Financial Data and Key Metrics Changes - Net investment income was $2,500,000 or $0.83 per share, driven primarily by a non-cash reversal of a capital gains incentive fee tied to unrealized depreciation [5][18] - Total investment income decreased by 25% to $1,600,000 compared to the prior year period, primarily due to reduced interest income and lower dividend income [17] - Net asset value at quarter end was $56,700,000, down from $65,300,000 at the end of Q1 2025, reflecting a $9,500,000 unrealized loss on Tilson [19] Business Line Data and Key Metrics Changes - The portfolio was valued at $52,400,000, down sequentially and from year-end, driven by repayments and valuation adjustments, particularly related to Tilson Technologies [8][9] - The portfolio mix remains tilted towards income-generating debt investments, accounting for 86% of the portfolio by fair value [10] - The annualized weighted average yield on debt investments, including PIK, was 12.2% at quarter end [10] Market Data and Key Metrics Changes - The overall investment environment remained muted with limited new deal flow and stalled M&A transactions, leading to a more conservative posture across the portfolio [4][5] - Approximately $1,200,000 of interest income was PIK, representing about one-third of total investment income [5] Company Strategy and Development Direction - The company continues to execute its long-term strategy focused on income generation and capital preservation, prioritizing yield-focused debt investments [22] - The company aims to maintain dividend stability even during periods of lower investment activity, demonstrating the strength of its portfolio [7][22] Management's Comments on Operating Environment and Future Outlook - Management noted that while the investment environment remains cautious, there are early signs that may lead to stronger deal activity in the second half of the year [22] - The company is well-equipped to support new investments and respond to evolving market conditions, with a strong liquidity position and no outstanding debt [20][22] Other Important Information - The company declared three quarterly dividends of $0.29 per share in 2025, with total dollar amounts paid to shareholders increasing due to a higher number of shares outstanding [8] - The largest portfolio exposure is in professional services at 37%, down from 45% in the prior quarter, largely due to the valuation adjustment of Tilson [12] Q&A Session Summary - No specific questions or answers were provided in the content, thus this section is not applicable.

Financial Data and Key Metrics Changes - Net investment income was $2,500,000 or $0.83 per share, driven primarily by a non-cash reversal of a capital gains incentive fee tied to unrealized depreciation [5][18] - Total investment income was $1,600,000, reflecting a 25% decrease compared to the prior year period, primarily due to reduced interest income and lower dividend income [17] - Net asset value at quarter end was $56,700,000, down from $65,300,000 at the end of Q1 2025, reflecting a $9,500,000 unrealized loss on Tilson [19][20] Business Line Data and Key Metrics Changes - The portfolio was valued at $52,400,000, down sequentially and from year-end, driven by repayments and valuation adjustments, particularly related to Tilson Technologies [8][9] - The portfolio mix remains tilted towards income-generating debt investments, accounting for 86% of the portfolio by fair value, while equity investments represented 14% [10] Market Data and Key Metrics Changes - The overall investment environment remained muted with limited new deal flow and stalled M&A transactions, leading to a more conservative posture across the portfolio [4][22] - Approximately $1,200,000 of interest income was PIK (payment in kind), representing about one-third of total investment income [5] Company Strategy and Development Direction - The company continues to execute its long-term strategy focused on income generation and capital preservation, prioritizing yield-focused debt investments [22] - The company aims to maintain dividend stability while navigating through a cautious investment environment [22] Management's Comments on Operating Environment and Future Outlook - Management noted that while Q2 did not include meaningful new investment activity, there are early signs of stronger deal activity in the second half of the year [22] - The company remains committed to creating value for shareholders through proactive oversight and prudent capital allocation [22] Other Important Information - The company declared three quarterly dividends of $0.29 per share in 2025, with total dollar amounts paid to shareholders increasing due to a higher number of shares outstanding [6][7] - The company ended the quarter with $4,400,000 in cash, significantly up from $835,000 at year-end 2024, with no outstanding bank debt [20] Q&A Session Summary - No specific questions or answers were provided in the content regarding the Q&A session.

Financial Performance - Net investment income increased to $2.5 million, or $0.83 per share, driven by incentive fee reversal[9] - Total expenses were a benefit of $864,000, reflecting a $1.5 million capital gains incentive fee reversal[9] - Total investment income decreased by 25% due to repayments exceeding originations[9, 32] - Adjusted expenses decreased 38% to $626,000 in Q2 2025, excluding the capital gains incentive fee benefit[32] - Net Asset Value (NAV) decreased from $65.3 million to $56.7 million[35] Portfolio Composition and Activity - The fair value of the investment in Tilson Technologies decreased by $9.5 million due to bankruptcy filing[20] - Portfolio mix at quarter-end: 86% fixed-rate debt investments and 14% equity investments in private companies[17] - Annualized weighted average yield of debt investments was 12.2% at June 30, 2025[17] - Total investments at fair value of $52.4 million[24] Liquidity and Dividends - Ended the quarter with approximately $25 million in liquidity and no debt[9] - Maintained quarterly dividend at $0.29 per share[38] - $20.2 million available credit capacity[38]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides a comprehensive overview of the company's financial performance and position, including statements, portfolio details, and accounting notes [Item 1. Financial Statements and Supplementary Data](index=3&type=section&id=Item%201.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Rand Capital Corporation's unaudited consolidated financial statements, including statements of financial position, operations, cash flows, and detailed notes for the periods ended June 30, 2025, and December 31, 2024 [Consolidated Statements of Financial Position](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) This statement details the company's assets, liabilities, and equity at specific points in time, reflecting its financial health **Consolidated Statements of Financial Position Highlights:** | Metric | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :----------------------------------- | :----------- | :----------- | :------- | :------- | | Total assets | $72,457,433 | $57,639,539 | $(14,817,894) | (20.5)% | | Total investments, at fair value | $70,818,041 | $52,364,254 | $(18,453,787) | (26.1)% | | Cash | $834,805 | $4,419,813 | $3,585,008 | 429.4% | | Total liabilities | $7,124,913 | $925,585 | $(6,199,328) | (87.0)% | | Line of credit | $600,000 | $0 | $(600,000) | (100.0)% | | Capital gains incentive fees | $1,565,000 | $0 | $(1,565,000) | (100.0)% | | Total stockholders' equity (net assets) | $65,332,520 | $56,713,954 | $(8,618,566) | (13.2)% | | Net assets per share | $25.31 | $19.10 | $(6.21) | (24.5)% | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This statement summarizes the company's revenues, expenses, and net income or loss over a period, indicating operational performance **Consolidated Statements of Operations Highlights (Six Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :------------------------------------------------- | :-------------------------- | :-------------------------- | :------- | | Total investment income | $4,203,368 | $3,610,201 | $(593,167) | | Total (benefits) expenses | $3,879,638 | $(73,094) | $(3,952,732) | | Net investment income (loss) | $322,390 | $3,696,349 | $3,373,959 | | Net realized gain (loss) on sales and dispositions of investments | $3,878,200 | $925,332 | $(2,952,868) | | Net change in unrealized appreciation/depreciation on investments | $4,936,564 | $(11,516,388) | $(16,452,952) | | Net (decrease) increase in net assets from operations | $9,137,154 | $(6,894,707) | $(16,031,861) | | Basic and diluted net (decrease) increase in net assets from operations per share | $3.54 | $(2.36) | $(5.90) | [Consolidated Statements of Changes in Net Assets](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) This statement outlines the changes in the company's net assets (stockholders' equity) over a period, including operations and dividends **Consolidated Statements of Changes in Net Assets Highlights (Six Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :------- | | Net assets at beginning of period | $60,815,213 | $65,332,520 | $4,517,307 | | Net (decrease) increase in net assets from operations | $9,137,154 | $(6,894,707) | $(16,031,861) | | Declaration of dividend | $(1,393,751) | $(1,723,859) | $(330,108) | | Net assets at end of period | $68,558,616 | $56,713,954 | $(11,844,662) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by the company from operating, investing, and financing activities over a period **Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :---------------------------------------- | :-------------------------- | :-------------------------- | :------- | | Net cash provided by (used in) operating activities | $(558,344) | $8,076,925 | $8,635,269 | | Net cash used in financing activities | $(443,751) | $(4,491,917) | $(4,048,166) | | Net increase (decrease) in cash | $(1,002,095) | $3,585,008 | $4,587,103 | | Cash, end of period | $2,293,226 | $4,419,813 | $2,126,587 | [Consolidated Schedule of Portfolio Investments](index=7&type=section&id=Consolidated%20Schedule%20of%20Portfolio%20Investments) This schedule provides a detailed listing and classification of the company's investment portfolio, including fair values and cost **Total Investments at Fair Value:** | Metric | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :------- | :------- | | Investments, at cost | $68,120,235 | $61,277,046 | $(6,843,189) | (10.0)% | | Unrealized (depreciation) appreciation, net | $2,697,806 | $(8,912,792) | $(11,610,598) | (430.4)% | | Investments, at fair value | $70,818,041 | $52,364,254 | $(18,453,787) | (26.1)% | **Investment Category Breakdown (Fair Value):** | Category | Dec 31, 2024 | Jun 30, 2025 | Change | % Change | | :-------------------------------- | :----------- | :----------- | :------- | :------- | | Non-Control/Non-Affiliate Investments | $16,649,897 | $7,646,779 | $(9,003,118) | (54.1)% | | Affiliate Investments | $51,668,144 | $42,717,475 | $(8,950,669) | (17.3)% | | Control Investments | $2,500,000 | $2,000,000 | $(500,000) | (20.0)% | **Industry Classification (June 30, 2025):** | Industry Classification | Percentage of Total Investments (at fair value) | | :-------------------------------- | :---------------------------------------------- | | Professional and Business Services | 36.6% | | Consumer Product | 24.9% | | Distribution | 13.1% | | Manufacturing | 8.7% | | Health and Wellness | 5.8% | | Automotive | 5.7% | | Software | 5.2% | [Notes to the Consolidated Schedule of Portfolio Investments](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Schedule%20of%20Portfolio%20Investments) These notes provide additional context and details regarding the valuation and characteristics of the company's investment portfolio - At June 30, 2025, restricted securities represented **100% of the fair value** of the investment portfolio, and all investments were classified as "Level 3" assets under ASC 820[27](index=27&type=chunk) - Non-income producing investments include Caitec, OnCore Golf Technology, Inc., Open Exchange, Inc., PostProcess Technologies, Inc., and Carolina Skiff LLC[27](index=27&type=chunk) - As of June 30, 2025, the total cost of investment securities was approximately **$61.3 million**, with a net unrealized depreciation of approximately **($8.9) million**[27](index=27&type=chunk) [Investments in and Advances to Affiliates (June 30, 2025)](index=11&type=section&id=Investments%20in%20and%20Advances%20to%20Affiliates) This section details the company's investments in and advances to affiliated entities as of June 30, 2025, highlighting changes in unrealized depreciation - Control Investments (ITA Acquisition, LLC) experienced a net change in unrealized depreciation of **$(875,000)** for the six months ended June 30, 2025, with gross additions of **$375,000**[29](index=29&type=chunk) - Affiliate Investments saw a net change in unrealized depreciation of **$(10,545,654)** and net realized gains of **$925,357** for the six months ended June 30, 2025[31](index=31&type=chunk) - Tilson Technology Management, Inc. (Affiliate Investment) had a significant net change in unrealized depreciation of **$(9,500,000)** during the period[31](index=31&type=chunk) [Industry Classification (June 30, 2025)](index=13&type=section&id=Industry%20Classification) This section categorizes the company's investment portfolio by industry as of June 30, 2025, showing concentration levels **Industry Classification of Total Investments (at fair value) as of June 30, 2025:** | Industry Classification | Percentage of Total Investments | | :-------------------------------- | :------------------------------ | | Professional and Business Services | 36.6% | | Consumer Product | 24.9% | | Distribution | 13.1% | | Manufacturing | 8.7% | | Health and Wellness | 5.8% | | Automotive | 5.7% | | Software | 5.2% | [Consolidated Schedule of Portfolio Investments (December 31, 2024)](index=14&type=section&id=Consolidated%20Schedule%20of%20Portfolio%20Investments%20(December%2031%2C%202024)) This schedule provides a detailed listing and classification of the company's investment portfolio as of December 31, 2024 **Investment Category Breakdown (Fair Value) as of December 31, 2024:** | Category | Fair Value | | :-------------------------------- | :----------- | | Non-Control/Non-Affiliate Investments | $16,649,897 | | Affiliate Investments | $51,668,144 | | Control Investments | $2,500,000 | | **TOTAL INVESTMENTS** | **$70,818,041** | - Tilson Technology Management, Inc. was the largest Affiliate Investment at fair value (**$11,500,000**), representing **17.6% of net assets**[42](index=42&type=chunk) - Mattison Avenue Holdings LLC was a significant Non-Control/Non-Affiliate Investment at fair value (**$5,572,902**), representing **8.5% of net assets**[36](index=36&type=chunk) [Notes to the Consolidated Schedule of Portfolio Investments (December 31, 2024)](index=17&type=section&id=Notes%20to%20the%20Consolidated%20Schedule%20of%20Portfolio%20Investments%20(December%2031%2C%202024)) These notes provide additional context and details regarding the valuation and characteristics of the company's investment portfolio as of December 31, 2024 - At December 31, 2024, restricted securities represented **100% of the fair value** of the investment portfolio, and all investments were classified as "Level 3" assets under ASC 820[44](index=44&type=chunk) - As of December 31, 2024, the total cost of investment securities was approximately **$68.1 million**, with a net unrealized appreciation of approximately **$2.7 million**[44](index=44&type=chunk) [Investments in and Advances to Affiliates (December 31, 2024)](index=18&type=section&id=Investments%20in%20and%20Advances%20to%20Affiliates%20(December%2031%2C%202024)) This section details the company's investments in and advances to affiliated entities as of December 31, 2024, highlighting changes in unrealized appreciation - Control Investments (ITA Acquisition, LLC) experienced a net change in unrealized depreciation of **$(2,565,130)** for the year ended December 31, 2024, with gross additions of **$916,170**[46](index=46&type=chunk) - Affiliate Investments saw a net change in unrealized appreciation of **$1,400,942** and net realized gains of **$6,165,419** for the year ended December 31, 2024[48](index=48&type=chunk) - SciAps, Inc. (Affiliate Investment) had significant net realized gains of **$7,716,461** from reductions in 2024[48](index=48&type=chunk) [Industry Classification (December 31, 2024)](index=21&type=section&id=Industry%20Classification%20(December%2031%2C%202024)) This section categorizes the company's investment portfolio by industry as of December 31, 2024, showing concentration levels **Industry Classification of Total Investments (at fair value) as of December 31, 2024:** | Industry Classification | Percentage of Total Investments | | :-------------------------------- | :------------------------------ | | Professional and Business Services | 47.6% | | Consumer Product | 17.7% | | Manufacturing | 12.7% | | Distribution | 9.7% | | Software | 4.1% | | Automotive | 4.1% | | Health and Wellness | 4.1% | [Notes to the Consolidated Financial Statements](index=22&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes provide essential disclosures and explanations supporting the consolidated financial statements, detailing accounting policies and other relevant information [Note 1. ORGANIZATION](index=22&type=section&id=Note%201.%20ORGANIZATION) This note describes Rand Capital Corporation's structure, regulatory status as a BDC and RIC, and its external management arrangement - Rand Capital Corporation operates as an externally managed, closed-end, non-diversified management investment company, regulated as a Business Development Company (BDC) under the 1940 Act[58](index=58&type=chunk)[152](index=152&type=chunk) - The company elected U.S. Federal tax treatment as a Regulated Investment Company (RIC), requiring distribution of substantially all investment company taxable income to shareholders[59](index=59&type=chunk)[157](index=157&type=chunk) - East Asset Management owns approximately **64%** of Rand Capital's outstanding common stock as of June 30, 2025, following a **$25 million** investment in November 2019[56](index=56&type=chunk) - Rand Capital Management, LLC (RCM) serves as the external investment adviser and administrator, with agreements extended through December 31, 2025[56](index=56&type=chunk)[153](index=153&type=chunk) - The Board declared quarterly cash dividends of **$0.29 per share** for Q1 and Q2 2025; a **$4.20 per share** dividend declared in December 2024 was paid 20% cash and 80% stock in January 2025, increasing outstanding shares from 2,581,021 to 2,969,814[60](index=60&type=chunk)[158](index=158&type=chunk) [Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=23&type=section&id=Note%202.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and methods used in preparing the financial statements, including investment valuation and income recognition - The financial statements are prepared in accordance with GAAP, following ASC 946 for Investment Companies[64](index=64&type=chunk) - Investments are classified by level of control (Control, Affiliate, Non-Control/Non-Affiliate) as defined by the 1940 Act[67](index=67&type=chunk) - All investments are valued at fair value, determined in good faith by RCM and approved by the Board, with **100% classified as "Level 3" assets** at June 30, 2025, and December 31, 2024[69](index=69&type=chunk)[97](index=97&type=chunk) - Interest income is recognized on an accrual basis, except for investments in default, and includes Payment-in-Kind (PIK) interest; for the six months ended June 30, 2025, **33.9% of total investment income was non-cash PIK interest**[71](index=71&type=chunk)[72](index=72&type=chunk)[195](index=195&type=chunk) - As of June 30, 2025, the debt investment in ITA Acquisition, LLC was on non-accrual status (cost **$5.4M**, fair value **$2.0M**), representing **8.9% of the investment portfolio**; no investments were on non-accrual status at December 31, 2024[72](index=72&type=chunk) - The company maintains RIC status and generally avoids corporate-level U.S. federal income taxes by distributing substantially all taxable income[83](index=83&type=chunk) - The valuation allowance against U.S. federal deferred tax assets was **$363,471** at June 30, 2025, and December 31, 2024[85](index=85&type=chunk) - Top five portfolio company concentrations at June 30, 2025, include Seybert's (**16%**), FSS (**13%**), EFINEA (**9%**), Caitec (**9%**), and First Coast Mulch (**7%**)[91](index=91&type=chunk) [Note 3. INVESTMENTS](index=26&type=section&id=Note%203.%20INVESTMENTS) This note details the company's investment valuation methodologies, significant unobservable inputs, and changes in Level 3 assets - All investments are Level 3 assets, valued using unobservable inputs; valuation approaches include cost, market (EBITDA/revenue multiples, transaction pricing), and income approaches[97](index=97&type=chunk)[99](index=99&type=chunk)[106](index=106&type=chunk) - Significant unobservable inputs for equity investments include EBITDA and revenue multiples, financial/operational performance, and debt/senior equity preferences[101](index=101&type=chunk) - Significant unobservable inputs for loan and debt securities include financial/operational performance, similar debt terms, and market acceptance of products/services[105](index=105&type=chunk) **Summary of Level 3 Assets by Valuation Approach (June 30, 2025):** | Investment Type | Market Approach (EBITDA Multiple) | Liquidation Seniority | Market Approach (Revenue Multiple) | Market Approach (Transaction Pricing) | Totals | | :-------------------------------- | :-------------------------------- | :-------------------- | :--------------------------------- | :------------------------------------ | :------- | | Non-Control/Non-Affiliate Equity | $0 | $0 | $700,000 | $100,038 | $800,038 | | Non-Control/Non-Affiliate Loan and Debt | $4,799,278 | $2,047,463 | $0 | $0 | $6,846,741 | | Affiliate Equity | $6,650,000 | $0 | $0 | $0 | $6,650,000 | | Affiliate Loan and Debt | $34,317,475 | $0 | $0 | $1,750,000 | $36,067,475 | | Control Equity | $0 | $0 | $0 | $0 | $0 | | Control Loan and Debt | $0 | $2,000,000 | $0 | $0 | $2,000,000 | | **Total Level 3 Investments** | **$45,766,753** | **$4,047,463** | **$700,000** | **$1,850,038** | **$52,364,254** | - The ending balance of Level 3 Assets decreased from **$70,818,041** at December 31, 2024, to **$52,364,254** at June 30, 2025, primarily due to net unrealized losses of **$(11,610,598)** and repayments/sales of **$(9,446,225)**[109](index=109&type=chunk) [Note 4. OTHER ASSETS](index=32&type=section&id=Note%204.%20OTHER%20ASSETS) This note provides a breakdown of the company's other assets, including prepaid expenses and deferred financing fees **Other Assets Composition:** | Metric | Dec 31, 2024 | Jun 30, 2025 | Change | | :---------------------- | :----------- | :----------- | :------- | | Prepaid expenses | $16,977 | $79,076 | $62,099 | | Deferred financing fees, net | $62,500 | $50,000 | $(12,500) | | Accounts receivable | $22,929 | $20,000 | $(2,929) | | Dividends receivable | $13,125 | $0 | $(13,125) | | **Total other assets** | **$115,531** | **$149,076** | **$33,545** | [Note 5. COMMITMENTS AND CONTINGENCIES](index=32&type=section&id=Note%205.%20COMMITMENTS%20AND%20CONTINGENCIES) This note discloses any material commitments or contingent liabilities affecting the company's financial position - The Corporation had no commitments at June 30, 2025, or December 31, 2024[112](index=112&type=chunk) [Note 6. SENIOR SECURED REVOLVING CREDIT FACILITY](index=32&type=section&id=Note%206.%20SENIOR%20SECURED%20REVOLVING%20CREDIT%20FACILITY) This note describes the terms and status of the company's credit facility, including outstanding balances and compliance with covenants - The company has a **$25.0 million** senior secured revolving credit facility with M&T Bank, maturing June 27, 2027[113](index=113&type=chunk) - No outstanding balance was drawn on the Credit Facility at June 30, 2025 (vs. **$600,000** at Dec 31, 2024)[119](index=119&type=chunk) - Unused line of credit balance was approximately **$20.2 million** at June 30, 2025[113](index=113&type=chunk)[221](index=221&type=chunk) - Interest rate at June 30, 2025, was **7.95%** (variable, SOFR + 3.50%)[114](index=114&type=chunk)[221](index=221&type=chunk) - The company was in compliance with all financial covenants (tangible net worth > **$50M**, asset coverage ratio > **3:1**, interest coverage ratio > **2.5:1**) as of June 30, 2025[115](index=115&type=chunk)[222](index=222&type=chunk) **Credit Facility Average Debt and Interest Rate (Six Months Ended June 30):** | Metric | 2024 | 2025 | | :-------------------------- | :-------------------------- | :-------------------------- | | Average debt outstanding | $17,132,143 | $301,657 | | Weighted average interest rate | 8.91% | 7.88% | [Note 7. CHANGES IN STOCKHOLDERS' EQUITY (NET ASSETS)](index=33&type=section&id=Note%207.%20CHANGES%20IN%20STOCKHOLDERS%27%20EQUITY%20(NET%20ASSETS)) This note explains the factors contributing to changes in the company's net assets, such as operational results and dividend payments - Net assets decreased from **$65,332,520** at January 1, 2025, to **$56,713,954** at June 30, 2025[123](index=123&type=chunk) - This decrease was primarily due to a net decrease in net assets from operations of **$(6,894,707)** and dividend payments of **$(1,723,859)**[123](index=123&type=chunk) - A stock dividend payment in January 2025 increased common stock by **$38,879** and capital in excess of par value by **$8,631,884**, while reducing stock dividends distributable by **$8,672,231**[123](index=123&type=chunk) [Note 8. RELATED PARTY TRANSACTIONS](index=34&type=section&id=Note%208.%20RELATED%20PARTY%20TRANSACTIONS) This note details transactions and balances with related parties, including management fees and incentive fees payable to the investment adviser **Amounts Payable to RCM (Due to Investment Adviser):** | Metric | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------------- | :----------- | :----------- | :------- | | Base Management Fee payable | $277,628 | $217,649 | $(59,979) | | Income Based Incentive Fees payable | $178,218 | $291,851 | $113,633 | | Capital Gains Fee payable | $1,727,000 | $0 | $(1,727,000) | | **Total due to investment adviser** | **$2,182,846** | **$509,500** | **$(1,673,346)** | - Base Management Fee for the six months ended June 30, 2025, was **$469,857**, a decrease from **$625,267** in the prior year, reflecting lower total assets[125](index=125&type=chunk)[203](index=203&type=chunk) - Income Based Incentive Fees for the six months ended June 30, 2025, were **$119,673** (vs. **$0** in 2024), resulting from an increase in Pre-Incentive Fee Net Investment Income above the applicable hurdle rate[133](index=133&type=chunk)[204](index=204&type=chunk) - A capital gains incentive fee benefit of **$(1,565,000)** was recorded for the six months ended June 30, 2025 (vs. expense of **$1,753,300** in 2024), due to net portfolio depreciation, particularly the write-down of Tilson; the **$1,727,000** fee payable at Dec 31, 2024, was paid in H1 2025[138](index=138&type=chunk)[201](index=201&type=chunk) - Administration fees for the six months ended June 30, 2025, were **$99,000**, an increase from **$78,167** in the prior year[141](index=141&type=chunk) [Note 9. FINANCIAL HIGHLIGHTS](index=37&type=section&id=Note%209.%20FINANCIAL%20HIGHLIGHTS) This note presents key financial ratios and per-share data, offering a summary of the company's financial performance and position **Per Share Data (Six Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :------------------------------------------------- | :----- | :----- | :----- | | Net asset value, beginning of period | $23.56 | $25.31 | $1.75 | | Net investment income | $0.13 | $1.24 | $1.11 | | Net realized gain on sales and dispositions of investments | $1.50 | $0.31 | $(1.19) | | Net change in unrealized appreciation/depreciation on investments | $1.91 | $(3.88) | $(5.79) | | (Decrease) increase in net assets from operations | $3.54 | $(2.32) | $(5.86) | | Payment of cash dividend | $(0.54) | $(0.58) | $(0.04) | | Effect of stock dividend | $0 | $(3.31) | $(3.31) | | (Decrease) increase in net assets per share | $3.00 | $(6.21) | $(9.21) | | Net asset value, end of period | $26.56 | $19.10 | $(7.46) | | Per share market price, end of period | $15.22 | $16.12 | $0.90 | | Total return based on market value | 21.32% | (13.25)% | (34.57)% | | Total return based on net asset value | 15.02% | (22.26)% | (37.28)% | **Supplemental Data (Six Months Ended June 30):** | Metric | 2024 | 2025 | | :------------------------------------------ | :----- | :----- | | Ratio of expenses before income taxes to average net assets | 12.00% | (0.24)% | | Ratio of net investment income to average net assets | 1.00% | 12.11% | | Portfolio turnover | 13.33% | 0.67% | | Debt/equity ratio | 25.09% | 0% | [Note 10. SUBSEQUENT EVENT](index=37&type=section&id=Note%2010.%20SUBSEQUENT%20EVENT) This note discloses significant events that occurred after the reporting period but before the financial statements were issued - On July 28, 2025, Rand's Board of Directors declared a quarterly cash dividend of **$0.29 per share**, payable on or about September 12, 2025, to shareholders of record as of August 29, 2025[146](index=146&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Rand Capital's financial condition and operating results for the three and six months ended June 30, 2025, highlighting portfolio value changes and liquidity [FORWARD LOOKING STATEMENTS](index=38&type=section&id=FORWARD%20LOOKING%20STATEMENTS) This section cautions readers about statements regarding future plans, strategies, and financial performance, which are subject to various risks and uncertainties - The report contains forward-looking statements regarding plans, strategies, objectives, expectations, investment strategies, co-investment intentions, RIC tax impact, liquidity, capital gains fees, and future dividend payments[149](index=149&type=chunk) - These statements are subject to risks and uncertainties, including economic conditions, securities markets, liquidity, and inflation, as detailed in the "Risk Factors" section[149](index=149&type=chunk) [Overview](index=38&type=section&id=Overview) This section provides a general description of Rand Capital's business model, regulatory status, investment focus, and recent significant events - Rand Capital is an externally managed, non-diversified investment company focused on lending to and investing in lower middle market companies, primarily through higher-yielding debt instruments[151](index=151&type=chunk) - The company operates as a Business Development Company (BDC) and has elected Regulated Investment Company (RIC) tax treatment[152](index=152&type=chunk)[157](index=157&type=chunk) - The asset coverage requirement for senior securities changed from **200% to 150%** effective January 24, 2025, but the Credit Agreement requires a **300% Asset Coverage Ratio**[155](index=155&type=chunk) - The investment in Tilson Technology Management, Inc. was reduced to **$0** after it filed for Chapter 11 bankruptcy, impacting net assets by approximately **14.5%** as of March 31, 2025[159](index=159&type=chunk) - The company holds a separate investment in SQF Holdco LLC, valued at **$2.0 million** at June 30, 2025, which is not part of the Tilson bankruptcy[160](index=160&type=chunk) - The company is permitted to co-invest with affiliates under an SEC exemptive order[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [SEC Exemptive Order](index=39&type=section&id=SEC%20Exemptive%20Order) This section explains the SEC order permitting Rand Capital to co-invest with affiliates, subject to independent director approval and fair terms - An SEC exemptive order (New Order, March 29, 2021) permits Rand to co-invest in portfolio companies with affiliates managed by RCM and Callodine[162](index=162&type=chunk) - Co-investments require approval by a "required majority" of Rand's independent directors, ensuring fair terms, consistency with investment objectives, and no disadvantage to Rand[163](index=163&type=chunk) - An amendment (September 6, 2022) allows participation in follow-on investments with Affiliated Funds that do not hold existing investments in those portfolio companies[163](index=163&type=chunk) [Critical Accounting Policies](index=40&type=section&id=Critical%20Accounting%20Policies) This section refers to the company's annual report for a summary of key accounting policies and the use of estimates in financial reporting - The company's consolidated financial statements are prepared in accordance with United States generally accepted accounting principles (GAAP), requiring the use of estimates and assumptions[164](index=164&type=chunk) - A summary of critical accounting policies can be found in the Annual Report on Form 10-K for the year ended December 31, 2024[164](index=164&type=chunk) [Financial Condition](index=40&type=section&id=Financial%20Condition) This section analyzes the company's balance sheet, including assets, liabilities, and net assets, highlighting changes over the reporting period **Financial Condition Overview:** | Metric | Dec 31, 2024 | Jun 30, 2025 | Decrease | % Decrease | | :------------ | :----------- | :----------- | :------- | :------- | | Total assets | $72,457,433 | $57,639,539 | $(14,817,894) | (20.5)% | | Total liabilities | $7,124,913 | $925,585 | $(6,199,328) | (87.0)% | | Net assets | $65,332,520 | $56,713,954 | $(8,618,566) | (13.2)% | | NAV per share | $25.31 | $19.10 | $(6.21) | (24.5)% | - Cash approximated **7.8% of net assets** at June 30, 2025, compared to **1.3%** at December 31, 2024, indicating a significant increase in cash holdings[166](index=166&type=chunk) - There was no outstanding balance drawn on the **$25 million** senior secured revolving credit facility at June 30, 2025[167](index=167&type=chunk) [Composition of Our Investment Portfolio](index=40&type=section&id=Composition%20of%20Our%20Investment%20Portfolio) This section details the structure and changes within the company's investment portfolio, including fair value, cost, and investment objectives **Investment Portfolio Summary:** | Metric | Dec 31, 2024 | Jun 30, 2025 | Decrease | % Decrease | | :-------------------------------- | :----------- | :----------- | :------- | :------- | | Investments, at cost | $68,120,235 | $61,277,046 | $(6,843,189) | (10.0)% | | Unrealized (depreciation) appreciation, net | $2,697,806 | $(8,912,792) | $(11,610,598) | (430.4)% | | Investments, at fair value | $70,818,041 | $52,364,254 | $(18,453,787) | (26.1)% | - Total investments at fair value approximated **92% of net assets** at June 30, 2025, down from approximately **108%** at December 31, 2024[168](index=168&type=chunk) - The company's investment objective is to generate current income and capital appreciation, primarily through higher-yielding debt instruments and related equity investments in privately held, lower middle market companies[169](index=169&type=chunk) - Changes in investments at cost for the six months ended June 30, 2025, included **$409,755** in new investments, **$1,267,949** from other changes (interest conversion, OID amortization), and **$(8,520,893)** from repayments, sales, or liquidations[171](index=171&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, comparing investment income, expenses, and net changes in assets for the reported periods [Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024](index=41&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030%2C%202025%20to%20the%20three%20months%20ended%20June%2030%2C%202024) This section provides a detailed comparison of the company's financial results for the second quarter of 2025 versus 2024 [Investment Income](index=41&type=section&id=Investment%20Income) This section analyzes the sources and changes in the company's investment income for the specified three-month period **Investment Income (Three Months Ended June 30):** | Metric | 2024 | 2025 | Change | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Interest from portfolio companies | $1,995,227 | $1,514,562 | $(480,665) | (24.1)% | | Interest from other investments | $144 | $36,556 | $36,412 | 25286.1% | | Dividend and other investment income | $73,175 | $0 | $(73,175) | (100.0)% | | Fee income | $67,603 | $51,179 | $(16,424) | (24.3)% | | **Total investment income** | **$2,136,149** | **$1,602,297** | **$(533,852)** | **(25.0)%** | - Interest from portfolio companies decreased by **24%** due to repayments of several interest-yielding investments (Hilton, Mattison, Nailbiter, Pressure Pro, SciAps) without replacement[173](index=173&type=chunk) - Non-cash PIK interest income accounted for **37.4%** of total investment income in Q2 2025, up from **21.8%** in Q2 2024[174](index=174&type=chunk) - Dividend income decreased to **$0** in Q2 2025 from **$73,175** in Q2 2024, as prior year included dividends from FS KKR, Pennantpark, Tilson, and Barings[176](index=176&type=chunk) [Expenses](index=42&type=section&id=Expenses) This section details the company's operating expenses and incentive fees, explaining significant changes for the specified three-month period **Total (Benefits) Expenses (Three Months Ended June 30):** | Metric | 2024 | 2025 | Decrease | % Decrease | | :------------------------ | :-------------------------- | :-------------------------- | :------- | :------- | | Total (benefits) expenses | $2,652,782 | $(864,159) | $(3,516,941) | (132.6)% | - The decrease in total expenses was primarily due to a **$3,131,000** decrease in the capital gains incentive fee expense, a **$367,755** decrease in interest expense, and a **$105,023** decrease in base management fees[177](index=177&type=chunk) - The capital gains incentive fee benefit in Q2 2025 was due to a net increase in net unrealized depreciation, primarily from the **$9,500,000** write-down of Tilson[178](index=178&type=chunk) - Interest expense decreased from **$393,172** in Q2 2024 to **$25,417** in Q2 2025 due to lower average outstanding debt balances under the Credit Facility[179](index=179&type=chunk) [Net Investment Income (Loss)](index=43&type=section&id=Net%20Investment%20Income%20(Loss)) This section reports the company's net investment income or loss after deducting expenses from investment income for the specified three-month period **Net Investment Income (Loss) (Three Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :------- | | Net investment income (loss) | $(517,195) | $2,478,234 | $2,995,429 | [Realized Gain on Investments](index=43&type=section&id=Realized%20Gain%20on%20Investments) This section details the gains or losses realized from the sale or disposition of investments during the specified three-month period **Realized Gain on Investments (Three Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :------- | | Realized gain on investments before income taxes | $428,108 | $0 | $(428,108) | - Q2 2024 included net realized gains from sales of Carlyle Secured Lending Inc., PennantPark Investment Corporation, Ares Capital Corporation, and proceeds from Tilson/SQF assets, partially offset by a realized loss from Knoa Software, Inc. liquidation[182](index=182&type=chunk)[183](index=183&type=chunk) [Change in Unrealized (Depreciation) Appreciation of Investments](index=43&type=section&id=Change%20in%20Unrealized%20(Depreciation)%20Appreciation%20of%20Investments) This section explains the fluctuations in the fair value of the investment portfolio due to unrealized gains or losses for the specified three-month period **Change in Unrealized (Depreciation) Appreciation of Investments (Three Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :---------------------------------------------------------------- | :-------------------------- | :-------------------------- | :------- | | Change in unrealized (depreciation) appreciation of investments before income taxes | $7,779,026 | $(10,312,214) | $(18,091,240) | - Q2 2025 saw significant depreciation, primarily due to a **$(9,500,000)** write-down of Tilson Technology Management, Inc. after it filed for Chapter 11 bankruptcy[184](index=184&type=chunk)[186](index=186&type=chunk) - Valuations of Carolina Skiff, FSS, Lumious, and MRES also decreased, while EFINEA, First Coast Mulch, and Mobile IV Nurses increased due to improved performance[184](index=184&type=chunk)[185](index=185&type=chunk) [Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024](index=44&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202025%20to%20the%20six%20months%20ended%20June%2030%2C%202024) This section provides a detailed comparison of the company's financial results for the first half of 2025 versus 2024 [Investment Income](index=44&type=section&id=Investment%20Income) This section analyzes the sources and changes in the company's investment income for the specified six-month period **Investment Income (Six Months Ended June 30):** | Metric | 2024 | 2025 | Change | % Change | | :-------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Interest from portfolio companies | $3,808,875 | $3,191,728 | $(617,147) | (16.2)% | | Interest from other investments | $2,058 | $46,939 | $44,881 | 2180.8% | | Dividend and other investment income | $225,010 | $13,125 | $(211,885) | (94.2)% | | Fee income | $167,425 | $358,409 | $190,984 | 114.1% | | **Total investment income** | **$4,203,368** | **$3,610,201** | **$(593,167)** | **(14.1)%** | - Interest from portfolio companies decreased by **16%** due to repayments of several interest-yielding investments (Hilton, Mattison, Nailbiter, Pressure Pro, SciAps) without replacement[194](index=194&type=chunk) - Non-cash PIK interest income accounted for **33.9%** of total investment income in H1 2025, up from **18.9%** in H1 2024[195](index=195&type=chunk) - Dividend income decreased significantly from **$225,010** in H1 2024 to **$13,125** in H1 2025, as prior year included dividends from Tilson, FS KKR, Pennantpark, Carlyle, Barings, and Ares[197](index=197&type=chunk) - Fee income increased due to prepayment fees from Mattison and Pressure Pro, and a loan modification fee from MRES in H1 2025[197](index=197&type=chunk) [Expenses](index=45&type=section&id=Expenses) This section details the company's operating expenses and incentive fees, explaining significant changes for the specified six-month period **Total (Benefits) Expenses (Six Months Ended June 30):** | Metric | 2024 | 2025 | Decrease | % Decrease | | :------------------------ | :-------------------------- | :-------------------------- | :------- | :------- | | Total (benefits) expenses | $3,879,638 | $(73,094) | $(3,952,732) | (101.9)% | - The decrease in total expenses was primarily due to a **$3,318,300** decrease in the capital gains incentive fee expense, a **$721,289** decrease in interest expense, and a **$155,410** decrease in base management fees[200](index=200&type=chunk) - The capital gains incentive fee benefit in H1 2025 was due to a net increase in net unrealized depreciation in excess of realized capital gains, primarily from the **$9,500,000** write-down of Tilson[201](index=201&type=chunk) - Interest expense decreased from **$783,192** in H1 2024 to **$61,903** in H1 2025 due to lower average outstanding debt balances under the Credit Facility[202](index=202&type=chunk) - The income based incentive fee increased by **$119,673** in H1 2025 due to an increase in Pre-Incentive Fee Net Investment Income above the applicable hurdle rate[200](index=200&type=chunk)[204](index=204&type=chunk) [Net Investment Income (Loss)](index=46&type=section&id=Net%20Investment%20Income%20(Loss)) This section reports the company's net investment income or loss after deducting expenses from investment income for the specified six-month period **Net Investment Income (Six Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :-------------------------- | :-------------------------- | :-------------------------- | :------- | | Net investment income | $322,390 | $3,696,349 | $3,373,959 | [Realized Gain on Investments](index=46&type=section&id=Realized%20Gain%20on%20Investments) This section details the gains or losses realized from the sale or disposition of investments during the specified six-month period **Realized Gain on Investments (Six Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :------- | | Realized gain on investments before income taxes | $3,878,200 | $925,332 | $(2,952,868) | - H1 2025 included an **$870,000** gain from the sale of a Pressure Pro warrant and a **$58,329** gain from additional proceeds from Microcision LLC, offset by a small loss on GoNoodle[206](index=206&type=chunk) - H1 2024 included significant gains from sales of ACV Auctions, Inc., Carlyle, Pennantpark, Ares, and Tilson/SQF assets, partially offset by a loss from Knoa liquidation[207](index=207&type=chunk)[208](index=208&type=chunk) [Change in Unrealized (Depreciation) Appreciation of Investments](index=47&type=section&id=Change%20in%20Unrealized%20(Depreciation)%20Appreciation%20of%20Investments) This section explains the fluctuations in the fair value of the investment portfolio due to unrealized gains or losses for the specified six-month period **Change in Unrealized (Depreciation) Appreciation of Investments (Six Months Ended June 30):** | Metric | 2024 | 2025 | Change | | :---------------------------------------------------------------- | :-------------------------- | :-------------------------- | :------- | | Change in unrealized (depreciation) appreciation of investments before income taxes | $4,888,730 | $(11,610,598) | $(16,499,328) | - H1 2025 saw significant depreciation, primarily due to a **$(9,500,000)** write-down of Tilson Technology Management, Inc. after it filed for Chapter 11 bankruptcy[209](index=209&type=chunk)[211](index=211&type=chunk) - Valuations of Carolina Skiff, FSS, ITA, Lumious, and MRES also decreased, while EFINEA, First Coast Mulch, Mobile IV Nurses, and Seybert's increased due to improved performance[210](index=210&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, credit facility availability, and strategies for funding future investment activities - Total liquidity at June 30, 2025, consisted of approximately **$4.42 million** in cash and **$20.2 million** of unused availability on the Credit Facility[219](index=219&type=chunk)[221](index=221&type=chunk) - Net cash provided by operating activities for the six months ended June 30, 2025, was approximately **$8.08 million**, primarily from net investment income and sales/repayments of investments[223](index=223&type=chunk)[224](index=224&type=chunk) - Net cash used in financing activities was approximately **$4.49 million**, including **$600,000** repaid on the Credit Facility and approximately **$3.89 million** in cash dividends paid to shareholders[225](index=225&type=chunk) - The company anticipates funding investment activities through cash generated from ongoing operating activities and borrowings under the **$25 million** Credit Facility[226](index=226&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section details the company's exposure to market risks, including interest rate fluctuations on its credit facility and valuation risks for illiquid investments [Interest Rate Risk](index=49&type=section&id=Interest%20Rate%20Risk) This section analyzes the potential impact of interest rate changes on the company's financial performance, particularly concerning its variable-rate debt - Changes in interest rates may affect the company's interest expense on the variable-rate debt outstanding under its Credit Facility (SOFR + 3.50%)[228](index=228&type=chunk) - As of June 30, 2025, all of the company's debt investments had fixed interest rates and were not directly impacted by changes in market interest rates[228](index=228&type=chunk) - Due to no outstanding balance on the Credit Facility at June 30, 2025, hypothetical interest rate changes would have no immediate impact on net investment income[229](index=229&type=chunk)[230](index=230&type=chunk) - The company does not currently engage in any hedging activities against interest rate fluctuations[232](index=232&type=chunk) [Valuation Risk](index=50&type=section&id=Valuation%20Risk) This section discusses the inherent uncertainties and judgments involved in determining the fair value of the company's privately held, illiquid investments - Investments are carried at fair value, determined in good faith by RCM and approved by the Board[233](index=233&type=chunk) - Determining fair value involves significant judgment due to the inherent uncertainty and lack of readily available market values for privately held investments[233](index=233&type=chunk) - Actual realized values on these investments may differ materially from estimated fair values due to market environment changes and other events[233](index=233&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures and reports no material changes in internal control over financial reporting [Disclosure Controls and Procedures](index=50&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by management - The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the company's disclosure controls and procedures as of June 30, 2025[234](index=234&type=chunk) - Based on their evaluation, they concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[234](index=234&type=chunk) [Changes in Internal Control over Financial Reporting](index=50&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes to the company's internal control over financial reporting during the quarter - There have been no changes in the company's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[235](index=235&type=chunk) [PART II. OTHER INFORMATION](index=51&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional disclosures not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period - The company reported no legal proceedings[238](index=238&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the annual report for a comprehensive discussion of the company's risk factors - Refer to the "Risk Factors" section in the annual report on Form 10-K for the year ended December 31, 2024, for detailed risk information[239](index=239&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no share repurchases during the period and details the approval of a new share repurchase plan - No shares of Rand's common stock were repurchased by the Corporation during the six months ended June 30, 2025, or the six months ended June 30, 2024[82](index=82&type=chunk)[240](index=240&type=chunk) - On April 23, 2025, the Board approved a new share repurchase plan authorizing repurchases of up to **$1,500,000** of common stock at prices no greater than the current net asset value, effective through April 23, 2026[82](index=82&type=chunk)[243](index=243&type=chunk) [Item 3. Defaults upon Senior Securities](index=51&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - The company reported no defaults upon senior securities[241](index=241&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is not applicable[242](index=242&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) This section confirms no director or officer adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No director or officer adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[243](index=243&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including corporate documents, certifications, and XBRL data - Exhibits include corporate organizational documents (Certificate of Incorporation, By-laws), certifications (31.1, 31.2, 32.1), and Inline XBRL documents[246](index=246&type=chunk)

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Q2 2025 saw net investment income growth due to a non-cash fee reversal, despite declining total investment income and significant PIK interest, with strong liquidity maintained [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO highlighted Q2 2025 net investment income growth from a non-cash fee reversal, despite total investment income decline due to loan repayments and significant PIK interest - Net investment income growth in Q2 2025 was primarily driven by a **non-cash capital gains incentive fee reversal** tied to the write-down of an investment in Tilson[3](index=3&type=chunk) - Total investment income declined due to continued **portfolio loan repayments** not yet offset by new investments, and slower deal origination amid economic uncertainty[3](index=3&type=chunk) - Over **$1.2 million of interest** was added to the principal of portfolio obligations (PIK) in the first half of 2025, representing approximately **34% of total investment income**[3](index=3&type=chunk) - The company ended the quarter with approximately **$25 million in total liquidity** and **no debt outstanding**, positioning it to support dividends and pursue new investment opportunities[3](index=3&type=chunk) [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Q2 2025 highlights include a 25% decrease in total investment income, a significant increase in net investment income to $2.5 million, and strong liquidity with no outstanding debt Second Quarter 2025 Key Financial Highlights | Metric | Q2 2025 | Change YoY | | :------------------------ | :---------- | :--------- | | Total investment income | $1.6 million | -25% | | Net investment income | $2.5 million | N/A (from loss) | | Net investment income per share | $0.83 | N/A (from loss) | | Total liquidity | ~$25 million | N/A | | Debt outstanding | $0 | N/A | | Quarterly dividend (Q3 2025) | $0.29 per share | N/A | [Financial Performance Analysis](index=1&type=section&id=Financial%20Performance%20Analysis) Q2 2025 financial performance shows a decline in total investment income, a significant expense benefit from incentive fee reversal, and a substantial increase in net investment income [Investment Income](index=1&type=section&id=Investment%20Income) Total investment income for Q2 2025 decreased by 25% year-over-year, primarily due to a 24% reduction in interest income from portfolio debt repayments Total Investment Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :---------------------- | :---------- | :---------- | :----- | | Total investment income | $1.6 million | $2.136 million | -25% | - The decrease was primarily due to a **24% reduction in interest income** from portfolio companies, reflecting the repayment of five debt instruments over the past year[6](index=6&type=chunk) - Lower dividend income also contributed to the year-over-year decrease in total investment income[6](index=6&type=chunk) [Expenses](index=1&type=section&id=Expenses) Total expenses in Q2 2025 resulted in an $864,000 benefit, a significant improvement driven by a $3.1 million reduction in capital gains incentive fee expense Total Expenses (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :-------------------------- | :---------- | :---------- | | Total expenses (benefit) | $(864,000) | $2.7 million | | Capital gains incentive fee | $(1.5 million) (benefit) | $1.6 million (expense) | | Adjusted expenses (non-GAAP) | $626,000 | $1.0 million | - The improvement in total expenses was primarily driven by a **$3.1 million reduction in capital gains incentive fee expense**, with Rand recording a **$1.5 million benefit** in Q2 2025 compared to a **$1.6 million expense** in Q2 2024[6](index=6&type=chunk) - Lower average outstanding debt balances led to a **$368,000 reduction in interest expense**, and base management fees declined by **$105,000**[6](index=6&type=chunk) [Net Investment Income](index=2&type=section&id=Net%20Investment%20Income) Net investment income significantly increased to $2.5 million, or $0.83 per share, in Q2 2025, reversing a prior-year loss, though adjusted net investment income per share decreased Net Investment Income (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :------------------------------------ | :---------- | :---------- | | Net investment income | $2.5 million | $(517,000) | | Net investment income per share | $0.83 | $(0.20) | | Adjusted net investment income per share (non-GAAP) | $0.33 | $0.44 | - The Q2 2025 per share amounts were computed using **2,969,814 weighted average shares outstanding**, reflecting a higher number of shares following a Q4 2024 dividend paid partly in common stock[7](index=7&type=chunk) [Portfolio and Investment Activity](index=2&type=section&id=Portfolio%20and%20Investment%20Activity) Rand's investment portfolio fair value decreased by 26% in Q2 2025 due to repayments and valuation adjustments, despite a follow-on equity investment [Portfolio Overview](index=2&type=section&id=Portfolio%20Overview) As of June 30, 2025, Rand's investment portfolio fair value decreased by 26% to $52.4 million, primarily due to loan repayments and valuation adjustments Portfolio Overview (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | Change | | :------------------------------------ | :-------------- | :------------- | :----- | | Portfolio fair value | $52.4 million | $70.9 million | -26% | | Number of portfolio businesses | 19 | N/A | N/A | | Debt investments | ~86% | N/A | N/A | | Equity investments | ~14% | N/A | N/A | | Annualized weighted average yield of debt investments (incl. PIK) | 12.2% | 13.8% | -1.6% | - The decrease in portfolio fair value was primarily due to **portfolio company loan repayments** and **valuation adjustments** in multiple portfolio companies[8](index=8&type=chunk) [Key Investment Activities (Q2 2025)](index=2&type=section&id=Key%20Investment%20Activities%20(Q2%202025)) Q2 2025 saw a follow-on equity investment in Carolina Skiff LLC, but a **$9.5 million decrease** in Tilson Technologies' valuation due to its Chapter 11 bankruptcy - Funded a follow-on equity investment of **$35,000** in Carolina Skiff LLC, bringing Rand's total equity investment in Carolina Skiff to a fair value of **$800,000** at quarter-end[13](index=13&type=chunk) - The valuation of Rand's investment in Tilson Technologies decreased **$9.5 million** after it filed for Chapter 11 bankruptcy[13](index=13&type=chunk) [Capital Management](index=2&type=section&id=Capital%20Management) Rand maintained strong liquidity in Q2 2025 with increased cash and no outstanding debt, while consistently declaring quarterly cash dividends [Liquidity and Capital Resources](index=2&type=section&id=Liquidity%20and%20Capital%20Resources) Rand ended Q2 2025 with **$4.4 million in cash** and **no outstanding debt** on its credit facility, which has approximately **$20 million** in unused availability Liquidity Overview (June 30, 2025 vs. Dec 31, 2024) | Metric | June 30, 2025 | Dec 31, 2024 | | :------------------------------------ | :-------------- | :------------- | | Cash | $4.4 million | $835,000 | | Outstanding balance on credit facility | $0 | N/A | | Unused credit facility availability | ~$20 million | N/A | - The company has the capacity to increase its credit facility availability to a total of **$25 million**, subject to certain borrowing criteria[10](index=10&type=chunk) - No outstanding common stock was repurchased during the second quarter of 2025[10](index=10&type=chunk) [Dividends](index=2&type=section&id=Dividends) Rand declared and paid a regular quarterly cash dividend of **$0.29 per share** in Q2 2025 and subsequently declared another for Q3 2025 - On April 30, 2025, Rand declared its regular quarterly cash dividend of **$0.29 per share**, which was paid during the second quarter[11](index=11&type=chunk) - On July 28, 2025, Rand declared its regular quarterly cash dividend of **$0.29 per share**, to be distributed on or about September 12, 2025[11](index=11&type=chunk) [Company Information & Disclosures](index=2&type=section&id=Company%20Information%20%26%20Disclosures) This section provides details on Rand Capital's Q2 2025 webcast, company profile, forward-looking statement disclaimer, and investor contacts [Webcast and Conference Call](index=3&type=section&id=Webcast%20and%20Conference%20Call) Rand hosted a conference call and webcast on August 4, 2025, to discuss financial results, with replay and transcript information available - Rand hosted a conference call and webcast on Monday, August 4, 2025, at 1:30 p.m. Eastern Time, to review its financial results[12](index=12&type=chunk) - A telephonic replay was available through August 18, 2025, and a transcript of the call will be posted once available[14](index=14&type=chunk) [About Rand Capital](index=3&type=section&id=About%20Rand%20Capital) Rand Capital Corporation is an externally managed BDC focused on maximizing shareholder returns through debt and equity investments in lower middle market companies - Rand Capital Corporation is an externally managed business development company (BDC) with an investment objective to maximize total return to shareholders through current income and capital appreciation[15](index=15&type=chunk) - The company primarily invests in privately-held, lower middle market companies with sustainable, differentiated, and market-proven products, **revenue exceeding $10 million**, and **EBITDA in excess of $1.5 million**[15](index=15&type=chunk) [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor%20Statement) This legal disclaimer indicates the press release contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - The press release contains "forward-looking statements" regarding the Company's strategy, outlook, dividend growth, and market improvements[16](index=16&type=chunk) - Actual results may vary materially due to factors such as evolving legal, regulatory, and tax regimes; changes in economic and industry conditions; and other risk factors detailed in SEC filings[16](index=16&type=chunk) [Contacts](index=3&type=section&id=Contacts) Contact information is provided for Rand Capital's President and CEO, Daniel P. Penberthy, and for investor relations through Alliance Advisors IR - Company contact: Daniel P. Penberthy, President and CEO[18](index=18&type=chunk) - Investor Relations contacts: Craig P. Mychajluk and Deborah K. Pawlowski of Alliance Advisors IR[18](index=18&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents Rand Capital's consolidated financial statements, including statements of financial position, operations, and changes in net assets for Q2 2025 [Consolidated Statements of Financial Position](index=4&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) The Consolidated Statements of Financial Position show a decrease in total investments and assets, alongside a significant reduction in total liabilities and stockholders' equity Consolidated Statements of Financial Position Highlights | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Total investments, at fair value | $52,364,254 | $70,818,041 | | Cash | $4,419,813 | $834,805 | | Total assets | $57,639,539 | $72,457,433 | | Total liabilities | $925,585 | $7,124,913 | | Total stockholders' equity (net assets) | $56,713,954 | $65,332,520 | | Net assets per share | $19.10 | $25.31 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations show decreased total investment income but significantly improved net investment income due to an expense benefit from capital gains incentive fees Consolidated Statements of Operations Highlights | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total investment income | $1,602,297 | $2,136,149 | $3,610,201 | $4,203,368 | | Total (benefits) expenses | $(864,159) | $2,652,782 | $(73,094) | $3,879,638 | | Net investment income (loss) | $2,478,234 | $(517,195) | $3,696,349 | $322,390 | | Net (decrease) increase in net assets from operations | $(7,736,154) | $7,737,773 | $(6,894,707) | $9,137,154 | | Basic and diluted net (decrease) increase in net assets from operations per share | $(2.60) | $3.00 | $(2.36) | $3.54 | [Consolidated Statements of Changes in Net Assets](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Net%20Assets) The Consolidated Statements of Changes in Net Assets show a net decrease in net assets from operations, primarily driven by a significant net change in unrealized depreciation on investments Consolidated Statements of Changes in Net Assets Highlights | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net assets at beginning of period | $65,311,253 | $61,569,339 | $65,332,520 | $60,815,213 | | Net investment income (loss) | $2,478,234 | $(517,195) | $3,696,349 | $322,390 | | Net realized gain on sales and dispositions of investments | — | $428,108 | $925,332 | $3,878,200 | | Net change in unrealized appreciation/depreciation on investments | $(10,214,388) | $7,826,860 | $(11,516,388) | $4,936,564 | | Net (decrease) increase in net assets from operations | $(7,736,154) | $7,737,773 | $(6,894,707) | $9,137,154 | | Declaration of dividend | $(861,145) | $(748,496) | $(1,723,859) | $(1,393,751) | | Net assets at end of period | $56,713,954 | $68,558,616 | $56,713,954 | $68,558,616 | [Non-GAAP Reconciliations](index=8&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations of GAAP total expenses and net investment income per share to their non-GAAP adjusted counterparts, excluding capital gains incentive fees [Reconciliation of GAAP Total Expense to Non-GAAP Adjusted Expenses](index=8&type=section&id=Reconciliation%20of%20GAAP%20Total%20Expense%20to%20Non-GAAP%20Adjusted%20Expenses) This section reconciles GAAP total expenses to non-GAAP adjusted expenses, excluding capital gains incentive fees, showing a significant year-over-year decrease in adjusted expenses - Adjusted expenses is a non-GAAP financial measure defined as GAAP total expenses removing the effect of any (credits)/expenses for capital gains incentive fees accrual[27](index=27&type=chunk) Reconciliation of GAAP Total Expense to Non-GAAP Adjusted Expenses | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total (benefits) expenses (GAAP) | $(864,159) | $2,652,782 | $(73,094) | $3,879,638 | | Exclude (credits) expenses for capital gains incentive fees | $(1,490,000) | $1,641,000 | $(1,565,000) | $1,753,300 | | Adjusted total expenses (Non-GAAP) | $625,841 | $1,011,782 | $1,491,906 | $2,126,338 | [Reconciliation of GAAP Net Investment Income (Loss) per Share to Adjusted Net Investment Income per Share](index=8&type=section&id=Reconciliation%20of%20GAAP%20Net%20Investment%20Income%20(Loss)%20per%20Share%20to%20Adjusted%20Net%20Investment%20Income%20per%20Share) This reconciliation adjusts GAAP Net Investment Income (Loss) per Share by excluding capital gains incentive fees, showing a decrease in the non-GAAP adjusted measure year-over-year - Adjusted Net Investment Income per Share is a non-GAAP financial measure that excludes the effect of any (credits)/expenses for capital gains incentive fees[29](index=29&type=chunk) Reconciliation of GAAP Net Investment Income (Loss) per Share to Adjusted Net Investment Income per Share | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net investment income (loss) per share (GAAP) | $0.83 | $(0.20) | $1.27 | $0.12 | | Exclude (credits) expenses for capital gains incentive fees per share | $(0.50) | $0.64 | $(0.54) | $0.68 | | Adjusted net investment income per share (Non-GAAP) | $0.33 | $0.44 | $0.73 | $0.80 | - Weighted average shares outstanding for Q2 2025 were higher (**2,969,814** for three months, **2,920,135** for six months) compared to Q2 2024 (**2,581,021**), due to a dividend paid partly in common stock[30](index=30&type=chunk)

Financial Data and Key Metrics Changes - Total investment income for Q1 2025 was $2,000,000, a slight decline of $59,000 or 3% from the prior year period, primarily due to lower dividend income and an 8% reduction in interest income [18] - Net investment income increased by 45% year over year to $1,200,000 or $0.42 per share, compared to $840,000 or $0.33 per share in Q1 2024 [21] - Net asset value per share decreased to $21.99 from $25.31 at year end 2024, reflecting the dilutive impact from the issuance of additional shares [5][22] Business Line Data and Key Metrics Changes - The portfolio's fair value as of March 31, 2025, was approximately $62,000,000, a decline from year end 2024, driven by loan repayments from three portfolio companies [10] - Debt investments now represent 72% of the portfolio, up from prior years, supporting greater earnings stability [11] - The annualized weighted average yield on debt investments was 12.2%, down from prior quarters due to one debt investment being on nonaccrual status [11] Market Data and Key Metrics Changes - 18 portfolio companies contributed to investment income in Q1 2025, down from 24 companies in the same period last year [18] - Exposure to professional services decreased from 48% to 45%, and manufacturing declined from 13% to 8%, while consumer products grew as a share of the portfolio [14] Company Strategy and Development Direction - The company aims to maintain a strong financial position and has repaid $600,000 of its revolver debt, finishing the quarter with nearly $5,000,000 in cash and over $22,000,000 in available credit capacity [6] - The investment strategy focuses on a balanced portfolio structure to adapt to changing macro conditions while pursuing strong risk-adjusted returns [15] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing macroeconomic and political uncertainty affecting new investment opportunities but remains optimistic about capitalizing on conditions as they improve [6][25] - The company is committed to driving NAV growth and total returns through active portfolio oversight and sound financial management [27] Other Important Information - The company declared a regular quarterly cash dividend of $0.29 per share, payable on or about June 13, 2025 [23] - The Board of Directors renewed the share repurchase program, authorizing the repurchase of up to 1,500,000 shares [24] Q&A Session Summary - No specific questions or answers were provided in the content regarding the Q&A session.

Financial Data and Key Metrics Changes - Total investment income for Q1 2025 was $2,000,000, a slight decline of $59,000 or 3% from the prior year period, primarily due to lower dividend income and an 8% reduction in interest income [18] - Net investment income increased by 45% year over year to $1,200,000 or $0.42 per share, compared to $840,000 or $0.33 per share in Q1 2024 [21] - Net asset value per share decreased to $21.99 from $25.31 at year-end 2024, reflecting the dilutive impact from the issuance of additional shares [22] Business Line Data and Key Metrics Changes - The portfolio stood at a fair value of approximately $62,000,000 across 19 businesses, a decline from year-end 2024, primarily due to loan repayments from three portfolio companies [10] - Debt investments now represent 72% of the portfolio, up from prior years, supporting greater earnings stability [11] - The annualized weighted average yield on debt investments was 12.2%, down from prior quarters due to one debt investment being on nonaccrual status [11] Market Data and Key Metrics Changes - The number of portfolio companies contributing to investment income decreased to 18 from 24 in the same period last year [18] - Exposure to professional services decreased from 48% to 45%, and manufacturing declined from 13% to 8%, while consumer products grew as a share of the portfolio [14] Company Strategy and Development Direction - The company aims to maintain a strong financial position and has repaid $600,000 of its revolver debt, ending the quarter with nearly $5,000,000 in cash and over $22,000,000 in available credit capacity [6] - The focus remains on disciplined execution, proactive portfolio oversight, and building sustainable shareholder value [7] - The investment strategy prioritizes structures where subordinated debt provides a yield-based return while capturing potential upside through equity participation [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic and political uncertainty affecting new investment opportunities but remains optimistic about capitalizing on conditions as they improve [6][27] - The company is committed to driving NAV growth and total returns through active portfolio oversight and sound financial management [28] Other Important Information - The company declared a regular quarterly cash dividend of $0.29 per share, payable on or about June 13, 2025 [23] - The Board of Directors renewed the share repurchase program, authorizing the repurchase of up to 1,500,000 shares [24] Q&A Session Summary - No specific questions or answers were documented in the provided content, thus this section is not applicable.

FIRST QUARTER 2025 FINANCIAL RESULTS May 5, 2025 Daniel P. Penberthy President & CEO Margaret W. Brechtel EVP & CFO © 2025 Rand Capital Corporation Nasdaq: RAND FORWARD LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than historical facts, including but not limited to statements regarding the strategy of the Company ...

Financial Position - Total assets decreased by 6.4% from $72,457,433 on December 31, 2024, to $67,821,430 on March 31, 2025[162]. - Total liabilities decreased significantly by 64.8% from $7,124,913 to $2,510,177 during the same period[162]. - Net asset value per share (NAV) was $21.99 at March 31, 2025, down from $25.31 at December 31, 2024[162]. - Cash represented 7.6% of net assets at March 31, 2025, compared to 1.3% at December 31, 2024[163]. - Investments at fair value decreased by 12.2% from $70,818,041 on December 31, 2024, to $62,157,363 on March 31, 2025[165]. - Unrealized appreciation, net, fell by 48.1% from $2,697,806 to $1,399,422 during the same period[165]. Dividend and Credit Facility - The company declared a quarterly cash dividend of $0.29 per share for the first quarter of 2025, with a record date of March 14, 2025[157]. - The company has a $25 million senior secured revolving credit facility with M&T Bank, with no outstanding balance as of March 31, 2025[164]. - The company entered into a $25 million Credit Facility with an unused line of credit balance of $22,437,163 as of March 31, 2025[186]. - The applicable interest rate on the Credit Facility was 7.91% as of March 31, 2025, calculated as 3.50 percentage points above the greater of the daily simple secured overnight financing rate (SOFR) or 0.25%[187]. Income and Expenses - Total investment income for the three months ended March 31, 2025, was $2,007,904, a decrease of 2.9% compared to $2,067,219 for the same period in 2024[168]. - Interest from portfolio companies decreased by 7.5% to $1,677,166 in Q1 2025 from $1,813,648 in Q1 2024 due to repayments of several interest-yielding investments[168][169]. - Total expenses decreased by 35.5% to $791,065 in Q1 2025 from $1,226,856 in Q1 2024, primarily due to a $353,534 decrease in interest expense[172]. - Net investment income increased to $1,218,115 for the three months ended March 31, 2025, compared to $839,585 for the same period in 2024[177]. - Realized gain on investments before income taxes was $925,332 in Q1 2025, a decrease of $2,524,760 from $3,450,092 in Q1 2024[178]. - The change in unrealized depreciation of investments was $(1,298,384) for Q1 2025, an improvement of $1,591,912 compared to $(2,890,296) in Q1 2024[180]. Liquidity and Cash Flow - As of March 31, 2025, total liquidity consisted of approximately $4,933,000 in cash and $22,437,163 of unused availability on the Credit Facility[185]. - For the three months ended March 31, 2025, the company experienced a net increase in cash of approximately $4,098,000, driven by $7,729,000 from operating activities[189]. - The net cash provided by operating activities included approximately $9,325,000 from sales of equity investments and repayments of debt investments[190]. - Net cash used in financing activities during the same period was approximately $3,631,000, which included $600,000 repaid on the Credit Facility and approximately $3,031,000 in cash dividends paid to shareholders[191]. - The company anticipates continuing to fund investment activities through cash generated from operations and borrowings under the Credit Facility[192]. Risk Management - The company is subject to financial market risks, primarily from changes in interest rates and the valuation of its investment portfolio[193]. - As of March 31, 2025, all of the company's debt investments had fixed interest rates and were not directly impacted by changes in market interest rates[194]. - The company does not currently engage in hedging activities but may consider them in the future to manage interest rate fluctuations[198]. - The company carries its investments at fair value, which involves judgment and may differ from actual liquidation values due to market conditions[199]. Investment Strategy - The company aims to generate current income and capital appreciation primarily through investments in higher yielding debt instruments[166]. - The capital gains incentive fee expense decreased due to a net increase in unrealized depreciation exceeding realized capital gains during Q1 2025[174]. - The base management fee payable to RCM decreased to $252,208 in Q1 2025 from $302,595 in Q1 2024[175].

Investment Income - Net investment income increased by 45% to $1.2 million, or $0.42 per share, compared to $840,000, or $0.33 per share, in the first quarter of 2024[4] - Total investment income was $2.0 million, a decrease of 3% from the prior-year period, primarily due to the early repayment of three debt instruments[4] - Total investment income for Q1 2025 was $2,007,904, a decrease of 2.6% from $2,067,219 in Q1 2024[24] - Net investment income before income taxes increased to $1,216,839 in Q1 2025, compared to $840,363 in Q1 2024, representing a growth of 45%[24] - Adjusted net investment income per share for Q1 2025 was $0.40, slightly up from $0.37 in Q1 2024[32] Expenses - Total expenses declined by 36% year-over-year to $791,000, driven by lower interest expenses from reduced debt levels[5] - Adjusted total expenses for Q1 2025 were $866,065, compared to $1,114,556 in Q1 2024, reflecting a decrease of 22.3%[29] Portfolio Performance - The portfolio's fair value decreased by $8.7 million, or 12%, to $62.2 million as of March 31, 2025, primarily due to loan repayments[8] - The annualized weighted average yield of debt investments was 12.2% at March 31, 2025, down from 13.8% at the end of 2024[8] - Net realized gain on sales and dispositions of investments was $925,332 in Q1 2025, significantly lower than $3,450,092 in Q1 2024[24] - Net change in unrealized appreciation/depreciation on investments was a loss of $1,302,000 in Q1 2025, compared to a loss of $2,890,296 in Q1 2024[24] Net Assets and Shareholder Value - The net asset value per share decreased to $21.99 from $25.31 at year-end 2024, reflecting the issuance of additional shares[4] - Net increase in net assets from operations for Q1 2025 was $841,447, down from $1,399,381 in Q1 2024[26] - Basic and diluted net increase in net assets from operations per share was $0.29 in Q1 2025, compared to $0.54 in Q1 2024[24] - Net assets at the end of Q1 2025 were $65,311,253, a decrease from $61,569,339 at the end of Q1 2024[26] - The weighted average shares outstanding increased to 2,869,339 in Q1 2025 from 2,581,021 in Q1 2024, indicating a higher share count due to dividend payments[31] Cash and Dividends - Cash increased to $4.9 million from $835,000 at year-end 2024, with no outstanding debt on the senior secured revolving credit facility[10] - A quarterly dividend of $0.29 per share was declared for the second quarter of 2025, consistent with the previous quarter[14] Investments - Rand funded a follow-on debt investment of $375,000 in ITA Acquisition, LLC, bringing the total investment in ITA to a fair value of $2.0 million[13] - The company realized a gain of $925,000 during the quarter from portfolio redemptions[4]