##### 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 June 30, 2018**

 
****☐********
**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 CapitalCorporation**

**(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 Actof 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 past90 days.    Yes  ☒    No  ☐ 

Indicate by check mark whether the registranthas 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 forsuch 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 anemerging 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 periodfor 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 theAct).    Yes  ☐    No  ☒ 

As of August 2, 2018, there were 6,321,988 sharesof the registrant’s common stock outstanding. 

 

 

 
**

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 June 30, 2018 (Unaudited) and December 31, 2017
   3  
Consolidated Statements of Operations for the Three Months and Six Months EndedJune 30, 2018 and 2017 (Unaudited)
   4  
Consolidated Statements of Changes in Net Assets for the Three Months and SixMonths Ended June 30, 2018 and 2017 (Unaudited)
   5  
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 (Unaudited)
   6  
Consolidated Schedule of Portfolio Investments as of June 30, 2018 (Unaudited)
   7  
Consolidated Schedule of Portfolio Investments as of December 31,2017
   15  
Notes to the Consolidated Financial Statements (Unaudited)
   23 
Item 2.
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
   34 
Item 3.
 
Quantitative and Qualitative Disclosures about Market Risk
   42 
Item 4.
 
Controls and Procedures
   43  **PART II. – OTHER INFORMATION**  
Item 1.
 
Legal Proceedings
   44 
Item 1A.
 
Risk Factors
   44 
Item 2.
 
Unregistered Sales of Equity Securities and Use of Proceeds
   44 
Item 3.
 
Defaults upon Senior Securities
   44 
Item 4.
 
Mine Safety Disclosures
   44 
Item 5.
 
Other Information
   44 
Item 6.
 
Exhibits
   45 
 
2 

Table of Contents
**PART I. FINANCIAL INFORMATION**

 
**Item 1.**
**Financial Statements and Supplementary Data**

**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF FINANCIAL POSITION**

 
   **June 30, 2018**  **December 31,**    **(Unaudited)**  **2017** 
**ASSETS**
   
Investments at fair value:
   
Control investments (cost of $99,500)
  **$****99,500**** ** $99,500 
Affiliate investments (cost of $21,937,593 and $20,871,129, respectively)
  ** ****17,526,818**** **  17,016,795 
Non-affiliate investments (cost of $15,903,520 and $15,718,690, respectively)
  ** ****14,701,108**** **  15,167,767   
 

 
  
 

 
 
Total investments, at fair value (cost of $37,940,613 and $36,689,319, respectively)
  ** ****32,327,426**** **  32,284,062 
Cash
  ** ****4,720,381**** **  6,262,039 
Interest receivable (net of allowance: $237,641 at 6/30/18; $161,000 at 12/31/17)
  ** ****127,897**** **  231,048 
Deferred tax asset
  ** ****898,903**** **  551,863 
Prepaid income taxes
  ** ****740,086**** **  762,047 
Other assets
  ** ****55,956**** **  42,854   
 

 
  
 

 
 
**Total assets**
  **$****38,870,649**** ** $40,133,913   
 

 
  
 

 
 
**LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)**
   
**Liabilities:**
   
Debentures guaranteed by the SBA (net of debt issuance costs)
  **$****7,868,873**** ** $7,855,173 
Profit sharing and bonus payable
  ** ****—  **** **  144,000 
Accounts payable and accrued expenses
  ** ****168,918**** **  178,348 
Deferred revenue
  ** ****65,880**** **  37,707   
 

 
  
 

 
 
Total liabilities
  ** ****8,103,671**** **  8,215,228 
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 outstandingof 6,321,988
  ** ****686,304**** **  686,304 
Capital in excess of par value
  ** ****10,581,789**** **  10,581,789 
Accumulated net investment loss
  ** ****(1,808,243****) **  (1,597,146) 
Undistributed net realized gain on investments
  ** ****27,215,738**** **  27,215,738 
Net unrealized depreciation on investments
  ** ****(4,439,505****) **  (3,498,895) 
Treasury stock, at cost: 541,046 shares
  ** ****(1,469,105****) **  (1,469,105)   
 

 
  
 

 
 
Total stockholders’ equity (net assets) (per share $4.87 at 6/30/18; $5.05 at12/31/17)
  ** ****30,766,978**** **  31,918,685   
 

 
  
 

 
 
**Total liabilities and stockholders’ equity (net assets)**
  **$****38,870,649**** ** $40,133,913   
 

 
  
 

 
 
See accompanying notes 

 
3 

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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(Unaudited)**

 
   **Three months**  **Three months**  **Six months**  **Six months**    **ended**  **ended**  **ended**  **ended**    **June 30, 2018**  **June 30, 2017**  **June 30, 2018**  **June 30, 2017** 
**Investment income:**
     
Interest from portfolio companies:
     
Affiliate investments
  **$****175,990**** ** $137,243  $323,026  $274,000 
Non-Control/Non-Affiliate investments
  ** ****139,710**** **  140,397   290,022   249,731   
 

 
  
 

 
  
 

 
  
 

 
 
Total interest from portfolio companies
  ** ****315,700**** **  277,640   613,048   523,731 
Interest from other investments:
     
Non-Control/Non-Affiliate investments
  ** ****7,735**** **  6,859   12,845   17,834   
 

 
  
 

 
  
 

 
  
 

 
 
Total interest from other investments
  ** ****7,735**** **  6,859   12,845   17,834 
Dividend and other investment income:
     
Affiliate investments
  ** ****76,266**** **  53,024   127,049   115,397 
Non-Control/Non-Affiliate investments
  ** ****2,676**** **  2,681   6,058   5,193   
 

 
  
 

 
  
 

 
  
 

 
 
Total dividend and other investment income
  ** ****78,942**** **  55,705   133,107   120,590 
Fee income:
     
Affiliate investments
  ** ****4,416**** **  3,167   7,583   4,084 
Non-Control/Non-Affiliate investments
  ** ****6,725**** **  5,768   9,744   11,537   
 

 
  
 

 
  
 

 
  
 

 
 
Total fee income
  ** ****11,141**** **  8,935   17,327   15,621   
 

 
  
 

 
  
 

 
  
 

 
 
**Total investment income**
  ** ****413,518**** **  349,139   776,327   677,776   
 

 
  
 

 
  
 

 
  
 

 
 
**Operating expenses:**
     
Salaries
  ** ****169,875**** **  165,413   339,749   330,826 
Employee benefits
  ** ****45,251**** **  47,699   108,996   100,069 
Directors’ fees
  ** ****28,624**** **  36,374   63,499   71,249 
Professional fees
  ** ****37,341**** **  178,193   139,028   262,195 
Stockholders and office operating
  ** ****64,599**** **  80,725   129,038   147,935 
Insurance
  ** ****6,900**** **  6,258   18,888   17,560 
Corporate development
  ** ****10,646**** **  11,609   26,442   33,317 
Other operating
  ** ****2,424**** **  3,323   5,115   5,283   
 

 
  
 

 
  
 

 
  
 

 
   ** ****365,660**** **  529,594   830,755   968,434 
Interest on SBA obligations
  ** ****77,269**** **  77,569   154,838   155,138 
Bad debt expense
  ** ****30,741**** **  —     76,641   —     
 

 
  
 

 
  
 

 
  
 

 
 
Total expenses
  ** ****473,670**** **  607,163   1,062,234   1,123,572   
 

 
  
 

 
  
 

 
  
 

 
 
**Net investment loss before income taxes**
  ** ****(60,152****) **  (258,024)   (285,907)   (445,796)   
 

 
  
 

 
  
 

 
  
 

 
 
Income tax benefit
  ** ****(22,384****) **  (99,403)   (74,810)   (171,911)   
 

 
  
 

 
  
 

 
  
 

 
 
**Net investment loss**
  ** ****(37,768****) **  (158,621)   (211,097)   (273,885)   
 

 
  
 

 
  
 

 
  
 

 
 
**Net increase in unrealized depreciation on investments:**
     
Affiliate investments
  ** ****(306,441****) **  (665,675)   (556,441)   (665,675) 
Non-Control/Non-Affiliate investments
  ** ****(450,000****) **  (52,664)   (651,489)   (433,308)   
 

 
  
 

 
  
 

 
  
 

 
 
Increase in unrealized depreciation before income tax benefit
  ** ****(756,441****) **  (718,339)   (1,207,930)   (1,098,983) 
Deferred income tax benefit
  ** ****(162,915****) **  (241,623)   (267,320)   (378,050)   
 

 
  
 

 
  
 

 
  
 

 
 
Net increase in unrealized depreciation on investments
  ** ****(593,526****) **  (476,716)   (940,610)   (720,933)   
 

 
  
 

 
  
 

 
  
 

 
 
**Net unrealized loss on investments**
  ** ****(593,526****) **  (476,716)   (940,610)   (720,933)   
 

 
  
 

 
  
 

 
  
 

 
 
**Net decrease in net assets from operations**
  **($****631,294****) ** ($635,337)  ($1,151,707)  ($994,818)   
 

 
  
 

 
  
 

 
  
 

 
 
**Weighted average shares outstanding**
  ** ****6,321,988**** **  6,321,988   6,321,988   6,321,988 
**Basic and diluted net decrease in net assets from operations per share**
  **($****0.10****) ** ($0.10)  ($0.18)  ($0.16) 
See accompanying notes 

 
4 

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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS**

**(Unaudited)**

 
           **Three months**  **Three months**  **Six months**  **Six months**    **ended**  **ended**  **ended**  **ended**    **June 30, 2018**  **June 30, 2017**  **June 30, 2018**  **June 30, 2017** 
**Net assets at beginning of period**
  **$****31,398,272**** ** $32,269,882  $31,918,685  $32,629,363 
Net investment loss
  ** ****(37,768****) **  (158,621)   (211,097)   (273,885) 
Net increase in unrealized depreciation on investments
  ** ****(593,526****) **  (476,716)   (940,610)   (720,933)   
 

 
  
 

 
  
 

 
  
 

 
 
Net decrease in net assets from operations
  ** ****(631,294****) **  (635,337)   (1,151,707)   (994,818)   
 

 
  
 

 
  
 

 
  
 

 
 
Total decrease in net assets
  ** ****(631,294****) **  (635,337)   (1,151,707)   (994,818)   
 

 
  
 

 
  
 

 
  
 

 
 
**Net assets at end of period**
  **$****30,766,978**** ** $31,634,545  $30,766,978  $31,634,545   
 

 
  
 

 
  
 

 
  
 

 
 
**Accumulated net investment loss**
  **($****1,808,243****) ** ($1,851,733)  ($1,808,243)  ($1,851,733)   
 

 
  
 

 
  
 

 
  
 

 
 
See accompanying notes 

 
5 

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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

 
   **Six months**       **ended**  **Six months**    **June 30,**  **ended**    **2018**  **June 30, 2017** 
**Cash flows from operating activities:**
   
Net decrease in net assets from operations
  **($****1,151,707****) ** ($994,818) 
Adjustments to reconcile net decrease in net assets to net cash used in operatingactivities:
   
Investments in portfolio companies
  ** ****(1,225,000****) **  (3,800,000) 
Proceeds from loan repayments
  ** ****70,131**** **  —   
Increase in unrealized depreciation on investments
  ** ****1,207,930**** **  1,098,983 
Deferred tax benefit
  ** ****(347,040****) **  (519,163) 
Depreciation and amortization
  ** ****14,800**** **  15,700 
Original issue discount amortization
  ** ****(19,271****) **  (8,395) 
Non-cash conversion of debenture interest
  ** ****(77,154****) **  (53,294) 
Change in interest receivable allowance
  ** ****76,641**** **  —   
Changes in operating assets and liabilities:
   
Decrease (increase) in interest receivable
  ** ****26,510**** **  (49,598) 
(Increase) decrease in other assets
  ** ****(14,202****) **  537,995 
Decrease (increase) in prepaid income taxes
  ** ****21,961**** **  (298,630) 
Decrease in income tax payable
  ** ****—  **** **  (320,008) 
Decrease in accounts payable and accrued expenses
  ** ****(21,430****) **  (160,244) 
Decrease in profit sharing and bonus payable
  ** ****(132,000****) **  (1,138,052) 
Increase in deferred revenue
  ** ****28,173**** **  378   
 

 
  
 

 
 
Total adjustments
  ** ****(389,951****) **  (4,694,328)   
 

 
  
 

 
 
**Net cash used in operating activities**
  ** ****(1,541,658****) **  (5,689,146)   
 

 
  
 

 
 
**Net decrease in cash**
  ** ****(1,541,658****) **  (5,689,146) 
**Cash:**
   
Beginning of period
  ** ****6,262,039**** **  12,280,140   
 

 
  
 

 
 
End of period
  **$****4,720,381**** ** $6,590,994   
 

 
  
 

 
 
 
See accompanying notes

 

6 

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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**June 30, 2018**

**(Unaudited)**

 

**Company, Geographic Location, Business**

**Description, (Industry) and Website**
  
**(a)**

 

**Type of Investment**
  
**(b)**

**      Date      **

**Acquired**
  
**(c)**

 

**Equity**
  **      Cost      **   
**    (d)(f)    **

**Fair**

**Value**
   
**  Percent  **

**of Net**

**Assets**

**Non-Control/Non-Affiliate Investments – 47.8% of**

**net assets: (j)**
            **ACV Auctions, Inc. (e)(g)**  1,181,160 Series A Preferred  8/12/16  <1%      0.9%Buffalo, NY. Live mobile wholesale auctions for new  shares.       $163,000    $282,356   
and used car dealers. (Software)

www.acvauctions.com
            **Centivo Corporation (e)(g)**  190,967 Series A-1 Preferred  7/5/17  <1%      1.0%New York, NY. Tech-enabled health solutions  shares.       200,000    200,000   company that helps self-insured employers and their  337,808 Series A-2 Preferred          employees save money and have a better experience.  shares.       101,342    101,342   (Health Care)  **Total Centivo**               301,342    301,342   www.centivo.com            **eHealth Global Technologies, Inc. (g)**  $3,500,000 Term Notes at 10%  6/28/16  0%      11.4%Henrietta, NY. eHealth Connect® improves health  due September 2, 2019.       3,500,000    3,500,000   
care delivery through intelligently aggregated

clinical record and images for patient referrals.
            
(Health Care)

www.ehealthtechnologies.com
            **Empire Genomics, LLC (h)(g)**  $1,101,489 Senior Secured  6/13/14  0%      2.2%Buffalo, NY. Molecular diagnostics company that  Convertible Term Notes at 10%          offers a comprehensive menu of assay services for  due April 30, 2018.       1,101,489    450,000   diagnosing and guiding patient therapeutic treatments.  $250,000 Promissory Note at 12%          (Health Care)  due December 31, 2019.           228,334      228,334   www.empiregenomics.com  **Total Empire**               1,329,823    678,334   **GoNoodle, Inc. (g)(m)**  $1,000,000 Secured Note at 12%  2/6/15  <1%      3.3%**(Formerly Health Teacher, Inc.)**  due January 31, 2020, (1%          Nashville, TN. Student engagement education  Payment in Kind (PIK)).       1,034,484    1,034,484   software providing core aligned physical activity  Warrant for 47,324 Series C          breaks. (Software)  Preferred shares.                   25                25   www.gonoodle.com  **Total GoNoodle**               1,034,509    1,034,509   **Mercantile Adjustment Bureau, LLC (g)**  $1,199,039 Subordinated Secured  10/22/12  4%      3.1%Williamsville, NY. Full service accounts receivable  Note at 13% (3% for the calendar          management and collections company.  year 2018) due January 31, 2019.       1,199,040    949,040   (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                 -     **(i)**Interest receivable $53,069.            **Total Mercantile**               1,446,665    949,040   **Outmatch Holdings, LLC (e)(g)**  2,693,224 Class P1 Units.  11/18/10  4%   2,140,007    2,140,007   7.0%**(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)**  $300,000 Convertible Promissory  7/25/16  0%      1.0%Buffalo, NY. Provides innovative solutions for the  Note at 5% due July 28, 2018.       300,000    300,000   post-processing of additive manufactured 3D parts.            
(Manufacturing)

www.postprocess.com
            
 
7 

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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**June 30, 2018 (Continued)**

**(Unaudited)**

    **(a)**  **(b)**  **(c)**      **    (d)(f)    **   **  Percent  ****Company, Geographic Location, Business**     **      Date      **     **                    **   **Fair**   **of Net**
**Description, (Industry) and Website**
  
**Type of Investment**
  
**Acquired**
  
**Equity**
  **Cost**   
**Value**
   
**Assets**
**Rheonix, Inc. (e)**  9,676 Common shares.  10/29/09  4%   -    11,000   9.6%Ithaca, NY. Developer of fully automated  **(g)**1,839,422 Series A preferred          microfluidic based molecular assay and diagnostic  shares.       2,099,999    2,165,999   testing devices. (Health Care)  **(g)**50,593 Common shares.       -    59,000   www.rheonix.com  **(g)**589,420 Series B Preferred shares.             702,732         702,732     **Total Rheonix**         2,802,731      2,938,731   **SocialFlow, Inc. (e)(g)**  1,049,538 Series B Preferred shares.  4/5/13  4%   500,000    731,431   6.7%New York, NY. Provides instant analysis of social  1,204,819 Series B-1 Preferred shares.       750,000    839,648   networks using a proprietary, predictive analytic  717,772 Series C Preferred shares.            500,000         500,221   algorithm to optimize advertising and publishing.  **Total Social Flow**         1,750,000      2,071,300   
(Software)

www.socialflow.com
            **Somerset Gas Transmission Company, LLC (e)**  26.5337 Units.  7/10/02  3%   719,097    500,000   1.6%Columbus, OH. Natural gas transportation.            
(Oil and Gas)

www.somersetgas.com
            **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**                     $15,903,520    $14,701,108   **Affiliate Investments – 57.0% of net assets (k)**            **BeetNPath, LLC (Grainful) (e)(g)**  1,119,024 Series A-2 Preferred  10/20/14  9%      2.1%Ithaca, NY. Frozen entrées and packaged dry side  Membership Units.       $359,000    $359,000   dishes made from 100% whole grain steel cut oats  1,032,918 Series B Preferred          under Grainful brand name. (Consumer Product)  Membership Units.       261,277    291,000   www.grainful.com  **Total BeetNPath**       620,277    650,000   **Carolina Skiff LLC (g)**  6.0825% Class A Common  1/30/04  7%      5.7%Waycross, GA. Manufacturer of fresh water,  Membership Interest.       15,000    1,750,000   ocean fishing and pleasure boats.            
(Manufacturing)

www.carolinaskiff.com
            **ClearView Social, Inc. (e)(g)**  312,500 Series Seed Plus Preferred  1/4/16  6%      0.7%Buffalo, NY. Social media publishing tool for law,  shares.       200,000    200,000   
CPA and professional firms. (Software)

www.clearviewsocial.com
            **First Wave Products Group, LLC (e)(g)**  $500,000 Senior Term Notes at 10%  4/19/12  7%      0.0%Batavia, NY. Sells First Crush automated pill  due July 31, 2017.       661,563    -   crusher that crushes and grinds medical pills for  $280,000 Junior Term Notes at 10%          nursing homes and medical institutions. (Health  due July 31, 2017.       316,469    -   Care)  Warrant for 41,619 Capital Securities.           22,000    -   www.firstwaveproducts.com  **Total First Wave**       1,000,032    -   **Genicon, Inc. (g) (m)**  1,586,902 Series B Preferred shares.  4/10/15  6%   1,000,000    1,000,000   13.3%Winter Park, FL. Designs, produces and  $3,000,000 Promissory Notes at 10%          distributes patented surgical instrumentation.  due May 1, 2020, (8% Payment in          (Health Care)  Kind (PIK)).       2,984,127    2,984,127   www.geniconendo.com  Warrant for 250,000 Common shares.       80,000    80,000     Warrant for 125,000 Common shares.            40,000         40,000     **Total Genicon**       4,104,127    4,104,127   
 
8 

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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**June 30, 2018 (Continued)**

**(Unaudited)**

   **(a)**  **(b)**  **(c)**        **    (d)(f)    **   **  Percent  ****Company, Geographic Location, Business**    **      Date      **     **                    **     **Fair**   **of Net****Description, (Industry) and Website** **Type of Investment**  **Acquired **  **Equity**  **Cost**     **Value**   **Assets****GiveGab, Inc. (e)(g)** 5,084,329 Series Seed Preferred shares.  3/13/13  6%   616,221      616,221   2.0%
Ithaca, NY. Online fundraising, day of giving

supporter engagement software for non-profit

organizations.(Software)

www.givegab.com
             **G-TEC Natural Gas Systems (e)** 16.639% Class A Membership Interest.  8/31/99  17%        0.3%Buffalo, NY. Manufactures and distributes 8% cumulative dividend.       400,000      100,000   
systems that allow natural gas to be used as an

alternative fuel to gases. (Manufacturing)

www.gas-tec.com
             **Intrinsiq Materials, Inc. (e)(g)** 4,161,747 Series A Preferred shares.  9/19/13  12%   1,125,673      400,000   1.3%
Rochester, NY. Produces printable electronics

utilizing a unique process of nanomaterial based

ink in aroom-temperature environment.
             
(Manufacturing)

www.intrinsiqmaterials.com
             **Knoa Software, Inc. (h)(g)** 973,533 Series A-1 Convertible  11/20/12  7%        4.0%New York, NY. End user experience Preferred shares.       750,000      750,000   management and performance (EMP) solutions 1,876,922 Series B Preferred shares.           479,155          479,155   utilizing enterprise applications. (Software) **Total Knoa**       1,229,155      1,229,155   www.knoa.com             **KnowledgeVision Systems, Inc. (g)** 200,000 Series A-1 Preferred shares.  11/13/13  7%   250,000      -   4.3%Lincoln, MA. Online presentation and training 214,285 Series A-2 Preferred shares.       300,000      300,000   software. (Software) 129,033 Series A-3 Preferred shares.       165,001      165,001   www.knowledgevision.com Warrant for 46,743 Series A-3 shares.       35,000      35,000    $75,000 Subordinated Promissory Notes             at 8% payable on demand of majority of             holders after August 31, 2019.**(e)**       75,000      75,000    $750,000 Replacement Term Note at             11% due April 30, 2021.           750,000          750,000    **Total KnowledgeVision**       1,575,001      1,325,001   **Mezmeriz, Inc. (e)(g)** 1,554,565 Series Seed Preferred shares.  1/9/08  14%   742,850      351,477   1.1%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
             **Microcision LLC (g)(m)** $1,500,000 Subordinated Promissory  9/24/09  15%        6.3%Pennsauken Township, NJ. Manufacturer of Note at 12% (1% PIK) due December            precision machined medical implants, 31, 2024.       1,923,722      1,923,722   components and assemblies. (Manufacturing) 15% Class A Common Membership            www.microcision.com Interest.                     -                    -    **Total Microcision**       1,923,722      1,923,722   **New Monarch Machine Tool, Inc. (g)** 22.84 Common shares.  9/24/03  15%   22,841      22,841   0.1%
Cortland, NY. Manufactures and services

vertical/horizontal machining centers.
             (Manufacturing)             www.monarchmt.com             
 
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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**June 30, 2018 (Continued)**

**(Unaudited)**

   **(a)**  **(b)**  **(c)**     **    (d)(f)    **  **  Percent  ****Company, Geographic Location, Business**    **      Date      **     **                    **  **Fair**  **of Net****Description, (Industry) and Website** **Type of Investment**  **Acquired**  **Equity**  **Cost**  **Value**  **Assets****OnCore Golf Technology, Inc. (e)(g)** 150,000 Series AA Preferred shares.  12/31/14  9%  375,000   -   1.0%Buffalo, NY. Maker of patented golf balls. $300,000 Subordinated Convertible          (Consumer Product) Promissory Notes at 6% due January 24,          www.oncoregolf.com 2018.           **(i)**Interest receivable $50,342.      300,000   300,000    **Total OnCore**      675,000   300,000   **SciAps, Inc. (e)(g)** 187,500 Series A Preferred shares.  7/12/13  6%  1,500,000   700,000   6.6%Woburn, MA. Instrumentation company 274,299 Series A-1 Convertible          producing portable analytical devices using XRF, Preferred shares.      504,710   250,000   LIBS and RAMAN spectroscopy to identify 117,371 Series B Convertible Preferred          compounds, minerals, and elements. shares.      250,000   250,000   (Manufacturing) 113,636 Series C Convertible Preferred          www.sciaps.com shares.      175,000   175,000    369,698 Series C-1 Convertible           Preferred shares.      399,274   399,274    147,059 Series D Convertible Preferred           shares.         250,000      250,000    **Total SciAps**      3,078,984   2,024,274   **SOMS Technologies, LLC (e)(g)** 5,959,490 Series B Membership  12/2/08  9%      0.1%Valhalla, NY. Produces and markets the Interests.      472,632   30,000   microGreen Extended Performance Oil Filter.           
(Consumer Products)

www.microgreenfilter.com
           **Teleservices Solutions Holdings, LLC (e)** 250,000 Class B Preferred Units.  5/30/14  6%  250,000   -   0.0%**(g)(m)** 1,000,000 Class C Preferred Units.      1,190,680   -   Montvale, NJ. Customer contact center 80,000 Class D Preferred Units.      91,200   -   specializing in customer acquisition and retention 104,198 Class E Preferred Units.          104,198   -   for selected industries. (Contact Center) PIK dividend for Series C and D at 12%          www.ipacesetters.com and 14%, respectively.           **Total Teleservices**      1,636,078   -   **Tilson Technology Management, Inc. (g)** 120,000 Series B Preferred shares.  1/20/15  11%  600,000   600,000   8.1%Portland, ME. Cellular, fiber optic and wireless 21,391 Series C Convertible Preferred          information systems, construction, and shares.      200,000   200,000   management. (Professional Services) $200,000 Subordinated Promissory          www.tilsontech.com Note at 8% due September 28, 2021.      200,000   200,000    65,790 Series D Preferred shares.      750,000   750,000    $750,000 Subordinated Promissory           Note at 8% due December 1, 2022.         750,000      750,000    **Total Tilson**      2,500,000   2,500,000              **Subtotal Affiliate Investments**       $21,937,593   $17,526,818   **Control Investments – 0.3% of net assets (l)**           **Advantage 24/7 LLC (e)(g)** 45% Membership Interest.  12/30/10  45%  $99,500   $99,500   0.3%Williamsville, NY. Marketing program for wine           and spirits dealers. (Marketing Company)           www.advantage24-7.com                             
 

**Subtotal Control Investments**
       
 

$99,500
   $99,500   **TOTAL INVESTMENTS – 105.1%**       $37,940,613   $32,327,426   **OTHER ASSETS IN EXCESS OF****LIABILITIES – (5.1%)**                (1,560,448)                 **NET ASSETS – 100%**                $30,766,978                 
 
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**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**June 30, 2018 (Continued)**

**(Unaudited)**

 
**Notes to the Consolidated Schedule of Portfolio Investments**

 
(a)
At June 30, 2018, 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 date in which the Corporation first acquired an investment in thecompany or a predecessor company. 
(c)
Each equity percentage estimates the Corporation’s ownership interest in the applicable portfolioinvestment. 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 ofdebentures, 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 StandardsCodification (ASC) 820 “Fair Value Measurements and Disclosures,” which defines fair value and establishes guidelines for measuring fair value. At June 30, 2018, 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 reporting period. Restrictedsecurities 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 Corporationmay 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 otherdispositions 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 producinginvestments 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 June 30, 2018 the total cost of investment securities was approximately $37.9 million. Netunrealized depreciation was approximately ($5.6) million, which was comprised of $1.9 million of unrealized appreciation of investment securities and ($7.5) million of unrealized depreciation of investment securities. At June 30, 2018, theaggregate gross unrealized gain for federal income tax purposes was $2.5 million and the aggregate gross unrealized loss for federal income tax purposes was ($7.0) million. The net unrealized loss for federal income tax purposes was ($4.5) millionbased on a tax cost of $36.8 million. 
(g)
Rand Capital SBIC, Inc. investment. 
(h)
Reduction in cost and value from previously reported balances reflects current principal repayment.
(i)
Represents interest due (amounts over $50,000) from investments included as interest receivable on theCorporation’s Statement of Financial Position. 
(j)
Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor AffiliateInvestments. 
(k)
Affiliate Investments are defined by the Investment Company Act of 1940, as amended (“1940 Act”), asthose 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 thevoting 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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**June 30, 2018 (Continued)**

**(Unaudited)**

 
**  Investments in and Advances to Affiliates**

 

 
                         **  Amount of  **                      **Net**   **Interest/**       **December**       **Gross**  **June 30,**   **  Realized  **   **Dividend/**       **31, 2017**   **Gross**   **  Reductions  **  **  2018 Fair  **   **Gains**   **Fee Income** **Company**  **Type of Investment**  **  Fair Value  **   **  Additions (1)  **   **(2)**  **Value**   **(Losses)**   **(3)** **Control Investments:**             **Advantage 24/7 LLC**  45% Membership interest.   $99,500    $-    $-   $99,500    $-    $-   **Total Control Investments**    ** ****$99,500**** **  ** ****$-**** **  ** ****$-**** ** ** ****$99,500**** **  ** ****-**** **  ** ****$-**** ****Affiliate Investments:**             **BeetNPath, LLC**  1,119,024 Series A-2 Preferred Membership             Units.   $359,000    $-    $-   $359,000    -    $-   1,032,918 Series B Preferred Membership          -     Units.   291,000    -    -   291,000    -    -   **Total BeetNPath**     650,000    -    -   650,000    -    - **Carolina Skiff LLC**  6.0825% Class A common membership             interest.   1,750,000    -    -   1,750,000    -    80,264 **ClearView Social, Inc.**  312,500 Series seed plus preferred shares.   200,000    -    -   200,000    -    - **First Wave Products**  $500,000 senior term notes at 10%.   250,000    -    (250,000)   -    -    - **Group, LLC**  $280,000 junior term notes at 10%.   -    -    -   -    -    -   Warrant for 41,619 capital securities.               -    -    -   -    -    -   **Total First Wave**     250,000    -    (250,000)   -    -    - **Genicon, Inc.**  1,586,902 Series B preferred shares.   1,000,000    -    -   1,000,000    -    -   $3,000,000 promissory notes at 8%.   2,903,779    80,348    -   2,984,127    -    159,950   Warrant for 250,000 common shares   80,000    -    -   80,000    -    -   Warrant for 125,000 common shares        40,000              -    -        40,000    -               -   **Total Genicon**     4,023,779    80,348    -   4,104,127    -    159,950 **GiveGab, Inc.**  5,084,329 Series Seed preferred shares.   424,314    191,907    -   616,221    -    - **G-TEC Natural Gas**  16.639% Class A membership interest. 8%           **Systems**  cumulative dividend.   100,000    -    -   100,000    -    - **Intrinsiq Materials,**  4,161,747 Series A preferred shares.   400,000    -    -   400,000    -    - **Inc.**             **Knoa Software, Inc.**  973,533 Series A-1 convertible preferred             shares.   750,000    -    -   750,000    -    -   1,876,922 Series B preferred shares.   479,155    -    -   479,155    -    -   $48,466 convertible promissory note at 8%.        48,466    -    (48,466)                  -    -    773   **Total Knoa**     1,277,621    -    (48,466)   1,229,155    -    773 **KnowledgeVision**  200,000 Series A-1 preferred shares.   -    -    -   -    -    - **Systems, Inc.**  214,285 Series A-2 preferred shares.   300,000    -    -   300,000    -    -   129,033 Series A-3 preferred shares.   165,001    -    -   165,001    -    -   $75,000 subordinated promissory notes at 8%   50,000    25,000    -   75,000    -    2,383   $750,000 replacement term note at 11%   -    750,000    -   750,000    -    12,823   Warrant for 46,743 Series A-3 shares.     35,000               -    -      35,000    -              -   **Total Knowledge**     550,001    775,000    -   1,325,001    -    15,206   **Vision**             **Mezmeriz, Inc.**  1,554,565 Series seed preferred shares.   351,477    -    -   351,477    -    - **Microcision LLC**  $1,500,000 subordinated promissory note at             12% (1% PIK).   1,914,140    9,582    -   1,923,722    -    114,992 **New Monarch**  22.84 common shares.   22,841    -    -   22,841    -    29,409 **Machine Tool, Inc.**             
 
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**June 30, 2018 (Continued)**

**(Unaudited)**

 
**  Investments in and Advances to Affiliates**

 
                     **Net**   **Amount of**      **  December 31,  **   **Gross**   **Gross**  **  June 30, 2018  **   **Realized**   **Interest/**   **Type of Investment**  **2017 Fair**   **  Additions  **   **  Reductions  **  **Fair Value**   **Gains**   **Dividend/****Company**      **Value**   **(1)**   **(2)**       **  (Losses)  **   **  Fee Income (3)  **
**  OnCore Golf**
  150,000 Series AA preferred shares.   -    -    -   -    -    - 
**  Technology, Inc.**
  $300,000 subordinated convertible             promissory notes at 6%.   300,000    -    -   300,000    -    -   **Total OnCore**       300,000    -    -   300,000    -    - 
**  SciAps, Inc.**
  187,500 Series A convertible preferred             shares.   700,000    -    -   700,000    -    -   274,299 Series A-1 convertible preferred             shares.   250,000    -    -   250,000    -    -   117,371 Series B convertible preferred             shares.   250,000    -    -   250,000    -    -   113,636 Series C preferred shares.   175,000    -    -   175,000    -    -   369,698 Series C-1 preferred shares.   399,274    -    -   399,274    -    -   147,059 Series D shares                 -    250,000    -      250,000    -    -   **Total SciAps**       1,774,274    250,000    -   2,024,274    -    - 
**  SOMS**
  5,959,490 Series B membership interests.   528,348    -    (498,348)   30,000    -    - 
**  Technologies, LLC**
             
**  Teleservices**
  250,000 Class B preferred units.   -    -    -   -    -    - 
**  Solutions**
  1,000,000 Class C preferred units.   -    -    -   -    -    - 
**  Holdings, LLC**
  80,000 Class D preferred units.   -    -    -   -    -    -   104,198 Class E preferred units.   -    -    -   -    -    -   **Total Teleservices    **   -    -    -   -    -    - 
**  Tilson Technology**
  120,000 Series B preferred shares.   600,000    -    -   600,000    -    10,000 
**  Management, Inc.**
  21,391 Series C convertible preferred             shares.   200,000    -    -   200,000    -    -   $200,000 subordinated promissory note at 8%.   200,000    -    -   200,000    -    7,934   65,790 Series D preferred shares.   750,000    -    -   750,000    -    9,376   $750,000 subordinated promissory note at 8%.      750,000    -    -      750,000    -    29,754   **Total Tilson    **   2,500,000    -    -   2,500,000    -    57,064   **Total Affiliate Investments    **  ** ****$17,016,795**** **  ** ****$1,306,837**** **  ** ****($796,814)    **** ** ** ****$17,526,818**** **  ** ****$-**** **  ** ****$457,658**** **  **Total Control and Affiliate Investments    **  ** ****$17,116,295**** **  ** ****$1,306,837**** **  ** ****($796,814)    **** ** ** ****$17,626,318**** **  ** ****$-**** **  ** ****$457,658****   **                               
This schedule should be read in conjunction with the Corporation’s Consolidated Financial Statements, including theConsolidated 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 investments,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 intothis 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 anothercategory. 
(3)
Represents the total amount of interest, fees or dividends credited to income for the portion of the period aninvestment was included in Control or Affiliate categories, respectively. 

 
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**June 30, 2018 (Continued)**

**(Unaudited)**

 
 

 

 

**Industry Classification**
  
**Percentage of Total**

**Investments (at fair value)**

**as of June 30, 2018**

Healthcare
  35.7%
Software
  27.5
Manufacturing
  20.2
Professional Services
  7.7
Consumer Product
  3.0
Contact Center
  2.9
Oil and Gas
  1.6
Electronics
  1.1
Marketing
  0.3  
 

**Total Investments**
  **100%**  
 

 
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**December 31, 2017**

 

**Company, Geographic Location, Business**

**Description, (Industry) and Website**
  
**(a)**

 

**Type of Investment**
  
**(b)**

**      Date      **

**Acquired**
   
**(c)**

 

**Equity**
 **      Cost      **   
**    (d)(f)    **

**Fair**

**Value**
   
**  Percent  **

**of Net**

**Assets**

**Non-Control/Non-Affiliate Investments – 47.5% of**

**net assets: (j)**
           **ACV Auctions, Inc. (e)(g)**  1,181,160 Series A preferred   8/12/16   <1%     0.9%Buffalo, NY. Live mobile wholesale auctions for new  shares.      $163,000    $282,356   
and used car dealers. (Software)

www.acvauctions.com
           **Centivo Corporation (e)(n)**  $100,000 convertible unsecured   7/5/17   0%     0.3%New York, NY. Tech-enabled health solutions  note at 2% due February 1, 2019.      100,000    100,000   
company that helps self-insured employers and

their employees save money and have a better experience.

(HealthCare)
           **eHealth Global Technologies, Inc.**  **(g)**$1,500,000 term note at 10%   6/28/16   0%     11.0%Henrietta, NY. eHealth Connect® improves health  due September 2, 2019.      1,500,000    1,500,000   care delivery through intelligently aggregated clinical  **(n)**$2,000,000 term note at 10%         record and images for patient referrals.  due September 2, 2019.      2,000,000    2,000,000   (Health Care)  **Total eHealth**      3,500,000    3,500,000   www.ehealthtechnologies.com           **Empire Genomics, LLC (g)**  $1,101,489 senior secured   6/13/14   0%     4.2%Buffalo, NY. Molecular diagnostics company that  convertible term notes at 10% due         offers a comprehensive menu of assay services for  April 30, 2018.      1,101,489    1,101,489   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 $65,906.           **Total Empire**      1,351,489    1,351,489   **GoNoodle, Inc. (g)(m)**  $1,000,000 secured note at 12%   2/6/15   <1%     3.2%**(Formerly HealthTeacher, Inc.)**  due January 31, 2020, (1%         Nashville, TN. Student engagement education  Payment in Kind (PIK)).      1,029,330    1,029,330   software providing core aligned physical activity  Warrant for 47,324 Series C         breaks. (Software)  Preferred shares.                  25                25   www.gonoodle.com  **Total GoNoodle**      1,029,355    1,029,355   **Mercantile Adjustment Bureau, LLC (g)**  $1,199,039 subordinated secured   10/22/12   4%     3.0%Williamsville, NY. Full service accounts receivable  note at 13% (3% for the calendar         management and collections company.  year 2017) due January 31, 2018.      1,199,040    949,040   (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                -     **(i)**Interest receivable $55,983.           **Total Mercantile**      1,446,665    949,040   
**Outmatch Holdings, LLC (e)(g)**
  2,641,899 Class P1 Units.   11/18/10   4%  2,140,007    2,140,007   6.7%
**(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)**
  $300,000 convertible promissory   7/25/16   0%     0.9%
Buffalo, NY. Provides innovative solutions for the
  note at 5% due July 28, 2018.      300,000    300,000   
post-processing of additive manufactured 3D parts.
           
(Manufacturing)

www.postprocess.com
           
 
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**December 31, 2017 (Continued)**

 
**Company, Geographic Location, Business**

**Description, (Industry) and Website**
  
**(a)**

 

**Type of Investment**
  
**(b)**

**      Date      **

**Acquired**
   
**(c)**

 

**Equity**
 **      Cost      **   
**    (d)(f)    **

**Fair**

**Value**
   
**  Percent  **

**of Net**

**Assets**

**Rheonix, Inc. (e)**
  9,676 common shares.   10/29/09   4%  -    11,000   9.2%
Ithaca, NY. Developer of fully automated
  **(g)**1,839,422 Series A preferred         
microfluidic based molecular assay and diagnostic
  shares.      2,099,999    2,165,999   
testing devices. (Health Care)
  **(g)**50,593 common shares.      -    59,000   
www.rheonix.com
  **(g)**589,420 Series B preferred shares.          702,732        702,732     **Total Rheonix**         2,802,731     2,938,731   
**SocialFlow, Inc. (e)(g)**
  1,049,538 Series B preferred shares.   4/5/13   4%  500,000    731,431   6.5%
New York, NY. Provides instant analysis of social
  1,204,819 Series B-1 preferred shares.      750,000    839,648   
networks using a proprietary, predictive analytic
  717,772 Series C preferred shares.          500,000        500,221   
algorithm to optimize advertising and publishing.
  **Total Social Flow**         1,750,000     2,071,300   
(Software)

www.socialflow.com
           
**Somerset Gas Transmission Company, LLC (e)**
  26.5337 units.   7/10/02   3%  719,097    500,000   1.6%
Columbus, OH. Natural gas transportation.
           
(Oil and Gas)

www.somersetgas.com
           
**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**
                               $15,718,690    $15,167,767               
**Affiliate Investments – 53.3% of net assets (k)**
           
**BeetNPath, LLC (Grainful) (e)(g)**
  1,119,024 Series A-2 Preferred   10/20/14   9%     2.0%
Ithaca, NY. Frozen entrées and packaged dry side
  Membership Units.      $359,000    $359,000   
dishes made from 100% whole grain steel cut oats
  1,032,918 Series B Preferred         
under Grainful brand name. (Consumer Product)
  Membership Units.      261,277    291,000   
www.grainful.com
  **Total BeetNPath**        620,277    650,000   
**Carolina Skiff LLC (g)**
  6.0825% Class A common   1/30/04   7%     5.5%
Waycross, GA. Manufacturer of fresh water,
  membership interest.      15,000    1,750,000   
ocean fishing and pleasure boats.
           
(Manufacturing)

www.carolinaskiff.com
           
**ClearView Social, Inc. (e)(g)**
  312,500 Series seed plus preferred   1/4/16   6%     0.6%
Buffalo, NY. Social media publishing tool for law,
  shares.      200,000    200,000   
CPA and professional firms. (Software)

www.clearviewsocial.com
           
**First Wave Products Group, LLC (e)(g)**
  $500,000 senior term notes at 10% due   4/19/12   7%     0.8%
Batavia, NY. Sells First Crush automated pill
  July 31, 2017.      661,563    250,000   
crusher that crushes and grinds medical pills for
  $280,000 junior term notes at 10% due         
nursing homes and medical institutions. (Health
  July 31, 2017.      316,469    -   
Care)
  Warrant for 41,619 capital securities.           22,000                -   
www.firstwaveproducts.com
  **Total First Wave**        1,000,032    250,000   
**Genicon, Inc.**
  **(g)**1,586,902 Series B preferred shares.   4/10/15   6%  1,000,000    1,000,000   12.6%
Winter Park, FL. Designs, produces and
  **(g)**$2,000,000 promissory note at 8%         
distributes patented surgical instrumentation.
  due May 1, 2020.      1,936,002    1,936,002   
(Health Care)
  **(g)**Warrant for 250,000 common         
www.geniconendo.com
  shares.      80,000    80,000     **(n)**$1,000,000 promissory note at 8%           due May 1, 2020.      967,777    967,777     **(n)**Warrant for 125,000 common           shares.           40,000         40,000     **Total Genicon**        4,023,779    4,023,779   
 
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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**December 31, 2017 (Continued)**

    **(a)**  **(b)**  **(c)**     **    (d)(f)    **   **  Percent  ****Company, Geographic Location, Business**     **      Date      **  **                    **     **Fair**   **of Net**
**Description, (Industry) and Website**
  
**Type of Investment**
  
**Acquired**
  
**Equity**
 
**Cost**
   
**Value**
   
**Assets**
**GiveGab, Inc. (e)(g)**  5,084,329 Series Seed preferred shares.  3/13/13  6%  616,221    424,314   1.3%
Ithaca, NY. Online fundraising, day of giving

supporter engagement software for non-profit

organizations.(Software)

www.givegab.com
           **G-TEC Natural Gas Systems (e)**  16.639% Class A membership interest.  8/31/99  17%     0.3%Buffalo, NY. Manufactures and distributes  8% cumulative dividend.      400,000    100,000   
systems that allow natural gas to be used as

analternative fuel to gases. (Manufacturing)

www.gas-tec.com
           **Intrinsiq Materials, Inc. (e)(g)**  4,161,747 Series A preferred shares.  9/19/13  12%  1,125,673    400,000   1.3%
Rochester, NY. Produces printable electronics

utilizing a unique process of nanomaterial based

ink in aroom-temperature environment.

(Manufacturing)

www.intrinsiqmaterials.com
           **Knoa Software, Inc. (g)**  973,533 Series A-1 convertible  11/20/12  7%     4.0%New York, NY. End user experience  preferred shares.      750,000    750,000   management and performance (EMP) solutions  1,876,922 Series B preferred shares.      479,155    479,155   utilizing enterprise applications. (Software)  $48,466 convertible promissory note at         www.knoa.com  8% due May 9, 2018.      48,466    48,466     **Total Knoa**      1,277,621    1,277,621   **KnowledgeVision Systems, Inc. (e)(g)**  200,000 Series A-1 preferred shares.  11/13/13  7%  250,000    -   1.7%Lincoln, MA. Online presentation and training  214,285 Series A-2 preferred shares.      300,000    300,000   software. (Software)  129,033 Series A-3 preferred shares.      165,001    165,001   www.knowledgevision.com  Warrant for 46,743 Series A-3 shares.      35,000    35,000     $50,000 subordinated promissory note           at 8% payable on demand of majority of           noteholders after August 31, 2017.        50,000      50,000     **Total KnowledgeVision**      800,001    550,001   **Mezmeriz, Inc. (e)(g)**  1,554,565 Series Seed preferred shares.  1/9/08  14%  742,850    351,477   1.1%
Ithaca, NY. Micro-electronic mechanical systems

(MEMS) developer of carbon fiber MEMS mirror

modules for gesturerecognition and 3D scanning.

(Electronics Developer)

www.mezmeriz.com
           **Microcision LLC (g)(m)**  $1,500,000 subordinated promissory  9/24/09  15%     6.0%Pennsauken Township, NJ. Manufacturer of  note at 12% (1% PIK) due December         precision machined medical implants,  31, 2024.      1,914,140    1,914,140   components and assemblies. (Manufacturing)  15% Class A common membership         www.microcision.com  interest.      -    -     **Total Microcision**      1,914,140    1,914,140   **New Monarch Machine Tool, Inc. (g)**  22.84 common shares.  9/24/03  15%  22,841    22,841   0.1%
Cortland, NY. Manufactures and services

vertical/horizontal machining centers.

(Manufacturing)

www.monarchmt.com
           
 
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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**December 31, 2017 (Continued)**

**    **

    **(a)**  **(b)**   **(c)**      **    (d)(f)    **  **  Percent  ** **Company, Geographic Location, Business**     **      Date      **   **                    **      **Fair**  **of Net** 
**Description, (Industry) and Website**
  
**Type of Investment**
  
**Acquired**
   
**Equity**
  
**Cost**
   
**Value**
  
**Assets**
 
**OnCore Golf Technology, Inc. (e)(g)**
  150,000 Series AA preferred shares.   12/31/14    9%   375,000    -   0.9% 
Buffalo, NY. Maker of patented golf balls.
  $300,000 subordinated convertible        
(Consumer Product)
  promissory notes at 6% (10% for        
www.oncoregolf.com
  calendar year 2017) due January 24, 2018.          **(i)**Interest receivable $50,342.      300,000    300,000    **Total OnCore**      675,000    300,000  
**SciAps, Inc. (e)(g)**
  187,500 Series A convertible preferred   7/12/13    8%      5.6% 
Woburn, MA. Instrumentation company
  shares.      1,500,000    700,000  
producing portable analytical devices using XRF,
  274,299 Series A-1 convertible        
LIBS and RAMAN spectroscopy to identify
  preferred shares.      504,710    250,000  
compounds, minerals, and elements.
  117,371 Series B convertible preferred        
(Manufacturing)
  shares.      250,000    250,000  
www.sciaps.com
  113,636 Series C preferred shares.      175,000    175,000    369,698 Series C-1 preferred shares.         399,274       399,274    **Total SciAps**      2,828,984    1,774,274  
**SOMS Technologies, LLC (e)(g)**
  5,959,490 Series B membership   12/2/08    9%      1.7% 
Valhalla, NY. Produces and markets the
  interests.      472,632    528,348  
microGreen Extended Performance Oil Filter.
          
(Consumer Products)

www.microgreenfilter.com
          
**Teleservices Solutions Holdings, LLC (e)**
  250,000 Class B preferred units.   5/30/14    6%   250,000    -   0.0% 
**(g)(m)**
  1,000,000 Class C preferred units.      1,190,680    -  
Montvale, NJ. Customer contact center
  80,000 Class D preferred units.      91,200    -  
specializing in customer acquisition and retention
  104,198 Class E preferred units.        104,198    -  
for selected industries. (Contact Center)
  PIK dividend for Series C and D at 12%        
www.ipacesetters.com
  and 14%, respectively.          **Total Teleservices**      1,636,078    -  
**Tilson Technology Management, Inc.**
  **(g)**120,000 Series B preferred shares.   1/20/15    11%   600,000    600,000   7.8% 
Portland, ME. Cellular, fiber optic and wireless
  21,391 Series C convertible preferred        
information systems, construction, and
  shares.      200,000    200,000  
management. (Professional Services)
  **(g)**$200,000 subordinated promissory        
www.tilsontech.com
  note at 8% due September 28, 2021.      200,000    200,000    **(n)**65,790 Series D preferred shares.      750,000    750,000    **(n)**$750,000 subordinated promissory          note at 8% due December 1, 2022.         750,000       750,000    **Total Tilson**      2,500,000    2,500,000              
**Subtotal Affiliate Investments**
        $20,871,129    $17,016,795  
**Control Investments – 0.3% of net assets (l)**
          
**Advantage 24/7 LLC (e)(g)**
  53% Membership interest.   12/30/10    53%   $99,500    $99,500   0.3% 
Williamsville, NY. Marketing program for wine
          
and spirits dealers. (Marketing Company)
          
www.advantage24-7.com
            
**Subtotal Control Investments**
        $99,500    $99,500  
**TOTAL INVESTMENTS – 101.1%**
        $36,689,319    $32,284,062  
**OTHER ASSETS IN EXCESS OF**
          
**LIABILITIES – (1.1%)**
          (365,377)  
**NET ASSETS – 100%**
          $31,918,685               
 
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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**December 31, 2017 (Continued)**

 
**Notes to the Consolidated Schedule of Portfolio Investments**

 
(a)
At December 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 date in which the Corporation first acquired an investment in thecompany or a predecessor company. 
(c)
Each equity percentage estimates the Corporation’s ownership interest in the applicable portfolioinvestment. 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 ofdebentures, 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 StandardsCodification (ASC) 820 “Fair Value Measurements and Disclosures,” which defines fair value and establishes guidelines for measuring fair value. At December 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 reporting period. Restrictedsecurities 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 Corporationmay 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 otherdispositions 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 producinginvestments 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, 2017, the total cost of investment securities was approximately $36.7 million. Netunrealized depreciation was approximately ($4.4) million, which was comprised of $2.4 million of unrealized appreciation of investment securities and ($6.8) million of unrealized depreciation of investment securities. At December 31, 2017, theaggregate gross unrealized gain for federal income tax purposes was $2.8 million and the aggregate gross unrealized loss for federal income tax purposes was ($4.4) million. The net unrealized loss for federal income tax purposes was ($1.6) millionbased on a tax cost of $33.9 million. 
(g)
Rand Capital SBIC, Inc. investment. 
(h)
Reduction in cost and value from previously reported balances reflects current principal repayment. There wereno principal repayments during the year ended December 31, 2017. 
(i)
Represents interest due (amounts over $50,000) from investments included as interest receivable on theCorporation’s Statement of Financial Position. 
(j)
Non-Control/Non-Affiliate Investments are investments that are neither Control Investments nor AffiliateInvestments. 
(k)
Affiliate Investments are defined by the Investment Company Act of 1940, as amended (“1940 Act”), asthose 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 thevoting 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.
(n)
Rand Capital SBIC II, L.P. investment. 

 
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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**December 31, 2017 (Continued)**

 **  Investments in and Advances to Affiliates**                      **Net**   **Amount of**      **December**   **Gross**   **Gross**  **December**   **Realized**   **Interest/**   **Type of Investment**  **31, 2016**   **Additions**   **Reductions**  **31, 2017 Fair**   **Gains**   **Dividend/****Company**      **Fair Value**   **(1)**   **(2)**  **Value**   **(Losses)**   **     Fee Income (3)     ****  Control Investments:**             **  Advantage 24/7 LLC**  53% Membership interest.   $99,500    $-    $-   $99,500    $-    $-   
 

**Total ControlInvestments    **
  ** ****$99,500**** **  ** ****$-**** **  ** ****$-**** ** ** ****$99,500**** **  ** ****-**** **  ** ****$-**** **
 

**  Affiliate Investments:**
             **  BeetNPath, LLC**  1,119,024 Series A-2 Preferred Membership             Units.   $359,000      $-   $359,000    -    $-   1,032,918 Series B Preferred Membership          -     Units   -    $291,000    -   291,000    -    -   $150,000 convertible promissory note at 8%.   150,000               -    (150,000)               -    -    4,800   **Total BeetNPath    **   509,000    291,000    (150,000)   650,000    -    4,800 
 

**  Carolina Skiff LLC**
  
 

6.0825% Class A common membership
   1,100,000    650,000    -   1,750,000    -    178,532   interest.           
 

**  ClearView Social, Inc.**
  
 

312,500 Series seed plus preferred shares.
   200,000    -    -   200,000    -    - 
 

**  First Wave Products**
  
 

$500,000 senior term notes at 10%.
   250,000    -    -   250,000    -    - **  Group, LLC**  $280,000 junior term notes at 10%.   -    -    -   -    -    -   Warrant for 41,619 capital securities.              -    -    -               -    -    -   **Total First Wave    **   250,000    -    -   250,000    -    - 
 

**  Genicon, Inc.**
  
 

1,586,902 Series B preferred shares.
   1,000,000    -    -   1,000,000    -    -   $1,100,000 senior term loans at 12%.   1,100,000    -    (1,100,000)   -    -    50,234   $600,000 term loan at 14%.   600,000    -    (600,000)   -    -    32,200   $2,000,000 promissory note at 8%   -    2,016,002    (80,000)   1,936,002    -    129,752   $1,000,000 promissory note at 8%   -    1,007,777    (40,000)   967,777    -    60,860   Warrant for 250,000 common shares   -    80,000    -   80,000    -     Warrant for 125,000 common shares                 -         40,000                    -        40,000    -                -   **Total Genicon    **   2,700,000    3,143,779    (1,820,000)   4,023,779    -    273,046 
 

**  GiveGab, Inc.**
  
 

5,084,329 Series Seed preferred shares.
   424,314    -    -   424,314    -    - 
 

**  G-TEC Natural Gas**
  
 

16.639% Class A membership interest. 8%
           **  Systems**  cumulative dividend   100,000    -    -   100,000    -    - 
 

**  Intrinsiq Materials, Inc.**
  
 

4,161,747 Series A preferred shares.
   780,000    -    (380,000)   400,000    -    - 
 

**  Knoa Software, Inc.**
  
 

973,533 Series A-1 convertible preferred
   -    750,000    -   750,000    -    -   shares. 1,876,922 Series B preferred shares.   449,455    29,700    -   479,155    -    -   $48,466 convertible promissory note at 8%.     48,466                -    -        48,466    -    3,877   **Total Knoa    **   497,921    779,700    -   1,277,621    -    3,877 
 

**  KnowledgeVision**
  
 

200,000 Series A-1 preferred shares.
   -    -    -   -    -    - **  Systems, Inc.**  214,285 Series A-2 preferred shares.   300,000    -    -   300,000    -    -   129,033 Series A-3 preferred shares.   165,001    -    -   165,001    -           -   $50,000 subordinated promissory note at 8%   -    50,000    -   50,000    -    3,748   Warrant for 46,743 Series A-3 shares.     35,000              -    -     35,000    -            -   **Total Knowledge Vision    **   500,001    50,000    -   550,001    -    3,748 
 

**  Mezmeriz, Inc.**
  
 

1,554,565 Series seed preferred shares.
   351,477    -    -   351,477    -    - 
 

**  Microcision LLC**
  
 

$1,500,000 subordinated promissory note at
             12% (1% PIK).   1,891,964    22,176    -   1,914,140    -    228,239 
 

**  New Monarch**
  
 

22.84 common shares.
   22,841    -    -   22,841    -    28,409 **  Machine Tool, Inc.**             
 
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**RAND CAPITAL CORPORATION AND SUBSIDIARIES**

**CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS**

**December 31, 2017 (Continued)**

 **  Investments in and Advances to Affiliates**                               **Net**   **Amount of**      **December 31,**   **Gross**   **Gross**  **December 31,**   **Realized**   **Interest/**   **Type of Investment**  **2016 Fair**   **Additions**   **Reductions**  **2017 Fair**   **Gains**   **Dividend/**
**Company**

 
      
**Value**

 
   
**(1)**

 
   
**(2)**

 

 
  
**Value**

 
   
**(Losses)**

 
   
**Fee Income (3)**

 
**  OnCore Golf**  150,000 Series AA preferred shares.   -    -    -   -    -    - **  Technology, Inc.**  $300,000 subordinated convertible             promissory notes at 6%.   300,000    -    -   300,000    -    29,211   **Total OnCore**     300,000    -    -   300,000    -    29,211 **  SciAps, Inc.**  187,500 Series A convertible preferred             shares.   1,000,000    -    (300,000)   700,000    -    -   274,299 Series A-1 convertible preferred             shares.   504,710    -    (254,710)   250,000    -    -   117,371 Series B convertible preferred             shares.   250,000    -    -   250,000    -    -     113,636 Series C preferred shares.   -    175,000    -   175,000    -    -   369,698 Series C-1 preferred shares.   -    399,274    -   399,274    -    -   $200,000 subordinated promissory note at             10%.   200,000    -    (200,000)   -    -    4,731   $100,000 secured subordinated convertible             note at 10%.      100,000                -    (100,000)                 -    -    2,376   **Total SciAps**     2,054,710    574,274    (854,710)   1,774,274    -    7,107 **  SOMS**  5,959,490 Series B membership interests.   528,348    -    -   528,348    -    6,024 **  Technologies, LLC    **             **  Teleservices**  250,000 Class B preferred units.   -    -    -   -    -    - **  Solutions**  1,000,000 Class C preferred units.   200,000    -    (200,000)   -    -    - **  Holdings, LLC**  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**  120,000 Series B preferred shares.   600,000    -   
 

-

 
  600,000    -    20,000 **  Management, Inc.**  21,391 Series C convertible preferred   200,000    -     200,000    -    -   shares.       -        $200,000 subordinated promissory note at   200,000    -     200,000    -    16,000   8%.   -    750,000     750,000      1,579   65,790 Series D preferred shares.             $750,000 subordinated promissory note at                 -       750,000    -      750,000    -      5,096   8%.   1,000,000    1,500,000    -   2,500,000    -    42,675   **Total Tilson**                                 **Total Affiliate Investments  **  ** ****$13,605,974**** **  ** ****$7,010,929**** **  ** ****($3,600,108****) ** ** ****$17,016,795**** **  ** ****$-**** **  ** ****$805,668**** **  **Total Control and Affiliate Investments  **  ** ****$13,705,474**** **  ** ****$7,010,929**** **  ** ****($3,600,108****) ** ** ****$17,116,295**** **  ** ****$-**** **  ** ****$805,668**** **                                
This schedule should be read in conjunction with the Corporation’s Consolidated Financial Statements, including theConsolidated 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 investments,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 intothis 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 anothercategory. 
(3)
Represents the total amount of interest, fees or dividends credited to income for the portion of the period aninvestment was included in Control or Affiliate categories, respectively. 

 
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**December 31, 2017 (Continued)**

           
**Industry Classification**
  **Percentage of Total**