Rand Capital Announces First Quarter 2017 Results
Post# of 617763
BUFFALO, NY --(Marketwired - April 27, 2017) -
- Filed a formal license application in April with the U.S. Small Business Administration ("SBA") to establish new Small Business Investment Company ("SBIC") fund in support of strategic growth plan
- Invested $450,000 in three follow-on transactions during the first quarter
- Net Asset Value per share was $5.10 at March 31
Rand Capital Corporation (
Allen F. ("Pete") Grum, President and Chief Executive Officer of Rand Capital, commented, "We continued to advance our long-term strategic growth plan with the filing of our formal license application with the SBA. The proposed new fund will become our primary investing vehicle and we will begin investing from the fund under the terms of the SBA's pre-licensing investment protocols prior to receiving our formal approval."
The Company previously announced that it had filed its license application to the SBA to form a new SBIC. The application was filed pursuant to the "Green Light" letter received from the SBA in December 2016 which invited Rand to continue its license application process. The combination of Rand's capital contribution of $7.5 million and the expected $15.0 million of SBA debentures creates Rand's second SBIC fund with $22.5 million in available investment capital.
Mr. Grum continued, "Our current portfolio of 33 companies continues to mature and several companies are analyzing various approaches to monetize their enterprise value. Although I cannot predict the timing of these exits, we are working with the companies to assist with their processes and enhance the likelihood of transactions."
First Quarter 2017 Financial Highlights
- Reported $5.10 net asset value (NAV) per share at March 31, 2017, compared with $5.16 at December 31, 2016. Lower NAV reflects net unrealized loss on investments.
- Supported three current portfolio companies with $450,000 of debt investments during the quarter:
- Genicon, Inc. $300,000
- Mercantile Adjustment Bureau, LLC $100,000
- KnowledgeVision Systems, Inc. $ 50,000
- Investment income increased 69% over the prior year period.
- At March 31, 2017, portfolio fair value was $27.6 million and cash was $10.7 million, or approximately 33% of net assets.
Mr. Grum concluded, "With the exit of Gemcor and the receipt of a debt instrument repayment last year, we are actively seeking and investing in instruments that provide current investment income to offset our expenses. In the first quarter, our investment income increased to approximately $329,000 from approximately $194,000. We will continue on this path with the goal to have our investment income cover our expenses on an annual basis."
Total expenses in the first quarter were approximately $516,000.
Selected portfolio highlights:
- Genicon, Inc. produces patented surgical instrumentation focused exclusively on laparoscopic, or minimally invasive, surgery. Genicon has been on a solid path of growth. Rand provided a $300,000 promissory note in the first quarter of 2017, supporting the company's global growth initiatives. This is Rand's fifth follow-on since the initial investment in April 2015, bringing its total investment in Genicon to $3.0 million as of March 31, 2017.
- SciAps, Inc. develops portable analytical instruments which identify virtually any compound, mineral or element on earth. A customer recently announced a major breakthrough with the first use of handheld LIBS (laser-induced breakdown spectroscopy) to directly measure lithium in geological samples in Western Australia. SciAps recently successfully raised $1.9 million of capital to support its ongoing product development and growth initiatives. Rand holds a $2.1 million investment in SciAps as of March 31, 2017.
- eHealth Global Technologies, Inc. is the industry-leading provider of clinically-informed referral services. The company serves more than half of the top 100 hospitals in the U.S. as well as the leading health information exchanges. The company recently announced that it plans to expand and add 84 jobs over the next three years, including customer service and research and development jobs. These investments will support eHealth's ability to digitally organize the growing volume of electronic medical records, facilitating advanced patient care services. Rand holds a $1.5 million investment in eHealth as of March 31, 2017.
As of March 31, 2017, Rand's portfolio consisted of 33 companies. At that date, the portfolio was comprised of approximately 63% in equity investments and 37% in debt investments, compared with 75% in equity investments and 25% in debt investments at the same time last year.
ABOUT RAND CAPITAL Rand Capital (
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.
| Rand Capital Corporation and Subsidiary | |||||||||||
| Consolidated Statements of Financial Position | |||||||||||
| March 31, | |||||||||||
| 2017 | December 31, | ||||||||||
| (Unaudited) | 2016 | ||||||||||
| ASSETS | |||||||||||
| Investments at fair value: | |||||||||||
| Control investments (cost of $99,500 and $99,500, respectively) | $ | 99,500 | $ | 99,500 | |||||||
| Affiliate investments (cost of $17,947,514 and $17,589,623, respectively) | 13,963,865 | 13,605,974 | |||||||||
| Non-Control/Non-Affiliate investments (cost of $14,046,954 and $13,941,907, respectively). | 13,519,410 | 13,795,007 | |||||||||
| Total investments, at fair value (cost of $32,093,968 and $31,631,030, respectively | 27,582,775 | 27,500,481 | |||||||||
| Cash | 10,689,392 | 12,280,140 | |||||||||
| Interest receivable (net of allowance: $161,000 at 3/31/17 and 12/31/16) | 368,140 | 324,237 | |||||||||
| Deferred tax asset | 1,437,250 | 1,165,164 | |||||||||
| Other assets | 726,643 | 1,148,508 | |||||||||
| Total assets | $ | 40,804,200 | $ | 42,418,530 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (NET ASSETS) | |||||||||||
| Liabilities: | |||||||||||
| Debentures guaranteed by the SBA, net | $ | 7,834,623 | $ | 7,827,773 | |||||||
| Profit sharing and bonus payable | 132,000 | 1,270,052 | |||||||||
| Income tax payable | 391,119 | 320,008 | |||||||||
| Accounts payable and accrued expenses | 136,465 | 324,537 | |||||||||
| Deferred revenue | 40,111 | 46,797 | |||||||||
| Total liabilities | 8,534,318 | 9,789,167 | |||||||||
| Stockholders' equity (net assets): | |||||||||||
| Common stock, $.10 par; shares authorized 10,000,000; shares issued 6,863,034; shares outstanding of 6,321,988 as of 3/31/17 and 12/31/16 | 686,304 | 686,304 | |||||||||
| Capital in excess of par value | 10,581,789 | 10,581,789 | |||||||||
| Accumulated net investment loss | (1,693,112 | ) | (1,577,848 | ) | |||||||
| Undistributed net realized gain on investments | 27,127,054 | 27,127,054 | |||||||||
| Net unrealized depreciation on investments | (2,963,048 | ) | (2,718,831 | ) | |||||||
| Treasury stock, at cost; 541,046 shares as of 3/31/17 and 12/31/16 | (1,469,105 | ) | (1,469,105 | ) | |||||||
| Total stockholders' equity (net assets) (per share 3/31/17: $5.10, 12/31/16: $5.16) | 32,269,882 | 32,629,363 | |||||||||
| Total liabilities and stockholders' equity (net assets) | $ | 40,804,200 | $ | 42,418,530 | |||||||
| Rand Capital Corporation and Subsidiary | |||||||||||
| Consolidated Statements of Operations | |||||||||||
| For the Quarter Ended March 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| Investment income: | |||||||||||
| Interest from portfolio companies: | |||||||||||
| Control investments | $ | - | $ | 11,828 | |||||||
| Affiliate investments | 136,757 | 64,962 | |||||||||
| Non-Control/Non-Affiliate investments | 109,334 | 61,104 | |||||||||
| Total interest from portfolio companies | 246,091 | 137,894 | |||||||||
| Interest from other investments: | |||||||||||
| Non-Control/Non-Affiliate investments | 10,975 | 3,061 | |||||||||
| Total interest from other investments | 10,975 | 3,061 | |||||||||
| Dividend and other investment income: | |||||||||||
| Affiliate investments | 62,373 | 47,565 | |||||||||
| Non-Control/Non-Affiliate investments | 2,512 | - | |||||||||
| Total dividend and other investment income | 64,885 | 47,565 | |||||||||
| Fee income: | |||||||||||
| Control investments | - | 2,000 | |||||||||
| Affiliate investments | 917 | 695 | |||||||||
| Non-Control/Non-Affiliate investments | 5,769 | 2,916 | |||||||||
| Total fee income | 6,686 | 5,611 | |||||||||
| Total investment income | 328,637 | 194,131 | |||||||||
| Expenses: | |||||||||||
| Salaries | 165,413 | 155,438 | |||||||||
| Bonus and profit sharing | - | 1,411,659 | |||||||||
| Employee benefits | 52,370 | 89,511 | |||||||||
| Directors' fees | 34,875 | 47,375 | |||||||||
| Professional fees | 84,002 | 64,760 | |||||||||
| Stockholders and office operating | 67,210 | 62,494 | |||||||||
| Insurance | 11,302 | 11,260 | |||||||||
| Corporate development | 21,708 | 15,470 | |||||||||
| Other operating | 1,960 | 3,600 | |||||||||
| 438,840 | 1,861,567 | ||||||||||
| Interest on SBA obligations | 77,569 | 77,569 | |||||||||
| Total expenses | 516,409 | 1,939,136 | |||||||||
| Net investment loss before income taxes | (187,772 | ) | (1,745,005 | ) | |||||||
| Income tax benefit | (72,508 | ) | (663,027 | ) | |||||||
| Net investment loss | (115,264 | ) | (1,081,978 | ) | |||||||
| Net realized gain on investments: | |||||||||||
| Control investments | - | 13,176,313 | |||||||||
| Net realized gain before income tax expense | - | 13,176,313 | |||||||||
| Income tax expense | - | 4,942,961 | |||||||||
| Net realized gain on investments | - | 8,233,352 | |||||||||
| Net change in unrealized depreciation or appreciation on investments : | |||||||||||
| Control investments | - | (11,362,500 | ) | ||||||||
| Affiliate investments | - | (422,800 | ) | ||||||||
| Non-Control/Non-Affiliate investments | (380,644 | ) | - | ||||||||
| Change in unrealized depreciation or appreciation before income tax benefit | (380,644 | ) | (11,785,300 | ) | |||||||
| Deferred income tax benefit | (136,427 | ) | (4,416,406 | ) | |||||||
| Net change in unrealized deprecation or appreciation on investments | (244,217 | ) | (7,368,894 | ) | |||||||
| Net realized and unrealized (loss) gain on investments | (244,217 | ) | 864,458 | ||||||||
| Net decrease in net assets from operations | $ | (359,481 | ) | $ | (217,520 | ) | |||||
| Weighted average shares outstanding | 6,321,988 | 6,328,538 | |||||||||
| Basic and diluted net decrease in net assets from operations per share | $ | (0.06 | ) | $ | (0.04 | ) | |||||
Contacts: Company: Allen F. ("Pete") Grum President and CEO Phone: 716.853.0802 Email: pgrum@randcapital.com Investors: Deborah K. Pawlowski / Karen L. Howard Kei Advisors LLC Phone: 716.843.3908 / 716.843.3942 Email: dpawlowski@keiadvisors.com / khoward@keiadvisors.com
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