##### 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, 2010
 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
    
    14203(Address of Principal executive offices)
    
    (Zip Code)
 (716) 853-0802
(
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 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, 2010 and December 31, 2009
    
    
    3Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2010 and 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2010 and 2009
    
    
    5Condensed Consolidated Statements of Changes in Net Assets for the Three Months and Six Months Ended June 30, 2010 and 2009
    
    
    6Condensed Consolidated Schedule of Portfolio Investments as of June 30, 2010
    
    
    7Notes to the Consolidated Financial Statements
    
    
    10Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    25Item 4T. Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3.Defaults upon Senior Securities
    
    
    27Item 4.Submission of Matters to a Vote of Security Holders
    
    
    27Item 5.Other Information
    
    
    27Item 6.Exhibits
    
    
    28Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 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, 2010 and December 31, 2009
 June 30, 2010
    
    
    December 31,(Unaudited)
    
    
    2009ASSETSInvestments at fair value (identified cost: 6/30/10 
$17,600,827; 12/31/09  $14,767,920)
    
    $
    26,385,893
    
    
    $
    24,296,145Cash and cash equivalents
    
    
    5,852,822
    
    
    
    9,417,236Interest receivable (net of allowance  $209,089)
    
    
    1,137,547
    
    
    
    1,192,118Income taxes receivable
    
    
    72,405
    
    
    
    Other assets
    
    
    763,535
    
    
    
    725,872Total assets
    
    $
    34,212,202
    
    
    $
    35,631,371LIABILITIES AND STOCKHOLDERS EQUITY (NET ASSETS)Liabilities:Debentures guaranteed by the SBA
    
    $
    10,000,000
    
    
    $
    9,100,000Deferred tax liability
    
    
    1,557,276
    
    
    
    1,809,000Income taxes payable
    
    
    
    
    
    
    1,082,646Accounts payable and accrued expenses
    
    
    270,267
    
    
    
    431,233Deferred revenue
    
    
    1,783
    
    
    
    2,611Total liabilities
    
    
    11,829,326
    
    
    
    12,425,490Stockholders 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)
    
    
    (5,271,365
    )
    
    
    (4,961,725
    )Undistributed net realized gain on investments
    
    
    10,897,390
    
    
    
    10,897,390Net unrealized appreciation on investments
    
    
    5,535,964
    
    
    
    6,049,329Treasury stock, at cost, 44,100 shares
    
    
    (47,206
    )
    
    
    (47,206
    )Net assets
(per share 6/30/10  $3.28, 12/31/09  $3.40)
    
    
    22,382,876
    
    
    
    23,205,881Total liabilities and stockholders equity (net assets)
    
    $
    34,212,202
    
    
    $
    35,631,371
   3




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##### Table of Contents



RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months and Six Months Ended June 30, 2010 and 2009
 (Unaudited)
 Three months
    
    
    Three months
    
    
    Six months
    
    
    Six monthsended
    
    
    ended
    
    
    ended
    
    
    endedJune 30, 2010
    
    
    June 30, 2009
    
    
    June 30, 2010
    
    
    June 30, 2009Investment income:Interest from portfolio companies
    
    $
    167,509
    
    
    $
    152,007
    
    
    $
    334,006
    
    
    $
    287,523Interest from other investments
    
    
    4,005
    
    
    
    3,160
    
    
    
    9,189
    
    
    
    12,294Dividend and other investment income
    
    
    22,389
    
    
    
    159,745
    
    
    
    36,291
    
    
    
    384,271Other income
    
    
    4,525
    
    
    
    6,083
    
    
    
    7,328
    
    
    
    15,166198,428
    
    
    
    320,995
    
    
    
    386,814
    
    
    
    699,254Operating expenses:Salaries
    
    
    115,050
    
    
    
    111,843
    
    
    
    230,100
    
    
    
    223,765Employee benefits
    
    
    25,995
    
    
    
    29,919
    
    
    
    84,137
    
    
    
    66,095Directors fees
    
    
    46,795
    
    
    
    44,000
    
    
    
    57,750
    
    
    
    54,500Professional fees
    
    
    32,268
    
    
    
    67,798
    
    
    
    90,691
    
    
    
    139,019Stockholders and office operating
    
    
    45,901
    
    
    
    51,491
    
    
    
    71,924
    
    
    
    85,896Insurance
    
    
    9,655
    
    
    
    10,550
    
    
    
    19,820
    
    
    
    25,428Corporate development
    
    
    14,537
    
    
    
    14,841
    
    
    
    23,767
    
    
    
    24,375Other operating
    
    
    5,232
    
    
    
    2,276
    
    
    
    8,028
    
    
    
    4,729295,433
    
    
    
    332,718
    
    
    
    586,217
    
    
    
    623,807Interest on SBA obligations
    
    
    147,560
    
    
    
    125,065
    
    
    
    284,004
    
    
    
    243,424Bad debt recovery
    
    
    (5,983
    )
    
    
    (10,977
    )
    
    
    (5,983
    )
    
    
    (10,977
    )Total expenses
    
    
    437,010
    
    
    
    446,806
    
    
    
    864,238
    
    
    
    856,254Investment (loss) before income taxes
    
    
    (238,582
    )
    
    
    (125,811
    )
    
    
    (477,424
    )
    
    
    (157,000
    )Current income tax (benefit) expense
    
    
    (145,856
    )
    
    
    34,012
    
    
    
    (145,856
    )
    
    
    136,062Deferred income tax expense (benefit)
    
    
    57,525
    
    
    
    (80,034
    )
    
    
    (21,928
    )
    
    
    (192,034
    )Net investment (loss)
    
    
    (150,251
    )
    
    
    (79,789
    )
    
    
    (309,640
    )
    
    
    (101,028
    )Realized and unrealized gain (loss) on investments:Realized loss on sales and dispositions
    
    
    
    
    
    
    (31,271
    )
    
    
    
    
    
    
    (31,271
    )Income tax( benefit)
    
    
    
    
    
    
    (11,149
    )
    
    
    
    
    
    
    (11,149
    )Net realized loss on investments
    
    
    
    
    
    
    (20,122
    )
    
    
    
    
    
    
    (20,122
    )Unrealized appreciation on investments:Beginning of period
    
    
    8,728,226
    
    
    
    13,739,831
    
    
    
    9,528,226
    
    
    
    13,739,831End of period
    
    
    8,785,064
    
    
    
    12,859,507
    
    
    
    8,785,064
    
    
    
    12,859,507Change in unrealized appreciation before
income taxes
    
    
    56,838
    
    
    
    (880,324
    )
    
    
    (743,162
    )
    
    
    (880,324
    )Deferred income tax expense (benefit)
    
    
    50,327
    
    
    
    (322,817
    )
    
    
    (229,797
    )
    
    
    (322,817
    )Net increase (decrease) in unrealized appreciation
    
    
    6,511
    
    
    
    (557,507
    )
    
    
    (513,365
    )
    
    
    (557,507
    )Net realized and unrealized gain (loss) on investments
    
    
    6,511
    
    
    
    (577,629
    )
    
    
    (513,365
    )
    
    
    (577,629
    )Net decrease in net assets from operations
    
    $
    (143,740
    )
    
    $
    (657,418
    )
    
    $
    (823,005
    )
    
    $
    (678,657
    )Weighted average shares outstanding
    
    
    6,818,934
    
    
    
    5,718,934
    
    
    
    6,818,934
    
    
    
    5,718,934Basic and diluted net decrease in net assets from
operations per share
    
    $
    (0.02
    )
    
    $
    (0.11
    )
    
    $
    (0.12
    )
    
    $
    (0.12
    )
   4




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##### Table of Contents



RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Six Months Ended June 30, 2010 and 2009
 (Unaudited)
 June 30, 2010
    
    
    June 30, 2009Cash flows from operating activities:Net decrease in net assets from operations
    
    $
    (823,005
    )
    
    $
    (678,657
    )Adjustments to reconcile net decrease in net
assets to net cash used in operating activities:Depreciation and amortization
    
    
    20,745
    
    
    
    17,891Change in interest receivable allowance
    
    
    
    
    
    
    36,245Decrease in unrealized appreciation of
investments
    
    
    743,162
    
    
    
    880,324Deferred tax benefit
    
    
    (251,724
    )
    
    
    (526,000
    )Net realized loss on portfolio investments
    
    
    
    
    
    
    31,271Non-cash conversion of debenture interest
    
    
    (324,553
    )
    
    
    (42,349
    )Changes in operating assets and liabilities:Decrease (increase) in interest receivable
    
    
    54,571
    
    
    
    (197,950
    )(Increase) decrease in other assets
    
    
    (35,737
    )
    
    
    101,575Increase in income taxes receivable
    
    
    (72,405
    )
    
    
    (85,521
    )Decrease in income taxes payable
    
    
    (1,082,646
    )
    
    
    (98,723
    )Decrease in accounts payable and accrued
expenses
    
    
    (160,966
    )
    
    
    (13,394
    )Decrease in deferred revenue
    
    
    (828
    )
    
    
    (15,182
    )Total adjustments
    
    
    (1,110,381
    )
    
    
    88,187Net cash used in operating activities
    
    
    (1,933,386
    )
    
    
    (590,470
    )Cash flows from investing activities:Investments originated
    
    
    (2,580,000
    )
    
    
    (381,756
    )Proceeds from sale of portfolio investments
    
    
    
    
    
    
    57,479Proceeds from loan repayments
    
    
    71,643
    
    
    
    33,038Capital expenditures
    
    
    (846
    )
    
    
    Net cash used in investing activities
    
    
    (2,509,203
    )
    
    
    (291,239
    )Cash flows from financing activities:Proceeds from SBA debenture
    
    
    900,000
    
    
    
    Origination costs to SBA
    
    
    (21,825
    )
    
    
    Net cash provided by financing activities
    
    
    878,175
    
    
    
    Net decrease in cash and cash equivalents
    
    
    (3,564,414
    )
    
    
    (881,709
    )Cash and cash equivalents:Beginning of period
    
    
    9,417,236
    
    
    
    2,757,653End of period
    
    $
    5,852,822
    
    
    $
    1,875,944
   5




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##### Table of Contents



RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
 For the Three Months and the Six Months Ended June 30, 2010 and 2009
 (Unaudited)
 Three months
    
    
    Three months
    
    
    Six months
    
    
    Six monthsended
    
    
    ended
    
    
    ended
    
    
    endedJune 30, 2010
    
    
    June 30, 2009
    
    
    June 30, 2010
    
    
    June 30, 2009Net assets at beginning of period
    
    $
    22,526,616
    
    
    $
    20,205,727
    
    
    $
    23,205,881
    
    
    $
    20,226,966Net investment loss
    
    
    (150,251
    )
    
    
    (68,640
    )
    
    
    (309,640
    )
    
    
    (89,879
    )Net realized loss on investments
    
    
    
    
    
    
    (31,271
    )
    
    
    
    
    
    
    (31,271
    )Change in unrealized appreciation before
income taxes
    
    
    56,838
    
    
    
    (880,324
    )
    
    
    (743,162
    )
    
    
    (880,324
    )Deferred income tax expense (benefit)
    
    
    50,327
    
    
    
    (322,817
    )
    
    
    (229,797
    )
    
    
    (322,817
    )Increase (decrease) in unrealized
appreciation
on investments (net of tax benefit)
    
    
    6,511
    
    
    
    (557,507
    )
    
    
    (513,365
    )
    
    
    (557,507
    )Net decrease in net assets from operations
    
    
    (143,740
    )
    
    
    (657,418
    )
    
    
    (823,005
    )
    
    
    (678,657
    )Net assets at end of period
    
    $
    22,382,876
    
    
    $
    19,548,309
    
    
    $
    22,382,876
    
    
    $
    19,548,309
   6




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##### Table of Contents



RAND CAPITAL CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS
 June 30, 2010
 (Unaudited)
 (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    PerCompany, Geographic Location, Business
    
    
    
    Date
    
    
    (c)
    
    
    
    
    
    
    (d)(f)
    
    
    ShareDescription, (Industry) and Website
    
    Type of Investment
    
    Acquired
    
    
    Equity
    
    
    Cost
    
    
    Value
    
    
    of RandNon-Control/Non-Affiliate Investments: (k)Mezmeriz, 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
    
    141,334 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)481,430 Series A preferred shares.  50,593 common shares.
    
    
    10/29/09
    
    
    
    3
    %
    
    
    503,000
    
    
    
    639,000
    
    
    
    .09Somerset Gas TransmissionCompany, LLC (e)
Columbus, OH. Natural gas
transportation company.
(Oil and Gas)
www.somersetgas.com
    
    26.5337 units.
    
    
    7/10/02
    
    
    
    2
    %
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    $
    2,693,085
    
    
    $
    5,715,258
    
    
    $
    .84Affiliate Investments: (l)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.  6.6233% Class A common membership interest.(j)Interest receivable $834,055.
    
    
    1/30/04
    
    
    
    7
    %
    
    $
    1,518,861
    
    
    $
    1,518,861
    
    
    $
    .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.  Warrant for 8% of common stock.
    
    
    12/19/05
    
    
    
    7
    %
    
    
    675,045
    
    
    
    675,045
    
    
    
    .10GridApp Systems, Inc. (g)
New York, NY. Provider of
database automation
software that helps
businesses gain control of
their heterogeneous
database applications
through a centralized
software console.
(Software)
www.gridapp.com
    
    1,309,375 Series A-1 preferred shares.  584,480 common
shares.  8% cumulative dividend.
    
    
    11/25/08
    
    
    
    14
    %
    
    
    1,577,708
    
    
    
    1,281,773
    
    
    
    .19Innov-X Systems, Inc. (g)
Woburn, MA. Manufactures portable x-ray fluorescence
(XRF) analyzers used in
metals/alloy analysis.
(Manufacturing)
www.innovxsys.com
    
    (e)$250,000 note at 11% due March 31, 2017.  2,642 Series A
preferred stock.  8% cumulative dividend. Warrants for 21,924 common shares.
(j)Interest receivable $260,277.
    
    
    9/27/04
    
    
    
    9
    %
    
    
    1,250,000
    
    
    
    5,600,000
    
    
    
    .82
  7




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##### Table of Contents



RAND CAPITAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 2010 (Continued)
(Unaudited)
 (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    PerCompany, Geographic Location,
    
    
    
    Date
    
    
    (c)
    
    
    
    
    
    
    (d)(f)
    
    
    ShareBusiness Description, (Industry) and Website
    
    Type of Investment
    
    Acquired
    
    
    Equity
    
    
    Cost
    
    
    Value
    
    
    of RandMicrocision LLC (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 (PIK) due December 31, 2013.  15% class A common membership
interest.
    
    
    9/24/09
    
    
    
    15
    %
    
    
    1,535,856
    
    
    
    1,535,856
    
    
    
    .23Mid America Brick (g)
Mexico, MO. Manufacturer of face
brick for residential and commercial
construction. (Manufacturing).
www.midamericabrick.com
    
    19,524 common membership units.
    
    
    6/1/10
    
    
    
    19.5
    %
    
    
    800,000
    
    
    
    800,000
    
    
    
    .12Niagara Dispensing Technologies, Inc.
Amherst, NY. Beverage dispensing technology development and products manufacturer, specializing in rapid
pour beer dispensing systems for high volume stadium and concession operations. (Manufacturing)
www.niagaradispensing.com
    
    202,081 Series B preferred stock.(g)463,691 Series A preferred stock.  518,752 Series B preferred stock. (e)$300,000 promissory note at 6%, 8% deferred interest (PIK) due July 30, 2011.
$200,000 secured convertible note at 14% due February 19, 2012. Warrants for 190,561 class A
common stock.  Warrants for 110,672 series B preferred stock.
    
    
    3/8/06
    
    
    
    14
    %
    
    
    1,814,947
    
    
    
    1,235,995
    
    
    
    .18SOMS 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 preferred stock.
    
    
    12/2/08
    
    
    
    11.7
    %
    
    
    370,687
    
    
    
    426,001
    
    
    
    .06Ultra  Scan Corporation
Amherst, 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
    
    
    
    2.5
    %
    
    
    938,164
    
    
    
    1,203,000
    
    
    
    .18Subtotal Affiliate Investments
    
    
    
    
    
    
    
    
    
    
    
    $
    10,481,268
    
    
    $
    14,276,531
    
    
    $
    2.10Control Investments (m)Gemcor 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
    %
    
    $
    952,238
    
    
    $
    6,152,238
    
    
    $
    .90G-TEC Natural Gas Systems
Buffalo, NY. Manufactures and distributes systems that allow
natural gas to be used as an
alternative fuel to gases.
(Manufacturing)
www.gas-tec.com
    
    23.60% Class A membership interest.  8% cumulative dividend.
    
    
    8/31/99
    
    
    
    21.6
    %
    
    
    400,000
    
    
    
    100,000
    
    
    
    .01Subtotal Control Investments
    
    
    
    
    
    
    
    
    
    
    
    $
    1,352,238
    
    
    $
    6,252,238
    
    
    $
    .91Other Investments (a)(i)
    
    Various
    
    
    
    
    
    
    
    
    
    $
    3,074,236
    
    
    $
    141,866
    
    
    
    .02Total portfolio investments
    
    
    
    
    
    
    
    
    
    $
    17,600,827
    
    
    $
    26,385,893
    
    
    $
    3.87
  8




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##### Table of Contents



RAND CAPITAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS
June 30, 2010 (Continued)
(Unaudited)
 Notes to Consolidated Schedule of Portfolio Investments(a)
    
    Unrestricted securities are freely marketable securities having readily available market
quotations. All other securities are restricted securities, which are subject to one or more
restrictions on resale and are not freely marketable. At June 30, 2010 restricted securities
represented 99% of the value of the investment portfolio. 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.(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 primarily uses the SBAs valuation guidelines for SBICs which describes the
policies and procedures used in valuing investments. Under the valuation policy of the
Corporation, unrestricted securities are valued at the closing price for publicly held securities
for the last three days of the month. Restricted securities, including securities of publicly-held
companies, 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. On a consolidated basis the Corporation uses Accounting Standards Codification (ASC) 820
(formerly FAS No. 157) Fair Value Measurements which defines fair value and establishes
guidelines for measuring fair value. ASC 820 designates the Corporations investments primarily as
Level 3 assets due to their privately held restricted nature.(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)
    
    Income Tax Information  As of June 30, 2010, the total cost of investment securities
approximated $17.6 million. Net unrealized appreciation was approximately $8.8 million, which was
comprised of $12.9 million of unrealized appreciation of investment securities and $4.1 million
related to unrealized depreciation of investment securities(g)
    
    Rand Capital SBIC, Inc. investment.(h)
    
    Reduction in cost and value from previously reported balances reflects current principal
repayment.(i)
    
    Included in Other Investments is 30,500 shares OTC: PHPG.OB, a publicly owned company.(j)
    
    Represents interest due (amounts over $50,000 net of reserves) from investment included as
interest receivable on the Corporations Balance Sheet.(k)
    
    Non-Control/Non-Affiliate investments are investments that are neither Control Investments or
Affiliated Investments.(l)
    
    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.(m)
    
    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, 2010 and 2009
 (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




---



##### 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, 2009Form 10-Q
    
    Quarterly Report on Form 10-Q for the quarters ended March 31, 2010,
September 30, 2009 and June 30, 2009Form 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
  Deferred Debenture Costs
 SBA Leverage
 Net Assets per Share
 Supplemental Cash Flow Information
  12




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##### Table of Contents



Accounting Estimates
 Stockholders Equity (Net Assets) 
  Profit Sharing and Stock Option Plan 
  Income Taxes 
  13




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##### Table of Contents



Concentration of Credit Risk 
 Subsequent Events 
 Note 3. INVESTMENTS
    14




---



##### Table of Contents




    
    Market 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.
 
    
    Income approach  The income approach employs a cash flow and discounting
methodology to value an investment.
 
    
    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.
      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, 2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Loan investments
    
    $
    452,239
    
    
    
    
    
    
    
    
    
    
    $
    452,239Debt investments
    
    
    3,531,923
    
    
    
    
    
    
    
    
    
    
    
    3,531,923Equity investments
    
    
    22,401,731
    
    
    $
    32,025
    
    
    
    
    
    
    
    22,369,706Total Venture
Capital Investments
    
    $
    26,385,893
    
    
    $
    32,025
    
    
    $
    0
    
    
    $
    26,353,868
 Quoted Prices in
    
    
    Significant
    
    
    Other SignificantActive Markets for
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Venture Capital
Investments
    
    $
    24,296,145
    
    
    $
    30,498
    
    
    $
    0
    
    
    $
    24,265,647
  15




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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, 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
    )Purchases of SecuritiesMicrocision 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
    
    
    
    
    
    
    
    15,897Repayments of SecuritiesGemcor II, LLC (Gemcor)
    
    
    (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
    )
  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 InvestmentsBeginning Balance, December 31, 2008, of Level 3 Assets
    
    
    
    
    
    $
    28,014,282Realized Gains or Losses included in net change in
net assets from operations
    
    
    
    
    
    
    Unrealized gains or losses included in net
change in net assets from operations
    
    
    
    
    
    
    Associates Interactive, LLC (Associates)
    
    $
    (293,518
    )APF Group, Inc. (APF)
    
    $
    (174,213
    )Adampluseve, Inc. (Adampluseve)
    
    $
    (65,341
    )Golden Goal LLC (Golden Goal)
    
    $
    (100,000
    )G-TEC Natural Gas Systems (G-Tec)
    
    $
    (98,000
    )Niagara Dispensing Technologies, Inc. (Niagara Dispensing)
    
    $
    (168,702
    )
    
    $
    (899,774
    )Purchases of SecuritiesAssociates
    
    $
    43,518APF
    
    $
    24,212Golden Goal
    
    $
    38,238GridApp Systems Inc. (GridApp)
    
    $
    18,137Innov-X Systems, Inc. (Innovex)
    
    $
    250,000Niagara Dispensing
    
    $
    50,000
    
    
    $
    424,105Repayments of SecuritiesGemcor II, LLC (Gemcor)
    
    $
    (33,038
    )
    
    $
    (33,038
    )Transfers in or out of Level 3
    
    
    
    
    
    
    Ending Balance, June 30, 2009, of Level 3 Assets
    
    
    
    
    
    $
    27,505,575The 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.
    
    
    
    
    
    $
    (899,774
    )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
    
    
    
    
    
    $
    (899,774
    )
  17




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##### Table of Contents



Note 4. FINANCIAL HIGHLIGHTS
  Six months ended
    
    
    Year endedJune 30, 2010
    
    
    December 31,(Unaudited)
    
    
    2009Income from investment operations (1):Investment income
    
    $
    0.06
    
    
    $
    0.28Expenses
    
    
    0.13
    
    
    
    0.30Investment (loss) before income taxes
    
    
    (0.07
    )
    
    
    (0.02
    )Income tax (benefit)
    
    
    (0.02
    )
    
    
    (0.01
    )Net investment (loss)
    
    
    (0.05
    )
    
    
    (0.01
    )Issuance of common stock
    
    
    
    
    
    
    0.61Net realized and unrealized (loss) on investments
    
    
    (0.07
    )
    
    
    (0.11
    )(Decrease) increase in net asset value
    
    
    (0.12
    )
    
    
    0.49Net asset value, beginning of period, based on weighted average
shares
    
    
    3.40
    
    
    
    3.54Net asset value, end of period, based on weighted average shares
    
    $
    3.28
    
    
    $
    4.03Per share market price, end of period
    
    $
    3.25
    
    
    $
    3.98Total return based on market value
    
    
    (18.34
    )%
    
    
    13.71
    %Total return based on net asset value
    
    
    (3.55
    )%
    
    
    (3.74
    )%Supplemental data:Ratio of expenses before income taxes to average net assets
    
    
    3.79
    %
    
    
    8.52
    %Ratio of expenses including taxes to average net assets
    
    
    3.06
    %
    
    
    8.35
    %Ratio of net investment loss to average net assets
    
    
    (1.36
    )%
    
    
    (0.29
    )%Portfolio turnover
    
    
    10.2
    %
    
    
    11.3
    %Net assets, end of period
    
    $
    22,382,876
    
    
    $
    23,205,881Weighted average shares outstanding, end of period
    
    
    6,818,934
    
    
    
    6,115,081
 (1)
    
    Per share data are based on weighted average shares outstanding and the results are
rounded   18




---



##### 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.
 Corporate Structure
    19




---



##### Table of Contents



Business Developments
  Critical Accounting Policies
   20




---



##### Table of Contents



Financial Condition
  6/30/10
    
    
    12/31/09
    
    
    Decrease
    
    
    % DecreaseTotal assets
    
    $
    34,212,202
    
    
    $
    35,631,371
    
    
    $
    (1,419,169
    )
    
    
    (4.0
    %)Total liabilities
    
    
    11,829,326
    
    
    
    12,425,490
    
    
    
    (596,164
    )
    
    
    (4.8
    %)Net assets
    
    $
    22,382,876
    
    
    $
    23,205,881
    
    
    $
    (823,005
    )
    
    
    (3.5
    %)
  Increase
    
    
    % Increase6/30/10
    
    
    12/31/09
    
    
    (Decrease)
    
    
    (Decrease)Investments, at cost
    
    $
    17,600,827
    
    
    $
    14,767,920
    
    
    $
    2,832,907
    
    
    
    19.2
    %Unrealized appreciation, net
    
    
    8,785,066
    
    
    
    9,528,225
    
    
    
    (743,159
    )
    
    
    (7.8
    %)Investments at fair value
    
    $
    26,385,893
    
    
    $
    24,296,145
    
    
    $
    2,089,748
    
    
    
    8.6
    %
  AmountNew Investments:Microcision LLC (Microcision)
    
    $
    850,000Mid America Brick (Mid America)
    
    
    800,000GridApp Systems, Inc. (GridApp)
    
    
    480,000Rheonix, Inc. (Rheonix)
    
    
    250,000Niagara Dispensing Technologies, Inc. (Niagara Dispensing)
    
    
    200,000Total of new investments made during the six months
ended June 30, 2010
    
    $
    2,580,000Changes to Investments:EmergingMed.com, Inc (Emerging Med) interest conversion
    
    $
    216,712Microcision interest conversion
    
    
    27,048Niagara Dispensing interest conversion
    
    
    22,752Mezmeriz, Inc (Mezmeriz) interest conversion
    
    
    21,509Carolina Skiff LLC (Carolina Skiff) interest conversion
    
    
    18,861SOMS Technologies, LLC (SOMS) interest conversion
    
    
    15,897GridApp interest conversion
    
    
    1,774Total of changes to investments made during the six months
ended June 30, 2010
    
    $
    324,553Investment Repayments:Gemcor II, LLC (Gemcor)
    
    
    (71,646
    )Total of investment repayments during the six months
ended June 30, 2010
    
    
    (71,646
    )Total change in investments, at cost,
during the six months ended June 30, 2010
    
    $
    2,832,907
  21




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##### Table of Contents



Results of Operations
 Investment Income
  Comparison of the six months ended June 30, 2010 to the six months ended June 30, 2009
 Increase
    
    
    % IncreaseJune 30, 2010
    
    
    June 30, 2009
    
    
    (Decrease)
    
    
    (Decrease)Interest from portfolio companies
    
    $
    334,006
    
    
    $
    287,523
    
    
    $
    46,483
    
    
    
    16.2
    %Interest from other investments
    
    
    9,189
    
    
    
    12,294
    
    
    
    (3,105
    )
    
    
    (25.3
    %)Dividend and other investment income
    
    
    36,291
    
    
    
    384,271
    
    
    
    (347,980
    )
    
    
    (90.6
    %)Other income
    
    
    7,328
    
    
    
    15,166
    
    
    
    (7,838
    )
    
    
    (51.7
    )%Total investment income
    
    $
    386,814
    
    
    $
    699,254
    
    
    $
    (312,440
    )
    
    
    (44.7
    %)
 Interest from portfolio companies
  Interest
    
    
    Investment
    
    
    Year that InterestCompany
    
    Rate
    
    
    Cost
    
    
    Accrual CeasedAPF
    
    
    8
    %
    
    $
    631,547
    
    
    
    2009Associates Interactive LLC (Associates)
    
    
    8
    %
    
    
    293,518
    
    
    
    2009Golden Goal LLC
    
    
    13
    %
    
    
    675,652
    
    
    
    2009G-Tec Natural Gas Systems (G-Tec)
    
    
    8
    %
    
    
    400,000
    
    
    
    2004UStec, Inc. (Ustec)
    
    
    5
    %
    
    
    100,000
    
    
    
    2006WineIsIt.com (Wineisit)
    
    
    10
    %
    
    
    801,918
    
    
    
    2005
 Interest from other investments
 Dividend and other investment income
  22




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##### Table of Contents



Other income
   Operating Expenses
 Comparison of the six months ended June 30, 2010 to the six months ended June 30, 2009
 June 30, 2010
    
    
    June 30, 2009
    
    
    Increase
    
    
    % IncreaseTotal Expenses
    
    $
    864,238
    
    
    $
    856,254
    
    
    $
    7,984
    
    
    
    0.9
    %
   Net Realized Gains and Losses on Investments
  Net Change in Unrealized Appreciation of Investments
   23




---



##### Table of Contents



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
    )
      June 30, 2009Photonic
    
    $
    19,450Associates Interactive
    
    
    (293,518
    )APF Group, Inc. (APF)
    
    
    (174,213
    )Niagara Dispensing
    
    
    (168,702
    )Golden Goal LLC (Golden Goal)
    
    
    (100,000
    )G-TEC Natural Gas Systems (G-Tec)
    
    
    (98,000
    )Adampluseve, Inc. (Adampluseve)
    
    
    (65,341
    )Total change in net unrealized appreciation
during the six months ended June 30, 2009
    
    $
    (880,324
    )
       24




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Net Decrease in Net Assets from Operations
  Liquidity and Capital Resources
    
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
     25




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##### Table of Contents



Item 4T. Controls and Procedures
 Management report on Internal Control Over Financial Reporting
      Changes in Internal Control over Financial Reporting.
   26




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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
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Removed and Reserved
 
 Item 5. Other Information
   27




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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.*(10.3
    )
    
    Agreement of Limited Partnership for Rand Capital SBIC, L.P. 
incorporated by reference to Exhibit 10.3 to the Corporations Form 10-K
filed for the year ended December 31, 2001.(10.4
    )
    
    Certificate of Formation of Rand Capital SBIC, L.P.  incorporated by
reference to Exhibit 10.4 to the Corporations Form10-K filed for the year
ended December 31, 2001(10.5
    )
    
    Limited Liability Corporation Agreement of Rand Capital Management, LLC
 incorporated by reference to Exhibit 10.5 to the Corporations Form 10-K
Report filed for the year ended December 31, 2001.(10.6
    )
    
    Certificate of Formation of Rand Capital Management, LLC  incorporated
by reference to Exhibit 10.6 to the Corporations Form 10-K Report filed
for the year ended December 31, 2001.(10.7
    )
    
    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.(10.8
    )
    
    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.(10.9
    )
    
    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.(10.10
    )
    
    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.*(10.11
    )
    
    Form of Subscription Agreement used by Rand Capital Corporation in
connection with a private offering of 1,100,000 shares of common stock
that was completed on September 4, 2009  incorporated by reference to
Exhibit 99.1 to the Corporations Form 8-K report filed on August 13,
2009.
  28




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(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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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. Grum

Allen F. Grum, PresidentBy:
    
    /s/ Daniel P. Penberthy

Daniel P. Penberthy, TreasurerRAND CAPITAL SBIC, INC.By:
    
    /s/ Allen F. Grum

Allen F. Grum, PresidentBy:
    
    /s/ Daniel P. Penberthy

Daniel P. Penberthy, Treasurer
 
  30