UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _____ to _______

Commission File Number: 814-00235

Rand Capital Corporation

(Exact Name of Registrant as specified in its Charter)

New York		16-0961359
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

2200 Rand Building, Buffalo, NY		14203
(Address of Principal executive offices)		(Zip Code)

(716) 853-0802

(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 registered

Common 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 [X] 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	[X]	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 [X]

As of October 30, 2020, there were 2,583,772 shares of the registrant’s common stock outstanding.

RAND CAPITAL CORPORATION

TABLE OF CONTENTS FOR FORM 10-Q

PART I. – FINANCIAL INFORMATION

Item 1.	Financial Statements and Supplementary Data	1

	Consolidated Statements of Financial Position as of September 30, 2020 (Unaudited) and December 31, 2019	1

	Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	2

	Consolidated Statements of Changes in Net Assets for the Three Months and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	3

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	4

	Consolidated Schedule of Portfolio Investments as of September 30, 2020 (Unaudited)	5

	Consolidated Schedule of Portfolio Investments as of December 31, 2019	13

	Notes to the Consolidated Financial Statements (Unaudited)	21

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	48

Item 4.	Controls and Procedures	49

PART II. – OTHER INFORMATION

Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3.	Defaults upon Senior Securities	51

Item 4.	Mine Safety Disclosures	51

Item 5.	Other Information	51

Item 6.	Exhibits	52

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements and Supplementary Data

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

	September 30, 2020 (Unaudited)			December 31, 2019
ASSETS
Investments at fair value:
Affiliate investments (cost of $22,859,230 and $19,035,446, respectively)	$	15,459,415		$	12,151,435
Non- Control/Non-Affiliate investments (cost of $26,961,995 and $25,584,017, respectively)		26,223,106			24,869,357
Total investments, at fair value (cost of $49,821,225 and $44,619,463, respectively)		41,682,521			37,020,792
Cash and cash equivalents		19,074,372			25,815,720
Interest receivable (net of allowance: $142,413 at 9/30/20 and $166,413 at 12/31/19)		457,501			142,265
Deferred tax asset		-			1,204,198
Prepaid income taxes		40,789			343,096
Other assets		53,732			265,378
Total assets	$	61,308,915		$	64,791,449

LIABILITIES AND STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities:
Debentures guaranteed by the SBA (net of debt issuance costs)	$	10,815,169		$	10,786,913
Amounts due to investment adviser		152,447			50,564
Accounts payable and accrued expenses		82,785			207,873
Deferred tax payable		228,695			-
Bonus payable		-			80,000
Deferred revenue		79,666			37,583
Total liabilities		11,358,762			11,162,933
Commitments and contingencies (See Note 5)

Stockholders’ equity (net assets):
Common stock, $0.10 par; shares authorized 100,000,000; shares issued: 2,648,916 at 9/30/20 and 1,688,485 at 12/31/19; shares outstanding: 2,585,403 at 9/30/20 and 1,628,369 at 12/31/19		2,384,547			1,519,637
Capital in excess of par value		34,142,455			34,142,455
Treasury stock, at cost: shares: 63,513 at 9/30/20 and 60,116 at 12/31/19		(1,507,093	)		(1,469,105	)
Total distributable earnings		14,930,244			19,435,529
Total stockholders’ equity (net assets) (per share – 9/30/20: $19.32, 12/31/19: $32.93)		49,950,153			53,628,516
Total liabilities and stockholders’ equity (net assets)	$	61,308,915		$	64,791,449

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended September 30, 2020			Three months ended September 30, 2019			Nine months ended September 30, 2020			Nine months ended September 30, 2019
Investment income:
Interest from portfolio companies:
Affiliate investments	$	178,714		$	217,953		$	487,822		$	632,705
Non-Control/Non-Affiliate investments		456,160			110,150			1,253,439			416,852
Total interest from portfolio companies		634,874			328,103			1,741,261			1,049,557

Interest from other investments:
Non-Control/Non-Affiliate investments		1,157			36,797			87,161			108,146
Total interest from other investments		1,157			36,797			87,161			108,146

Dividend and other investment income:
Affiliate investments		13,125			65,996			39,375			307,681
Non-Control/Non-Affiliate investments		80,212			-			161,525			-
Total dividend and other investment income		93,337			65,996			200,900			307,681

Fee income:
Affiliate investments		5,000			3,607			10,417			11,460
Non-Control/Non-Affiliate investments		2,500			2,852			7,500			262,927
Total fee income		7,500			6,459			17,917			274,387
Total investment income		736,868			437,355			2,047,239			1,739,771
Expenses:
Base management fee (see Note 8)		152,438			-			434,201			-
Interest on SBA obligations		104,190			94,191			312,570			303,849
Professional fees		126,759			68,931			383,795			406,859
Stockholders and office operating		50,022			85,782			217,866			466,543
Directors’ fees		28,375			30,124			85,125			87,372
Insurance		8,033			10,500			26,101			31,070
Corporate development		10,474			18,301			12,480			51,627
Other operating		107			604			572			3,413
Salaries		-			181,500			-			544,500
Employee benefits		-			40,606			-			143,705
Bad debt (recovery) expense		(24,000	)		-			(24,000	)		5,413
Total expenses		456,398			530,539			1,448,710			2,044,351
Net investment income (loss) before income taxes		280,470			(93,184	)		598,529			(304,580	)
Income tax benefit		-			(27,635	)		(419,101	)		(118,498	)
Net investment income (loss)		280,470			(65,549	)		1,017,630			(186,082	)

Net realized gain (loss) on sales and dispositions of investments:
Control investments		-			-			-			80,393
Affiliate investments		-			-			56,916			(472,632	)
Non-Control/Non-Affiliate investments		-			-			2,355,130			-
Income tax benefit		-			-			-			(90,861	)
Net realized gain (loss) on sales and dispositions of investments		-			-			2,412,046			(301,378	)
Net change in unrealized depreciation on investments:
Affiliate investments		-			(1,847,468	)		(515,804	)		(1,176,320	)
Non-Control/Non-Affiliate investments		(17,947	)		(1,749,661	)		(24,229	)		(3,020,961	)

Change in unrealized depreciation before income taxes		(17,947	)		(3,597,129	)		(540,033	)		(4,197,281	)
Deferred income tax (benefit) expense		-			(783,790	)		1,773,412			(913,719	)
Net change in unrealized depreciation on investments		(17,947	)		(2,813,339	)		(2,313,445	)		(3,283,562	)

Net realized and unrealized (loss) gain on investments		(17,947	)		(2,813,339	)		98,601			(3,584,940	)
Net increase (decrease) in net assets from operations	$	262,523		$	(2,878,888	)	$	1,116,231		$	(3,771,022	)
Weighted average shares outstanding		2,587,155			702,443			2,162,308			702,443
Basic and diluted net increase (decrease) in net assets from operations per share	$	0.10		$	(4.10	)	$	0.52		$	(5.37	)

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)

	Three months ended September 30, 2020			Three months ended September 30, 2019			Nine months ended September 30, 2020			Nine months ended September 30, 2019

Net assets at beginning of period	$	49,711,314		$	30,632,053		$	53,628,516		$	31,524,187

Net investment income (loss)		280,470			(65,549	)		1,017,630			(186,082	)
Net realized gain (loss) on sales and dispositions of investments		-			-			2,412,046			(301,378	)
Net change in unrealized depreciation on investments		(17,947	)		(2,813,339	)		(2,313,445	)		(3,283,562	)
Net increase (decrease) in net assets from operations		262,523			(2,878,888	)		1,116,231			(3,771,022	)
Purchase of treasury shares		(23,684	)		-			(37,988	)		-
Payment of cash dividend		-			-			(4,756,606	)		-
Net assets at end of period	$	49,950,153		$	27,753,165		$	49,950,153		$	27,753,165

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended September 30, 2020			Nine months ended September 30, 2019
Cash flows from operating activities:
Net increase (decrease) in net assets from operations	$	1,116,231		$	(3,771,022	)
Adjustments to reconcile net increase (decrease) in net assets to net cash (used in) provided by operating activities:
Investments in portfolio companies		(7,027,982	)		(900,012	)
Proceeds from sale of portfolio investments		4,557,542			39,893
Proceeds from loan repayments		-			4,525,000
Net realized (gain) loss on portfolio investments		(2,412,046	)		392,239
Change in unrealized depreciation on investments before income taxes		540,033			4,197,281
Deferred tax benefit		1,432,893			(1,128,197	)
Depreciation and amortization		28,256			27,809
Original issue discount amortization		(38,552	)		(30,573	)
Non-cash conversion of debenture interest		(280,724	)		(344,222	)
Change in interest receivable allowance		(24,000	)		5,413
Changes in operating assets and liabilities:
(Increase) decrease in interest receivable		(291,236	)		14,311
Decrease (increase) in other assets		211,644			(306,174	)
Decrease in prepaid income taxes		302,307			649,940
Decrease in accounts payable and accrued expenses		(125,088	)		(143,025	)
Decrease in bonus payable		(80,000	)		(125,000	)
Increase in due to investment advisor		101,883			-
Increase (decrease) in deferred revenue		42,085			(44,388	)
Total adjustments		3,062,985			6,830,295
Net cash (used in) provided by operating activities		(1,946,754	)		3,059,273

Cash flows from financing activities:
Payment of cash dividend		(4,756,606	)		-
Purchase of treasury shares		(37,988	)
Proceeds from SBA debentures		-			2,250,000
Origination costs to SBA		-			(54,563	)
Net cash (used in) provided by financing activities		(4,794,594	)		2,195,437

Net (decrease) increase in cash and cash equivalents		(6,741,348	)		5,254,710
Cash and cash equivalents:
Beginning of period		25,815,720			4,033,792
End of period	$	19,074,372		$	9,288,502

See accompanying notes

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

September 30, 2020

(Unaudited)

Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity			Cost		(d)(f) Fair Value		Percent of Net Assets

Non-Control/Non-Affiliate Investments – 52.5% of net assets: (j)

ACV Auctions, Inc. (e)(g) Buffalo, NY. Live mobile wholesale auctions for new and used car dealers. (Software) www.acvauctions.com	1,181,160 Series A Preferred.	8/12/16		<1	%	$	163,000	$	6,531,815		13.1	%

Advantage 24/7 LLC (g)	$140,000 Term Note at 7% due	1/1/19		0	%						0.1	%
Williamsville, NY. Marketing program for wine and spirits dealers. (Marketing Company) www.advantage24-7.com	January 1, 2022						65,000		65,000

AIKG LLC (Andretti) (e)(i)(l) Marietta, GA. Entertainment company engaged in indoor karting, games and food. (Entertainment) www.andrettikarting.com	$4,250,000 Term Notes at 12% (+4% PIK) due December 28, 2023. (i) Interest receivable $225,081.	11/8/19		0	%		4,533,387		4,533,387		9.0	%

Apollo Investment Corporation NASDAQ: AINV (n) Public BDC New York, NY.	35,000 shares.	3/16/20		<1	%		364,084		292,717		0.5	%

Ares Capital Corporation NASDAQ: ARCC (n) Public BDC New York, NY.	27,000 shares.	3/16/20		<1	%		343,460		378,000		0.7	%

Barings BDC, Inc. NYSE: BBDC (n) Public BDC New York, NY.	40,000 shares.	8/13/20		<1	%		333,352		319,867		0.6	%

Centivo Corporation (e)(g)	190,967 Series A-1 Preferred.	3/19/18		<1	%		200,000		200,000		0.6	%
New York, NY. Tech-enabled health solutions	337,808 Series A-2 Preferred.	3/19/18					101,342		101,342
company that helps self-insured employers and their	Total Centivo						301,342		301,342
employees save money and have a better experience.
(Health Care)
www.centivo.com

Empire Genomics, LLC (g)	$1,209,014 Senior Secured due	6/13/14		0	%						1.2	%
Buffalo, NY. Molecular diagnostics company that	Convertible Term Notes at 10%
offers a comprehensive menu of assay services for	December 31, 2020.						1,308,675		157,654
diagnosing and guiding patient therapeutic treatments.	$444,915 Promissory Note at 9%	10/1/18
(Health Care)	due December 31, 2020.						444,915		444,915
www.empiregenomics.com	Total Empire						1,753,590		602,569
	(i) Interest receivable $50,692.

First Wave Technologies, Inc. (e)(g) Batavia, NY. Sells First Crush automated pill crusher that crushes and grinds pills for nursing homes and medical institutions. (Health Care) www.firstwavetechnologies.com	670,443.2 Class A Common.	4/19/12		4	%		661,563		33,000		0.7	%

FS KKR Capital Corp. NYSE: FSK (n) Public BDC Philadelphia, PA.	25,000 shares	3/16/20		<1	%		338,980		398,167		0.8	%

GiveGab, Inc. (e)(g) Ithaca, NY. Nonprofit giving platform that provides an easy and effective way for fundraising professionals to raise money online. (Software) www.givegab.com	5,084,329 Series Seed Preferred.	1/14/15		4	%		616,221		616,221		1.2	%

Golub Capital BDC, Inc. NASDAQ: GBDC (n) Public BDC New York, NY.	31,250 shares	3/16/20		<1	%		403,910		410,833		0.8	%

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

September 30, 2020 (Continued)

(Unaudited)

Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity			Cost		(d)(f) Fair Value		Percent of Net Assets

GoNoodle, Inc. (g)(l)	$1,500,000 Secured Note at 12% (1%	11/1/19		<1	%						3.0	%
Nashville, TN. Student engagement education	PIK) due September 30, 2024.						1,513,754		1,513,754
software providing core aligned physical activity	Warrant for 47,324 Series C Preferred.	3/1/15					25		25
breaks. (Software)	Warrant for 21,948 Series D Preferred.	11/1/19					38		38
www.gonoodle.com	Total GoNoodle						1,513,817		1,513,817

HDI Acquisition LLC (Hilton Displays) (l)	$1,245,119 Term Loan at 12% (+2%	11/8/19		0	%						2.5	%
Greenville, NC. HDI is engaged in manufacturing, installation and maintenance of signage and brands. (Manufacturing) www.hiltondisplays.com	PIK) due June 20, 2023.						1,268,656		1,268,656

Lumious (Tech 2000, Inc.) (g)	$850,000 Replacement Term Note at	11/16/18		0	%						1.7	%
Herndon, VA. Develops and delivers IT training. (Software) www.t2000inc.com	14% due November 15, 2021.						860,777		860,777

Mattison Avenue Holdings LLC (e)(l)	$1,031,406 Second Amended, Restated	11/8/19		0	%						2.2	%
Dallas, TX. Provider of upscale salon spaces for	and Consolidated Promissory Note at
lease. (Professional Services)	14% (2% PIK) due June 9, 2022.						1,116,498		1,116,498
www.mattisonsalonsuites.com

Mercantile Adjustment Bureau, LLC (g)	$1,199,039 Subordinated Secured Note	10/22/12		4	%						1.0	%
Williamsville, NY. Full service accounts	at 13% (8% effective August 2020)
receivable management and collections company.	due January 31, 2022.						1,199,040		500,000
(Contact Center) www.mercantilesolutions.com	(e) $150,000 Subordinated Debenture	6/30/14
	at 8% due January 31, 2022.
	Warrant for 3.29% Membership	10/22/12					150,000		-
	Interests. Option for 1.5%
	Membership Interests.						97,625		-
	Total Mercantile						1,446,665		500,000

Open Exchange, Inc. (g)	397,899 Series C Preferred	11/13/13		4	%		1,193,697		543,283		2.2	%
(Formerly KnowledgeVision Systems, Inc.)	397,899 Common.	10/22/19					208,243		108,656
Lincoln, MA. Online presentation and training	$450,000 Replacement Term Note at	10/22/19
software. (Software)	9% due September 30, 2022.						450,000		450,000
www.openexc.com	Total Open Exchange						1,851,940		1,101,939

Owl Rock Capital Corporation NYSE: ORRC (n) Public BDC New York, NY.	30,000 shares.	3/16/20		<1	%		347,067		364,700		0.7	%

PennantPark Investment Corporation NASDAQ: PNNT (n) Public BDC New York, NY.	100,000 shares.	8/13/20		<1	%		370,130		322,000		0.6	%

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		471,603		0.9	%

Rheonix, Inc. (e)	9,676 Common.	10/29/09		4	%		-		-		1.4	%
Ithaca, NY. Developer of fully automated	(g) 1,839,422 Series A Preferred.	12/12/13					2,099,999		-
microfluidic based molecular assay and diagnostic	(g) 50,593 Common.	10/24/09					-		-
testing devices. (Health Care)	(g) 589,420 Series B Preferred.	9/29/15					702,732		702,732
www.rheonix.com	Total Rheonix						2,802,731		702,732

Science and Medicine Group, Inc. (SMG) (g)	$1,900,000 Promissory Note at 12% due	7/31/20		0	%						3.8	%
Arlington, VA. Research and advisory firm serving the life science, analytical instrument, diagnostic, healthcare, radiology, and dental industries. (Health Care) www.scienceandmedicinegroup.com	March 5, 2023.						1,900,000		1,900,000

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

September 30, 2020 (Continued)

(Unaudited)

Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity			Cost		(d)(f) Fair Value		Percent of Net Assets

SocialFlow, Inc. (e)(g)	1,049,538 Series B Preferred.	4/5/13		4	%		500,000		209,908		1.5	%
New York, NY. Provides instant analysis of	1,204,819 Series B-1 Preferred.	4/8/14					750,000		324,761
social networks using a proprietary, predictive	717,772 Series C Preferred.	6/26/15					500,000		215,332
analytic algorithm to optimize advertising and	Total Social Flow						1,750,000		750,000
publishing. (Software) www.socialflow.com

Somerset Gas Transmission Company, LLC (e)(m)	26.5337 Units.	4/1/05		3	%		719,097		500,000		1.0	%
Columbus, OH. Natural gas transportation. (Oil and Gas) www.somersetgas.com

TCG BDC, Inc. NASDAQ: CGBD (n) Public BDC	40,000 shares.	8/13/20		<1	%		376,996		367,466		0.7	%
New York, NY.

Other Non-Control/Non-Affiliate Investments:	Membership Interest.	10/1/98		5	%		310,357		-		0.0	%
DataView, LLC (e)
(Software)

UStec/Wi3 (e)	Common stock.	12/17/98		<1	%		100,500		-		0.0	%
(Manufacturing)
Subtotal Non-Control/Non-Affiliate Investments						$	26,961,995	$	26,223,106

Affiliate Investments – 30.9% of net assets (k)	1,119,024 Series A-2 Preferred	10/20/14		9	%						0.0	%
BeetNPath, LLC (Grainful) (e)(g)(m)	Membership Units.					$	359,000	$	-
Ithaca, NY. Frozen entrées made from 100%	1,032,918 Series B Preferred	10/16/15
whole grain steel cut oats under Grainful brand	Membership Units.						261,277		-
name. (Consumer Product)	$262,626.64 Convertible Secured Notes	6/17/16
www.grainful.com	at 8% due December 21, 2019.						262,627		-
	Total BeetNPath						882,904		-

Carolina Skiff LLC (e)(g)(m)	6.0825% Class A Common Membership	1/30/04		7	%						3.5	%
Waycross, GA. Manufacturer of ocean fishing	Interest.						15,000		1,750,000
and pleasure boats. (Manufacturing)
www.carolinaskiff.com

ClearView Social, Inc. (e)(g)	312,500 Series Seed Plus Preferred.	1/4/16		6	%		200,000		200,000		0.4	%
Buffalo, NY. Social media publishing tool for law, CPA and professional firms. (Software) www.clearviewsocial.com

Filterworks Acquisition USA, LLC (l)(m)	$2,283,702 Term Note at 12% (+2%	11/8/19		9	%						5.8	%
Deerfield Beach, FL. Provides spray booth	PIK) due December 4, 2023.						2,337,882		2,337,882
equipment, frame repair machines and paint booth	562.5 Class A Units						562,500		562,500
filter services for collision shops. (Automotive)	Total Filterworks						2,900,382		2,900,382
www.filterworksusa.com

Genicon, Inc. (e)(g)(l)	1,586,902 Series B Preferred.	4/10/15		6	%		1,000,000		-		0.5	%
Winter Park, FL. Designs, produces and	$3,250,000 Promissory Notes at 10%	11/2/18
distributes patented surgical instrumentation.	due June 12, 2022, (10% PIK).						3,743,377		-
(Health Care)	$250,000 Promissory Note at 10% due	6/14/19
www.geniconendo.com	June 12, 2021 (10% PIK).						262,184		250,000
	Warrants for Common.	11/2/18					120,000		-
	Total Genicon						5,125,561		250,000

Knoa Software, Inc. (e)(g)	973,533 Series A-1 Convertible	11/20/12		7	%						2.4	%
New York, NY. End user experience	Preferred.						750,000		750,000
management and performance (EMP) solutions	1,876,922 Series B Preferred.	6/9/14					479,155		479,155
utilizing enterprise applications. (Software)	Total Knoa						1,229,155		1,229,155
www.knoa.com

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

September 30, 2020 (Continued)

(Unaudited)

Company, Geographic Location, Business Description, (Industry) and Website	(a) Type of Investment	(b) Date Acquired	(c) Equity			Cost		(d)(f) Fair Value		Percent of Net Assets

Mezmeriz, Inc. (e)(g)	1,554,565 Series Seed Preferred.	5/14/15		12	%		742,850		-		0.0	%
Ithaca, NY. Technology company developing novel reality capture tools for 3D mapping, reality modeling, object tracking and classification. (Electronics Developer) www.mezmeriz.com

Microcision LLC (g)	$1,500,000 Subordinated Promissory	1/10/20		5	%						3.0	%
Pennsauken Township, NJ. Manufacturer of	Note at 11% due January 10, 2025.						1,406,498		1,406,498
precision machined medical implants,	Membership Interest Purchase Warrant	1/10/20
components and assemblies. (Manufacturing)	for 5%.						110,000		110,000
www.microcision.com	Total Microcision						1,516,498		1,516,498

New Monarch Machine Tool, Inc. (e)(g)	22.84 Common.	1/17/08		15	%		22,841		22,841		0.1	%
Cortland, NY. Manufactures and services vertical/horizontal machining centers. (Manufacturing) www.monarchmt.com

OnCore Golf Technology, Inc. (e)(g)	300,483 Preferred AA.	11/30/18		8	%		752,712		300,000		0.6	%
Buffalo, NY. Patented and proprietary golf balls utilizing technology and innovation. (Consumer Product) www.oncoregolf.com

SciAps, Inc. (e)(g)	187,500 Series A Preferred.	7/12/13		6	%		1,500,000		-		5.2	%
Woburn, MA. Instrumentation company	274,299 Series A1 Convertible Preferred.	4/4/14					504,710		-
producing portable analytical devices using XRF,	117,371 Series B Convertible Preferred.	8/31/15					250,000		250,000
LIBS and RAMAN spectroscopy to identify	113,636 Series C Convertible Preferred.	4/7/16					175,000		175,000
compounds, minerals, and elements.	369,698 Series C1 Convertible Preferred.	4/7/16					399,274		399,274
(Manufacturing)	147,059 Series D Convertible Preferred.	5/9/17					250,000		250,000
www.sciaps.com	Warrant to purchase Series D-1	5/9/17
	Preferred.						45,000		45,000
	$1,500,000 Secured Subordinated	4/23/20
	Promissory Note at 12% due April 23,
	2023.						1,461,250		1,461,250
	Total SciAps						4,585,234		2,580,524
	(i) Interest receivable $78,500.

Teleservices Solutions Holdings, LLC (e)(g)(l)	250,000 Class B Preferred Units.	5/30/14		6	%		250,000		-		0.0	%
Montvale, NJ. Customer contact center	1,000,000 Class C Preferred Units.	5/30/14					1,190,680		-
specializing in customer acquisition and retention	80,000 Class D Preferred Units.	12/19/14					91,200		-
for selected industries. (Contact Center)	104,198 Class E Preferred Units.	6/10/15					-		-
www.ipacesetters.com	PIK dividend for Series C and D at 12%	3/27/16
	and 14%, respectively.						104,198		-
	Total Teleservices						1,636,078		-

Tilson Technology Management, Inc. (g)	*120,000 Series B Preferred.	1/20/15		9	%		600,000		1,950,000		9.4	%
Portland, ME. Provides network deployment	*21,391 Series C Preferred.	9/28/16					200,000		347,604
construction and information system services	*70,176 Series D Preferred.	9/29/17					800,000		1,140,360
management for cellular, fiber optic and wireless	*15,385 Series E Preferred.	3/15/19					500,012		500,012
systems providers. Its affiliated entity, SQF, LLC	211,567 SQF Hold Co. Common.	3/15/19					-		22,036
is a CLEC supporting small cell 5G deployment.	23,077 Series F Preferred.	6/15/20					750,003		750,003
(Professional Services)	Total Tilson						2,850,015		4,710,015
www.tilsontech.com	*2.5% dividend payable quarterly.

Other Affiliate Investments:
G-TEC Natural Gas Systems (e)(m) (Manufacturing)	Membership Interest	8/31/99		17	%		400,000		-		0.0	%

Subtotal Affiliate Investments						$	22,859,230	$	15,459,415
Total investments – 83.4%						$	49,821,225	$	41,682,521
Other Assets in excess of liabilities – 16.6%								$	8,267,632
Net Assets – 100%								$	49,950,153

RAND CAPITAL CORPORATION AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

September 30, 2020 (Continued)

(Unaudited)

Notes to the Consolidated Schedule of Portfolio Investments

(a) At September 30, 2020, restricted securities represented 93% 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, 2020, ASC 820 designates 93% 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 by our external investment advisor Rand Capital Management, LLC (“RCM”) and submitted to the Board of Directors for approval. 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. However, 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, 2020, the total cost of investment securities was approximately $49.8 million. Net unrealized depreciation was approximately ($8.1) million, which was comprised of $10.1 million of unrealized appreciation of investment securities and ($18.2) million of unrealized depreciation of investment securities. At September 30, 2020, the aggregate gross unrealized gain for federal income tax purposes was $10.1 million and the aggregate gross unrealized loss for federal income tax purposes was ($16.9) million. The net unrealized loss for federal income tax purposes was ($6.8) million based on a tax cost of $48.6 million.

(g) Rand Capital SBIC, Inc. investment.

(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 SBIC, Inc. for federal income tax and Regulated Investment Company (RIC) compliance.

(n) Publicly traded company.

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

September 30, 2020 (Continued)

(Unaudited)

Investments in and Advances to Affiliates

Company	Type of Investment	December 31, 2019 Fair Value		Net Change in Unrealized Appreciation (Depreciation)			Gross Additions (1)		Gross Reductions (2)			September 30, 2020 Fair Value		Net Realized Gains (Losses)		Amount of Interest/ Dividend/ Fee Income (3)
Control Investments:
	Total Control Investments	$	-	$	-		$	-	$	-		$	-	$	-	$	-
Affiliate Investments:
BeetNPath, LLC	1,119,024 Series A-2 Preferred Membership Units.	$	-	$	-		$	-	$	-		$	-	$	-	$	-
	1,032,918 Series B Preferred Membership Units.		-		-			-		-			-		-		-
	$262,626.64 Convertible Secured Notes at 8%		-		-			-		-			-		-		-
	Total BeetNPath		-		-			-		-			-		-		-

Carolina Skiff LLC	6.0825% Class A Common Membership interest.		1,750,000		-			-		-			1,750,000		-		-

ClearView Social, Inc.	312,500 Series Seed Plus Preferred.		200,000		-			-		-			200,000		-		-

Filterworks	$2,283,702 Term Note at 12%.		2,302,653		-			35,229		-			2,337,882		-		247,607
Acquisition USA,	562.5 Class A Units.		562,500		-			-		-			562,500		-		-
LLC	Total Filterworks		2,865,153		-			35,229		-			2,900,382		-		247,607

Genicon, Inc.	1,586,902 Series B Preferred.		-		-			-		-			-		-		-
	$3,250,000 Promissory Notes at 10%.		500,000		(500,000	)		-		-			-		-		17,054
	$250,000 Promissory Note at 10%		250,000		-			-		-			250,000		-		-
	Warrant for Common.		-		-			-		-			-		-		-
	Total Genicon		750,000		(500,000	)		-		-			250,000		-		17,054

G-TEC Natural Gas Systems	16.639% Class A Membership Interest. 8% cumulative dividend.		-		-			-		-			-		-		-

Knoa Software, Inc.	973,533 Series A-1 Convertible Preferred.		750,000		-			-		-			750,000		-		-
	1,876,922 Series B Preferred.		479,155		-			-		-			479,155		-		-
	Total Knoa		1,229,155		-			-		-			1,229,155		-		-

Mezmeriz, Inc.	1,554,565 Series Seed Preferred.		-		-			-		-			-		-		-

Microcision	$1,500,000 Subordinated Promissory Note at 10%		-		-			1,406,498		-			1,406,498		-		140,667
	Membership Interest Purchase Warrant for 5%		-		-			110,000		-			110,000		56,916		-
	Total Microcision		-		-			1,516,498		-			1,516,498		56,916		140,667

New Monarch	22.84 Common.		22,841		-			-		-			22,841		-
Machine Tool, Inc.

OnCore Golf	300,483 Series AA Preferred.		300,000		-			-		-			300,000		-		-
Technology, Inc.

SciAps, Inc.	187,500 Series A Preferred.		-		-			-		-			-		-		-
	274,299 Series A-1 Convertible Preferred.		-		-			-		-			-		-		-
	117,371 Series B Convertible Preferred.		250,000		-			-		-			250,000		-		-
	113,636 Series C Convertible Preferred.		175,000		-			-		-			175,000		-		-
	369,698 Series C-1 Convertible Preferred.		399,274		-			-		-			399,274		-		-
	147,059 Series D Convertible Preferred.		250,000		-			-		-			250,000		-		-
	Warrant to Purchase Series D-1 Preferred.		-		-			45,000					45,000
	$1,500,000 Subordinated Promissory Note at 12%.		-		-			1,500,000		(38,750	)		1,461,250		-		93,911
	Total SciAps		1,074,274		-			1,545,000		(38,750	)		2,580,524		-		93,911

Teleservices	250,000 Class B Preferred Units.		-		-			-		-			-		-		-
Solutions Holdings, LLC	1,000,000 Class C Preferred Units.		-		-			-		-			-		-		-
	80,000 Class D Preferred Units.		-		-			-		-			-		-		-
	104,198 Class E Preferred Units.		-		-			-		-			-		-		-
	Total Teleservices		-		-			-		-			-		-		-

RAND CAPITAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS

September 30, 2020 (Continued)

(Unaudited)

Investments in and Advances to Affiliates

Company	Type of Investment	December 31, 2019 Fair Value		Net Change in Unrealized Appreciation (Depreciation)			Gross Additions (1)		Gross Additions (2)			September 30, 2020 Fair Value		Net Realized Gains (Losses)		Amount of Interest/ Dividend/ Fee Income (3)
Tilson	120,000 Series B Preferred.		1,950,000		-			-		-			1,950,000		-		39,375
Technology	21,391 Series C Preferred.		347,604		-			-		-			347,604		-		-
Management, Inc.	70,176 Series D Preferred.		1,140,360		-			-		-			1,140,360		-		-
	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		-			-		-			22,036		-		-
	Total Tilson		3,960,012		-			750,003		-			4,710,015		-		39,375

	Total Affiliate Investments	$	12,151,435	$	(500,000	)	$	3,846,730	$	(38,750	)	$	15,459,415	$	56,916	$	537,614
	Total Control and Affiliate Investments	$	12,151,435	$	(500,000	)	$	3,846,730	$	(38,750	)	$	15,459,415	$	56,916	$	537,614

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.

RAND CAPITAL CORPORATION AND SUBSIDIARIES