- Invested $775,000 during the second
quarter
- Net Asset Value per share was $4.87
at June 30
- Progressing with Small Business
Administration (SBA) new financing process
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 and six months ended June 30, 2018.
Allen F. (“Pete”) Grum, President and Chief Executive Officer of
Rand Capital, commented, “During the quarter we invested $775,000
in debt instruments supporting KnowledgeVision’s progression of its
smart media technology. Since we first began investing in them in
2013, the company has increased its registered user base
tenfold.”
Mr. Grum added, “We continue to work with the SBA to secure an
additional $6 million of debentures. With a full pipeline of
investment opportunities, we look forward to completing this
transaction and putting the funds to work in support of exciting
growth businesses.”
Second Quarter 2018 Financial Highlights
- Reported $4.87 net asset value (NAV)
per share at June 30, 2018, compared with $4.97 at March 31, 2018.
The decrease was primarily due to write-downs of investments in
certain portfolio companies based on their recent operating
performance.
- Supported an existing portfolio
company, KnowledgeVision® Systems, Inc., with $775,000 of
investments during the quarter.
- Investment income increased 18% and 15%
over the prior-year second quarter and first six months,
respectively.
- At June 30, 2018, portfolio fair value
was $32.3 million and consolidated cash was $4.7 million.
Total investment income in the second quarter of 2018 grew to
$413,000, up from $349,000 in the second quarter of 2017. The
$64,000 increase was driven by the Company’s success with focusing
on investments in income producing instruments. Total expenses in
the 2018 and 2017 second quarters were $474,000 and $607,000,
respectively, reflecting a reduction of 22%. The decrease is
primarily due to lower professional fees, partially offset by
higher bad debt expense.
Total investment income was $776,000 and $678,000 for the first
six months ended June 30, 2018 and 2017, respectively. Similar to
the second quarter, the growth was driven by the Company’s
investment focus on income-generating instruments. Total expenses
for the first six months of 2018 and 2017 were $1.1 million in each
period.
Selected Portfolio Highlights
- KnowledgeVision Systems, Inc. is
a leader in smart media creation and hosting technology. Its
Knovio® video platform is used by more than 300,000 people
worldwide in more than 2,000 companies and campuses to create,
host, share, organize, collaborate around, and measure online media
content. The company recently further strengthened its leadership
position by winning its second U.S. patent for its video
presentation technology, launching a groundbreaking live multimedia
webcasting product, Knovio Live. Including its second quarter
investments, at June 30, 2018, Rand’s investment in KnowledgeVision
was valued at approximately $1.3 million.
- Centivo Corporation is a new
high-value healthcare solution built specifically for employers and
their employees and families. CentivoSM targets lowering
healthcare costs and improved healthcare outcomes by rewarding
members and providers for smart choices and actions while
delivering an exceptional member experience. Centivo recently
raised $34 million in Series A funding, in which Rand invested
$200,000 and converted a $100,000 convertible note during the first
quarter of 2018. The capital will be deployed to build the
company’s technology and infrastructure, develop local
partnerships, and support market launch. At June 30, 2018, Rand’s
investment in Centivo was valued at approximately $301,000.
- Rheonix, Inc. is a developer of
fully automated, sample-to-answer molecular testing solutions for
use in multiple applications. Rheonix recently announced two new
innovative products for use on the Encompass Optimum™ workstation.
First, they expanded their Beer SpoilerAlert™ assay to detect more
organisms that may cause spoilage in beer, resulting in the
simplest and most comprehensive beer spoilage test in the market.
Second, Rheonix launched the Listeria PatternAlert™ assay, a
breakthrough method for rapidly identifying molecular patterns from
Listeria strains. Its quick results enable food producers to take
rapid action to reduce the risk of contamination and recall. In
addition, the company has initiated clinical studies to gain FDA
clearance for its Encompass MDx™ Workstation and the Rheonix STI
Tri-Plex assay for the simultaneous detection of three sexually
transmitted infections. At June 30, 2018, Rand’s investment in
Rheonix was valued at approximately $2.9 million.
As of June 30, 2018, Rand’s portfolio consisted of 30 active
companies. At that date, the portfolio was comprised of
approximately 58% in equity investments and 42% in debt
investments, compared with 59% in equity investments and 41% in
debt investments at June 30, 2017.
Webcast and Conference Call
Rand will host a conference call and live webcast today, August
7, 2018, at 1:30 p.m. Eastern Time to review its financial
condition and results for the 2018 second 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 Tuesday, August 14, 2018. To listen
to the archived call, dial (412) 317-6671, and enter conference ID
number 13681337. 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 June
30, 2018 December 31, (Unaudited)
2017
ASSETS
Investments at fair value: Control investments (cost of $99,500)
$ 99,500 $ 99,500 Affiliate investments (cost of
$21,937,593 and $20,871,129, respectively)
17,526,818
17,016,795 Non-Control/Non-Affiliate investments (cost of
$15,903,520 and $15,718,690, respectively)
14,701,108
15,167,767 Total investments, at fair value
(cost of $37,940,613 and $36,689,319, respectively)
32,327,426 32,284,062 Cash
4,720,381 6,262,039
Interest receivable (net of allowance: $237,641 at 6/30/18;
$161,000 at 12/31/17)
127,897 231,048 Deferred tax asset
898,903 551,863 Prepaid income taxes
740,086 762,047
Other assets
55,956
42,854 Total assets
$ 38,870,649
$ 40,133,913
LIABILITIES AND
STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities: Debentures guaranteed by the SBA (net of debt
issuance costs)
$ 7,868,873 $ 7,855,173 Profit
sharing and bonus payable
- 144,000 Accounts payable and
accrued expenses
168,918 178,348 Deferred revenue
65,880 37,707
Total liabilities
8,103,671 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
686,304 686,304 Capital in excess
of par value
10,581,789 10,581,789 Accumulated net
investment loss
(1,808,243 ) (1,597,146 )
Undistributed net realized gain on investments
27,215,738
27,215,738 Net unrealized depreciation on investments
(4,439,505 ) (3,498,895 ) Treasury stock, at cost;
541,046 shares
(1,469,105
) (1,469,105 )
Total stockholders’ equity (net assets) (per share $4.87 at
6/30/18; $5.05 at 12/31/17)
30,766,978
31,918,685 Total liabilities
and stockholders’ equity (net assets) $
38,870,649 $
40,133,913 Rand Capital
Corporation and Subsidiaries Consolidated Statements of
Operations (Unaudited) For the Quarter
Ended For the Six Months Ended June 30, June
30, 2018 2017
2018 2017
Investment income: Interest from portfolio
companies: Affiliate investments
$ 175,990 $ 137,243
$ 323,026 $ 274,000 Non-Control/Non-Affiliate
investments
139,710 140,397
290,022 249,731
Total interest from portfolio companies
315,700
277,640
613,048
523,731 Interest from other
investments: Non-Control/Non-Affiliate investments
7,735 6,859
12,845
17,834 Total interest from other
investments
7,735 6,859
12,845 17,834
Dividend and other investment income: Affiliate investments
76,266 53,024
127,049 115,397
Non-Control/Non-Affiliate investments
2,676
2,681
6,058
5,193 Total dividend and other investment income
78,942 55,705
133,107 120,590 Fee
income: Affiliate investments
4,416 3,167
7,583 4,084
Non-Control/Non-Affiliate investments
6,725
5,768
9,744
11,537 Total fee income
11,141
8,935
17,327
15,621
Total investment income 413,518
349,139
776,327
677,776
Expenses: Salaries
169,875 165,413
339,749 330,826 Employee benefits
45,251 47,699
108,996 100,069 Directors' fees
28,624 36,374
63,499 71,249 Professional fees
37,341 178,193
139,028 262,195 Stockholders and
office operating
64,599 80,725
129,038 147,935
Insurance
6,900 6,258
18,888 17,560 Corporate
development
10,646 11,609
26,442 33,317 Other
operating
2,424 3,323
5,115 5,283
365,660 529,594
830,755 968,434 Interest on SBA
obligations
77,269 77,569
154,838 155,138 Bad debt
expense
30,741 -
76,641 - Total expenses
473,670 607,163
1,062,234
1,123,572
Net investment loss before
income taxes (60,152 ) (258,024 )
(285,907
) (445,796 ) Income tax benefit
(22,384
) (99,403 )
(74,810 )
(171,911 )
Net investment loss (37,768
) (158,621 )
(211,097 )
(273,885 )
Net increase in unrealized depreciation
on investments: Affiliate investments
(306,441 )
(665,675 )
(556,441 ) (665,675 )
Non-Control/Non-Affiliate investments
(450,000
) (52,664 )
(651,489 )
(433,308 ) Increase in unrealized depreciation before
income tax benefit
(756,441 ) (718,339 )
(1,207,930 ) (1,098,983 ) Deferred income tax benefit
(162,915 ) (241,623 )
(267,320 ) (378,050 ) Net increase in
unrealized depreciation on investments
(593,526
) (476,716 )
(940,610 )
(720,933 )
Net unrealized loss on investments
(593,526 ) (476,716 )
(940,610 ) (720,933 )
Net decrease
in net assets from operations $ (631,294 )
$ (635,337 )
$ (1,151,707 ) $
(994,818 )
Weighted average shares outstanding
6,321,988 6,321,988
6,321,988 6,321,988
Basic and
diluted net decrease in net assets from operations per share
$ (0.10 ) $ (0.10 )
$
(0.18 ) $ (0.16 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180807005255/en/
Rand Capital CorporationCompany:Allen 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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