Financial Position - Total assets decreased by 1.5% to $79,798,119 as of September 30, 2024, from $81,021,982 at December 31, 2023[143]. - Total liabilities decreased significantly by 53.7% to $9,351,483 from $20,206,769[143]. - Net assets increased by 15.8% to $70,446,636, compared to $60,815,213 at the end of 2023[143]. - Net asset value per share (NAV) rose to $27.29 at September 30, 2024, up from $23.56 at December 31, 2023[143]. Investment Performance - Total investment income for the three months ended September 30, 2024, was $2,218,454, an increase of 27.4% compared to $1,741,114 for the same period in 2023[151]. - Interest from portfolio companies increased by $409,918, or 26.7%, to $1,945,595 for the three months ended September 30, 2024, due to additional interest-yielding investments[151][154]. - Realized gain on investments for the three months ended September 30, 2024, was $7,230,082, a significant increase of $10,032,813 compared to a loss of $2,802,731 in the same period in 2023[160]. - The company recognized a realized gain of $7,699,879 from the sale of its investment in SciAps during the three months ended September 30, 2024[160]. - The company recognized a realized gain on investments before income taxes of $11,108,282 for the nine months ended September 30, 2024, a substantial increase from $1,068,904 in the same period of 2023[175]. Expenses and Income - Total expenses for the three months ended September 30, 2024, were $1,333,930, representing a 64.7% increase from $809,936 in the same period in 2023[158]. - Net investment income for the three months ended September 30, 2024, was $887,035, compared to $798,583 for the same period in 2023[160]. - Total expenses for the nine months ended September 30, 2024, were $5,213,568, representing a 64.8% increase from $3,164,522 in the same period of 2023[172]. - Net investment income for the nine months ended September 30, 2024, was $1,209,425, down from $2,006,129 in the same period of 2023[173]. Cash Flow and Liquidity - As of September 30, 2024, the company had total liquidity of approximately $24,453,000, consisting of $3,353,000 in cash and $21,100,000 available on the Credit Facility[182]. - The company experienced a net cash increase of approximately $57,000 for the nine months ended September 30, 2024, driven by $14,550,000 from operating activities and $14,492,000 used in financing activities[186]. - Net cash used in financing activities during the nine months ended September 30, 2024, was approximately $14,492,000, which included $12,350,000 repaid on the Credit Facility and approximately $2,142,000 in dividends paid to shareholders[188]. Investment Strategy and Future Outlook - The company anticipates continuing to fund investment activities through cash generated from ongoing operations and borrowings under the $25 million Credit Facility[189]. - The company plans to continue exiting investments, although the timing of liquidation events for privately held investments is difficult to project[189]. - The company does not currently engage in any hedging activities but may consider using futures, options, and forward contracts in the future to hedge against interest rate fluctuations[192]. Valuation and Market Conditions - The company carries its investments at fair value, which requires judgment and may involve material risks due to the uncertainty of determining fair value[193]. - Changes in market conditions and other events may cause the realized value of investments to differ from assigned valuations[193]. - The company’s valuation process considers factors such as third-party valuations, the portfolio company's payment ability, and comparisons to publicly-traded securities[193].

Financial Data and Key Metrics Changes - Total investment income for Q2 2024 was $2.1 million, an 18% increase compared to the same quarter last year, driven by a 35% increase in interest income from 7 new interest-yielding investments [11] - Total expenses for the quarter were approximately $2.7 million, up from $1.3 million in the same quarter last year, primarily due to a $1.2 million rise in capital gain incentive fees [11] - Net investment loss was $517,000 or $0.20 per share, compared to a net investment income of $493,000 or $0.19 per share in the prior year [12] - Net assets at June 30, 2024, were $68.6 million, reflecting an 11% increase, largely due to unrealized appreciation on investments of $7.8 million [12] Business Line Data and Key Metrics Changes - The portfolio had a fair value of $87.1 million across 26 businesses, up 13% from year-end 2023 and 5% sequentially [7] - The portfolio is comprised of approximately 66% debt investments with an annualized weighted average yield of 13.8% [7] - The largest fair value investment, Tilson, increased by 17% to $12.3 million, while SciAps' value more than doubled to $10.8 million following a purchase agreement [10] Market Data and Key Metrics Changes - Manufacturing increased from 20% to 25% of the portfolio, while BDC stocks decreased from 5% to 2% [9] - The company received $3.3 million in total proceeds from liquidating shareholdings in 3 BDC investments, resulting in realized gains [8] Company Strategy and Development Direction - The company aims to expand by pursuing new investments and reinvesting in existing portfolio companies with high potential [15] - The strategy includes participating in smaller M&A transactions to support a steady income stream through new debt instruments [15] - The focus remains on debt financing for lower to middle market businesses while maintaining minority equity investments [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy of transforming the portfolio to include more income-generating investments, which is expected to sustain higher dividend levels over time [13] - The anticipated capital infusion from the acquisition of SciAps will be strategically redeployed to drive further value for shareholders [5] Other Important Information - The company declared total dividends of $0.83 per share year-to-date, including a cash dividend of $0.29 per share for Q2 [6] - Total available liquidity at quarter end was over $11 million, including cash on hand and remaining highly liquid publicly traded BDC securities [6] Q&A Session Summary - The Q&A session concluded without specific questions or answers being documented in the provided content.

Financial Performance - Total assets increased by 12.1% to $90,789,069 as of June 30, 2024, compared to $81,021,982 at December 31, 2023[142] - Net assets rose by 12.7% to $68,558,616 at June 30, 2024, up from $60,815,213 at the end of 2023[142] - The net asset value per share (NAV) was $26.56 at June 30, 2024, compared to $23.56 at December 31, 2023[142] - Total investments at fair value increased by 12.9% to $87,070,967 as of June 30, 2024, from $77,125,712 at December 31, 2023[145] - Unrealized appreciation, net, surged by 55.8% to $13,648,836 at June 30, 2024, compared to $8,760,106 at the end of 2023[145] - Total investment income for the three months ended June 30, 2024, was $2,136,149, representing a 17.7% increase from $1,815,432 in the same period of 2023[149] - Total investment income for the six months ended June 30, 2024, was $4,203,368, representing a 14.6% increase from $3,666,930 in the same period of 2023[168] - Net investment income for the six months ended June 30, 2024, was $322,390, a significant decrease from $1,207,546 in the same period of 2023[175] Investment Activities - New investments totaled $10,945,497 during the six months ended June 30, 2024[148] - The company liquidated investments in Ares, Carlyle, Knoa, and Pennantpark during the three months ended June 30, 2024[161] - The company funded approximately $10,945,000 in new or follow-on portfolio company investments during the same period[190] Dividends and Expenses - The company declared quarterly cash dividends of $0.25 and $0.29 for the first and second quarters of 2024, respectively[139] - Total expenses rose significantly by 103.0% to $2,652,782 in Q2 2024, up from $1,306,741 in Q2 2023, primarily driven by a $1,150,000 increase in capital gains incentive fee expense[152] - Total expenses rose by 64.8% to $3,879,638 for the six months ended June 30, 2024, up from $2,354,586 in 2023, primarily due to increased capital gains fee expenses and interest expenses[172] Cash Flow and Liquidity - As of June 30, 2024, total liquidity consisted of approximately $2,293,000 in cash and $7,800,000 available on the Credit Facility[186] - The company entered into a $25 million Credit Facility with an outstanding balance of $17.2 million as of June 30, 2024, leaving an unused line of credit of $7.8 million[187] - For the six months ended June 30, 2024, the company experienced a net decrease in cash of approximately $1,002,000, primarily due to $558,000 used in operating activities and $444,000 in financing activities[190] Financial Risks and Management - The company is subject to financial market risks, including interest rate changes that may affect its interest expense on the debt outstanding under the Credit Facility[192] - A hypothetical 1% increase in interest rates could decrease net investment income by approximately $172,000, while a 1% decrease could increase it by the same amount[194] - The company does not currently engage in hedging activities but may consider them in the future to manage interest rate fluctuations[195] Future Outlook - SciAps announced a definitive purchase agreement for acquisition with total consideration of up to $260 million, expected to close later in 2024[162] - SciAps announced a definitive purchase agreement for up to $260 million, with closing expected later in 2024, which may impact future valuations[181] Investment Strategy - The company’s investment objective focuses on generating current income and capital appreciation through investments in lower middle market companies[146] - The company has co-investment opportunities with affiliates under an SEC exemptive order, enhancing investment diversification[140] Performance Metrics - Interest from portfolio companies increased by 35.4% to $1,995,227 in Q2 2024, compared to $1,473,540 in Q2 2023, due to additional interest-yielding investments[150] - Interest from portfolio companies increased by 37.5% to $3,808,875 for the six months ended June 30, 2024, compared to $2,770,443 in 2023, due to additional interest-yielding investments[169] - The net increase in net assets from operations for the three months ended June 30, 2024, was $7,737,773, compared to $2,671,890 in the same period of 2023[164] - The net increase in net assets from operations for the six months ended June 30, 2024, was $9,137,154, compared to $4,842,167 in 2023[185] - The change in unrealized appreciation of investments was $7,779,026 for Q2 2024, a significant improvement from a depreciation of ($1,367,270) in Q2 2023[159] - The change in unrealized appreciation of investments before income taxes for the six months ended June 30, 2024, was $4,888,730, compared to $34,703 in 2023, indicating a substantial increase[179]

Investment Performance - Total investment income increased by 18% to $2.1 million for Q2 2024, driven by a 35% increase in interest from portfolio companies[3] - Total investment income increased by 18% to $2,136,149 for the three months ended June 30, 2024, compared to $1,815,432 for the same period in 2023[16] - Adjusted net investment income per share was $0.44, a 16% increase from $0.38 per share in Q2 2023[5] - Basic and diluted net increase in net assets from operations per share was $3.00 for the three months ended June 30, 2024, compared to $1.04 for the same period in 2023[17] - Net investment (loss) income per share for the three months ended June 30, 2024, is $(0.20), a decrease from $0.19 for the same period in 2023[22] - Excluding expenses for capital gains incentive fees, net investment income per share was $0.64 for the three months ended June 30, 2024, up from $0.19 in the same period of 2023[22] - For the six months ended June 30, 2024, net investment (loss) income per share was $0.12, down from $0.47 for the same period in 2023[22] - The adjusted net investment income per share for the six months ended June 30, 2024, was $0.80, compared to $0.77 in the same period last year[22] Financial Position - Net asset value per share rose to $26.56 at June 30, 2024, reflecting an 11% increase from March 31, 2024, and a 13% increase from year-end 2023[1] - As of June 30, 2024, Rand's portfolio had a fair value of $87.1 million, a 13% increase from December 31, 2023[6] - Net assets at the end of the period were $68,558,616 as of June 30, 2024, compared to $61,402,028 at the same time in 2023[18] Expenses and Costs - Total expenses for Q2 2024 were $2.7 million, up from $1.3 million in the same period last year, primarily due to a $1.2 million increase in capital gains incentive fees[4] - Total expenses for the three months ended June 30, 2024, were $2,652,782, compared to $1,306,741 for the same period in 2023[20] - Adjusted total expenses, excluding capital gains incentive fees, were $1,011,782 for the three months ended June 30, 2024[20] Debt Management - Rand reduced its debt balance by $2.0 million during the quarter, with an additional $2.3 million repaid subsequent to quarter-end[1] - The annualized weighted average yield of debt investments was 13.8% at June 30, 2024, compared to 13.6% at the end of 2023[6] Dividends - A quarterly dividend of $0.29 per share was announced for Q3 2024, consistent with previous distributions[1] - The company declared a dividend of $(748,496) for the three months ended June 30, 2024, compared to $(645,255) in the same period last year[18] Investment Gains and Losses - Net investment (loss) income before income taxes was $(516,633) for the three months ended June 30, 2024, compared to $508,691 for the same period in 2023[16] - Net realized gain on sales and dispositions of investments was $428,108 for the three months ended June 30, 2024, down from $3,480,089 in the same period last year[18] - The company reported a net change in unrealized appreciation on investments of $7,826,860 for the three months ended June 30, 2024[18] Future Outlook - The company expects to leverage capital from the pending sale of portfolio investment company SciAps, anticipated to close later this year[2] - Rand's total debt and equity investment in SciAps had a fair value of $10.8 million at quarter-end[7]

Financial Data and Key Metrics Changes - Total investment income for Q1 2024 was $2.1 million, a 12% increase from the previous year's first quarter, driven by a 40% increase in interest income [17] - Net investment income increased 17% to $840,000 or $0.33 per share compared to $715,000 or $0.28 per share in Q1 2023 [18] - Total expenses were approximately $1.2 million in Q1 2024, up from $1 million in the prior year's first quarter [9] - Net assets at March 31, 2024, were $61.6 million, a 1% increase from the end of 2023 [31] Business Line Data and Key Metrics Changes - The portfolio comprised approximately 70% in debt investments, up from 64% at the end of 2023, with an annualized weighted average yield of 13.7% [14][25] - The company completed one follow-on and two new investments during the quarter, including a $5.5 million debt investment in Madison Avenue Holdings [14][26] - The fair value of the portfolio increased to $82.8 million across 30 portfolio businesses, up $5.6 million or 7% from the end of 2023 [26] Market Data and Key Metrics Changes - The company observed growth in sectors such as professional services, consumer products, and distribution, while declines were noted in manufacturing and software industries [7] - The company liquidated approximately $3 million worth of BDC stocks post-quarter end to safeguard accrued gains [22] Company Strategy and Development Direction - The company aims to maximize shareholder value through sustained growth of dividends and strategic investments in income-generating debt instruments [34] - The strategic shift towards a higher proportion of debt investments is expected to support increased dividend levels over time [20][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to replicate historical achievements and deliver compelling returns for shareholders [22] - The company highlighted the importance of maintaining a strong and flexible balance sheet for future investments [19] Other Important Information - The company declared total dividends of $0.54 per share year-to-date, including a cash dividend of $0.25 per share for Q1 2024, with a subsequent increase to $0.29 per share for Q2 2024 [13][20] - Total outstanding borrowings were $19.2 million with an interest rate of approximately 8.8% at quarter end [32] Q&A Session Summary Question: What is the outlook for future dividends? - Management indicated that the strategic focus on income-generating investments is expected to support an increase in dividends over time [34] Question: How has the portfolio composition changed? - The portfolio now consists of 70% debt investments, reflecting a strategic shift from previous years [25] Question: What were the key drivers of investment income growth? - The increase in investment income was primarily driven by a significant rise in interest income [17]

Investment Income and Portfolio Performance - Total investment income increased by 12% to $2.1 million for Q1 2024, driven by a 40% rise in interest from portfolio companies [4]. - Net investment income grew 17% to $840,000, or $0.33 per share, compared to $715,000, or $0.28 per share, in Q1 2023 [6]. - Total investment income for the first quarter of 2024 increased by 12% to $2,067,219 compared to $1,851,498 in the same period of 2023 [24]. - Net investment income for the first quarter of 2024 was $839,585, up from $714,916 in the first quarter of 2023 [25]. - The annualized weighted average yield of debt investments was 13.7% at March 31, 2024, slightly up from 13.6% at the end of 2023 [7]. - The investment portfolio consisted of 70% interest-yielding debt instruments at quarter-end, up from 64% at the end of 2023, enhancing portfolio yield and net interest income [4]. Asset and Dividend Information - The net asset value per share (NAV) was $23.85 at March 31, 2024, reflecting a 1% increase from year-end 2023 [4]. - Regular quarterly dividend increased by 16% to $0.29 per share for Q2 2024, up from $0.25 per share [14]. - Net assets at the end of the first quarter of 2024 were $61,569,339, an increase from $59,375,393 at the end of the first quarter of 2023 [25]. - The company declared a dividend of $645,255 in the first quarter of 2024, up from $516,204 in the same quarter of 2023 [25]. Investment Activities - New and follow-on investments totaled $10.8 million during the first quarter, including a $5.5 million investment in Mattison Avenue Holdings [4]. - The company realized a gain of $3.5 million from the sale of ACV Auctions stock, with the shares sold at an average price of $18.02 each [12]. - Net realized gain on sales and dispositions of investments reached $3,450,092, significantly higher than $53,388 in the same quarter of the previous year [25]. Expenses and Financial Metrics - Total expenses for the first quarter of 2024 were $1,226,856, compared to $1,047,845 in the first quarter of 2023 [28]. - Adjusted total expenses, excluding capital gains incentive fees, were $1,114,556 for the first quarter of 2024, compared to $756,845 in the same period of 2023 [28]. - Net increase in net assets from operations was $1,399,381 for the first quarter of 2024, down from $2,170,277 in the same quarter of 2023 [25]. - Basic and diluted net increase in net assets from operations per share decreased to $0.54 from $0.84 year-over-year [23]. - Outstanding borrowings on the senior secured revolving credit facility were $19.2 million, with an interest rate of 8.8% at quarter-end [9]. - Adjusted net investment income per share for the first quarter of 2024 was $0.37, compared to $0.39 in the same period of 2023 [30].

Financial Position - Total assets increased by $3,333,148, or 4.1%, from $81,021,982 on December 31, 2023, to $84,355,130 on March 31, 2024[157]. - Total liabilities rose by $2,579,022, or 12.8%, from $20,206,769 to $22,785,791 during the same period[157]. - Net asset value per share (NAV) was $23.85 at March 31, 2024, compared to $23.56 at December 31, 2023[157]. Investment Income - Total investment income for the three months ended March 31, 2024, was $2,067,219, an increase of $215,721, or 11.7%, from $1,851,498 in the same period of 2023[165]. - Interest from portfolio companies increased by $516,745, or 39.8%, from $1,296,903 to $1,813,648 year-over-year[165]. - Interest from portfolio companies increased by approximately 40% during the three months ended March 31, 2024, compared to the same period in 2023, due to more interest-yielding investments originated[166]. - Total dividend and other investment income for the three months ended March 31, 2024, was $151,835, a decrease from $474,743 in the same period in 2023[168]. - Net investment income for the three months ended March 31, 2024, was $839,585, compared to $714,916 for the same period in 2023[175]. Expenses and Liabilities - Total expenses for the three months ended March 31, 2024, were $1,226,856, representing a 17.1% increase from $1,047,845 in the same period in 2023[169]. - Interest expense rose to $390,020 for the three months ended March 31, 2024, from $158,400 in the same period in 2023, reflecting higher average outstanding debt balances[170]. - The company has a $25 million senior secured revolving credit facility with $19,200,000 drawn as of March 31, 2024, with an applicable interest rate of 8.84%[159]. - The outstanding balance drawn on the Credit Facility at March 31, 2024, was $19,200,000, with an applicable interest rate of 8.84%[185]. Unrealized Gains and Losses - Unrealized appreciation, net decreased by $2,890,296, or 33.0%, from $8,760,106 to $5,869,810 during the same period[161]. - The change in unrealized depreciation of investments for the three months ended March 31, 2024, was $(2,890,296), compared to an appreciation of $1,401,973 in the same period in 2023[178]. - The company recognized a net realized gain of $3,450,092 on the sale of 194,934 shares of Class A common stock of ACV during the three months ended March 31, 2024[176]. Cash and Liquidity - As of March 31, 2024, cash approximated 1.2% of net assets, down from 5.4% at December 31, 2023[158]. - As of March 31, 2024, total liquidity consisted of approximately $759,000 in cash and $5,800,000 remaining availability on the Credit Facility[183]. Interest Rate Sensitivity - As of March 31, 2024, all debt investments had fixed interest rates, insulating them from market interest rate changes[193]. - A 1% increase in interest rates could lead to a decrease in net investment income by $192,000, while a 1% decrease could increase net investment income by $192,000[195]. - The company’s net investment income is dependent on the difference between borrowing rates and the rates earned on invested proceeds[194]. - Changes in interest rates can impact the company's ability to acquire loans and securities, as well as the value of its investment portfolio[194]. - The analysis of interest rate sensitivity does not account for changes in credit quality or other business developments that could affect net investment income[195]. - Future interest rate fluctuations may limit the company's ability to benefit from lower interest rates if hedging is implemented[196]. - The company does not currently engage in any hedging activities but may consider using standard hedging instruments in the future[196]. - The company is currently not engaged in any hedging activities to mitigate interest rate risks[196]. Fair Value Determination - Fair value of investments is determined by RCM and approved by the Board, with inherent risks in valuation due to market uncertainties[197]. - The company may face material risks associated with fair value determinations, which could differ significantly from actual liquidation values[197].

Financial Data and Key Metrics Changes - The company reported total investment income for Q4 2023 of $1.9 million, an increase of 11% year-over-year, driven by a 47% rise in interest income [28] - Full-year total investment income grew 27% to $7.3 million, reflecting new debt instruments [28] - Net investment income per share for Q4 2023 was $0.37, down from $0.48 in Q4 2022, while adjusted net investment income per share increased 11% to $1.46 for the full year [13][14] Business Line Data and Key Metrics Changes - The portfolio consisted of 64% debt investments, up from 56% at the end of 2022, resulting in improved portfolio yield [22] - The company invested a total of $20.3 million across nine transactions in 2023, primarily in interest-yielding assets [9] - The largest industry concentration, Professional Services, increased to 42% of the total portfolio, while Automotive and Consumer Products saw declines [10] Market Data and Key Metrics Changes - The company held investments with a fair value of $77.1 million at year-end, an increase of 25% from December 31, 2022 [24] - The top five portfolio companies represented 45% of the total portfolio at year-end, with Tilson as the largest investment at $10.6 million [27] Company Strategy and Development Direction - The company aims to grow by focusing on debt and related equity investments in privately held lower middle market companies to drive investment income growth and increase dividends [39] - Future investments are expected to range from $2 million to $4 million, targeting opportunities with favorable risk-adjusted returns [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong balance sheet and significant liquidity position, which positions the company well for future investments [30] - The company anticipates that its portfolio transformation towards more income-producing investments will support increased dividend levels over time [14] Other Important Information - Total dividends paid in 2023 were $1.33 per share, a 60% increase over 2022, including a special dividend of $0.38 per share in Q4 [6][7] - The net asset value at December 31, 2023, was $60.8 million, up 5% from the end of 2022, with net asset value per share increasing to $23.56 [37] Q&A Session Summary - No specific questions or answers were provided in the content regarding the Q&A session [1]

($ in thousands, except per share data) • Driven by a 47% increase in interest from portfolio companies 10 Total investment income grew 27% © 2023 Rand Capital Corporation Nasdaq: RAND Net assets at 12/31/2022 Net investment income Net realized gain on sales and dispositions Net change in unrealized Cash dividend Net assets at 12/31/2023 $57,721 $2,968 $691 $2,868 ($3,433) $60,815 of investments appreciation on investments $57,721,320 $60,815,213 STRONG AND FLEXIBLE BALANCE SHEET 13 2024 OBJECTIVES • Levera ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _____ to _______ Commission File Number: 814-00235 Rand Capital Corporation (Exact name of registrant as specified in its charter) New York 16-0961359 (S ...