ------------------------------------------------------ | ------------------- |  | ----
|(a)
Company, Geographic Location, BusinessDescription, (Industry) and Website                                                                                                                                     |  | Type of Investment                                                                                                                                                                                                                                                                                        |  | (b)
Date
Acquired |  | (c) 
Equity |  | Cost |                                                        |  | (d)(f)
Fair
Value |  |                                                        | Percentof NetAssets
|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |            
|G-TEC Natural Gas Systems (e)
Buffalo, NY. Manufactures and distributes systems that allow natural gas to be used as an alternative fuel to gases. (Manufacturing)
www.gas-tec.com                                |  | 16.930% Class A membership interest.8% cumulative dividend.                                                                                                                                                                                                                                               |  | 8/31/99           |  | 18%         |  |      | 400,000                                                |  |                   |  | 100,000                                                |                     |  | 0.3%
|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |            
|Intrinsiq Materials, Inc. (e)(g)
Rochester, NY. Produces printable electronics utilizing a unique process of nanomaterial based ink in a room-temperature environment. (Manufacturing)
www.intrinsiqmaterials.com |  | 4,161,747 Series A preferred shares.                                                                                                                                                                                                                                                                      |  | 9/19/13           |  | 12%         |  |      | 1,125,673                                              |  |                   |  | 780,000                                                |                     |  | 2.4%
|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |            
|Knoa Software, Inc. (e)(g) New York, NY.
End user experience management and performance (EMP) solutions utilizing enterprise applications. (Software) www.knoa.com                                                |  | 973,533 Series A-1 convertible preferred shares.
1,876,922 Series B preferred shares. $48,466 convertible promissory
note at 8% due May 9, 2018. Total Knoa                                                                                                                                               |  | 11/20/12          |  | 7%          |  |      | 750,000
479,155 
48,466
1,277,621                      |  |                   |  | -
 449,455
 48,466
497,921                             |                     |  | 1.5%
|KnowledgeVision Systems, Inc. (e)(g)
Lincoln, MA. Online presentation and training software. (Software)
www.knowledgevision.com                                                                                   |  | 200,000 Series A-1 preferred shares.
214,285 Series A-2 preferred shares.
129,033 Series A-3 preferred shares.
Warrant for 46,743 Series A-3 shares.
Total KnowledgeVision                                                                                                                                |  | 11/13/13          |  | 7%          |  |      | 250,000300,000
165,001 35,000
750,001                  |  |                   |  | -300,000
165,001 35,000
500,001                        |                     |  | 1.5%
|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |            
|Mezmeriz, Inc. (e)(g) Ithaca, NY.
Micro-electronic mechanical systems (MEMS) developer of carbon fiber MEMS mirror modules for gesture recognition and 3D scanning. (Electronics Developer)
www.mezmeriz.com      |  | 1,554,565 Series Seed preferred shares.                                                                                                                                                                                                                                                                   |  | 1/9/08            |  | 14%         |  |      | 742,850                                                |  |                   |  | 351,477                                                |                     |  | 1.1%
|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |            
|Microcision LLC (g) Pennsauken Township,
NJ. Manufacturer of precision machined medical implants, components and assemblies. (Manufacturing)
www.microcision.com                                                  |  | $1,500,000 subordinated promissory note at 12% (1% PIK) due December 31, 2024.
15% Class A common membership interest. Total
Microcision                                                                                                                                                                  |  | 9/24/09           |  | 15%         |  |      | 1,891,964

-
1,891,964                                 |  |                   |  | 1,891,964

-
1,891,964                                 |                     |  | 5.8%
|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |            
|New Monarch Machine Tool, Inc. (g)
Cortland, NY. Manufactures and servicesvertical/horizontal machining centers. (Manufacturing)
www.monarchmt.com                                                                |  | 22.84 common shares.                                                                                                                                                                                                                                                                                      |  | 9/24/03           |  | 15%         |  |      | 22,841                                                 |  |                   |  | 22,841                                                 |                     |  | 0.1%
|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |            
|OnCore Golf Technology, Inc. (e)(g)
Buffalo, NY. Maker of patented hollow-metalcore golf balls. (Consumer Product)
www.oncoregolf.com                                                                             |  | 150,000 Series AA preferred shares. $300,000
subordinated convertible promissory notes at 6% due January 24, 2017. Total OnCore                                                                                                                                                                           |  | 12/31/14          |  | 7%          |  |      | 375,000 
300,000675,000                                |  |                   |  | - 
300,000300,000                                      |                     |  | 0.9%
|                                                                                                                                                                                                                  |  |                                                                                                                                                                                                                                                                                                           |  |                   |  |            
|SciAps, Inc. (e)(g) Woburn, MA.
Instrumentation companyproducing portable analytical devices using XRF, LIBS and RAMAN spectroscopy to identify compounds, minerals, and elements. (Manufacturing)
www.sciaps.com |  | 187,500 Series A convertible preferred shares.
274,299 Series A-1 convertible preferred shares.
117,371 Series B convertible preferred shares. $200,000
subordinated convertible note at 10% due April 8, 2017. $100,000 secured subordinated convertible note at 10% due December 31, 2017.
Total SciAps |  | 7/12/13           |  | 9%          |  |      | 1,500,000
 504,710
250,000 
200,000 
100,000
2,554,710 |  |                   |  | 1,000,000
 504,710
250,000 
200,000 
100,000
2,054,710 |                     |  | 6.3%



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2016 (Continued)



|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   |  |                                      |                     |  |     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- |  | ----------- |  | ---- | ------------------------------------------- |  | ----------------- |  | ------------------------------------ | ------------------- |  | ----
|(a)
Company, Geographic Location, BusinessDescription, (Industry) and Website                                                                                                                           |  | Type of Investment                                                                                                                                                                                                    |  | (b)
Date
Acquired |  | (c) 
Equity |  | Cost |                                             |  | (d)(f)
Fair
Value |  |                                      | Percentof NetAssets
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |            
|SOMS Technologies, LLC (g) Valhalla, NY.
Produces and markets the microGreen Extended Performance Oil Filter. (Consumer Products) www.microgreenfilter.com                                              |  | 5,959,490 Series B membership interests.                                                                                                                                                                              |  | 12/2/08           |  | 9%          |  |      | 472,632                                     |  |                   |  | 528,348                              |                     |  | 1.6%
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |            
|Teleservices Solutions Holdings, LLC (e) (g)(m)
Montvale, NJ. Customer contact center specializing in customer acquisition and retention for selected industries. (Contact Center)
www.ipacesetters.com |  | 250,000 Class B preferred units. 1,000,000
Class C preferred units. 80,000 Class D preferred units.
104,198 Class E preferred units. PIK dividend for Series C and
D at 12% and 14%, respectively. Total
Teleservices |  | 5/30/14           |  | 6%          |  |      | 250,0001,190,680
91,200
104,198 
 1,636,078 |  |                   |  | -  200,000
91,200
104,198 
 395,398  |                     |  | 1.2%
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |            
|Tilson Technology Management, Inc.(g)
Portland, ME. Cellular, fiber optic and wireless information systems, construction, and management. (Professional Services)
www.tilsontech.com                    |  | 120,000 Series B preferred shares. 21,391 Series
C convertible preferred shares. $200,000 subordinated promissory note at 8% due September 28, 2021.
Total Tilson                                                     |  | 1/20/15           |  | 8%          |  |      | 600,000 200,000
 200,000
1,000,000          |  |                   |  | 600,000  
200,000 
200,000
1,000,000 |                     |  | 3.1%
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   | 
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   | 
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |            
|Subtotal Affiliate Investments                                                                                                                                                                          |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      | $17,589,623                                 |  |                   |  | $13,605,974                          |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   | 
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |            
|Control Investments  0.3% of net assets (l)                                                                                                                                                            |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   |  |                                      |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |            
|Advantage 24/7 LLC (e)(g) Williamsville,
NY. Marketing program for wine and spirits dealers. (Marketing Company) www.advantage24-7.com                                                                  |  | 53% Membership interest.                                                                                                                                                                                              |  | 12/30/10          |  | 53%         |  |      | $99,500                                     |  |                   |  | $99,500                              |                     |  | 0.3%
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   | 
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   | 
|Subtotal Control Investments                                                                                                                                                                            |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      | $99,500                                     |  |                   |  | $99,500                              |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   | 
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |            
|TOTAL INVESTMENTS  84.3%                                                                                                                                                                               |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      | $31,631,030                                 |  |                   |  | $27,500,481                          |                     |  |     
|OTHER ASSETS IN EXCESS OF
LIABILITIES  15.7%                                                                                                                                                           |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  | 5,128,882         |  |                                      |                    
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   |  |                                      |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |            
|NET ASSETS  100%                                                                                                                                                                                       |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   |  | $32,629,363                          |                     |  |     
|                                                                                                                                                                                                        |  |                                                                                                                                                                                                                       |  |                   |  |             |  |      |                                             |  |                   |  |                                      |                     |  |     



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2016 (Continued)



Notes to the Consolidated Schedule of Portfolio Investments



|(a) | At December 31, 2016, restricted securities represented 100% of the fair value of the investment portfolio. Restricted securities are subject to one or more restrictions on resale and are not freely marketable.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The Date Acquired column indicates the year in which the Corporation first acquired an investment in the company or a predecessor company.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Each equity percentage estimates the Corporations ownership interest in the applicable portfolio investment. The estimated ownership is calculated based on the percent of outstanding voting securities held by the
Corporation or the potential percentage of voting securities held by the Corporation upon exercise of warrants or conversion of debentures, or other available data. If applicable, the symbol <1% indicates that the Corporation holds an
equity interest of less than one percent.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) | The Corporations investments are carried at fair value in accordance with Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures, which defines fair value and establishes
guidelines for measuring fair value. At December 31, 2016, ASC 820 designates 100% of the Corporations investments as Level 3 assets. Under the valuation policy of the Corporation, unrestricted publicly held securities
are valued at the average closing bid price for these securities for the last three trading days of the month. Restricted securities are subject to restrictions on resale, and are valued at fair value as determined by the management of the
Corporation and submitted to the Board of Directors for approval. Fair value is considered to be the amount that the Corporation may reasonably expect to receive for portfolio securities when sold on the valuation date. Valuations as of any
particular date, however, are not necessarily indicative of amounts which may ultimately be realized as a result of future sales or other dispositions of securities and these favorable or unfavorable differences could be material. Among the factors
considered in determining the fair value of restricted securities are the financial condition and operating results, projected operations, and other analytical data relating to the investment. Also considered are the market prices for unrestricted
securities of the same class (if applicable) and other matters which may have an impact on the value of the portfolio company (see Note 3 Investments to the Consolidated Financial Statements).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(e) | These investments are non-income producing. All other investments are income producing. Non-income producing investments have not generated
cash payments of interest or dividends including LLC tax-related distributions within the last twelve months, or are not expected to do so going forward.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(f) | As of December 31, 2016 the total cost of investment securities was approximately $31.6 million. Net unrealized depreciation was approximately ($4.1) million, which was comprised of $1.9 million of
unrealized appreciation of investment securities and ($6.0) million of unrealized depreciation of investment securities. At December 31, 2016, the aggregate gross unrealized gain for federal income tax purposes was $2.2 million and the
aggregate gross unrealized loss for federal income tax purposes was ($5.4) million. The net unrealized loss for federal income tax purposes was ($3.3) million based on a tax cost of $30.8 million.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(g) | Rand Capital SBIC, Inc. investment.
|--- | -----------------------------------

|(h) | Reduction in cost and value from previously reported balances reflects current principal repayment. There were no principal repayments during the three months ended December 31, 2016.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(i) | Represents interest due (amounts over $50,000 net of reserves) from investment included as interest receivable on the Corporations Statement of Financial Position.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(j) | Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor Affiliate Investments.
|--- | ---------------------------------------------------------------------------------------------------------------------

|(k) | Affiliate Investments are defined by the Investment Company Act of 1940, as amended (1940 Act), as those Non-Control investments in companies in which between 5% and
25% of the voting securities are owned by the Corporation.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(l) | Control Investments are defined by the 1940 Act as investments in companies in which more than 25% of the voting securities are owned by the Corporation or where greater than 50% of the board representation is
maintained.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(m) | Payment in kind (PIK) represents earned interest that is added to the cost basis of the investment.
|--- | ---------------------------------------------------------------------------------------------------



19



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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2016 (Continued)



Investments in and Advances to Affiliates



|                               |  |                                                                                                                                                      |  |                            |                         |  |                   |  |                       |                    |  |  |                            |  |  |                                                  |                            |  |  |  |                       | 
|------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ----------------------- |  | ----------------- |  | --------------------- | ------------------ |  |  | -------------------------- |  |  | ------------------------------------------------ | -------------------------- |  |  |  | --------------------- | 
|Company                        |  | Type of Investment                                                                                                                                   |  | December 31,2015 FairValue |                         |  | GrossAdditions(1) |  |                       | GrossReductions(2) |  |  | December 31,2016 FairValue |  |  | Amount of   Interest/
Dividend/
Fee Income   (3) |                           
|Control Investments:           |  |                                                                                                                                                      |  |                            |                         |  |                   |  |                       |                    |  |  |                            |  |  |                                                  |                            |  |  |  |                       | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|Advantage 24/7 LLC             |  | 53% Membership interest.                                                                                                                             |  |                            | $99,500                 |  |                   |  | $             -       |                    |  |  | $              -           |  |  |                                                  | $99,500                    |  |  |  | $              -      | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|Gemcor II, LLC                 |  | $1,000,000 subordinated promissory note at 15%.
31.25 membership units. Escrow receivable due from sale of
business.                                 |  |                            | 416,97213,400,000
-     |  |                   |  | --
-                  |                    |  |  | (416,972)(13,400,000)
-    |  |  |                                                  | --
-                       |  |  |  | 11,828  2,000
-       | 
|                               |  | Total Gemcor                                                                                                                                         |  |                            | 13,816,972              |  |                   |  | -                     |                    |  |  | (13,816,972)               |  |  |                                                  | -                          |  |  |  | 13,828                | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|                               |  | Total Control Investments                                                                                                                            |  |                            | $13,916,472             |  |                   |  | $0                    |                    |  |  | ($13,816,972)              |  |  |                                                  | $99,500                    |  |  |  | $13,828               | 
|Affiliate Investments:         |  |                                                                                                                                                      |  |                            |                         |  |                   |  |                       |                    |  |  |                            |  |  |                                                  |                            |  |  |  |                       | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|BeetNPath, LLC                 |  | 1,119,024 Series A-2 Preferred Membership Units.
$150,000 convertible promissory note at 8%.                                                         |  |                            | $359,000-               |  |                   |  | $            -150,000 |                    |  |  | $                --        |  |  |                                                  | $359,000150,000            |  |  |  | $        -  6,477     | 
|                               |  | Total BeetNPath                                                                                                                                      |  |                            | 359,000                 |  |                   |  | 150,000               |                    |  |  | -                          |  |  |                                                  | 509,000                    |  |  |  | 6,477                 | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|Carolina Skiff LLC             |  | 6.0825% Class A common membership interest.                                                                                                          |  |                            | 600,000                 |  |                   |  | 500,000               |                    |  |  | -                          |  |  |                                                  | 1,100,000                  |  |  |  | 131,785               | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|ClearView Social, Inc.         |  | 312,500 Series seed plus preferred shares.                                                                                                           |  |                            | -                       |  |                   |  | 200,000               |                    |  |  | -                          |  |  |                                                  | 200,000                    |  |  |  | -                     | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|First Wave Products Group, LLC |  | $500,000 senior term notes at 10%. $280,000
junior term notes at 10%. Warrant for 41,619 capital securities.                                         |  |                            | 250,000-
-              |  |                   |  | --
-                  |                    |  |  | --
-                       |  |  |                                                  | 250,000-
-                 |  |  |  | 834  -
-              | 
|                               |  | Total First Wave                                                                                                                                     |  |                            | 250,000                 |  |                   |  | -                     |                    |  |  | -                          |  |  |                                                  | 250,000                    |  |  |  | 834                   | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|Genicon, Inc.                  |  | 1,586,902 Series B preferred shares.
$1,100,000 senior term loans at 12%. $600,000 term loan at
14%.                                                 |  |                            | 1,000,000-
-            |  |                   |  | -1,100,000
600,000    |                    |  |  | --
-                       |  |  |                                                  | 1,000,0001,100,000
600,000 |  |  |  | 3,028  109,700
28,700 | 
|                               |  | Total Genicon                                                                                                                                        |  |                            | 1,000,000               |  |                   |  | 1,700,000             |                    |  |  | -                          |  |  |                                                  | 2,700,000                  |  |  |  | 141,428               | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|GiveGab, Inc.                  |  | 5,084,329 Series Seed preferred shares.                                                                                                              |  |                            | 424,314                 |  |                   |  | -                     |                    |  |  | -                          |  |  |                                                  | 424,314                    |  |  |  | -                     | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|G-TEC Natural Gas Systems      |  | 17.845% Class A membership interest. 8% cumulative dividend.                                                                                         |  |                            | 100,000                 |  |                   |  | -                     |                    |  |  | -                          |  |  |                                                  | 100,000                    |  |  |  | -                     | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|Intrinsiq Materials, Inc.      |  | 4,161,747 Series A preferred shares. $95,000
convertible promissory note at 8%.                                                                      |  |                            | -95,000                 |  |                   |  | 780,000-              |                    |  |  | -(95,000)                  |  |  |                                                  | 780,000-                   |  |  |  | -  6,689              | 
|                               |  | Total Intrinsiq                                                                                                                                      |  |                            | 95,000                  |  |                   |  | 780,000               |                    |  |  | (95,000)                   |  |  |                                                  | 780,000                    |  |  |  | 6,689                 | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|Knoa Software, Inc.            |  | 973,533 Series A-1 convertible preferred shares. 1,876,922 Series B preferred shares.
$48,466 convertible promissory note at 8%.                     |  |                            | 381,503490,752
-        |  |                   |  | --
48,466             |                    |  |  | (381,503)( 41,297)
-       |  |  |                                                  | -449,455
48,466            |  |  |  | -  -
2,499            | 
|                               |  | Total Knoa                                                                                                                                           |  |                            | 872,255                 |  |                   |  | 48,466                |                    |  |  | (422,800)                  |  |  |                                                  | 497,921                    |  |  |  | 2,499                 | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|KnowledgeVision Systems, Inc.  |  | 200,000 Series A-1 preferred shares.
214,285 Series A-2 preferred shares.
129,033 Series A-3 preferred shares.
Warrant for 46,743 Series A-3 shares. |  |                            | -300,000
165,001
35,000 |  |                   |  | --
- -                |                    |  |  | --
- -                     |  |  |                                                  | -300,000
165,001
35,000    |  |  |  | -  -
-
-              | 
|                               |  | Total Knowledge Vision                                                                                                                               |  |                            | 500,001                 |  |                   |  | -                     |                    |  |  | -                          |  |  |                                                  | 500,001                    |  |  |  | -                     | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|Mezmeriz, Inc.                 |  | 1,554,565 Series seed preferred shares.                                                                                                              |  |                            | 351,477                 |  |                   |  | -                     |                    |  |  | -                          |  |  |                                                  | 351,477                    |  |  |  | -                     | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|Microcision LLC                |  | $1,500,000 subordinated promissory note at 11%.
15% Class A common membership interest.                                                              |  |                            | 1,891,964-              |  |                   |  | --                    |                    |  |  | --                         |  |  |                                                  | 1,891,964-                 |  |  |  | 211,269  -            | 
|                               |  | Total Microcision                                                                                                                                    |  |                            | 1,891,964               |  |                   |  | -                     |                    |  |  | -                          |  |  |                                                  | 1,891,964                  |  |  |  | 211,269               | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|New Monarch Machine Tool, Inc. |  | 22.84 common shares.                                                                                                                                 |  |                            | 22,841                  |  |                   |  | -                     |                    |  |  | -                          |  |  |                                                  | 22,841                     |  |  |  | 29,409                | 
|                               |  |                                                                                                                                                      |  |                            |                         | 
|OnCore Golf Technology, Inc.   |  | 150,000 Series AA preferred shares. $300,000
subordinated convertible promissory notes at 6%.                                                        |  |                            | 187,500150,000          |  |                   |  | -150,000              |                    |  |  | (187,500)-                 |  |  |                                                  | -300,000                   |  |  |  | -  17,186             | 
|                               |  | Total OnCore                                                                                                                                         |  |                            | 337,500                 |  |                   |  | 150,000               |                    |  |  | (187,500)                  |  |  |                                                  | 300,000                    |  |  |  | 17,186                | 
|                               |  |                                                                                                                                                      |  |                            |                         |  |                   |  |                       |                    |  |  |                            |  |  |                                                  |                            |  |  |  |                       | 



20



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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2016 (Continued)



Investments in and Advances to Affiliates

|                       |  |                                                        |  |                            |             |  |                    |  |            |                     |  |  |                             |  |  |                                                |             |  |  |  |          | 
|---------------------- |  | ------------------------------------------------------ |  | -------------------------- | ----------- |  | ------------------ |  | ---------- | ------------------- |  |  | --------------------------- |  |  | ---------------------------------------------- | ----------- |  |  |  | -------- | 
|Company                |  | Type of Investment                                     |  | December 31,2015 FairValue |             |  | GrossAdditions
(1) |  |            | GrossReductions
(2) |  |  | December 31,2016 Fair
Value |  |  | Amount of  Interest/
Dividend/
Fee  Income (3) |            
|Rheonix, Inc.          |  | 9,676 common shares.                                   |  |                            | 11,000      |  |                    |  | -          |                     |  |  | (11,000)                    |  |  |                                                | -           |  |  |  | -        | 
|                       |  | 1,839,422 Series A preferred shares.                   |  |                            | 2,165,999   |  |                    |  | -          |                     |  |  | (2,165,999)                 |  |  |                                                | -           |  |  |  | -        | 
|                       |  | 50,593 common shares.                                  |  |                            | 59,000      |  |                    |  | -          |                     |  |  | (59,000)                    |  |  |                                                | -           |  |  |  | -        | 
|                       |  | 589,420 Series B preferred shares.                     |  |                            | 702,732     |  |                    |  | -          |                     |  |  | (702,732)                   |  |  |                                                | -           |  |  |  | -        | 
|                       |  | Total Rheonix                                          |  |                            | 2,938,731   |  |                    |  | -          |                     |  |  | (2,938,731)                 |  |  |                                                | -           |  |  |  | -        | 
|                       |  |                                                        |  |                            |             | 
|SciAps, Inc.           |  | 187,500 Series A convertible preferred shares.         |  |                            | 1,000,000   |  |                    |  | -          |                     |  |  | -                           |  |  |                                                | 1,000,000   |  |  |  | -        | 
|                       |  | 274,299 Series A-1 convertible preferred shares.       |  |                            | 504,710     |  |                    |  | -          |                     |  |  | -                           |  |  |                                                | 504,710     |  |  |  | -        | 
|                       |  | 117,371 Series B preferred shares.                     |  |                            | 250,000     |  |                    |  | -          |                     |  |  | -                           |  |  |                                                | 250,000     |  |  |  | -        | 
|                       |  | $200,000 subordinated promissory note at 10%.          |  |                            | -           |  |                    |  | 200,000    |                     |  |  | -                           |  |  |                                                | 200,000     |  |  |  | 14,611   | 
|                       |  | $100,000 secured subordinated convertible note at 10%. |  |                            | -           |  |                    |  | 100,000    |                     |  |  | -                           |  |  |                                                | 100,000     |  |  |  | 2,555    | 
|                       |  | Total SciAps                                           |  |                            | 1,754,710   |  |                    |  | 300,000    |                     |  |  | -                           |  |  |                                                | 2,054,710   |  |  |  | 17,166   | 
|                       |  |                                                        |  |                            |             | 
|SOMS Technologies, LLC |  | 5,959,490 Series B membership interests.               |  |                            | 528,348     |  |                    |  | -          |                     |  |  | -                           |  |  |                                                | 528,348     |  |  |  | 13,464   | 
|                       |  |                                                        |  |                            |             | 
|Statisfy, Inc.         |  | 65,000 Series seed preferred shares.                   |  |                            | 20,968      |  |                    |  | -          |                     |  |  | (20,968)                    |  |  |                                                | -           |  |  |  | -        | 
|                       |  | Warrant for 1,950,000 Series seed preferred shares.    |  |                            | 629,032     |  |                    |  | -          |                     |  |  | (629,032)                   |  |  |                                                | -           |  |  |  | -        | 
|                       |  | Total Statisfy                                         |  |                            | 650,000     |  |                    |  | -          |                     |  |  | (650,000)                   |  |  |                                                | -           |  |  |  | -        | 
|                       |  |                                                        |  |                            |             | 
|Teleservices Solutions |  | 250,000 Class B shares.                                |  |                            | -           |  |                    |  | -          |                     |  |  | -                           |  |  |                                                | -           |  |  |  | -        | 
|Holdings, LLC          |  | 1,000,000 Class C shares.                              |  |                            | 1,190,680   |  |                    |  | -          |                     |  |  | (990,680)                   |  |  |                                                | 200,000     |  |  |  | -        | 
|                       |  | 80,000 Class D preferred units.                        |  |                            | 91,200      |  |                    |  | -          |                     |  |  | -                           |  |  |                                                | 91,200      |  |  |  | -        | 
|                       |  | 104,198 Class E preferred units.                       |  |                            | 104,198     |  |                    |  | -          |                     |  |  | -                           |  |  |                                                | 104,198     |  |  |  | -        | 
|                       |  | Total Teleservices                                     |  |                            | 1,386,078   |  |                    |  | -          |                     |  |  | (990,680)                   |  |  |                                                | 395,398     |  |  |  |          | 
|                       |  |                                                        |  |                            |             | 
|Tilson Technology      |  | 12 Series B preferred shares.                          |  |                            | 600,000     |  |                    |  | -          |                     |  |  | -                           |  |  |                                                | 600,000     |  |  |  | 16,250   | 
|Management, Inc.       |  | 21,390 Series C convertible preferred shares.          |  |                            | -           |  |                    |  | 200,000    |                     |  |  | -                           |  |  |                                                | 200,000     |  |  |  | -        | 
|                       |  | $200,000 subordinated promissory note at 8%.           |  |                            | -           |  |                    |  | 200,000    |                     |  |  | -                           |  |  |                                                | 200,000     |  |  |  | 4,164    | 
|                       |  | Total Tilson                                           |  |                            | 600,000     |  |                    |  | 400,000    |                     |  |  | -                           |  |  |                                                | 1,000,000   |  |  |  | 20,414   | 
|                       |  |                                                        |  |                            |             | 
|                       |  | Total Affiliate Investments                            |  |                            | $14,662,219 |  |                    |  | $4,228,466 |                     |  |  | ($5,284,711)                |  |  |                                                | $13,605,974 |  |  |  | $598,620 | 
|                       |  |                                                        |  |                            |             | 
|                       |  | Total Control and Affiliate Investments                |  |                            | $28,578,691 |  |                    |  | $4,228,466 |                     |  |  | ($19,101,683)               |  |  |                                                | $13,705,474 |  |  |  | $612,448 | 
|                       |  |                                                        |  |                            |             |  |                    |  |            |                     |  |  |                             |  |  |                                                |             |  |  |  |          | 

This schedule should be read in conjunction with the Corporations Consolidated Financial Statements,
including the Consolidated Schedule of Portfolio Investments and Notes to the Consolidated Financial Statements.

(1) Gross additions
include increases in the cost basis of investments resulting from new portfolio investment, follow on investments, capitalized interest and the accretion of discounts. Gross additions also include net increases in unrealized appreciation or net
decreases in unrealized depreciation, and the movement of an existing portfolio company into this category and out of another category.

(2) Gross reductions include decreases in the cost basis of investments resulting from principal repayments, sales, note conversions, net
increases in unrealized depreciation, net decreases in unrealized appreciation, the exchange of existing securities for new securities and the movement of an existing portfolio company out of this category and into another category.

(3) Represents the total amount of interest, fees or dividends credited to income for the portion of the period an investment was included in
Control or Affiliate categories, respectively.



21



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RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2016 (Continued)



|                        |  |                                                                              
|----------------------- |  | -----------------------------------------------------------------------------
|Industry Classification |  | Percentage of Total    Investments (at fair value)    as of December 31, 2016
|                        | 
|Healthcare              |  | 32.6%                                                                        
|                        | 
|Software                |  | 27.3                                                                         
|                        | 
|Manufacturing           |  | 22.7                                                                         
|                        | 
|Contact Center          |  | 5.4                                                                          
|                        | 
|Consumer Product        |  | 4.9                                                                          
|                        | 
|Professional Services   |  | 3.6                                                                          
|                        | 
|Oil and Gas             |  | 1.8                                                                          
|                        | 
|Electronics             |  | 1.3                                                                          
|                        | 
|Marketing               |  | 0.4                                                                          
|                        |  |                                                                              
|                        | 
|Total Investments       |  | 100%                                                                         
|                        |  |                                                                              



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##### Table of Contents

Rand Capital Corporation and Subsidiary

Notes to the Consolidated Financial Statements

For the Three Months Ended March 31, 2017 and 2016

(Unaudited)

Note 1. ORGANIZATION

Rand Capital Corporation (Rand) was incorporated under the laws of New York in February 1969. We completed our initial
public offering in 1971 as an internally managed, closed-end, diversified, management investment company. We have elected to be treated as a business development company (BDC) under the Investment
Company Act of 1940, as amended (the 1940 Act). As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in qualifying assets and
provide managerial assistance to the portfolio companies in which we invest. See Item 1. Business  Regulation, Regulation as a Business Development Company in our Annual Report on Form 10-K for the year
ended December 31, 2016.

We have historically made the majority of our venture capital investments through our wholly-owned
subsidiary, Rand Capital SBIC, Inc. (Rand SBIC), which operates as a small business investment company (SBIC) and has been licensed by the U.S. Small Business Administration (SBA) since 2002. Rand SBICs
predecessor was organized as a Delaware limited partnership and was converted into a New York corporation on December 31, 2008, at which time our operations as a licensed SBIC were continued. Although Rand SBIC was operated as if it were a BDC,
it was registered as an investment company under the 1940 Act. In 2012, the SEC granted an Order of Exemption for Rand with respect to the operations of Rand SBIC, and then Rand SBIC filed an election to be regulated as a BDC under the 1940 Act.
Rand SBICs board of directors is comprised of the directors of Rand, a majority of whom are not interested persons of Rand or Rand SBIC.

Responding to our request submitted during 2016, the SBA issued a green light or go forth letter authorizing Rand to
continue its application process to obtain a license to form and operate a second SBIC subsidiary. We expect the anticipated new SBIC subsidiary will continue our investment strategy of focusing on privately-held, early stage and emerging growth
businesses with proven management teams. Our initial wholly-owned subsidiary, Rand SBIC, has been our primary investment vehicle since its formation and, once approved by the SBA, we expect to continue this investment strategy through our new SBIC
subsidiary. The application for the new SBIC was filed with the SBA in April 2017.

We operate as an internally managed investment company
whereby our officers and employees conduct the business of the Corporation under the general supervision of our Board of Directors. We have not elected to qualify to be taxed as a regulated investment company as defined under Subchapter M of the
Internal Revenue Code.

In this Quarterly Report on Form 10-Q, unless the context otherwise
requires, we, the Corporation, us, and our refer to Rand Capital Corporation and Rand SBIC.

Our corporate office is located in Buffalo, NY and our website address is www.randcapital.com. We make available free of charge on our website
our annual and periodic reports, proxy statements and other information as soon as reasonably practicable after such material is filed with the Securities and Exchange Commission (SEC). Our shares are traded on the NASDAQ Capital Market
under the ticker symbol RAND.



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Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation It is our opinion that the accompanying consolidated financial statements include all adjustments of
a normal recurring nature necessary for a fair presentation in accordance with United States generally accepted accounting principles (GAAP) of the consolidated financial position, results of operations, cash flows and statement of
changes in net assets for the interim periods presented. Certain information and note disclosures normally included in audited annual consolidated financial statements prepared in accordance with GAAP have been omitted; however, we believe that the
disclosures made are adequate to make the information presented herein not misleading. Our interim results for the three months ended March 31, 2017 are not necessarily indicative of the results for the full year.

These statements should be read in conjunction with the consolidated financial statements and the notes included in our Annual Report on Form 10-K for the year ended December 31, 2016. Information contained in this filing should also be reviewed in conjunction with our related filings with the SEC prior to the date of this report. Those filings
include, but are not limited to, the following:



N-54A

Election to Adopt Business Development Company statusDEF-14A

2017 Definitive Proxy Statement submitted to shareholdersForm 10-K

Annual Report on Form 10-K for the year ended December 31, 2016


Principles of Consolidation - The consolidated financial statements include the accounts
of Rand and its wholly-owned subsidiary Rand SBIC. All intercompany accounts and transactions have been eliminated in consolidation.

Reclassification Certain balances in prior years were reclassified to conform to presentations adopted in 2017.

Fair Value of Financial Instruments  The carrying amounts reported in the consolidated statement of financial position of
cash, interest receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.

Fair Value of SBA Debentures -In March 2017, the SBIC Funding Corporation completed a pooling of SBA debentures that have a
coupon rate of 2.845%, excluding a mandatory SBA annual charge estimated to be 0.804%, resulting in a total estimated fixed rate for ten years of 3.649%. The carrying value of Rands SBA debentures is a reasonable estimate of fair value
because their stated interest rates approximate current interest rates that are available for debt with similar terms.

Investment
Classification In accordance with the provisions of the 1940 Act, the Corporation classifies its investments by level of control. Under the 1940 Act, Control Investments are investments in companies that the Corporation is
deemed to Control because it owns more than 25% of the voting securities of the company or has greater than 50% representation on the companys board. Affiliate Investments are companies in which the Corporation owns
between 5% and 25% of the voting securities. Non-Control/Non-Affiliate Investments are those companies that are neither Control Investments nor Affiliate
Investments.

Investments - Investments are valued at fair value as determined in good faith by the management of the
Corporation and approved by the Board of Directors. The Corporation invests in loan instruments, debt instruments, and equity instruments. There is no single standard for determining fair value in good faith. As a result, determining fair value
requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistent valuation process. The Corporation analyzes and values each investment quarterly, and records unrealized depreciation
for an investment that it believes has become impaired, including where collection of a loan or debt security or realization of the recorded value of an equity security is doubtful. Conversely, the Corporation will record unrealized appreciation if
it believes that an underlying portfolio company has appreciated in value and, therefore, its equity securities have also appreciated in value. These estimated fair values may differ from the values that would have been used had a ready market for
the investments existed and these differences could be material if the Corporations assumptions and judgments differ from results of actual liquidation events.



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Qualifying Assets- All of the Corporations investments were made in
privately held small business enterprises, that were not investment companies, were principally based in the United States, and represent qualifying assets as defined by Section 55(a) of the 1940 Act.

Revenue Recognition - Interest Income - Interest income is recognized on the accrual basis except where the
investment is in default or otherwise presumed to be in doubt. In such cases, interest is recognized at the time of receipt. A reserve for possible losses on interest receivable is maintained when appropriate.

Rand SBICs interest accrual is also regulated by the SBAs Accounting Standards and Financial Reporting Requirements for
Small Business Investment Companies. Under these rules, interest income cannot be recognized if collection is doubtful, and a 100% reserve must be established. The collection of interest is presumed to be in doubt when there is substantial
doubt about a portfolio companys ability to continue as a going concern or a loan is in default for more than 120 days. Management also uses other qualitative and quantitative measures to determine the value of a portfolio investment and the
collectability of any accrued interest.

The following investments remain on non-accrual status: G-TEC Natural Gas Systems (G-Tec), First Wave Products Group, LLC (First Wave) and a portion of the Mercantile Adjustment Bureau, LLC (Mercantile) outstanding loan balance.

The Corporation holds debt securities in its investment portfolio that contain payment-in-kind (PIK) interest provisions. PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is
recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment.

Revenue Recognition - Dividend Income -The Corporation may receive cash distributions from portfolio companies that are limited
liability companies or corporations and these distributions are classified as dividend income on the consolidated statement of operations. Dividend income is recognized on an accrual basis when it can be reasonably estimated.

The Corporation holds preferred equity securities that contain cumulative dividend provisions. Cumulative dividends are recorded as dividend
income, if declared, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed.

Revenue Recognition - Fee Income- Consists of amortization of financing fees charged to the portfolio companies upon successful
closing of Rand SBIC financings and income associated with portfolio company board attendance fees. The income associated with the amortization of financing fees was $6,686 and $3,611 for the three months ended March 31, 2017 and 2016,
respectively. The board fees were $0 and $2,000 for the three months ended March 31, 2017 and 2016, respectively.

Realized
Gain or Loss and Unrealized Appreciation or Depreciation of Investments -Amounts reported as realized gains and losses are measured by the difference between the proceeds from the sale or exchange and the cost basis of the investment
without regard to unrealized gains or losses recorded in prior periods. The cost of securities that have, in managements judgment, become worthless are written off and reported as realized losses when appropriate. Unrealized appreciation or
depreciation reflects the difference between the fair value of the investments and the cost basis of the investments.

Original
Issue Discount  Investments may include original issue discount or OID income. This occurs when the Corporation purchases a warrant and a note from a portfolio company simultaneously, which requires an allocation of a
portion of the purchase price to the warrant and reduces the note or debt instrument by an equal amount in the form of a note discount or OID. The note is reported net of the OID and the OID is accreted into interest income over the life of the
loan. The Corporation recognized $2,499 in OID income for each of the three months ended March 31, 2017 and 2016. OID income is estimated to be approximately $7,500 for the remainder of 2017.



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Deferred Debenture Costs - SBA debenture origination and commitment costs, which
are netted against the debenture obligation (See Note 6 SBA Debentures), will be amortized ratably over the terms of the SBA debentures. Amortization expense was $6,850 for each of the three months ended March 31, 2017 and 2016.
Amortization expense on currently outstanding debentures for the next five years is estimated to average approximately $27,000 per year.

SBA Debenture -The Corporation had $8,000,000 in outstanding SBA debentures at March 31, 2017 and December 31, 2016
with a weighted average interest rate of 3.54% as of March 31, 2017. The debentures are presented net of deferred debenture costs (see Note 6). The $8,000,000 in outstanding SBA leverage matures from 2022 through 2025.

In the event of a future default of such SBA obligations, the Corporation has consented to the exercise, by the SBA, of all rights of the SBA
under 13 C.F.R. 107.1810(i) SBA remedies for automatic events of default and has agreed to take all actions that the SBA may so require. These actions may include the Corporations automatic consent to the appointment of the SBA, or
its designee, as receiver under Section 311(c) of the Small Business Investment Act of 1958.

Net Assets per Share - Net
assets per share are based on the number of shares of common stock outstanding. We do not have any common stock equivalents outstanding.

Supplemental Cash Flow Information - Income taxes refunded during the three months ended March 31, 2017 was $7,960. Income
taxes paid during the three months ended March 31, 2016, net of refunds, was $2,244,600. Interest paid during the three months ended March 31, 2017 and 2016 was $140,275 and $141,050, respectively. The Corporation converted $10,439 and
$2,522 of interest receivable into investments during the three months ended March 31, 2017 and 2016, respectively.

Accounting
Estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Stockholders Equity (Net Assets) -At March 31, 2017 and December 31, 2016, there were 500,000 shares of $10.00
par value preferred stock authorized and unissued.

On October 19, 2016, the Board of Directors extended the repurchase authorization
for up to 1,000,000 shares of the Corporations outstanding common stock on the open market through October 19, 2017 at prices that are no greater than the then current net asset value. No shares were repurchased during the three months
ended March 31, 2017 or March 31, 2016. At March 31, 2017, the total treasury shares held was 541,046 shares with a total cost of $1,469,105.

Profit Sharing and Stock Option Plan-In 2001, the stockholders of the Corporation authorized the establishment of an
Employee Stock Option Plan (the Option Plan), that provides for the award of stock options to purchase up to 200,000 common shares to eligible employees. In 2002, the Corporation placed the Option Plan on inactive status as it developed
a new profit sharing plan for the Corporations employees in connection with the formation of its SBIC subsidiary. As of March 31, 2017, no stock options had been awarded under the Option Plan. Because Section 57(n) of the 1940 Act
prohibits maintenance of a profit sharing plan for the officers and employees of a BDC where any option, warrant or right is outstanding under an executive compensation plan, no stock options will be granted under the Option Plan while any profit
sharing plan is in effect with respect to the Corporation.



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In 2002, the Corporation established a Profit Sharing Plan (the Plan) for its
executive officers in accordance with Section 57(n) of the 1940 Act. Under the Plan, the Corporation will pay its executive officers aggregate profit sharing payments equal to 12% of the net realized capital gains of its SBIC subsidiary, net of
all realized capital losses and unrealized depreciation of the SBIC subsidiary, for the fiscal year, computed in accordance with the Plan and the Corporations interpretation of the Plan. Any profit sharing paid or accrued cannot exceed 20% of
the Corporations net income, as defined in the Plan. For purposes of the 20% profit sharing test, the Corporation interprets net income to be the total of the Corporations net investment gain (loss) and its net realized gain
(loss) on investments, prior to inclusion of the estimated profit sharing obligation. The profit sharing payments are split equally between the Corporations two executive officers, each of whom is fully vested in the Plan.

There were no amounts earned pursuant to the Plan for the three months ended March 31, 2017. The Corporation had accrued $1,593,659 under
the Plan for the three months ended March 31, 2016. Estimated payroll taxes and benefits on the profit sharing under the Plan were also accrued at March 31, 2016. The amounts accrued did not exceed the defined limits under the Plan. At
December 31, 2016, the Corporations final approved and accrued amount was $1,270,052 under the Plan, of which $1,138,052 was paid during the three months ended March 31, 2017.

Income Taxes -The Corporation reviews the tax positions it has taken to determine if they meet a more likely than not
threshold for the benefit of the tax position to be recognized in the consolidated financial statements. A tax position that fails to meet the more likely than not recognition threshold will result in either a reduction of a current or
deferred tax asset or receivable, or the recording of a current or deferred tax liability. There were no new uncertain tax positions recorded at March 31, 2017.

It is the Corporations policy to include interest and penalties related to income tax liabilities in income tax expense. There were no
amounts recognized for interest or penalties related to tax expense for the three months ended March 31, 2017 or 2016.

Concentration of Credit and Market Risk  The Corporations financial instruments potentially subject it to
concentrations of credit risk. Cash is invested with banks in amounts which, at times, exceed insurable limits. Management does not anticipate non-performance by such banks.

At March 31, 2017, Genicon, Inc. (Genicon), Rheonix, Inc. (Rheonix), Outmatch (formerly Chequed Holdings, LLC) (Outmatch), Social Flow,
Inc. (Social Flow) and SciAps, Inc. (Sciaps) represented 11%, 11%, 8%, 8% and 7%, respectively, of the fair value of the Corporations investment portfolio.

Subsequent Event -Subsequent to the end of the quarter Rand filed limited partnership documents for the establishment of its
new wholly owned SBIC subsidiary, Rand Capital SBIC II, L.P. and also received pre-licensing approval from the SBA to fund its first investment, a $2 million note, into an existing portfolio
company of Rand SBIC. This financing is expected to be funded prior to April 30, 2017.

Note 3. INVESTMENTS

The Corporations investments are carried at fair value in accordance with Accounting Standards Codification (ASC) 820, Fair Value
Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements.

Loan investments are defined as traditional loan financings with no equity features. Debt investments are defined as debt financings that
include one or more equity features such as conversion rights, stock purchase warrants, and/or stock purchase options. A financing may also be categorized as a debt financing if it is accompanied by the direct purchase of an equity interest in the
company.



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The Corporation uses several approaches to determine the fair value of an investment. The main
approaches are:



| |  |  | Loan and debt securities are valued at cost when it is representative of the fair value of the investment or sufficient assets or liquidation proceeds are expected to exist from a sale of a portfolio company at
its estimated fair value. However, they may be valued at an amount other than the price the security would command given the rate and related inherent portfolio risk of the investment. A loan or debt instrument may be reduced in value if it is
judged to be of poor quality, collection is in doubt or insufficient liquidation proceeds exist.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Equity securities may be valued using the asset approach, market approach or income approach. The asset approach involves estimating the liquidation value of the portfolio
companys assets. To the extent the value exceeds the remaining principal amount of the debt or loan and all other debt securities of the portfolio company, the fair value of such securities is generally estimated to be their
cost. However, where value is less than the remaining principal amount of the loan and all other debt securities, the Corporation may discount the value of such securities. The market approach uses observable prices and other relevant
information generated by similar market transactions. It may include the use of market multiples derived from a set of comparables to assist in pricing the investment. Additionally, the Corporation adjusts valuations if a subsequent significant
equity financing has occurred that includes a meaningful portion of the financing by a sophisticated, unrelated new investor. The income approach employs a cash flow and discounting methodology to value an investment.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ASC 820 classifies the inputs used to measure fair value into the following hierarchy:

Level 1: Quoted prices in active markets for identical assets or liabilities, used in the Corporations valuation at the measurement
date.

Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or
liabilities in markets that are not active, or other observable inputs other than quoted prices.

Level 3: Unobservable and
significant inputs to determining the fair value.

Financial assets are categorized based upon the level of judgment associated with the
inputs used to measure their fair value.

Any changes in estimated fair value are recorded in the statement of operations as Net
(decrease) increase in unrealized depreciation or appreciation on investments.

Under the valuation policy, the Corporation values
unrestricted publicly traded companies, categorized as Level 1 investments, at the average closing bid price for the last three trading days of the reporting period. There were no such Level 1 investments as of March 31, 2017.

In the valuation process, the Corporation values restricted securities, categorized as Level 3 investments, using information from these
portfolio companies, which may include:



| |  |  | Audited and unaudited statements of operations, balance sheets and operating budgets;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | Current and projected financial, operational and technological developments of the portfolio company;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Current and projected ability of the portfolio company to service its debt obligations;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | The current capital structure of the business and the seniority of the various classes of equity if a deemed liquidation event were to occur;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pending debt or capital restructuring of the portfolio company;
| | - |  | ---------------------------------------------------------------



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| |  |  | Current information regarding any offers to purchase the investment, or recent fundraising transactions;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | Current ability of the portfolio company to raise additional financing if needed;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Changes in the economic environment which may have a material impact on the operating results of the portfolio company;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | Qualitative assessment of key management;
| | - |  | -----------------------------------------



| |  |  | Contractual rights, obligations or restrictions associated with the investment; and
| | - |  | -----------------------------------------------------------------------------------



| |  |  | Other factors deemed relevant by the Corporations management to assess valuation.
| | - |  | ----------------------------------------------------------------------------------

The
valuation may be reduced if a portfolio companys performance and potential have deteriorated significantly. If the factors that led to a reduction in valuation are overcome, the valuation may be readjusted.

Equity Securities

Equity Securities may
include preferred stock, common stock, warrants and limited liability company membership interests.

The significant unobservable inputs
used in the fair value measurement of the Corporations equity investments are earnings before interest, tax and depreciation and amortization (EBITDA) and revenue multiples, where applicable, the financial and operational performance of the
business, and the senior equity preferences that may exist in a deemed liquidation event. Standard industry multiples may be used when available; however, the Corporations portfolio companies are typically small and in early stages of
development and these industry standards may be adjusted to more closely match the specific financial and operational performance of the portfolio company. Due to the nature of certain investments, fair value measurements may be based on other
criteria, which may include third party appraisals. Significant changes to the unobservable inputs, such as variances in financial performance from expectations, may result in a significantly higher or lower fair value measurement. Significant
changes in any of these unobservable inputs may result in a significantly higher or lower fair value estimate.

Another key factor used in
valuing equity investments is a significant recent arms-length equity transaction, entered into by the portfolio company, with a sophisticated non-strategic unrelated new investor. The terms of these equity
transactions may not be identical to the equity transactions between the portfolio company and the Corporation, and the impact of the difference in transaction terms on the market value of the portfolio company may be difficult or impossible to
quantify.

When appropriate the Black-Scholes pricing model is used to estimate the fair value of warrants for accounting purposes. This
model requires the use of highly subjective inputs including expected volatility and expected life, in addition to variables for the valuation of minority equity positions in small private and early stage companies. Significant changes in any of
these unobservable inputs may result in a significantly higher or lower fair value estimate.

For recent investments, the Corporation
generally relies on the cost basis, which is deemed to represent the fair value, unless other fair market value inputs are identified causing the Corporation to depart from this basis.

Loan and Debt Securities

The significant
unobservable inputs used in the fair value measurement of the Corporations loan and debt securities are the financial and operational performance of the portfolio company, similar debt with similar terms with other portfolio companies, as well
as the market acceptance for the portfolio companys products or services. These inputs will likely provide an indicator as to the probability of principal recovery of the investment. The Corporations loan and debt investments are often
junior secured or unsecured debt securities. Fair value may also be determined based on other criteria where appropriate. Significant changes to the unobservable inputs may result in a change in fair value. For recent investments, the Corporation
generally relies on the cost basis, which is deemed to represent the fair value, unless other fair market value inputs are identified causing the Corporation to depart from this basis.



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The following table provides a summary of the significant unobservable inputs used to determine
the fair value of the Corporations Level 3 portfolio investments as of March 31, 2017:



|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|-------------------------------- |  | ---------------------------- | --------------- |  | ---------------------------------- | - | ----------- | ----------------------------- |  | - | -------------------------------- |  |  | ------------------------------ | ---------------- |  | ------ | - | -------------- |  |  | - | ---------- | 
|Investment Type                  |  | MarketApproachEBITDAMultiple |                 |  | MarketApproachLiquidationSeniority |   |             | MarketApproachRevenueMultiple |  |   | MarketApproachTransactionPricing |  |  | AssetApproachLiquidationMethod |                  |  | Totals |  
|Non-Control/Non-Affiliate
Equity |  | $                            | 943,189         |  |                                    | $ |            |                               |  | $ | 2,321,325                        |  |  | $                              | 6,283,247        |  |        | $ |               |  |  | $ | 8,604,572  | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Non-Control/Non-Affiliate
Debt   |  |                              |                |  |                                    |   |            |                               |  |   | 3,671,649                        |  |  |                                |                 |  |        |   | 300,000        |  |  |   | 4,914,838  | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Total
Non-Control/Non-Affiliate  |  |                              | 943,189         |  |                                    |   |            |                               |  |   | 5,992,974                        |  |  |                                | 6,283,247        |  |        |   | 300,000        |  |  |   | 13,519,410 | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Affiliate Equity                 |  |                              | 2,023,746       |  |                                    |   | 22,841      |                               |  |   | 3,163,166                        |  |  |                                | 2,755,791        |  |        |   | 800,000        |  |  |   | 8,765,544  | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Affiliate Debt                   |  |                              | 1,899,855       |  |                                    |   |            |                               |  |   | 1,098,466                        |  |  |                                | 2,000,000        |  |        |   | 200,000        |  |  |   | 5,198,321  | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Total Affiliate                  |  |                              | 3,923,601       |  |                                    |   | 22,841      |                               |  |   | 4,261,632                        |  |  |                                | 4,755,791        |  |        |   | 1,000,000      |  |  |   | 13,963,865 | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Control Equity                   |  |                              |                |  |                                    |   |            |                               |  |   | 99,500                           |  |  |                                |                 |  |        |   |               |  |  |   | 99,500     | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Control Debt                     |  |                              |                |  |                                    |   |            |                               |  |   |                                 |  |  |                                |                 |  |        |   |               |  |  |   |           | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Total Control                    |  |                              |                |  |                                    |   |            |                               |  |   | 99,500                           |  |  |                                |                 |  |        |   |               |  |  |   | 99,500     | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Total Level 3 Investments        |  | $                            | 4,866,790       |  |                                    | $ | 22,841      |                               |  | $ | 10,354,106                       |  |  | $                              | 11,039,038       |  |        | $ | 1,300,000      |  |  | $ | 27,582,775 | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |                                |                  |  |        |   |                |  |  |   |            | 
|Range                            |  |                              | 4.8X-6.7X       |  |                                    |   | 1X          |                               |  |   | 0.5X-10.3X                       |  |  |                                | Not Applicable   |  |        |   | Not Applicable |  |  |   |            | 
|Unobservable Input               |  |                              | EBITDA Multiple |  |                                    |   | Asset Value |                               |  |   | RevenueMultiple                  |  |  |                                | TransactionPrice |  |        |   | Asset Value    |  |  |   |            | 
|Weighted Average                 |  |                              | 5.9X            |  |                                    |   | 1X          |                               |  |   | 3.5X                             |  |  |                                | Not Applicable   |  |        |   | Not Applicable |  |  |   |            | 

The following table provides a summary of the components of Level 1, 2 and 3 Assets Measured at Fair
Value on a Recurring Basis at March 31, 2017:



|                   |  |               |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 
|------------------ |  | ------------- | ---------------------------------------------- |  | ----------------------------------------------------------- | - | - | ------------------------------------- |  | - | -------------------------------------------- |  |  | - | ---------- | 
|                   |  |               | Fair Value Measurements at Reported Date Using | 
|Description        |  | March 31,2017 |                                                |  | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | SignificantObservable Inputs(Level 2) |  |   | Other SignificantUnobservableInputs(Level 3) | 
|Loan investments   |  | $             | 3,500,000                                      |  |                                                             | $ |  |                                       |  | $ |                                             |  |  | $ | 3,500,000  | 
|Debt investments   |  |               | 6,613,159                                      |  |                                                             |   |  |                                       |  |   |                                             |  |  |   | 6,613,159  | 
|Equity investments |  |               | 17,469,616                                     |  |                                                             |   |  |                                       |  |   |                                             |  |  |   | 17,469,616 | 
|                   |  |               |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 
|Total              |  | $             | 27,582,775                                     |  |                                                             | $ |  |                                       |  | $ |                                             |  |  | $ | 27,582,775 | 
|                   |  |               |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 



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The following table provides a summary of the components of Level 1, 2 and 3 Assets Measured
at Fair Value on a Recurring Basis at December 31, 2016:



|                   |  |                  |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 
|------------------ |  | ---------------- | ---------------------------------------------- |  | ----------------------------------------------------------- | - | - | ------------------------------------- |  | - | -------------------------------------------- |  |  | - | ---------- | 
|                   |  |                  | Fair Value Measurements at Reported Date Using | 
|Description        |  | December 31,2016 |                                                |  | Quoted Prices inActive Marketsfor Identical Assets(Level 1) |   |   | SignificantObservable Inputs(Level 2) |  |   | Other SignificantUnobservableInputs(Level 3) | 
|Loan investments   |  | $                | 3,200,000                                      |  |                                                             | $ |  |                                       |  | $ |                                             |  |  | $ | 3,200,000  | 
|Debt investments   |  |                  | 6,700,221                                      |  |                                                             |   |  |                                       |  |   |                                             |  |  |   | 6,700,221  | 
|Equity investments |  |                  | 17,600,260                                     |  |                                                             |   |  |                                       |  |   |                                             |  |  |   | 17,600,260 | 
|                   |  |                  |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 
|Total              |  | $                | 27,500,481                                     |  |                                                             | $ |  |                                       |  | $ |                                             |  |  | $ | 27,500,481 | 
|                   |  |                  |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 

The following table provides a summary of changes in Assets Measured at Fair Value on a Recurring Basis Using
Significant Unobservable Inputs (Level 3) for the three months ended March 31, 2017:



|                                                                                                  |  |                                                                                                   |           |         |                 |   |           |                   |  |   |            |   |  |   |            |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- | --------- | ------- | --------------- | - | --------- | ----------------- |  | - | ---------- | - |  | - | ---------- | -
|                                                                                                  |  | Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Venture Capital Investments |          
|Description                                                                                       |  | LoanInvestments                                                                                   |           |         | DebtInvestments |   |           | EquityInvestments |  |   | Total      |  
|Ending Balance, December 31, 2016, of Level 3 Assets                                              |  | $                                                                                                 | 3,200,000 |         |                 | $ | 6,700,221 |                   |  | $ | 17,600,260 |   |  | $ | 27,500,481 |  
|Unrealized Gains and Losses included in net change in net assets from
operations:                 |  |                                                                                                   |           |         |                 |   |           |                   |  |   |            |   |  |   |            |  
|ACV Auctions, Inc. (ACV Auctions)                                                                 |  |                                                                                                   |          |         |                 |   |          |                   |  |   | 119,356    |   |  |   | 119,356    |  
|City Dining Cards, Inc. (Loupe)                                                                   |  |                                                                                                   |          |         |                 |   |          |                   |  |   | (250,000   | ) |  |   | (250,000   | )
|Mercantile Adjustment Bureau, LLC (Mercantile)                                                    |  |                                                                                                   |          |         |                 |   | (250,000  | )                 |  |   |           |   |  |   | (250,000   | )
|                                                                                                  |  |                                                                                                   |           |         |                 |   |           |                   |  |   |            |   |  |   |            |  
|Total Unrealized Gains and Losses                                                                 |  |                                                                                                   |          |         |                 |   | (250,000  | )                 |  |   | (130,644   | ) |  |   | (380,644   | )
|Purchases of Securities/Changes to
Securities/Non-cash conversions:                               |  |                                                                                                   |           |         |                 |   |           |                   |  |   |            |   |  |   |            |  
|Genicon, Inc. (Genicon)                                                                           |  |                                                                                                   | 300,000   |         |                 |   |          |                   |  |   |           |   |  |   | 300,000    |  
|GoNoodle, Inc. (GoNoodle)                                                                         |  |                                                                                                   |          |         |                 |   | 2,548     |                   |  |   |           |   |  |   | 2,548      |  
|KnowledgeVision Systems, Inc. (Knowledge Vision)                                                  |  |                                                                                                   |          |         |                 |   | 50,000    |                   |  |   |           |   |  |   | 50,000     |  
|Mercantile                                                                                        |  |                                                                                                   |          |         |                 |   | 102,499   |                   |  |   |           |   |  |   | 102,499    |  
|Microcision LLC (Microcision)                                                                     |  |                                                                                                   |          |         |                 |   | 7,891     |                   |  |   |           |   |  |   | 7,891      |  
|                                                                                                  |  |                                                                                                   |           |         |                 |   |           |                   |  |   |            |   |  |   |            |  
|Total Purchases of Securities/Changes to
Securities/Non-cash conversions                          |  |                                                                                                   | 300,000   |         |                 |   | 162,938   |                   |  |   |           |   |  |   | 462,938    |  
|                                                                                                  |  |                                                                                                   |           |         |                 |   |           |                   |  |   |            |   |  |   |            |  
|Ending Balance, March 31, 2017, of Level 3 Assets                                                 |  | $                                                                                                 | 3,500,000 |         |                 | $ | 6,613,159 |                   |  | $ | 17,469,616 |   |  | $ | 27,582,775 |  
|                                                                                                  |  |                                                                                                   |           |         |                 |   |           |                   |  |   |            |   |  |   |            |  
|Change in unrealized depreciation on investments for the period included in changes
in net assets |  |                                                                                                   | ($        | 380,644 | )              
|Net realized gain on investments for the period included in changes in net
assets                 |  |                                                                                                   | $         |        |                



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The following table provides a summary of changes in Assets Measured at Fair Value on a Recurring
Basis Using Significant Unobservable Inputs (Level 3) for the three months ended March 31, 2016:



|                                                                                                  |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- | --------- | ------------ | --------------- | - | --------- | ----------------- |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                  |  | Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Venture Capital Investments |          
|Description                                                                                       |  | LoanInvestments                                                                                   |           |              | DebtInvestments |   |           | EquityInvestments |  |   | Total       |  
|Ending Balance, December 31, 2015, of Level 3 Assets                                              |  | $                                                                                                 | 416,972   |              |                 | $ | 5,076,632 |                   |  | $ | 31,338,796  |   |  | $ | 36,832,400  |  
|Realized Gains included in net change in net assets from operations:                              |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Gemcor II, LLC (Gemcor)                                                                           |  |                                                                                                   |          |              |                 |   |          |                   |  |   | 13,176,313  |   |  |   | 13,176,313  |  
|                                                                                                  |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Total Realized Gains                                                                              |  |                                                                                                   |          |              |                 |   |          |                   |  |   | 13,176,313  |   |  |   | 13,176,313  |  
|Unrealized Losses included in net change in net assets from operations                            |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Gemcor II, LLC (Gemcor)                                                                           |  |                                                                                                   |          |              |                 |   |          |                   |  |   | (11,362,500 | ) |  |   | (11,362,500 | )
|Knoa Software, Inc. (Knoa)                                                                        |  |                                                                                                   |          |              |                 |   |          |                   |  |   | (422,800    | ) |  |   | (422,800    | )
|                                                                                                  |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Total Unrealized Losses                                                                           |  |                                                                                                   |          |              |                 |   |          |                   |  |   | (11,785,300 | ) |  |   | (11,785,300 | )
|Purchases of Securities/Changes to
Securities/Non-cash conversions:                               |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|ClearView Social, Inc. (Clearview Social)                                                         |  |                                                                                                   |          |              |                 |   |          |                   |  |   | 200,000     |   |  |   | 200,000     |  
|Empire Genomics, LLC (Empire Genomics)                                                            |  |                                                                                                   |          |              |                 |   | 300,000   |                   |  |   |            |   |  |   | 300,000     |  
|Genicon, Inc. (Genicon)                                                                           |  |                                                                                                   | 1,000,000 |              |                 |   |          |                   |  |   |            |   |  |   | 1,000,000   |  
|GoNoodle, Inc. (GoNoodle)                                                                         |  |                                                                                                   |          |              |                 |   | 2,522     |                   |  |   |            |   |  |   | 2,522       |  
|Mercantile Adjustment Bureau, LLC (Mercantile)                                                    |  |                                                                                                   |          |              |                 |   | 2,499     |                   |  |   |            |   |  |   | 2,499       |  
|OnCore Golf Technology, Inc. (Oncore Golf)                                                        |  |                                                                                                   |          |              |                 |   | 150,000   |                   |  |   |            |   |  |   | 150,000     |  
|                                                                                                  |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Total Purchases of Securities/Changes to
Securities/Non-cash conversions                          |  |                                                                                                   | 1,000,000 |              |                 |   | 455,021   |                   |  |   | 200,000     |   |  |   | 1,655,021   |  
|Repayments of Securities                                                                          |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Gemcor                                                                                            |  |                                                                                                   | (416,972  | )            |                 |   |          |                   |  |   | (13,801,313 | ) |  |   | (14,218,285 | )
|                                                                                                  |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Total Repayments of Securities                                                                    |  |                                                                                                   | (416,972  | )            |                 |   |          |                   |  |   | (13,801,313 | ) |  |   | (14,218,285 | )
|                                                                                                  |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Ending Balance, March 31, 2016, of Level 3 Assets                                                 |  | $                                                                                                 | 1,000,000 |              |                 | $ | 5,531,653 |                   |  | $ | 19,128,496  |   |  | $ | 25,660,149  |  
|                                                                                                  |  |                                                                                                   |           |              |                 |   |           |                   |  |   |             |   |  |   |             |  
|Change in unrealized appreciation on investments for the period included in changes
in net assets |  |                                                                                                   |           | ($11,785,300 | )              
|Net realized gain on investments for the period included in changes in net
assets                 |  |                                                                                                   | $         | 13,176,313   |                

NOTE 4.OTHER ASSETS

At March 31, 2017 and December 31, 2016, other assets was comprised of the following:



|                                              |  |               |          |  |                  |  |            | 
|--------------------------------------------- |  | ------------- | -------- |  | ---------------- |  | ---------- | 
|                                              |  | March 31,2017 |          |  | December 31,2016 | 
|Escrow receivable from Gemcor II LLC (Gemcor) |  |               | $550,000 |  |                  |  | $1,100,000 | 
|Prepaid expenses                              |  |               | 111,658  |  |                  |  | 6,758      | 
|Dividend receivable                           |  |               | 57,373   |  |                  |  | 34,101     | 
|Equipment (net)                               |  |               | 5,523    |  |                  |  | 6,523      | 
|Operating receivables                         |  |               | 2,089    |  |                  |  | 1,126      | 
|                                              |  |               |          |  |                  |  |            | 
|Total other assets                            |  |               | $726,643 |  |                  |  | $1,148,508 | 
|                                              |  |               |          |  |                  |  |            | 

During the first quarter of 2016, Gemcor II, LLC sold its assets, and $1,100,000 of the proceeds were held in
escrow, subject to potential claims. During the first quarter of 2017, $550,000 was released and the remainder is expected to be released during 2017.



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Note 5. COMMITMENTS AND CONTINGENCIES

The Corporation did not have any commitments to fund any investments as of March 31, 2017.

Note 6. SBA DEBENTURES

Pursuant to
Accounting Standard Update (ASU) 2015-03, the debt origination costs associated with the SBA debt obligations are presented as a direct deduction of the related debt obligation.



|                                      |  |               |            |   |                  |  |            |  
|------------------------------------- |  | ------------- | ---------- | - | ---------------- |  | ---------- | -
|                                      |  | March 31,2017 |            |   | December 31,2016 | 
|Debentures guaranteed by the SBA      |  |               | $8,000,000 |   |                  |  | $8,000,000 |  
|Less unamortized issue costs          |  |               | (165,377   | ) |                  |  | (172,227   | )
|                                      |  |               |            |   |                  |  |            |  
|Debentures guaranteed by the SBA, net |  |               | $7,834,623 |   |                  |  | $7,827,773 |  
|                                      |  |               |            |   |                  |  |            |  

Note 7. FINANCIAL HIGHLIGHTS

The following schedule provides the financial highlights, calculated based on weighted average shares outstanding, for the three months ended
March 31, 2017 and the year ended December 31, 2016:



|                                                                         |  |                                             |            |    |                            |   |            |   
|------------------------------------------------------------------------ |  | ------------------------------------------- | ---------- | -- | -------------------------- | - | ---------- | --
|                                                                         |  | Three months endedMarch 31, 2017(Unaudited) |            |    | Year endedDecember 31,2016 |  
|Income from investment operations (1):                                   |  |                                             |            |    |                            |   |            |   
|Investment income                                                        |  | $                                           | 0.05       |    |                            | $ | 0.16       |   
|Operating expenses                                                       |  |                                             | 0.08       |    |                            |   | 0.54       |   
|                                                                         |  |                                             |            |    |                            |   |            |   
|Investment loss before income taxes                                      |  |                                             | (0.03      | )  |                            |   | (0.38      | ) 
|Income tax benefit                                                       |  |                                             | (0.01      | )  |                            |   | (0.13      | ) 
|                                                                         |  |                                             |            |    |                            |   |            |   
|Net investment loss                                                      |  |                                             | (0.02      | )  |                            |   | (0.25      | ) 
|Net realized and unrealized (loss) gain on investments                   |  |                                             | (0.04      | )  |                            |   | 0.06       |   
|                                                                         |  |                                             |            |    |                            |   |            |   
|Decrease in net asset value                                              |  |                                             | (0.06      | )  |                            |   | (0.19      | ) 
|Net asset value, beginning of period                                     |  |                                             | 5.16       |    |                            |   | 5.35       |   
|                                                                         |  |                                             |            |    |                            |   |            |   
|Net asset value, end of period                                           |  | $                                           | 5.10       |    |                            | $ | 5.16       |   
|                                                                         |  |                                             |            |    |                            |   |            |   
|Per share market price, end of period                                    |  | $                                           | 3.04       |    |                            | $ | 3.16       |   
|                                                                         |  |                                             |            |    |                            |   |            |   
|Total return based on market value                                       |  |                                             | (3.80      | %) |                            |   | (16.1      | %)
|Total return based on net asset value                                    |  |                                             | (1.10      | %) |                            |   | (3.62      | %)
|Supplemental data:                                                       |  |                                             |            |    |                            |   |            |   
|Ratio of operating expenses before income taxes to average net assets    |  |                                             | 1.59       | %  |                            |   | 10.23      | % 
|Ratio of operating expenses including income taxes to average net assets |  |                                             | 0.95       | %  |                            |   | 8.48       | % 
|Ratio of net investment loss to average net assets                       |  |                                             | (1.11      | %) |                            |   | (3.62      | %)
|Portfolio turnover                                                       |  |                                             | 1.7        | %  |                            |   | 18.4       | % 
|Net assets, end of period                                                |  | $                                           | 32,269,882 |    |                            | $ | 32,629,363 |   
|Weighted shares outstanding, end of period                               |  |                                             | 6,321,988  |    |                            |   | 6,325,792  |   



|(1) | Per share data are based on weighted average shares outstanding and the results are rounded to the nearest cent.
|--- | ----------------------------------------------------------------------------------------------------------------



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The Corporations interim period results could fluctuate as a result of a number of factors;
therefore results for any interim period should not be relied upon as being indicative of performance for the full year or in future periods.



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

You should read the following discussion and analysis of our financial condition and results of operations in
conjunction with the consolidated financial statements and related notes included elsewhere in this report. Historical results and percentage relationships among any amounts in the consolidated financial statements are not necessarily indicative of
trends in operating results for any future periods.

FORWARD LOOKING STATEMENTS

Statements included in this Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this
report that do not relate to present or historical conditions are forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21E of the Securities Exchange Act of
1934, as amended. Additional oral or written forward-looking statements may be made by us from time to time, and forward-looking statements may be included in documents that are filed with the Securities and Exchange Commission. Forward-looking
statements involve risks and uncertainties that could cause our results or outcomes to differ materially from those expressed in the forward-looking statements. Forward-looking statements may include, without limitation, statements relating to our
plans, strategies, objectives, expectations and intentions and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as believes, forecasts,
intends, possible, expects, estimates, anticipates, or plans and similar expressions are intended to identify forward-looking statements. Among the important factors on which
such statements are based are assumptions concerning the state of the United States economy and the local markets in which our portfolio companies operate, the state of the securities markets in which the securities of the our portfolio companies
could be traded, liquidity within the United States financial markets, and inflation. Forward-looking statements are also subject to the risks and uncertainties described under the caption Risk Factors contained in Part II, Item 1A of
this report and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.

There may be other factors not identified that affect the accuracy of our forward-looking statements. Further, any forward-looking statement
speaks only as of the date when it is made and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of
anticipated or unanticipated events or circumstances. New factors emerge from time to time that may cause our business not to develop as we expect, and we cannot predict all of them.

Overview

We are an internally managed
investment company that lends to and invests in small companies. We have elected to be treated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the 1940 Act). As a BDC, we are
required to comply with certain regulatory requirements as provided for in the 1940 Act and the rules and regulations promulgated there under. We have historically made the majority of our investments through our wholly-owned subsidiary, Rand
Capital SBIC, Inc. (Rand SBIC), which operates as a small business investment company (SBIC) and has been licensed by the U.S. Small Business Administration (SBA) since 2002.

Responding to our request submitted during 2016, the U.S. Small Business Administration (SBA) issued a green light or go
forth letter authorizing Rand to continue its application process to obtain a license to form and operate its second SBIC subsidiary and create a new SBIC fund. We expect that our new SBIC fund will use some of the proceeds from the 2016
Gemcor exit, combined with additional SBA leverage, to create a new $22.5 million SBIC fund. We also expect our anticipated new SBIC subsidiary will continue our investment strategy of focusing on privately-held, early stage and emerging growth
businesses with proven management teams. Our initial wholly-owned subsidiary, Rand SBIC, has historically been our primary investment vehicle since its formation and, once approved by the SBA, we expect to continue this investment strategy through
our new SBIC subsidiary.



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Outlook

As we work to create our new SBIC fund, we believe the combination of cash on hand, proceeds from portfolio exits, potential future SBA
leverage, and prospective investment income provides sufficient capital for us to continue to add new investments to our portfolio while reinvesting in existing portfolio companies that demonstrate continued growth potential. The following short and
long-term trends provide us confidence in our ability to grow Rand:



| |  |  | We expect that well run businesses will require capital to grow and should be able to compete effectively given the low cost of capital, strong business and consumer spending, and eager reception of new technologies and
service concepts.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Given our increased scale we are able to invest larger amounts in companies, which will provide an opportunity to accelerate our rate of growth.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



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



| |  |  | We are actively involved with the governance and management of our portfolio companies, which enables us to support their operating and marketing efforts and facilitate their growth.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As our portfolio continues to expand, we are able to better leverage our infrastructure.
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | We have sufficient cash to invest in new opportunities and to repurchase shares for the treasury. At quarter end, we had authorization to repurchase an additional 458,954 shares of our common stock. However, our
prioritized use of cash continues to be growing our portfolio.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles (GAAP), which
require the use of estimates and assumptions that affect the reported amounts of assets and liabilities. A summary of our critical accounting policies can be found in our Annual Report on Form 10-K for the
year ended December 31, 2016 under Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations.



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Financial Condition



|                  |  |         |            |  |          |   |            |            |  |    |              |   |  |  |       |   
|----------------- |  | ------- | ---------- |  | -------- | - | ---------- | ---------- |  | -- | ------------ | - |  |  | ----- | --
|Overview:         |  | 3/31/17 |            |  | 12/31/16 |   |            | (Decrease) |  |    | % (Decrease) |  
|Total assets      |  | $       | 40,804,200 |  |          | $ | 42,418,530 |            |  | ($ | 1,614,330    | ) |  |  | (3.8  | %)
|Total liabilities |  |         | 8,534,318  |  |          |   | 9,789,167  |            |  |    | (1,254,849   | ) |  |  | (12.8 | %)
|                  |  |         |            |  |          |   |            |            |  |    |              |   |  |  |       |   
|Net assets        |  | $       | 32,269,882 |  |          | $ | 32,629,363 |            |  | ($ | 359,481      | ) |  |  | (1.1  | %)
|                  |  |         |            |  |          |   |            |            |  |    |              |   |  |  |       |   

Net asset value per share (NAV) was $5.10 at March 31, 2017 and $5.16 at December 31, 2016.

Our outstanding SBA debentures at March 31, 2017 were $8,000,000 and will mature from 2022 through 2025. Cash approximated 33% of net
assets at March 31, 2017 as compared to 38% at December 31, 2016.

Composition of Our Investment Portfolio

Our financial condition is dependent on the success of our portfolio holdings. We have invested substantially all of our assets in small to medium-sized companies. The following summarizes our investment portfolio at the dates indicated.



|                             |  |         |            |   |          |   |            |                    |  |   |                      |   |  |  |      |   
|---------------------------- |  | ------- | ---------- | - | -------- | - | ---------- | ------------------ |  | - | -------------------- | - |  |  | ---- | --
|                             |  | 3/31/17 |            |   | 12/31/16 |   |            | Increase(Decrease) |  |   | % Increase(Decrease) |  
|Investments, at cost         |  | $       | 32,093,968 |   |          | $ | 31,631,030 |                    |  | $ | 462,938              |   |  |  | 1.5  | % 
|Unrealized depreciation, net |  |         | (4,511,193 | ) |          |   | (4,130,549 | )                  |  |   | (380,644             | ) |  |  | (9.2 | %)
|                             |  |         |            |   |          |   |            |                    |  |   |                      |   |  |  |      |   
|Investments at fair value    |  | $       | 27,582,775 |   |          | $ | 27,500,481 |                    |  | $ | 82,294               |   |  |  | 0.3  | % 
|                             |  |         |            |   |          |   |            |                    |  |   |                      |   |  |  |      |   

Our total investments at fair value, as estimated by management and approved by our Board of Directors,
approximated 86% of net assets at March 31, 2017 versus 84% of net assets at December 31, 2016.

The change in investments
during the three months ended March 31, 2017, at cost, is comprised of the following:



|                                                  |  |                        |         | 
|------------------------------------------------- |  | ---------------------- | ------- | 
|                                                  |  | CostIncrease(Decrease) |        
|New investments:                                  |  |                        |         | 
|Genicon, Inc. (Genicon)                           |  | $                      | 300,000 | 
|KnowledgeVision Systems, Inc. (Knowledge Vision)  |  |                        | 50,000  | 
|Mercantile Adjustment Bureau, LLC (Mercantile)    |  |                        | 100,000 | 
|                                                  |  |                        |         | 
|Total of new investments                          |  |                        | 450,000 | 
|Other changes to investments:                     |  |                        |         | 
|GoNoodle, Inc. (GoNoodle) interest conversion     |  |                        | 2,548   | 
|Mercantile OID amortization                       |  |                        | 2,499   | 
|Microcision LLC (Microcision) interest conversion |  |                        | 7,891   | 
|                                                  |  |                        |         | 
|Total of other changes to investments             |  |                        | 12,938  | 
|                                                  |  |                        |         | 
|Net change in investments, at cost                |  | $                      | 462,938 | 
|                                                  |  |                        |         | 



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Results of Operations

Investment Income

Our investment
objective is to achieve long-term capital appreciation on our equity investments while investing in a mixture of loan, debenture and equity instruments, which are structured to provide a current return on a portion of the investment portfolio.

Comparison of the three months ended March 31, 2017 to the three months ended March 31, 2016



|                                     |  |               |         |  |               |   |         |          |  |   |            |  |  |  |       |  
|------------------------------------ |  | ------------- | ------- |  | ------------- | - | ------- | -------- |  | - | ---------- |  |  |  | ----- | -
|                                     |  | March 31,2017 |         |  | March 31,2016 |   |         | Increase |  |   | % Increase | 
|Interest from portfolio companies    |  | $             | 246,091 |  |               | $ | 137,894 |          |  | $ | 108,197    |  |  |  | 78.5  | %
|Interest from other investments      |  |               | 10,975  |  |               |   | 3,061   |          |  |   | 7,914      |  |  |  | 258.5 | %
|Dividend and other investment income |  |               | 64,885  |  |               |   | 47,565  |          |  |   | 17,320     |  |  |  | 36.4  | %
|Fee income                           |  |               | 6,686   |  |               |   | 5,611   |          |  |   | 1,075      |  |  |  | 19.2  | %
|                                     |  |               |         |  |               |   |         |          |  |   |            |  |  |  |       |  
|Total investment income              |  | $             | 328,637 |  |               | $ | 194,131 |          |  | $ | 134,506    |  |  |  | 69.3  | %
|                                     |  |               |         |  |               |   |         |          |  |   |            |  |  |  |       |  

Interest from portfolio companies  Interest from portfolio companies was 79% higher in during the first quarter
of 2017 versus the same period in 2016 due to several investments made in the form of debt instruments in 2016 and 2017. These new debt instruments were originated from Genicon Inc. (Genicon), eHealth Global Technologies, Inc. (eHealth), Empire
Genomics, LLC (Empire Genomics), SciAps, Inc. (Sciaps) and several other portfolio companies.

The following investments remain on non-accrual status: G-TEC Natural Gas Systems (G-Tec), First Wave Products Group, LLC (First Wave) and a portion of the Mercantile
Adjustment Bureau, LLC (Mercantile) outstanding loan balance.

Interest from other investments - The increase in interest from other investments is
primarily due to higher average cash balances during the three months ended March 31, 2017 versus the same period in 2016.

Dividend and other
investment income - Dividend income is comprised of cash distributions from limited liability companies (LLCs) and corporations in which we have invested. Our investment agreements with certain LLCs require those LLCs to distribute funds to us
for payment of income taxes on our allocable share of the LLCs profits. These portfolio companies may also elect to make additional discretionary distributions. Dividend income will fluctuate based upon the profitability of these LLCs and
corporations and the timing of the distributions or the impact of new investments or divestitures. The dividend distributions for the respective periods were:



|                                            |  |               |        |  |               |   |        | 
|------------------------------------------- |  | ------------- | ------ |  | ------------- | - | ------ | 
|                                            |  | March 31,2017 |        |  | March 31,2016 |  
|Carolina Skiff LLC (Carolina Skiff)         |  | $             | 57,373 |  |               | $ | 34,101 | 
|Tilson Technology Management, Inc. (Tilson) |  |               | 5,000  |  |               |   |       | 
|Empire Genomics LLC (Empire Genomics)       |  |               | 2,512  |  |               |   |       | 
|SOMS Technologies, LLC (SOMS)               |  |               |       |  |               |   | 13,464 | 
|                                            |  |               |        |  |               |   |        | 
|Total dividend and other investment income  |  | $             | 64,885 |  |               | $ | 47,565 | 
|                                            |  |               |        |  |               |   |        | 

Fee income - Fee income consists of the revenue associated with the amortization of financing fees charged to the
portfolio companies upon successful closing of Rand SBIC financings and income from portfolio company board attendance fees. The financing fees are amortized ratably over the life of the instrument associated with the fees. The unamortized fees are
carried on the balance sheet under the line item Deferred revenue.

The income associated with the amortization of financing
fees was $6,686 and $3,611 for the three months ended March 31, 2017 and 2016, respectively. The income from board fees was $0 and $2,000 for the three months ended March 31, 2017 and 2016, respectively.



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Operating Expenses

Comparison of the three months ended March 31, 2017 to the three months ended March 31, 2016



|                         |  |               |         |  |               |   |           |          |  |    |            |   |  |  |       |   
|------------------------ |  | ------------- | ------- |  | ------------- | - | --------- | -------- |  | -- | ---------- | - |  |  | ----- | --
|                         |  | March 31,2017 |         |  | March 31,2016 |   |           | Decrease |  |    | % Decrease |  
|Total operating expenses |  | $             | 516,409 |  |               | $ | 1,939,136 |          |  | ($ | 1,422,727  | ) |  |  | (73.4 | %)

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

The decrease
in operating expenses during the three months ended March 31, 2017 versus the same period in 2016 was primarily caused by a decrease of $1,411,659 in bonus and profit sharing expense.

Gemcor II, LLC (Gemcor), previously our largest portfolio company in terms of fair value, sold its assets in March 2016 and based on our
ownership percentage, we received gross cash proceeds of approximately $13.8 million, excluding escrow, and realized a gain, before income taxes, of approximately $13.2 million from the sale. Related to this sale, we expensed $1,411,659
under our Profit Sharing Plan during the three months ended March 31, 2016. There were no amounts earned pursuant to the Profit Sharing Plan for the three months ended March 31, 2017.

Realized Gains and Losses on Investments

Comparison of the three months ended March 31, 2017 to the three months ended March 31, 2016



|                                                 |  |               |   |  |               |   |            |          |  |    |            |  
|------------------------------------------------ |  | ------------- | - |  | ------------- | - | ---------- | -------- |  | -- | ---------- | -
|                                                 |  | March 31,2017 |   |  | March 31,2016 |   |            | Decrease | 
|Realized gain on investments before income taxes |  | $             |  |  |               | $ | 13,176,313 |          |  | ($ | 13,176,313 | )

During the three months ended March 31, 2016, our portfolio company Gemcor II, LLC sold its assets and
accordingly, we received gross cash proceeds of $13,801,313, excluding escrow receivable, and recognized a realized gain, before income taxes, of $13,176,313.

There were no realized gains or losses during the three months ended March 31, 2017.

Change in Unrealized Depreciation or Appreciation of Investments

Comparison of the three months ended March 31, 2017 to the three months ended March 31, 2016



|                                                      |  |               |         |   |               |    |            |          |  |   |            | 
|----------------------------------------------------- |  | ------------- | ------- | - | ------------- | -- | ---------- | -------- |  | - | ---------- | 
|                                                      |  | March 31,2017 |         |   | March 31,2016 |    |            | Increase | 
|Change in unrealized depreciation before income taxes |  | ($            | 380,644 | ) |               | ($ | 11,785,300 | )        |  | $ | 11,404,656 | 

The decrease in unrealized depreciation, before income taxes, for the three months ended March 31, 2017
was comprised of the following:



|                                                                                                                            |  |               |         |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | -
|                                                                                                                            |  | March 31,2017 |        
|City Dining Cards, Inc. (Loupe)                                                                                             |  | ($            | 250,000 | )
|Mercantile Adjustment Bureau, LLC (Mercantile)                                                                              |  | ($            | 250,000 | )
|ACV Auctions, Inc. (ACV)                                                                                                    |  |               | 119,356 |  
|                                                                                                                            |  |               |         |  
|Total change in net unrealized depreciation of investments before income taxes during the three
months ended March 31, 2017 |  | ($            | 380,644 | )
|                                                                                                                            |  |               |         |  

The valuation of our investments in Loupe and Mercantile was each decreased after we reviewed each portfolio
company and its financial condition and determined that a valuation adjustment was necessary.



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In accordance with our valuation policy, we increased the value of our investment in ACV based on
a significant equity financing by a new non-strategic outside entity. This new financing used a higher valuation for ACV than had been used for its prior financing rounds.

The decrease in unrealized appreciation before income taxes for the three months ended March 31, 2016 was comprised of the following:



|                                                                                                                            |  |               |            |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ---------- | -
|                                                                                                                            |  | March 31,2016 |           
|Reclassify Gemcor II, LLC (Gemcor) to a realized gain                                                                       |  | ($            | 11,362,500 | )
|Knoa Software, Inc. (Knoa)                                                                                                  |  |               | (422,800   | )
|                                                                                                                            |  |               |            |  
|Total change in net unrealized appreciation of investments before income taxes during the three
months ended March 31, 2016 |  | ($            | 11,785,300 | )
|                                                                                                                            |  |               |            |  

During March 2016, our portfolio company, Gemcor II, LLC sold its assets and accordingly, we received gross
cash proceeds of approximately $13.8 million and recognized a realized gain, before income taxes, of approximately $13.2 million. As of March 31, 2016 and 2017, we continue to own 31% of Gemcor II, LLC, which is the entity that sold
substantially all of its assets. After the asset sale, a contingent escrow remained on the books of Gemcor valued at $1,412,500. A plan of the liquidation of Gemcor II, LLC was agreed to by all members of the limited liability company, and this
escrow was released and a gain realized during the third quarter of 2016.

The valuation of our investment in Knoa was decreased during
the three months ended March 31, 2016 to value our equity holdings at a value consistent with the anticipated pricing for Knoas future equity financing.

All of these value adjustments resulted from a review by our management using the guidance set forth by ASC 820 and our established valuation
policy.

Net Decrease in Net Assets from Operations

We account for our operations under GAAP for investment companies. The principal measure of our financial performance is net decrease in
net assets from operations on our consolidated statements of operations. For the three months ended March 31, 2017 and 2016, the net decrease in net assets from operations was ($359,481) and ($217,520), respectively.

Liquidity and Capital Resources

Our
principal objective is to achieve growth in net asset value per share through capital appreciation. Therefore, a significant portion of our 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.

As of March 31,
2017, our total liquidity consisted of approximately $10.7 million in cash on hand.

Net cash provided by operating activities has
averaged approximately $1,740,000 over the last three years. Our cash flow from operations may fluctuate based on the timing of the receipt of dividend income and realized gains and the associated income taxes paid. We will generally use cash to
fund our operating expenses and also to invest in companies, as we seek to build our portfolio utilizing our available cash and proceeds from liquidations of portfolio investments. We anticipate that we will continue to exit investments. However,
the timing of liquidation events within the portfolio is difficult to project with any certainty. As of March 31, 2017, we did not have any outstanding commitments to borrow funds from the SBA. Starting in 2022, our SBA debt begins to reach
maturity, and this will require us to identify sources of future funding if liquidation of investments is not sufficient to fund operations and repay the SBA debt obligation.



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We received authorization from the SBA during the fourth quarter of 2016 to file a formal
application to form and operate our second SBIC subsidiary and start a new SBIC. We expect to capitalize the new SBIC with $7.5 million of cash on hand and, if our application is approved by the SBA, a debt commitment from the SBA equal to two
times our equity capital investment, or $15 million, for a total fund size of $22.5 million.

We believe that the cash on hand
at March 31, 2017 and the scheduled interest payments on our portfolio investments will be sufficient to meet our cash needs throughout 2017. We continue to seek potential exits from portfolio companies to increase the amount of liquidity
available for new investments, operating activities and future SBA debenture obligations.

Item 3. Quantitative and
Qualitative Disclosures about Market Risk

Our investment activities contain elements of risk. Our investment portfolio consists of
equity and debt securities in private companies and is subject to valuation risk. Because there is typically no public market for the equity and debt securities in which we invest, the valuation of the equity interests in the portfolio is stated at
fair value as determined in good faith by our management and approved by our Board of Directors. This is in accordance with our investment valuation policy (see the discussion of valuation policy contained in Note 3.
Investments in the consolidated financial statements contained in Item 1 of this report, which is hereby incorporated herein by reference.) In the absence of readily ascertainable market values, the estimated value of the portfolio may differ
significantly from the values that would be placed on the portfolio if a ready market for the investments existed. Any changes in valuation are recorded on the consolidated statement of operations as Net change in unrealized depreciation on
investments.

At times, a portion of our portfolio may include marketable securities traded in the over-the-counter market. In addition, there may be a portion of the portfolio for which no regular trading market exists. In order to realize the full value of a security, the market must trade in an orderly
fashion or a willing purchaser must be available when a sale is to be made. Should an economic or other event occur that would not allow markets to trade in an orderly fashion, we may not be able to realize the fair value of our marketable
investments or other investments in a timely manner.

As of March 31, 2017, we did not have any
off-balance sheet arrangements or hedging or similar derivative financial instrument investments.

Item 4. Controls and Procedures

Disclosure Controls and Procedures.The Corporation maintains disclosure controls and
procedures that are designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the
SECs rules and forms, and that this information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The
Chief Executive Officer and the Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of the Corporations disclosure controls and procedures as of March 31, 2017. Based on the evaluation of
these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Corporations controls and procedures were effective as of March 31, 2017.

Changes in Internal Control over Financial Reporting.There have been no changes in our internal control over financial reporting
during the Corporations most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporations internal control over financial reporting.



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##### Table of Contents

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

See Part I, Item 1A, Risk Factors, of the Annual Report on Form 10-K for the year
ended December 31, 2016.

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

Issuer Purchases of Equity Securities



|                     |  |                                     |   |  |                                 |  |   |                                                                      |  |  |                                                                                   |  |  |  |         | 
|-------------------- |  | ----------------------------------- | - |  | ------------------------------- |  | - | -------------------------------------------------------------------- |  |  | --------------------------------------------------------------------------------- |  |  |  | ------- | 
|Period               |  | Total number ofshares purchased (1) |   |  | Average price paidper share (2) |  |   | Total number of sharespurchased as part ofpubliclyannounced plan (3) |  |  | Maximum number ofshares that may yetbe purchased underthe share repurchaseprogram | 
|1/1/2017  1/31/2017 |  |                                     |  |  |                                 |  |  |                                                                      |  |  |                                                                                  |  |  |  | 458,954 | 
|2/1/2017  2/28/2017 |  |                                     |  |  |                                 |  |  |                                                                      |  |  |                                                                                  |  |  |  | 458,954 | 
|3/1/2017  3/31/2017 |  |                                     |  |  |                                 |  |  |                                                                      |  |  |                                                                                  |  |  |  | 458,954 | 



|(1) | There were no shares repurchased during the first quarter of 2017.
|--- | ------------------------------------------------------------------

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

|(3) | On October 19, 2016, the Board of Directors extended the repurchase authorization of up to 1,000,000 shares of the Corporations common stock on the open market at prices no greater than the then current net
asset value through October 19, 2017.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 3. Defaults upon Senior Securities

None.

Item 4.
Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.



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Item 6. Exhibits



| | (a) | Exhibits
| | --- | --------

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



(3)(i)

Certificate of Incorporation of the Corporation, incorporated by reference to Exhibit (a) (1) and (a) (2) of Form N-2 filed with the Securities Exchange Commission on April 22,
1997 (File No. 333-25617).(3)(ii)

By-laws of the Corporation, incorporated by reference to Exhibit 3(ii) to the Corporations Quarterly Report on Form 10-Q for the period ended
September 30, 2016 filed with the Securities and Exchange Commission on November 2, 2016 (File No. 814-00235).(4)

Specimen certificate of common stock certificate, incorporated by reference to Exhibit (d) (1) of Form N-2 filed with the Securities Exchange Commission on April 22, 1997 (File No. 333-25617).(10.1)

Change in Control Agreement, dated as of March 1, 2017, by and between Rand Capital Corporation and Allen F. Grum, incorporated by reference to Exhibit 10.1 to the Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on March 3, 2017.(10.2)

Change in Control Agreement, dated as of March 1, 2017, by and between Rand Capital Corporation and Daniel P. Penberthy, incorporated by reference to Exhibit 10.2 to the Corporations Current Report on Form 8-K filed with the Securities and Exchange Commission on March 3, 2017.(31.1)

Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended, filed
herewith.(31.2)

Certification of Chief Financial Officer Pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended, filed
herewith.(32.1)

Section 1350 Certifications  Rand Capital Corporation  furnished herewith






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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Dated: April 27, 2017



RAND CAPITAL CORPORATIONBy:

/s/ Allen F. GrumAllen F. Grum, PresidentBy:

/s/ Daniel P. PenberthyDaniel P. Penberthy, Treasurer




44