- Net asset value per share of $5.14 was up 18% compared with the first quarter last year
- Invested $2.7 million in two new companies and five portfolio companies during the quarter
- Largest investment, Gemcor, a leader in automated aerospace fastening technology, expects strong growth in 2015
BUFFALO, N.Y., April 28, 2015 (GLOBE NEWSWIRE) -- Rand Capital Corporation (Nasdaq:RAND) ("Rand"), a business development company that makes venture capital investments in companies with emerging product, service or technology concepts, announced its results for the quarter ended March 31, 2015.
First Quarter 2015 Financial Highlights
- Achieved $5.14 net asset value (NAV) per share at March 31, 2015, up $0.79 per share, or 18%, over March 31, 2014
- Invested $1.6 million in two new companies: An IT professional services and network construction company that focuses on cellular network expansion and electric utility smart grids; and a digital provider of classroom wellness tools
- Provided $1.1 million in capital as follow-on investments in five portfolio companies
- Investment portfolio fair value increased $2.4 million to $32.7 million
- $7.9 million in cash available at quarter-end; provides further portfolio growth opportunity
Allen F. ("Pete") Grum, President and Chief Executive Officer of Rand Capital, commented, "We are off to a solid start in 2015. Our portfolio companies are performing well and we have the capital to support their growth. During the quarter, we provided $1.1 million to five of our portfolio companies to support their growth efforts. Additionally, we added two exciting new companies to the portfolio that are changing the game in the markets in which they compete."
Portfolio and Investment Activity
As of March 31, 2015, Rand's portfolio consisted of 31 businesses valued at $32.7 million. It was comprised of approximately 46% in manufacturing, 21% in software, 10% in healthcare and 23% in a diverse group of other industry categories. The portfolio included approximately 23% in debt investments and 77% in equity investments.
Follow-on investments were provided to GiveGab, Inc., KnowledgeVision Systems, Inc., OnCore Golf Technology, Inc., Rheonix, Inc. and SciAps, Inc.
Portfolio highlights include:
- Gemcor II, LLC (http://www.gemcor.com/wp/): Gemcor is a leading designer and manufacturer of automated drilling and fastening systems for aircraft manufacturers, such as Bombardier, Boeing, Embraer, Airbus, and AVIC. Over the last year, Gemcor's patented all-electric riveting technology and unique robot-assisted assembly systems had orders from China, Japan, Brazil, Russia and France, as well as the U.S.
- Empire Genomics, LLC (http://www.empiregenomics.com/): A new Rand investment in 2014, Empire Genomics, a molecular diagnostics company, offers comprehensive assay services for diagnosing and guiding patient therapeutic treatments. During the first quarter of 2015, Empire Genomics acquired ID Labs Inc., expanding its product offerings as well as its international distribution reach. The company experienced record order levels in the first quarter of 2015, up over 130%, driven by the U.S. federal government funding of the Precision Medicine Initiative, the continued need to lower healthcare costs and the focus by pharmaceutical firms to accelerate availability of better cancer drugs.
- Rheonix, Inc. (http://www.rheonix.com/): Rheonix develops fully automated microfluidic-based molecular assay and diagnostic testing, including the EncompassMDx® platform, a highly customizable technology with unmatched versatility and affordability. During the first quarter of 2015, Rheonix received a $1.5 million Small Business Innovation Research (SBIR) Phase II grant from the National Institutes of Health to complete the development of a fully automated self-confirming assay that can simultaneously detect HIV/AIDS antibodies and viral RNA from the AIDS virus in a single specimen. The additional funding will be used to achieve a commercial-ready test for use in the developing world.
Liquidity and Capital Resources
Rand is focused on increasing net asset value through capital appreciation and maintaining sufficient income to drive operational leverage. The current average age of investments in Rand's portfolio is greater than four years.
Cash on hand at March 31, 2015 was $7.9 million. The primary use of cash is for follow-on and new investments to grow the Company's portfolio and net asset value.
Strategy and Outlook
Mr. Grum concluded, "This continues to be an exciting time for Rand. We have many diverse investment opportunities in our pipeline, as well as sufficient capital to put to work. We are focused on accelerating our rate of investment and continuing to grow net asset value to further drive returns for our shareholders."
ABOUT RAND CAPITAL
Rand Capital (Nasdaq:RAND) provides investors the ability to participate in venture capital opportunities through an investment in the Company's stock. Rand is a Business Development Company (BDC), and its wholly-owned subsidiary is licensed by the U.S. Small Business Administration (SBA) as a Small Business Investment Company (SBIC). Rand focuses its investments in early or expansion stage companies with strong leadership that are bringing to market new or unique products, technologies or services that have a high potential for growth. Additional information can be found at the Company's website where it regularly posts information: www.randcapital.com.
Safe Harbor Statement
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements concerning future revenue and earnings, involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Corporation to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the valuation of the Corporation's portfolio, the timing and opportunity for investments or divestitures as well as conditions affecting the portfolio companies' markets, competitor responses, and market acceptance of their products and services and other factors disclosed in the Corporation's periodic reports filed with the Securities and Exchange Commission. Consequently, such forward looking statements should be regarded as the Corporation's current plans, estimates and beliefs. The Corporation assumes no obligation to update the forward-looking information contained in this release.
FINANCIAL TABLES FOLLOW.
| Rand Capital Corporation and Subsidiary | ||
| Consolidated Statements of Operations | ||
| For the Quarter Ended March 31, | ||
| 2015 | 2014 | |
| Investment income: | ||
| Interest from portfolio companies: | ||
| Control investments | $ 22,145 | $ 32,299 |
| Affiliate investments | 115,129 | 122,856 |
| Non-Control/Non-Affiliate investments | 48,800 | 38,024 |
| Total interest from portfolio companies | 186,074 | 193,179 |
| Interest from other investments: | ||
| Non-Control/Non-Affiliate investments | 6,821 | 5,166 |
| Total interest from other investments | 6,821 | 5,166 |
| Dividend and other investment income: | ||
| Control investments | 412,151 | 283,086 |
| Affiliate investments | 29,368 | 30,833 |
| Total dividend and other investment income | 441,519 | 313,919 |
| Other income: | ||
| Control investments | 2,000 | 3,500 |
| Affiliate investments | 1,417 | 933 |
| Non-Control/Non-Affiliate investments | 3,916 | 1,250 |
| Total other income | 7,333 | 5,683 |
| Total investment income | 641,747 | 517,947 |
| Operating expenses: | ||
| Salaries | 149,555 | 147,669 |
| Employee benefits | 30,407 | 38,067 |
| Directors' fees | 21,750 | 18,750 |
| Professional fees | 73,069 | 56,491 |
| Stockholders and office operating | 59,397 | 30,289 |
| Insurance | 11,254 | 12,409 |
| Corporate development | 16,981 | 11,125 |
| Other operating | 3,650 | 1,277 |
| 366,063 | 316,077 | |
| Interest on SBA obligations | 74,322 | 58,280 |
| Bad debt expense (recovery) | -- | 6,311 |
| Total expenses | 440,385 | 380,668 |
| Investment gain before income taxes | 201,362 | 137,279 |
| Income tax expense | 72,067 | 49,131 |
| Net investment income | 129,295 | 88,148 |
| Net realized gain (loss) on investments: | ||
| Affiliate investments | -- | (778,253) |
| Non-Control/Non-Affiliate investments | 131,744 | (2,767) |
| Income tax expense (benefit) | 47,151 | (279,525) |
| Net realized gain (loss) on investments | 84,593 | (501,495) |
| Net (decrease) increase in unrealized appreciation on investments: | ||
| Affiliate investments | -- | 386,880 |
| Non-Control/Non-Affiliate investments | (54,509) | -- |
| Change in unrealized appreciation before income taxes | (54,509) | 386,880 |
| Deferred income tax (benefit) expense | (20,169) | 143,146 |
| Net (decrease) increase in unrealized appreciation | (34,340) | 243,734 |
| Net realized and unrealized gain (loss) on investments | 50,253 | (257,761) |
| Net increase (decrease) in net assets from operations | $ 179,548 | $(169,613) |
| Weighted average shares outstanding | 6,328,538 | 6,411,892 |
| Basic and diluted net increase in net assets from operations per share | $ 0.03 | $ (0.03) |
| Rand Capital Corporation and Subsidiary | |||
| Top Five Portfolio Companies at March 31, 2015 | |||
| Company | Industry | Fair Value | % of Total Assets |
| Gemcor II, LLC | Manufacturing – Aerospace Machinery | $ 9,874,184 | 23% |
| Rheonix, Inc. | Health Care – Testing Devices | $ 2,535,999 | 6% |
| Microcision LLC | Manufacturing – Medical Products | $ 1,891,964 | 4% |
| Carolina Skiff LLC | Consumer Products – Boats | $ 1,710,000 | 4% |
| SciApps, Inc. | Manufacturing – Instrumentation | $ 1,700,000 | 4% |
| TOTAL | 41% | ||
| Rand Capital Corporation and Subsidiary | ||
| Consolidated Statements of Financial Position | ||
| March 31, | December 31, | |
| 2015 | 2014 | |
| ASSETS | ||
| Investments at fair value: | ||
| Control investments (cost of $1,298,684 and $1,347,300, respectively) | $ 9,973,684 | $ 10,022,300 |
| Affiliate investments (cost of $17,077,153 and $15,188,935, respectively) | 16,505,596 | 14,617,378 |
| Non-affiliate investments (cost of $6,277,719 and $5,677,241, respectively) | 6,211,666 | 5,665,698 |
| Total investments, at fair value (cost of $24,653,556 and $22,213,476, respectively) | 32,690,946 | 30,305,376 |
| Cash | 7,948,799 | 13,230,717 |
| Interest receivable (net of allowance: $128,311 at 3/31/15 and 12/31/14) | 202,183 | 165,094 |
| Prepaid income taxes | 102,187 | -- |
| Other assets | 1,849,216 | 1,824,800 |
| Total assets | $ 42,793,331 | $ 45,525,987 |
| LIABILITIES AND STOCKHOLDERS' EQUITY (NET ASSETS) | ||
| Liabilities: | ||
| Debentures guaranteed by the SBA | $ 8,000,000 | $ 8,000,000 |
| Income tax payable | -- | 2,065,795 |
| Deferred tax liability | 1,860,782 | 1,838,351 |
| Profit sharing and bonus payable | 226,165 | 953,490 |
| Accounts payable and accrued expenses | 133,465 | 290,646 |
| Deferred revenue | 39,930 | 24,264 |
| Total liabilities | 10,260,342 | 13,172,546 |
| Commitments and contingencies | ||
| Stockholders' equity (net assets): | ||
| Common stock, $.10 par; shares authorized 10,000,000; shares issued 6,863,034; shares outstanding of 6,328,538 as of 3/31/15 and 12/31/14 | 686,304 | 686,304 |
| Capital in excess of par value | 10,581,789 | 10,581,789 |
| Accumulated net investment (loss) | (738,187) | (867,482) |
| Undistributed net realized gain on investments | 18,374,967 | 18,290,374 |
| Net unrealized appreciation on investments | 5,075,607 | 5,109,947 |
| Treasury stock, at cost; 534,496 shares as of 3/31/15 and 12/31/14 | (1,447,491) | (1,447,491) |
| Total stockholders' equity (net assets) (per share 3/31/15: $5.14, 12/31/14: $5.11) | 32,532,989 | 32,353,441 |
| Total liabilities and stockholders' equity | $ 42,793,331 | $ 45,525,987 |
CONTACT: Company:
Allen F. ("Pete") Grum
President and CEO
Phone: 716.853.0802
Email: pgrum@randcapital.com
Investors:
Deborah K. Pawlowski
Kei Advisors LLC
Phone: 716.843.3908
Email: dpawlowski@keiadvisors.com
Source: Rand Capital Corporation
Released April 28, 2015