- Net Asset Value per share was $4.84
at September 30
- Several portfolio companies on pace
for significant revenue growth
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 nine months ended September 30, 2018.
Allen F. (“Pete”) Grum, President and Chief Executive Officer of
Rand Capital, commented, “During the third quarter we invested
$140,000 in a convertible secured note supporting BeetNPath’s
ongoing growth. As we previously reported, earlier this year the
company updated its brand look and feel, and introduced new
packaging for its frozen entrée product line.”
Third Quarter 2018 Financial Highlights
- Reported $4.84 net asset value (NAV)
per share at September 30, 2018, compared with $4.87 at June 30,
2018. The decrease was primarily due to a realized loss upon the
sale of a portfolio company, partially offset by a tax
benefit.
- Supported an existing portfolio
company, BeetNPath, LLC, by investing $140,000 during the
quarter.
- Investment income increased 66% and 34%
over the prior-year third quarter and nine month periods,
respectively, driven by nonrecurring loan restructuring income in
the third quarter.
- At September 30, 2018, portfolio fair
value was $32.2 million and consolidated cash was$4.4 million.
Total investment income in the third quarter of 2018 grew to
$662,000, up from $397,000 in the third quarter of 2017. The
$265,000 increase included approximately $233,000 of nonrecurring
interest and debt modification fee income upon a portfolio company
loan restructuring. The remaining $32,000 increase represented an
8% increase over the third quarter of 2017. Total expenses in the
2018 and 2017 third quarters were $448,000 and $439,000,
respectively. The 2% increase is primarily due to higher
professional fees, partially offset by a bad debt recovery.
Total investment income was $1.4 million and $1.1 million for
the first nine months ended September 30, 2018 and 2017,
respectively. The growth was driven by the loan restructuring
income noted above as well as the Company’s investment focus on
income-generating instruments. Total expenses for the first nine
months of 2018 and 2017 were $1.5 million and $1.6 million,
respectively.
Selected Portfolio Highlights
- Genicon, Inc. is recognized as
an emerging leader in the design, production, and distribution of
patented surgical instrumentation focused exclusively on
laparoscopic surgery. The company reports increasing market
penetration, with revenue up 38% over the prior year. Recent new
contract wins or expansions from HealthTrust Purchase Group, Vizient, and Germany-based Helios
are expected to lead to further revenue and profit growth.
Additionally, six new inventions, as well as registration and
market approval in Saudi Arabia, are expected to be catalysts for
further global market acceptance of Genicon’s growing product
offering. At September 30, 2018, Genicon was Rand’s highest valued
investment, at approximately$4.2 million.
- Tilson Technology Management,
Inc. provides network deployment and information system
professional services to telecom, construction, utility and
government clients, and successfully executes complex and
challenging projects worldwide. Tilson was recently ranked eight
consecutive years on the Inc. 5000 list, the most prestigious
ranking of the fastest-growing private companies in the U.S. Only a
fraction of companies on the list have ranked more than once, and
less than 2% have made the list eight or more times, according to
Inc. Media. Additionally, Tilson projects 2018 revenue growth of
over 50%, and a similar trajectory in 2019. The company’s ongoing
growth is being driven by its differentiated capability to lead
technology advancement in support of expanding 5G infrastructure
deployment. At September 30, 2018, Rand’s investment in Tilson was
valued at $2.5 million.
- GiveGab, Inc. is the Nonprofit
Giving Platform, providing a quick and easy way for fundraising
professionals to raise money online. Synergies from GiveGab’s
acquisition of Kimbia earlier this year include adopting the best
practices and platforms of each company to drive the growth of the
combined organization. The company’s 2018 giving transaction volume
is on pace to grow at a rate of approximately 10x over 2017 – when
it grew about 5x over 2016. Over the past three years, GiveGab has
expanded to partner with more than 150 giving days annually, while
helping tens of thousands of nonprofits raise approximately $500
million on GiveGab’s platforms in 2018 alone. At September 30,
2018, Rand’s investment in GiveGab was valued at approximately
$616,000.
As of September 30, 2018, Rand’s portfolio consisted of 29
active companies. At that date, the portfolio was comprised of
approximately 57% in equity investments and 43% in debt
investments, compared with 58% in equity investments and 42% in
debt investments at September 30, 2017.
Webcast and Conference Call
Rand will host a conference call and live webcast today,
November 7, 2018, at 1:30 p.m. Eastern Time to review its financial
condition and results for the 2018 third 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, November 14, 2018. To
listen to the archived call, dial (412) 317-6671, and enter
conference ID number 13683885. 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
September 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
$20,413,709 and $20,871,129, respectively)
16,728,607
17,016,795 Non-Control/Non-Affiliate investments (cost of
$16,796,433 and $15,718,690, respectively)
15,344,150
15,167,767 Total investments, at fair value
(cost of $37,309,642 and $36,689,319, respectively)
32,172,257 32,284,062 Cash
4,404,574 6,262,039
Interest receivable (net of allowance: $211,342 at 9/30/18;
$161,000 at 12/31/17)
147,934 231,048 Deferred tax asset
772,275 551,863 Prepaid income taxes
1,122,826
762,047 Other assets
38,360
42,854 Total assets
$ 38,658,226
$ 40,133,913
LIABILITIES AND
STOCKHOLDERS’ EQUITY (NET ASSETS)
Liabilities: Debentures guaranteed by the SBA (net of debt
issuance costs)
$ 7,875,723 $ 7,855,173 Profit
sharing and bonus payable
- 144,000 Accounts payable and
accrued expenses
120,886 178,348 Deferred revenue
73,941 37,707
Total liabilities
8,070,550 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
(1,643,744 ) (1,597,146 )
Undistributed net realized gain on investments
26,496,804
27,215,738 Net unrealized depreciation on investments
(4,064,372 ) (3,498,895 ) Treasury stock, at cost;
541,046 shares
(1,469,105
) (1,469,105 )
Total stockholders’ equity (net assets) (per share $4.84 at
9/30/18; $5.05 at 12/31/17)
30,587,676
31,918,685 Total liabilities
and stockholders’ equity (net assets) $
38,658,226 $
40,133,913
Rand Capital Corporation and
Subsidiaries
Consolidated Statements of
Operations
(Unaudited)
For the
Quarter Ended September 30, For the Nine Months Ended
September 30, 2018 2017 2018
2017 Investment income: Interest from
portfolio companies: Affiliate investments
$ 192,758
$ 142,247
$ 515,784 $ 416,247
Non-Control/Non-Affiliate investments
257,531
167,675
547,553
417,406 Total interest from portfolio
companies
450,289 309,922
1,063,337 833,653
Interest from other investments:
Non-Control/Non-Affiliate investments
7,872
6,348
20,717
24,182 Total interest from other
investments
7,872 6,348
20,717 24,182
Dividend and other investment income: Affiliate
investments
48,856 74,408
175,905 189,805
Non-Control/Non-Affiliate investments
-
2,405
6,058
7,598 Total dividend and other investment income
48,856 76,813
181,963 197,403
Fee income: Affiliate investments
4,042 2,166
11,625 6,250 Non-Control/Non-Affiliate investments
151,243 1,770
160,987 13,307 Total fee
income
155,285 3,936
172,612 19,557
Total investment income 662,302
397,019
1,438,629
1,074,795
Expenses:
Salaries
169,875 165,413
509,624 496,239 Employee
benefits
39,845 38,454
148,841 138,523 Directors'
fees
28,624 36,374
92,123 107,623 Professional fees
81,745 48,433
220,773 310,628 Stockholders and office
operating
47,839 45,355
176,877 193,290 Insurance
8,700 8,058
27,588 25,618 Corporate development
15,028 16,621
41,470 49,938 Other operating
4,875 2,772
9,990 8,055
396,531 361,480
1,227,286 1,329,914 Interest on SBA
obligations
77,568 77,568
232,406 232,706 Bad debt
(recovery) expense
(26,299 )
-
50,342 -
Total expenses
447,800
439,048
1,510,034
1,562,620
Net investment gain (loss) before income
taxes 214,502 (42,029 )
(71,405 ) (487,825
) Income tax expense (benefit)
50,003
(17,050 )
(24,807 )
(188,961 )
Net investment gain (loss)
164,499 (24,979 )
(46,598 ) (298,864 )
Net realized loss on sales and dispositions of investments:
Affiliate investments
(1,125,673 )
-
(1,125,673 )
- Net realized loss before income tax expense
benefit
(1,125,673 ) -
(1,125,673 ) -
Income tax benefit
406,739
-
406,739 -
Net realized loss on investments
(718,934 ) -
(718,934 ) -
Net change in unrealized
depreciation on investments: Affiliate investments
725,673 -
169,232 (665,675 )
Non-Control/Non-Affiliate investments
(249,871
) 111,000
(901,360
) (322,308 ) Change in unrealized
depreciation before income tax expense (benefit)
475,802
111,000
(732,128 ) (987,983 )
Deferred income tax expense (benefit)
100,669 28,090
(166,651 ) (349,960 ) Net
change in unrealized depreciation on investments
375,133 82,910
(565,477 ) (638,023 )
Net unrealized (loss) gain on investments
(343,801 ) 82,910
(1,284,411 ) (638,023 )
Net
(decrease) increase in net assets from operations $
(179,302 ) $ 57,931
$
(1,331,009 ) $ (936,887 )
Weighted
average shares outstanding 6,321,988 6,321,988
6,321,988 6,321,988
Basic and diluted net (decrease)
increase in net assets from operations per share $
(0.03 ) $ 0.01
$
(0.21 ) $ (0.15 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181107005176/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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