The company ended the year with more than $23 million in liquidity and no outstanding debt, providing flexibility for future investments.

Rand Capital Corporation (Nasdaq: RAND) ("Rand" or the "Company"), a business development company providing alternative financing for lower middle market companies, announced its results for the fourth quarter and full year ended December 31, 2025.

"2025 was a year of disciplined execution and deliberate capital allocation for Rand," said Daniel P. Penberthy, President and Chief Executive Officer of Rand. "We monetized a meaningful portion of our portfolio, strengthened the balance sheet, and entered 2026 with robust liquidity and no debt outstanding. While certain portfolio repayments moderated near-term investment income, our continued focus on disciplined underwriting, selective portfolio construction, and expanding our base of income-producing assets has positioned Rand with the flexibility to pursue attractive risk-adjusted opportunities as M&A market conditions continue to evolve favorably. We remain committed to prudently scaling the portfolio and delivering sustainable long-term shareholder value through active portfolio management and consistent capital deployment."

Fourth Quarter Review (compared with the prior-year period unless otherwise noted)

Total investment income was $1.3 million, a decrease of $852,000, or 40%, compared with the same period last year. The change was primarily driven by a 46% reduction in interest income from portfolio companies, reflecting the repayment of five debt instruments over the past year. Lower fee income also contributed to the year-over-year decrease. Payment-in-kind (PIK) interest remained a component of investment income during the quarter, as certain portfolio companies continued to utilize this feature. For the fourth quarter of 2025, non-cash PIK interest totaled $308,000, representing 24% of total investment income, compared with 30% in the prior-year period.

Total expenses were $666,000 for the fourth quarter, compared with a net credit of $376,000 in the prior-year period. The variance was driven primarily by capital gains incentive fees, as the fourth quarter of the prior year included a $1.1 million credit related to portfolio valuation changes, whereas no capital gains incentive fee was recorded in the fourth quarter of 2025.

Adjusted expenses, which exclude capital gains incentive fees, and is a non-GAAP financial measure, were down slightly to $666,000 compared with $678,000 in the fourth quarter of 2024. See the attached description of this non-GAAP financial measure and reconciliation table for adjusted expenses.

Net investment income was $600,000, or $0.20 per share, compared with $2.2 million, or $0.86 per share, in the fourth quarter of 2024. The per-share amount for the fourth quarter of 2025 was calculated based on 2,969,814 weighted average shares outstanding, reflecting the increase in shares outstanding following the fourth quarter 2024 dividend, which was distributed in the first quarter of 2025 and partially paid in common stock. This compared with 2,581,021 weighted average shares outstanding for the fourth quarter of 2024. Adjusted net investment income per share, a non-GAAP financial measure, which excludes the capital gains incentive fee, was $0.20 per share, compared with $0.45 per share in last year's fourth quarter. See the attached description of this non-GAAP financial measure and reconciliation table for adjusted net investment income per share.

2025 Review

Total investment income was $6.5 million compared with $8.6 million in the prior year. The change was largely due to several interest-yielding investments that were repaid during the last year and a slowdown in deal originations.

Total expenses declined $3.6 million, or 75%, to $1.2 million, which reflected a $2.6 million decrease in the capital gains incentive fee expense, a $977,000 decrease in interest expense, and a $382,000 decrease in base management fees payable to the Company's external investment advisor.

Excluding the capital gains incentive fee accrual, adjusted expenses, which is a non-GAAP financial measure, decreased $1.1 million to $2.8 million in 2025. See the attached description of this non-GAAP financial measure and reconciliation table for adjusted expenses.

Net investment income per share of $1.80 for 2025 increased 35% over $1.33 per share in the prior year. Excluding the capital gains incentive fee accrual, adjusted net investment income per share was $1.26 compared with $1.72 in 2024. See the attached description of this non-GAAP financial measure and reconciliation table for adjusted net investment income per share.

Net assets at December 31, 2025 were $52.2 million.

Portfolio and Investment Activity

As of December 31, 2025, Rand's investment portfolio had a fair value of $48.5 million across 20 portfolio companies, representing a decrease of $22.3 million, or 32%, from December 31, 2024. The decline was driven primarily by portfolio company loan repayments and valuation adjustments across multiple holdings. At year-end 2025, the portfolio was comprised of approximately 79% debt investments and 21% equity investments. The annualized weighted average yield on debt investments, including PIK interest, decreased to 11.3% from 13.8% at year-end 2024, primarily due to increased non-accrual rates on debt investments during 2025 and changes in portfolio mix following repayments and new investment activity.

Fourth Quarter 2025:

New Investment: Committed $3.25 million to Bauer Sheet Metal and Fabricating Inc. ("Bauer"), consisting of a 13% term loan and warrants for a 12% ownership interest. Headquartered in Muskegon, MI, Bauer specializes in the fabrication and installation of sheet metal solutions serving the mining, marine, engineering, and other industrial sectors.

Full year 2025:

Monetized select equity investments and received loan repayments that generated approximately $17.8 million in aggregate cash proceeds.

Invested a total of $6.6 million across five transactions, primarily in interest-earning assets. Activity included two new portfolio company investments and three follow-on investments supporting existing borrowers.

Liquidity and Capital Resources

Rand closed the year with $4.2 million in cash and cash equivalents, a significant increase from $835,000 at year-end 2024. As of December 31, 2025, the Company had no outstanding borrowings under its senior secured revolving credit facility, leaving $19.2 million of available capacity. The facility, which matures in 2027, permits up to $25 million in borrowings subject to compliance with borrowing conditions and portfolio eligibility requirements.

The Company did not repurchase any outstanding common stock during 2025.

Dividends

In 2025, Rand paid total dividends of $1.72 per share in cash.

On February 25, 2026, Rand declared its regular quarterly cash dividend of $0.29 per share, payable on or about March 25, 2026, to shareholders of record as of March 11, 2026.

Webcast and Conference Call

Rand will host a conference call and webcast on Thursday, March 5, 2026, at 1:30 p.m. Eastern Time, to review its financial results.

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