Rand Capital Makes $2.1 Million of Investments in 2015 Second Quarter; Net Asset Value Increased to $5.16 Per Share

  • Active quarter for follow-on investments totaling $1.6 million in seven portfolio companies
  • Added additional medical device manufacturer to portfolio with $500,000 investment
  • Total assets of $43.0 million, up 14% from 2014 second quarter

BUFFALO, N.Y., Aug. 4, 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 June 30, 2015.

Second Quarter 2015 Financial Highlights

  • Achieved $5.16 net asset value (NAV) per share at June 30, 2015, up $0.73 per share, or 16%, over June 30, 2014
  • Provided $1.6 million as follow-on investments in seven portfolio companies, with the largest additional investments made in SocialFlow, Rheonix, and SciAps
  • Made initial investment of $500,000 in GENICON, a medical device manufacturer and distributor focused exclusively on laparoscopic surgery
  • Investment portfolio fair value now totals $34.3 million

Allen F. ("Pete") Grum, President and Chief Executive Officer of Rand Capital, commented, "The second quarter was an active quarter of investing for us. Our conviction to our portfolio companies and their growth opportunities led to our further financial support of several of them this quarter, as well as an addition to the portfolio. We like the progress we are seeing in these companies and recognize the follow-on investments will help to support their continued development."

Investment Activity and Portfolio Overview

Highlights of several of this quarter's largest investments follow:

  • New to the Rand portfolio, GENICON (http://geniconendo.com/) is a recognized emerging leader in the design, production, and distribution of patented surgical instrumentation focused exclusively on laparoscopic surgery. Product concepts originate from a distinguished panel of general, gynecologic, urologic and pediatric surgeons. The panel provides oversight on product design to meet the needs of a global surgeon client base. Research & development by mechanical and electrical engineers with significant experience in medical device design and manufacturing advance the development process. Rand has a $0.5 million equity investment in GENICON.
  • SocialFlow, Inc. (http://www.socialflow.com/) handles social publishing for the largest and most influential publishers in the world including Facebook, Twitter, and LinkedIn while also solving complex social media problems for brand marketers and providing data-driven solutions for optimized, cost effective social media marketing campaigns. SocialFlow was recently selected as an ad-tech partner for Pinterest's Marketing Developer Partners program. Rand now holds a $1.75 million investment in SocialFlow.
  • SciAps, Inc. (http://sciaps.com/) is an instrumentation company that provides durable, field-tested, portable analytical instruments to identify virtually any compounds, minerals and elements on the planet. The recent infusion of capital allows the company to develop proprietary laser technology aimed at a tenfold improvement in analyzer performance and vertical integration of key components. Additionally, the company intends to pursue new markets that have emerged for its industry-leading handheld laser induced breakdown spectrometer, including geochem, food and agriculture. Rand holds a $2.0 million investment in SciAps as of June 30, 2015.

Additional follow-on investments were provided to Rheonix, Inc., Mezmeriz, Inc., Teleservices Solutions Holdings, LLC, Intrinsiq Materials, Inc., and OnCore Golf Technology, Inc. At $2.8 million, Rheonix is Rand's largest investment on a cost basis.

As of June 30, 2015, Rand's portfolio consisted of 31 businesses valued at $34.3 million. It was comprised of approximately 46% in manufacturing, 21% in software, 11% in healthcare and 22% in a diverse group of other industry categories. The portfolio included approximately 23% in debt investments and 77% in equity investments.

Liquidity and Capital Resources

Rand is focused on increasing net asset value through capital appreciation and maintaining sufficient income to drive operational leverage.   

Cash on hand at June 30, 2015 was $6.5 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

Rand's strategy is to invest in small-to-mid-sized companies with new or unique products or services that offer competitive advantage and strong growth potential. It focuses primarily on upstate New York and Northeast businesses to more efficiently enable the Rand team to work closely with senior management and boards of portfolio companies.

Mr. Grum concluded, "We are realizing solid success with the investments we have made and plan to replicate our approach to keep growing the portfolio.  Historically, over the past decade we achieved a net asset value per share compound annual growth rate of approximately 14.5%. We believe we have the momentum to continue to achieve solid returns over the long-term. To achieve our goal, our rate of investment has accelerated over the last three years while we maintained our investment discipline."

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 net asset value growth, investment returns and opportunities. These statements 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 Financial Position    
     
     
   
  June 30, December 31,
  2015 2014
ASSETS (Unaudited)  
Investments at fair value:    
Control investments (cost of $1,248,221 and $1,347,300, respectively)  $ 9,923,221  $ 10,022,300
Affiliate investments (cost of $18,139,387 and $15,188,935, respectively)  17,374,393  14,617,378
Non-affiliate investments (cost of $7,100,532 and $5,677,241, respectively)  6,961,261  5,665,698
Total investments, at fair value (cost of $26,488,140 and $22,213,476, respectively)  34,258,875  30,305,376
Cash  6,520,170  13,230,717
Interest receivable (net of allowance: $122,000 at 6/30/15 and $128,311 at 12/31/14)  207,441  165,094
Prepaid income taxes  148,807  --
Other assets  1,817,277  1,824,800
Total assets  $ 42,952,570  $ 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  1,862,464  1,838,351
Profit sharing and bonus payable - officers  194,740  953,490
Accounts payable and accrued expenses  184,017  290,646
Deferred revenue  35,264  24,264
Total liabilities  10,276,485  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 6/30/15 and 12/31/14  686,304  686,304
Capital in excess of par value  10,581,789  10,581,789
Accumulated net investment (loss)  (506,475)  (867,482)
Undistributed net realized gain on investments  18,463,557  18,290,374
Net unrealized appreciation on investments  4,898,401  5,109,947
Treasury stock, at cost; 534,496 shares as of 6/30/15 and 12/31/14  (1,447,491)  (1,447,491)
Total stockholders' equity (net assets) (per share 6/30/15: $5.16, 12/31/14: $5.11)  32,676,085  32,353,441
Total liabilities and stockholders' equity  $ 42,952,570  $ 45,525,987
   
 
Rand Capital Corporation and Subsidiary
Consolidated Statements of Operations
(Unaudited)
   
     
  For the Quarter Ended
June 30,
For the Six Months Ended
June 30,
  2015 2014 2015 2014
Investment income:        
Interest from portfolio companies:        
Control investments  $ 20,275  $ 29,460  $ 42,420  $ 61,759
Affiliate investments  96,522  130,517  211,651  253,373
Non-Control/Non-Affiliate investments  66,422  41,320  115,222  79,344
Total interest from portfolio companies  183,219  201,297  369,293  394,476
         
Interest from other investments:        
Non-Control/Non-Affiliate investments  8,369  3,031  15,190  8,197
Total interest from other investments  8,369  3,031  15,190  8,197
         
Dividend and other investment income:        
Control investments  491,208  399,895  903,359  682,981
Affiliate investments  29,061  59,232  58,429  90,065
Non-Control/Non-Affiliate investments  --  2,531  --  2,531
Total dividend and other investment income  520,269  461,658  961,788  775,577
         
Fee income:        
Control investments  2,000  2,500  4,000  6,000
Affiliate investments  416  1,767  1,833  2,700
Non-Control/Non-Affiliate investments  4,251  1,306  8,167  2,556
Total fee income  6,667  5,573  14,000  11,256
Total investment income  718,524  671,559  1,360,271  1,189,506
Operating expenses:        
Salaries  149,555  147,669  299,110  295,338
Bonus and profit sharing  --  (45,635)  --  (45,635)
Employee benefits  29,394  24,689  59,801  62,756
Directors' fees  29,300  55,500  51,050  74,250
Professional fees  20,433  44,021  93,502  100,512
Stockholders and office operating  55,717  55,361  115,114  85,650
Insurance  6,300  7,500  17,554  19,909
Corporate development  14,400  16,431  31,381  27,556
Other operating  2,224  1,979  5,874  3,256
   307,323  307,515  673,386  623,592
Interest on SBA obligations  77,569  68,137  151,891  126,417
Bad debt expense  --  --  --  6,311
Total operating expenses  384,892  375,652  825,277  756,320
Investment income before income taxes  333,632  295,907  534,994  433,186
Income tax expense  101,920  48,712  173,987  97,843
Net investment income  231,712  247,195  361,007  335,343
         
Net Realized gain (loss) on investments:        
Affiliate investments  --  --  --  (778,253)
Non-Control/Non-Affiliate investments  131,181  (444,172)  262,925  (446,939)
Net realized gain (loss) before income taxes  131,181  (444,172)  262,925  (1,225,192)
Income tax expense (benefit)  42,591  (142,701)  89,742  (422,226)
Net realized gain (loss) on investments  88,590  (301,471)  173,183  (802,966)
         
Net (decrease) increase in unrealized appreciation on investments:        
Affiliate investments  (193,436)  (356,900)  (193,436)  29,980
Non-Control/Non-Affiliate investments  (73,219)  1,236,251  (127,728)  1,236,251
Change in unrealized appreciation before income taxes  (266,655)  879,351  (321,164)  1,266,231
Deferred income tax (benefit) expense  (89,449)  305,299  (109,618)  448,445
Net (decrease) increase in unrealized appreciation on investments  (177,206)  574,052  (211,546)  817,786
         
Net realized and unrealized (loss) gain on investments  (88,616)  272,581  (38,363)  14,820
Net increase in net assets from operations  $ 143,096  $ 519,776  $ 322,644  $ 350,163
Weighted average shares outstanding  6,328,538  6,411,892  6,328,538  6,411,892
Basic and diluted net increase in net assets per share from operations  $ 0.02  $ 0.08  $ 0.05  $ 0.05
 
Rand Capital Corporation and Subsidiary
Top Five Portfolio Companies at June 30, 2015
(Unaudited)
 
Company Industry Fair Value % of Total Assets
Gemcor II, LLC Manufacturing – Aerospace Machinery $9,823,721 23%
Rheonix, Inc. Health Care – Testing Devices $2,916,474 7%
SciAps, Inc. Manufacturing – Instrumentation $2,004,710 5%
Microcision LLC Manufacturing – Medical Products $1,891,964 4%
SocialFlow, Inc. Software – Social Publishing $1,750,000 4%
TOTAL     43%
 
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