##### Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 10-Q    ☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022  ☐
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.)1405 Rand Building, Buffalo, NY

14203(Address of Principal executive offices)

(Zip Code) (716) 853-0802 (Registrants telephone number, including area code)   Securities registered pursuant to Section 12(b) of the Act:  Title of each class

Trading
Symbol(s)

Name of each exchange
on which registeredCommon Stock, $0.10 par value

RAND

Nasdaq Capital Market Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.    Yes  ☒    No  ☐ Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit such files).    Yes  ☐    No  ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting
company and emerging growth company in Rule 12b-2 of the Exchange Act.   Large accelerated filer

☐

Accelerated filer

☐Non-accelerated filer

☒

Smaller reporting company

☐Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).    Yes  ☐    No  ☒ As of November 7, 2022, there were 2,581,021 shares
of the registrants common stock outstanding.




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##### Table of Contents

RAND CAPITAL CORPORATION TABLE OF CONTENTS FOR FORM 10-Q  PART I.  FINANCIAL INFORMATIONItem 1.

Financial Statements and Supplementary Data


1Consolidated Statements of Financial Position as of September 30, 2022 (Unaudited) and December 31, 2021


1Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)


2Consolidated Statements of Changes in Net Assets for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)


4Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited)


5Consolidated Schedule of Portfolio Investments as of September 30, 2022 (Unaudited)


6Consolidated Schedule of Portfolio Investments as of December 31, 2021


14Notes to the Consolidated Financial Statements (Unaudited)


22Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations


39Item 3.

Quantitative and Qualitative Disclosures about Market Risk


52Item 4.

Controls and Procedures


53PART II.  OTHER INFORMATIONItem 1.

Legal Proceedings


54Item 1A.

Risk Factors


54Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


54Item 3.

Defaults upon Senior Securities


54Item 4.

Mine Safety Disclosures


54Item 5.

Other Information


54Item 6.

Exhibits


55




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##### Table of Contents

PART I. FINANCIAL INFORMATION  Item 1.
Financial Statements and Supplementary Data RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION  September 30,2022(Unaudited)


December 31,2021ASSETSInvestments at fair value:Control investments (cost of $4,612,896 and $0, respectively)

$
4,237,896


$
Affiliate investments (cost of $26,176,398 and $27,357,797, respectively)


29,521,315



30,279,873Non-Control/Non-Affiliate
investments (cost of $22,329,474 and $25,012,871, respectively)


25,964,429



33,788,589Total investments, at fair value (cost of $53,118,768 and $52,370,668, respectively)


59,723,640



64,068,462Cash


1,035,455



833,875Interest receivable


220,664



128,047Prepaid income taxes


51,136



252,010Deferred tax asset


229,398



181,003Other assets


447,317



181,457Total assets

$
61,707,610


$
65,644,854LIABILITIES AND STOCKHOLDERS EQUITY (NET ASSETS)Liabilities:Due to investment adviser

$
225,649


$
891,102Accounts payable and accrued expenses


74,142



51,689Capital gains incentive fees


2,667,000



3,547,760Deferred revenue


358,886



408,887Total liabilities


3,325,677



4,899,438Commitments and contingencies (See Note 5)Stockholders equity (net assets):Common stock, $0.10 par; shares authorized 100,000,000; shares issued: 2,648,916; shares
outstanding: 2,581,021 at 9/30/22 and 12/31/21


264,892



264,892Capital in excess of par value


51,679,809



51,679,809Treasury stock, at cost: 67,895 shares at 9/30/22 and 12/31/21


(1,566,605
)


(1,566,605
)Total distributable earnings


8,003,837



10,367,320Total stockholders equity (net assets) (per share  9/30/22: $22.62; 12/31/21:
$23.54)


58,381,933



60,745,416Total liabilities and stockholders equity (net assets)

$
61,707,610


$
65,644,854 See accompanying notes  1




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)  Three monthsendedSeptember 30,2022


Three monthsendedSeptember 
30,2021


Nine monthsendedSeptember 30,2022


Nine monthsendedSeptember 30,2021Investment income:Interest from portfolio companies:Control investment

$
124,408


$
8,898


$
124,408


$
11,765Affiliate investments


581,911



409,467



1,767,024



1,023,968Non-Control/Non-Affiliate investments


393,686



339,416



1,125,544



1,075,016Total interest from portfolio companies


1,100,005



757,781



3,016,976



2,110,749Interest from other investments:Non-Control/Non-Affiliate investments


48



473



49



13,343Total interest from other investments


48



473



49



13,343Dividend and other investment income:Affiliate investments


305,959



100,896



552,469



208,947Non-Control/Non-Affiliate investments


115,700



129,013



358,700



404,678Total dividend and other investment income


421,659



229,909



911,169



613,625Fee income:Control investments


3,900







3,900



Affiliate investments


19,340



13,867



72,160



77,785Non-Control/Non-Affiliate investments


9,313



10,313



27,941



24,270Total fee income


32,553



24,180



104,001



102,055Total investment income


1,554,265



1,012,343



4,032,195



2,839,772Expenses:Base management fee (see Note 8)


225,730



230,724



696,772



619,240Capital gains incentive fees (see Note 8)


22,000



454,000



(880,760
)


4,114,000Interest expense


26,042



104,190



26,042



312,570Professional fees


126,089



94,258



569,310



378,382Stockholders and office operating


41,739



43,420



163,327



184,503Directors fees


47,800



39,050



137,783



114,450Insurance


9,525



9,230



31,788



28,937Corporate development






2,027



3,753



10,330Bad debt recovery






(15,000
)






(15,000
)Other operating


34







124



108Total expenses


498,959



961,899



748,139



5,747,520Net investment income (loss) before income taxes:


1,055,306



50,444



3,284,056



(2,907,748
)Income tax expense


45,140



(2,708
)


83,750



17,015Net investment income (loss)


1,010,166



53,152



3,200,306



(2,924,763
)Net realized gain on sales and dispositions of investments:Affiliate investments










167,159



135,430Non-Control/Non-Affiliate investments


1,919



2,601,361



523,432



4,594,036Net realized gain on sales and dispositions of investments


1,919



2,601,361



690,591



4,729,466  2




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##### Table of Contents

Net change in unrealized appreciation/depreciation on investments:Affiliate investments






3,647,299



47,841



3,647,299Non-Control/Non-Affiliate investments


92,817



(3,980,612
)


(5,140,762
)


9,401,742Change in unrealized appreciation/depreciation before income taxes


92,817



(333,313
)


(5,092,921
)


13,049,041Deferred income tax expense














951Net change in unrealized appreciation/depreciation on investments


92,817



(333,313
)


(5,092,921
)


13,048,090Net realized and unrealized gain (loss) on investments


94,736



2,268,048



(4,402,330
)


17,777,556Net increase (decrease) in net assets from operations

$
1,104,902


$
2,321,200


($
1,202,024
)

$
14,852,793Weighted average shares outstanding


2,581,021



2,581,679



2,581,021



2,581,942Basic and diluted net increase (decrease) in net assets from operations per share

$
0.43


$
0.90


($
0.47
)

$
5.75 See accompanying notes  3




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)  Three monthsendedSeptember 30,2022


Three monthsendedSeptember 30,2021


Nine monthsendedSeptember 30,2022


Nine monthsendedSeptember 30,2021Net assets at beginning of period

$
57,664,184


$
58,119,821


$
60,745,416


$
46,104,830Net investment income (loss)


1,010,166



53,152



3,200,306



(2,924,763
)Net realized gain on sales and dispositions of investments


1,919



2,601,361



690,591



4,729,466Net change in unrealized appreciation/depreciation on investments


92,817



(333,313
)


(5,092,921
)


13,048,090Net increase (decrease) in net assets from operations


1,104,902



2,321,200



(1,202,024
)


14,852,793Purchase of treasury shares






(20,771
)






(20,771
)Declaration of dividend


(387,153
)


(258,125
)


(1,161,459
)


(774,727
)Net assets at end of period

$
58,381,933


$
60,162,125


$
58,381,933


$
60,162,125 See accompanying notes  4




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)  Nine monthsendedSeptember 30,2022


Nine monthsendedSeptember 30,2021Cash flows from operating activities:Net (decrease) increase in net assets from operations

($
1,202,024
)

$
14,852,793Adjustments to reconcile net (decrease) increase in net assets to net cash provided by (used in)
operating activities:Investments in portfolio companies


(3,142,086
)


(15,086,336
)Proceeds from sale of portfolio investments


3,529,549



7,243,193Proceeds from loan repayments


90,175



3,873,553Net realized gain on sales and dispositions of portfolio investments


(690,591
)


(4,729,466
)Change in unrealized (appreciation) depreciation on investments before income taxes


5,092,921



(13,049,041
)Deferred income tax (benefit)


(48,395
)


(68,395
)Depreciation and amortization


6,250



28,255Original issue discount amortization


(18,754
)


(105,923
)Non-cash conversion of debenture interest


(516,391
)


(199,848
)Change in interest receivable allowance






(15,000
)Changes in operating assets and liabilities:(Increase) decrease in interest receivable


(92,617
)


161,973Increase in other assets


(147,111
)


(93,860
)Decrease in prepaid income taxes


200,874



20,459Increase (decrease) in accounts payable and accrued expenses


22,453



(89,064
)(Decrease) increase in due to investment adviser


(665,453
)


76,439(Decrease) increase in capital gains incentive fees payable


(880,760
)


4,114,000(Decrease) increase in deferred revenue


(50,001
)


230,301Total adjustments


2,690,063



(17,688,760
)Net cash provided by (used in) operating activities


1,488,039



(2,835,967
)Cash flows from financing activities:Payment of cash dividends


(1,161,459
)


(4,208,843
)Payment of closing fee


(125,000
)


Purchase of treasury shares






(20,771
)Net cash used in financing activities


(1,286,459
)


(4,229,614
)Net increase (decrease) in cash and cash equivalents


201,580



(7,065,581
)Cash and cash equivalents:Beginning of period


833,875



20,365,415End of period

$
1,035,455


$
13,299,834 See accompanying notes  5




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS September 30, 2022 (Unaudited)  Company, Geographic Location, Business
Description, (Industry) and Website

(a)
Type of Investment

(b)
Date
Acquired

(c)Equity


Cost


(d)(f)FairValue


Percent    of NetAssetsNon-Control/Non-Affiliate Investments  44.5% of net assets: (g) (j)ACV Auctions, Inc. (e)(n)(p) NASDAQ:
ACVA Buffalo, NY. Live mobile wholesale auctions for new and used car dealers. (Software)
www.acvauctions.com

319,934 shares of Class A Common Stock valued at $7.97 per share.

8/12/16


<1
%

$
87,219


$
2,548,808



4.4
%Ares Capital Corporation (n) NASDAQ:
ARCC New York, NY. (BDC Investment Fund)

21,000 shares.

3/16/20


<1
%


267,140



358,540



0.6
%Barings BDC, Inc. (n) NYSE:
BBDC New York, NY. (BDC Investment Fund)

40,000 shares.

8/13/20


<1
%


333,352



336,800



0.6
%Caitec, Inc. (l) Halethorpe,
MD. Pet product manufacturer and distributor. (Consumer Goods) www.caitec.com

$1,750,000 Subordinated Secured Promissory Note at 12% (+2% PIK) due June 1, 2026.

11/6/20


2
%


1,818,630



1,818,630



6.7
%150 Class A Units.

11/6/20






150,000



150,000$1,750,000 Subordinated Secured Promissory Note at 12% (+2% PIK) due June 1, 2026.

11/6/20


2
%


1,818,630



1,818,630150 Class A Units.

11/6/20






150,000



150,000Total Caitec








3,937,260



3,937,260Carlyle Secured Lending Inc. (formerly TCG BDC, Inc.) (n)
NASDAQ: CGBD New York, NY.
(BDC Investment Fund)

86,000 shares.

8/13/20


<1
%


899,749



1,018,527



1.7
%Empire Genomics, Corp. Buffalo, NY.
Molecular diagnostics company that offers a comprehensive menu of assay services for diagnosing and guiding patient therapeutic treatments. (Health Care)
www.empiregenomics.com

$444,915 + $1,000,000 Secured Promissory Notes at 8% due December 31, 2026.

5/3/21


0
%


1,444,915



1,444,915



2.5
%FS KKR Capital Corp. (n) NYSE:
FSK Philadelphia, PA. (BDC Investment Fund)

48,000 shares.

3/16/20


<1
%


755,058



828,640



1.4
%GoNoodle, Inc. (h) (l)
Nashville, TN. Student engagement education software providing core aligned physical activity breaks. (Software)
www.gonoodle.com

$1,500,000 Secured Note at 12% (1% PIK) due September 30, 2024.

11/1/19


<1
%


1,408,248



1,408,248



2.4
%Warrant for 47,324 Series C Preferred.

3/1/15






25



25Warrant for 21,948 Series D Preferred.

11/1/19






38



38Total GoNoodle








1,408,311



1,408,311HDI Acquisition LLC (Hilton Displays) (l)
Greenville, NC. HDI is engaged in manufacturing, installation and maintenance of signage and brands. (Manufacturing)
www.hiltondisplays.com

$1,245,119 Term Loan at 12% (+2% PIK) due June 20, 2023.

11/8/19


0
%


1,321,030



1,321,030



2.2
%Lumious (Tech 2000, Inc.) Herndon, VA.
Develops and delivers IT training. (Software)
www.t2000inc.com

$850,000 Replacement Term Note at 14% due November 15, 2023.

11/16/18


0
%


860,777



860,777



1.5
%  6




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS September 30, 2022 (Continued) (Unaudited)  Company, Geographic Location, Business
Description, (Industry) and Website

(a)
Type of Investment

(b)
Date
Acquired

(c)Equity


Cost


(d)(f)FairValue


Percent    of NetAssetsMattison Avenue Holdings LLC (l) Dallas,
TX. Provider of upscale salon spaces for lease. (Professional Services) www.mattisonsalonsuites.com

$1,794,944 Third Amended, Restated and Consolidated Promissory Note at 14% (2% PIK) due December 9, 2023.

6/23/21


0
%


1,847,096



1,847,096



3.2
%Nailbiter, Inc. Reston, VA.
Video-metrics data analytics supporting name brand Consumer Products Groups (CPG) shopping behavioral insight. (Professional Services) www.nailbiter.com

$2,250,000 Membership Interest of USB Focus Fund Nailbiter I, LLC with economic interest of $2,250,000 Subordinated Secured Promissory Note at net 9% due November 23, 2024.

11/22/21


<1
%


2,250,000



2,250,000



3.9
%Warrants for Preferred Stock.












Total Nailbiter, Inc.








2,250,000



2,250,000(i) Interest Receivable $50,092OnCore Golf Technology, Inc. (e) Buffalo,
NY. Patented and proprietary golf balls utilizing technology and innovation. (Consumer Product)
www.oncoregolf.com

300,483 Preferred AA.

11/30/18


3
%


752,712



300,000



0.5
%Open Exchange, Inc. (e)
Lincoln, MA. Online presentation and training software. (Software)
www.openexc.com

397,899 Series C Preferred.

11/13/13


3
%


1,193,697



2,785,000



9.5
%397,899 Common.

10/22/19






208,243



2,785,000Total Open Exchange








1,401,940



5,570,000PennantPark Investment Corporation (n)
NASDAQ: PNNT New York, NY.
(BDC Investment Fund)

195,000 shares.

8/13/20


<1
%


892,212



1,084,850



1.9
%PostProcess Technologies, Inc. (e)
Buffalo, NY. Provides innovative solutions for the post-processing of additive manufactured 3D parts. (Manufacturing) www.postprocess.com

360,002 Series A1 Preferred.

11/1/19


<1
%


348,875



348,875



0.6
%Rheonix, Inc. (e) Ithaca, NY.
Developer of fully automated microfluidic based molecular assay and diagnostic testing devices. (Health Care) www.rheonix.com

9,676 Common.

10/29/09


4
%










0.0
%1,839,422 Series A Preferred.

12/12/13






2,099,999



50,593 Common.

10/24/09










589,420 Series B Preferred.

9/29/15






702,732



Total Rheonix








2,802,731



Somerset Gas Transmission Company, LLC (e)(m)
Columbus, OH. Natural gas transportation. (Oil and Gas)
www.somersetgas.com

26.5337 Units.

4/1/05


3
%


719,097



500,000



0.9
%Subtotal Non-Control/Non-Affiliate Investments









$
22,329,474


$
25,964,429Affiliate Investments  50.6% of net assets (g)(k)Applied Image, Inc. Rochester
NY. Global supplier of precision imaged optical components and calibration standards for a wide range of industries and applications. (Manufacturing)
www.appliedimage.com

$1,750,000 Term Note at 10% dueFebruary 1, 2029.
Warrant for 1,167 Shares.

12/31/21
12/31/21


12
%

$
1,750,000


$
1,750,000



3.0
%Total Applied Imaging







$
1,750,000


$
1,750,000BMP Swanson Holdco, LLC (m)
Plano, TX. Designs, installs, and maintains a variety of fire protection systems.
(Professional Services)

$1,600,000 Term Note at 12% due September 4,
2026.

3/4/21


9
%


1,600,000


$
1,600,000



3.1
%Preferred Membership Interest for 9.29%.

3/4/21






233,333



233,333Total BMP Swanson








1,833,333



1,833,333  7




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS September 30, 2022 (Continued) (Unaudited)  Company, Geographic Location, Business
Description, (Industry) and Website

(a)
Type of Investment

(b)
Date
Acquired

(c)Equity


Cost


(d)(f)FairValue


Percent    of NetAssetsCarolina Skiff LLC (m) Waycross, GA.
Manufacturer of ocean fishing and pleasure boats. (Manufacturing) www.carolinaskiff.com

6.0825% Class A Common Membership Interest.

1/30/04


7
%


15,000



1,300,000



2.2
%DSD Operating, LLC (l)(m)
Duluth, GA. Design and renovate auto dealerships. (Automotive)
www.dsdteam.com

$3,063,276 Term Note at 12% (+2% PIK) due September 30, 2026.

9/30/21


11
%


3,123,816



3,123,816



7.2
%1,067 Class A Preferred Shares.








1,067,500



1,067,5001,067 Class B Common Shares.












Total DSD








4,191,316



4,191,316Filterworks Acquisition USA, LLC
DBA Autotality (l)(m) Deerfield Beach, FL. Provides spray
booth equipment, frame repair machines and paint booth filter services for collision shops. (Automotive) www.autotality.com

$2,283,702 Term Note at 12% (+2% PIK) modified to 8% PIK and 6% payable in A-0 shares for the period May 1, through December 31, 2022.

11/18/19


8
%


2,593,340



2,593,340



5.0
%626.2 Shares Class A-1 Units.

6/3/22






626,243



256,994258.7 Shares Class A-0 Units.

9/30/22






86,213



86,213Total Filterworks








3,305,796



2,936,547Knoa Software, Inc. (e)

973,533 Series A-1 Convertible Preferred.

11/20/12


7
%


750,000







0.8
%New York, NY. End user experience management and performance (EMP) solutions utilizing enterprise applications. (Software)
www.knoa.com

1,876,922 Series B Preferred.

6/9/14






479,155



479,155Total Knoa








1,229,155



479,155Mezmeriz, Inc. (e) Ithaca, NY.
Technology company developing novel reality capture tools for 3D mapping, reality modeling, object tracking and classification.
(Electronics Developer) www.mezmeriz.com

1,554,565 Series Seed Preferred.

5/14/15


12
%


742,850







0.0
%SciAps, Inc. (e) Woburn, MA.
Instrumentation company producing portable analytical devices using XRF, LIBS and RAMAN spectroscopy to identify compounds, minerals, and elements.
(Manufacturing) www.sciaps.com

187,500 Series A Preferred.

7/12/13


6
%


1,500,000



210,000



4.2
%274,299 Series A1 Convertible Preferred.

4/4/14






504,710



96,000117,371 Series B Convertible Preferred.

8/31/15






250,000



124,000113,636 Series C Convertible Preferred.

4/7/16






175,000



84,000369,698 Series C1 Convertible Preferred.

4/7/16






399,274



207,000147,059 Series D Convertible Preferred.

5/9/17






250,000



250,000Warrant to purchase Series D-1 Preferred.

5/9/17






45,000



$1,500,000 Second Amended and Restated Secured Subordinated Promissory Note at 12% due August 20, 2024.

8/20/21






1,491,250



1,491,250Total SciAps








4,615,234



2,462,250Seyberts Billiards Corporation (l)
Coldwater, MI. Billiard supplies. (Consumer Product)
www.seyberts.com

$4,139,444 Term Note at 12% (+2% PIK) due January 19, 2026.

11/22/21


8
%


4,161,500



4,161,500



9.7
%Warrant for 4%.

1/19/21






25,000



25,000$1,435,435 Term Note at 12% (+2% PIK) due January 19, 2026.

1/19/21






1,432,199



1,432,199Warrant for 4%.

1/19/21






25,000



25,000Total Seyberts








5,643,699



5,643,699  8




---

##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS September 30, 2022 (Continued) (Unaudited)  Company, Geographic Location, Business
Description, (Industry) and Website

(a)
Type of Investment

(b)
Date
Acquired

(c)Equity


Cost


(d)(f)FairValue


Percent    of NetAssetsTilson Technology Management, Inc.
Portland, ME. Provides network deployment construction and information system services management for cellular, fiber optic and wireless systems providers. Its
affiliated entity, SQF, LLC is a CLEC supporting small cell 5G deployment. (Professional Services) www.tilsontech.com

*120,000 Series B Preferred.

1/20/15


9
%


600,000



3,900,000



15.3
%*21,391 Series C Preferred.

9/28/16






200,000



695,000*70,176 Series D Preferred.

9/29/17






800,000



2,280,000*15,385 Series E Preferred.

3/15/19






500,012



500,012211,567 Class A-1 Units of SQF Holdco LLC.

3/15/19










800,00023,077 Series F Preferred.

6/15/20






750,003



750,003Total Tilson








2,850,015



8,925,015*2.5% dividend payable quarterly.Subtotal Affiliate Investments









$
26,176,398


$
29,521,315Control Investments -7.3% of net assets (o)ITA Acquisition, LLC (l)(m)
Ormond Beach, FL. Blind and shade manufacturing. (Manufacturing)
www.itainc.com

$1,900,000 Term Note at 12% (+2% PIK) due June 21, 2026.

6/22/21


37
%


1,949,783



1,949,783



7.3
%$1,500,000 Term Note at 12% (+2% PIK) due June 21, 2026.

6/22/21






1,539,303



1,539,3031,124 Class A Preferred Units and 1,924 Class B Common Units.

6/22/21






1,123,810



748,810Total ITA








4,612,896



4,237,896(i) Interest Receivable $70,765.Subtotal Control Investments









$
4,612,896


$
4,237,896TOTAL INVESTMENTS  102.3%









$
53,118,768


$
59,723,640LIABILITIES IN EXCESS OF OTHER ASSETS - (2.3%)














(1,341,707
)NET ASSETS  100%













$
58,381,933  9




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARY CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS September 30, 2022 (Continued) (Unaudited)  Notes to the Consolidated Schedule of Portfolio Investments  (a)
At September 30, 2022, restricted securities represented 90% of the fair value of the investment
portfolio. Restricted securities are subject to one or more restrictions on resale and are not freely marketable. Type of investment for equity position is in the form of shares unless otherwise noted as units or interests, i.e., preferred shares,
common shares. (b)
The Date Acquired column indicates the date on which the Corporation first acquired an investment. (c)
Each equity percentage estimates the Corporations ownership interest in the applicable portfolio
investment. The estimated ownership is calculated based on the percent of outstanding voting securities held by the Corporation or the potential percentage of voting securities held by the Corporation upon exercise of warrants or conversion of
debentures, or other available data. If applicable, the symbol <1% indicates that the Corporation holds an equity interest of less than one percent. (d)
The Corporations investments are carried at fair value in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures, which defines fair value and establishes guidelines for measuring fair value. At September 30, 2022, ASC 820 designates 90% of the
Corporations investments as Level 3 assets. Under the valuation policy of the Corporation, unrestricted publicly traded securities are valued at the average closing price for these securities for the last three trading days of
the reporting period. Restricted securities are subject to restrictions on resale and are valued at fair value as determined in good faith by our external investment advisor Rand Capital Management, LLC (RCM) and approved by the Board of
Directors. Fair value is considered to be the amount that the Corporation may reasonably expect to receive for portfolio securities when sold on the valuation date. Valuations as of any particular date, however, are not necessarily indicative of
amounts which may ultimately be realized as a result of future sales or other dispositions of securities and these favorable or unfavorable differences could be material. Among the factors considered in determining the fair value of restricted
securities are the financial condition and operating results, projected operations, and other analytical data relating to the investment. Also considered are the market prices for unrestricted securities of the same class (if applicable) and other
matters which may have an impact on the value of the portfolio company (see Note 3. Investments to the Consolidated Financial Statements). (e)
These investments are non-income producing. All other investments are
income producing. Non-income producing investments have not generated cash payments of interest or dividends including LLC tax-related distributions within the last
twelve months or are not expected to do so going forward. If a debt or a preferred equity investment fails to make its most recent payment, then the investment will also be classified as non-income producing. (f)
As of September 30, 2022, the total cost of investment securities was approximately $53.1 million.
Net unrealized appreciation was approximately $6.6 million, which was comprised of $14.5 million of unrealized appreciation of investment securities and ($7.9) million of unrealized depreciation of investment securities. At
September 30, 2022, the aggregate gross unrealized gain for federal income tax purposes was $13.8 million and the aggregate gross unrealized loss for federal income tax purposes was ($7.6) million. The net unrealized gain for federal
income tax purposes was $6.2 million based on a tax cost of $53.6 million. (g)
All of the Corporations portfolio assets are pledged as collateral for purposes of securing the
Corporations senior secured revolving credit facility pursuant to a general security agreement, dated June 27, 2022, between the Corporation, the subsidiaries listed therein, and the Lender (as defined herein). (h)
Reduction in cost and value from previously reported balances reflects current principal repayment. (i)
Represents interest due (amounts over $50,000) from investments included as interest receivable on the
Corporations Consolidated Statements of Financial Position. (j)
Non-Control/Non-Affiliate
Investments are investments that are neither Control Investments nor Affiliate Investments. (k)
Affiliate Investments are defined by the Investment Company Act of 1940, as amended (1940 Act), as
those Non-Control investments in companies in which between 5% and 25% of the voting securities are owned by the Corporation. (l)
Payment in kind (PIK) represents earned interest that is added to the cost basis of the investment and due at
maturity. The amount of PIK earned is included in the interest rate detailed in the Type of Investment column, unless it has been noted with a (+), in which case the PIK is in addition to the face amount of interest due on the security. (m)
Equity holdings are held in a wholly owned (100%) blocker corporation of Rand Capital Corporation
or Rand Capital Sub LLC for federal income tax and Regulated Investment Company (RIC) compliance. (n)
Publicly traded company. (o)
Control Investments are defined by the 1940 Act as investments in companies in which more than 25% of the
voting securities are owned by the Corporation or where greater than 50% of the board representation is maintained. (p)
Subsequent to September 30, 2022, ACV Auctions (ACVA) public market share price had a trading range
on Nasdaq of $7.68 per share to $8.99 per share for the period of October 1, 2022 to October 30, 2022. The Corporations value per share at September 30, 2022 was $7.97.  10




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS September 30, 2022 (Continued) (Unaudited)  Investments in and Advances to Affiliates  Company

Type of Investment

January 1,2022, FairValue


Net Change inUnrealizedAppreciation(Depreciation)


GrossAdditions(1)


GrossReductions(2)


September 30,2022,FairValue


NetRealized(Losses)Gains


Amount ofInterest/Dividend/Fee Income(3)Control Investments:ITA Acquisition

$1,900,000 Term Note at 12% (+2% PIK) due June 21, 2026.

$



$



$
1,949,783


$



$
1,949,783


$



$
71,422$1,500,000 Term Note at 12% (+2% PIK) due June 21, 2026.










1,539,303







1,539,303







56,8861,124 Class A Preferred Units










748,810







748,810







1,924Class B Common Units.


























Total ITA










4,237,896







4,237,896







128,308Total Control Investments

$



$



$
4,237,896






$
4,237,896


$



$
128,308Affiliate Investments:Applied Image Inc.

$1,750,000 Term Note at 10% due December 28, 2028.

$
1,750,000


$



$



$



$
1,750,000


$



$
137,773Warrant for 1,167 shares.


























Total Applied Image


1,750,000















1,750,000







137,773BMP Swanson Holdco, LLC

$1,600,000 Term Note at 12% due September 4, 2026.


1,600,000















1,600,000







150,600Preferred Membership Interest for 9.29%


233,333















233,333







Total BMP Swanson


1,833,333















1,833,333







150,600Carolina Skiff LLC

6.0825% Class A Common Membership interest.


1,300,000















1,300,000







398,830DSD Operating, LLC

$2,745,000 Term Note at 12% (+2% PIK) due September 30, 2026.


2,759,183







364,633







3,123,816







450,2051,067 Class A Preferred shares.


1,067,500















1,067,500







1,067 Class B Common shares.


























Total DSD


3,826,683







364,633







4,191,316







450,205Filterworks

$2,283,702 Term Note at 12%.


2,446,617







146,723







2,593,340







265,761Acquisition USA,

626.2 Class A Units.


256,994















256,994







LLC

258.7 Class A-0 Units










86,213







86,213







Total Filterworks


2,703,611







232,936







2,936,547







265,761ITA Acquisition

$1,900,000 Term Note at 12% (+2% PIK) due June 21, 2026.


1,920,459







29,324



(1,949,783
)









$
139,547$1,500,000 Term Note at 12% (+2% PIK) due June 21, 2026.


1,516,152







23,151



(1,539,303
)










110,3731,124 Class A Preferred Units


125,000







623,810



(748,810
)










1,924Class B Common Units.


























Total ITA


3,561,611







676,285



(4,237.896
)










249,920Knoa Software, Inc.

973,533 Series A-1 Convertible Preferred.


























1,876,922 Series B Preferred.


479,155















479,155







Total Knoa


479,155















479,155







Mezmeriz, Inc.

1,554,565 Series Seed Preferred.


























Microcision

Membership Interest Purchase Warrant for 5%.


85,000











(85,000
)






190,000



New MonarchMachine Tool, Inc.

22.84 Common.






















(22,841
)


SciAps, Inc.

187,500 Series A Preferred.


210,000















210,000







274,299 Series A-1 Convertible Preferred.


96,000















96,000







117,371 Series B Convertible Preferred.


124,000















124,000







113,636 Series C Convertible Preferred.


84,000















84,000







369,698 Series C-1 Convertible Preferred.


207,000















207,000







147,059 Series D Convertible Preferred.


250,000















250,000







Warrant to Purchase Series D-1 Preferred.


























$1,500,000 Subordinated Promissory Note at 12%.


1,480,000







11,250







1,491,250







161,250Total SciAps


2,451,000







11,250







2,462,250







161,250Seyberts Billiards Corporation

$1,400,000 Term Note at 12% (+2% PIK) due January 19, 2026.


1,907,774







2,253,726







4,161,500







376,208Warrant for 4%.


25,000















25,000







$1,400,000 Term Note at 12% (+2% PIK) due January 19, 2026.


1,406,690







25,509







1,432,199







161,732Warrant for 4%.


25,000















25,000







Total Seyberts


3,364,464







2,279,235







5,643,699







537,940  11




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS September 30, 2022 (Continued) (Unaudited)  Company

Type of Investment

January 1,2022, FairValue


Net Change inUnrealizedAppreciation(Depreciation)


GrossAdditions(1)


GrossReductions(2)


September 30,2022, FairValue


NetRealized(Losses)Gains


Amount ofInterest/Dividend/Fee Income(3)Tilson Technology

120,000 Series B Preferred.


3,900,000















3,900,000







39,375Management, Inc.

21,391 Series C Preferred.


695,000















695,000







70,176 Series D Preferred.


2,280,000















2,280,000







15,385 Series E Preferred.


500,012















500,012







23,077 Series F Preferred.


800,000















800,000







211,567 SQF Hold Co. Common.


750,003















750,003







Total Tilson


8,925,015















8,925,015







39,375Total Affiliate Investments

$
30,279,872


$



$
3,564,339


$
(4,322,896
)

$
29,521,315


$
167,159


$
2,391,654Total Control and Affiliate Investments

$
30,279,872


$



$
7,802,235


$
(4,322,896
)

$
33,759,211


$
167,159


$
2,519,962 This schedule should be read in conjunction with the Corporations Consolidated Financial Statements, including the Notes
to the Consolidated Financial Statements and the Consolidated Schedule of Portfolio Investments.  (1)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments,
follow on investments, capitalized interest and the accretion of discounts. Gross additions also include the movement of an existing portfolio company into this category and out of another category. (2)
Gross reductions include decreases in the cost basis of investments resulting from principal repayments, sales,
note conversions, the exchange of existing securities for new securities and the movement of an existing portfolio company out of this category and into another category. (3)
Represents the total amount of interest, fees or dividends credited to income for the portion of the period an
investment was included in Control or Affiliate categories, respectively.  12




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS September 30, 2022 (Continued) (Unaudited)  Industry Classification

Percentage of TotalInvestments (at fair value)as of September 30, 2022Professional Services

24.9%Manufacturing

19.1Software

18.2Consumer Product

16.6Automotive

11.9BDC Investment Fund

6.1Healthcare

2.4Oil and Gas

0.8Total Investments

100%  13




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2021  Company, Geographic Location, BusinessDescription,
(Industry) and Website

(a)
Type of Investment

(b)DateAcquired


(c)Equity


Cost


(d)(f)FairValue


Percentof NetAssetsNon-Control/Non-Affiliate Investments  55.6% of net assets: (j)ACV Auctions, Inc. NASDAQ: ACVA (e)(g)(n)(p)
Buffalo, NY. Live mobile wholesale auctions for new and used car dealers. (Software)
www.acvauctions.com

442,934 Class A Common stock valued at $18.81 per share.


8/12/16



<1
%

$
121,659


$
8,333,065



13.7
%Ares Capital Corporation (n) NASDAQ: ARCC
New York, NY. (BDC Investment Fund)

27,000 shares.


3/16/20



<1
%


343,460



567,090



0.9
%Barings BDC, Inc. (n) NYSE: BBDC
New York, NY. (BDC Investment Fund)

40,000 shares.


8/13/20



<1
%


333,352



438,000



0.7
%Caitec, Inc. (l) Halethorpe,
MD. Pet product manufacturer and distributor. (Consumer Goods) www.caitec.com

$1,750,000 Subordinated Secured Promissory Note at 12% (+2% PIK) due June 1, 2026.


11/6/20



4
%


1,791,278



1,791,278



6.4
%150 Class A Units.


11/6/20







150,000



150,000(g) $1,750,000 Subordinated Secured Promissory Note at 12% (+2% PIK) due June 1, 2026.


11/6/20







1,791,278



1,791,278(g) 150 Class A Units.


11/6/20







150,000



150,000Total Caitec










3,882,556



3,882,556Empire Genomics Corp. (g) Buffalo, NY.
Molecular diagnostics company that offers a comprehensive menu of assay services for diagnosing and guiding patient therapeutic treatments. (Health
Care) www.empiregenomics.com

$444,915 + $1,000,000 Secured Promissory Notes at 8% due December 31, 2026.


5/3/21



0
%


1,444,915



1,444,915



2.4
%FS KKR Capital Corp. (n) NYSE: FSK
Philadelphia, PA. (BDC Investment Fund)

54,000 shares.


3/16/20



<1
%


849,438



1,127,160



1.9
%Golub Capital BDC, Inc. (n) NASDAQ:
GBDC New York, NY. (BDC Investment Fund)

31,250 shares.


3/16/20



<1
%


403,910



481,563



0.8
%GoNoodle, Inc. (g)(h)(l)
Nashville, TN. Student engagement education software providing core aligned physical activity breaks.
(Software) www.gonoodle.com

$1,500,000 Secured Note at 12% (1% PIK) due September 30, 2024.


11/1/19



<1
%


1,487,801



1,487,801



2.5
%Warrant for 47,324 Series C Preferred.


3/1/15







25



25Warrant for 21,948 Series D Preferred.


11/1/19







38



38Total GoNoodle










1,487,864



1,487,864HDI Acquisition LLC (Hilton Displays) (l)
Greenville, NC. HDI is engaged in manufacturing, installation and maintenance of signage and brands. (Manufacturing) www.hiltondisplays.com

$1,245,119 Term Loan at 12% (+2% PIK) due June 20, 2023.


11/8/19



0
%


1,301,195



1,301,195



2.1
%Lumious (Tech 2000, Inc.) (g) Herndon, VA.
Develops and delivers IT training. (Software) www.t2000inc.com

$850,000 Replacement Term Note at 14% due November 15, 2023.


11/16/18



0
%


860,777



860,777



1.4
%Mattison Avenue Holdings LLC (l) Dallas,
TX. Provider of upscale salon spaces for lease. (Professional Services) www.mattisonsalonsuites.com

$1,794,944 Third Amended, Restated and Consolidated Promissory Note at 14% (2% PIK) due December 9, 2023.


6/23/21



0
%


1,819,362



1,819,362



3.0
%  14




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2021 (Continued)  Company, Geographic Location, BusinessDescription,
(Industry) and Website

(a)
Type of Investment

(b)DateAcquired


(c)Equity


Cost


(d)(f)FairValue


Percentof NetAssetsNailbiter, Inc. Reston, VA.
Video-metrics data analytics supporting name brand consumer products groups (CPG) shopping behavioral insight. (Professional Services) www.nailbiter.com

$2,250,000 Membership Interest of USB Focus Fund Nailbiter I, LLC with economic interest of $2,250,000 Subordinated Secured Promissory Note at 10% due November 23, 2024.


11/22/21



<1
%


2,250,000



2,250,000



3.7
%Warrants for Preferred stock of Nailbiter, Inc.














Total Nailbiter










2,250,000



2,250,000OnCore Golf Technology, Inc. (e)(g)
Buffalo, NY. Patented and proprietary golf balls utilizing technology and innovation. (Consumer Product)
www.oncoregolf.com

300,483 Preferred AA.


11/30/18



3
%


752,712



300,000



0.5
%Open Exchange, Inc. (e)(g)(Formerly KnowledgeVision Systems, Inc.)
Lincoln, MA. Online presentation and training software. (Software)
www.openexc.com

397,899 Series C Preferred.


11/13/13



3
%


1,193,697



2,785,000



9.2
%397,899 Common.


10/22/19







208,243



2,785,000Total Open Exchange










1,401,940



5,570,000Owl Rock Capital Corporation (n) NYSE: ORCC (n)
New York, NY. (BDC Investment Fund)

30,000 shares.


3/16/20



<1
%


347,067



427,600



0.7
%PennantPark Investment Corporation (n) NASDAQ: PNNT
New York, NY. (BDC Investment Fund)

195,000 shares.


8/13/20



<1
%


892,212



1,345,500



2.2
%PostProcess Technologies, Inc. (e)(g)
Buffalo, NY. Provides innovative solutions for the post-processing of additive manufactured 3D parts. (Manufacturing) www.postprocess.com

360,002 Series A1 Preferred.


11/1/19



<1
%


348,875



348,875



0.6
%Rheonix, Inc. (e)
Ithaca, NY. Developer of fully automated microfluidic based molecular assay and diagnostic testing devices. (Health Care)
www.rheonix.com

9,676 Common.


10/29/09



4
%










0.0
%(g)1,839,422 Series A Preferred.


12/12/13







2,099,999



(g) 50,593 Common.


10/24/09











(g) 589,420 Series B Preferred.


9/29/15







702,732



Total Rheonix










2,802,731



SocialFlow, Inc. (e)(g)
New York, NY. Provides instant analysis of social networks using a proprietary, predictive analytic algorithm to optimize advertising and publishing. (Software)
www.socialflow.com

1,049,538 Series B Preferred.


4/5/13



4
%


500,000



35,000



0.2
%1,204,819 Series B-1 Preferred.


4/8/14







750,000



52,000717,772 Series C Preferred.


6/26/15







500,000



35,000Total Social Flow










1,750,000



122,000Somerset Gas Transmission Company, LLC (e)(m)
Columbus, OH. Natural gas transportation. (Oil and Gas)
www.somersetgas.com

26.5337 Units.


4/1/05



3
%


719,097



500,000



0.8
%TCG BDC, Inc. (n) NASDAQ: CGBD
New York, NY. (BDC Investment Fund)

86,000 shares.


8/13/20



<1
%


899,749



1,181,067



1.9
%Subtotal Non-Control/Non-Affiliate Investments











$
25,012,871


$
33,788,589  15




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2021 (Continued)  Company, Geographic Location, BusinessDescription,
(Industry) and Website

(a)
Type of Investment

(b)DateAcquired


(c)Equity


Cost


(d)(f)FairValue


Percentof NetAssetsAffiliate Investments  49.9% of net assets (k)Applied Image, Inc.
Rochester, NY. Global supplier of precision imaged optical components and calibration standards for a wide range of industries and applications. (Manufacturing)
www.appliedimage.com

$1,750,000 Term Note at 10% due February 1, 2029.


12/31/21



12
%

$
1,750,000


$
1,750,000



2.9
%Warrant for 1,167 shares.


12/31/21











Total Applied Image










1,750,000



1,750,000BMP Swanson Holdco, LLC (g)(m)
Plano, TX. Designs, installs and maintains a variety of fire protection systems.
(Professional Services) www.swansonfire.com

$1,600,000 Term Note at 12% due September 4,
2026.


3/4/21



9%



1,600,000



1,600,000



3.0
%Preferred Membership Interest for 9.29%.


3/4/21







233,333



233,333Total BMP Swanson










1,833,333



1,833,333Carolina Skiff LLC (g)(m)
Waycross, GA. Manufacturer of ocean fishing and pleasure boats. (Manufacturing)
www.carolinaskiff.com

6.0825% Class A Common Membership Interest.


1/30/04



7
%


15,000



1,300,000



2.2
%DSD Operating, LLC (l)(m)
Duluth, GA. Design and renovate auto dealerships. (Automotive)
www.dsdteam.com

$2,745,000 Term Note at 12% (+2% PIK) due September 30, 2026.


9/30/21



11
%


2,759,183



2,759,183



6.3
%1,067 Class A Preferred shares.










1,067,500



1,067,5001,067 Class B Common shares.














Total DSD










3,826,683



3,826,683Filterworks Acquisition USA, LLC DBA Autotality (l)(m)
Deerfield Beach, FL. Provides spray booth equipment, frame repair machines and paint booth filter services for collision shops. (Automotive)
www.autotality.com

$2,283,702 Term Note at 12% (+2% PIK), modified to 4% (+10% PIK) through March 31, 2022, due December 4, 2023.


11/8/19



9%



2,446,617



2,446,617



4.5
%626 Class A Units.


12/28/21







626,243



256,994Total Filterworks










3,072,860



2,703,611ITA Acquisition, LLC (l) (m)
Ormond Beach, FL. Blind and shade manufacturing. (Manufacturing)
www.itainc.com

$1,900,000 Term Note at 12% (+2% PIK) due June 21, 2026.


6/22/21



24%



1,920,459



1,920,459



5.9
%(g) $1,500,000 Term Note at 12% (+2% PIK) due June 21, 2026.


6/22/21







1,516,152



1,516,152(g) 500 Class A Preferred Units and 500 Class B Common Units.


6/22/21







500,000



125,000Total ITA










3,936,611



3,561,611Knoa Software, Inc. (e)(g)
New York, NY. End user experience management and performance (EMP) solutions utilizing enterprise applications. (Software)
www.knoa.com

973,533 Series A-1 Convertible Preferred.


11/20/12



7%



750,000







0.8
%1,876,922 Series B Preferred.


6/9/14







479,155



479,155Total Knoa










1,229,155



479,155Mezmeriz, Inc. (e)(g)
Ithaca, NY. Technology company developing novel reality capture tools for 3D mapping, reality modeling, object tracking and classification. (Electronics
Developer) www.mezmeriz.com

1,554,565 Series Seed Preferred.


5/14/15



12
%


742,850







0.0
%Microcision LLC (g)
Pennsauken Township, NJ. Manufacturer of precision machined medical implants, components and assemblies. (Manufacturing)
www.microcision.com

Membership Interest Purchase Warrant for 5%.


1/10/20



5
%


110,000



85,000



0.1
%New Monarch Machine Tool, Inc. (e)(g)
Cortland, NY. Manufactures and services vertical/horizontal machining centers. (Manufacturing)
www.monarchmt.com

22.84 Common.


1/17/08



15
%


22,841







0.0
%  16




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2021 (Continued)  Company, Geographic Location, BusinessDescription,
(Industry) and Website

(a)
Type of Investment

(b)DateAcquired


(c)Equity


Cost


(d)(f)FairValue


Percentof NetAssetsSciAps, Inc. (e)(g) Woburn,
MA. Instrumentation company producing portable analytical devices using XRF, LIBS and RAMAN spectroscopy to identify compounds, minerals, and elements. (Manufacturing)
www.sciaps.com

187,500 Series A Preferred.


7/12/13



6
%


1,500,000



210,000



4.0
%274,299 Series A1 Convertible Preferred.


4/4/14







504,710



96,000117,371 Series B Convertible Preferred.


8/31/15







250,000



124,000113,636 Series C Convertible Preferred.


4/7/16







175,000



84,000369,698 Series C1 Convertible Preferred.


4/7/16







399,274



207,000147,059 Series D Convertible Preferred.


5/9/17







250,000



250,000Warrant to purchase Series D-1 Preferred.


5/9/17







45,000



$1,500,000 Second Amended and Restated Secured Subordinated Promissory Note at 12% due August 20, 2024.


8/20/21







1,480,000



1,480,000Total SciAps










4,603,984



2,451,000Seyberts Billiards Corporation (l)
Coldwater, MI. Billiard supplies. (Consumer Product)
www.seyberts.com

$1,900,000 Term Note at 12% (+2% PIK) due January 19, 2026.


11/22/21



8
%


1,907,775



1,907,775



5.5
%Warrant for 4%.


1/19/21







25,000



25,000(g) $1,400,000 Term Note at 12% (+2% PIK) due January 19, 2026.


1/19/21







1,406,690



1,406,690Warrant for 4%.


1/19/21







25,000



25,000Total Seyberts










3,364,465



3,364,465Tilson Technology Management, Inc. (g)
Portland, ME. Provides network deployment construction and information system services management for cellular, fiber optic and wireless systems providers. Its
affiliated entity, SQF, LLC is a CLEC supporting small cell 5G deployment. (Professional Services) www.tilsontech.com

*120,000 Series B Preferred.


1/20/15



9
%


600,000



3,900,000



14.7
%*21,391 Series C Preferred.


9/28/16







200,000



695,000*70,176 Series D Preferred.


9/29/17







800,000



2,280,000*15,385 Series E Preferred.


3/15/19







500,012



500,012211,567 SQF Hold Co. Common.


3/15/19











800,00023,077 Series F Preferred.


6/15/20







750,003



750,003Total Tilson










2,850,015



8,925,015*2.5% dividend payable quarterly.Subtotal Affiliate Investments











$
27,357,797


$
30,279,873TOTAL INVESTMENTS  105.5%











$
52,370,668


$
64,068,462LIABILITIES IN EXCESS OF OTHER ASSETS  (5.5%)
















(3,323,046
)NET ASSETS  100%















$
60,745,416  17




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2021 (Continued)  Notes to the Consolidated Schedule of Portfolio Investments (a)
At December 31, 2021, restricted securities represented 78% of the fair value of the investment portfolio.
Restricted securities are subject to one or more restrictions on resale and are not freely marketable. Type of investment for equity position is in the form of shares unless otherwise noted as units or interests, i.e., preferred shares, common
shares. (b)
The Date Acquired column indicates the date on which the Corporation first acquired an investment. (c)
Each equity percentage estimates the Corporations ownership interest in the applicable portfolio
investment. The estimated ownership is calculated based on the percent of outstanding voting securities held by the Corporation or the potential percentage of voting securities held by the Corporation upon exercise of warrants or conversion of
debentures, or other available data. If applicable, the symbol <1% indicates that the Corporation holds an equity interest of less than one percent. (d)
The Corporations investments are carried at fair value in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures, which defines fair value and establishes guidelines for measuring fair value. At December 31, 2021, ASC 820 designates 78% of the
Corporations investments as Level 3 assets. Under the valuation policy of the Corporation, unrestricted publicly traded securities are valued at the average closing price for these securities for the last three trading days of
the reporting period. Restricted securities are subject to restrictions on resale and are valued at fair value as determined in good faith by our external investment advisor RCM and approved by the Board of Directors. Fair value is considered to be
the amount that the Corporation may reasonably expect to receive for portfolio securities when sold on the valuation date. Valuations as of any particular date, however, are not necessarily indicative of amounts which may ultimately be realized as a
result of future sales or other dispositions of securities and these favorable or unfavorable differences could be material. Among the factors considered in determining the fair value of restricted securities are the financial condition and
operating results, projected operations, and other analytical data relating to the investment. Also considered are the market prices for unrestricted securities of the same class (if applicable) and other matters which may have an impact on the
value of the portfolio company (see Note 3. Investments to the Consolidated Financial Statements). (e)
These investments are non-income producing. All other investments are
income producing. Non-income producing investments have not generated cash payments of interest or dividends including LLC tax-related distributions within the last
twelve months or are not expected to do so going forward. If a debt or a preferred equity investment fails to make its most recent payment, then the investment will also be classified as non-income producing. (f)
As of December 31, 2021, the total cost of investment securities was approximately $52.4 million. Net
unrealized appreciation was approximately $11.7 million, which was comprised of $21.2 million of unrealized appreciation of investment securities and ($9.5) million of unrealized depreciation of investment securities. At December 31,
2021, the aggregate gross unrealized gain for federal income tax purposes was $20.6 million and the aggregate gross unrealized loss for federal income tax purposes was ($9.6) million. The net unrealized gain for federal income tax purposes was
$11.0 million based on a tax cost of $53.0 million. (g)
Rand Capital investment held by Rand Capital Sub LLC. (h)
Reduction in cost and value from previously reported balances reflects current principal repayment. (i)
Represents interest due (amounts over $50,000) from investments included as interest receivable on the
Corporations Consolidated Statements of Financial Position. (j)
Non-Control/Non-Affiliate
Investments are investments that are neither Control Investments nor Affiliate Investments. (k)
Affiliate Investments are defined by the 1940 Act, as those Non-Control
investments in companies in which between 5% and 25% of the voting securities are owned by the Corporation. (l)
Payment in kind (PIK) represents earned interest that is added to the cost basis of the investment and due at
maturity. The amount of PIK earned is included in the interest rate detailed in the Type of Investment column, unless it has been noted with a (+), in which case the PIK is in addition to the face amount of interest due on the security. (m)
Equity holdings are held in a wholly owned (100%) blocker corporation of Rand Capital Corporation
or Rand Capital Sub LLC for federal income tax and Regulated Investment Company (RIC) compliance. (n)
Publicly traded company. (o)
Control Investments are defined by the 1940 Act as investments in companies in which more than 25% of the
voting securities are owned by the Corporation or where greater than 50% of the board representation is maintained (None at December 31, 2021). (p)
Subsequent to December 31, 2021, ACV Auctions (ACVA) public market share price had a trading range
on Nasdaq of $10.30 per share to $19.73 per share for the period of January 1, 2022 to February 28, 2022. The Corporations value per share at December 31, 2021 was $18.81.  18




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2021 (Continued)  Investments in and Advances to Affiliates  Company

Type of Investment

January 1,2021, FairValue


Net Change inUnrealizedAppreciation(Depreciation)


GrossAdditions(1)


GrossReductions(2)


December 31,2021Fair Value


NetRealized(Losses)Gains


Amount ofInterest/Dividend/Fee Income(3)Control Investments:Empire Genomics Corp.

$444,915 Secured Promissory Note at 8% due December 31, 2026.

$



$



$
444,915


($
444,915
)

$



($
308,676
)

$
23,0681,576,499 common shares










157,655



(157,655
)










Total Empire










602,570



(602,570
)






(308,676
)


23,068Total Control Investments

$



$



$
602,570


($
602,570
)

$



($
308,676
)

$
23,068Affiliate Investments:Applied Image Inc.

$1,750,000 Term Note at 10% due
December 28, 2028.

$



$



$
1,750,000


$



$
1,750,000


$



$
17,500Warrant for 1,167 shares.


























Total Applied Image










1,750,000







1,750,000







17,500BMP Swanson Holdco, LLC

$1,600,000 Term Note at 12% due September 4, 2026.










1,600,000







1,600,000







166,623Preferred Membership Interest for 9.29%










233,333







233,333







Total BMP Swanson










1,833,333







1,833,333







166,623Carolina Skiff LLC

6.0825% Class A Common Membership interest.


1,500,000



(200,000
)










1,300,000







214,265ClearView Social, Inc.

312,500 Series Seed Plus Preferred.


200,000











(200,000
)






135,430



DSD Operating, LLC

$2,745,000 Term Note at 12% (+2% PIK) due September 30, 2026.










2,759,183







2,759,183







103,0891,067 Class A Preferred shares.










1,067,500







1,067,500







1,067 Class B Common shares.


























Total DSD










3,826,683







3,826,683







103,089Filterworks Acquisition USA, LLC

$2,283,702 Term Note at 12%.


2,349,831







96,786







2,446,617







336,090562.5 Class A Units.


562,500



(369,249
)


63,743







256,994







Total Filterworks


2,912,331



(369,249
)


160,529







2,703,611







336,090ITA Acquisition LLC

$1,900,000 Term Note at 12% (+2% PIK) due June 22, 2026.










1,920,459







1,920,459







147,049(g) $1,500,000 Term Note at 12% (+2% PIK) due June 22, 2026.










1,516,152







1,516,152







118,220(g)500 Class A Preferred Units and 500 Class B Common Units.






(375,000
)


500,000







125,000







14,096Total ITA






(375,000
)


3,936,611







3,561,611







279,365Knoa Software, Inc.

973,533 Series A-1 Convertible Preferred.


544,860



(544,860
)


















87,7711,876,922 Series B Preferred.


479,155















479,155







Total Knoa


1,024,015



(544,860
)










479,155







87,771Mezmeriz, Inc.

1,554,565 Series Seed Preferred.


























Microcision LLC

$1,500,000 Subordinated Promissory Note at 10%.


1,411,997







88,003



(1,500,000
)






57,215



126,711Membership Interest Purchase Warrant for 5%


95,000



(10,000
)










85,000







Total Microcision


1,506,997



(10,000
)


88,003



(1,500,000
)


85,000



57,215



126,711New Monarch Machine Tool, Inc.

22.84 Common.


22,841



(22,841
)


















OnCore Golf Technology, Inc.

300,483 Series AA Preferred.


300,000











(300,000
)










SciAps, Inc.

187,500 Series A Preferred.






210,000











210,000







274,299 Series A-1 Convertible Preferred.






96,000











96,000







117,371 Series B Convertible Preferred.






124,000











124,000







113,636 Series C Convertible Preferred.






84,000











84,000







369,698 Series C-1 Convertible Preferred.






207,000











207,000







147,059 Series D Convertible Preferred.


250,000















250,000







Warrant to Purchase Series D-1 Preferred.


























$1,500,000 Subordinated Promissory Note at 12%.


1,465,000







15,000







1,480,000







215,000Total SciAps


1,715,000



721,000



15,000







2,451,000







215,000  19




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2021 (Continued)  Company

Type of Investment

January 1,2021, FairValue


Net Change inUnrealizedAppreciation(Depreciation)


GrossAdditions(1)


GrossReductions(2)


December 31,2021FairValue


NetRealized(Losses)Gains


Amount ofInterest/Dividend/Fee Income(3)Seyberts Billiards Corporation

$1,400,000 Term Note at 12% (+2% PIK) due January 19, 2026.










1,907,774







1,907,774







209,904Warrant for 4%.










25,000







25,000







(g) $1,400,000 Term Note at 12% (+2% PIK) due January 19, 2026.










1,406,690







1,406,690







201,922Warrant for 4%.










25,000







25,000







Total Seyberts










3,364,464







3,364,464







411,826Tilson Technology Management, Inc.

120,000 Series B Preferred.


1,950,000



1,950,000











3,900,000







52,50021,391 Series C Preferred.


347,604



347,396











695,000







70,176 Series D Preferred.


1,140,360



1,139,640











2,280,000







15,385 Series E Preferred.


500,012















500,012







23,077 Series F Preferred.


750,003















750,003







211,567 SQF Hold Co. Common.


22,036



777,964











800,000







Total Tilson


4,710,015



4,215,000











8,925,015







52,500Total Affiliate Investments

$
13,891,199


$
3,414,050


$
14,974,623


($
2,000,000
)

$
30,279,872


$
192,645


$
2,010,740Total Control and Affiliate Investments

$
13,891,199


$
3,414,050


$
15,577,193


($
2,602,570
)

$
30,279,872


($
116,031
)

$
2,033,808 This schedule should be read in conjunction with the Corporations Consolidated Financial Statements, including the Notes
to the Consolidated Financial Statements and the Consolidated Schedule of Portfolio Investments.  (1)
Gross additions include increases in the cost basis of investments resulting from new portfolio investments,
follow on investments, capitalized interest and the accretion of discounts. Gross additions also include the movement of an existing portfolio company into this category and out of another category. (2)
Gross reductions include decreases in the cost basis of investments resulting from principal repayments, sales,
note conversions, the exchange of existing securities for new securities and the movement of an existing portfolio company out of this category and into another category. (3)
Represents the total amount of interest, fees or dividends credited to income for the portion of the period an
investment was included in Control or Affiliate categories, respectively.  20




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##### Table of Contents

RAND CAPITAL CORPORATION AND SUBSIDIARIES CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2021 (Continued)  Industry Classification

Percentage of TotalInvestments (at fair value)as of December 31, 2021Software


26.3
%Professional Services


23.1Manufacturing


16.8Consumer Product


11.8Automotive


10.2BDC Investment Funds


8.7Healthcare


2.3Oil and Gas


0.8Total Investments


100
%  21




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##### Table of Contents

Rand Capital Corporation and Subsidiaries Notes to the Consolidated Financial Statements (Unaudited) Note 1. ORGANIZATION Rand Capital Corporation (Rand, we, us and our) was incorporated under the laws of New
York in February 1969. We completed our initial public offering in 1971 and operated as an internally managed, closed end, diversified, management investment company from that time until November 2019. In November 2019, Rand completed a stock sale transaction (the Closing) with East Asset Management (East). The
transaction consisted of a $25 million investment in Rand by East, in the form of cash and contributed portfolio assets, in exchange for approximately 8.3 million shares of Rand common stock. East owns approximately 64% of Rand
Capitals outstanding common stock at September 30, 2022. Concurrent with the Closing, Rands management and staff became employees of Rand Capital Management, LLC (RCM), a registered investment adviser that has been
retained by Rand as its external investment adviser and administrator (the Closing and the retention of RCM as our investment adviser and administrator are collectively referred to herein as the Transaction). In connection with a change
of control of RCM (the Adviser Change of Control), Rands shareholders approved a new investment advisory and management agreement (the Investment Management Agreement) with RCM at a special meeting of shareholders held
on December 16, 2020 (the Special Meeting), the term of which expires December 31, 2022. The terms of the Investment Management Agreement are identical to those contained in the prior investment management agreement that
was in effect prior to the Adviser Change of Control (the Prior Investment Management Agreement) with RCM continuing to provide investment advisory and management services to Rand. Following approval by Rands shareholders at the
Special Meeting, Rand, on December 31, 2020, entered into the Investment Management Agreement and a new administration agreement (the Administration Agreement) with RCM, the term of which expires December 31, 2022, and
terminated the prior administration agreement (the Prior Administration Agreement). The terms of the Administration Agreement are identical to those contained in the Prior Administration Agreement. After expiration of the initial two-year term, the Investment Management Agreement and Administration Agreement will continue automatically for successive annual periods provided that such continuance is specifically approved at least annually by
(i)(A) the affirmative vote of a majority of the Board of Directors or (B) the affirmative vote of a majority of our outstanding voting securities, and (ii) the affirmative vote of a majority of our directors who are not interested
persons, as defined in Section 2(a)(19) of the 1940 Act, of us, RCM or our respective affiliates. Pursuant to the terms of the Investment Management Agreement, Rand pays RCM a base management fee and may pay an incentive fee, if specified
benchmarks are met. In connection with the Closing, we also entered into a shareholder agreement by and between Rand and East (the
Shareholder Agreement). Pursuant to the terms of the Shareholder Agreement, East has the right to designate two or three persons, depending upon the size of the Board of Directors of Rand (the Board), for nomination for
election to the Board. East has the right to designate (i) up to two persons if the size of the Board is composed of fewer than seven directors or (ii) up to three persons if the size of the Board is composed of seven or more directors.
Easts right to designate persons for nomination for election to the Board under the Shareholder Agreement is the exclusive means by which East may designate or nominate persons for election to the Board. The Board currently consists of five
directors, and Easts designees are Adam S. Gusky and Benjamin E. Godley. After the completion of the Transaction, we are an
externally managed, closed-end, diversified management investment company. We have elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as
amended (the 1940 Act). As a BDC, we are required to comply with certain regulatory requirements specified in the 1940 Act. For instance, we generally have to invest at least 70% of our total assets in qualifying assets and
provide managerial assistance to the portfolio companies in which we invest. See Item 1. Business - Regulations, Business Development Company Regulations in our Annual Report on Form 10-K for the
year ended December 31, 2021.  22




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##### Table of Contents

Prior to 2021, we made the majority of our investments through our wholly owned subsidiary,
Rand Capital SBIC, Inc. (Rand SBIC), which operated as a small business investment company (SBIC) and was licensed by the U.S. Small Business Administration (SBA) from 2002 until December 2021. Until December
2021, Rand SBIC also operated as a BDC. In November 2021, Rand SBIC repaid, in full, all of its outstanding SBA-guaranteed debentures and surrendered its SBIC license. In connection with the surrender of its SBIC license, Rand SBIC changed its name to Rand Capital Sub, Inc. (Rand Sub), withdrew its election to
be regulated as a BDC, and merged with and into Rand Capital Sub LLC, a Delaware limited liability company, a wholly owned subsidiary of Rand. In connection with the completion of the Transaction, we adopted an investment strategy focused on higher yielding debt investments and
elected to be treated as a regulated investment company (RIC) for U.S. Federal income tax purposes as of January 1, 2020 on our U.S. Federal tax return for the 2020 tax year. As required for the RIC election, we paid a special
dividend to shareholders to distribute all of our accumulated earnings and profits since inception to 2019. The Board declared the
following quarterly cash dividends during the nine months ended September 30, 2022:  Quarter

Dividend/ShareAmount

Record Date


Payment Date1st

$0.15


March 14, 2022



March 28, 20222nd

$0.15


June 1, 2022



June 15, 20223rd

$0.15


September 1, 2022



September 15, 2022 In order to qualify to make the RIC election, Rand placed several of its equity investments in newly formed
holding companies that facilitate a tax structure that is advantageous to the RIC election. Rand has the following wholly owned blocker companies in place at September 30, 2022: Rand Somerset Holdings Corp., Rand Carolina Skiff Holdings Corp.,
Rand DSD Holdings Corp., Rand Filterworks Holdings Corp., Rand ITA Holdings Corp., and Rand BMP Swanson Holdings Corp. (the Blocker Corps). These subsidiaries are consolidated using United States generally accepted accounting principles
(GAAP) for financial reporting purposes. On October 7, 2020, Rand, RCM and certain of their affiliates received
exemptive relief from the Securities and Exchange Commission (SEC) to permit Rand to co-invest in portfolio companies with certain other funds, including other BDCs and registered investment
companies, managed by RCM and certain of its affiliates in a manner consistent with Rands investment objective, positions, policies, strategies and restrictions as well as regulatory requirements, subject to compliance with certain conditions
(the Order). Pursuant to the Order, Rand is generally permitted to co-invest with affiliated funds if a required majority (as defined in Section 57(o) of the 1940 Act) of
Rands independent directors make certain conclusions in connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are
reasonable and fair to Rand and its shareholders and do not involve overreaching in respect to Rand or its shareholders on the part of any person concerned and (2) the transaction is consistent with the interests of Rands shareholders and
is consistent with Rands investment objective and strategies. On March 29, 2021, the SEC granted approval for a new exemptive relief order (the New Order) that supersedes the Order and permits the Corporation to co-invest with affiliates of RCM and Callodine Group, LLC (Callodine) in connection with the completion of the Adviser Change of Control. Callodine holds a controlling interest in RCM.  23




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##### Table of Contents

The accompanying consolidated financial statements describe the operations of Rand and its
wholly-owned subsidiaries Rand Sub and the Blocker Corps, (collectively, the Corporation). Our corporate office is located in
Buffalo, NY and our website address is www.randcapital.com. We make available on our website our annual and quarterly reports, proxy statements and other information as soon as reasonably practicable after such material is filed with the Securities
and Exchange Commission (SEC). Our shares are traded on the Nasdaq Capital Market under the ticker symbol RAND. Note 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation It is our opinion that the accompanying
consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair presentation in accordance with GAAP of the consolidated financial position, results of operations, cash flows and statement of changes in
net assets for the interim periods presented. Certain information and note disclosures normally included in audited annual consolidated financial statements prepared in accordance with GAAP have been omitted; however, we believe that the disclosures
made are adequate to make the information presented herein not misleading. The interim results for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year. These statements should be read in conjunction with the consolidated financial statements and the notes included in our Annual Report on Form 10-K for the year ended December 31, 2021. Information contained in this filing should also be reviewed in conjunction with our related filings with the SEC prior to the date of this report. Principles of Consolidation - The consolidated financial statements include the accounts of Rand and its wholly owned
subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Fair Value of Financial
Instruments  The carrying amounts reported in the consolidated statement of financial position of cash, interest receivable, accounts payable and accrued expenses approximate fair value because of the immediate or short-term nature of
these financial instruments. Investment Classification In accordance with the provisions of the 1940 Act, the
Corporation classifies its investments by level of control. Under the 1940 Act, Control Investments are investments in companies that the Corporation is deemed to Control because it owns more than 25% of the voting securities
of the company or has greater than 50% representation on the companys board. Affiliate Investments are companies in which the Corporation owns between 5% and 25% of the voting securities. Non-Control/Non-Affiliate Investments are those companies that are neither Control Investments nor Affiliate Investments. Investments  Investments are valued at fair value as determined in good faith by RCM and approved by our Board. The
Corporation generally invests in loan, debt, and equity instruments and there is no single standard for determining fair value of these investments. As a result, determining fair value requires that judgment be applied to the specific facts and
circumstances of each portfolio company while employing a consistent valuation process. Due to the inherent uncertainty of determining the fair value of portfolio investments, there may be material risks associated with this determination including
that estimated fair values may differ from the values that would have been used had a readily available market value for the investments existed and these differences could be material if our assumptions and judgments differ from results of actual
liquidation events. The Corporation analyzes and values each investment quarterly and records unrealized depreciation for an investment that they believe has become impaired, including where collection of a loan or realization of the recorded value
of an equity security is doubtful. Conversely, the Corporation will record unrealized appreciation if they believe that an underlying portfolio company has appreciated in value and, therefore, its equity security has also appreciated in value.
Additionally, the Corporation continues to assess any material risks associated with this fair value determination, including risks associated with material conflicts of interest. Under the valuation policy of the Corporation, unrestricted publicly
traded securities are valued at the average closing price for these securities for the last three trading days of the reporting period.  24




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##### Table of Contents

Qualifying Assets- More than 70% of the Corporations investments were
made in qualifying privately held small business enterprises, that were not investment companies, are principally based in the United States, and represent qualifying assets as defined by Section 55(a) of the 1940 Act. Revenue Recognition - Interest Income - Interest income is recognized on the accrual basis except where the
investment is in default or otherwise presumed to be in doubt. In such cases, interest is recognized at the time of receipt. A reserve for possible losses on interest receivable is maintained when appropriate. The Corporation holds debt securities in its investment portfolio that contain
payment-in-kind (PIK) interest provisions. PIK interest, computed at the contractual rate specified in each debt agreement, is added to the principal balance
of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Revenue Recognition - Dividend Income The Corporation may receive cash distributions from portfolio companies that are
limited liability companies or corporations, and these distributions are classified as dividend income on the consolidated statement of operations. Dividend income is recognized on an accrual basis when it can be reasonably estimated. The Corporation may hold preferred equity securities that contain cumulative dividend provisions. Cumulative dividends are recorded as
dividend income, if declared and deemed collectible, and any dividends in arrears are recognized into income and added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such
time as the preferred equity is redeemed. Revenue Recognition - Fee Income- Consists of the revenue associated with the
amortization of financing fees charged to the portfolio companies upon successful closing of financings and income associated with portfolio company board attendance fees. Realized Gain or Loss and Unrealized Appreciation or Depreciation of Investments -Amounts reported as realized gains and losses
are measured by the difference between the proceeds from the sale or exchange and the cost basis of the investment without regard to unrealized gains or losses recorded in prior periods. The cost of securities that have, in managements
judgment, become worthless are written off and reported as realized losses when appropriate. Unrealized appreciation or depreciation reflects the difference between the fair value of the investments and the cost basis of the investments. Original Issue Discount  Investments may include original issue discount or OID income. This occurs when the
Corporation purchases a warrant and a note from a portfolio company simultaneously, which requires an allocation of a portion of the purchase price to the warrant and reduces the note or debt instrument by an equal amount in the form of a note
discount or OID. Net Assets per Share - Net assets per share are based on the number of shares of common stock outstanding.
There are no common stock equivalents outstanding. Supplemental Cash Flow Information - Income taxes (refunded) paid during
the nine months ended September 30, 2022 and 2021 were ($69,028) and $63,276, respectively. The Corporation paid a one-time closing fee on the Senior Secured Credit Facility (see Note 6) in the amount of
$125,000 during the nine months ended September 30, 2022. Interest paid during the nine months ended September 30, 2022 and 2021 was $19,792 and $379,085, respectively. The Corporation converted $516,391 and $199,848 of interest receivable
into investments during the nine months ended September 30, 2022 and 2021, respectively.  25




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##### Table of Contents

Accounting Estimates - The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ from those estimates. Stockholders Equity (Net
Assets) -At September 30, 2022 and December 31, 2021, there were 500,000 shares of $10.00 par value preferred stock authorized and unissued. On April 21, 2022, the Board approved a share repurchase plan which authorizes the Corporation to repurchase shares of the
Corporations outstanding common stock with an aggregate cost of up to $1,500,000 at prices per share of common stock no greater than the then current net asset value. This share repurchase authorization is in effect through April 21,
2023. This share repurchase plan replaces the share repurchase authorization that was previously approved by the Board in April 2021. No shares of common stock were repurchased by the Corporation during the nine months ended September 30, 2022.
During the nine months ended September 30, 2021, the Corporation repurchased 1,148 shares of common stock at a cost of $20,771. Income Taxes The Corporation elected to be treated, for income tax purposes, as a RIC for the 2022 and 2021 tax years
under Subchapter M of the Code. As a result, the Corporation did not pay corporate-level federal income taxes on any net ordinary income or capital gains that the Corporation distributed to its shareholders as dividends. The Corporation must
distribute substantially all of its investment company taxable income each tax year as dividends to its shareholders to maintain its RIC status. Accordingly, no provision for federal income tax has been made in the financial statements for the nine
months ended September 30, 2022 and 2021, respectively. Distributions from net investment income and distributions from net realized
capital gains are determined in accordance with U.S. federal tax regulations, which may differ from amounts determined in accordance with GAAP and those differences could be material. These book-to-tax differences are either temporary or permanent in nature. Reclassifications due to permanent book-tax differences, including the offset of net operating
losses against short-term gains and nondeductible meals and entertainment, have no impact on net assets. The Corporation reviews the tax
positions it has taken to determine if they meet a more likely than not threshold for the benefit of the tax position to be recognized in the consolidated financial statements. A tax position that fails to meet the more likely than not
recognition threshold will result in either a reduction of a current or deferred tax asset or receivable, or the recording of a current or deferred tax liability. There were no uncertain tax positions recorded at September 30, 2022 or
December 31, 2021. The Corporation is currently open to audit under the statute of limitations by the Internal Revenue Service for
the years ended December 31, 2018 through 2021. In general, the Corporations state income tax returns are open to audit under the statute of limitations for the years ended December 31, 2018 through 2021. It is the Corporations policy to include interest and penalties related to income tax liabilities in income tax expense on the
Consolidated Statement of Operations. There were no amounts recognized for the nine months ended September 30, 2022 or the nine months ended September 30, 2021. Concentration of Credit and Market Risk  The Corporations financial instruments potentially subject it to concentrations of credit
risk. Cash is invested with banks in amounts which, at times, exceed insurable limits. The Corporation does not anticipate non-performance by such banks. The following are the concentrations of the top five portfolio company values compared to the fair value of the Corporations total
investment portfolio:  September 30, 2022Tilson Technology Management, Inc. (Tilson)


15
%Seyberts Billiards Corporation (Seyberts)


9
%Open Exchange, Inc. (Open Exchange)


9
%ITA Acquisition, LLC (ITA)


7
%DSD Operating, LLC (DSD)


7
%  26




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##### Table of Contents

December 31, 2021Tilson


14
%ACV Auctions, Inc. (ACV)


13
%Open Exchange


9
%Caitec, Inc. (Caitec)


6
%DSD


6
% Note 3. INVESTMENTS The Corporations investments are carried at fair value, as determined in good faith by the Board, in accordance with FASB Accounting
Standards Codification (ASC) 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. Loan investments are defined as traditional loan financings typically with no equity features or required equity co-investment. Debt investments are defined as debt financings that include one or more equity features such as conversion rights, stock purchase warrants, and/or stock purchase options. Equity investments will be
direct investments into a portfolio company and may include preferred stock, common stock, warrants and limited liability company membership interests. The Corporation uses several approaches to determine the fair value of an investment. The main approaches are:  

Loan and debt securities are generally valued using an Asset approach and will be valued at cost when
representative of the fair value of the investment or sufficient assets or liquidation proceeds are expected to exist from a sale of a portfolio company at its estimated fair value. The valuation may also consider the carrying interest rate versus
the related inherent portfolio risk of the investment. A loan or debt instrument may be reduced in value if it is judged to be of poor quality, collection is in doubt or insufficient liquidation proceeds exist.  

Equity securities may be valued using the asset approach, market approach or
income approach. The asset approach involves estimating the liquidation value of the portfolio companys assets. To the extent the value exceeds the remaining principal amount of the debt or loan securities of the portfolio
company, the fair value of such securities is generally estimated to be their cost. However, where value is less than the remaining principal amount of the loan and debt securities, the Corporation may discount the value of an equity security.
The market approach uses observable prices and other relevant information generated by similar market transactions. It may include both private and public M&A transactions where the traded price is a multiple of EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortization) or another relevant operating metric. It may also include the market value of comparable public companies that are trading in an active market, or 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 valuation techniques to convert future benefits or costs, usually in the form of cash flows, into a present value amount. The measurement is based on value indicated by current market expectations about those future amounts.  27




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##### Table of Contents

ASC 820 classifies the inputs used to measure fair value into the following hierarchy: Level 1: Quoted prices in active markets for identical assets or liabilities, used in the Corporations valuation at the measurement
date. Under the valuation policy, the Corporation values unrestricted publicly traded companies, categorized as Level 1 investments, at the average closing price for the last three trading days of the reporting period. Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or
liabilities in markets that are not active, or other observable inputs other than quoted prices. Level 3: Unobservable and
significant inputs to determining the fair value. Financial assets are categorized based upon the level of judgment associated with the
inputs used to measure their fair value. Any changes in estimated fair value are recorded in the statement of operations. At
September 30, 2022, 10% of the Corporations investments were Level 1 investments and 90% were Level 3 investments. At December 31, 2021, 22% of the Corporations investments were Level 1 investments and 78% were
Level 3 investments. There were no Level 2 investments at September 30, 2022 or December 31, 2021. In the valuation
process, the Corporation values restricted securities categorized as Level 3 investments, using information from these portfolio companies, which may include:  

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

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

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

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

Pending debt or capital restructuring of the portfolio company;  

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

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

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

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

Qualitative assessment of key management;  

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

Other factors deemed relevant to assess valuation. The valuation may be reduced if a portfolio companys performance and potential have deteriorated significantly. If the factors that led
to a reduction in valuation are overcome, the valuation may be readjusted. Equity Securities Equity securities may include preferred stock, common stock, warrants and limited liability company membership interests. The significant unobservable inputs used in the fair value measurement of the Corporations equity investments are earnings before
interest, tax and depreciation and amortization (EBITDA) and revenue multiples, where applicable, the financial and operational performance of the business, and the debt and senior equity preferences that may exist in a deemed liquidation event.
Standard industry multiples may be used when available; however, the Corporations portfolio companies are typically small and in early stages of development  28




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##### Table of Contents

and these industry standards may be adjusted to more closely match the specific financial and operational performance of the portfolio company. Due to the nature of certain investments, fair
value measurements may be based on other criteria, which may include third party appraisals. Significant changes in any of these unobservable inputs may result in a significantly higher or lower fair value estimate. Another key factor used in valuing equity investments is a significant recent arms-length equity transaction entered into by the portfolio
company with a sophisticated, non-strategic, unrelated, new investor. The terms of these equity transactions may not be identical to the equity transactions between the portfolio company and the Corporation,
and the impact of the difference in transaction terms on the market value of the portfolio company may be difficult or impossible to quantify. When appropriate the Black-Scholes pricing model is used to estimate the fair value of warrants for accounting purposes. This model requires
the use of highly subjective inputs including expected volatility and expected life, in addition to variables for the valuation of minority equity positions in small private and early stage companies. Significant changes in any of these unobservable
inputs may result in a significantly higher or lower fair value estimate. For investments made within the last year, the Corporation
generally relies on the cost basis, which is deemed to represent the fair value, unless other fair value inputs are identified causing the Corporation to depart from this basis. Loan and Debt Securities The significant
unobservable inputs used in the fair value measurement of the Corporations loan and debt securities are the financial and operational performance of the portfolio company, similar debt with similar terms with other portfolio companies, as well
as the market acceptance for the portfolio companys products or services. These inputs will likely provide an indicator as to the probability of principal recovery of the investment. The Corporations loan and debt investments are often
junior secured or unsecured securities. Fair value may also be determined based on other criteria where appropriate. Significant changes to the unobservable inputs may result in a change in fair value. For recent investments, the Corporation
generally relies on the cost basis, which is deemed to represent the fair value, unless other fair value inputs are identified causing the Corporation to depart from this basis. The following table provides a summary of the significant unobservable inputs used to determine the fair value of the Corporations
Level 3 portfolio investments as of September 30, 2022:  Investment Type

MarketApproachEBITDAMultiple


MarketApproachLiquidationSeniority


MarketApproachRevenueMultiple


MarketApproachTransactionPricing


TotalsNon-Control/Non-Affiliate Equity

$



$
500,000


$



$
6,518,938


$
7,018,938Non-Control/Non-Affiliate Loan and
Debt


3,168,126



2,269,025



1,444,915



5,887,260



12,769,326Total Non-Control/Non-Affiliate

$
3,168,126


$
2,769,025


$
1,444,915


$
12,406,198


$
19,788,264Affiliate Equity

$
1,643,207


$



$
1,450,155


$
10,275,848


$
13,369,210Affiliate Loan and Debt


2,593,340







1,491,250



12,067,515



16,152,105Total Affiliate

$
4,236,547


$



$
2,941,405


$
22,343,363


$
29,521,315Control Equity

$
748,810


$



$



$



$
748,810Control Loan and Debt














3,489,086



3,489,086Total Control

$
748,810


$



$



$
22,343,363


$
4,237,896Total Level 3 Investments

$
8,153,483


$
2,769,025


$
4,386,320


$
38,238,647


$
53,547,475Range


5X - 6X



1X



1X - 4X



Not ApplicableUnobservable Input


EBITDA Multiple



Asset Value



Revenue Multiple



Transaction PriceWeighted Average


5.8X



1X



1.9X



Not Applicable  29




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##### Table of Contents

The following table provides a summary of the components of Level 1, 2 and 3 Assets
Measured at Fair Value at September 30, 2022:  Fair Value Measurements at Reported Date UsingDescription

September 30,2022


Quoted Prices inActive Markets forIdentical Assets(Level 1)


SignificantObservable Inputs(Level 2)


Other SignificantUnobservableInputs(Level 3)Loan investments

$
16,002,950


$



$



$
16,002,950Debt investments


16,407,567











16,407,567Equity investments


27,313,123



6,176,165







21,136,958Total

$
59,723,640


$
6,176,165


$



$
53,547,475 The following table provides a summary of the components of Level 1, 2 and 3 Assets Measured at Fair
Value at December 31, 2021:  Fair Value Measurements at Reported Date UsingDescription

December 31,2021


Quoted Prices inActive Markets forIdentical Assets(Level 1)


SignificantObservable Inputs(Level 2)


Other SignificantUnobservableInputs(Level 3)Loan investments

$
15,503,404


$



$



$
15,503,404Debt investments


14,030,078











14,030,078Equity investments


34,534,980



13,901,045







20,633,935Total

$
64,068,462


$
13,901,045


$



$
50,167,417 The following table provides a summary of changes in Assets Measured at Fair Value Using Significant
Unobservable Inputs (Level 3) for the nine months ended September 30, 2022:  Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Description

LoanInvestments


DebtInvestments


EquityInvestments


TotalEnding balance December 31, 2021, of Level 3 Assets

$
15,503,404


$
14,030,078


$
20,633,935


$
50,167,417Realized gains (losses) included in net change in net assets from
operations:ClearView Social, Inc. (Clearview Social)










38,881



38,881GiveGab, Inc. (Givegab)










1,919



1,919Microcision, LLC (Microcision)










190,000



190,000New Monarch Machine Tool, Inc. (New Monarch)










(22,841
)


(22,841
)SocialFlow, Inc. (Social Flow)










(1,481,498
)


(1,481,498
)Total realized (losses), net










(1,273,539
)


(1,273,539
)  30




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##### Table of Contents

Unrealized gains, net included in net change in net assets from operations:Microcision










25,000



25,000New Monarch










22,841



22,841Social Flow










1,628,000



1,628,000Total unrealized gains










1,675,841



1,675,841Purchases of securities/changes to
securities/non-cash conversions:Caitec, Inc. (Caitec)


54,704











54,704DSD Operating, LLC (DSD)


364,633











364,633Filterworks Acquisition USA, LLC (Filterworks)






146,723



86,213



232,936GoNoodle, Inc. (GoNoodle)






10,622







10,622HDI Acquisition LLC (Hilton Displays)






19,835







19,835ITA Acquisition, LLC (ITA)


52,475







623,810



676,285Mattison Avenue Holdings LLC (Mattison)


27,734











27,734Seyberts Billiards Corporation (Seyberts)






2,279,234







2,279,234SciAps, Inc. (Sciaps)






11,250







11,250Total purchases of securities/changes to
securities/non-cash conversions


499,546



2,467,664



710,023



3,677,233Repayments and sales of securities:Clearview Social










(38,881
)


(38,881
)Givegab










(1,919
)


(1,919
)GoNoodle






(90,175
)






(90,175
)Microcision










(300,000
)


(300,000
)Social Flow










(268,502
)


(268,502
)Total repayments and sales of securities






(90,175
)


(609,302
)


(699,477
)Ending balance September 30, 2022, of Level 3 Assets

$
16,002,950


$
16,407,567


$
21,136,958


$
53,547,475  Change in unrealized appreciation/depreciation on investments for the period included in changes
in net assets

($
5,092,921
)Net realized gain on investments for the period included in changes in net assets

$
690,591 The following table provides a summary of changes in Assets Measured at Fair Value Using Significant
Unobservable Inputs (Level 3) for the nine months ended September 30, 2021:  Fair Value Measurements Using SignificantUnobservable Inputs (Level 3)Description

LoanInvestments


DebtInvestments


EquityInvestments


TotalEnding Balance December 31, 2020, of Level 3 Assets

$
6,771,394


$
9,799,365


$
20,181,405


$
36,752,164Realized gain included in net change in net assets from operations:Centivo Corporation (Centivo)










1,614,433



1,614,433ClearView Social, Inc. (Clearview Social)










135,430



135,430GiveGab, Inc. (Givegab)










1,846,705



1,846,705Total realized gains










3,596,568



3,596,568Unrealized gains/(losses) included in net change in net assets from
operations:Centivo










(584,832
)


(584,832
)Knoa Software, Inc. (Knoa)










(544,860
)


(544,860
)Mercantile Adjustment Bureau, LLC (Mercantile)






849,040







849,040New Monarch Machine Tool, Inc. (New Monarch)










(22,841
)


(22,841
)Open Exchange, Inc. (Open Exchange)










4,918,061



4,918,061Post Process technologies, Inc. (Post Process)










(122,728
)


(122,728
)Tilson Technology Management, Inc. (Tilson)










4,215,000



4,215,000Total unrealized gains (losses)






849,040



7,857,800



8,706,840  31




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##### Table of Contents

Purchases of securities/changes to
securities/non-cash conversions:Caitec, Inc. (Caitec)


53,606











53,606DSD Operating, LLC (DSD)


2,745,000







1,067,500



3,812,500Filterworks Acquisition USA, LLC (Filterworks)






35,819







35,819GoNoodle, Inc. (GoNoodle)






11,412







11,412HDI Acquisition LLC (Hilton Displays)






19,438







19,438ITA Acquisition, LLC (ITA)


3,419,000







500,000



3,919,000Mattison Avenue Holdings LLC (Mattison)


682,296



5,611







687,907Microcision, LLC (Microcision)






88,003







88,003Seyberts Billiards Corporation (Seyberts)






2,796,366



50,000



2,846,366SciAps, Inc. (Sciaps)






11,250







11,250BMP Swanson Holdco, LLC (Swanson)


1,600,000







233,333



1,833,333Total purchases of securities/changes to
securities/non-cash conversions


8,500,002



2,967,899



1,850,833



13,318,734Repayments and sale of securities:Advantage 24/7, LLC (Advantage 24/7)


(55,000
)










(55,000
)Centivo










(2,415,775
)


(2,415,775
)Clearview Social










(335,430
)


(335,430
)Givegab










(2,462,926
)


(2,462,926
)Mercantile






(418,553
)






(418,553
)Microcision






(1,500,000
)






(1,500,000
)Science and Medicine Group, Inc. (SMG)


(1,900,000
)










(1,900,000
)Total repayments and sale of securities


(1,955,000
)


(1,918,553
)


(5,214,131
)


(9,087,684
)Transfers within Level 3


1,127,815



(1,285,469
)


157,654



Transfers out of Level 3










(6,531,815
)


(6,531,815
)Ending Balance September 30, 2021, of Level 3 Assets

$
14,444,211


$
10,412,281


$
21,898,315


$
46,754,807  Change in unrealized appreciation/depreciation on investments for the period included in changes
in net assets

$
13,049,041Net realized gain on investments for the period included in changes in net assets

$
4,729,466 Note 4. OTHER ASSETS At September 30, 2022 and December 31, 2021, other assets was comprised of the following:  September 30,2022


December 31, 2021Dividend receivables

$
220,891


$
99,720Deferred financing fees, net


118,750



Escrow receivables


68,983



71,765Prepaid expenses


38,693



9,972Total other assets

$
447,317


$
181,457 Amortization expense related to the deferred financing fees during the nine months ended September 30,
2022 was $6,250. Note 5. COMMITMENTS AND CONTINGENCIES The Corporation had no commitments at September 30, 2022 or December 31, 2021. Note 6. SENIOR SECURED REVOLVING CREDIT FACILITY On June 27, 2022, the Corporation entered into a credit agreement (the Credit Agreement) with M&T Bank, as lender (the
Lender), which provides the Corporation with a senior secured revolving credit facility in a principal amount not to exceed $25.0 million (the Credit Facility). The amount the Corporation  32




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##### Table of Contents

can borrow, at any given time, under the Credit Facility is tied to a borrowing base, which is measured as (i) 75% of the aggregate sum of the fair market values of the publicly traded equity
securities held (other than shares of ACV Auctions) plus (ii) the least of (a) 75% of the fair market value of the shares of ACV Auctions held, (b) $6.25 million and (c) 25% of the aggregate borrowing base availability for the Credit
Facility at any date of determination plus (iii) 50% of the aggregate sum of the fair market values of eligible private loans held that meet specified criteria plus (iv) the lesser of (a) 50% of the aggregate sum of the fair market values of
unsecured private loans held that meet specified criteria and (b) $1.25 million minus (v) such reserves as the Lender may establish from time to time in its sole discretion. The Credit Facility has a maturity date of June 27, 2027. The Corporations borrowings under the Credit Facility bear interest at a variable rate determined as a rate per annum equal to 3.50
percentage points above the greater of (i) the applicable daily simple secured overnight financing rate (SOFR) and (ii) 0.25%. In addition, under the terms of the Credit Facility, the Corporation has also agreed to pay the Lender an unused
commitment fee on a quarterly basis, computed as 0.30% multiplied by the average daily Unused Commitment Fee Base (which is defined as the difference between (i) $25.0 million and (ii) the sum of the aggregate principal amount of the
Corporations outstanding borrowings under the Credit Facility) for the preceding quarter. The Credit Agreement contains
representations and warranties and affirmative, negative and financial covenants usual and customary for agreements of this type, including among others, covenants that prohibit, subject to certain specified exceptions, the Corporations
ability to merge or consolidate with other companies, sell any material part of the Corporations assets, incur other indebtedness, incur liens on the Corporations assets, make investments or loans to third parties other than permitted
investments and permitted loans, and declare any distribution or dividend other than certain permitted distributions. The Credit Agreement includes the following financial covenants: (i) a tangible net worth covenant that requires the
Corporation to maintain a Tangible Net Worth (defined in the Credit Agreement as the Corporations aggregate assets, excluding intangible assets, less all liabilities) of not less than $50.0 million, which is measured quarterly at the end
of each fiscal quarter, (ii) an asset coverage ratio covenant that requires the Corporation to maintain an Asset Coverage Ratio (defined in the Credit Agreement as the ratio of the fair market value of all of the Corporations assets to
the sum of all of the Corporations obligations for borrowed money plus all capital lease obligations) of not less than 3:00:1:00, which is measured quarterly at the end of each fiscal quarter and (iii) an interest coverage ratio covenant
that requires the Corporation to maintain an Interest Coverage Ratio (defined in the Credit Agreement as the ratio of Cash Flow (as defined in the Credit Agreement) to Interest Expense (as defined in the Credit Agreement)) of not less than
2:50:1:00, which is measured quarterly on a trailing twelve-months basis. Events of default under the Credit Agreement which permit the
Lender to exercise its remedies, including acceleration of the principal and interest on the Credit Facility, include, among others: (i) default in the payment of principal or interest on the Credit Facility, (ii) default by the
Corporation on any other obligation, condition, covenant or other provision under the Credit Agreement and related documents, (iii) failure by the Corporation to pay any material indebtedness or obligation owing to any third party or affiliate,
or the failure by the Corporation to perform any agreement with any third party or affiliate that would have a material adverse effect on the Corporation and its subsidiaries taken as a whole, (iv) the sale of all or substantially all of the
Corporations assets to a third party, (v) various bankruptcy and insolvency events, and (vi) any material adverse change in the Corporations and its subsidiaries, taken as a whole, or their business, assets, operations,
management, ownership, affairs, condition (financial or otherwise) or the Lenders collateral that the Lender reasonably determines will have a material adverse effect on the Lenders collateral, the Corporation and its subsidiaries, taken
as a whole, or their business, assets, operation or condition (financial or otherwise) or on the Corporations ability to repay its debts. In connection with entry into the Credit Facility, the Corporation and each of its subsidiaries that guaranty the Credit Facility entered into
a general security agreement, dated June 27, 2022, with the Lender (the Security Agreement). The Security Agreement secures all of the Corporations obligations to the  33




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##### Table of Contents

Lender, including, without limitation, principal and interest on the Credit Facility and any fees and charges. The security interest granted under the Security Agreement covers all of the
Corporations personal property including, among other things, all accounts, chattel paper, investment property, deposit accounts, general intangibles, inventory, and all of the fixtures. The Security Agreement contains various representations,
warranties, covenants and agreements customary in security agreements and various events of default with remedies under the New York Uniform Commercial Code and the Security Agreement. Events of default under the Security Agreement, which permit the
Lender to exercise its various remedies, are similar to those contained in the Credit Agreement. There was no outstanding balance drawn
on the Credit Facility at September 30, 2022. A closing fee of $125,000 was paid related to the closing of this Credit Facility, and it is recorded in Other Assets on the Consolidated Statements of Financial Position at September 30, 2022.
This closing fee will be amortized over the life of the Credit Facility. Amortization expense related to the Credit Facility during the nine months ended September 30, 2022 was $6,250. Note 7. CHANGES IN STOCKHOLDERS EQUITY (NET ASSETS) The following schedule analyzes the changes in stockholders equity (net assets) section of the Consolidated Statement of Financial
Position for the three and nine months ended September 30, 2022 and 2021, respectively:  CommonStock


Capital inexcess of parvalue


TreasuryStock, at cost


Totaldistributableearnings (losses)


Total StockholdersEquity (Net Assets)July 1, 2022

$
264,892


$
51,679,809


($
1,566,605
)

$
7,286,088


$
57,664,184Payment of dividend














(387,153
)


(387,153
)Net increase in net assets from operations














1,104,902



1,104,902September 30, 2022

$
264,892


$
51,679,809


($
1,566,605
)

$
8,003,837


$
58,381,933CommonStock


Capital inexcess of parvalue


TreasuryStock, at cost


Totaldistributableearnings (losses)


Total StockholdersEquity (Net Assets)July 1, 2021

$
264,892


$
52,003,545


($
1,545,834
)

$
7,397,218


$
58,119,821Payment of dividend














(258,125
)


(258,125
)Purchase of treasury shares










(20,771
)






(20,771
)Net increase in net assets from operations














2,321,200



2,321,200September 30, 2021

$
264,892


$
52,003,545


($
1,566,605
)

$
9,460,293


$
60,162,125CommonStock


Capital inexcess of parvalue


TreasuryStock, at cost


Totaldistributable(losses) earnings


Total StockholdersEquity (Net Assets)January 1, 2022

$
264,892


$
51,679,809


($
1,566,605
)

$
10,367,320


$
60,745,416Payment of dividend














(1,161,459
)


(1,161,459
)Net decrease in net assets from operations














(1,202,024
)


(1,202,024
)September 30, 2022

$
264,892


$
51,679,809


($
1,566,605
)

$
8,003,837


$
58,381,933CommonStock


Capital inexcess of parvalue


TreasuryStock, at cost


Totaldistributable(losses) earnings


Total StockholdersEquity (Net Assets)January 1, 2021

$
264,892


$
52,003,545


($
1,545,834
)

($
4,617,773
)

$
46,104,830Payment of dividend














(774,727
)


(774,727
)Purchase of treasury shares










(20,771
)






(20,771
)Net increase in net assets from operations














14,852,793



14,852,793September 30, 2021

$
264,892


$
52,003,545


($
1,566,605
)

$
9,460,293


$
60,162,125  34




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##### Table of Contents

Note 8. RELATED PARTY TRANSACTIONS Investment Management Agreement Effective
with the Closing, RCM, a registered investment adviser, was retained by the Corporation as its external investment adviser and administrator. Under the Investment Management Agreement, the Corporation pays RCM, as compensation for the investment
advisory and management services, fees consisting of two components: (i) the Base Management Fee and (ii) the Incentive Fee. The Base Management Fee is calculated at an annual rate of 1.50% of the Corporations total assets (other than cash but
including assets purchased with borrowed funds). For the three and nine months ended September 30, 2022, the Base Management Fee was $225,730 and $696,772, respectively. For the three and nine months ended September 30, 2021, the Base
Management Fee was $230,724 and $619,240, respectively. At September 30, 2022 and December 31, 2021, the Corporation had $225,649 and $238,862 payable, respectively, for the Base Management Fees on its Consolidated Statement of Financial
Position. The Incentive Fee is comprised of two parts: (1) the Income Based Fee and (2) the
Capital Gains Fee. The Income Based Fee is calculated and payable quarterly in arrears based on the Pre-Incentive Fee Net Investment Income (as defined in the agreement) for the
immediately preceding calendar quarter, subject to a hurdle rate of 1.75% per quarter (7% annualized) and is payable promptly following the filing of the Corporations financial statements for such quarter. The Corporation pays RCM an Incentive Fee with respect to its Pre-Incentive Fee Net Investment Income
in each calendar quarter as follows:  (i)
no Income Based Fee in any quarter in which the Pre-Incentive Fee Net
Investment Income for such quarter does not exceed the hurdle rate of 1.75% (7.00% annualized);  (ii)
100% of the Pre-Incentive Fee Net Investment Income for any calendar
quarter with respect to that portion of the Pre-Incentive Fee Net Investment Income for such calendar quarter, if any, that exceeds the hurdle rate of 1.75% (7.00% annualized) but is less than 2.1875% (8.75%
annualized); and  (iii)
20% of the amount of the Pre-Incentive Fee Net Investment Income for
any calendar quarter with respect to that portion of the Pre-Incentive Fee Net Investment Income for such calendar quarter, if any, that exceeds 2.1875% (8.75% annualized). The Income Based Fee paid to RCM for any calendar quarter shall not be in excess of the Incentive Fee Cap. The Incentive Fee Cap
for any quarter is an amount equal to (1) 20.0% of the Cumulative Net Return (as defined below) during the relevant Income Based Fee Calculation Period (as defined below) minus (2) the aggregate Income Based Fee that was paid in respect of the
calendar quarters included in the relevant Income Based Fee Calculation Period. For purposes of the calculation of the Income Based Fee,
Income Based Fee Calculation Period is defined as, with reference to a calendar quarter, the period of time consisting of such calendar quarter and the additional quarters that comprise the lesser of (1) the number of quarters
immediately preceding such calendar quarter that began more than two years after November 8, 2019 or (2) the eleven calendar quarters immediately preceding such calendar quarter. For purposes of the calculation of the Income Based Fee, Cumulative Net Return is defined as (1) the aggregate net investment
income in respect of the relevant Income Based Fee Calculation Period minus (2) any Net Capital Loss, if any, in respect of the relevant Income Based Fee Calculation Period. If, in any quarter, the Incentive Fee Cap is zero or a negative value,
the Corporation pays no Income Based Fee to RCM for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter is a positive value but is less than the Income Based Fee that is payable to RCM  35




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##### Table of Contents

for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Corporation pays an Income Based Fee to RCM equal to the Incentive Fee Cap for such quarter.
If, in any quarter, the Incentive Fee Cap for such quarter is equal to or greater than the Income Based Fee that is payable to RCM for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, we pay an Income Based
Fee to the Adviser equal to the Income Based Fee calculated as described above for such quarter without regard to the Incentive Fee Cap. For purposes of the calculation of the Income Based Fee, Net Capital Loss, in respect of a particular period, means the
difference, if positive, between (1) aggregate capital losses, whether realized or unrealized, in such period and (2) aggregate capital gains, whether realized or unrealized, in such period. Any Income Based Fee otherwise payable under the Investment Management Agreement with respect to Accrued Unpaid Income (such fees being the
Accrued Unpaid Income Based Fees) shall be deferred, on a security by security basis, and shall become payable to RCM only if, as, when and to the extent cash is received by us in respect of any Accrued Unpaid Income. Any Accrued Unpaid
Income that is subsequently reversed by us in connection with a write-down, write-off, impairment or similar treatment of the investment giving rise to such Accrued Unpaid Income will, in the applicable period
of reversal, (1) reduce Pre-Incentive Fee Net Investment Income and (2) reduce the amount of Accrued Unpaid Income Based Fees. Subsequent payments of Accrued Unpaid Income Based Fees deferred
pursuant to this paragraph shall not reduce the amounts otherwise payable for any quarter as an Income Based Fee. For the nine months
ended September 30, 2022 and the nine months ended September 30, 2021, there were no Income Based Fees earned under the Investment Management Agreement. The second part of the Incentive Fee is the Capital Gains Fee. This fee is determined and payable in arrears as of the end of each
calendar year. Under the terms of the Investment Management Agreement, the Capital Gains Fee is calculated at the end of each applicable year by subtracting (1) the sum of the cumulative aggregate realized capital losses and aggregate
unrealized capital depreciation from (2) the cumulative aggregate realized capital gains, in each case calculated from November 8, 2019. If this amount is positive at the end of any calendar year, then the Capital Gains Fee for such year
is equal to 20.0% of such amount, less the cumulative aggregate amount of Capital Gains Fees paid in all prior years. If such amount is negative, then there is no Capital Gains Fee payable for that calendar year. If the Investment Management
Agreement is terminated as of a date that is not a calendar year end, the termination date shall be treated as though it were a calendar year end for purposes of calculating and paying the Capital Gains Fee. For purposes of the Capital Gains Fee:  

The cumulative aggregate realized capital gains are calculated as the sum of the differences, if positive,
between (a) the net sales price of each investment in the Corporations portfolio when sold minus (b) the accreted or amortized cost basis of such investment.  

The cumulative aggregate realized capital losses are calculated as the sum of the amounts by which (a) the
net sales price of each investment in the portfolio when sold is less than (b) the accreted or amortized cost basis of such investment.  

The aggregate unrealized capital depreciation is calculated as the sum of the amount, if negative, between
(a) the valuation of each investment in the portfolio as of the applicable Capital Gains Fee calculation date minus (b) the accreted or amortized cost basis of such investment. In determining whether a capital gains incentive fee accrual is necessary, U.S. generally accepted accounting principles (GAAP) requires a
company to consider the amount of cumulative aggregate unrealized  36




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##### Table of Contents

capital appreciation that such company has with respect to its investments, as a capital gains incentive fee would be payable if such unrealized capital appreciation were realized, despite the
fact that such unrealized capital appreciation is not used by the Corporation in determining the amount of Capital Gains Fee actually payable under the terms of the RCM Investment Management Agreement. A capital gains incentive fee accrual under
GAAP is calculated using the cumulative aggregate realized capital gains and losses and the aggregate net change in unrealized capital appreciation/depreciation at the close of the period. If the calculated amount is positive, GAAP requires the
Corporation to record a capital gains incentive fee accrual equal to 20% of this cumulative amount, less the aggregate amount of actual capital gains incentive fees paid, or capital gains incentive fees accrued under GAAP, for all prior periods.
There can be no guarantee that the Corporation will realize the unrealized capital appreciation, upon which this accrual has been calculated, in the future. As of September 30, 2022, there was no Capital Gains Fee currently payable under the terms of the Investment Management Agreement, and
the final calculations are determined annually, and subject to change based on subsequent realized gains, losses or unrealized losses during the remainder of 2022. At December 31, 2021, there was $652,240 of Capital Gains Fee payable. The
Capital Gains Fee earned of $652,240 was included in the Due to investment adviser line on the Consolidated Statements of Financial Position and the $3,547,760 cumulative accrued capital gains incentive fee was recorded in the line item
Capital gains incentive fees on the Consolidated Statements of Financial Position at December 31, 2021. In accordance
with GAAP, the Corporation is required to accrue a capital gains incentive fee on all realized and unrealized gains and losses, resulting in an accrual of $2,667,000 at September 30, 2022, which represents the fee that would be due based on net
portfolio appreciation. The $2,667,000 accrued capital gains incentive fee is recorded in the line item Capital gains incentive fees on the Consolidated Statements of Financial Position at September 30, 2022. At December 31,
2021, there was an accrual of $4,200,000 for the capital gains incentive fee, which represented both the capital gains fee payable to RCM of $652,240 and $3,547,760 that would be due based on net portfolio appreciation at December 31, 2021. The
$652,240 capital gains fee payable was paid to RCM during the nine months ended September 30, 2022. Administration Agreement Under the terms of the Administration Agreement, RCM agreed to perform (or oversee, or arrange for, the performance of) the administrative
services necessary for the Corporations operations, including, but not limited to, office facilities, equipment, clerical, bookkeeping, finance, accounting, compliance and record keeping services at such office facilities and such other
services as RCM, subject to review by the Board, will from time to time determine to be necessary or useful to perform its obligations under the Administration Agreement. RCM shall also arrange for the services of, and oversee, custodians,
depositories, transfer agents, dividend disbursing agents, other shareholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and such other persons in any such other capacity deemed
to be necessary or desirable. RCM is responsible for the Corporations financial and other records that are required to be
maintained and prepares all reports and other materials required to be filed with the SEC or any other regulatory authority, including reports to shareholders. In addition, RCM assists the Corporation in determining and publishing the
Corporations net asset value (NAV), overseeing the preparation and filing of the tax returns, and the printing and dissemination of reports to shareholders, and generally overseeing the payment of expenses and the performance of administrative
and professional services rendered by others. RCM provides, on the Corporations behalf, managerial assistance to those portfolio companies that have accepted its offer to provide such assistance.  37




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##### Table of Contents

Note 9.    FINANCIAL HIGHLIGHTS The following schedule provides the financial highlights, calculated based on shares outstanding, for the periods indicated:  Nine monthsendedSeptember 30,2022 (Unaudited) *


Nine monthsendedSeptember 30,2021 (Unaudited) *Income (loss) from investment operations (1):Investment income

$
1.56


$
1.10Expenses


0.29



2.22Investment income (loss) before income taxes


1.27



(1.12
)Income tax expense


0.03



0.01Net investment income (loss)


1.24



(0.13
)Net realized and unrealized (loss) gain on investments


(1.71
)


6.89(Decrease) increase in net assets from operations


(0.47
)


5.76Purchase of treasury shares






(0.01
)Payment of cash dividend


(0.45
)


(0.30
)(Decrease) increase in net assets


(0.92
)


5.45Net asset value, beginning of period


23.54



17.86Net asset value, end of period

$
22.62


$
23.31Per share market price, end of period

$
14.65


$
16.13Total return based on market price


(13.8
%)


(8.4
%)Total shareholder return (includes dividends paid)


(11.1
%)


0.9
%Total return based on net asset value


(3.9
%)


30.5
%Supplemental data:Ratio of expenses before income taxes to average net assets


1.26
%


10.8
%Ratio of expenses including income taxes to average net assets


1.40
%


10.9
%Ratio of net investment income (loss) to average net assets


6.77
%


(5.5
%)Debt/Equity ratio


0
%


18.0
%Portfolio turnover


5.08
%


29.5
%Net assets, end of period

$
58,381,933


$
60,162,124Weighted shares outstanding, end of period


2,581,021



2,582,942  (1)
Per share data is based on shares outstanding and the results are rounded to the nearest cent. *
Amounts are rounded. The Corporations interim period results could fluctuate as a result of a number of factors; therefore results for any interim period
should not be relied upon as being indicative of performance for the full year or in future periods. Note 10. SUBSEQUENT EVENT Subsequent to the quarter end, on October 6, 2022, the Corporation borrowed $300,000 from the Lender under its Credit Facility for use to
fund a debt investment.  38




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##### Table of Contents

Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion and analysis of our financial condition and results of operations in
conjunction with the consolidated financial statements and related notes included elsewhere in this report. Historical results and percentage relationships among any amounts in the consolidated financial statements are not necessarily indicative of
trends in operating results for any future periods. FORWARD LOOKING STATEMENTS Statements included in this Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this
report that do not relate to present or historical conditions are forward-looking statements within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21E of the Securities
Exchange Act of 1934, as amended. Additional oral or written forward-looking statements may be made by us from time to time, and forward-looking statements may be included in documents that are filed with the SEC. Forward-looking statements involve
risks and uncertainties that could cause our results or outcomes to differ materially from those expressed in the forward-looking statements. Forward-looking statements may include, without limitation, statements relating to our plans, strategies,
objectives, expectations and intentions, including statements related to our investment strategies and our intention to co-invest with certain of our affiliates, the impact of
COVID-19 on our portfolio companies; the impact of our election as a RIC for U.S. federal tax purposes on the payment of corporate level U.S. federal income taxes by Rand; statements regarding our liquidity
and financial resources; statements regarding any capital gains fee that may be due to RCM upon a hypothetical liquidation of our portfolio and the amount of the capital gains fee that may be payable for 2022; and statements regarding our compliance
with the RIC requirements as of September 30, 2022, future dividend payments, 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 scope of the impact of the COVID-19 pandemic and its specific impact on our portfolio companies, the state of the United
States economy and the local markets in which our portfolio companies operate, the state of the securities markets in which the securities of our portfolio companies could be traded, liquidity within the United States financial markets, and
inflation. Forward-looking statements are also subject to the risks and uncertainties described under the caption Risk Factors contained in Part II, Item 1A of this report and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021. There may be other factors not identified that affect
the accuracy of our forward-looking statements. Further, any forward-looking statement speaks only as of the date when it is made and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or
circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time that may cause our business not to develop as we expect, and we cannot
predict all of them. Overview We
are an externally managed investment company that lends to and invests in lower middle market companies. Our investment objective is to generate current income and when also possible, capital appreciation, by targeting investment opportunities with
favorable risk-adjusted returns. Our investment activities are managed by our investment adviser, Rand Capital Management, LLC (RCM). We have elected to be regulated as a business development company (BDC) under the Investment Company Act of 1940, as amended (the
1940 Act). As a BDC, we are required to comply with certain regulatory requirements specified in the 1940 Act.  39




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##### Table of Contents

In November 2019, Rand completed a stock sale transaction (the Transaction) with
East. The Transaction consisted of a $25 million investment in Rand by East, in exchange for approximately 8.3 million shares of Rand common stock. Concurrent with the closing of the Transaction, on November 8, 2019, Rand entered into
an investment advisory and management agreement (the Prior Investment Management Agreement) and an administration agreement (the Prior Administration Agreement) with RCM. In connection with retaining RCM as our investment
adviser and administrator, Rands management and staff became employees of RCM. In December 2020, Rands shareholders approved
a new investment advisory and management agreement (the Investment Management Agreement) with RCM at a special meeting of shareholders (the Special Meeting). The approval was required because Callodine Group, LLC
(Callodine) planned to acquire a controlling interest in RCM, which was, at that time, majority owned by East (the Adviser Change in Control). The terms of the Investment Management Agreement are identical to those contained
in the Prior Investment Management Agreement, with RCM continuing to provide investment advisory and management services to Rand following the Adviser Change in Control. Following approval by Rands shareholders at the Special Meeting, Rand, on
December 31, 2020, entered into the Investment Management Agreement and a new administration agreement (the Administration Agreement) with RCM and terminated the Prior Administration Agreement. The terms of the Administration
Agreement are identical to those contained in the Prior Administration Agreement. Pursuant to the terms of the Investment Management
Agreement, Rand pays RCM a base management fee and may pay an incentive fee if specified benchmarks are met. We elected U.S federal tax
treatment as a regulated investment company (RIC) as of January 1, 2020, under subchapter M of the Internal Revenue Code of 1986, as amended, on our timely filed U.S. Federal tax return for the 2020 tax year. To maintain our
qualification as a RIC, we must, among other things, meet certain source of income and asset diversification requirements. As of September 30, 2022, we believe we were in compliance with the RIC requirements. As a RIC, we generally will not be
subject to corporate-level U.S. federal income taxes on any net ordinary income or capital gains that we timely distribute to our shareholders as dividends. In connection with our RIC election, we paid a special dividend of $23.7 million, or approximately $1.62 per share, on the
Corporations common stock, par value $0.10 per shares (the Common Stock), in cash and stock to our shareholders on May 11, 2020, which distributed all of our accumulated earnings and profits since our inception through 2019.
The total amount of cash distributed to all shareholders, as part of the special dividend, was limited to $4.8 million, or 20% of the total special dividend that was paid. The remaining 80% of the special dividend was paid using approximately
8.6 million shares of the Corporations common stock. In addition, to maintain our RIC status, we must distribute annually to
our shareholders at least 90% of our ordinary net income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Accordingly, our Board of Directors has initiated a quarterly cash dividend. The Board of Directors declared the following quarterly cash dividends during the nine months ended September 30, 2022:  Quarter

Dividend/ShareAmount


Record Date

Payment Date1st

$
0.15


March 14, 2022

March 28, 20222nd

$
0.15


June 1, 2022

June 15, 20223rd

$
0.15


September 1, 2022

September 15, 2022  40




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##### Table of Contents

We intend to co-invest, subject to the conditions
included in the exemptive relief order we received from the SEC, with certain of our affiliates. See SEC Exemptive Order below. We believe these types of co-investments are likely to afford us
additional investment opportunities and provide an ability to achieve greater diversification in our investment portfolio. SEC Exemptive Order On October 7, 2020, the Corporation, RCM and certain of their affiliates received exemptive relief from the SEC to permit the
Corporation to co-invest in portfolio companies with certain other funds, including other BDCs and registered investment companies managed by RCM and certain of its affiliates, in a manner consistent with the
Corporations investment objective, positions, policies, strategies and restrictions as well as regulatory requirements, subject to compliance with certain conditions (the Order). Pursuant to the Order, the Corporation is generally
permitted to co-invest with affiliated funds if a required majority (as defined in Section 57(o) of the 1940 Act) of the Corporations independent directors makes certain conclusions in
connection with a co-investment transaction, including that (1) the terms of the transaction, including the consideration to be paid, are reasonable and fair to the Corporation and its shareholders and do
not involve overreaching in respect of the Corporation or its shareholders on the part of any person concerned; and (2) the transaction is consistent with the interests of the Corporations shareholders and is consistent with the
Corporations investment objective and strategies. On March 29, 2021, the SEC approved a new exemptive relief order (the
New Order) reflecting the new organizational structure of RCM and its affiliates after the Adviser Change of Control. This New Order supersedes the Order and permits, subject to compliance with specified conditions, the Corporation to co-invest with funds managed by RCM and its affiliates under RCMs current ownership structure after the completion of the Adviser Change in Control. COVID-19 Update Since the outbreak of the COVID-19 pandemic, our investment adviser, RCM, has continued to engage in
active discussions with the management teams of the companies within our portfolio regarding actions taken by those portfolio companies with respect to the safety and welfare of their employees. RCM has informed us about the impact of COVID-19 on the businesses of our portfolio companies, and the potential impact of disruptions in the supply chain, and the actions these portfolio companies have taken, and are taking, to adapt to changes in
demand, both increased and decreased, depending upon the portfolio company. While we do not know what the ultimate long-term impact of the COVID -19 pandemic will be on our portfolio companies, RCM is actively
monitoring our portfolio companies, their liquidity and operational status. Critical Accounting Policies We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles (GAAP), which
require the use of estimates and assumptions that affect the reported amounts of assets and liabilities. A summary of our critical accounting policies can be found in our Annual Report on Form 10-K for the
year ended December 31, 2021 under Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations.  41




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##### Table of Contents

Financial Condition Overview:  September 30, 2022


December 31, 2021


Decrease


% DecreaseTotal assets

$
61,707,610


$
65,644,854


($
3,937,244
)


(6.0
%)Total liabilities


3,325,677



4,899,438



(1,573,761
)


(32.1
%)Net assets

$
58,381,933


$
60,745,416


($
2,363,483
)


(3.9
%) Net asset value per share (NAV) was $22.62 at September 30, 2022 and $23.54 at December 31,
2021. Cash approximated 1.8% of net assets at September 30, 2022, as compared to 1.4% of net assets at
December 31, 2021. During the second quarter of 2022, we entered into a new $25 million senior secured revolving credit
facility (the Credit Facility), with the amount that we can borrow thereunder, at any given time, determined based upon a borrowing base formula. The Credit Facility has a 5-year term with a
maturity date of June 27, 2027. Our borrowings under the Credit Facility bear interest at a variable rate determined as a rate per annum equal to 3.50 percentage points above the greater of (i) the applicable daily simple secured overnight
financing rate (SOFR) and (ii) 0.25%. There was no outstanding balance drawn on the Credit Facility at September 30, 2022. See Note 6. Senior Secured Revolving Credit Facility for additional information regarding the terms of our
Credit Facility. Composition of Our Investment Portfolio Our financial condition is dependent on the success of our portfolio holdings. The following summarizes our investment portfolio at the dates
indicated.  September 30, 2022


December 31, 2021


Increase(Decrease)


% Increase(Decrease)Investments, at cost

$
53,118,768


$
52,370,668


$
748,100



1.4
%Unrealized appreciation, net


6,604,872



11,697,794



(5,092,922
)


(43.5
%)Investments, at fair value

$
59,723,640


$
64,068,462


($
4,344,822
)


(6.8
%) Our total investments at fair value, as determined by RCM and approved by our Board of Directors, approximated
102% of net assets at September 30, 2022 as compared to approximately 106% of net assets at December 31, 2021. Our investment
objective is to generate current income and when possible, capital appreciation, by targeting investment opportunities with favorable risk-adjusted returns. As a result, we are focused on investing in higher yielding debt instruments and related
equity investments in privately held, lower middle market companies with a committed and experienced management team in a broad variety of industries. We may also invest in publicly traded shares of other business development companies that provide
income through dividends and have more liquidity than our private company equity investments.  42




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##### Table of Contents

The change in investments during the nine months ended September 30, 2022, at cost, is
comprised of the following:  CostIncrease (Decrease)New investments:Seyberts Billiards Corporation (Seyberts)

$
2,200,000ITA Acquisition, LLC (ITA)


623,810DSD Operating, LLC (DSD)


318,276Total of new investments


3,142,086Other changes to investments:Filterworks Acquisition USA, LLC (Filterworks) interest conversion


232,936Seyberts OID amortization and interest conversion


79,234Caitec, Inc. (Caitec) interest conversion


54,704ITA interest conversion


52,475DSD interest conversion


46,357Mattison Avenue Holdings, LLC (Mattison) interest conversion


27,734HDI Acquisition LLC (Hilton Displays) interest conversion


19,835SciAps, Inc. (Sciaps) OID amortization


11,250GoNoodle, Inc. (GoNoodle) interest conversion


10,622Total of other changes to investments


535,147Investments repaid, sold, liquidated or converted:New Monarch Machine Tool, Inc. (New Monarch) liquidated


(22,841
)ACV Auctions, Inc. (ACV) sale


(34,440
)Ares Capital Corporation (Ares) sale


(76,320
)GoNoodle debt repayment


(90,175
)FS KKR Capital Corp. (FS KKR) sale


(94,380
)Microcision LLC (Microcision) sale


(110,000
)Owl Rock Capital Corporation (Owl Rock) sale


(347,067
)Golub Capital BDC, Inc. (Golub) sale


(403,910
)SocialFlow, Inc. (Social Flow) sale


(1,750,000
)Total of investments repaid, sold, liquidated or converted


(2,929,133
)Net change in investments, at cost

$
748,100 Results of Operations Comparison of the three months ended September 30, 2022 to the three months ended September 30, 2021 Investment Income  Three monthsendedSeptember 30,2022


Three monthsendedSeptember 30,2021


Increase(Decrease)


%Increase(Decrease)Interest from portfolio companies

$
1,100,005


$
757,781


$
342,224



45.2
%Interest from other investments


48



473



(425
)


(89.9
%)Dividend and other investment income


421,659



229,909



191,750



83.4
%Fee income


32,553



24,180



8,373



34.6
%Total investment income

$
1,554,265


$
1,012,343


$
541,922



53.5
% The total investment income during the three months ended September 30, 2022 was received from 21
portfolio companies. For the three months ended September 30, 2021 total investment income was generated from 23 portfolio companies. Interest
from portfolio companies  Interest from portfolio companies was approximately 45% higher during the three months ended September 30, 2022 versus the same period in 2021 due to the fact that we originated more interest yielding
investments during the last year. The new debt instruments were originated from Applied Image, Inc. (Applied Image), DSD Operating, LLC (DSD), Nailbiter Inc. (Nailbiter) and Seyberts Billiards Corporation (Seyberts). Interest from other investments - The decrease in interest from other investments is due to lower cash balances during the three months ended
September 30, 2022 versus the same period in 2021.  43




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##### Table of Contents

Dividend and other investment income - Dividend income is comprised of cash distributions from
limited liability companies (LLCs) and corporations in which we have invested, including our investment in the shares of publicly traded business development companies (BDC). Our investment agreements with certain LLCs require those LLCs to
distribute funds to us for payment of income taxes on our allocable share of the LLCs profits. These portfolio companies may also elect to make additional discretionary distributions. Dividend income will fluctuate based upon the profitability
of these LLCs and corporations and the timing of the distributions. The dividend distributions for the respective periods were:  Three months endedSeptember 30, 2022


Three months endedSeptember 30, 2021Carolina Skiff LLC (Carolina Skiff)

$
178,570


$
DSD Operating, LLC (DSD)


114,264



Carlyle Secured Lending Inc. (Carlyle)(formerly TCG BDC, Inc.)


34,400



32,680FS KKR


32,160



35,100PennantPark Investment Corporation (PennantPark)


29,250



23,400Tilson Technology Management Inc. (Tilson)


13,125



13,125Ares Capital Corporation (Ares)


10,290



11,070Barings BDC, Inc. (Barings)


9,600



8,400Knoa Software, Inc. (Knoa)






87,771Owl Rock Capital Corporation (Owl Rock)






9,300Golub Capital BDC, Inc. (Golub)






9,063Total dividend and other investment income

$
421,659


$
229,909 Fee income - Fee income generally consists of the revenue associated with the amortization of financing fees charged to
the portfolio companies upon successful closing of financings, income from portfolio company board attendance fees and other miscellaneous fees. The financing fees are amortized ratably over the life of the instrument associated with the fees. The
unamortized fees are carried on the balance sheet under the line item Deferred revenue. The income associated with the
amortization of financing fees was $32,553 and $24,180 for the three months ended September 30, 2022 and 2021, respectively. Expenses  Three monthsendedSeptember 30, 2022


Three monthsendedSeptember 30, 2021


Decrease


% DecreaseTotal expenses

$
498,959


$
961,899


($
462,940
)


(48.1
%) The decrease in total expenses during the three months ended September 30, 2022 versus the same period in
2021 was primarily due to a $432,000 decrease in the capital gains incentive fee accrual and a $78,148 decrease in interest expense. The decrease in the capital gains incentive fee accrual during the three months ended September 30, 2022 was
primarily due to the decrease in unrealized appreciation on our publicly traded securities. The Investment Management Agreement with RCM does not include unrealized gains in calculating the amount of the capital gains incentive fee payable under
that agreement. However, as required by GAAP, we must accrue capital gains incentive fees including unrealized gains on our Consolidated Statement of Financial Position. Our capital gains incentive fee accrual, on our Consolidated Statement of
Financial Position, reflects the capital gains incentive fees that would be payable to RCM if our entire investment portfolio was liquidated at its fair value as of the balance sheet date even though RCM is not entitled to be paid a capital gains
incentive fee with respect to unrealized gains unless and until such gains are actually realized.  44




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##### Table of Contents

On June 27, 2022, we entered into a credit agreement with M&T Bank, as lender (the
Lender), which provides us with a senior secured revolving credit facility in a principal amount not to exceed $25 million. We incurred $26,042 in interest expense related to the line of credit during the three months ended
September 30, 2022. There was no corresponding expense during the three months ended September 30, 2022. During the fourth
quarter of 2021, we repaid, in full, our $11,000,000 of outstanding SBA debentures, using cash on hand. Therefore, we did not incur any interest expense related to the SBA debentures during the three months ended September 30, 2022, while we
incurred $104,190 in interest expense during the same period in 2021. Net Investment Income The net investment income for the three months ended September 30, 2022 and 2021 was $1,010,166 and $53,152, respectively. Realized Gain on Investments  Three months endedSeptember 30, 2022


Three months endedSeptember 30, 2021


ChangeRealized gain on investments before income taxes

$
1,919


$
2,601,361


($
2,599,442
) During the three months ended September 30, 2022, we recognized a gain of $1,919 on GiveGab, Inc.
(Givegab), an investment we exited in 2021. During the three months ended September 30, 2021, we sold our investment in Centivo
Corporation and recognized a realized gain of $1,614,433. In addition, during the three months ended September 30, 2021, we recognized a net realized gain of $957,573 on the sale of 50,000 shares of Class A common stock of ACV Auctions,
Inc. (ACV). As of September 30, 2021, we owned 540,580 shares of Class A common stock of ACV. In addition, during the three months ended September 30, 2021, we received additional proceeds from the sale of our investment in Givegab
and recognized a gain of $29,355. Change in Unrealized Appreciation (Depreciation) of Investments  Three monthsendedSeptember 30, 2022


Three monthsendedSeptember 30, 2021


ChangeChange in unrealized appreciation (depreciation) of investments before income taxes

$
92,817


($
333,313
)

$
426,130 The change in net unrealized appreciation (depreciation), before income taxes, for the three months ended
September 30, 2022, was comprised of the following:  Three months endedSeptember 30, 2022PennantPark Investment Corporation (Pennantpark)

($
122,200
)FS KKR Capital Corp. (FS KKR)


(97,920
)Carlyle Secured Lending Inc. (Carlyle)(formerly TCG BDC, Inc.)


(86,287
)Barings BDC, Inc. (Barings)


(38,667
)Ares Capital Corporation (Ares)


(18,550
)ACV Auctions, Inc. (ACV)


456,441Total change in net unrealized appreciation (depreciation) of investments before income
taxes

$
92,817  45




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##### Table of Contents

ACV,Ares, Barings, Carlyle, FS KKR, and Pennantpark are all publicly traded stocks,
and as such, are marked to market at the end of each quarter, using the three-day average closing price prior to the end of the quarter. The change in unrealized appreciation (depreciation), before income taxes, for the three months ended September 30, 2021, was comprised
of the following:  Three months endedSeptember 30, 2021ACV Auctions, Inc. (ACV)

($
4,318,151
)Centivo sale


(584,832
)Knoa Software, Inc. (Knoa)


(544,860
)PennantPark Investment Corporation (Pennantpark)


(22,750
)New Monarch Machine Tool, Inc. (New Monarch)


(22,841
)Owl Rock Capital Corporation (Owl Rock)


(7,300
)Golub Capital BDC, Inc. (Golub)


8,854Barings BDC, Inc. (Barings)


13,600Carlyle Secured Lending Inc. (Carlyle)(formerly TCG BDC, Inc.)


15,767Ares Capital Corporation (Ares)


19,800FS KKR Capital Corp. (FS KKR)


45,360Mercantile Adjustment Bureau, LLC (Mercantile)


849,040Tilson Technology Management, Inc. (Tilson)


4,215,000Total change in net unrealized appreciation (depreciation) of investments before income
taxes

($
333,313
) Ares, Barings, Carlyle, FS KKR, Golub, Owl Rock and Pennantpark are all publicly traded stocks, and as such,
are marked to market at the end of each quarter. ACV completed an Initial Public Offering (IPO) at a price of $25.00 per share on
March 23, 2021. At September 30, 2021, we held 540,580 shares of unrestricted Class A common stock. Our holdings in the Class A common stock of ACV at September 30, 2021 was valued using a price of $18.12 per share, based
upon the three-day average closing price. In accordance with the Corporations valuation
policy, we increased the value of our investment in Tilson based on a significant equity financing by new non-strategic outside investors that had a higher valuation for this portfolio company. During the three months ended September 30, 2021, the valuations of our investments in Knoa and New Monarch were decreased after a review
of their operations and financial condition. In addition, our investment in Mercantile was increased during the same three-month period after a review of their financial operations. All of these valuation adjustments resulted from a review by RCM management, which was subsequently approved by our Board of Directors, using
the guidance set forth by ASC 820 and our established valuation policy. Net Increase in Net Assets from Operations The net increase in net assets from operations on our consolidated statements of operations for the three months ended September 30, 2022
and 2021 was $1,104,902 and $2,321,200, respectively.  46




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##### Table of Contents

Comparison of the nine months ended September 30, 2022 to the nine months ended
September 30, 2021 Investment Income  Nine monthsendedSeptember 30,2022


Nine monthsendedSeptember 30,2021


Increase(Decrease)


%Increase(Decrease)Interest from portfolio companies

$
3,016,976


$
2,110,749


$
906,227



42.9
%Interest from other investments


49



13,343



(13,294
)


(99.6
%)Dividend and other investment income


911,169



613,625



297,544



48.5
%Fee income


104,001



102,055



1,946



1.9
%Total investment income

$
4,032,195


$
2,839,772


$
1,192,423



42.0
% The total investment income during the nine months ended September 30, 2022 was received from 23
portfolio companies as compared to 26 companies during the prior year period. Interest from portfolio companies  Interest from
portfolio companies was approximately 43% higher during the nine months ended September 30, 2022 versus the same period in 2021 due to the fact that we originated more interest yielding investments during the last year. The new debt instruments
were originated from Applied Image, Inc. (Applied Image), BMP Swanson Holdco, LLC (Swanson), Caitec, Inc. (Caitec), DSD Operating, LLC (DSD), ITA Acquisition, LLC (ITA), Nailbiter Inc. (Nailbiter) and Seyberts Billiards Corporation
(Seyberts). Interest from other investments - The decrease in interest from other investments is due to lower cash balances during the nine
months ended September 30, 2022 versus the same period in 2021. Dividend and other investment income - Dividend income is comprised of cash
distributions from limited liability companies (LLCs) and corporations in which we have invested, including our investment in the shares of publicly traded business development companies (BDC). Our investment agreements with certain LLCs require
those LLCs to distribute funds to us for payment of income taxes on our allocable share of the LLCs profits. These portfolio companies may also elect to make additional discretionary distributions. Dividend income will fluctuate based upon the
profitability of these LLCs and corporations and the timing of the distributions. The dividend distributions for the respective periods were:  Nine months endedSeptember 30, 2022


Nine months endedSeptember 30, 2021Carolina Skiff LLC (Carolina Skiff)

$
398,830


$
81,801DSD Operating, LLC (DSD)


114,264



Carlyle


103,200



95,460FS KKR


95,040



99,900Pennantpark


84,825



70,200Tilson


39,375



39,375Ares


28,560



32,670Barings


28,400



24,000Golub


9,375



27,188Owl Rock


9,300



27,900Knoa






87,771Apollo






27,360Total dividend and other investment income

$
911,169


$
613,625  47




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##### Table of Contents

Fee income - Fee income generally consists of the revenue associated with the amortization of
financing fees charged to the portfolio companies upon successful closing of financings, income from portfolio company board attendance fees and other miscellaneous fees. The financing fees are amortized ratably over the life of the instrument
associated with the fees. The unamortized fees are carried on the balance sheet under the line item Deferred revenue. The
income associated with the amortization of financing fees was $94,001 and $57,959 for the nine months ended September 30, 2022 and 2021, respectively. In addition, during the nine months ended September 30, 2022, we recognized a one-time loan
monitoring fee of $10,000 from our investment in Seyberts. During the nine months ended September 30, 2021, we recognized a one-time fee of $30,000 in conjunction with the repayment of the
Microcision loan instrument. There were no board fees earned during the nine months ended September 30, 2022 and $14,096 in board
fees earned for the nine months ended September 30, 2021. Expenses  Nine months endedSeptember 30, 2022


Nine months endedSeptember 30, 2021


Decrease


% DecreaseTotal expenses

$
748,139


$
5,747,520


($
4,999,381
)


(87.0
%) The decrease in total expenses during the nine months ended September 30, 2022 versus the same period in
2021 was primarily due to a $4,994,760 decrease in the capital gains incentive fees expense and a $286,528 decrease in interest expense. The decrease was partially offset by a $190,928 increase in professional fees. The decrease in capital gains incentive fees expense is due to an adjustment of the capital gains incentive fees accrual during the nine
months ended September 30, 2022 based on valuation changes within our portfolio companies. The Investment Management Agreement with RCM does not include unrealized gains in calculating the amount of the capital gains incentive fee payable under
that agreement. However, as required by GAAP, we must accrue capital gains incentive fees including unrealized gains on our Consolidated Statement of Financial Position. Our capital gains incentive fee accrual, on our Consolidated Statement of
Financial Position, reflects the capital gains incentive fees that would be payable to RCM if our entire investment portfolio was liquidated at its fair value as of the balance sheet date, even though RCM is not entitled to be paid a capital gains
incentive fee with respect to unrealized gains unless and until such gains are actually realized. On June 27, 2022, we entered into
a credit agreement with the Lender, which provides us with a senior secured revolving credit facility in a principal amount not to exceed $25 million. We incurred $26,042 in interest expense related to the line of credit during the nine months
ended September 30, 2022. There was no corresponding expense during the nine months ended September 30, 2021. During the fourth
quarter of 2021, we repaid, in full, our $11,000,000 of outstanding SBA debentures. Therefore, we did not incur any interest expense related to the SBA debentures during the nine months ended September 30, 2022, while we incurred $312,570 in
interest expense during the same period in 2021. These decreases are offset by increases in our base management fees and professional
fees. The base management fee, payable to RCM, increased 13%, or $77,532, during the nine months ended September 30, 2022 versus the same period in 2021 because, as we deploy more cash into investments, the base management fee payable to RCM
increases accordingly. Professional fees increased 50%, or $190,928, during the nine months ended September 30, 2022 versus the same period in 2021 because we incurred increased fees associated with the complex regulatory environment in which
we operate.  48




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##### Table of Contents

Net Investment Income (Loss) The net investment income (loss) for the nine months ended September 30, 2022 and 2021 was $3,200,306 and ($2,924,763), respectively. Realized Gain on Investments  Nine months endedSeptember 30, 2022


Nine months endedSeptember 30, 2021


ChangeRealized gain on investments before income taxes

$
690,591


$
4,729,466


($
4,038,875
) During the nine months ended September 30, 2022, we sold our investment in Social Flow and recognized a
realized loss of ($1,481,498). Additionally, during the nine months ended September 30, 2022, we sold our investment in Microcision and recognized a realized gain of $190,000 and recognized a realized loss of ($22,841) on our investment in New
Monarch Machine Tool, Inc. (New Monarch), when the company commenced bankruptcy proceedings. We recognized a realized gain on the receipt of $38,881 from ClearView Social, Inc. (Clearview Social), an investment we exited during 2021. We also
recognized a realized gain of $1,919 from additional proceeds received from GiveGab, Inc. (Givegab), an investment we exited during 2021. We recognized a net realized gain of $1,701,446 on the sale of 123,000 shares of Class A common stock of ACV Auctions, Inc. (ACV), during
the nine months ended September 30, 2022. At September 30, 2022, we owned 319,934 shares of Class A common stock of ACV. In addition, during the nine months ended September 30, 2022, we recognized a $73,101 realized gain on the sale of 31,250 shares of Golub
Capital BDC, Inc (Golub), a $97,932 realized gain on the sale of 30,000 shares of Owl Rock Capital Corporation (Owl Rock), a $50,238 realized gain on the sale of 6,000 shares of Ares Capital Corporation (Ares), and a $41,413 realized gain on the
sale of 6,000 shares of FS KKR Capital Corp. (FS KKR). During the nine months ended September 30, 2021, we sold our investment in
Givegab and recognized a gain of $1,846,705, sold our investment in Centivo Corporation and recognized a gain of $1,614,433, and sold our investment in ClearView Social, Inc. and recognized a gain of $135,430. The realized gain from the sale of our
investment in Clearview Social included $35,766 that was held in escrow and was received during the nine months ended September 30, 2022. In addition, during the nine months ended September 30, 2021 we recognized a net realized gain of $957,573 on the sale of 50,000 shares
of ACV. As of September 30, 2021, we owned 540,580 shares of ACV. During the nine months ended September 30, 2021, we also sold our shares in Apollo Investment Corporation and recognized a gain of approximately $175,000. Change in Unrealized (Depreciation) Appreciation of Investments  Nine months endedSeptember 30, 2022


Nine months endedSeptember 30, 2021


ChangeChange in unrealized (depreciation) appreciation of investments before income taxes

($
5,092,921
)

$
13,049,041


($
18,141,962
)  49




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##### Table of Contents

The change in net unrealized (depreciation) appreciation, before income taxes, for the nine
months ended September 30, 2022, was comprised of the following:  Nine months endedSeptember 30, 2022SocialFlow, Inc. (Social Flow)

$
1,628,000Microcision LLC (Microcision)


25,000New Monarch Machine Tool, Inc. (New Monarch)


22,841Golub Capital BDC, Inc. (Golub)


(77,653
)Owl Rock Capital Corporation (Owl Rock)


(80,533
)Barings BDC, Inc. (Barings)


(101,200
)Ares Capital Corporation (Ares)


(132,230
)Carlyle Secured Lending Inc. (Carlyle) (formerly TCG BDC, Inc.)


(162,540
)FS KKR Capital Corp. (FS KKR)


(204,140
)PennantPark Investment Corporation (Pennantpark)


(260,650
)ACV Auctions, Inc. (ACV)


(5,749,816
)Total change in net unrealized (depreciation) appreciation of investments before income
taxes

($
5,092,921
) ACV,Ares, Barings, Carlyle, FS KKR and Pennantpark are all publicly traded stocks, and as such, are
marked to market at the end of each quarter, using the three-day average closing price prior to the end of the quarter. We sold our investments in Social Flow, Golub and Owl Rock during the nine months ended September 30, 2022. The change in net unrealized appreciation, before income taxes, for the nine months ended September 30, 2021, was comprised of the
following:  Nine months endedSeptember 30, 2021Open Exchange

$
4,918,061Tilson


4,215,000ACV


3,277,495Mercantile


849,040Pennantpark


296,501FS KKR


276,465Carlyle


225,007Ares


97,560Barings


73,867Golub


58,022Owl Rock


44,900Apollo


(7,616
)New Monarch


(22,841
)Post Process


(122,728
)Knoa


(544,860
)Centivo sale


(584,832
)Total change in net unrealized appreciation of investments before income taxes

$
13,049,041 Ares, Barings, Carlyle, FS KKR, Golub, Owl Rock and Pennantpark are all publicly traded stocks, and as such,
are marked to market at the end of each quarter. We sold our Apollo shares during the nine months ended September 30, 2021. ACV
completed an Initial Public Offering (IPO) at a price of $25.00 per share on March 23, 2021. At September 30, 2021, we held 540,580 shares of unrestricted Class A common stock. Our holdings in the Class A common stock of ACV at
September 30, 2021 was valued using a price of $18.12 per share, based upon the three-day average closing price.  50




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##### Table of Contents

In accordance with the Corporations valuation policy, we increased the value of our
investments in Open Exchange and Tilson based on significant equity financings for each of these portfolio companies. During the nine
months ended September 30, 2021, the valuation of our investments in Knoa, New Monarch and Post Process was decreased after a review of their operations and financial condition. In addition, our investment in Mercantile was increased during the
nine months ended September 30, 2021 after a review of their financial operations. All of these valuation adjustments resulted from
a review by RCM management, which was subsequently approved by our Board of Directors, using the guidance set forth by ASC 820 and our established valuation policy. Net (Decrease) Increase in Net Assets from Operations The net (decrease) increase in net assets from operations on our consolidated statements of operations for the nine months ended
September 30, 2022 and 2021 was ($1,202,024) and $14,852,793, respectively. Liquidity and Capital Resources Liquidity is a measure of our ability to meet anticipated cash requirements, fund new and follow-on
portfolio investments, pay distributions to our shareholders and respond to other general business demands. As of September 30, 2022, our total liquidity consisted of approximately $1,035,000 in cash. In addition, we hold publicly traded equity
securities of several BDCs and ACV Auctions, which are available for future liquidity requirements. During the second quarter of 2022, we
entered into a new $25 million Credit Facility. The amount we can borrow, at any given time, under the Credit Facility is tied to a borrowing base, which is measured as (i) 75% of the aggregate sum of the fair market values of the publicly
traded equity securities we hold (other than shares of ACV Auctions) plus (ii) the least of (a) 75% of the fair market value of the shares of ACV Auctions we hold, (b) $6.25 million and (c) 25% of the aggregate borrowing base availability
for the Credit Facility at any date of determination plus (iii) 50% of the aggregate sum of the fair market values of eligible private loans we hold that meet specified criteria plus (iv) the lesser of (a) 50% of the aggregate sum of the fair
market values of unsecured private loans we hold that meet specified criteria and (b) $1.25 million minus (v) such reserves as the Lender may establish from time to time in its sole discretion. The Credit Facility has a maturity date of
June 27, 2027. As of September 30, 2022, under the borrowing base formula described above, we could have borrowed approximately $21.0 million under the Credit Facility. Our borrowings under the Credit Facility bear interest at a variable rate determined as a rate per annum equal to 3.50 percentage points above
the greater of (i) the applicable daily simple secured overnight financing rate (SOFR) and (ii) 0.25%. The Credit Agreement contains
representations and warranties and affirmative, negative and financial covenants usual and customary for agreements of this type, including among others covenants that prohibit, subject to certain specified exceptions, our ability to merge or
consolidate with other companies, sell any material part of our assets, incur other indebtedness, incur liens on our assets, make investments or loans to third parties other than permitted investments and permitted loans, and declare any
distribution or dividend other than certain permitted distributions. The Credit Agreement includes the following financial covenants: (i) a tangible net worth covenant that requires us to maintain a Tangible Net Worth (defined in the Credit
Agreement as our aggregate assets, excluding intangible assets, less all of our liabilities) of not less than $50.0 million, which is measured quarterly at the end of each fiscal quarter, (ii) an asset coverage ratio covenant that  51




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requires us to maintain an Asset Coverage Ratio (defined in the Credit Agreement as the ratio of the fair market value of all of our assets to the sum of all of our obligations for borrowed money
plus all capital lease obligations) of not less than 3:00:1:00, which is measured quarterly at the end of each fiscal quarter and (iii) an interest coverage ratio covenant that requires us to maintain an Interest Coverage Ratio (defined in the
Credit Agreement as the ratio of Cash Flow (as defined in the Credit Agreement) to Interest Expense (as defined in the Credit Agreement)) of not less than 2:50:1:00, which is measured quarterly on a trailing twelve-months basis. There was no outstanding balance drawn on the Credit Facility at September 30, 2022. See Note 6. Senior Secured Revolving Credit
Facility on our Consolidated Statement of Financial Position for additional information regarding the terms of our Credit Facility. See Note 10. Subsequent Event. For the nine months ended September 30, 2022, we experienced a net increase in cash of approximately $202,000, which is a net effect of
approximately $1,488,000 of cash provided in our operating activities and approximately $1,286,000 used in our financing activities. We
anticipate that we will continue to fund our investment activities through cash, cash flows generated through our ongoing operating activities, the sale of our publicly traded liquid investments, and through borrowings under the $25 million
Credit Facility. We anticipate that we will continue to exit investments. However, the timing of liquidation events with respect to our privately held investments is difficult to project. Our ongoing liquidity is tied to the performance of our portfolio companies and, as such, it may be affected going forward based on the impact
of the COVID-19 pandemic and its lasting impact on the capital markets, our portfolio companies, and the U.S. economy in general.  Item 3.
Quantitative and Qualitative Disclosures about Market Risk Our investment activities contain elements of risk. Our investment portfolio primarily consists of equity and debt securities in private
companies and is subject to valuation risk. Because there is typically no public market for the equity and debt securities in which we invest, the valuation of the equity interests in the portfolio is stated at fair value as determined
in good faith by RCM and approved by our Board of Directors. This is in accordance with our investment valuation policy (see the discussion of valuation policy contained in Note 3. Investments in the Consolidated Financial Statements
contained in Item 1 of this report, which is hereby incorporated herein by reference.) In the absence of readily ascertainable market values, the estimated value of investments in our portfolio may differ significantly from the values that would be
placed on such investments in our portfolio if a ready market for the investments existed. Any changes in valuation are recorded on the consolidated statement of operations as Net change in unrealized depreciation on investments. At times, our portfolio may include, and does currently include, marketable securities traded in the over-the-counter market or on other stock markets. In addition, there may be a portion of the portfolio for which no regular trading market exists. In order to realize the full value of a security, the market
must trade in an orderly fashion, or a willing purchaser must be available when a sale is to be made. Should an economic or other event occur that would not allow markets to trade in an orderly fashion, we may not be able to realize the fair value
of our marketable investments or other investments in a timely manner. At September 30, 2022, we did not have any off-balance sheet arrangements or hedging or similar derivative financial instrument investments.  52




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Item 4.
Controls and Procedures Disclosure Controls and Procedures.The Corporation maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SECs rules and forms, and that this
information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Chief Executive Officer and the Chief
Financial Officer carried out an evaluation of the effectiveness of the design and operation of the Corporations disclosure controls and procedures as of September 30, 2022. Based on the evaluation of these disclosure controls and
procedures, the Chief Executive Officer and Chief Financial Officer concluded that the Corporations controls and procedures were effective as of September 30, 2022. Changes in Internal Control over Financial Reporting.There have been no changes in our internal control over financial reporting
during the Corporations most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Corporations internal control over financial reporting.  53




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PART II. OTHER INFORMATION  Item 1.
Legal Proceedings None.  Item 1A.
Risk Factors See the information provided under the heading Risk Factors in our annual report on Form
10-K for the year ended December 31, 2021.  Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds Issuer Purchases of Equity Securities  Period

Total number ofshares purchased (1)


Average price paidper share (2)


Total number of sharespurchased as part ofpubliclyannounced plan (3)


Maximum dollar amountof shares that may yet bepurchased under the sharerepurchase program
(3)7/1/2022  7/31/2022













$
1,500,0008/1/2022  8/31/2022













$
1,500,0009/1/2022  9/30/2022













$
1,500,000Total










  (1)
There were no shares repurchased during the quarter. (2)
The average price paid per share is calculated on a settlement basis and includes commission. (3)
On April 21, 2022, the Board of Directors approved a new share repurchase plan, which authorizes the
Corporation to repurchase shares of the Corporations outstanding common stock with an aggregate cost of up to $1,500,000 at prices per share of common stock of no greater than the then current net asset value. This share repurchase
authorization lasts for a period of 12 months from the authorization date, until April 21, 2023.  Item 3.
Defaults upon Senior Securities  None.  Item 4.
Mine Safety Disclosures Not Applicable.  Item 5.
Other Information None.  54




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Item 6.
Exhibits  (a)
Exhibits The following exhibits are filed with this report or are incorporated herein by reference to a prior filing, in accordance with Rule 12b-32
under the Securities Exchange Act of 1934.  (3.1)(i)

Certificate of Incorporation of the Corporation, incorporated by reference to Exhibit (a)(1) of Form N-2 filed with the SEC on April 22, 1997. (File No. 333-25617).(3.1)(ii)

Certificate of Amendment to the Certificate of Incorporation, as amended, incorporated by reference to Exhibit 3.1 to the Corporations Current Report
on Form 8-K filed with the SEC on November 12, 2019.(3.1)(iii)

Certificate of Amendment to the Certificate of Incorporation, as amended, incorporated by reference to Exhibit 3.1 to the Corporations Current Report
on Form 8-K filed with the SEC on May 21, 2020.(3.1)(iv)

By-laws of the Corporation, incorporated by reference to Exhibit 3(ii) to the Corporations Quarterly Report on Form 10-Q for the period ended
 September 30, 2016 filed with the SEC on November 2, 2016. (File No. 814-00235).(4.1)

Specimen certificate of common stock certificate, incorporated by reference to Exhibit (b) of Form N-2 filed with the SEC on April 22, 1997. (File No. 333-25617).(31.1)

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

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

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  Rand Capital Corporation  filed herewith.  55




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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 CORPORATIONDated: November 7, 2022/s/ Daniel P. Penberthy
Daniel P. Penberthy, Chief Executive Officer and President
(Chief Executive Officer)Dated: November 7, 2022/s/ Margaret W. Brechtel
Margaret W. Brechtel, Executive Vice President, Chief
Financial Officer and Treasurer
(Chief Financial Officer)  56