RAND CAPITAL CORPORATION AND SUBSIDIARY
CONSOLIDATED SCHEDULE OF PORTFOLIO INVESTMENTS
March 31, 2021 (Continued)
(Unaudited)
Notes to the Consolidated Schedule of Portfolio Investments
(a) At March 31, 2021, restricted securities represented 90% of the fair value of the investment portfolio. This includes $15,819,670, or 30% of the
portfolio, of restricted and currently non-saleable shares of ACV Auctions, Inc..(NASDAQ:ACVA). Restricted securities are subject to one or more restrictions on resale and are not freely marketable. Type of
investment for equity position is in the form of shares unless otherwise noted as units or interests, i.e., preferred shares, common shares.
(b) The Date
Acquired column indicates the date on which the Corporation first acquired an investment.
(c) Each equity percentage estimates the Corporations
ownership interest in the applicable portfolio investment. The estimated ownership is calculated based on the percent of outstanding voting securities held by the Corporation or the potential percentage of voting securities held by the Corporation
upon exercise of warrants or conversion of debentures, or other available data. If applicable, the symbol <1% indicates that the Corporation holds an equity interest of less than one percent.
(d) The Corporations investments are carried at fair value in accordance with Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) 820 Fair Value Measurements and Disclosures, which defines fair value and establishes guidelines for measuring fair value. At March 31, 2020, ASC 820 designates 90% of the Corporations investments as
Level 3 asset, and also identifies the restricted holdings of ACVA, 30% of investments as Level 2 assets. Under the valuation policy of the Corporation, unrestricted publicly traded securities are valued at the average closing
price for these securities for the last three trading days of the reporting period. Restricted securities are subject to restrictions on resale and are valued at fair value as determined by our external investment advisor Rand Capital Management,
LLC (RCM) and submitted to the Board of Directors for approval. Fair value is considered to be the amount that the Corporation may reasonably expect to receive for portfolio securities when sold on the valuation date. Valuations as of
any particular date, however, are not necessarily indicative of amounts which may ultimately be realized as a result of future sales or other dispositions of securities and these favorable or unfavorable differences could be material. Among the
factors considered in determining the fair value of restricted securities are the financial condition and operating results, projected operations, and other analytical data relating to the investment. Also considered are the market prices for
unrestricted securities of the same class (if applicable) and other matters which may have an impact on the value of the portfolio company (see Note 3. Investments to the Consolidated Financial Statements).
(e) These investments are non-income producing. All other investments are income producing. Non-income producing investments have not generated cash payments of interest or dividends including LLC tax-related distributions within the last twelve months or are not
expected to do so going forward. However, if a debt or a preferred equity investment fails to make its most recent payment, then the investment will also be classified as non-income producing.
(f) As of March 31, 2021, the total cost of investment securities was approximately $43.1 million. Net unrealized appreciation was approximately
$9.2 million, which was comprised of $20.2 million of unrealized appreciation of investment securities and ($11.0) million of unrealized depreciation of investment securities. At March 31, 2021, the aggregate gross unrealized gain for
federal income tax purposes was $10.1 million and the aggregate gross unrealized loss for federal income tax purposes was ($11.3) million. The net unrealized loss for federal income tax purposes was ($1.2) million based on a tax cost of
$40.9 million.
(g) Rand Capital SBIC, Inc. investment.
(h) Reduction in cost and value from previously reported balances reflects current principal repayment.
(i) Represents interest due (amounts over $50,000) from investments included as interest receivable on the Corporations Consolidated Statements of
Financial Position.
(j) Non-Control/Non-Affiliate Investments are
investments that are neither Control Investments nor Affiliate Investments.
(k) Affiliate Investments are defined by the Investment Company Act of 1940,
as amended (1940 Act), as those Non-Control investments in companies in which between 5% and 25% of the voting securities are owned by the Corporation.
(l) Payment in kind (PIK) represents earned interest that is added to the cost basis of the investment and due at maturity. The amount of PIK earned is
included in the interest rate detailed in the Type of Investment column, unless it has been noted with a (+), in which case the PIK is in addition to the face amount of interest due on the security.
(m) Equity holdings are held in a wholly owned (100%) blocker corporation of Rand Capital Corporation or Rand Capital SBIC, Inc. for federal
income tax and Regulated Investment Company (RIC) compliance.
(n) Publicly traded company.
(o) On March 24, 2021, ACV completed its initial public offering of Class A shares which closed
at $34.61 per share on March 31, 2021. ACVs Class A shares had a trading range on Nasdaq of $26.49 to $35.78 for the period March 24 through March 31, 2021. Rands ACV holdings are restricted Class B shares and
are nonsaleable through September 20, 2021, or earlier if certain conditions are met, and have been valued at $26.79 per share.
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