- Invested $450,000 in two follow-on
transactions during the first quarter
- Net Asset Value per share was $4.97
at March 31
- Progress with expanding relationship
with Small Business Administration (SBA)
Rand Capital Corporation (NASDAQ:RAND) (“Rand”), a venture
capital company which invests in growth businesses with unique
product, service or technology concepts, announced its results for
the quarter ended March 31, 2018.
Allen F. (“Pete”) Grum, President and Chief Executive Officer of
Rand Capital, commented, “In the quarter we made two follow-on
investments totaling $450,000. The first was in one of our newer
portfolio companies, Centivo, which we started investing in last
year. The other was in one of our long-standing holdings, SciAps,
in which we have been investing since 2013. Both investments were
part of capital raises to support these companies’ growth.”
During the quarter, Rand consolidated the majority of its
investments and cash of its newly formed Small Business Investment
Company (SBIC) applicant fund, Rand SBIC II, into its original SBIC
fund.
Mr. Grum noted, “We have finalized our strategy with the SBA and
have consolidated our SBIC funds as the first step. We can now
begin the application process for $6 million minimum of additional
leverage in 2018. We are excited to expand our longstanding
relationship with the SBA.”
First Quarter 2018 Financial Highlights
- Reported $4.97 net asset value (NAV)
per share at March 31, 2018, compared with $5.05 at December 31,
2017.
- Supported two current portfolio
companies with $450,000 of investments during the quarter:
- Centivo Corporation $200,000
- SciAps, Inc. $250,000
- Investment income increased 10.4% over
the prior-year first quarter.
- At March 31, 2018, portfolio fair value
was $32.2 million and consolidated cash was $5.5 million.
Total investment income in the first quarter of 2018 grew to
approximately $363,000, up from approximately $329,000 in the first
quarter of 2017. The $34,000 increase was driven by the Company’s
success with focusing investments in income producing instruments.
Total expenses in the 2018 and 2017 first quarters were
approximately $589,000 and $516,000, respectively.
Selected Portfolio Highlights
- ACV Auctions, Inc., the leading
dealer-to-dealer full-service wholesale online auction platform,
reached a major milestone in March selling more than 5,000 units
online for a total of more than $35 million in vehicle
inventory sold. The rapidly growing automotive company is
increasing vehicle sales at a rate of 400 percent per year,
including over 500 new dealer sign-ups per month. ACV Auctions
operates and sells vehicles in 52 markets throughout the East Coast
and Midwest. By the end of 2018, the company expects to be in over
70 markets by expanding to the West Coast. ACV Auctions'
world-class technology modernizes the wholesale auction operation,
including title management, floor plan purchasing, arbitration and
facilitating the transportation of the vehicles. Rand’s initial
$163,000 investment in 2016 has a fair market value of $282,000 at
March 31, 2018.
- SciAps, Inc. develops portable
analytical instruments that identify virtually any compound,
mineral or element on earth. The company recently introduced a new
Scrapper X-250, which is an X-ray analyzer designed from the ground
up to be the fastest scrap sorter in existence. It measures
magnesium up to 10 times faster than any other X-ray gun, which is
one of the keys to highly accurate aluminum alloy testing. SciAps
recently completed a Series D $10 million financing round, in which
Rand invested $250,000 during the first quarter. This represents
Rand’s tenth investment in SciAps. At March 31, 2018, Rand’s
investment in SciAps was valued at approximately $2.0 million.
- OutMatch Holdings, LLC is a
leader in delivering actionable predictive analytics to build
world-class workforces and is transforming the world of work by
helping companies hire, retain and develop great talent. The
company experienced a breakthrough year in 2017, fueled by the
acquisition of a leading culture analytics firm and the launch of
its robust new platform. Outmatch gained 60 new clients and its
client retention rate was 98% which drove double-digit
year-over-year recurring revenue growth. For 2018, the company is
developing enhancements to expand its candidate assessment
platform, broadening its OutMatch Impact. They recently announced
the launch of two new solutions, which include the industry’s
fastest pre-hire assessment and OutMatch Bridge, an exclusive
solution that allows point-and-click integration of assessments
into applicant tracking systems. At March 31, 2018, Rand’s
investment in OutMatch was valued at approximately $2.1
million.
As of March 31, 2018, Rand’s portfolio consisted of 30 active
companies. At that date, the portfolio was comprised of
approximately 60% in equity investments and 40% in debt
investments, compared with 63% in equity investments and 37% in
debt investments at March 31, 2017. The change in investment mix
reflects Rand’s goal to generate sufficient investment income to
cover operating expenses.
Webcast and Conference Call
Rand will host a conference call and live webcast today, May 2,
2018, at 1:30 p.m. Eastern Time to review its financial condition
and results for the 2018 first quarter, as well as its strategy and
outlook. The review will be accompanied by a slide presentation,
which will be available on Rand’s website at www.randcapital.com
under the “Investor Relations” heading. A question-and-answer
session will follow the formal presentation.
Rand’s conference call can be accessed by calling (201)
689-8263. Alternatively, the webcast can be monitored on Rand’s
website at www.randcapital.com under the “Investor Relations”
heading.
A telephonic replay will be available from approximately 4:30
p.m. Eastern Time today through Wednesday, May 9, 2018. To listen
to the archived call, dial (412) 317-6671, and enter conference ID
number 13679104. A transcript of the call will be placed on Rand’s
website, once available.
ABOUT RAND CAPITAL
Rand Capital (NASDAQ: RAND) provides investors the ability to
participate in venture capital opportunities through an investment
in the Company’s stock. Rand is a Business Development Company
(BDC) with a wholly owned subsidiary licensed by the U.S. Small
Business Administration (SBA) as a Small Business Investment
Company (SBIC). Rand focuses its equity investments in early or
expansion stage companies and generally lends to more mature
companies. The Company seeks investment opportunities in businesses
with strong leaders who are bringing to market new or unique
products, technologies or services that have a high potential for
growth. Additional information can be found at the Company’s
website where it regularly posts information:
http://www.randcapital.com/.
Safe Harbor Statement
This news release contains “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include, but are not limited to, statements
concerning future net asset value growth, investment returns and
opportunities as well as Rand’s plans for utilizing proceeds from
sales of portfolio companies when and if received. These statements
involve known and unknown risks, uncertainties and other factors
that could cause the actual results to differ materially from the
results expressed or implied by such statements, including general
economic and business conditions, conditions affecting the
portfolio companies’ markets, competitor responses, and market
acceptance of their products and services and other factors
disclosed in the Corporation’s periodic reports filed with the
Securities and Exchange Commission. Consequently, such
forward-looking statements should be regarded as the Corporation’s
current plans, estimates and beliefs. The Corporation assumes no
obligation to update the forward-looking information contained in
this release.
FINANCIAL TABLES FOLLOW
Rand Capital Corporation and
Subsidiaries Consolidated Statements of Financial
Position March 31, 2018 December
31, (Unaudited) 2017
ASSETS
Investments at fair value: Control investments (cost of $99,500)
$ 99,500 $ 99,500 Affiliate investments (cost of
$21,086,529 and $20,871,129, respectively)
16,982,195
17,016,795 Non-Control/Non-Affiliate investments (cost of
$15,900,940 and $15,718,690, respectively)
15,148,528
15,167,767 Total investments, at fair value
(cost of $37,086,969 and $36,689,319, respectively)
32,230,223 32,284,062 Cash
5,499,266 6,262,039
Interest receivable (net of allowance: $206,900 at 3/31/18;$161,000
at 12/31/)
168,129 231,048 Deferred tax asset
656,268
551,863 Prepaid income taxes
797,422 762,047 Other assets
82,247 42,854
Total assets $
39,433,555 $
40,133,913
LIABILITIES AND
STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities: Debentures guaranteed by the SBA (net of debt
issuance costs)
$ 7,862,023 $ 7,855,173 Profit
sharing and bonus payable
- 144,000 Accounts payable and
accrued expenses
119,739 178,348 Deferred revenue
53,521 37,707
Total liabilities
8,035,283 8,215,228
Stockholders’ equity (net assets): Common stock, $.10 par;
shares authorized 10,000,000; shares issued 6,863,034; shares
outstanding of 6,321,988 at 3/31/18 and 12/31/17
686,304
686,304 Capital in excess of par value
10,581,789 10,581,789
Accumulated net investment loss
(1,770,475 )
(1,597,146 ) Undistributed net realized gain on investments
27,215,738 27,215,738 Net unrealized depreciation on
investments
(3,845,979 ) (3,498,895 ) Treasury stock,
at cost; 541,046 shares
(1,469,105
) (1,469,105 )
Total stockholders’ equity (net assets) (per share $4.97 at
3/31/18; $5.05 at 12/31/17)
31,398,272
31,918,685 Total liabilities
and stockholders’ equity (net assets) $
39,433,555 $
40,133,913
Rand Capital Corporation and Subsidiaries Consolidated
Statements of Operations (Unaudited)
For the Quarter Ended March
31,
2018 2017 Investment income: Interest from
portfolio companies: Affiliate investments
$ 147,036
$ 136,757 Non-Control/Non-Affiliate investments
150,312 109,334 Total interest from
portfolio companies
297,348 246,091
Interest from other investments:
Non-Control/Non-Affiliate investments
5,110
10,975 Total interest from other investments
5,110 10,975 Dividend and other
investment income: Affiliate investments
50,783 62,373
Non-Control/Non-Affiliate investments
3,382
2,512 Total dividend and other investment income
54,165 64,885 Fee income:
Affiliate investments
3,167 917 Non-Control/Non-Affiliate
investments
3,019 5,769 Total
fee income
6,186 6,686
Total
investment income 362,809 328,637
Expenses: Salaries
169,874 165,413
Employee benefits
63,745 52,370 Directors' fees
34,875 34,875 Professional fees
101,687 84,002
Stockholders and office operating
64,439 67,210 Insurance
11,988 11,302 Corporate development
15,796 21,708
Other operating
2,691 1,960
465,095 438,840 Interest on SBA obligations
77,569
77,569 Bad debt expense
45,900 -
Total expenses
588,564 516,409
Net investment loss before income taxes (225,755
) (187,772 ) Income tax (benefit)
(52,426
) (72,508 )
Net investment (loss)
(173,329 ) (115,264 )
Net
change in unrealized depreciation on investments: Affiliate
investments
(250,000 ) - Non-Control/Non-Affiliate
investments
(201,489 ) (380,644 )
Change in unrealized depreciation before income tax expense
(benefit)
(451,489 ) (380,644 ) Deferred income tax
(benefit)
(104,405 ) (136,427 ) Net
change in unrealized depreciation on investments
(347,084 ) (244,217 )
Net realized
and unrealized (loss) on investments (347,084
) (244,217 )
Net (decrease) in net assets from
operations $ (520,413 ) $ (359,481 )
Weighted average shares outstanding 6,321,988
6,321,988
Basic and diluted net (decrease) in net assets from
operations per share $ (0.08 ) $ (0.06 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180502005278/en/
Company:Rand Capital CorporationAllen F. ("Pete") Grum,
716-853-0802President and
CEOpgrum@randcapital.comorInvestors:Kei Advisors LLCDeborah
K. Pawlowski / Karen L. Howard716-843-3908 /
716-843-3942dpawlowski@keiadvisors.com /
khoward@keiadvisors.com
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