RAND CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF PORTFOLIO
December 31, 2021 (Continued)
Notes to the Consolidated Schedule of Portfolio
(a) At December 31, 2021, restricted securities represented
78% of the fair value of the investment portfolio. 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 Corporation’s 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 Corporation’s 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
December 31, 2021, ASC 820 designates 78% of the Corporation’s
investments as “Level 3” 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 approved by the Board of Directors.
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
(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
within the last twelve months or are not expected to do so going
forward. 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
(f) As of December 31, 2021, the total cost of investment
securities was approximately $52.4 million. Net unrealized
appreciation was approximately $11.7 million, which was
comprised of $21.2 million of unrealized appreciation of
investment securities and ($9.5) million of unrealized depreciation
of investment securities. At December 31, 2021, the aggregate
gross unrealized gain for federal income tax purposes was
$20.6 million and the aggregate gross unrealized loss for
federal income tax purposes was ($9.6) million. The net unrealized
gain for federal income tax purposes was $11.0 million based
on a tax cost of $53.0 million.
(g) Rand Capital investment held by Rand Capital Sub LLC.
(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 Corporation’s Consolidated
Statements of Financial Position.
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
(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 Sub LLC
for federal income tax and Regulated Investment Company (RIC)
(n) Publicly traded company.
(o) Control Investments are defined by the 1940 Act as investments
in companies in which more than 25% of the voting securities are
owned by the Corporation or where greater than 50% of the board
representation is maintained (None at December 31, 2021).
(p) Subsequent to December 31, 2021, ACV Auctions’ (ACVA)
public market share price had a trading range on NASDAQ of $10.30
to $19.73 for the period of January 1st to February 28th,
2022. The Corporation’s value per share at December 31, 2021