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, 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 Capital Corporation

(Exact Name of Registrant as specified in its Charter)







|                                                              |  |                                 
|------------------------------------------------------------- |  | --------------------------------
|New York                                                      |  | 16-0961359                      
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (IRS EmployerIdentification 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 May 2, 2018, there were 6,321,988 shares of
the registrants common stock outstanding.









---

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, 2018 (Unaudited) and December 31, 2017            |  |  | 3  | 
|                                |  |                                                                                                                
|                                |  | Consolidated Statements of Operations for the Three Months Ended March 31, 2018 and 2017 (Unaudited)            |  |  | 4  | 
|                                |  |                                                                                                                
|                                |  | Consolidated Statements of Changes in Net Assets for the Three Months Ended March 31, 2018 and 2017 (Unaudited) |  |  | 5  | 
|                                |  |                                                                                                                
|                                |  | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 (Unaudited)            |  |  | 6  | 
|                                |  |                                                                                                                
|                                |  | Consolidated Schedule of Portfolio Investments as of March 31, 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                                                      |  |  | 39 | 
|                                |  |                                                                                                                
|Item 4.                         |  | Controls and Procedures                                                                                         |  |  | 40 | 
|                                | 
|PART II.  OTHER INFORMATION    |  |                                                                                                                 |  | 
|                                |  |                                                                                                                
|Item 1.                         |  | Legal Proceedings                                                                                               |  |  | 41 | 
|                                |  |                                                                                                                
|Item 1A.                        |  | Risk Factors                                                                                                    |  |  | 41 | 
|                                |  |                                                                                                                
|Item 2.                         |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                     |  |  | 41 | 
|                                |  |                                                                                                                
|Item 3.                         |  | Defaults upon Senior Securities                                                                                 |  |  | 41 | 
|                                |  |                                                                                                                
|Item 4.                         |  | Mine Safety Disclosures                                                                                         |  |  | 41 | 
|                                |  |                                                                                                                
|Item 5.                         |  | Other Information                                                                                               |  |  | 41 | 
|                                |  |                                                                                                                
|Item 6.                         |  | Exhibits                                                                                                        |  |  | 42 | 



2



---

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



|                                                                                                               |  |                          |            |   |                  |   |            |  
|-------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                                                               |  | March 31,2018(Unaudited) |            |   | December 31,2017 |  
|ASSETS                                                                                                         |  |                          |            |   |                  |   |            |  
|Investments at fair value:                                                                                     |  |                          |            |   |                  |   |            |  
|Control investments (cost of $99,500)                                                                          |  | $                        | 99,500     |   |                  | $ | 99,500     |  
|Affiliate investments (cost of $21,086,529 and $20,871,129, respectively)                                      |  |                          | 16,982,195 |   |                  |   | 17,016,795 |  
|Non-affiliate investments (cost of $15,900,940 and
$15,718,690, respectively)                                  |  |                          | 15,148,528 |   |                  |   | 15,167,767 |  
|                                                                                                               |  |                          |            |   |                  |   |            |  
|Total investments, at fair value (cost of $37,086,969 and $36,689,319, respectively)                           |  |                          | 32,230,223 |   |                  |   | 32,284,062 |  
|Cash                                                                                                           |  |                          | 5,499,266  |   |                  |   | 6,262,039  |  
|Interest receivable (net of allowance: $206,900 at 3/31/18; $161,000 at 12/31/17)                              |  |                          | 168,129    |   |                  |   | 231,048    |  
|Deferred tax asset                                                                                             |  |                          | 656,268    |   |                  |   | 551,863    |  
|Prepaid income taxes                                                                                           |  |                          | 797,422    |   |                  |   | 762,047    |  
|Other assets                                                                                                   |  |                          | 82,247     |   |                  |   | 42,854     |  
|                                                                                                               |  |                          |            |   |                  |   |            |  
|Total assets                                                                                                   |  | $                        | 39,433,555 |   |                  | $ | 40,133,913 |  
|                                                                                                               |  |                          |            |   |                  |   |            |  
|LIABILITIES AND STOCKHOLDERS EQUITY (NET ASSETS)                                                              | 
|Liabilities:                                                                                                   |  |                          |            |   |                  |   |            |  
|Debentures guaranteed by the SBA (net of debt issuance costs)                                                  |  | $                        | 7,862,023  |   |                  | $ | 7,855,173  |  
|Profit sharing and bonus payable                                                                               |  |                          |           |   |                  |   | 144,000    |  
|Accounts payable and accrued expenses                                                                          |  |                          | 119,739    |   |                  |   | 178,348    |  
|Deferred revenue                                                                                               |  |                          | 53,521     |   |                  |   | 37,707     |  
|                                                                                                               |  |                          |            |   |                  |   |            |  
|Total liabilities                                                                                              |  |                          | 8,035,283  |   |                  |   | 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 outstanding
of 6,321,988 |  |                          | 686,304    |   |                  |   | 686,304    |  
|Capital in excess of par value                                                                                 |  |                          | 10,581,789 |   |                  |   | 10,581,789 |  
|Accumulated net investment loss                                                                                |  |                          | (1,770,475 | ) |                  |   | (1,597,146 | )
|Undistributed net realized gain on investments                                                                 |  |                          | 27,215,738 |   |                  |   | 27,215,738 |  
|Net unrealized depreciation on investments                                                                     |  |                          | (3,845,979 | ) |                  |   | (3,498,895 | )
|Treasury stock, at cost: 541,046 shares                                                                        |  |                          | (1,469,105 | ) |                  |   | (1,469,105 | )
|                                                                                                               |  |                          |            |   |                  |   |            |  
|Total stockholders equity (net assets) (per share $4.97 at 3/31/18; $5.05 at
12/31/17)                        |  |                          | 31,398,272 |   |                  |   | 31,918,685 |  
|                                                                                                               |  |                          |            |   |                  |   |            |  
|Total liabilities and stockholders equity (net assets)                                                        |  | $                        | 39,433,555 |   |                  | $ | 40,133,913 |  
|                                                                                                               |  |                          |            |   |                  |   |            |  

See accompanying notes



3



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                                       |  |                                 |           |   |                                 |   |           |  
|---------------------------------------------------------------------- |  | ------------------------------- | --------- | - | ------------------------------- | - | --------- | -
|                                                                       |  | Three monthsendedMarch 31, 2018 |           |   | Three monthsendedMarch 31, 2017 |  
|Investment income:                                                     |  |                                 |           |   |                                 |   |           |  
|Interest from portfolio companies:                                     |  |                                 |           |   |                                 |   |           |  
|Affiliate investments                                                  |  | $                               | 147,036   |   |                                 | $ | 136,757   |  
|Non-Control/Non-Affiliate
investments                                  |  |                                 | 150,312   |   |                                 |   | 109,334   |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Total interest from portfolio companies                                |  |                                 | 297,348   |   |                                 |   | 246,091   |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Interest from other investments:                                       |  |                                 |           |   |                                 |   |           |  
|Non-Control/Non-Affiliate
investments                                  |  |                                 | 5,110     |   |                                 |   | 10,975    |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Total interest from other investments                                  |  |                                 | 5,110     |   |                                 |   | 10,975    |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Dividend and other investment income:                                  |  |                                 |           |   |                                 |   |           |  
|Affiliate investments                                                  |  |                                 | 50,783    |   |                                 |   | 62,373    |  
|Non-Control/Non-Affiliate
investments                                  |  |                                 | 3,382     |   |                                 |   | 2,512     |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Total dividend and other investment income                             |  |                                 | 54,165    |   |                                 |   | 64,885    |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Fee income:                                                            |  |                                 |           |   |                                 |   |           |  
|Affiliate investments                                                  |  |                                 | 3,167     |   |                                 |   | 917       |  
|Non-Control/Non-Affiliate
investments                                  |  |                                 | 3,019     |   |                                 |   | 5,769     |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Total fee income                                                       |  |                                 | 6,186     |   |                                 |   | 6,686     |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Total investment income                                                |  |                                 | 362,809   |   |                                 |   | 328,637   |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Expenses:                                                              |  |                                 |           |   |                                 |   |           |  
|Salaries                                                               |  |                                 | 169,874   |   |                                 |   | 165,413   |  
|Employee benefits                                                      |  |                                 | 63,745    |   |                                 |   | 52,370    |  
|Directors fees                                                        |  |                                 | 34,875    |   |                                 |   | 34,875    |  
|Professional fees                                                      |  |                                 | 101,687   |   |                                 |   | 84,002    |  
|Stockholders and office operating                                      |  |                                 | 64,439    |   |                                 |   | 67,210    |  
|Insurance                                                              |  |                                 | 11,988    |   |                                 |   | 11,302    |  
|Corporate development                                                  |  |                                 | 15,796    |   |                                 |   | 21,708    |  
|Other operating                                                        |  |                                 | 2,691     |   |                                 |   | 1,960     |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|                                                                       |  |                                 | 465,095   |   |                                 |   | 438,840   |  
|Interest on SBA obligations                                            |  |                                 | 77,569    |   |                                 |   | 77,569    |  
|Bad debt expense                                                       |  |                                 | 45,900    |   |                                 |   |          |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Total expenses                                                         |  |                                 | 588,564   |   |                                 |   | 516,409   |  
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Net investment loss before income taxes                                |  |                                 | (225,755  | ) |                                 |   | (187,772  | )
|Income tax benefit                                                     |  |                                 | (52,426   | ) |                                 |   | (72,508   | )
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Net investment loss                                                    |  |                                 | (173,329  | ) |                                 |   | (115,264  | )
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Net decrease in unrealized depreciation on investments:                |  |                                 |           |   |                                 |   |           |  
|Affiliate investments                                                  |  |                                 | (250,000  | ) |                                 |   |          |  
|Non-Control/Non-Affiliate
investments                                  |  |                                 | (201,489  | ) |                                 |   | (380,644  | )
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Decrease in unrealized depreciation before income taxes                |  |                                 | (451,489  | ) |                                 |   | (380,644  | )
|Deferred income tax benefit                                            |  |                                 | (104,405  | ) |                                 |   | (136,427  | )
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Net decrease in unrealized depreciation on investments                 |  |                                 | (347,084  | ) |                                 |   | (244,217  | )
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Net unrealized loss on investments                                     |  |                                 | (347,084  | ) |                                 |   | (244,217  | )
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Net decrease in net assets from operations                             |  |                                 | ($520,413 | ) |                                 |   | ($359,481 | )
|                                                                       |  |                                 |           |   |                                 |   |           |  
|Weighted average shares outstanding                                    |  |                                 | 6,321,988 |   |                                 |   | 6,321,988 |  
|Basic and diluted net decrease in net assets from operations per share |  |                                 | ($0.08    | ) |                                 |   | ($0.06    | )

See accompanying notes



4



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)



|                                                       |  |                                 |             |   |                                 |  |             |  
|------------------------------------------------------ |  | ------------------------------- | ----------- | - | ------------------------------- |  | ----------- | -
|                                                       |  | Three monthsendedMarch 31, 2018 |             |   | Three monthsendedMarch 31, 2017 | 
|Net assets at beginning of period                      |  |                                 | $31,918,685 |   |                                 |  | $32,629,363 |  
|Net investment loss                                    |  |                                 | (173,329    | ) |                                 |  | (115,264    | )
|Net decrease in unrealized depreciation on investments |  |                                 | (347,084    | ) |                                 |  | (244,217    | )
|                                                       |  |                                 |             |   |                                 |  |             |  
|Net decrease in net assets from operations             |  |                                 | (520,413    | ) |                                 |  | (359,481    | )
|                                                       |  |                                 |             |   |                                 |  |             |  
|Total decrease in net assets                           |  |                                 | (520,413    | ) |                                 |  | (359,481    | )
|                                                       |  |                                 |             |   |                                 |  |             |  
|Net assets at end of period                            |  |                                 | $31,398,272 |   |                                 |  | $32,269,882 |  
|                                                       |  |                                 |             |   |                                 |  |             |  
|Accumulated net investment loss                        |  |                                 | ($1,770,475 | ) |                                 |  | ($1,693,112 | )
|                                                       |  |                                 |             |   |                                 |  |             |  

See accompanying notes



5



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



|                                                                                              |  |                                 |           |   |                                 |    |            |  
|--------------------------------------------------------------------------------------------- |  | ------------------------------- | --------- | - | ------------------------------- | -- | ---------- | -
|                                                                                              |  | Three monthsendedMarch 31, 2018 |           |   | Three monthsendedMarch 31, 2017 |   
|Cash flows from operating activities:                                                         |  |                                 |           |   |                                 |    |            |  
|Net decrease in net assets from operations                                                    |  | ($                              | 520,413   | ) |                                 | ($ | 359,481    | )
|Adjustments to reconcile net decrease in net assets to net cash used in operating
activities: |  |                                 |           |   |                                 |    |            |  
|Investments in portfolio companies                                                            |  |                                 | (450,000  | ) |                                 |    | (450,000   | )
|Proceeds from loan repayments                                                                 |  |                                 | 70,131    |   |                                 |    |           |  
|Increase in unrealized depreciation on investments before income taxes                        |  |                                 | 451,489   |   |                                 |    | 380,644    |  
|Deferred income tax benefit                                                                   |  |                                 | (104,405  | ) |                                 |    | (272,086   | )
|Depreciation and amortization                                                                 |  |                                 | 7,400     |   |                                 |    | 7,850      |  
|Original issue discount amortization                                                          |  |                                 | (9,080    | ) |                                 |    | (2,499     | )
|Non-cash conversion of debenture interest                                                     |  |                                 | (8,701    | ) |                                 |    | (10,439    | )
|Change in interest receivable allowance                                                       |  |                                 | 45,900    |   |                                 |    |           |  
|Changes in operating assets and liabilities:                                                  |  |                                 |           |   |                                 |    |            |  
|Decrease (increase) in interest receivable                                                    |  |                                 | 17,019    |   |                                 |    | (43,903    | )
|(Increase) decrease in other assets                                                           |  |                                 | (39,943   | ) |                                 |    | 420,866    |  
|Increase in prepaid income taxes                                                              |  |                                 | (35,375   | ) |                                 |    |           |  
|Increase in income taxes payable                                                              |  |                                 |          |   |                                 |    | 71,111     |  
|Decrease in accounts payable and accrued expenses                                             |  |                                 | (70,609   | ) |                                 |    | (188,073   | )
|Decrease in profit sharing and bonus payable                                                  |  |                                 | (132,000  | ) |                                 |    | (1,138,052 | )
|Increase (decrease) in deferred revenue                                                       |  |                                 | 15,814    |   |                                 |    | (6,686     | )
|                                                                                              |  |                                 |           |   |                                 |    |            |  
|Total adjustments                                                                             |  |                                 | (242,360  | ) |                                 |    | (1,231,267 | )
|                                                                                              |  |                                 |           |   |                                 |    |            |  
|Net cash used in operating activities                                                         |  |                                 | (762,773  | ) |                                 |    | (1,590,748 | )
|                                                                                              |  |                                 |           |   |                                 |    |            |  
|Net decrease in cash                                                                          |  |                                 | (762,773  | ) |                                 |    | (1,590,748 | )
|Cash:                                                                                         |  |                                 |           |   |                                 |    |            |  
|Beginning of period                                                                           |  |                                 | 6,262,039 |   |                                 |    | 12,280,140 |  
|                                                                                              |  |                                 |           |   |                                 |    |            |  
|End of period                                                                                 |  | $                               | 5,499,266 |   |                                 | $  | 10,689,392 |  
|                                                                                              |  |                                 |           |   |                                 |    |            |  

See accompanying notes



6



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 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  48.2% of net assets: (j)                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |            
|ACV Auctions, Inc. (e)(g) Buffalo, NY.
Live mobile wholesale 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% 
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |            
|Centivo Corporation (e)(g) New
York, NY. Tech-enabled health solutions company that helps self-insured employers and their employees save money and have a better experience.                                              |                                                                               | 190,967 Series A-1 Preferred shares.                                                            |  | 7/5/17            |  | 2%          |  |         | 200,000   |  |                   |         | 200,000   |                       |  | 1.0% 
|                                                                                                                                                                                                                           | 337,808 Series A-2 Preferred shares.                                          |                                                                                                 |  |                   |  |             |  | 101,342 |           |  |                   | 101,342 |           |                       | 
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|(Health Care)                                                                                                                                                                                                              |                                                                               | Total Centivo                                                                                   |  |                   |  |             |  |         | 301,342   |  |                   |         | 301,342   |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |            
|eHealth Global Technologies, Inc.
Henrietta, NY. eHealth Connect® improves health care delivery through intelligently aggregated clinical
record and images for patient referrals. (Health Care)                           |                                                                               | (g)$3,500,000 term notes at 10% due September 2, 2019.                                          |  | 6/28/16           |  | 0%          |  |         | 3,500,000 |  |                   |         | 3,500,000 |                       |  | 11.1%
|www.ehealthtechnologies.com                                                                                                                                                                                                |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |            
|Empire Genomics, LLC (g) (h)
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 |                                                                               | $1,101,489 senior secured convertible term notes at 10% due April 30, 2018.                     |  | 6/13/14           |  | 0%          |  |         | 1,101,489 |  |                   |         | 900,000   |                       |  | 3.6% 
|                                                                                                                                                                                                                           | $250,000 promissory note at 12% due December 31, 2019.                        |                                                                                                 |  |                   |  |             |  | 228,334 |           |  |                   | 228,334 |           |                       | 
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               | (i) Interest receivable $68,174.                                                                |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               | Total Empire                                                                                    |  |                   |  |             |  |         | 1,329,823 |  |                   |         | 1,128,334 |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |            
|GoNoodle, Inc. (g)(m)
(Formerly HealthTeacher, Inc.) Nashville, TN. Student
engagement education software providing core aligned physical activity breaks. (Software)                                                      |                                                                               | $1,000,000 secured note at 12% due January 31, 2020, (1% Payment in Kind (PIK)).                |  | 2/6/15            |  | <1%         |  |         | 1,031,904 |  |                   |         | 1,031,904 |                       |  | 3.3% 
|                                                                                                                                                                                                                           | Warrant for 47,324 Series C Preferred shares.                                 |                                                                                                 |  |                   |  |             |  | 25      |           |  |                   | 25      |           |                       | 
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|www.gonoodle.com                                                                                                                                                                                                           |                                                                               | Total GoNoodle                                                                                  |  |                   |  |             |  |         | 1,031,929 |  |                   |         | 1,031,929 |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |            
|Mercantile Adjustment Bureau, LLC (g)
Williamsville, NY. Full service accounts receivable management and collections company.
(Contact Center) www.mercantilesolutions.com                                                 |                                                                               | $1,199,039 subordinated secured note at 13% (3% for the calendar year 2018) due April 30, 2018. |  | 10/22/12          |  | 4%          |  |         | 1,199,040 |  |                   |         | 949,040   |                       |  | 3.0% 
|                                                                                                                                                                                                                           | (e)$150,000 subordinated 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 $53,710.                                                                |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               | Total Mercantile                                                                                |  |                   |  |             |  |         | 1,446,665 |  |                   |         | 949,040   |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |            
|Outmatch Holdings, LLC (e)(g)
(Chequed Holdings, LLC) Dallas, TX. Web based predictive
employee selection and reference checking. (Software) www.outmatch.com                                                              |                                                                               | 2,641,899 Class P1 Units.                                                                       |  | 11/18/10          |  | 4%          |  |         | 2,140,007 |  |                   |         | 2,140,007 |                       |  | 6.8% 
|                                                                                                                                                                                                                           | 109,788 Class C1 Units.                                                       |                                                                                                 |  |                   |  |             |  | 5,489   |           |  |                   | 5,489   |           |                       | 
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               | Total Outmatch                                                                                  |  |                   |  |             |  |         | 2,145,496 |  |                   |         | 2,145,496 |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |             |  |         |           |  |                   |         |           |                       |  |      
|                                                                                                                                                                                                                           |                                                                               |                                                                                                 |  |                   |  |            
|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   |                       |  | 1.0% 



7



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2018 (Continued)

(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
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |            
|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.                                 |  | 10/29/09          |  | 4%          |  |           |           |  |                   |           | 11,000     |                       |  | 9.3% 
|                                                                                                                                                                                                                      | (g)1,839,422 Series A preferred shares.              |                                                      |  |                   |  |             |  | 2,099,999 |            |  |                   | 2,165,999 |            |                       | 
|                                                                                                                                                                                                                      | (g) 50,593 common shares.                            |                                                      |  |                   |  |             |  |          |            |  |                   | 59,000    |            |                       | 
|                                                                                                                                                                                                                      | (g) 589,420 Series B preferred shares.               |                                                      |  |                   |  |             |  | 702,732   |            |  |                   | 702,732   |            |                       | 
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      | Total Rheonix                                        |  |                   |  |             |  |           | 2,802,731  |  |                   |           | 2,938,731  |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |            
|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.                 |  | 4/5/13            |  | 4%          |  |           | 500,000    |  |                   |           | 731,431    |                       |  | 6.6% 
|                                                                                                                                                                                                                      | 1,204,819 Series B-1 preferred shares.               |                                                      |  |                   |  |             |  | 750,000   |            |  |                   | 839,648   |            |                       | 
|                                                                                                                                                                                                                      | 717,772 Series C preferred shares.                   |                                                      |  |                   |  |             |  | 500,000   |            |  |                   | 500,221   |            |                       | 
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      | Total Social Flow                                    |  |                   |  |             |  |           | 1,750,000  |  |                   |           | 2,071,300  |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |            
|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    |                       |  | 1.6% 
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |            
|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                                                                                                                                                                        |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |          
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  | $         | 15,900,940 |  |                   | $         | 15,148,528 |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |          
|Affiliate Investments  54.1% 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 Preferred Membership Units.     |  | 10/20/14          |  | 9%          |  | $         | 359,000    |  |                   | $         | 359,000    |                       |  | 2.1% 
|                                                                                                                                                                                                                      | 1,032,918 Series B Preferred Membership Units.       |                                                      |  |                   |  |             |  | 261,277   |            |  |                   | 291,000   |            |                       | 
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      | Total BeetNPath                                      |  |                   |  |             |  |           | 620,277    |  |                   |           | 650,000    |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |            
|Carolina Skiff LLC (g) Waycross, GA.
Manufacturer of fresh water, ocean fishing and pleasure boats. (Manufacturing)
www.carolinaskiff.com                                                                             |                                                      | 6.0825% Class A common membership interest.          |  | 1/30/04           |  | 7%          |  |           | 15,000     |  |                   |           | 1,750,000  |                       |  | 5.6% 
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |            
|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 July 31, 2017. |  | 4/19/12           |  | 7%          |  |           | 661,563    |  |                   |           |           |                       |  | 0.0% 
|                                                                                                                                                                                                                      | $280,000 junior term notes at 10% due July 31, 2017. |                                                      |  |                   |  |             |  | 316,469   |            |  |                   |          |            |                       | 
|                                                                                                                                                                                                                      | Warrant for 41,619 capital securities.               |                                                      |  |                   |  |             |  | 22,000    |            |  |                   |          |            |                       | 
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      | Total First Wave                                     |  |                   |  |             |  |           | 1,000,032  |  |                   |           |           |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |            
|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.                 |  | 4/10/15           |  | 6%          |  |           | 1,000,000  |  |                   |           | 1,000,000  |                       |  | 12.8%
|                                                                                                                                                                                                                      | $3,000,000 promissory notes at 8% due May 1, 2020.   |                                                      |  |                   |  |             |  | 2,912,859 |            |  |                   | 2,912,859 |            |                       | 
|                                                                                                                                                                                                                      | Warrant for 250,000 common shares.                   |                                                      |  |                   |  |             |  | 80,000    |            |  |                   | 80,000    |            |                       | 
|                                                                                                                                                                                                                      | Warrant for 125,000 common shares.                   |                                                      |  |                   |  |             |  | 40,000    |            |  |                   | 40,000    |            |                       | 
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      
|                                                                                                                                                                                                                      |                                                      | Total Genicon                                        |  |                   |  |             |  |           | 4,032,859  |  |                   |           | 4,032,859  |                       |  |      
|                                                                                                                                                                                                                      |                                                      |                                                      |  |                   |  |             |  |           |            |  |                   |           |            |                       |  |      



8



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2018 (Continued)

(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
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |           
|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           |  | 6%         |  |         | 616,221   |  |                   |         | 424,314   |                       |  | 1.3%
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |           
|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                                |                                                                                                                | 16.639% Class A membership interest. 8% cumulative dividend.                   |  | 8/31/99           |  | 17%        |  |         | 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 |  |                   |         | 400,000   |                       |  | 1.3%
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |           
|Knoa Software, Inc. (g) (h)
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.                               |  | 11/20/12          |  | 7%         |  |         | 750,000   |  |                   |         | 750,000   |                       |  | 3.9%
|                                                                                                                                                                                                                  | 1,876,922 Series B preferred shares.                                                                           |                                                                                |  |                   |  |            |  | 479,155 |           |  |                   | 479,155 |           |                       | 
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |            |  |         |           |  |                   |         |           |                       |  |     
|                                                                                                                                                                                                                  |                                                                                                                | Total Knoa                                                                     |  |                   |  |            |  |         | 1,229,155 |  |                   |         | 1,229,155 |                       |  |     
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |            |  |         |           |  |                   |         |           |                       |  |     
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |           
|KnowledgeVision Systems, Inc. (e)(g)
Lincoln, MA. Online presentation and training software. (Software)
www.knowledgevision.com                                                                                   |                                                                                                                | 200,000 Series A-1 preferred shares.                                           |  | 11/13/13          |  | 7%         |  |         | 250,000   |  |                   |         |          |                       |  | 1.8%
|                                                                                                                                                                                                                  | 214,285 Series A-2 preferred shares.                                                                           |                                                                                |  |                   |  |            |  | 300,000 |           |  |                   | 300,000 |           |                       | 
|                                                                                                                                                                                                                  | 129,033 Series A-3 preferred shares.                                                                           |                                                                                |  |                   |  |            |  | 165,001 |           |  |                   | 165,001 |           |                       | 
|                                                                                                                                                                                                                  | 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) 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 promissory note at 12% (1% PIK) due December 31, 2024. |  | 9/24/09           |  | 15%        |  |         | 1,918,926 |  |                   |         | 1,918,926 |                       |  | 6.1%
|                                                                                                                                                                                                                  | 15% Class A common membership interest.                                                                        |                                                                                |  |                   |  |            |  |        |           |  |                   |        |           |                       | 
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |            |  |         |           |  |                   |         |           |                       |  |     
|                                                                                                                                                                                                                  |                                                                                                                | Total Microcision                                                              |  |                   |  |            |  |         | 1,918,926 |  |                   |         | 1,918,926 |                       |  |     
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |            |  |         |           |  |                   |         |           |                       |  |     
|                                                                                                                                                                                                                  |                                                                                                                |                                                                                |  |                   |  |           
|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%



9



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2018 (Continued)

(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
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |            
|OnCore Golf Technology, Inc. (e)(g)
Buffalo, NY. Maker of patented golf balls. (Consumer Product)
www.oncoregolf.com                                                                                               |                                                                                | 150,000 Series AA preferred shares.                           |  | 12/31/14          |  | 9%          |  |           | 375,000    |  |                   |         |           |                       |  | 1.0%
|                                                                                                                                                                                                                   | $300,000 subordinated convertible promissory notes at 6% due January 24, 2018. |                                                               |  |                   |  |             |  | 300,000   |            |  |                   | 300,000 |            |                       | 
|                                                                                                                                                                                                                   | (i) Interest receivable $50,342.                                               |                                                               |  |                   |  |             |  |           |            |  |                   |         |            |                       | 
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |         |            |                       |  |     
|                                                                                                                                                                                                                   |                                                                                | Total OnCore                                                  |  |                   |  |             |  |           | 675,000    |  |                   |         | 300,000    |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |         |            |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |            
|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 preferred shares.                |  | 7/12/13           |  | 6%          |  |           | 1,500,000  |  |                   |         | 700,000    |                       |  | 6.4%
|                                                                                                                                                                                                                   | 274,299 Series A-1 convertible preferred shares.                               |                                                               |  |                   |  |             |  | 504,710   |            |  |                   | 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 |            |                       | 
|                                                                                                                                                                                                                   | 147,059 Series D shares.                                                       |                                                               |  |                   |  |             |  | 250,000   |            |  |                   | 250,000 |            |                       | 
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |         |            |                       |  |     
|                                                                                                                                                                                                                   |                                                                                | Total SciAps                                                  |  |                   |  |             |  |           | 3,078,984  |  |                   |         | 2,024,274  |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |         |            |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |            
|SOMS Technologies, LLC (e)(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    |                       |  | 1.7%
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |            
|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.                              |  | 5/30/14           |  | 6%          |  |           | 250,000    |  |                   |         |           |                       |  | 0.0%
|                                                                                                                                                                                                                   | 1,000,000 Class C preferred units.                                             |                                                               |  |                   |  |             |  | 1,190,680 |            |  |                   |        |            |                       | 
|                                                                                                                                                                                                                   | 80,000 Class D preferred units.                                                |                                                               |  |                   |  |             |  | 91,200    |            |  |                   |        |            |                       | 
|                                                                                                                                                                                                                   | 104,198 Class E preferred units.                                               |                                                               |  |                   |  |             |  | 104,198   |            |  |                   |        |            |                       | 
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |         |            |                       |  |     
|                                                                                                                                                                                                                   |                                                                                | PIK dividend for Series C and D at 12% and 14%, respectively. |  |                   |  |             |  |           |            |  |                   |         |            |                       |  |     
|                                                                                                                                                                                                                   |                                                                                | Total Teleservices                                            |  |                   |  |             |  |           | 1,636,078  |  |                   |         |           |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |         |            |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |            
|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.                            |  | 1/20/15           |  | 11%         |  |           | 600,000    |  |                   |         | 600,000    |                       |  | 8.0%
|                                                                                                                                                                                                                   | 21,391 Series C convertible preferred shares.                                  |                                                               |  |                   |  |             |  | 200,000   |            |  |                   | 200,000 |            |                       | 
|                                                                                                                                                                                                                   | $200,000 subordinated promissory 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                                                                                                                                                                                     |                                                                                |                                                               |  |                   |  |             |  | $         | 21,086,529 |  |                   | $       | 16,982,195 |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |        
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |            
|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                                                                             |                                                                                | 45% Membership interest.                                      |  | 12/30/10          |  | 45%         |  | $         | 99,500     |  |                   | $       | 99,500     |                       |  | 0.3%
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |        
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |            
|Subtotal Control Investments                                                                                                                                                                                       |                                                                                |                                                               |  |                   |  |             |  | $         | 99,500     |  |                   | $       | 99,500     |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |        
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |            
|TOTAL INVESTMENTS  102.6%                                                                                                                                                                                         |                                                                                |                                                               |  |                   |  |             |  | $         | 37,086,969 |  |                   | $       | 32,230,223 |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |        
|OTHER ASSETS IN EXCESS OF LIABILITIES
 (2.6%)                                                                                                                                                                     |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |         | (831,951   | )                     |  |     
|NET ASSETS  100%                                                                                                                                                                                                  |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   | $       | 31,398,272 |                       |  |     
|                                                                                                                                                                                                                   |                                                                                |                                                               |  |                   |  |             |  |           |            |  |                   |         |            |                       |  |     



10



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2018 (Continued)

(Unaudited)

Notes to the
Consolidated Schedule of Portfolio Investments

(a) At March 31, 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 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, 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. 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, 2018 the total cost of investment securities was approximately
$37.1 million. Net unrealized depreciation was approximately ($4.9) million, which was comprised of $2.4 million of unrealized appreciation of investment securities and ($7.3) million of unrealized depreciation of investment securities. At
March 31, 2018, the aggregate gross unrealized gain for federal income tax purposes was $2.8 million and the aggregate gross unrealized loss for federal income tax purposes was ($6.5) million. The net unrealized loss for federal income tax
purposes was ($3.7) million based on a tax cost of $36 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 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.



11



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2018 (Continued)

(Unaudited)

Investments in and
Advances to Affiliates



|                                      |                                            |                                                              |  |                              |           |  |                    |       |       |                    |  |          |                         |   |  |                          |           |  |                                          |   |   |  |  |        |        | 
|------------------------------------- | ------------------------------------------ | ------------------------------------------------------------ |  | ---------------------------- | --------- |  | ------------------ | ----- | ----- | ------------------ |  | -------- | ----------------------- | - |  | ------------------------ | --------- |  | ---------------------------------------- | - | - |  |  | ------ | ------ | 
|Company                               |                                            | Type of Investment                                           |  | December
31, 2017
Fair Value |           |  | GrossAdditions
(1) |       |       | GrossReductions(2) |  |          | March 31,2018 FairValue |   |  | NetRealizedGains(Losses) |           |  | Amount ofInterest/Dividend/Fee Income(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 |  |                                          |   |  |  |  |        | 41,095 | 
|                                      |                                            |                                                              |  |                              |           |  |                   
|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%.                           |  |                              | 250,000   |  |                    |       |      |                    |  |          | (250,000                | ) |  |                          |          |  |                                          |   |  |  |  |        |       | 
|                                      | $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                    |           |  |                    | 9,080 |       |                    |  |         |                         |   |  | 2,912,859                |           |  |                                          |  |   |  |  | 71,247 |       
|                                      | 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 |  |                    |       | 9,080 |                    |  |          |                        |   |  |                          | 4,032,859 |  |                                          |   |  |  |  |        | 71,247 | 
|                                      |                                            |                                                              |  |                              |           |  |                    |       |       |                    |  |          |                         |   |  |                          |           |  |                                          |   |   |  |  |        |        | 
|                                      |                                            |                                                              |  |                              |           |  |                   
|GiveGab, Inc.                         |                                            | 5,084,329 Series Seed preferred shares.                      |  |                              | 424,314   |  |                    |       |      |                    |  |          |                        |   |  |                          | 424,314   |  |                                          |   |  |  |  |        |       | 
|                                      |                                            |                                                              |  |                              |           |  |                   
|G-TEC Natural Gas Systems             |                                            | 16.639% Class A membership interest. 8% cumulative dividend. |  |                              | 100,000   |  |                    |       |      |                    |  |          |                        |   |  |                          | 100,000   |  |                                          |   |  |  |  |        |       | 
|                                      |                                            |                                                              |  |                              |           |  |                   
|Intrinsiq Materials, Inc.             |                                            | 4,161,747 Series A preferred shares.                         |  |                              | 400,000   |  |                    |       |      |                    |  |          |                        |   |  |                          | 400,000   |  |                                          |   |  |  |  |        |       | 
|                                      |                                            |                                                              |  |                              |           |  |                   
|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
Systems, Inc.         |                                            | 200,000 Series A-1 preferred shares.                         |  |                              |          |  |                    |       |      |                    |  |          |                        |   |  |                          |          |  |                                          |   |  |  |  |        |       | 
|                                      | 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                   |           |  |                                          |  |   |  |  | 1,019  |       
|                                      | Warrant for 46,743 Series A-3 shares.      |                                                              |  | 35,000                       |           |  |                    |      |       |                    |  |         |                         |   |  | 35,000                   |           |  |                                          |  |   |  |  |       |       
|                                      |                                            |                                                              |  |                              |           |  |                    |       |       |                    |  |          |                         |   |  |                          |           |  |                                          |   |   |  |  |        |        | 
|                                      |                                            | Total Knowledge Vision                                       |  |                              | 550,001   |  |                    |       |      |                    |  |          |                        |   |  |                          | 550,001   |  |                                          |   |  |  |  |        | 1,019  | 
|                                      |                                            |                                                              |  |                              |           |  |                    |       |       |                    |  |          |                         |   |  |                          |           |  |                                          |   |   |  |  |        |        | 
|                                      |                                            |                                                              |  |                              |           |  |                   
|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 |  |                    |       | 4,786 |                    |  |          |                        |   |  |                          | 1,918,926 |  |                                          |   |  |  |  |        | 57,424 | 
|                                      |                                            |                                                              |  |                              |           |  |                   
|New Monarch Machine Tool, Inc.        |                                            | 22.84 common shares.                                         |  |                              | 22,841    |  |                    |       |      |                    |  |          |                        |   |  |                          | 22,841    |  |                                          |   |  |  |  |        | 1,000  | 



12



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2018 (Continued)

Investments in and Advances to Affiliates



|                                     |                                               |                                                           |  |                            |            |  |                   |   |         |                    |  |    |                         |   |  |                          |            |  |                                           |   |   |  |  |        |         | 
|------------------------------------ | --------------------------------------------- | --------------------------------------------------------- |  | -------------------------- | ---------- |  | ----------------- | - | ------- | ------------------ |  | -- | ----------------------- | - |  | ------------------------ | ---------- |  | ----------------------------------------- | - | - |  |  | ------ | ------- | 
|Company                              |                                               | Type of Investment                                        |  | December 31,2017 FairValue |            |  | GrossAdditions(1) |   |         | GrossReductions(2) |  |    | March 31,2018 FairValue |   |  | NetRealizedGains(Losses) |            |  | Amount ofInterest/Dividend/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
Technologies, LLC               |                                               | 5,959,490 Series B membership interests.                  |  |                            | 528,348    |  |                   |   |        |                    |  |    |                        |   |  |                          | 528,348    |  |                                           |   |  |  |  |        |        | 
|Teleservices
Solutions
Holdings, LLC |                                               | 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.              |                                                           |  |                           |            |  |                   |  |         |                    |  |   |                         |   |  |                         |            |  |                                           |  |   |  |  |       |        
|                                     |                                               |                                                           |  |                            |            |  |                   |   |         |                    |  |    |                         |   |  |                          |            |  |                                           |   |   |  |  |        |         | 
|                                     |                                               | Total Teleservices                                        |  |                            |           |  |                   |   |        |                    |  |    |                        |   |  |                          |           |  |                                           |   |  |  |  |        |        | 
|                                     |                                               |                                                           |  |                            |            |  |                   |   |         |                    |  |    |                         |   |  |                          |            |  |                                           |   |   |  |  |        |         | 
|                                     |                                               |                                                           |  |                            |            |  |                  
|Tilson Technology
Management, Inc.   |                                               | 120,000 Series B preferred shares.                        |  |                            | 600,000    |  |                   |   |        |                    |  |    |                        |   |  |                          | 600,000    |  |                                           |   |  |  |  |        | 5,000   | 
|                                     | 21,391 Series C convertible preferred shares. |                                                           |  | 200,000                    |            |  |                   |  |         |                    |  |   |                         |   |  | 200,000                  |            |  |                                           |  |   |  |  |        |        
|                                     | $200,000 subordinated promissory note at 8%.  |                                                           |  | 200,000                    |            |  |                   |   |         |                    |  |    |                         |   |  | 200,000                  |            |  |                                           |  |   |  |  | 3,945  |        
|                                     | 65,790 Series D preferred shares.             |                                                           |  | 750,000                    |            |  |                   |   |         |                    |  |    |                         |   |  | 750,000                  |            |  |                                           |  |   |  |  | 4,688  |        
|                                     | $750,000 subordinated promissory note at 8%.  |                                                           |  | 750,000                    |            |  |                   |  |         |                    |  |   |                         |   |  | 750,000                  |            |  |                                           |  |   |  |  | 14,795 |        
|                                     |                                               |                                                           |  |                            |            |  |                   |   |         |                    |  |    |                         |   |  |                          |            |  |                                           |   |   |  |  |        |         | 
|                                     |                                               | Total Tilson                                              |  |                            | 2,500,000  |  |                   |   |        |                    |  |    |                        |   |  |                          | 2,500,000  |  |                                           |   |  |  |  |        | 28,428  | 
|                                     |                                               |                                                           |  |                            |            | 
|                                     |                                               |                                                           |  |                            |            |  |                  
|                                     |                                               | Total Affiliate Investments                               |  | $                          | 17,016,795 |  |                   | $ | 263,866 |                    |  | ($ | 298,466                 | ) |  | $                        | 16,982,195 |  |                                           | $ |  |  |  | $      | 200,986 | 
|                                     |                                               |                                                           |  |                            |            | 
|                                     |                                               |                                                           |  |                            |            |  |                  
|                                     |                                               | Total Control and Affiliate Investments                   |  | $                          | 17,116,295 |  |                   | $ | 263,866 |                    |  | ($ | 298,466                 | ) |  | $                        | 17,081,695 |  |                                           | $ |  |  |  | $      | 200,986 | 
|                                     |                                               |                                                           |  |                            |            | 

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 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 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.



13



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RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

March 31, 2018 (Continued)



|                        |  |                                                                    
|----------------------- |  | -------------------------------------------------------------------
|Industry Classification |  | Percentage of TotalInvestments (at fair value)
as of March 31, 2018
|                        | 
|Healthcare              |  | 36.9%                                                              
|                        | 
|Software                |  | 24.6                                                               
|                        | 
|Manufacturing           |  | 20.2                                                               
|                        | 
|Professional Services   |  | 7.8                                                                
|                        | 
|Consumer Product        |  | 4.6                                                                
|                        | 
|Contact Center          |  | 2.9                                                                
|                        | 
|Oil and Gas             |  | 1.6                                                                
|                        | 
|Electronics             |  | 1.1                                                                
|                        | 
|Marketing               |  | 0.3                                                                
|                        |  |                                                                    
|                        | 
|Total Investments       |  | 100%                                                               
|                        |  |                                                                    



14



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

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)                                                                                                                                                                     |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|Buffalo, NY. Live mobile wholesale 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% 
|Centivo Corporation (e)(n)                                                                                                                                                                    |                                                                               |                                                                                                   |  | 7/5/17            |  | 0%          |  |           |           |  |                   |           |           |                       |  | 0.3% 
|New York, NY. Tech-enabled health solutions company that helps self-insured employers and their employees save money and have a better experience. (Health Care)                              |                                                                               | $100,000 convertible unsecurednote at 2% due February 1, 2019.                                    |  |                   |  |             |  |           | 100,000   |  |                   |           | 100,000   |                       |  |      
|eHealth Global Technologies, Inc.                                                                                                                                                             |                                                                               |                                                                                                   |  | 6/28/16           |  | 0%          |  |           |           |  |                   |           |           |                       |  | 11.0%
|Henrietta, NY. eHealth Connect® improves health care delivery through
intelligently aggregated clinical record and images for patient referrals. (Health Care) www.ehealthtechnologies.com    |                                                                               | (g) $1,500,000 term note at 10%due September 2, 2019.                                             |  |                   |  |             |  |           | 1,500,000 |  |                   |           | 1,500,000 |                       |  |      
|                                                                                                                                                                                              | (n) $2,000,000 term note at 10%due September 2, 2019.                         |                                                                                                   |  |                   |  |             |  | 2,000,000 |           |  |                   | 2,000,000 |           |                       | 
|                                                                                                                                                                                              |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|                                                                                                                                                                                              |                                                                               | Total eHealth                                                                                     |  |                   |  |             |  |           | 3,500,000 |  |                   |           | 3,500,000 |                       |  |      
|                                                                                                                                                                                              |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|Empire Genomics, LLC (g)                                                                                                                                                                      |                                                                               |                                                                                                   |  | 6/13/14           |  | 0%          |  |           |           |  |                   |           |           |                       |  | 4.2% 
|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 |                                                                               | $1,101,489 senior secured convertible term notes at 10% due April 30, 2018.                       |  |                   |  |             |  |           | 1,101,489 |  |                   |           | 1,101,489 |                       |  |      
|                                                                                                                                                                                              | $250,000 promissory note at 12% due December 31, 2019.                        |                                                                                                   |  |                   |  |             |  | 250,000   |           |  |                   | 250,000   |           |                       | 
|                                                                                                                                                                                              |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|                                                                                                                                                                                              |                                                                               | (i) Interest receivable $65,906.                                                                  |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|                                                                                                                                                                                              |                                                                               | Total Empire                                                                                      |  |                   |  |             |  |           | 1,351,489 |  |                   |           | 1,351,489 |                       |  |      
|                                                                                                                                                                                              |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|GoNoodle, Inc. (g)(m)                                                                                                                                                                         |                                                                               |                                                                                                   |  | 2/6/15            |  | <1%         |  |           |           |  |                   |           |           |                       |  | 3.2% 
|(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)).                   |  |                   |  |             |  |           | 1,029,330 |  |                   |           | 1,029,330 |                       |  |      
|                                                                                                                                                                                              | Warrant for 47,324 Series C Preferred shares.                                 |                                                                                                   |  |                   |  |             |  | 25        |           |  |                   | 25        |           |                       | 
|                                                                                                                                                                                              |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|                                                                                                                                                                                              |                                                                               | Total GoNoodle                                                                                    |  |                   |  |             |  |           | 1,029,355 |  |                   |           | 1,029,355 |                       |  |      
|                                                                                                                                                                                              |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|Mercantile Adjustment Bureau, LLC (g)                                                                                                                                                         |                                                                               |                                                                                                   |  | 10/22/12          |  | 4%          |  |           |           |  |                   |           |           |                       |  | 3.0% 
|Williamsville, NY. Full service accounts receivable management and collections company. (Contact Center) www.mercantilesolutions.com                                                          |                                                                               | $1,199,039 subordinated secured note at 13% (3% for the calendar year 2017) due January 31, 2018. |  |                   |  |             |  |           | 1,199,040 |  |                   |           | 949,040   |                       |  |      
|                                                                                                                                                                                              | (e) $150,000 subordinated 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) (Chequed
Holdings, LLC)                                                                                                                                         |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|Dallas, TX. Web based predictive employee selection and reference checking. (Software)
www.outmatch.com                                                                                       |                                                                               | 2,641,899 Class P1 Units.                                                                         |  | 11/18/10          |  | 4%          |  |           | 2,140,007 |  |                   |           | 2,140,007 |                       |  | 6.7% 
|                                                                                                                                                                                              |                                                                               | 109,788 Class C1 Units.                                                                           |  |                   |  |             |  |           | 5,489     |  |                   |           | 5,489     |                       |  |      
|                                                                                                                                                                                              |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|                                                                                                                                                                                              |                                                                               | Total Outmatch                                                                                    |  |                   |  |             |  |           | 2,145,496 |  |                   |           | 2,145,496 |                       |  |      
|                                                                                                                                                                                              |                                                                               |                                                                                                   |  |                   |  |             |  |           |           |  |                   |           |           |                       |  |      
|PostProcess Technologies LLC (e)(g)                                                                                                                                                           |                                                                               |                                                                                                   |  | 7/25/16           |  | 0%          |  |           |           |  |                   |           |           |                       |  | 0.9% 
|Buffalo, NY. Provides innovative solutions for the post-processing of additive manufactured 3D parts. (Manufacturing)www.postprocess.com                                                      |                                                                               | $300,000 convertible promissorynote at 5% due July 28, 2018.                                      |  |                   |  |             |  |           | 300,000   |  |                   |           | 300,000   |                       |  |      



15



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RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

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 microfluidic based molecular assay and diagnostic testing devices. (Health Care) www.rheonix.com                                                                             |                                                     | (g) 1,839,422 Series A preferred shares.              |  |                   |          |  |             |  |    |      |  |           | 2,099,999         |  |  |                       | 2,165,999  |  |  |  |       | 
|                                                                                                                                                                                                                      | (g) 50,593 common shares.                           |                                                       |  |                   |          |  |             |  |    |      |  |          |                   |  |  | 59,000                |            |  |  |  |      
|                                                                                                                                                                                                                      | (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 networks using a proprietary, predictive analytic algorithm to optimize
advertising and publishing. (Software) www.socialflow.com                                   |                                                     | 1,204,819 Series B-1 preferred shares.                |  |                   |          |  |             |  |    |      |  |           | 750,000           |  |  |                       | 839,648    |  |  |  |       | 
|                                                                                                                                                                                                                      | 717,772 Series C preferred shares.                  |                                                       |  |                   |          |  |             |  |    |      |  | 500,000   |                   |  |  | 500,221               |            |  |  |  |      
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |      
|                                                                                                                                                                                                                      | Total Social Flow                                   |                                                       |  |                   |          |  |             |  |    |      |  | 1,750,000 |                   |  |  | 2,071,300             |            |  |  |  |      
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |       | 
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |       | 
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |       | 
|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)
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 Preferred Membership Units.      |  |                   | 10/20/14 |  |             |  | 9% |      |  | $         | 359,000           |  |  | $                     | 359,000    |  |  |  | 2.0%  | 
|                                                                                                                                                                                                                      | 1,032,918 Series B Preferred Membership Units.      |                                                       |  |                   |          |  |             |  |    |      |  | 261,277   |                   |  |  | 291,000               |            |  |  |  |      
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |      
|                                                                                                                                                                                                                      | Total BeetNPath                                     |                                                       |  |                   |          |  |             |  |    |      |  | 620,277   |                   |  |  | 650,000               |            |  |  |  |      
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |       | 
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |       | 
|Carolina Skiff LLC (g) Waycross, GA.
Manufacturer of fresh water, ocean fishing and pleasure boats. (Manufacturing) www.carolinaskiff.com                                                                             |                                                     | 6.0825% Class A common membership interest.           |  |                   | 1/30/04  |  |             |  | 7% |      |  |           | 15,000            |  |  |                       | 1,750,000  |  |  |  | 5.5%  | 
|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% dueJuly 31, 2017.   |  |                   | 4/19/12  |  |             |  | 7% |      |  |           | 661,563           |  |  |                       | 250,000    |  |  |  | 0.8%  | 
|                                                                                                                                                                                                                      | $280,000 junior term notes at 10% dueJuly 31, 2017. |                                                       |  |                   |          |  |             |  |    |      |  | 316,469   |                   |  |  |                      |            |  |  |  |      
|                                                                                                                                                                                                                      | Warrant for 41,619 capital securities.              |                                                       |  |                   |          |  |             |  |    |      |  | 22,000    |                   |  |  |                      |            |  |  |  |      
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |      
|                                                                                                                                                                                                                      |                                                     | 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
distributes patented surgical instrumentation. (Health Care)
www.geniconendo.com                                                                                               |                                                     | (g) $2,000,000 promissory note at 8% due May 1, 2020. |  |                   |          |  |             |  |    |      |  |           | 1,936,002         |  |  |                       | 1,936,002  |  |  |  |       | 
|                                                                                                                                                                                                                      | (g) Warrant for 250,000 common 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  |  |  |  |       | 
|                                                                                                                                                                                                                      |                                                     |                                                       |  |                   |          |  |             |  |    |      |  |           |                   |  |  |                       |            |  |  |  |       | 



16



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RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

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
|                                                                                                                                                                                       |  |                                                                                                                |  |                   |  |            
|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 systems that allow natural gas to be used as an alternative fuel to gases. (Manufacturing) www.gas-tec.com                                   |  | 8% cumulative dividend.                                                                                        |  |                   |  |             |  |      | 400,000   |  |                   |  | 100,000   |                       |  |     
|                                                                                                                                                                                       |  |                                                                                                                |  |                   |  |            
|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 a room-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) www.knoa.com                                                                                                                             |  | $48,466 convertible promissory note at 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 gesture recognition 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 precision machined medical implants,                                                                                                          |  | note at 12% (1% PIK) due December 31, 2024.                                                                    |  |                   |  |             |  |      | 1,914,140 |  |                   |  | 1,914,140 |                       |  |     
|components and assemblies. (Manufacturing) www.microcision.com                                                                                                                         |  | 15% Class A common membership 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                                                                       |  |                                                                                                                |  |                   |  |             |  |      |           |  |                   |  |           |                       |  |     



17



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RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

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
|                                                                                                                                                                                                                   |                                                                        |                                                                                                                                                 |  |                   |  |            
|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 convertible promissory notes at 6% (10% for calendar year 2017) due January 24, 2018. |  | 12/31/14          |  | 9%          |  |           | 375,000     |  |                   |         |            |                       |  | 0.9%
|                                                                                                                                                                                                                   | (i)Interest receivable $50,342.                                        |                                                                                                                                                 |  |                   |  |             |  | 300,000   |             |  |                   | 300,000 |             |                       | 
|                                                                                                                                                                                                                   |                                                                        |                                                                                                                                                 |  |                   |  |             |  |           |             |  |                   |         |             |                       |  |     
|                                                                                                                                                                                                                   |                                                                        | Total OnCore                                                                                                                                    |  |                   |  |             |  |           | 675,000     |  |                   |         | 300,000     |                       |  |     
|                                                                                                                                                                                                                   |                                                                        |                                                                                                                                                 |  |                   |  |             |  |           |             |  |                   |         |             |                       |  |     
|                                                                                                                                                                                                                   |                                                                        |                                                                                                                                                 |  |                   |  |            
|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 preferred                                                                                                          |  | 7/12/13           |  | 8%          |  |           |             |  |                   |         |             |                       |  | 5.6%
|                                                                                                                                                                                                                   | shares.                                                                |                                                                                                                                                 |  |                   |  |             |  | 1,500,000 |             |  |                   | 700,000 |             |                       | 
|                                                                                                                                                                                                                   | 274,299 Series A-1 convertible preferred shares.                       |                                                                                                                                                 |  |                   |  |             |  | 504,710   |             |  |                   | 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 |             |                       | 
|                                                                                                                                                                                                                   |                                                                        |                                                                                                                                                 |  |                   |  |             |  |           |             |  |                   |         |             |                       |  |     
|                                                                                                                                                                                                                   |                                                                        | 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 microGreen Extended Performance Oil Filter.
(Consumer Products) www.microgreenfilter.com                                                                                    |                                                                        | interests.                                                                                                                                      |  |                   |  |             |  |           | 472,632     |  |                   |         | 528,348     |                       |  |     
|                                                                                                                                                                                                                   |                                                                        |                                                                                                                                                 |  |                   |  |            
|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.                                                                                                                |  | 5/30/14           |  | 6%          |  |           | 250,000     |  |                   |         |            |                       |  | 0.0%
|                                                                                                                                                                                                                   | 1,000,000 Class C preferred units.                                     |                                                                                                                                                 |  |                   |  |             |  | 1,190,680 |             |  |                   |        |             |                       | 
|                                                                                                                                                                                                                   | 80,000 Class D preferred units.                                        |                                                                                                                                                 |  |                   |  |             |  | 91,200    |             |  |                   |        |             |                       | 
|                                                                                                                                                                                                                   | 104,198 Class E preferred units.                                       |                                                                                                                                                 |  |                   |  |             |  | 104,198   |             |  |                   |        |             |                       | 
|                                                                                                                                                                                                                   |                                                                        |                                                                                                                                                 |  |                   |  |             |  |           |             |  |                   |         |             |                       | 
|                                                                                                                                                                                                                   |                                                                        | PIK dividend for Series C and D at 12% 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 information systems, construction, and management. (Professional Services)
www.tilsontech.com                                                                     |                                                                        | 21,391 Series C convertible preferred shares.                                                                                                   |  |                   |  |             |  |           | 200,000     |  |                   |         | 200,000     |                       |  |     
|                                                                                                                                                                                                                   | (g)$200,000 subordinated promissory 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 |                       |  |     
|                                                                                                                                                                                                                   |                                                                        |                                                                                                                                                 |  |                   |  |             |  |           |             |  |                   |         |             |                       |  |     



18



---

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 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, 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. 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, 2017, the total cost of investment securities was approximately
$36.7 million. Net unrealized 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, the aggregate 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) million based 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 were no principal repayments during the year
ended December 31, 2017.

(i) Represents interest due (amounts over $50,000) 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.

(n) Rand Capital SBIC II, L.P. investment.



19



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2017 (Continued)

Investments in and Advances to Affiliates



|                               |                                    |                                                             |  |                             |           |  |                    |   |           |                    |  |   |                             |  |  |                          |           |  |                                           |   |      |  |  |   |         | 
|------------------------------ | ---------------------------------- | ----------------------------------------------------------- |  | --------------------------- | --------- |  | ------------------ | - | --------- | ------------------ |  | - | --------------------------- |  |  | ------------------------ | --------- |  | ----------------------------------------- | - | ---- |  |  | - | ------- | 
|Company                        |                                    | Type of Investment                                          |  | December31, 2016
Fair Value |           |  | GrossAdditions
(1) |   |           | GrossReductions(2) |  |   | December
31, 2017 FairValue |  |  | NetRealizedGains(Losses) |           |  | Amount ofInterest/Dividend/Fee Income (3) |  
|                               |                                    |                                                             |  |                             |           |  |                   
|Control Investments:           |                                    |                                                             |  |                             |           |  |                    |   |           |                    |  |   |                             |  |  |                          |           |  |                                           |   |      |  |  |   |         | 
|Advantage 24/7 LLC             |                                    | 53% 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   |  |                                           |   |    |  |  |   |        | 
|                               |                                    | $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 interest.                 |  |                             | 1,100,000 |  |                    |   | 650,000   |                    |  |   |                            |  |  |                          | 1,750,000 |  |                                           |   |     |  |  |   | 178,532 | 
|                               |                                    |                                                             |  |                             |           |  |                   
|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%.                          |  |                             | 250,000   |  |                    |   |          |                    |  |   |                            |  |  |                          | 250,000   |  |                                           |   |     |  |  |   |        | 
|                               | $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 Systems      |                                    | 16.639% Class A membership interest. 8% 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 Systems, Inc.  |                                    | 200,000 Series A-1 preferred shares.                        |  |                             |          |  |                    |   |          |                    |  |   |                            |  |  |                          |          |  |                                           |   |     |  |  |   |        | 
|                               |                                    | 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 Machine Tool, Inc. |                                    | 22.84 common shares.                                        |  |                             | 22,841    |  |                    |   |          |                    |  |   |                            |  |  |                          | 22,841    |  |                                           |   |     |  |  |   | 28,409  | 



20



---

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2017 (Continued)

Investments in and Advances to Affiliates



|                                     |                                               |                                                           |  |                              |             |  |                    |         |            |                      |  |           |                            |  |  |                            |             |  |                                           |   |    |  |  |       |          | 
|------------------------------------ | --------------------------------------------- | --------------------------------------------------------- |  | ---------------------------- | ----------- |  | ------------------ | ------- | ---------- | -------------------- |  | --------- | -------------------------- |  |  | -------------------------- | ----------- |  | ----------------------------------------- | - | -- |  |  | ----- | -------- | 
|Company                              |                                               | Type of Investment                                        |  | December 31,
2016 Fair
Value |             |  | GrossAdditions
(1) |         |            | Gross
Reductions
(2) |  |           | December 31,2017 FairValue |  |  | Net
Realized
Gains(Losses) |             |  | Amount ofInterest/Dividend/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 Technologies, LLC               |                                               | 5,959,490 Series B membership interests.                  |  |                              | 528,348     |  |                    |         |           |                      |  |           |                           |  |  |                            | 528,348     |  |                                           |   |   |  |  |       | 6,024    | 
|                                     |                                               |                                                           |  |                              |             |  |                   
|Teleservices Solutions
Holdings, LLC |                                               | 250,000 Class B preferred units.                          |  |                              |            |  |                    |         |           |                      |  |           |                           |  |  |                            |            |  |                                           |   |   |  |  |       |         | 
|                                     | 1,000,000 Class C preferred units.            |                                                           |  | 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.   |                                               | 120,000 Series B preferred shares.                        |  |                              | 600,000     |  |                    |         |           |                      |  |           |                           |  |  |                            | 600,000     |  |                                           |   |   |  |  |       | 20,000   | 
|                                     | 21,391 Series C convertible preferred shares. |                                                           |  | 200,000                      |             |  |                    |        |            |                      |  |          |                            |  |  | 200,000                    |             |  |                                           |  |    |  |  |      |         
|                                     |                                               | $200,000 subordinated promissory note at 8%.              |  |                              | 200,000     |  |                    |         |           |                      |  |           |                            |  |  |                            | 200,000     |  |                                           |   |   |  |  |       | 16,000   | 
|                                     |                                               |                                                           |  |                             |             |  |                    | 750,000 |            |                      |  |           |                            |  |  | 750,000                    |             |  |                                           |   |    |  |  | 1,579 |         
|                                     |                                               | 65,790 Series D preferred shares.                         |  |                              |             |  |                    |         |            |                      |  |           |                            |  |  |                            |             |  |                                           |   |    |  |  |       |          | 
|                                     |                                               | $750,000 subordinated promissory note at 8%.              |  |                              |            |  |                    |         | 750,000    |                      |  |           |                           |  |  |                            | 750,000     |  |                                           |   |   |  |  |       | 5,096    | 
|                                     |                                               |                                                           |  |                              |             |  |                    |         |            |                      |  |           |                            |  |  |                            |             |  |                                           |   |    |  |  |       |          | 
|                                     |                                               | Total Tilson                                              |  |                              | 1,000,000   |  |                    |         | 1,500,000  |                      |  |           |                           |  |  |                            | 2,500,000   |  |                                           |   |   |  |  |       | 42,675   | 
|                                     |                                               |                                                           |  |                              |             | 
|                                     |                                               |                                                           |  |                              |             |  |                   
|                                     |                                               | 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 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 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 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 SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

December 31, 2017 (Continued)



|                        |  |                                                                      
|----------------------- |  | ---------------------------------------------------------------------
|Industry Classification |  | Percentage of TotalInvestments (at fair value)as of December 31, 2017
|                        | 
|Healthcare              |  | 37.7%                                                                
|                        | 
|Software                |  | 24.7                                                                 
|                        | 
|Manufacturing           |  | 19.4                                                                 
|                        | 
|Professional Services   |  | 7.7                                                                  
|                        | 
|Consumer Product        |  | 4.6                                                                  
|                        | 
|Contact Center          |  | 2.9                                                                  
|                        | 
|Oil and Gas             |  | 1.6                                                                  
|                        | 
|Electronics             |  | 1.1                                                                  
|                        | 
|Marketing               |  | 0.3                                                                  
|                        |  |                                                                      
|                        | 
|Total Investments       |  | 100%                                                                 
|                        |  |                                                                      



22



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Rand Capital Corporation and Subsidiaries

Notes to the Consolidated Financial Statements

(Unaudited)

Note 1. ORGANIZATION

Rand Capital Corporation (Rand, we, us and our) 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, 2017.

Throughout our history, our principal business has been
to make venture capital investments in early or expansion stage companies, often in upstate New York and regions in close proximity. In accordance with our strategic growth plan, we look for companies with strong leadership that are bringing to
market new or unique products, technologies or services and have a high potential for growth. We invest in a mixture of debt and equity instruments. The debt securities typically have an equity component in the form of warrants or options to acquire
stock or the right to convert the debt securities into stock.

We established our first small business investment company
(SBIC) in 2002, Rand Capital SBIC, Inc. (Rand SBIC), whereby we utilized funds borrowed from the Small Business Administration (SBA) combined with our capital to invest in our portfolio companies. We historically
made the majority of our venture capital investments through Rand SBIC. 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.

During 2017 we established a second SBIC subsidiary, Rand Capital SBIC II, L.P. (Rand SBIC II), and began making investments
through this SBIC subsidiary. During the first quarter of 2018, together with the SBA, we determined that the optimal structure was to revert back to investing in small businesses through our original SBIC, Rand SBIC, and the assets of Rand SBIC II
were transferred to Rand SBIC. Rand SBIC can now apply for $6 million in new SBA leverage commitment.

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.



23



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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, 2018 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, 2017. 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 status

DEF-14A        2018
Definitive Proxy Statement submitted to shareholders

Form 10-K      Annual Report on Form
10-K for the year ended December 31, 2017

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

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 nature of these financial instruments.

Fair Value of SBA Debentures In March 2018, the SBIC Funding Corporation completed a pooling of SBA debentures that have
a coupon rate of 3.187%, excluding a mandatory SBA annual charge estimated to be 0.804%, resulting in a total estimated fixed rate for ten years of 3.991%. 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.



24



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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 are on non-accrual status: G-TEC Natural Gas Systems (G-Tec), First Wave Products Group, LLC (First Wave), OnCore Golf Technology, Inc. (Oncore) and a portion of the Empire Genomics, LLC (Empire
Genomics) and 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 may hold preferred equity securities that contain cumulative dividend provisions. Cumulative dividends are recorded as
dividend income, if declared and deemed collectible, 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 the revenue associated with the amortization of
financing fees charged to the portfolio companies upon successful closing of SBIC financings and income associated with portfolio company board attendance fees. The income associated with the amortization of financing fees was $5,186 and $6,686 for
the three months ended March 31, 2018 and 2017, respectively. The board fees were $1,000 and $0 for the three months ended March 31, 2018 and 2017, 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 $9,080 and $2,499 in OID income for three months ended March 31, 2018 and 2017,
respectively. OID income is estimated to be approximately $31,000 for the remainder of 2018.



25



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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, 2018 and 2017.
Amortization expense on currently outstanding debentures for the next five years is estimated to average approximately $23,000 per year.

SBA Debentures The Corporation had $8,000,000 in outstanding SBA debentures at March 31, 2018 and December 31,
2017 with a weighted average interest rate of 3.54%. The debentures are presented net of deferred debenture costs (See Note 6 SBA Debentures). 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. The Corporation does not have any common stock equivalents outstanding.

Supplemental Cash Flow Information  Income taxes refunded during the three months ended March 31, 2018 and 2017 were
$17,051 and $7,960, respectively. Interest paid during each the three months ended March 31, 2018 and 2017 was $140,275. The Corporation converted $8,701 and $10,439 of interest receivable into investments during the three months ended
March 31, 2018 and 2017, 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, 2018 and December 31, 2017, there were 500,000 shares of $10.00 par value preferred stock authorized and unissued.

On October 26, 2017, 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 26, 2018 at prices no greater than the then current net asset value. No shares were repurchased during the three months ended March 31, 2018. At March 31, 2018, 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, 2018, 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.



26



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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.

The Corporation did not record any expense pursuant to the Plan for the three months ended March 31, 2018 and 2017, respectively.
Included in the profit sharing and bonus payable line on the Consolidated Statement of Financial Position at December 31, 2017 was $132,000 that was paid during the first quarter of 2018.

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 uncertain tax positions recorded at March 31, 2018.

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 for the three months ended March 31, 2018 or 2017.

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, 2018, Genicon, Inc. (Genicon), eHealth Global
Technologies, Inc. (eHealth), Rheonix, Inc. (Rheonix), Tilson Technology Management, Inc. (Tilson), and Outmatch (Outmatch) represented 13%, 11%, 9%, 8% and 7%, respectively, of the fair value of the Corporations investment portfolio.

At December 31, 2017, Genicon, Inc. (Genicon), eHealth Global Technologies, Inc. (eHealth), Rheonix, Inc. (Rheonix), Tilson Technology
Management, Inc. (Tilson), and Outmatch (Outmatch) represented 12%, 11%, 9%, 8% and 7%, respectively, of the fair value of the Corporations investment portfolio.

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.



27



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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 cost given the carrying interest rate versus the 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 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 debt securities, the Corporation may discount the value of an equity security. 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 in unrealized depreciation 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 Level 1 or 2 investments as of March 31, 2018.

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;
| | - |  | ---------------------------------------------------------------



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



28



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| |  |  | 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 circumstances and events 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 debt and 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 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 of less than one year old, the
Corporation generally relies on the cost basis, which is deemed to represent the fair value, unless other fair 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 value inputs are identified causing the Corporation to depart from this basis.



29



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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, 2018:



|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |        |                   |  |  |   |            | 
|-------------------------------- |  | ---------------------------- | --------------- |  | ---------------------------------- | - | ----------- | ----------------------------- |  | - | -------------------------------- |  |  | ------ | ----------------- |  |  | - | ---------- | 
|Investment Type                  |  | MarketApproachEBITDAMultiple |                 |  | MarketApproachLiquidationSeniority |   |             | MarketApproachRevenueMultiple |  |   | MarketApproachTransactionPricing |  |  | Totals |                  
|Non-Control/Non-Affiliate
Equity |  | $                            |                |  |                                    | $ | 25          |                               |  | $ | 2,145,496                        |  |  | $      | 6,093,729         |  |  | $ | 8,239,250  | 
|Non-Control/Non-Affiliate
Debt   |  | $                            | 949,040         |  |                                    |   | 2,160,238   |                               |  |   | 3,500,000                        |  |  |        | 300,000           |  |  |   | 6,909,278  | 
|Total
Non-Control/Non-Affiliate  |  | $                            | 949,040         |  |                                    | $ | 2,160,263   |                               |  | $ | 5,645,496                        |  |  | $      | 6,393,729         |  |  | $ | 15,148,528 | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |        |                   |  |  |   |            | 
|Affiliate Equity                 |  | $                            | 4,420,000       |  |                                    | $ | 22,841      |                               |  | $ | 5,406,092                        |  |  | $      | 1,001,477         |  |  | $ | 10,850,410 | 
|Affiliate Debt                   |  |                              | 5,781,785       |  |                                    |   |            |                               |  |   | 50,000                           |  |  |        | 300,000           |  |  |   | 6,131,785  | 
|Total Affiliate                  |  | $                            | 10,201,785      |  |                                    | $ | 22,841      |                               |  | $ | 5,456,092                        |  |  | $      | 1,301,477         |  |  | $ | 16,982,195 | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |        |                   |  |  |   |            | 
|Control Equity                   |  | $                            |                |  |                                    | $ |            |                               |  | $ | 99,500                           |  |  | $      |                  |  |  | $ | 99,500     | 
|Control Debt                     |  |                              |                |  |                                    |   |            |                               |  |   |                                 |  |  |        |                  |  |  |   |           | 
|Total Control                    |  | $                            |                |  |                                    | $ |            |                               |  | $ | 99,500                           |  |  | $      |                  |  |  | $ | 99,500     | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |        |                   |  |  |   |            | 
|Total Level 3 Investments        |  | $                            | 11,150,825      |  |                                    | $ | 2,183,104   |                               |  | $ | 11,201,088                       |  |  | $      | 7,695,206         |  |  | $ | 32,230,223 | 
|                                 |  |                              |                 |  |                                    |   |             |                               |  |   |                                  |  |  |        |                   |  |  |   |            | 
|Range                            |  |                              | 4X-9X           |  |                                    |   | 1X          |                               |  |   | 0.5X-6.2X                        |  |  |        | Not Applicable    |  |  |   |            | 
|Unobservable Input               |  |                              | EBITDA Multiple |  |                                    |   | Asset Value |                               |  |   | Revenue Multiple                 |  |  |        | Transaction Price |  |  |   |            | 
|Weighted Average                 |  |                              | 5.7X            |  |                                    |   | 1X          |                               |  |   | 2.3X                             |  |  |        | Not Applicable    |  |  |   |            | 

The following table provides a summary of the components of Level 1, 2 and 3 Assets Measured at Fair
Value at March 31, 2018:



|                   |  |               |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 
|------------------ |  | ------------- | ---------------------------------------------- |  | ----------------------------------------------------------- | - | - | ------------------------------------- |  | - | -------------------------------------------- |  |  | - | ---------- | 
|                   |  |               | Fair Value Measurements at Reported Date Using | 
|Description        |  | March 31,2018 |                                                |  | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | SignificantObservable Inputs(Level 2) |  |   | Other SignificantUnobservableInputs(Level 3) | 
|Loan investments   |  | $             | 3,550,000                                      |  |                                                             | $ |  |                                       |  | $ |                                             |  |  | $ | 3,550,000  | 
|Debt investments   |  |               | 9,491,063                                      |  |                                                             |   |  |                                       |  |   |                                             |  |  |   | 9,491,063  | 
|Equity investments |  |               | 19,189,160                                     |  |                                                             |   |  |                                       |  |   |                                             |  |  |   | 19,189,160 | 
|                   |  |               |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 
|Total              |  | $             | 32,230,223                                     |  |                                                             | $ |  |                                       |  | $ |                                             |  |  | $ | 32,230,223 | 
|                   |  |               |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 



30



---

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, 2017:



|                   |  |                  |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 
|------------------ |  | ---------------- | ---------------------------------------------- |  | ----------------------------------------------------------- | - | - | ------------------------------------- |  | - | -------------------------------------------- |  |  | - | ---------- | 
|                   |  |                  | Fair Value Measurements at Reported Date Using | 
|Description        |  | December 31,2017 |                                                |  | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   |   | SignificantObservable Inputs(Level 2) |  |   | Other SignificantUnobservableInputs(Level 3) | 
|Loan investments   |  | $                | 3,550,000                                      |  |                                                             | $ |  |                                       |  | $ |                                             |  |  | $ | 3,550,000  | 
|Debt investments   |  |                  | 10,096,244                                     |  |                                                             |   |  |                                       |  |   |                                             |  |  |   | 10,096,244 | 
|Equity investments |  |                  | 18,637,818                                     |  |                                                             |   |  |                                       |  |   |                                             |  |  |   | 18,637,818 | 
|                   |  |                  |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 
|Total              |  | $                | 32,284,062                                     |  |                                                             | $ |  |                                       |  | $ |                                             |  |  | $ | 32,284,062 | 
|                   |  |                  |                                                |  |                                                             |   |   |                                       |  |   |                                              |  |  |   |            | 

The following table provides a summary of changes in Assets Measured at Fair Value Using Significant
Unobservable Inputs (Level 3) for the quarter ended March 31, 2018:



|                                                                                                  |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- | --------- | --------- | --------------- | - | ---------- | ----------------- |  | - | ---------- |  |  | - | ---------- | -
|                                                                                                  |  | Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Venture Capital Investments |          
|Description                                                                                       |  | LoanInvestments                                                                                   |           |           | DebtInvestments |   |            | EquityInvestments |  |   | Total      | 
|Ending Balance, December 31, 2017, of Level 3 Assets                                              |  | $                                                                                                 | 3,550,000 |           |                 | $ | 10,096,244 |                   |  | $ | 18,637,818 |  |  | $ | 32,284,062 |  
|Unrealized Losses included in net change in net assets from operations:                           |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|Empire Genomics, LLC (Empire Genomics)                                                            |  |                                                                                                   |          |           |                 |   | (201,489   | )                 |  |   |           |  |  |   | (201,489   | )
|First Wave Products Group, LLC (First Wave)                                                       |  |                                                                                                   |          |           |                 |   | (250,000   | )                 |  |   |           |  |  |   | (250,000   | )
|                                                                                                  |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|Total Unrealized Losses                                                                           |  |                                                                                                   |          |           |                 |   | (451,489   | )                 |  |   |           |  |  |   | (451,489   | )
|Purchases of Securities/Changes to
Securities/Non-cash conversions:                               |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|Centivo Corporation (Centivo)                                                                     |  |                                                                                                   |          |           |                 |   |           |                   |  |   | 201,342    |  |  |   | 201,342    |  
|Genicon, Inc. (Genicon)                                                                           |  |                                                                                                   |          |           |                 |   | 9,080      |                   |  |   |           |  |  |   | 9,080      |  
|GoNoodle, Inc. (GoNoodle)                                                                         |  |                                                                                                   |          |           |                 |   | 2,573      |                   |  |   |           |  |  |   | 2,573      |  
|Microcision LLC (Microcision)                                                                     |  |                                                                                                   |          |           |                 |   | 4,786      |                   |  |   |           |  |  |   | 4,786      |  
|SciAps, Inc. (Sciaps)                                                                             |  |                                                                                                   |          |           |                 |   |           |                   |  |   | 250,000    |  |  |   | 250,000    |  
|                                                                                                  |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|Total Purchases of Securities/Changes to
Securities/Non-cash conversions                          |  |                                                                                                   |          |           |                 |   | 16,439     |                   |  |   | 451,342    |  |  |   | 467,781    |  
|Repayments and Sale of Securities:                                                                |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|Empire Genomics                                                                                   |  |                                                                                                   |          |           |                 |   | (21,665    | )                 |  |   |           |  |  |   | (21,665    | )
|Knoa Software, Inc. (Knoa)                                                                        |  |                                                                                                   |          |           |                 |   | (48,466    | )                 |  |   |           |  |  |   | (48,466    | )
|                                                                                                  |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|Total Repayments and Sale of Securities                                                           |  |                                                                                                   |          |           |                 |   | (70,131    | )                 |  |   |           |  |  |   | (70,131    | )
|Transfers within Level 3                                                                          |  |                                                                                                   |          |           |                 |   | (100,000   | )                 |  |   | 100,000    |  |  |   |           |  
|Transfers out of Level 3                                                                          |  |                                                                                                   |          |           |                 |   |           |                   |  |   |           |  |  |   |           |  
|                                                                                                  |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|Ending Balance, March 31, 2018, of Level 3 Assets                                                 |  | $                                                                                                 | 3,550,000 |           |                 | $ | 9,491,063  |                   |  | $ | 19,189,160 |  |  | $ | 32,230,223 |  
|                                                                                                  |  |                                                                                                   |           |           |                 |   |            |                   |  |   |            |  |  |   |            |  
|Change in unrealized depreciation on investments for the period included in changes
in net assets |  |                                                                                                   |           | ($451,489 | )              
|Net realized gain on investments for the period included in changes in net
assets                 |  |                                                                                                   | $         |          |                



31



---

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 Significant
Unobservable 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                 |  |                                                                         | $         |          |                

NOTE 4. OTHER ASSETS

At March 31, 2018 and December 31, 2017, other assets was comprised of the following:



|                      |  |                |        |  |                   |   |        | 
|--------------------- |  | -------------- | ------ |  | ----------------- | - | ------ | 
|                      |  | March 31, 2018 |        |  | December 31, 2017 |  
|Prepaid expenses      |  | $              | 77,435 |  |                   | $ |       | 
|Operating receivables |  |                | 2,872  |  |                   |   | 3,204  | 
|Equipment (net)       |  |                | 1,940  |  |                   |   | 2,490  | 
|Dividend receivable   |  |                |       |  |                   |   | 37,160 | 
|                      |  |                |        |  |                   |   |        | 
|Total other assets    |  | $              | 82,247 |  |                   | $ | 42,854 | 
|                      |  |                |        |  |                   |   |        | 

Note 5. COMMITMENTS AND CONTINGENCIES

The Corporation did not have any commitments to fund any investments as of March 31, 2018.

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, 2018 |           |   | December 31, 2017 |  
|Debentures guaranteed by the SBA      |  | $              | 8,000,000 |   |                   | $ | 8,000,000 |  
|Less unamortized issue costs          |  |                | (137,977  | ) |                   |   | (144,827  | )
|                                      |  |                |           |   |                   |   |           |  
|Debentures guaranteed by the SBA, net |  | $              | 7,862,023 |   |                   | $ | 7,855,173 |  
|                                      |  |                |           |   |                   |   |           |  



32



---

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, 2018 and March 31, 2017:



|                                                                         |  |                                             |            |    |                                             |   |            |   
|------------------------------------------------------------------------ |  | ------------------------------------------- | ---------- | -- | ------------------------------------------- | - | ---------- | --
|                                                                         |  | Three months endedMarch 31, 2018(Unaudited) |            |    | Three months endedMarch 31, 2017(Unaudited) |  
|Income from investment operations (1):                                   |  |                                             |            |    |                                             |   |            |   
|Investment income                                                        |  | $                                           | 0.05       |    |                                             | $ | 0.05       |   
|Operating expenses                                                       |  |                                             | 0.09       |    |                                             |   | 0.08       |   
|                                                                         |  |                                             |            |    |                                             |   |            |   
|Investment loss before income taxes                                      |  |                                             | (0.04      | )  |                                             |   | (0.03      | ) 
|Income tax benefit                                                       |  |                                             | (0.01      | )  |                                             |   | (0.01      | ) 
|                                                                         |  |                                             |            |    |                                             |   |            |   
|Net investment loss                                                      |  |                                             | (0.03      | )  |                                             |   | (0.02      | ) 
|Net realized and unrealized (loss) gain on investments                   |  |                                             | (0.05      | )  |                                             |   | (0.04      | ) 
|                                                                         |  |                                             |            |    |                                             |   |            |   
|Decrease in net asset value                                              |  |                                             | (0.08      | )  |                                             |   | (0.06      | ) 
|Net asset value, beginning of period                                     |  |                                             | 5.05       |    |                                             |   | 5.16       |   
|                                                                         |  |                                             |            |    |                                             |   |            |   
|Net asset value, end of period                                           |  | $                                           | 4.97       |    |                                             | $ | 5.10       |   
|                                                                         |  |                                             |            |    |                                             |   |            |   
|Per share market price, end of period                                    |  | $                                           | 2.69       |    |                                             | $ | 3.04       |   
|                                                                         |  |                                             |            |    |                                             |   |            |   
|Total return based on market value                                       |  |                                             | (10.93     | %) |                                             |   | (3.80      | %)
|Total return based on net asset value                                    |  |                                             | (1.63      | %) |                                             |   | (1.10      | %)
|Supplemental data:                                                       |  |                                             |            |    |                                             |   |            |   
|Ratio of operating expenses before income taxes to average net assets    |  |                                             | 1.86       | %  |                                             |   | 1.59       | % 
|Ratio of operating expenses including income taxes to average net assets |  |                                             | 1.36       | %  |                                             |   | 0.95       | % 
|Ratio of net investment loss to average net assets                       |  |                                             | (0.55      | %) |                                             |   | (1.11      | %)
|Portfolio turnover                                                       |  |                                             | 1.4        | %  |                                             |   | 1.7        | % 
|Net assets, end of period                                                |  | $                                           | 31,398,272 |    |                                             | $ | 32,269,882 |   
|Weighted shares outstanding, end of period                               |  |                                             | 6,321,988  |    |                                             |   | 6,321,988  |   



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

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.



33



---

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 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, 2017.

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 often concurrently with other investors. 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. 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. During 2017 we established a second SBIC subsidiary, Rand Capital SBIC II, L.P. (Rand
SBIC II) and began making investments through this SBIC subsidiary. During the first quarter of 2018, together with the SBA, we determined that the optimal structure was to revert back to investing in small businesses through our original SBIC, Rand
SBIC, and the assets of Rand SBIC II were transferred to Rand SBIC. Rand SBIC can now apply for an additional $6 million in new SBA leverage commitments.



34



---

Outlook

At the end of the first quarter of 2018, we had approximately $5.5 million in cash available for future investments and expenses. We
believe the combination of cash on hand, proceeds from portfolio exits, anticipated additional SBA leverage, and prospective investment income provide 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 strong macroeconomic environment and eager reception of new technologies and service concepts.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 expands, we are able to better leverage our infrastructure.
| | - |  | ----------------------------------------------------------------------------



| |  |  | We have sufficient cash to invest in new opportunities and to repurchase shares. 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, 2017 under Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations.



35



---

Financial Condition



|                  |  |                |            |  |                   |   |            |          |  |  |            |   |  |  |      |   
|----------------- |  | -------------- | ---------- |  | ----------------- | - | ---------- | -------- |  |  | ---------- | - |  |  | ---- | --
|Overview:         |  | March 31, 2018 |            |  | December 31, 2017 |   |            | Decrease |  |  | % Decrease |  
|Total assets      |  | $              | 39,433,555 |  |                   | $ | 40,133,913 |          |  |  | ($700,358  | ) |  |  | (1.7 | %)
|Total liabilities |  |                | 8,035,283  |  |                   |   | 8,215,228  |          |  |  | (179,945   | ) |  |  | (2.2 | %)
|                  |  |                |            |  |                   |   |            |          |  |  |            |   |  |  |      |   
|Net assets        |  | $              | 31,398,272 |  |                   | $ | 31,918,685 |          |  |  | ($520,413  | ) |  |  | (1.6 | %)
|                  |  |                |            |  |                   |   |            |          |  |  |            |   |  |  |      |   

Net asset value per share (NAV) was $4.97 at March 31, 2018 and $5.05 at December 31, 2017.

Our gross outstanding SBA debentures at March 31, 2018 were $8,000,000 and will mature from 2022 through 2025. Cash approximated 18% of
net assets at March 31, 2018 as compared to 20% at December 31, 2017.

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.



|                             |  |                |            |   |                   |   |            |                    |  |   |                      |   |  |  |       |   
|---------------------------- |  | -------------- | ---------- | - | ----------------- | - | ---------- | ------------------ |  | - | -------------------- | - |  |  | ----- | --
|                             |  | March 31, 2018 |            |   | December 31, 2017 |   |            | Increase(Decrease) |  |   | % Increase(Decrease) |  
|Investments, at cost         |  | $              | 37,086,969 |   |                   | $ | 36,689,319 |                    |  | $ | 397,650              |   |  |  | 1.1   | % 
|Unrealized depreciation, net |  |                | (4,856,746 | ) |                   |   | (4,405,257 | )                  |  |   | (451,489             | ) |  |  | (10.2 | %)
|                             |  |                |            |   |                   |   |            |                    |  |   |                      |   |  |  |       |   
|Investments at fair value    |  | $              | 32,230,223 |   |                   | $ | 32,284,062 |                    |  |   | ($53,839             | ) |  |  | (0.2  | %)
|                             |  |                |            |   |                   |   |            |                    |  |   |                      |   |  |  |       |   

Our total investments at fair value, as estimated by management and approved by our Board of Directors,
approximated 103% of net assets at March 31, 2018 versus 101% of net assets at December 31, 2017.

The change in investments
during the three months ended March 31, 2018, at cost, is comprised of the following:



|                                                  |  |                         |         |  
|------------------------------------------------- |  | ----------------------- | ------- | -
|                                                  |  | CostIncrease (Decrease) |        
|New investments:                                  |  |                         |         |  
|SciAps, Inc. (Sciaps)                             |  | $                       | 250,000 |  
|Centivo Corporation (Centivo)                     |  |                         | 200,000 |  
|                                                  |  |                         |         |  
|Total of new investments                          |  |                         | 450,000 |  
|Other changes to investments:                     |  |                         |         |  
|Genicon Inc. (Genicon) OID amortization           |  |                         | 9,080   |  
|Microcision LLC (Microcision) interest conversion |  |                         | 4,786   |  
|GoNoodle, Inc. (GoNoodle) interest conversion     |  |                         | 2,573   |  
|Centivo interest conversion                       |  |                         | 1,342   |  
|                                                  |  |                         |         |  
|Total of other changes to investments             |  |                         | 17,781  |  
|Investments repaid, sold or liquidated:           |  |                         |         |  
|Knoa Software Inc. (Knoa) repayment               |  |                         | (48,466 | )
|Empire Genomics, LLC (Empire Genomics) repayment  |  |                         | (21,665 | )
|                                                  |  |                         |         |  
|Total of investments repaid, sold or liquidated   |  |                         | (70,131 | )
|                                                  |  |                         |         |  
|Net change in investments, at cost                |  | $                       | 397,650 |  
|                                                  |  |                         |         |  



36



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Results of Operations

Our principal investment objective is to achieve long-term capital appreciation on our equity investments while maintaining a current cash flow
from our debenture and pass-through equity instruments to fund expenses. Therefore, we invest in a variety of financial instruments to provide a current return on a portion of the investment portfolio.

Comparison of the three months ended March 31, 2018 to the three months ended March 31, 2017

Investment Income



|                                     |  |                                 |         |  |                                 |   |         |                    |  |   |                      |   |  |  |       |   
|------------------------------------ |  | ------------------------------- | ------- |  | ------------------------------- | - | ------- | ------------------ |  | - | -------------------- | - |  |  | ----- | --
|                                     |  | Three monthsended March31, 2018 |         |  | Three monthsended March31, 2017 |   |         | Increase(Decrease) |  |   | % Increase(Decrease) |  
|Interest from portfolio companies    |  | $                               | 297,348 |  |                                 | $ | 246,091 |                    |  | $ | 51,257               |   |  |  | 20.8  | % 
|Interest from other investments      |  |                                 | 5,110   |  |                                 |   | 10,975  |                    |  |   | (5,865               | ) |  |  | (53.4 | %)
|Dividend and other investment income |  |                                 | 54,165  |  |                                 |   | 64,885  |                    |  |   | (10,720              | ) |  |  | (16.5 | % 
|Fee income                           |  |                                 | 6,186   |  |                                 |   | 6,686   |                    |  |   | (500                 | ) |  |  | (7.5  | %)
|                                     |  |                                 |         |  |                                 |   |         |                    |  |   |                      |   |  |  |       |   
|Total investment income              |  | $                               | 362,809 |  |                                 | $ | 328,637 |                    |  | $ | 34,172               |   |  |  | 10.4  | % 
|                                     |  |                                 |         |  |                                 |   |         |                    |  |   |                      |   |  |  |       |   

Interest from portfolio companies  Interest from portfolio companies was 21% higher during the three months ended
March 31, 2018 versus the same period in 2017 due to the fact that we have originated more income-producing debt investments in the last year. These new debt instruments were originated from Genicon Inc. (Genicon) and eHealth Global
Technologies, Inc. and several other portfolio companies.

The following investments are on
non-accrual status: G-TEC Natural Gas Systems (G-Tec), First Wave Products Group, LLC (First Wave), OnCore Golf Technology, Inc.
(Oncore) and a portion of the Empire Genomics, LLC (Empire Genomics) and Mercantile Adjustment Bureau, LLC (Mercantile) outstanding loan balance.

Interest from other investments  The decrease in interest from other investments is primarily due to lower average cash balances during the three
months ended March 31, 2018 versus the same period in 2017.

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:



|                                            |  |                                 |        |  |                                 |   |        | 
|------------------------------------------- |  | ------------------------------- | ------ |  | ------------------------------- | - | ------ | 
|                                            |  | Three monthsended March 31,2018 |        |  | Three monthsended March 31,2017 |  
|Carolina Skiff LLC (Carolina Skiff)         |  | $                               | 41,095 |  |                                 | $ | 57,373 | 
|Tilson Technology Management, Inc. (Tilson) |  |                                 | 9,688  |  |                                 |   | 5,000  | 
|Empire Genomics LLC (Empire Genomics)       |  |                                 | 3,382  |  |                                 |   | 2,512  | 
|                                            |  |                                 |        |  |                                 |   |        | 
|Total dividend and other investment income  |  | $                               | 54,165 |  |                                 | $ | 64,885 | 
|                                            |  |                                 |        |  |                                 |   |        | 

Fee income  Fee income consists of the revenue associated with the amortization of financing fees charged to the
portfolio companies upon successful closing of 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.



37



---

The income associated with the amortization of financing fees was $5,186 and $6,686 for the three
months ended March 31, 2018 and 2017, respectively. The income from board fees was $1,000 and $0 for the three months ended March 31, 2018 and 2017, respectively.

Expenses



|               |  |                                  |         |  |                                  |   |         |          |  |   |            |  |  |  |      |  
|-------------- |  | -------------------------------- | ------- |  | -------------------------------- | - | ------- | -------- |  | - | ---------- |  |  |  | ---- | -
|               |  | Three months endedMarch 31, 2018 |         |  | Three months endedMarch 31, 2017 |   |         | Increase |  |   | % Increase | 
|Total expenses |  | $                                | 588,564 |  |                                  | $ | 516,409 |          |  | $ | 72,155     |  |  |  | 14.0 | %

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 increase in expenses
during the three months ended March 31, 2018 versus the same period in 2017 was primarily caused by a 21% increase in professional fees. Professional fees were higher because we incurred additional expenses in connection with implementing our
long-term growth strategy. These expenses included external legal, tax consulting and other advisory expenses to support refinement of our strategy, which involved assessing options relative to the complex regulatory environment in which we
operate. In addition, for the three months ended March 31, 2018 there was a $45,900 charge to bad debt expense while there was no bad debt expense for the three months ended March 31, 2017.

Decrease in Unrealized Depreciation or Appreciation of Investments



|                                                                        |  |                                  |           |   |                                  |  |           |          |  |  |          |  
|----------------------------------------------------------------------- |  | -------------------------------- | --------- | - | -------------------------------- |  | --------- | -------- |  |  | -------- | -
|                                                                        |  | Three months endedMarch 31, 2018 |           |   | Three months endedMarch 31, 2017 |  |           | Decrease | 
|Decrease in unrealized depreciation or appreciation before income taxes |  |                                  | ($451,489 | ) |                                  |  | ($380,644 | )        |  |  | ($70,845 | )

The decrease in unrealized depreciation, before income taxes, for the three months ended March 31, 2018
was comprised of the following:



|                                                                                                                              |  |                                 |           |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | --------- | -
|                                                                                                                              |  | Three monthsended March 31,2018 |          
|First Wave Products Group (First Wave)                                                                                        |  |                                 | ($250,000 | )
|Empire Genomics, LLC (Empire Genomics)                                                                                        |  |                                 | (201,489  | )
|                                                                                                                              |  |                                 |           |  
|Total decrease in net unrealized depreciation of investments before income taxes during the
three months ended March 31, 2018 |  |                                 | ($451,489 | )
|                                                                                                                              |  |                                 |           |  

Our valuation of First Wave was decreased to reflect an anticipated round of financing expected to be
completed by First Wave in the second quarter of 2018.

The valuation of our investment in Empire Genomics was decreased after we reviewed
the portfolio companys operations and current and projected financial condition and determined that a valuation adjustment reflecting prior capitalized interest was necessary.

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



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



38



---

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

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.

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 Increase (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 increase
(decrease) in net assets from operations on our consolidated statements of operations. For the three months ended March 31, 2018 and 2017, the net decrease in net assets from operations was ($520,413) and ($359,481), respectively.

Liquidity and Capital Resources

Our
principal long-term 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, 2018, our total liquidity consisted of approximately $5.5 million in cash on hand.

Net cash provided by operating
activities has averaged approximately $3,200,000 over the last three years. The average cash used for investment in portfolio companies over the last three years was $850,000. 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, 2018, 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.

We believe that the cash on hand at March 31, 2018, the scheduled interest payments on
our portfolio investments and the anticipated additional SBA leverage will be sufficient to meet our cash needs for the next twelve months. 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 repayment 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



39



---

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, 2018 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 March 31,
2018. 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, 2018.

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.



40



---

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, 2017.



|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 yet bepurchased under the sharerepurchase program | 
|1/1/2018  1/31/2018                  |  |                                    |  |  |                                 |  |  |                                                                      |  |  |                                                                                   |  |  |  | 458,954 | 
|2/1/2018  2/28/18                    |  |                                    |  |  |                                 |  |  |                                                                      |  |  |                                                                                   |  |  |  | 458,954 | 
|3/1/2018  3/31/2018                  |  |                                    |  |  |                                 |  |  |                                                                      |  |  |                                                                                   |  |  |  | 458,954 | 



|(1) | There were no shares repurchased during the first quarter of 2018.
|--- | ------------------------------------------------------------------

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

|(3) | On October 26, 2017, 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 26, 2018.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 3. | Defaults upon Senior Securities
|------- | -------------------------------

None.



|Item 4. | Mine Safety Disclosures
|------- | -----------------------

Not Applicable.



|Item 5. | Other Information
|------- | -----------------

None.



41



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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.                                                                     
|          | 
|(3.1)(i)  |  | Certificate of Incorporation of the Corporation, incorporated by reference to Exhibit (a)(1) of Form N-2 filed with
 the Securities Exchange Commission on April 22, 1997. (File No. 333-25617).                                                           
|          | 
|(3.1)(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 Exchange Commission on November 2, 2016. (File No. 814-00235).
|          | 
|(4)       |  | Specimen certificate of common stock certificate, incorporated by reference to Exhibit (b) 
of Form N-2 filed with the Securities Exchange Commission on April 22, 1997. (File No. 333-25617).                                                             
|          | 
|(31.1)    |  | Certification of Principal 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 Principal Financial Officer Pursuant to Rules 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as
 amended  filed herewith.                                                                                                
|          | 
|(32.1)    |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  Rand Capital Corporation  filed herewith.                                                                                                                                       



42



---

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: May 2, 2018



RAND CAPITAL CORPORATIONBy:

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

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




43