Rand Capital Corporation · NASDAQ:RAND
Rand Capital — Q1 2019 Earnings Presentation
19 slides from Rand Capital's earnings presentation, May 2, 2019
Slide 1: eader in smart media creation, hosting and tracking technology. Its Knovio ® video platform
eader in smart media creation, hosting and tracking technology. Its Knovio ® video platform is used by more than 300,000 people worldwide in more than 2,000 companies and campuses to create, host, share, organize, collaborate around, and measure online media and presentation content. The company rec
Slide 2: First Quarter 2019 Financial Results
First Quarter 2019 Financial Results May 2, 2019 Allen F. “Pete” Grum President & CEO Daniel P. Penberthy Executive Vice President & CFO 2 NASDAQ: RAND
Slide 3: Cautionary Statement Regarding Forward-Looking Statements
Cautionary StatementRegarding Forward-Looking Statements This presentation contains forward-looking statements’ within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21€ of the Securities Exchange Act of 1934, as amended all statements, otherthan historical facts,
Slide 4: Key 2019 Highlights
Key 2019 = Filed definitive proxy statement for proposed $25 million investment by East Asset Management = Announced intention of Rand management and East to elect to receive all stock in proposed special dividend, increasing cash available to other shareholders = Received $3.5 million loan repaymen
Slide 5: East Asset Management to strategically invest $25 million in Rand
+ EastAsset Management, LLC (“EAM’” or “East”) to strategically invest $25 million in Rand Strategic * Consideration will include a combination of cash and yielding assets Investment + EAM receives approximately 8.3 million shares of Rand common stock Purchase price of $3.00 per share, represents a
Slide 6: Why support the proposals made by the Board?
WHY SUPPORT THE PROPOSALS MADE BY THE BOARD? $25 million strategic investment by East Asset Management enables: + Improved market valuation: $3.00 purchase price represents a 33% premium to the closing price of $2.26 per share on January 24, 2019, the day prior to the announcement of the transaction
Slide 7: Shareholders Benefit
Shareholders Benefit | Tax Benefits and Special Dividend Future Dividends Valuation Eliminate corporate-level U.S. federal income taxes + Rand intends to elect RIC tax treatment. A RICis a “pass-through entity” that avoids corporate- level U.S. federal income tax + Requires distribution of accumulat
Slide 8: Externalization of Management
Externalization of Management - Expected to reduce annual expenses as a percentage of portfolio assets - Leverages talent and enhances investment decision processes + Current management team to be employed by RCM - Broadens potential pipeline of investment opportunities + Access to a network of fami
Slide 9: The Alternative
The Alternati User-Friendly Phone Book (“USFB”) Suggests Liquidating the Portfolio + Destruction of shareholder value + Likely realizable value of assets in a liquidation expected to be less than $3.00 per share + Eliminates future return potential + Eliminates special dividend at $1.50 per share fo
Slide 10: The Future
The Future: Investment of $25 million from East purchase of Rand stock * Cash infusion of ~$13.4 million; $4.4 million’ to be used for expected Special Dividend * Contributed income producing portfolio assets of ~$11.6 million; yielding ~12%? Planned Special Dividend of $1.50 per share to Rand share
Slide 11: Tilson portfolio company profile
| Tilson Raisi a | L S 0 Headquarters Revenue Stage Portland, ME High Traction January 2015 Description Provides network deployment construction and information system services management for cellular, fiber optic and We wireless systems providers. Its affiliated entity, SQF, LLC isa $5.0 million CL
Slide 12: Investments by Industry Classification
Investments by Industry Classification March 31, 2019 March 31, 2018 Other Professional Other Professional vs Services 6% Services va aire ial Manufacturing 19% Manufacturing 20% Healthcare 24% Software Healthcare 25% 37% Based on total investments Based on total investments at fair value of $32.5 m
Slide 13: Flexibility: adjust Portfolio Asset Mix to meet needs
Flexibility: adjustinvestments Portfolio Asset Mix to meet needs Building investment income to cover operating expenses Include equity for upside potential $32.5 million March 31, 2019 © 2019 Rand Capital Corporation 12
Slide 14: $32.5 million total portfolio, active companies
$32.5 million total portfolio, 29 active companies Investments at Year Acquired IMI Company Fair Value (in millions) Professional Services— TILSO NSS $5.0 2015 Cellular Info Systems, 15% Construction, Mgmt ‘ Healthcare—Surgical GENICON Genicon $4.5 2015 instrumentation 14% Software—Live Mobile Pcl A
Slide 15: Financial Review
Financial Review Daniel P. Penberthy Executive Vice President & CFO ©2 NASDAQ: RAND
Slide 16: Net Asset Value per share
Net, (NAV per share, after tax) = NAV improvement in the quarter from year-end 2018 driven primarily by fair value $5.35 $5.16 $5.05 $4.99 $5.06 appreciation of Tilson Technology reflecting new investments = More than offset declines in fair value of other assets 12/31/2015 12/31/2016 12/31/2017 12/
Slide 17: Q1 2019 financial results
(in thousands, except per share data) Q12019 Q12018 SIA Investmentincome $ 719 $ 363 $356/98% Total expenses 690 589 = $101/17% Net investment gain (loss) before income taxes 29 (226) $255/NM Net realized and unrealized gain (loss) on investments a (347) $780/NM Net increase (decrease) in net assets
Slide 18: Strong balance sheet at March 31, 2019
Strong At March 31, 2019 Value/share $0.31 $1.9 million cash at Corporate $1.07 $6.8 million cash in SBIC $5.14 $32.5 million in portfolio investments ($1.74) $11.0 million in SBA borrowings (maturity 2022-2029) $0.28 $1.8 million other assets & liabilities, net $5.06 Net Asset Value (NAV) per share
Slide 19: First Quarter 2019 Teleconference Script
On May 2, 2019, Rand Capital Corporation used the following script for its earnings conference call for the first quarter of 2019: Rand Capital Corporation First Quarter 2019 Teleconference Script May 2, 2019