Rand Capital(US:RAND)2022-03-08 13:00Investment Management - RCM manages the investment portfolio and employs five individuals as of December 31, 2021[35]. - The Investment Committee must approve all investment decisions unanimously, ensuring thorough evaluation of potential investments[41]. - The Adviser may enter into sub-advisory agreements to recommend specific securities based on investment objectives[39]. - The Adviser is responsible for due diligence on prospective portfolio companies and investments[37]. - Daniel P. Penberthy is the principal investment portfolio manager, overseeing day-to-day management of the investment portfolio[40]. Fees and Expenses - The Base Management Fee is calculated at an annual rate of 1.50% of total assets, excluding cash or cash equivalents[43]. - The Income Based Fee is based on Pre-Incentive Fee Net Investment Income, with a hurdle rate of 1.75% per quarter (7% annualized)[49]. - The Capital Gains Fee is 20% of cumulative realized capital gains minus cumulative realized capital losses, calculated at the end of each calendar year[56]. - The Income Based Fee is subject to a cap, which is 20% of Cumulative Net Return minus previously paid Income Based Fees[50]. - The company is responsible for all operational costs, including organization, NAV calculations, and investment advisory fees[67]. - The company has a "catch-up" provision allowing for a 20.00% Income Based Fee on Pre-Incentive Fee Net Investment Income exceeding 1.75% in any quarter[63]. Financial Performance - As of December 31, 2021, total investments at fair value increased to $64,068,462 from $40,048,501 in 2020, representing a growth of 60%[304]. - The company reported total assets of $65,644,854 as of December 31, 2021, compared to $60,966,942 in 2020, indicating an increase of approximately 12.5%[304]. - Stockholders' equity rose to $60,745,416 in 2021, up from $46,104,830 in 2020, reflecting a significant increase of 31.7%[304]. - The company’s total distributable earnings improved to $10,367,320 in 2021, compared to a loss of $(4,617,773) in 2020[304]. - Total investment income for 2021 was $4,076,303, an increase of 31.3% from $3,102,919 in 2020[307]. - The net increase in net assets from operations for 2021 was $15,797,428, significantly higher than $743,766 in 2020[310]. - The total return based on net asset value was 31.81% in 2021, a recovery from a decline of (45.79%) in 2020[356]. Investment Portfolio - The company must maintain at least 70% of its total assets in qualifying assets as per the 1940 Act[79]. - At December 31, 2021, the company was in compliance with the 30% limit on non-qualifying investments[81]. - The total value of non-control/non-affiliate investments is $33,788,589, with a total cost of $25,012,871[318]. - The total control and affiliate investments reached $30,279,872, reflecting a strategic focus on high-potential sectors[330]. - As of December 31, 2021, restricted securities accounted for 78% of the fair value of the investment portfolio[326]. - The total cost of investment securities was approximately $52.4 million, with a net unrealized appreciation of approximately $11.7 million[328]. Taxation and Compliance - The company must distribute at least 90% of its investment company taxable income to maintain its RIC status, which is crucial for tax purposes[90]. - The Corporation did not pay corporate-level federal income taxes for the years ended December 31, 2021, and 2020, due to its RIC status[420]. - The Corporation's taxable income for 2021 was estimated at $746,766, a decrease from $3,512,380 in 2020[425]. - The tax benefit of RIC status for 2021 was reported as ($3,442,529), compared to ($417,780) in 2020[434]. Investment Valuation - The Corporation's investments are carried at fair value in accordance with FASB ASC 820, which establishes guidelines for measuring fair value[326]. - At December 31, 2021, 22% of the Corporation's investments were classified as Level 1, while 78% were Level 3 investments[397]. - The total fair value of assets measured at fair value as of December 31, 2020, was $40,048,501, with equity investments contributing $23,477,742[416]. - The weighted average EBITDA multiple for Level 3 investments was 5.4X as of December 31, 2021, compared to 5.3X in the previous year[414]. Shareholder Information - The Corporation's value per share on December 31, 2021, was $18.81, with ACV Auction's public market share price ranging from $10.30 to $19.73 from January 1 to February 28, 2022[326]. - The company reported a basic and diluted net increase in net assets from operations per share of $6.12 in 2021, compared to $0.33 in 2020[307]. - Cash dividends declared for 2021 totaled $0.44 per share, compared to $3.17 per share in 2020[366]. - The ratio of expenses before income taxes to average net assets increased to 12.49% in 2021 from 3.96% in 2020[356].