BUFFALO - Rand Capital Corporation (Nasdaq: RAND) ('Rand' or the 'Company'), a business development company ('BDC'), announced its results for the quarter ended September 30, 2021.
Allen F. ('Pete') Grum, President and Chief Executive Officer of Rand, commented, 'Our results continue to validate the success of our strategy to transform Rand into an income producing business development company that provides a dividend for its shareholders. We continue to liquidate our equity positions and reinvest in income producing vehicles.'
He added, 'As we transform Rand, we are also transitioning our leadership team. I have been honored over these last 25 years to serve as CEO and am excited to support Dan Penberthy and Margaret Brechtel as they take Rand to the next level.'
Third Quarter Highlights
Total investment income in the quarter grew 37% to $1.0 million due to increased interest income from portfolio companies, increased dividend and other investment income, and higher fee income.
Total expenses were $962,000 compared with $456,000 in the third quarter of 2020. The change was largely due to the accrual of $454,000 of capital gains incentive fees during the quarter compared with no similar accrual of fees in the prior-year period. The capital gains incentive fee accrual reflects realized gains from the sale of Rand's investment in Centivo Corporation and the increase in unrealized appreciation mostly related to Tilson Technologies. Operating expenses in the quarter, a non-GAAP financial measure which excludes the capital gains incentive fee accrual, increased $52,000, or 11%, mostly because of an increase in the base management fee payable to Rand's investment adviser resulting from increased asset values.
Net investment income was $53,000, or $0.02 per share, compared with $280,000, or $0.11 per share, in the prior-year period.
Adjusted net investment income per share, a non-GAAP financial measure, which excludes the capital gains incentive fee accrual, was $0.20 for the third quarter of 2021, compared with $0.11 per share in the prior-year period.
Net assets at September 30, 2021 were $60.2 million, up 4% from June 30, 2021. The increase largely reflects the realized gains from the sale of Rand's investment in Centivo Corporation and increase in unrealized appreciation of Tilson Technologies, offset by a reduction in value of
ACV Auctions from the prior quarter. Net assets were up 30% from December 31, 2020, mostly due to the increase in the fair market values of Rand's investment in Open Exchange, Tilson Technologies and ACV Auctions.
Portfolio and Investment Activity
As of September 30, 2021, Rand's portfolio consisted of 34 companies. At that date, the dollar value of the portfolio was comprised of approximately 51% in equity investments, 40% in fixed-rate debt investments and 9% in dividend paying, publicly traded BDCs. The annualized weighted average yield of debt investments was 11.9%.
At September 30, 2021, portfolio fair value increased $2.3 million, or 4%, to $62.1 million compared with June 30, 2021, due primarily to a new investment partially offset by sales, debt repayments and valuation changes.
ABOUT RAND CAPITAL
Rand Capital (Nasdaq: RAND) is an externally managed business development company (BDC). The Company's investment objective is to maximize total return to its shareholders with current income and capital appreciation by focusing its debt and related equity investments in privately-held, lower middle market companies with committed and experienced managements in a broad variety of industries. Rand invests in early to later stage businesses that have sustainable, differentiated and market-proven products, revenue of more than $2 million and a path to free cash flow or up to $5 million in EBITDA. The Company's investment activities are managed by its external investment adviser, Rand Capital Management, LLC.
Safe Harbor Statement
This press release 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 and its outlook, the effectiveness of changes in leadership and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words 'may,' 'will,' 'should,' 'potential,' 'intend,' 'expect,' 'endeavor,' 'seek,' 'anticipate,' 'estimate,' 'overestimate,' 'underestimate,' 'believe,' 'could,' 'project,' 'predict,' 'continue,' 'target' or other similar words or expressions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) evolving legal, regulatory and tax regimes; (2) changes in general economic and/or industry specific conditions and (3) other risk factors as detailed from time to time in Rand 's reports filed with the Securities and Exchange Commission ('SEC'), including Rand's annual report on Form 10-K for the year ended December 31, 2020, quarterly reports on Form 10-Q, and other documents filed with the SEC. Consequently, such forward-looking statements should be regarded as Rand's current plans, estimates and beliefs. Except as required by applicable law, Rand assumes no obligation to update the forward-looking information contained in this release.
RAND CAPITAL CORPORATION 
