##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended June 30, 2011
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number: 814-00235
 Rand Capital Corporation
 (Exact Name of Registrant as specified in its Charter)
 New York
    
    16-0961359(State or Other Jurisdiction of Incorporation or organization)
    
    (IRS Employer Identification No.)2200 Rand Building, Buffalo, NY
(Address of Principal executive offices)
    
    14203
(Zip Code)
 (716) 853-0802
(
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



RAND CAPITAL CORPORATION
TABLE OF CONTENTS FOR FORM 10-Q
 PART I.  FINANCIAL INFORMATIONItem 1. Financial Statements and Supplementary Data (Unaudited)
    
    
    3Condensed Consolidated Statements of Financial Position as of June 30, 2011 and
December 31, 2010
    
    
    3Condensed Consolidated Statements of Operations for the Three Months and Six Months
Ended June 30, 2011 and 2010
    
    
    4Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30,
2011 and 2010
    
    
    5Condensed Consolidated Statements of Changes in Net Assets for the Three Months and
Six Months Ended June 30, 2011 and 2010
    
    
    6Condensed Consolidated Schedule of Portfolio Investments as of June 30, 2011
    
    
    7Notes to the Consolidated Financial Statements
    
    
    10Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    28Item 1A. Risk Factors
    
    
    28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3. Defaults upon Senior Securities
    
    
    28Item 4. (Removed and Reserved)
    
    
    28Item 5. Other Information
    
    
    28Item 6. Exhibits
    
    
    29EX-31.1EX-31.2EX-32.1EX-32.2
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements and Supplementary Data
 RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 As of June 30, 2011 and December 31, 2010
 June 30, 2011
    
    
    December 31,(Unaudited)
    
    
    2010ASSETSInvestments at fair value (identified cost: 6/30/11 
$12,112,105; 12/31/10  $13,573,041)
    
    $
    20,068,121
    
    
    $
    19,364,625Cash and cash equivalents
    
    
    10,791,049
    
    
    
    11,698,653Interest receivable (net of allowance  6/30/11
$122,000, 12/31/10  $158,245)
    
    
    1,236,109
    
    
    
    1,051,848Prepaid income taxes
    
    
    500,059
    
    
    
    414,745Other assets
    
    
    2,140,126
    
    
    
    2,561,389Total assets
    
    $
    34,735,464
    
    
    $
    35,091,260LIABILITIES AND STOCKHOLDERS EQUITY (NET ASSETS)Liabilities:Debentures guaranteed by the SBA
    
    $
    10,000,000
    
    
    $
    10,000,000Deferred tax liability
    
    
    1,467,339
    
    
    
    1,044,315Accounts payable and accrued expenses
    
    
    401,518
    
    
    
    990,477Deferred revenue
    
    
    4,100
    
    
    
    5,650Total liabilities
    
    
    11,872,957
    
    
    
    12,040,442Stockholders equity (net assets):Common stock, $.10 par;
shares authorized 10,000,000; shares issued 6,863,034
    
    
    686,304
    
    
    
    686,304Capital in excess of par value
    
    
    10,581,789
    
    
    
    10,581,789Accumulated net investment loss
    
    
    (1,898,961
    )
    
    
    (1,648,118
    )Undistributed net realized gain on investments
    
    
    8,510,720
    
    
    
    9,833,282Net unrealized appreciation on investments
    
    
    5,029,861
    
    
    
    3,644,767Treasury stock, at cost, 44,100 shares
    
    
    (47,206
    )
    
    
    (47,206
    )Net assets (per share 6/30/11  $3.35, 12/31/10  $3.38)
    
    
    22,862,507
    
    
    
    23,050,818Total liabilities and stockholders equity (net assets)
    
    $
    34,735,464
    
    
    $
    35,091,260
   3




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RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months and Six Months Ended June 30, 2011 and 2010
 (Unaudited)
 Three months
    
    
    Three months
    
    
    Six months
    
    
    Six monthsended
    
    
    ended
    
    
    ended
    
    
    endedJune 30, 2011
    
    
    June 30, 2010
    
    
    June 30, 2011
    
    
    June 30, 2010Investment income:Interest from portfolio companies
    
    $
    202,495
    
    
    $
    167,509
    
    
    $
    379,636
    
    
    $
    334,006Interest from other investments
    
    
    10,000
    
    
    
    4,005
    
    
    
    18,081
    
    
    
    9,189Dividend and other investment income
    
    
    29,442
    
    
    
    22,389
    
    
    
    70,556
    
    
    
    36,291Other income
    
    
    5,776
    
    
    
    4,525
    
    
    
    7,580
    
    
    
    7,328247,713
    
    
    
    198,428
    
    
    
    475,853
    
    
    
    386,814Operating expenses:Salaries
    
    
    118,750
    
    
    
    115,050
    
    
    
    237,500
    
    
    
    230,100Employee benefits
    
    
    23,234
    
    
    
    25,995
    
    
    
    65,684
    
    
    
    84,137Directors fees
    
    
    37,500
    
    
    
    46,795
    
    
    
    52,500
    
    
    
    57,750Professional fees
    
    
    25,887
    
    
    
    32,268
    
    
    
    76,804
    
    
    
    90,691Stockholders and office operating
    
    
    40,489
    
    
    
    45,901
    
    
    
    74,599
    
    
    
    71,924Insurance
    
    
    7,800
    
    
    
    9,655
    
    
    
    19,846
    
    
    
    19,820Corporate development
    
    
    17,041
    
    
    
    14,537
    
    
    
    32,737
    
    
    
    23,767Other operating
    
    
    2,568
    
    
    
    5,232
    
    
    
    10,194
    
    
    
    8,028273,269
    
    
    
    295,433
    
    
    
    569,864
    
    
    
    586,217Interest on SBA obligations
    
    
    147,560
    
    
    
    147,560
    
    
    
    295,119
    
    
    
    284,004Bad debt recovery
    
    
    
    
    
    
    (5,983
    )
    
    
    
    
    
    
    (5,983
    )Total expenses
    
    
    420,829
    
    
    
    437,010
    
    
    
    864,983
    
    
    
    864,238Investment (loss) before income taxes
    
    
    (173,116
    )
    
    
    (238,582
    )
    
    
    (389,130
    )
    
    
    (477,424
    )Income tax (benefit)
    
    
    (62,683
    )
    
    
    (88,331
    )
    
    
    (138,287
    )
    
    
    (167,784
    )Net investment loss
    
    
    (110,433
    )
    
    
    (150,251
    )
    
    
    (250,843
    )
    
    
    (309,640
    )Realized and unrealized gain (loss) on investments:Realized loss on sales and dispositions
    
    
    (1,780,611
    )
    
    
    
    
    
    
    (2,074,130
    )
    
    
    Income tax benefit
    
    
    (648,836
    )
    
    
    
    
    
    
    (751,568
    )
    
    
    Net realized loss on investments
    
    
    (1,131,775
    )
    
    
    
    
    
    
    (1,322,562
    )
    
    
    Unrealized appreciation on investments:Beginning of period
    
    
    5,960,102
    
    
    
    8,728,226
    
    
    
    5,791,584
    
    
    
    9,528,226End of period
    
    
    7,956,016
    
    
    
    8,785,064
    
    
    
    7,956,016
    
    
    
    8,785,064Change in unrealized appreciation
before income taxes
    
    
    1,995,914
    
    
    
    56,838
    
    
    
    2,164,432
    
    
    
    (743,162
    )Deferred income tax expense (benefit)
    
    
    720,357
    
    
    
    50,327
    
    
    
    779,338
    
    
    
    (229,797
    )Net increase (decrease) in unrealized
appreciation
    
    
    1,275,557
    
    
    
    6,511
    
    
    
    1,385,094
    
    
    
    (513,365
    )Net realized and unrealized gain (loss) on investments
    
    
    143,782
    
    
    
    6,511
    
    
    
    62,532
    
    
    
    (513,365
    )Net increase (decrease) in net assets from operations
    
    $
    33,349
    
    
    $
    (143,740
    )
    
    $
    (188,311
    )
    
    $
    (823,005
    )Weighted average shares outstanding
    
    
    6,818,934
    
    
    
    6,818,934
    
    
    
    6,818,934
    
    
    
    6,818,934Basic and diluted net increase (decrease) in net assets
from operations per share
    
    $
    0.00
    
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.12
    )
   4




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RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six Months Ended June 30, 2011 and 2010
 (Unaudited)
 Six months
    
    
    Six monthsended
    
    
    endedJune 30, 2011
    
    
    June 30, 2010Cash flows from operating activities:Net decrease in net assets from operations
    
    $
    (188,311
    )
    
    $
    (823,005
    )Adjustments to reconcile net decrease in net assets to net
cash used in operating activities:Depreciation and amortization
    
    
    20,245
    
    
    
    20,745Original issue discount amortization
    
    
    (37,000
    )
    
    
    Change in interest receivable allowance
    
    
    (36,245
    )
    
    
    (Increase) decrease in unrealized appreciation of
investments
    
    
    (2,164,432
    )
    
    
    743,162Deferred tax benefit
    
    
    423,024
    
    
    
    (251,724
    )Net realized loss on portfolio investments
    
    
    2,074,130
    
    
    
    Non-cash conversion of debenture interest
    
    
    (47,828
    )
    
    
    (324,553
    )Changes in operating assets and liabilities:(Increase) decrease in interest receivable
    
    
    (148,016
    )
    
    
    54,571Decrease (increase) in other assets
    
    
    401,018
    
    
    
    (35,737
    )Increase in income taxes receivable
    
    
    (85,314
    )
    
    
    (72,405
    )Decrease in income taxes payable
    
    
    
    
    
    
    (1,082,646
    )Decrease in accounts payable and accrued
Expenses
    
    
    (588,959
    )
    
    
    (160,966
    )Decrease in deferred revenue
    
    
    (1,549
    )
    
    
    (828
    )Total adjustments
    
    
    (190,926
    )
    
    
    (1,110,381
    )Net cash used in operating activities
    
    
    (379,237
    )
    
    
    (1,933,386
    )Cash flows from investing activities:Investments originated
    
    
    (1,069,999
    )
    
    
    (2,580,000
    )Proceeds from loan repayments
    
    
    541,632
    
    
    
    71,643Capital expenditures
    
    
    
    
    
    
    (846
    )Net cash used in investing activities
    
    
    (528,367
    )
    
    
    (2,509,203
    )Cash flows from financing activities:Proceeds from SBA debenture
    
    
    
    
    
    
    900,000Origination costs to SBA
    
    
    
    
    
    
    (21,825
    )Net cash provided by financing activities
    
    
    
    
    
    
    878,175Net decrease in cash and cash equivalents
    
    
    (907,604
    )
    
    
    (3,564,414
    )Cash and cash equivalents:Beginning of period
    
    
    11,698,653
    
    
    
    9,417,236End of period
    
    $
    10,791,049
    
    
    $
    5,852,822
   5




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RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
 For the Three Months and the Six Months Ended June 30, 2011 and 2010
 (Unaudited)
 Three months
    
    
    Three months
    
    
    Six months
    
    
    Six monthsended
    
    
    ended
    
    
    ended
    
    
    endedJune 30, 2011
    
    
    June 30, 2010
    
    
    June 30, 2011
    
    
    June 30, 2010Net assets at beginning of period
    
    $
    22,829,158
    
    
    $
    22,526,616
    
    
    $
    23,050,818
    
    
    $
    23,205,881Net investment loss
    
    
    (110,433
    )
    
    
    (150,251
    )
    
    
    (250,843
    )
    
    
    (309,640
    )Net realized loss on dispositions of investments
    
    
    (1,131,775
    )
    
    
    
    
    
    
    (1,322,562
    )
    
    
    Net increase(decrease) in unrealized appreciation
    
    
    1,275,557
    
    
    
    6,511
    
    
    
    1,385,094
    
    
    
    (513,365
    )Net increase (decrease) in net assets from operations
    
    
    33,349
    
    
    
    (143,740
    )
    
    
    (188,311
    )
    
    
    (823,005
    )Net assets at end of period
    
    $
    22,862,507
    
    
    $
    22,382,876
    
    
    $
    22,862,507
    
    
    $
    22,382,876
   6




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RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS
 June 30, 2011
 (Unaudited)
 (a) Company, Geographic Location, BusinessDescription, (Industry) and Website
    
    Type of Investment
    
    (b) DateAcquired
    
    
    (c)Equity
    
    
    Cost
    
    
    (d)(f)Value
    
    
    Per Shareof RandNon-Control/Non-Affiliate Investments: (j)Chequed.com,
Inc. (g)Saratoga Springs, NY. Predictive employee selection and development software. (Software) www.chequed.com
    
    $500,000 convertible promissory notes at 8% due December 31, 2012.
    
    
    11/18/10
    
    
    
    0
    %
    
    $
    500,000
    
    
    $
    500,000
    
    
    $
    .07Liazon Corporation (e)(g)Buffalo, NY. Employee benefits solution company. (Health Benefits Provider) www.liazon.com
    
    120,000 Series C-1 preferred shares. 546,667 Series C-2 preferred shares.
    
    
    11/9/10
    
    
    
    4
    %
    
    
    858,199
    
    
    
    1,000,000
    
    
    
    .15Mezmeriz, Inc. (g)Ithaca, NY. Developer of micro mirror technology that replaces silicon with carbon fibers in micro-electronic mechanical systems (MEMS) enabling efficient, wide-angle, Pico projectors to be embedded in mobile devices. (Electronics Developer) www.mezmeriz.com
    
    141,125 Series A preferred shares.
    
    
    1/9/08
    
    
    
    4
    %
    
    
    121,509
    
    
    
    121,509
    
    
    
    .02Rheonix, Inc.Ithaca, NY. Developer of microfluidic testing devices including channels, pumps, reaction vessels, & diagnostic chambers, for testing of small volumes of chemicals and biological fluids. (Manufacturing) www.rheonix.com
    
    9,676 common shares. (g)694,015 Series A preferred shares. 50,593 common shares.
    
    
    10/29/09
    
    
    
    4
    %
    
    
    753,000
    
    
    
    889,000
    
    
    
    .12Somerset Gas Transmission Company, LLC (e)Columbus, OH. Natural gas transportation company. (Oil and Gas) www.somersetgas.com
    
    26.5337 units.
    
    
    7/10/02
    
    
    
    3
    %
    
    
    719,097
    
    
    
    786,748
    
    
    
    .12Synacor Inc. (g)Buffalo, NY. Develops provisioning platforms for aggregation and delivery of content and services across multiple digital devices. (Software) www.synacor.com
    
    234,558 Series A preferred shares. 600,000 Series B preferred shares. 240,378 Series C preferred shares. 897,438 common shares.
    
    
    11/18/02
    
    
    
    4
    %
    
    
    1,349,479
    
    
    
    4,168,001
    
    
    
    .61Subtotal Non-Control/Non-Affiliate Investments
    
    
    
    
    
    
    
    
    
    
    
    $
    4,301,284
    
    
    $
    7,465,258
    
    
    $
    1.09Affiliate Investments: (k)Carolina Skiff LLC (e)(g)Waycross, GA. Manufacturer of fresh water, ocean fishing and pleasure boats. (Manufacturing) www.carolinaskiff.com
    
    $985,000 Class A preferred membership interest at 14%.  Redeemable December 23, 2012. $500,000 subordinated promissory note at 14% due December 31, 2016. 6.0825% class A common membership interest.   (i) Interest receivable $1,180,556
    
    
    1/30/04
    
    
    
    7
    %
    
    $
    1,500,000
    
    
    $
    1,500,000
    
    
    $
    .22EmergingMed.com, Inc. (e)(g)New York, NY. Cancer clinical trial matching and referral service. (Software) www.emergingmed.com
    
    $675,045 senior subordinated note at 8% due January 19, 2013.  Warrants for 8% of common stock.
    
    
    12/19/05
    
    
    
    8
    %
    
    
    675,045
    
    
    
    675,045
    
    
    
    .10
  7




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##### Table of Contents



RAND CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 2011 (Continued)
(Unaudited)
 (a) Company, Geographic Location, BusinessDescription, (Industry) and Website
    
    Type of Investment
    
    (b) DateAcquired
    
    
    (c)Equity
    
    
    Cost
    
    
    (d)(f)Value
    
    
    Per Shareof RandMicrocision
LLC (e)(g)Philadelphia, PA. Custom manufacturer of medical and dental implants. (Manufacturing). www.microcision.com
    
    $1,500,000 subordinated promissory note at 5%, 6% deferred interest due December 31, 2013. 15% class A common membership interest.
    
    
    9/24/09
    
    
    
    15
    %
    
    
    1,630,109
    
    
    
    1,630,109
    
    
    
    .24Mid America Brick & Structural Clay Products, LLC(g)Mexico, MO. Manufacturer of face brick for residential and commercial construction. (Manufacturing). www.midamericabrick.com
    
    19.524 membership units.
    
    
    6/1/10
    
    
    
    19
    %
    
    
    800,000
    
    
    
    800,000
    
    
    
    .12SOMS Technologies, LLC (g)Valhalla, NY. Produces and markets the microGreen Extended Performance Oil Filter. (Auto Parts Developer) www.microgreenfilter.com
    
    4,808,224 Series B membership units.
    
    
    12/2/08
    
    
    
    12
    %
    
    
    370,687
    
    
    
    426,403
    
    
    
    .06Ultra  Scan CorporationAmherst, NY. Biometrics application developer of ultrasonic fingerprint technology. (Electronics Hardware/Software) www.ultra-scan.com
    
    536,596 common shares. 107,104 Series A-1 preferred shares. (g) 95,284 Series A-1 preferred shares.
    
    
    12/11/92
    
    
    
    2
    %
    
    
    938,164
    
    
    
    1,203,000
    
    
    
    .18Subtotal Affiliate Investments
    
    
    
    
    
    
    
    
    
    
    
    $
    5,914,005
    
    
    $
    6,234,557
    
    
    $
    .92Control Investments (l)Advantage 24/7 LLC (g)Williamsville, NY. Marketing program for wine and spirits dealers. (Marketing Company)
    
    50% Membership interest.
    
    
    12/30/10
    
    
    
    50
    %
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    .02Gemcor II, LLC (e)(g)(h)West Seneca, NY. Designs and sells automatic riveting machines used in the assembly of aircraft components. (Manufacturing) www.gemcor.com
    
    $500,000 subordinated promissory note at 15% due December 1, 2014. 25 membership units.  Warrant to purchase 6.25 membership units.
    
    
    6/28/04
    
    
    
    31
    %
    
    
    871,965
    
    
    
    6,071,965
    
    
    
    .90G-TEC Natural Gas SystemsBuffalo, NY. Manufactures and distributes systems that allow natural gas to be used as an alternative fuel to gases. (Manufacturing) www.gas-tec.com
    
    21.6% Class A membership interest. 8% cumulative dividend.
    
    
    8/31/99
    
    
    
    22
    %
    
    
    400,000
    
    
    
    100,000
    
    
    
    .01Subtotal Control Investments
    
    
    
    
    
    
    
    
    
    
    
    $
    1,371,965
    
    
    $
    6,271,965
    
    
    $
    .93Other Investments
    
    Various
    
    
    
    
    
    
    
    
    
    $
    524,851
    
    
    $
    96,341
    
    
    $
    0Total portfolio investments
    
    
    
    
    
    
    
    
    
    $
    12,112,105
    
    
    $
    20,068,121
    
    
    $
    2.94
  8




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##### Table of Contents



RAND CAPITAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 2011 (Continued)
(Unaudited)
 Notes to Consolidated Schedule of Portfolio Investments
 (a)
    
    At June 30, 2011 restricted securities represented 100% of the value of the investment
portfolio. Restricted securities are subject to one or more restrictions on resale and are not
freely marketable. Freed Maxick & Battaglia, CPAs PC has not examined the business descriptions of
the portfolio companies. Individual securities with values less than $100,000 are included in
Other Investments.(b)
    
    The Date Acquired column indicates the year in which the Corporation acquired its first
investment in the company or a predecessor company. Freed Maxick & Battaglia, CPAs, PC has not
audited the date acquired of the portfolio companies.(c)
    
    The equity percentages estimate the Corporations ownership interest in the portfolio
investment. The estimated ownership is calculated based on the percent of outstanding voting
securities held by the Corporation or the potential percentage of voting securities held by the
Corporation upon exercise of warrants or conversion of debentures, or other available data. Freed
Maxick & Battaglia, CPAs, PC has not audited the equity percentages of the portfolio companies.
The symbol <1% indicates that the Corporation holds an equity interest of less than one
percent.(d)
    
    The Corporation uses Accounting Standards Codification (ASC) 820 Fair Value Measurements
which defines fair value and establishes guidelines for measuring fair value. At June 30, 2011, ASC
820 designates all of the Corporations investments as Level 3 assets due to their privately held
restricted nature. Under the valuation policy of the Corporation, unrestricted securities are
valued at the closing price for publicly held securities for the last three days of the month.
Restricted securities 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 which 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.(e)
    
    These investments are income producing. All other investments are non-income producing.
Income producing investments have generated cash payments of interest or dividends within the last
twelve months.(f)
    
    As of June 30, 2011, the total cost of investment securities approximated $12.1 million. Net
unrealized appreciation was approximately $8.0 million, which was comprised of $8.7 million of
unrealized appreciation and $0.7 million of unrealized depreciation.(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 net of reserves) from investment included
as interest receivable on the Corporations Balance Sheet.(j)
    
    Non-Control/Non-Affiliate investments are investments that are neither Control Investments nor
Affiliated 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 or Rand holds a Board seat.(l)
    
    Control investments are defined by the 1940 Act as investments in companies in which more than
25% of the voting securities are owned or where greater than 50% of the board representation is
maintained.  9




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##### Table of Contents



Rand Capital Corporation and Subsidiary
 
 Notes to the Consolidated Financial Statements
 For the Six Months Ended June 30, 2011 and 2010
 (Unaudited)
 Note 1. ORGANIZATION
   SBIC Subsidiary
      10




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##### Table of Contents




    
    Rand and Rand SBIC to engage in certain related party transactions that the
Corporation would otherwise be permitted to engage in as a BDC if its component parts
were organized as a single corporation;
 
    
    Rand, as a BDC, and Rand SBIC, as its BDC/SBIC subsidiary, to meet asset coverage
requirements for senior securities on a consolidated basis; and
 
    
    Rand SBIC, as a BDC/SBIC subsidiary of Rand as a BDC, to file Exchange Act reports
on a consolidated basis as part of Rands Exchange Act reports.
   Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation 
  11




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##### Table of Contents



N-54A
    
    Election to Adopt Business Development Company statusDEF-14A
    
    Definitive Proxy Statement submitted to shareholdersForm 10-K
    
    Annual Report on Form 10-K for the year ended December 31, 2010Form 10-Q
    
    Quarterly Report on Form 10-Q for the quarters ended March 31, 2011,
September 30, 2010 and June 30, 2010Form N-23C-1
    
    Reports by closed-end investment companies of purchases of their own securities
  Principles of Consolidation
 Reclassification
 Cash and Cash Equivalents
 Revenue Recognition  Interest Income
  Revenue Recognition  Dividend Income 
 Original Issue Discount
  12




---



##### Table of Contents



Deferred Debenture Costs
 SBA Leverage 
 Net Assets per Share
 Supplemental Cash Flow Information
 Accounting Estimates
 Stockholders Equity (Net Assets) 
  Profit Sharing and Stock Option Plan 
   13




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##### Table of Contents



Income Taxes 
    Concentration of Credit Risk 
 Recent Accounting Pronouncements
 Note 3. INVESTMENTS
    14




---



##### Table of Contents




    
    Loan and debt securities are generally valued at the price the security would
command in order to provide a yield to maturity equivalent to the current yield of
similar debt securities. A loan or debt instrument may be reduced in value if it is
judged to be of poor quality and collection is in doubt. A loan or debt security may
also be valued based on the estimated proceeds from the sale of a portfolio company
at its estimated fair value.
 
    
    Equity securities may be valued using the market approach or income approach.
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.
  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.
       15




---



##### Table of Contents



Assets Measured at Fair Value on a Recurring Basis
 Fair Value Measurements at Reported Date UsingQuoted Prices in
    
    
    Significant
    
    
    Other SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    June 30, 2011
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Loan investments
    
    $
    371,964
    
    
    
    
    
    
    
    
    
    
    $
    371,964Debt investments
    
    
    3,378,654
    
    
    
    
    
    
    
    
    
    
    
    3,378,654Equity investments
    
    
    16,317,503
    
    
    
    
    
    
    
    
    
    
    
    16,317,503Total Venture
Capital Investments
    
    $
    20,068,121
    
    
    $
    0
    
    
    $
    0
    
    
    $
    20,068,121
 Fair Value Measurements at Reported Date UsingQuoted Prices in
    
    
    Significant Other
    
    
    SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Loan investments
    
    $
    413,596
    
    
    
    
    
    
    
    
    
    
    $
    413,596Debt investments
    
    
    3,595,327
    
    
    
    
    
    
    
    
    
    
    
    3,595,327Equity investments
    
    
    15,355,702
    
    
    
    
    
    
    
    
    
    
    
    15,355,702Total Venture
Capital Investments
    
    $
    19,364,625
    
    
    $
    0
    
    
    $
    0
    
    
    $
    19,364,625
  16




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##### Table of Contents



Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
 Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Venture Capital InvestmentsLoan
    
    
    Debt
    
    
    EquityDescription
    
    Investments
    
    
    Investments
    
    
    Investments
    
    
    TotalBeginning Balance, December 31,
2010, of Level 3 Assets
    
    $
    413,596
    
    
    $
    3,595,327
    
    
    $
    15,355,702
    
    
    $
    19,364,625Realized Gains or Losses included
in net change in net assets from
operationsAssociates Interactive (Associates)
    
    
    
    
    
    
    
    
    
    
    (293,518
    )
    
    
    (293,518
    )Niagara Dispensing Technologies,
Inc. (Niagara Dispensing)
    
    
    
    
    
    
    (498,828
    )
    
    
    (1,281,784
    )
    
    
    (1,780,612
    )Total Realized Losses
    
    
    
    
    
    
    (498,828
    )
    
    
    (1,575,302
    )
    
    
    (2,074,130
    )Unrealized gains or losses included
in net change in net assets from
operationsAssociates
    
    
    
    
    
    
    
    
    
    
    293,519
    
    
    
    293,519Liazon Corporation (Liazon)
    
    
    
    
    
    
    
    
    
    
    141,801
    
    
    
    141,801Niagara Dispensing
    
    
    
    
    
    
    447,328
    
    
    
    1,281,784
    
    
    
    1,729,112Total Unrealized Gains and Losses
    
    
    
    
    
    
    447,328
    
    
    
    1,717,104
    
    
    
    2,164,432Purchases of Securities/Changes to
Securities/Non-cash conversionsChequed.com, Inc. (Chequed)
    
    
    
    
    
    
    250,000
    
    
    
    
    
    
    
    250,000Microcision LLC (Microcision)
    
    
    
    
    
    
    47,827
    
    
    
    
    
    
    
    47,827Liazon
    
    
    
    
    
    
    37,000
    
    
    
    819,999
    
    
    
    856,999Total Purchases/Changes to
Securities and Non- Cash
conversions
    
    
    
    
    
    
    334,827
    
    
    
    819,999
    
    
    
    1,154,826Repayments of SecuritiesGemcor II, LLC (Gemcor)
    
    
    (41,632
    )
    
    
    
    
    
    
    
    
    
    
    (41,632
    )Liazon
    
    
    
    
    
    
    (500,000
    )
    
    
    
    
    
    
    (500,000
    )Total Repayments of Securities
    
    
    (41,632
    )
    
    
    (500,000
    )
    
    
    
    
    
    
    (541,632
    )Transfers within Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Transfers in or out of Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ending Balance, June 30, 2011, of
Level 3 Assets
    
    $
    371,964
    
    
    $
    3,378,654
    
    
    $
    16,317,503
    
    
    $
    20,068,121Amount of total gains or losses for the period included in
changes in net assets attributable
to the change in unrealized gains or losses relating to assets
still held at the reporting date and
reported within the net realized and unrealized gains or losses
on investments in the
Condensed Consolidated Statement of Operations
    
    $
    2,164,432Amount of realized losses included in changes in net assets from
operations for the
period reported above within the net realized and unrealized gains or
losses on investments in the
Condensed Consolidated Statement of Operations
    
    
    (2,074,130
    )Change in unrealized gains or losses relating to assets still held
at reporting date
    
    
    
    
    
    $
    90,302
  17




---



##### Table of Contents



Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Venture Capital InvestmentsLoan
    
    
    Debt
    
    
    EquityDescription
    
    Investments
    
    
    Investments
    
    
    Investments
    
    
    TotalBeginning Balance, December 31, 2009,
of Level 3 Assets
    
    $
    488,104
    
    
    $
    3,487,120
    
    
    $
    20,290,423
    
    
    $
    24,265,647Realized Gains or Losses included in
net change in net assets from
operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unrealized gains or losses included
in net change in net assets from
operationsSOMS Technologies, LLC (SOMS)
    
    
    
    
    
    
    
    
    
    
    55,313
    
    
    
    55,313Niagara Dispensing Technologies,
Inc. (Niagara Dispensing)
    
    
    
    
    
    
    
    
    
    
    (100,000
    )
    
    
    (100,000
    )Innov-X Systems, Inc. (Innovex)
    
    
    
    
    
    
    
    
    
    
    (700,000
    )
    
    
    (700,000
    )Total Unrealized Gains and Losses
    
    
    
    
    
    
    
    
    
    
    (744,687
    )
    
    
    (744,687
    )Purchases of Securities/Changes to
Securities/Non-cash conversionsMicrocision LLC (Microcision)
    
    
    
    
    
    
    877,048
    
    
    
    
    
    
    
    877,048Mid America Brick (Mid America)
    
    
    
    
    
    
    
    
    
    
    800,000
    
    
    
    800,000GridApp Systems Inc. (GridApp)
    
    
    
    
    
    
    
    
    
    
    481,774
    
    
    
    481,774Rheonix, Inc. (Rheonix)
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    250,000Niagara Dispensing
    
    
    
    
    
    
    222,753
    
    
    
    
    
    
    
    222,753EmergingMed.com, Inc. (Emerging Med)
    
    
    
    
    
    
    216,712
    
    
    
    
    
    
    
    216,712Mezmeriz, Inc. (Mezmeriz)
    
    
    
    
    
    
    
    
    
    
    21,509
    
    
    
    21,509Carolina Skiff LLC (Carolina Skiff)
    
    
    
    
    
    
    18,861
    
    
    
    
    
    
    
    18,861SOMS
    
    
    
    
    
    
    15,897
    
    
    
    
    
    
    
    15,897Total Purchases/Changes to Securities
and Non- Cash conversions
    
    
    
    
    
    
    1,351,271
    
    
    
    1,553,283
    
    
    
    2,904,554Repayments of SecuritiesGemcor II, LLC (Gemcor)
    
    
    (35,865
    )
    
    
    (35,781
    )
    
    
    
    
    
    
    (71,646
    )Total Repayments of Securities
    
    
    (35,865
    )
    
    
    (35,781
    )
    
    
    
    
    
    
    (71,646
    )Transfers within Level 3
    
    
    
    
    
    
    (1,270,687
    )
    
    
    1,270,687
    
    
    
    Transfers in or out of Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ending Balance, June 30, 2010, of
Level 3 Assets
    
    $
    452,239
    
    
    $
    3,531,923
    
    
    $
    22,369,706
    
    
    $
    26,353,868The amount of total gains or losses for the period included in earnings
(or changes in net assets) attributable to the change in unrealized gains
or losses relating to assets still held at the reporting date.
    
    $
    (744,687
    )Gains and losses (realized and unrealized) included in Net decrease
in net assets from operations for the period above are reported as follows:Net Gain (Loss) on Sales and Dispositions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Change in unrealized gains or losses
relating to assets still held at reporting date
    
    $
    (744,687
    )
  18




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##### Table of Contents



Note 4. FINANCIAL HIGHLIGHTS
  Six months ended
    
    
    Year endedJune 30, 2011
    
    
    December 31,(Unaudited)
    
    
    2010Income from investment operations (1):Investment income
    
    $
    0.07
    
    
    $
    0.12Expenses
    
    
    0.13
    
    
    
    0.34Investment loss before income taxes
    
    
    (0.06
    )
    
    
    (0.22
    )Income tax benefit
    
    
    (0.02
    )
    
    
    (0.08
    )Net investment loss
    
    
    (0.04
    )
    
    
    (0.14
    )Net realized and unrealized (loss) gain on investments
    
    
    0.01
    
    
    
    0.12Decrease in net asset value
    
    
    (0.03
    )
    
    
    (0.02
    )Net asset value, beginning of period, based on weighted average
shares
    
    
    3.38
    
    
    
    3.40Net asset value, end of period, based on weighted average shares
    
    $
    3.35
    
    
    $
    3.38Per share market price, end of period
    
    $
    2.90
    
    
    $
    3.23Total return based on market value
    
    
    (10.22
    )%
    
    
    (18.84
    %)Total return based on net asset value
    
    
    (0.82
    )%
    
    
    (0.67
    )%Supplemental data:Ratio of expenses before income taxes to average net assets
    
    
    3.77
    %
    
    
    10.24
    %Ratio of expenses including taxes to average net assets
    
    
    3.17
    %
    
    
    7.87
    %Ratio of net investment loss to average net assets
    
    
    (1.09
    )%
    
    
    (4.21
    )%Portfolio turnover
    
    
    5.9
    %
    
    
    16.5
    %Net assets, end of period
    
    $
    22,862,507
    
    
    $
    23,050,818Weighted average shares outstanding, end of period
    
    
    6,818,934
    
    
    
    6,818,934
 (1)
    
    Per share data are based on weighted average shares outstanding and the results are
rounded   19




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  FORWARD LOOKING STATEMENTS
 Statements included in this Managements Discussion and Analysis of Financial Condition
and Results of Operations and elsewhere in this document that do not relate to present or
historical conditions are forward-looking statements within the meaning of that term in Section
27A of the Securities Act of 1933, and in Section 21F of the Securities Exchange Act of 1934.
Additional oral or written forward-looking statements may be made by the Corporation from time to
time and those statements may be included in documents that are filed with the Securities and
Exchange Commission. Such forward-looking statements involve risks and uncertainties that could
cause results or outcomes to differ materially from those expressed in the forward-looking
statements. Forward-looking statements may include, without limitation, statements relating to the
Corporations plans, strategies, objectives, expectations and intentions and are intended to be
made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Words such as believes, forecasts, intends, possible, expects, estimates,
anticipates, or plans and similar expressions are intended to identify forward-looking
statements. Among the important factors on which such statements are based are assumptions
concerning the state of the national economy and the local markets in which the Corporations
portfolio companies operate, the state of the securities markets in which the securities of the
Corporations portfolio companies trade or could be traded, liquidity within the national financial
markets, and inflation. Forward-looking statements are also subject to the risks and uncertainties
described in Part II, Item 1A of this report, the text of which is incorporated herein by
reference.
 There may be other factors that we have not identified that affect the likelihood that the
forward-looking statements may prove to be accurate. Further, any forward-looking statement speaks
only as of the date 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
    20




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##### Table of Contents



Business Developments
  Critical Accounting Policies
   21




---



##### Table of Contents



Financial Condition
  6/30/11
    
    
    12/31/10
    
    
    Decrease
    
    
    % DecreaseTotal assets
    
    $
    34,735,464
    
    
    $
    35,091,260
    
    
    $
    (355,796
    )
    
    
    (1.0
    %)Total liabilities
    
    
    11,872,957
    
    
    
    12,040,442
    
    
    
    (167,485
    )
    
    
    (1.4
    %)Net assets
    
    $
    22,862,507
    
    
    $
    23,050,818
    
    
    $
    (188,311
    )
    
    
    (0.8
    %)
  (Decrease)
    
    
    % (Decrease)6/30/11
    
    
    12/31/10
    
    
    Increase
    
    
    IncreaseInvestments, at cost
    
    $
    12,112,105
    
    
    $
    13,573,041
    
    
    $
    (1,460,936
    )
    
    
    (10.8
    %)Unrealized appreciation, net
    
    
    7,956,016
    
    
    
    5,791,584
    
    
    
    2,164,432
    
    
    
    37.4
    %Investments at fair value
    
    $
    20,068,121
    
    
    $
    19,364,625
    
    
    $
    703,496
    
    
    
    3.6
    %
  AmountNew InvestmentsLiazon Corporation (Liazon)
    
    $
    819,999Chequed.com, Inc (Chequed)
    
    
    250,000Total of new investments during the six months ended
June 30, 2011
    
    $
    1,069,999Changes to Investments:Microcision LLC (Microcision) interest conversion
    
    $
    47,828Liazon interest conversion
    
    
    37,000Total of changes to investments during the six months ended
June 30, 2011
    
    $
    84,828Investment Repaid/Sold or Liquidated:Niagara Dispensing Technologies, Inc. (Niagara Dispensing)
    
    $
    (1,780,612
    )Liazon
    
    
    (500,000
    )Associates Interactive (Associates)
    
    
    (293,519
    )Gemcor II, LLC (Gemcor)
    
    
    (41,632
    )Total of investments repaid, sold or liquidated during
the six months ended June 30, 2011
    
    $
    (2,615,763
    )Total change in investments, at cost,
during the six months ended June 30, 2011
    
    $
    (1,460,936
    )
     22




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##### Table of Contents



Results of Operations
 Investment Income
  Comparison of the six months ended June 30, 2011 to the six months ended June 30, 2010
 June 30,
    
    
    June 30,
    
    
    Increase
    
    
    % Increase2011
    
    
    2010
    
    
    (Decrease)
    
    
    (Decrease)Interest from portfolio companies
    
    $
    379,636
    
    
    $
    334,006
    
    
    $
    45,630
    
    
    
    13.7
    %Interest from other investments
    
    
    18,081
    
    
    
    9,189
    
    
    
    8,892
    
    
    
    96.8
    %Dividend and other investment
income
    
    
    70,556
    
    
    
    36,291
    
    
    
    34,265
    
    
    
    94.4
    %Other income
    
    
    7,580
    
    
    
    7,328
    
    
    
    252
    
    
    
    3.4
    %Total investment income
    
    $
    475,853
    
    
    $
    386,814
    
    
    $
    89,039
    
    
    
    23.0
    %
 Interest from portfolio companies
  Interest
    
    
    Investment
    
    
    Year that InterestCompany
    
    Rate
    
    
    Cost
    
    
    Accrual CeasedG-Tec Natural Gas Systems (G-Tec)
    
    
    8
    %
    
    $
    400,000
    
    
    
    2004
 Interest from other investments
 Dividend and other investment income
  23




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##### Table of Contents



Other income
   Operating Expenses
 Comparison of the six months ended June 30, 2011 to the six months ended June 30, 2010
 June 30, 2011
    
    
    June 30, 2010
    
    
    Decrease
    
    
    % DecreaseTotal Expenses
    
    $
    864,983
    
    
    $
    864,238
    
    
    $
    (745
    )
    
    
    0.0
    %
  Net Realized Gains and Losses on Investments
     24




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##### Table of Contents



Net Change in Unrealized Appreciation of Investments
   June 30, 2011Reclass Niagara Dispensing to realized loss
    
    $
    1,729,112Reclass Associates to a realized loss
    
    
    293,519Liazon
    
    
    141,801Total change in net unrealized appreciation
during the six months ended June 30, 2011
    
    $
    2,164,432
   June 30, 2010SOMS
    
    $
    55,313Photonics Products Group, Inc (Photonics)
    
    
    1,525Innov-X Systems, Inc. (Innovex)
    
    
    (700,000
    )Niagara Dispensing
    
    
    (100,000
    )Total change in net unrealized appreciation
during the six months ended June 30, 2010
    
    $
    (743,162
    )
      Net Decrease in Net Assets from Operations
   25




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##### Table of Contents



Liquidity and Capital Resources
    
 Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
 Item 4.
    
    Controls and Procedures
 Management report on Internal Control Over Financial Reporting
   26




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##### Table of Contents



Changes in Internal Control over Financial Reporting.
   27




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##### Table of Contents



PART II.
OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  Fluctuations of Quarterly Results
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
 None
 
 Item 3.
    
    Defaults upon Senior Securities
 None
 
 Item 4.
    
    (Removed and Reserved)
 
 Item 5.
    
    Other Information
 None
  28




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##### Table of Contents



Item 6.
    
    Exhibits
 (a)
    
    Exhibits
  (3)
    (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.(3)
    (ii)
    
    By-laws of the Corporation incorporated by reference to Exhibit (b) of
Form N-2 filed with the Securities Exchange Commission on April 22, 1997.(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.(10.1)
    
    
    Employee Stock Option Plan  incorporated by reference to Appendix B to
the Corporations definitive Proxy Statement filed on June 1, 2002.*(10.2)
    
    
    Certificate of Incorporation of Rand Merger Corporation as filed by the
NY Department of State on 12/18/08  incorporated by reference to Exhibit
1(a) to Registration Statement No. 811-22276 on Form N-5 of Rand Capital
SBIC, Inc. filed with the SEC on 2/6/09.(10.3)
    
    
    By-laws of Rand Capital SBIC, Inc.  incorporated by reference to
Exhibit 2 to Registration Statement No. 811-22276 on Form N-5 of Rand
Capital SBIC, Inc. filed with the SEC on 2/6/09.(10.4)
    
    
    Certificate of Merger of Rand Capital SBIC, L.P. and Rand Capital
Management, LLC into Rand Merger Corporation, as filed by the NY
Department of State on 12/18/08  incorporated by reference to Exhibit
1(b) to Registration Statement No. 811-22276 on Form N-5 of Rand Capital
SBIC, Inc. filed with the SEC on 2/6/09.(10.5)
    
    
    Rand Capital Corporation Amended and Restated Profit Sharing Plan
applicable to Rand Capital SBIC, Inc.  incorporated by reference to
Exhibit 7 to Registration Statement No. 811-22276 on Form N-5 of Rand
Capital SBIC, Inc. filed with the SEC on 2/6/09.*(31.1)
    
    
    Certification of the Chief Executive Officer Pursuant to Rules
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended,
filed herewith(31.2)
    
    
    Certification of Chief Financial Officer Pursuant to Rules
13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended,
filed herewith(32.1)
    
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 Rand Capital Corporation  furnished herewith(32.2)
    
    
    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 Rand Capital SBIC, Inc.  furnished herewith
 *
    
    Management contract or compensatory plan.  29




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##### Table of Contents



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.
  RAND CAPITAL CORPORATIONBy:
    
    /s/ Allen F. GrumAllen F. Grum, PresidentBy:
    
    /s/ Daniel P. PenberthyDaniel P. Penberthy, TreasurerRAND CAPITAL SBIC, INC.By:
    
    /s/ Allen F. GrumAllen F. Grum, PresidentBy:
    
    /s/ Daniel P. PenberthyDaniel P. Penberthy, Treasurer
 
  30