[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]

Financial Data and Key Metrics Changes - Total investment income increased by 11% to $2.1 million in Q4 2024, with full-year investment income rising 17% to $8.6 million compared to the previous year [10][36] - Net asset value per share grew by 7% year-over-year, reaching $25.31 at year-end [11][43] - Total expenses for Q4 2024 were a credit of $376,000, compared to an expense of $1 million in Q4 2023, primarily due to a decrease in capital gains incentive fee expense [37][38] Business Line Data and Key Metrics Changes - Debt investments now make up 75% of the portfolio, up from 64% in 2023, contributing to improved yields and earnings stability [12][21] - The annualized weighted average yield of debt investments was 13.8% as of December 31, 2024, an increase of 20 basis points over 2023 [22] - The number of portfolio companies contributing to investment income decreased from 26 in 2023 to 25 in 2024 [36] Market Data and Key Metrics Changes - The portfolio's fair value decreased by 8% from the end of 2023, primarily due to the successful exit from SciAps [20] - Exposure to professional services increased from 42% to 48%, while manufacturing and software saw a relative decline [28] Company Strategy and Development Direction - The company is focused on creating long-term value for shareholders through disciplined capital allocation and managing a more income-generating portfolio [15][50] - The strategic shift towards income-producing investments is expected to support sustained higher dividend levels over time [45] - The company aims to capitalize on opportunities in the lower middle market, particularly family-owned businesses facing succession challenges [49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for recovery in portfolio valuations, particularly if consumer spending stabilizes [55] - The company is monitoring macroeconomic trends, including potential interest rate reductions, which could enhance portfolio performance [15][52] - Management emphasized the importance of proactive risk management in navigating economic and political uncertainties [54] Other Important Information - The company declared a total of $4.3 million in cash dividends during 2024, with a quarterly cash dividend increase of 16% to $0.29 per share [14][45] - The company successfully exited its investment in SciAps, generating $13.1 million in total proceeds and a realized gain of $7.7 million [25] Q&A Session Summary Question: What are the expectations for future dividend growth? - Management indicated confidence in the ability to sustain and potentially increase dividends due to the strategic shift towards income-generating investments [45][55] Question: How does the company plan to navigate economic uncertainties? - The company plans to maintain a diversified portfolio and proactive risk management to adapt to changing market conditions [54][55]

Management Fees and Incentives - The Base Management Fee is set at an annual rate of 1.50% of total assets, excluding cash[41]. - The Incentive Fees consist of an Income Based Fee and a Capital Gains Fee, with the Income Based Fee calculated quarterly based on Pre-Incentive Fee Net Investment Income[42][53]. - The hurdle rate for Pre-Incentive Fee Net Investment Income is 1.75% per quarter, equating to 7% annualized[46]. - If Pre-Incentive Fee Net Investment Income exceeds 2.1875% (8.75% annualized), the Income Based Fee is 20% of the amount above this threshold[51]. - The Capital Gains Fee is calculated at 20% of the positive difference between cumulative realized capital gains and cumulative realized capital losses at the end of each calendar year[53]. Investment Management and Operations - The Investment Committee, led by Daniel Penberthy and Scott Barfield, is responsible for all investment decisions[37]. - RCM did not utilize any Sub-Advisors for investment advice in the calendar year 2024[36]. - The company has no employees; operations are managed by RCM, the investment adviser[34]. - The Investment Committee's experience provides a competitive advantage in managing investments in lower middle-market companies[38]. - The company reimburses RCM for overhead and other expenses incurred in performing its obligations under the Administration Agreement[35]. Financial Performance and Results - Total assets decreased from $81,021,982 in 2023 to $72,457,433 in 2024, a decline of approximately 10.3%[306]. - Total investment income increased to $8,559,285 in 2024, up 16.6% from $7,338,163 in 2023[308]. - Net investment income rose to $3,425,077 in 2024, representing a 15.4% increase compared to $2,967,733 in 2023[308]. - Net realized gain on sales and dispositions of investments surged to $11,124,864 in 2024, compared to $691,397 in 2023, marking a significant increase[308]. - The net change in unrealized appreciation/depreciation on investments was a loss of $5,722,329 in 2024, contrasting with a gain of $2,867,520 in 2023[308]. Asset Coverage and Regulatory Compliance - The asset coverage ratio as of December 31, 2024, was 10,988.8%, significantly higher than the 474.2% recorded in 2023[79]. - The modified asset coverage requirement under the 1940 Act will change from 200% to 150%, effective January 24, 2025[78]. - A BDC must ensure that qualifying assets represent at least 70% of total assets at the time of acquisition[80]. - Non-qualifying investments may not exceed 30% of the BDC's total asset value[82]. - The Corporation must meet specified source-of-income and asset-diversification requirements to maintain RIC qualifications[84]. Risks and Challenges - Political and regulatory conditions, including the impact of the 2024 U.S. presidential election, could materially affect business operations and financial performance[98]. - RCM faces competition from larger entities with greater financial resources, which may impact the company's ability to secure favorable investment terms[100]. - The company may face cybersecurity risks that could impair operations and negatively impact financial condition and operating results[125]. - The company has a limited number of portfolio companies, increasing risk if any of these companies default, which could significantly impact net asset value[128]. - Economic downturns may negatively affect the financial performance of portfolio companies, impacting the company's overall financial performance[130]. Investment Strategy and Portfolio Composition - The company invests primarily in small private companies, which may present a greater risk of loss compared to larger companies due to limited access to capital and higher funding costs[137]. - The company’s investments are primarily in debt securities, which may rank equal to or senior to its investments, posing risks in insolvency scenarios[142]. - The Corporation's investment strategy includes a focus on restricted securities, which represented 100% of the fair value of the investment portfolio as of December 31, 2024[323]. - The portfolio includes significant investments in Professional and Business Services at 47.6%, followed by Consumer Products at 17.7%[332]. - Total investments amount to $68,120,235, with a fair value of $70,818,041, indicating an investment leverage of 108.4%[319]. Debt and Financing - As of December 31, 2024, the company had $600,000 in principal amount of outstanding indebtedness under its Credit Facility, with an annualized interest cost of 8.91%[151]. - The company’s ability to service existing and future debt depends largely on its financial performance, which is influenced by the performance of its portfolio companies and prevailing economic conditions[148]. - The company may face increased investment risk due to the potential increase in its maximum debt-to-equity ratio from one-to-one to two-to-one under the new asset coverage requirements[160]. - The company’s net investment income may be adversely affected by rising market interest rates, which could increase its cost of capital under its Credit Facility[157]. - The company is subject to risks related to its indebtedness, including the potential for loss magnification due to leverage[147]. Shareholder and Corporate Governance - East beneficially owns approximately 64% of the company’s outstanding common stock, allowing it to significantly influence corporate decisions[165]. - Conflicts of interest may arise from RCM managing multiple funds, potentially impacting investment returns for the company[101]. - The company is prohibited from certain transactions with affiliates without prior approval, which may restrict investment flexibility[104]. - The company is required to distribute at least 90% of its net ordinary income and realized net short-term capital gains to maintain RIC tax treatment[174]. - The company declared dividends totaling $12,982,536 in 2024, significantly higher than $3,432,757 in 2023[310].

Investment Performance - Total investment income increased by 11% to $2.1 million in Q4 2024, contributing to a full-year increase of 17% to $8.6 million[5] - Total investment income for 2024 reached $8,559,285, a 16.6% increase from $7,338,163 in 2023[26] - Net investment income for 2024 was $3,425,077, up 15.4% from $2,967,733 in 2023[26] - Rand Capital reported a 17% growth in net investment income, reaching $3,425,077 in 2024 compared to $2,967,733 in 2023[29] - Control investments generated $733,774 in interest income for 2024, compared to $698,872 in 2023, marking a growth of 5%[26] - Affiliate investments contributed $4,739,802 in interest income for 2024, a 22.8% increase from $3,858,696 in 2023[26] - The company reported a net realized gain on sales of investments of $11,124,864 for 2024, compared to $691,397 in 2023, indicating a substantial increase[26] - The net realized gain on sales and dispositions of investments significantly increased to $11,124,864 in 2024 from $691,397 in 2023[29] Financial Position - Net asset value per share grew by 7% year-over-year to $25.31[5] - Total assets decreased to $72,457,433 in 2024 from $81,021,982 in 2023, representing a decline of 10.3%[24] - Total liabilities significantly reduced to $7,124,913 in 2024 from $20,206,769 in 2023, a decrease of 64.8%[24] - Stockholders' equity increased to $65,332,520 in 2024, up from $60,815,213 in 2023, reflecting an increase of 7.5%[24] - The net assets at the end of 2024 were $65,332,520, up from $60,815,213 at the beginning of the year[29] Dividends and Returns - Total dividends declared in 2024 amounted to $5.03 per share, including a 16% increase in the regular quarterly cash dividend[4] - Rand Capital declared dividends totaling $12,982,536 in 2024, significantly higher than $3,432,757 in 2023[29] Debt Management - Debt investments now account for 75% of Rand's portfolio, up from 64% at the end of 2023, enhancing yields and net interest income[5] - Outstanding bank debt was reduced by $15.7 million year-over-year, with over $24 million in remaining availability at December 31, 2024[5] - The company plans to continue strategic debt investments to enhance future growth prospects[25] - The company continues to focus on strategic debt investments to enhance its financial performance[30] Strategic Investments - Strategic capital deployment of nearly $14 million during 2024 positions Rand for continued growth in 2025[5] - Rand funded a new investment of $2.9 million in Mobile IV Nurses Management LLC, consisting of a $2.5 million term loan and a $375,000 equity investment[19] Expenses - Total expenses for the year ended December 31, 2024, were $4,837,282, up from $4,178,319 in 2023[32] - Adjusted total expenses for 2024 were $3,824,982, compared to $3,373,619 in 2023[32] Cash Reserves - Cash reserves decreased to $834,805 in 2024 from $3,295,321 in 2023, a decline of 74.7%[24] Unrealized Gains and Losses - The net change in unrealized appreciation/depreciation on investments was a loss of $5,722,329 in 2024, contrasting with a gain of $2,867,520 in 2023[29]

Financial Data and Key Metrics Changes - Total investment income increased by 27% year-over-year to $2.2 million, driven by a rise in interest income and enhanced fee income [6][17] - Net asset value per share rose 3% from the prior quarter and 16% year-to-date, reaching $27.29 at the end of Q3 2024 [7][23] - Net investment income for Q3 increased to $887,000 or $0.34 per share, up from $799,000 or $0.31 per share in the same period last year [21] - Total expenses for Q3 amounted to approximately $1.3 million, up from $810,000 in the prior quarter, primarily due to an increase in incentive fees [18] Business Line Data and Key Metrics Changes - The portfolio now stands at a fair value of $75 million, with 74% concentrated in debt investments and 26% in equity investments [7][11] - The company successfully exited several key investments, including a notable sale of SciAps, generating $13.1 million in proceeds [8][12] - A follow-on debt investment of $125,000 was made in ITA, increasing total holdings in ITA to a fair value of $4.9 million [12] Market Data and Key Metrics Changes - The fair value of the portfolio decreased by approximately 14% sequentially, reflecting successful exits and stock sales [11] - The professional services allocation increased from 43% to 50% of the portfolio, while manufacturing decreased from 25% to 16% [14] Company Strategy and Development Direction - The company aims to expand its debt portfolio while maintaining equity exposure for long-term gains [26] - There is a commitment to optimizing portfolio holdings to maximize future returns amid complex market conditions [28] - The strategy includes supporting portfolio companies to navigate economic challenges, thereby enhancing their resilience [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for income growth through targeted strategic originations and efficient capital deployment [27] - The company is positioned to benefit from recent Fed rate reductions, which are expected to lower borrowing costs and enhance profitability [27] - There is a strong commitment to driving shareholder returns through increased dividends and sustainable long-term value [29] Other Important Information - The company distributed $748,000 in cash dividends to shareholders during the quarter [23] - Total liquidity stood at $24 million, providing strategic positioning for future investments [9] Q&A Session Summary - The Q&A session concluded without specific questions or answers being documented in the provided content.