March 31, 1999
First Quarter
April 27, 1999
To Our Shareholders:
During the first quarter of 1999, we increased our investment in DataView,
LLC by purchasing a Convertible Subordinated Note for $100,000. This increases
our ownership to 5% on a converted basis. DataView provides value-added
data-visualization information tools for financial market professionals to help
spot trends and to enhance decision making. The product is currently used by
several major brokerage houses through proprietary systems and over the
Internet.
During the quarter, Pathlight Technology, Inc. signed a multi-year
agreement with IBM's Storage System Division to deliver the new IBM Storage Area
Network, which is driven by Pathlight's proprietary technology. This contract
represents a key milestone for the company and is indicative of the markets
commercial acceptance of their technology.
We ended the quarter with a net asset value of $1.43 per share and a cash
position of $3.5 million. Our pipeline of potential transactions is very active
and we hope to report on these transactions in the coming quarters.
Thank you for your support.
Allen F. Grum
President
<PAGE>
Portfolio Valuation / March 31, 1999
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
Per Per
Company and Business Type of Investment Date Acquired share share
Cost Value of Rand Value of Rand
- ------------------------------- -------------------- -------------- ---------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
American Tactile Corporation Convertible 6/23/95 150,000 50,000 0.01 50,000 0.01
Medina, NY. Develops Debentures at 8%
equipment and due June 2000
systems to produce signage. and April 2001 with
www.americantactile.com detachable warrants
ARIA Wireless Systems, Inc. Common Stock - 5/23/97 438,000 122,000 0.02 122,000 0.02
(OTC:AWSI)* 488,000 shares
Buffalo, NY. Markets wireless
radio transmission
communication equipment.
www.ariawireless.com
BioVector, Inc. Common Stock - 4/17/97 50,000 125,000 0.08 125,000 0.08
Buffalo, NY. 50,000 shares 360,000 360,000 360,000
Medical technological sales Convertible
force company. Promissory Note at
8%, due April 2002
Option to purchase
165,000 Common
Shares
BioWorks, Inc. Series A 11/6/95 56,000 56,000 0.01 56,000 0.01
Geneva, NY. Develops and Convertible
manufactures Preferred Stock -
biological alternative to 32,000 shares
chemical pesticides.
www.bioworksbiocontrol.com
Clearview Cable TV, Inc. Common Stock - 400 2/23/96 55,541 55,541 0.01 55,541 0.01
New Providence, NJ. Cable shares
television operator.
DataView, LLC Convertible 10/1/98 200,000 200,000 0.04 100,000 0.02
Mt. Kisco, NY. Designs, Subordinated Note -
develops and markets $200,000
browser based software for 8% Due October 15,
investment professionals. 1999
www.marketgauge.com
Fertility Acoustics, Inc. Common Stock 10/1/97 50,000 125,000 0.02 125,000 0.02
Buffalo, NY. Developer of -150,000 shares
proprietary Option to purchase
methods to diagnose onset of 15,000 shares
ovulation.
J. Giardino First mortgage 2/26/88 121,112 121,112 0.02 121,112 0.02
Buffalo, NY. Commercial real at 13%
estate.
Hammertime, Inc. Convertible 10/1/98 100,000 100,000 0.04 100,000 0.04
Clarence, NY. Exclusive Sears Preferred Stock - 100,000 100,000 100,000
licensed 1,000 Shares
installer of kitchens and Senior Subordinated
baths. Note at 12% due
October 2000
HealthWay Products Company, Common Stock -1,000 3/18/96 100,100 100,100 0.02 100,000 0.02
Inc. shares
Syracuse, NY. Manufactures Promissory Note at
air filters and 24%, due June 1996
climate control devices. 4,667 warrants for
www.healthway.com Series A Preferred
Stock
InfoMiners, Inc. Bridge loan at 10% 12/21/98 420,000 420,000 0.07 420,000 0.07
Amherst, NY. Data warehousing due June 1999
and decision 147,000 warrants
support software for for shares of stock
healthcare industries.
www.infominers.com
Lightbridge, Inc. Common Stock - 3/31/94 218,271 66,648 0.01 72,408 0.01
(NASDAQ:LTBG)* 13,165 shares
Burlington, MA. Provides
software based services
for wireless
telecommunications industry.
www.lightbridge.com
MINRAD, Inc. Common Stock - 8/4/97 429,000 949,512 0.17 949,512 0.17
Buffalo, NY. Developer of 118,689 shares
laser guided surgical devices.
Pathlight Technology, Inc. Class A Series 1(a) 10/7/97 100,000 100,000 0.04 100,000 0.04
Ithaca, NY. Develops high Convertible 100,000 100,000 100,000
technology Serial Preferred
Storage Architecture for Stock - 100,000
computer industry. shares with 6%
www.pathlight.com cumulative
dividend.
Subordinated Note
at 7.5% due
December 2000
Platform Technology Holdings, Two units with 9/24/97 8,045 60,000 0.01 60,000 0.01
LLC option for two
Charlottesville, VA. Provides additional units
sales support and
management for unique medical
businesses.
Reflection Technology, Inc. Series J 10/4/95 500,000 150,000 0.02 150,000 0.03
Waltham, MA. Develops and Convertible
licenses proprietary Preferred Stock -
virtual display technology. 243,903 shares
www.reflectiontech.com
UStec, Inc. Promissory Note at 12/17/98 100,000 100,000 0.02 100,000 0.02
Victor, NY. Manufacturers and 12% due December
markets digital wiring 2003
systems for residential new 50,000 warrants for
home construction. common shares
www.ustecnet.com
Other investments Other 481,564 10,330 0.00 20,597 0.00
Total portfolio 4,137,633 3,471,243 0.61 3,387,170 0.59
investments ========= ========= ==== ========= ====
Cash and Cash 3,505,402 0.61 3,757,399 0.66
equivalents
Net receivables 98,868 0.02 20,583 0.00
(payables) ------ ------
Net Assets before 7,075,513 1.24 7,165,152 1.25
Taxes
Tax provision (1,071,880) (0.19) (1,071,880) (0.19)
(benefit) ----------- -----------
Net Assets 8,147,393 8,237,032
========= =========
Net Asset Value per 1.43 1.44
Share (5,708,034
shares outstanding
during both periods)
</TABLE>
* Publicly owned company ^ Unrestricted securities as defined in Note (a)
Note: Restricted securities, including securities of publicly-owned companies
which are subject to restrictions on resale, are valued at fair value as
determined by the Board of Directors. Fair value is considered to be the amount
which the Corporation may reasonably expect to receive for portfolio securities
if such securities were 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. Among the factors considered by the Board of Directors 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.
<PAGE>
Rand Capital Corporation
Board of Directors (Elected by Shareholders April 27, 1999)
Reginald B. Newman II Chairman of the Board
Allen F. Grum
a, c Luiz F. Kahl
g Erland E. Kailbourne
c, g Ross B. Kenzie
a Willis S. McLeese
a, c, g Jayne K. Rand
a - Member of audit committee
c - Member of compensation committee
g - Member of governance committee
Officers Title Email
Allen F. Grum President, Chief Executive Officer [email protected]
Nora B. Sullivan Executive Vice President [email protected]
Daniel P. Penberthy Chief Financial Officer [email protected]
Corporate Data
Stock Listing NASDAQ SmallCap Market - symbol RAND
Transfer Agent and Registrar Continental Stock Transfer & Trust Company
General Counsel Hodgson, Russ, Andrews, Woods & Goodyear, LLP
Independent Accountants Deloitte & Touche LLP
Number of Shareholders 786 (as of March 15, 1999)
Rand is actively seeking business opportunities for investment
consideration. If you are aware of such businesses which may need Rand's support
and assistance, please feel free to contact us.
Rand Capital Corporation
2200 Rand Building
Buffalo, NY 14203
Tel: 716-853-0802
Fax: 716-854-8480
