FORWARD LOOKING STATEMENTS

Statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this document that do not relate to present or historical conditions are "forward-looking statements" within the meaning of that term in Section 27A of the Securities Act of 1933, and in Section 21F of the Securities Exchange Act of 1934. Additional oral or written forward-looking statements may be made by the Company from time to time, and those statements may be included in documents that are filed with the Securities and Exchange Commission. Such forward-looking statements involve risks and uncertainties that could cause results or outcomes to differ materially from those expressed in the forward-looking statements. Forward-looking statements may include, without limitation, statements relating to the Company's plans, strategies, objectives, expectations and intentions and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "believes," "forecasts," "intends," "possible," "expects," "estimates," "anticipates," or "plans" and similar expressions are intended to identify forward-looking statements. Among the important factors on which such statements are based are assumptions concerning the state of the national economy and the local markets in which the Company's portfolio companies operate, the state of the securities markets in which the securities of the Company's portfolio company trade or could be traded, liquidity within the national financial markets, and inflation. Forward-looking statements are also subject to the risks and uncertainties described under the caption "Certain Risk Factors" below.

Financial Condition

Rand's total assets and net assets at September 30, 2001 and December 31, 2000 were as follows:

Primarily contributing to the $701,000 increase in total assets and the $704,000 increase in net assets was the net change in valuations of various portfolio companies, the sale of ADIC securities for a gain, and the related tax effects of these transactions during the nine-month period.

Rand's financial condition is dependent on the success of its investments. Rand has invested a substantial portion of its assets in early stage or start-up companies. These private businesses tend to be thinly capitalized, unproven, small companies that may lack management depth and history of operations. A summary of Rand's investment portfolio is as follows:

The increase in the unrealized appreciation of the investments is primarily attributable to the net effect of portfolio valuation adjustments to the following portfolio companies during the nine-month period ended September 30, 2001: Pathlight Technology/Advanced Digital Information Corporation ("ADIC"), $2.4 million; BNKR.com, ($0.4 million); Fertility Acoustics, Inc., ($1.1 million), Aria Wireless Systems, Inc., ($0.1 million), and Platform Technology Holdings, LLC, ($0.1 million).

Rand's total investments at fair value approximated 84% of net assets at September 30, 2001 and 85% of net assets at December 31, 2000. Of Rand's portfolio investments, one investment, Pathlight/ADIC, valued at $4.4 million at September 30, 2001 and $2.0 million at December 31, 2000, approximated 48% of net assets at September 30, 2001 and 24% of net assets at December 31, 2000.

During the nine-month period ending September 30, 2001 Rand's investment activities included the sale of 70,000 shares of ADIC in August 2001, (with a realized gain of approximately $720,000). Other investing activity during the period included the sale of Rand's investments in Motorola and Texaco preferred stocks, valued at $0.2 million at December 31, 2000; New investments included a $100,000 bridge loan to Ultra-Scan and a $55,000 follow-on investment in Platform Technology Holdings (subsequently written off).

The effect of the portfolio valuation changes, net operating losses for the period, and the realized gain from the sale of ADIC securities, resulted in a net change in the deferred tax asset from $660,790 at December 31, 2000 to $439,551 at September 30, 2001. In addition, during the quarter ended June 30, 2001, Rand reversed the $168,650 tax valuation allowance previously recorded, reflecting the increased likelihood of its utilization given the Pathlight/ADIC transaction.

Results of Operations

On May 11, 2001, one of Rand's privately held portfolio investments, Pathlight Technologies Inc. was acquired by Advanced Digital Information Corporation (NASDAQ:ADIC). In exchange for Rand's estimated 5% ownership of Pathlight (cost basis of approximately $1.2 million), Rand has received 461,265 shares of ADIC common stock and options to purchase 54,786 shares. The ADIC shares received by Rand are subject to sale under Rule 145 restrictions and became tradable August 20, 2001.

During August 2001 Rand sold a total of 70,000 shares at a range of $12.10 - $12.72. Rand's average cost basis for the ADIC securities is $2.12. Rand's remaining ADIC holdings have been valued at $4.4 million in its September 30, 2001 investment portfolio.

Following the end of the quarter, an additional 229,000 shares were sold in October 2001 at a range of $10.10 - $15.50. At October 31, 2001, Rand is holding approximately 217,000 shares of ADIC.

Investment Income and Expenses:

Total investment income for the three-months ended September 30, 2001 and 2000 was $27,578 and $62,368, respectively, of which $25,769 (93%) and $42,689 (68%) consisted of interest from portfolio companies during the period. The remaining income consisted of interest on other temporary short-term investments and cash balances. For the nine-months ended September 30, 2001 and 2000, the total investment income was $103,927 and $186,139, respectively, of which $88,298 (85%) and $122,396 (66%) consisted of interest from portfolio companies during the period. The remaining income consisted of interest on short-term investments, cash balances, and other income. The total investment income for the three and nine-months ended September 30, 2000 was higher mainly due to higher idle cash balances and the related interest income earnings, in addition to the shutdown of portfolio companies affecting the portfolio's interest earning investments. Due to the lower cash balances in 2001, the Corporation was not materially affected by decline in interest rates during the preceding 12 months.

Expenses for the three-months ended September 30, 2001 and 2000 were $161,730 and $144,517, respectively. Expenses for the nine-month period ended September 30, 2001 and September 30, 2000 were $626,294 and $486,739, respectively. A majority of the Rand's expenses consist of employee compensation, shareholder and office expenses, expenses related to identifying and reviewing investment opportunities and professional fees. A major increase in expenses during the three-month and nine-month periods in 2001 directly resulted from costs (consulting and advisory fees) incurred for restructuring the Corporation to a Business Development Company ("BDC"), and research into stock option plans and other corporate matters. These costs have been included in other operating expenses and total $71,000 for the nine-months ended September 30, 2001. Also increasing expenses during 2001 were the establishment of allowances related to the write-off of certain portfolio related receivables totaling $36,371 for the nine-months ended September 30, 2001.

Net investment losses from operations were $209,732 and $85,159 for the three-months ended September 30, 2001 and 2000, respectively. For the nine-months ended September 30, 2001 and 2000, net investment losses were $611,354 and $309,608, respectively. The combined effect of the shutdown of the operations of several Rand portfolio companies, the loss of their related dividend/interest payments, and the increased costs related to Rand's annual proxy filings have resulted in increased operating losses in 2001 as compared to 2000.

Net Realized Gains and Losses on Portfolio of Investments:

During the three-months ended September 30, 2001, Rand sold 70,000 shares of its ADIC holdings, generating a realized gain of approximately $720,000. Also during the quarter, ADIC settled its patent litigation with Pathlight, which resulted in a release from escrow of an additional 26,417 ADIC shares to Rand, and a forfeiture of 28,313 shares previously held in escrow (with an average cost basis of $60,024). During the same period in 2000 Rand had realized a loss of $8,551 from the sale of certain preferred securities held in the portfolio.

Net Increase (decrease) in Net Assets from Operations:

Rand accounts for its operations under accounting principles generally accepted in the United States of America for investment companies. On this basis, the principal measure of its financial performance is "net increase (decrease) in net assets from operations" on its condensed statements of operations. For the three-months ended September 30, 2001, the net increase in net assets from operations was $130,319 as compared to a net decrease in net assets from operation of ($26,253) for the three-months ended September 30, 2000. The increase in net realized and unrealized gain on investments during the third quarter is primarily attributable to the sale of ADIC securities at a gain. The year-to-date increase in assets is attributable to net effect of portfolio valuation adjustments to the following portfolio companies during the nine-month period ended September 30, 2001: Pathlight Technology, Inc./ADIC, $2.4 million; BNKR.com, ($.4 million); Fertility Acoustics, Inc., ($1.1 million); Aria Wireless Systems, Inc., ($0.1 million); and Platform Technology Holdings, LLC ($0.1 million).

For the nine-months ended September 30, 2001 and 2000, the net increase in net assets from operations was $672,318 and $1,042,263, respectively.

Liquidity and Capital Resources

Rand's principal objective is to achieve capital appreciation. Therefore, a significant portion of the investment portfolio is structured to maximize the potential for capital appreciation and certain Rand portfolio investments may be structured to provide little or no current yield in the form of dividends or interest payments. Rand does earn interest income on idle cash balances. Rand has historically relied on and continues to rely to a large extent upon proceeds from sales of investments rather than investment income to defray a significant portion of its operating expenses. Because such sales cannot be predicted with certainty, Rand attempts to maintain adequate working capital necessary for short-term needs.

On September 30, 2001, Rand was holding approximately $714,000 in cash (primarily generated from the sale of the ADIC securities in August 2001) compared to a total of approximately $512,000 ($304,000 cash and $208,000 in marketable preferred equities) at December 31, 2000. Through August, Rand had a decrease in liquidity, which resulted in decreased interest earnings on idle cash balances.

During the nine-month period ended September 30, 2001, Rand has sold 70,000 shares of its ADIC holdings and also sold its investments in Motorola and Texaco preferred stocks. New investments included an Ultra-scan bridge loan of $100,000 and a $55,000 follow-on investment in Platform Technology Holdings.

During the year, Rand also adjusted the valuations for several portfolio investments during the period, which included; ARIA Wireless Systems, Inc., Pathlight Technology, Inc./ADIC, Fertility Acoustics, Inc., BNKR.com; INRAD, Inc. These were non-cash adjustments, included as adjustments in the condensed statements of cash flows.

During the nine-month period ended September 30, 2000, Rand made new investments in BNKR.com, $250,000 and TSS-Transnet, $250,000 (both were subsequently written off); and made a follow-on investment in Pathlight Technology, Inc., $750,000. The InfoMiners.com $420,000 bridge loan was also repaid. During this period, valuation changes were made to Fertility Acoustics, Inc. and Pathlight Technology, Inc. However, these are non-cash adjustments.

Certain Risk Factors

Investing in Rand's Stock is Highly Speculative and an Investor Could Lose Some or All of the Amount Invested

The value of Rand's common stock may decline and may be affected by numerous market conditions, which could result in the loss of some or all of the amount invested in Rand's shares. The securities markets frequently experience extreme price and volume fluctuations which affect market prices for securities of companies generally, and technology and very small capitalization companies in particular. General economic conditions, and general conditions in the Internet and information technology, life sciences, material sciences and other high technology industries, will also affect the Rand's stock price. The recent decimalization of the stock exchanges, particularly NASDAQ, is a new risk factor that may decrease liquidity of smaller capitalization issues such as the Company's own common stock and that of its publicly traded holdings. In addition, the terrorist acts of September 11, 2001 in the United States also are a new risk factor, which may affect the operations of both Rand and its portfolio companies.

Investing in Rand's Shares May be Inappropriate for the Investor's Risk Tolerance

Rand's investments, in accordance with its investment objective and principal strategies, result in a far above average amount of risk and volatility and may well result in loss of principal. Rand's investments in portfolio companies are highly speculative and aggressive and, therefore, an investment in its shares may not be suitable for investors for whom such risk is inappropriate.

Rand may face competition in its investing activities from private venture capital funds, investment affiliates of large industrial, technology, service and financial companies, small business investment companies, wealthy individuals and foreign investors. As a regulated Business Development Company ("BDC"), the Company is required to disclose quarterly the name and business description of portfolio companies and value of any portfolio securities. Most of Rand's competitors are not subject to this disclosure requirement. Rand's obligation to disclose this information could hinder its ability to invest in certain portfolio companies. Additionally, other regulations, current and future, may make Rand less attractive as a potential investor to a given portfolio company than a private venture.

Rand Operates in a Regulated Environment

Rand is subject to substantive SEC regulations as a BDC. Securities and tax laws and regulations governing the Rand's activities may change in ways adverse to Rand's and its shareholders' interests, and interpretations of such laws and regulations may change with unpredictable consequences. Any change in the laws or regulations that govern Rand's business could have an adverse impact on Rand or its operations.

Rand is Dependent Upon Key Management Personnel for Future Success

Rand is dependent for the selection, structuring, closing and monitoring of its investments on the diligence and skill of its senior management. The future success of Rand depends to a significant extent on the continued service and coordination of its senior management team. The departure of any of the executive officers or key employees could materially adversely affect Rand's ability to implement its business strategy. Rand does not maintain key man life insurance on any of its officers or employees.

Investment in Small, Private Companies

There are significant risks inherent in Rand's venture capital business. Rand has invested a substantial portion of its assets in early stage or start-up companies. These private businesses tend to be thinly capitalized, unproven, small companies with risky technologies that lack management depth and have not attained profitability or have no history of operations. Because of the speculative nature and the lack of a public market for these investments, there is significantly greater risk of loss than is the case with traditional investment securities. Rand expects that some of its venture capital investments will be a complete loss or will be unprofitable and that some will appear to be likely to become successful but never realize their potential. Rand has been risk seeking rather than risk averse in its approach to venture capital and other investments. Neither Rand's investments nor an investment in Rand is intended to constitute a balanced investment program. Rand has in the past relied, and continues to rely to a large extent, upon proceeds from sales of investments rather than investment income to defray a significant portion of it's operating expenses. Such sales are unpredictable and may not occur. The terrorist acts in the United States of September 11, 2001 are the type of events that could severely impact a small company that does not have as many resources to ride out market downturns and would need immediate investment capital that might be temporarily unavailable.

Illiquidity of Portfolio Investments

Most of the investments of Rand are or will be either equity securities acquired directly from small companies or below investment grade subordinated debt securities. The Company's portfolio of equity securities are and will usually be subject to restrictions on resale or otherwise have no established trading market. The illiquidity of most of the Company's portfolio may adversely affect the ability of the Company to dispose of such securities at times when it may be advantageous for the Company to liquidate such investments.

Even if the Rand's portfolio companies are able to develop commercially viable products, the market for new products and services is highly competitive and rapidly changing. Commercial success is difficult to predict and the marketing efforts of Rand's portfolio companies may not be successful.

Valuation of Portfolio Investments

There is typically no public market of equity securities of the small privately held companies in which Rand invests. As a result, the valuation of the equity securities in Rand's portfolio is subject to the good faith estimate of Rand's Board of Directors. In the absence of a readily ascertainable market value, the estimated value of Rand's portfolio of securities may differ significantly from the values that would be placed on the portfolio if a ready market for the equity securities existed. Any changes in estimated net asset value are recorded in Rand's statement of operations as "Change in unrealized appreciation on investments".

Fluctuations of Quarterly Results

Rand's quarterly operating results could fluctuate as a result of a number of factors. These factors include, among others, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which portfolio companies encounter competition in their markets and general economic conditions. As a result of these factors, results for any one quarter should not be relied upon as being indicative of performance in future quarters.

Changes In Interest Rates

Rand has no borrowings; therefore, any change in interest rates will have no material impact on interest expense. A hypothetical 10% change in short-term interest rates on our income generated from cash and cash equivalent would not be material to the results of operations. Such discussion includes forward-looking statements of risks, which involve certain assumptions as to market interest rates. Actual market conditions may differ materially from such assumptions. Changes in interest rates may impact future interest income, however, through September 30, 2001, Rand has not held strong cash positions.

Item 3.    Quantitative and Qualitative Disclosures about Market Risks

A portion of the Company's portfolio is in marketable securities traded in the over-the-counter market, and there is a portion of the Company's 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 the markets to trade in an orderly fashion, the Company may not be able to realize the fair value of its marketable investments or other investments in a timely manner.

As of September 30, 2001, the Company did not have any off-balance sheet investments or hedging investments.