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Rand Capital(RAND) - 2025 Q1 - Quarterly Report
RANDRand Capital(RAND)2025-05-05 12:45
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Financial Position - Total assets decreased by 6.4% from 72,457,433onDecember31,2024,to72,457,433 on December 31, 2024, to 67,821,430 on March 31, 2025[162]. - Total liabilities decreased significantly by 64.8% from 7,124,913to7,124,913 to 2,510,177 during the same period[162]. - Net asset value per share (NAV) was 21.99atMarch31,2025,downfrom21.99 at March 31, 2025, down from 25.31 at December 31, 2024[162]. - Cash represented 7.6% of net assets at March 31, 2025, compared to 1.3% at December 31, 2024[163]. - Investments at fair value decreased by 12.2% from 70,818,041onDecember31,2024,to70,818,041 on December 31, 2024, to 62,157,363 on March 31, 2025[165]. - Unrealized appreciation, net, fell by 48.1% from 2,697,806to2,697,806 to 1,399,422 during the same period[165]. Dividend and Credit Facility - The company declared a quarterly cash dividend of 0.29pershareforthefirstquarterof2025,witharecorddateofMarch14,2025[157].−Thecompanyhasa0.29 per share for the first quarter of 2025, with a record date of March 14, 2025[157]. - The company has a 25 million senior secured revolving credit facility with M&T Bank, with no outstanding balance as of March 31, 2025[164]. - The company entered into a 25millionCreditFacilitywithanunusedlineofcreditbalanceof25 million Credit Facility with an unused line of credit balance of 22,437,163 as of March 31, 2025[186]. - The applicable interest rate on the Credit Facility was 7.91% as of March 31, 2025, calculated as 3.50 percentage points above the greater of the daily simple secured overnight financing rate (SOFR) or 0.25%[187]. Income and Expenses - Total investment income for the three months ended March 31, 2025, was 2,007,904,adecreaseof2.92,007,904, a decrease of 2.9% compared to 2,067,219 for the same period in 2024[168]. - Interest from portfolio companies decreased by 7.5% to 1,677,166inQ12025from1,677,166 in Q1 2025 from 1,813,648 in Q1 2024 due to repayments of several interest-yielding investments[168][169]. - Total expenses decreased by 35.5% to 791,065inQ12025from791,065 in Q1 2025 from 1,226,856 in Q1 2024, primarily due to a 353,534decreaseininterestexpense[172].−Netinvestmentincomeincreasedto353,534 decrease in interest expense[172]. - Net investment income increased to 1,218,115 for the three months ended March 31, 2025, compared to 839,585forthesameperiodin2024[177].−Realizedgainoninvestmentsbeforeincometaxeswas839,585 for the same period in 2024[177]. - Realized gain on investments before income taxes was 925,332 in Q1 2025, a decrease of 2,524,760from2,524,760 from 3,450,092 in Q1 2024[178]. - The change in unrealized depreciation of investments was (1,298,384)forQ12025,animprovementof(1,298,384) for Q1 2025, an improvement of 1,591,912 compared to (2,890,296)inQ12024[180].LiquidityandCashFlow−AsofMarch31,2025,totalliquidityconsistedofapproximately(2,890,296) in Q1 2024[180]. Liquidity and Cash Flow - As of March 31, 2025, total liquidity consisted of approximately 4,933,000 in cash and 22,437,163ofunusedavailabilityontheCreditFacility[185].−ForthethreemonthsendedMarch31,2025,thecompanyexperiencedanetincreaseincashofapproximately22,437,163 of unused availability on the Credit Facility[185]. - For the three months ended March 31, 2025, the company experienced a net increase in cash of approximately 4,098,000, driven by 7,729,000fromoperatingactivities[189].−Thenetcashprovidedbyoperatingactivitiesincludedapproximately7,729,000 from operating activities[189]. - The net cash provided by operating activities included approximately 9,325,000 from sales of equity investments and repayments of debt investments[190]. - Net cash used in financing activities during the same period was approximately 3,631,000,whichincluded3,631,000, which included 600,000 repaid on the Credit Facility and approximately 3,031,000incashdividendspaidtoshareholders[191].−ThecompanyanticipatescontinuingtofundinvestmentactivitiesthroughcashgeneratedfromoperationsandborrowingsundertheCreditFacility[192].RiskManagement−Thecompanyissubjecttofinancialmarketrisks,primarilyfromchangesininterestratesandthevaluationofitsinvestmentportfolio[193].−AsofMarch31,2025,allofthecompany′sdebtinvestmentshadfixedinterestratesandwerenotdirectlyimpactedbychangesinmarketinterestrates[194].−Thecompanydoesnotcurrentlyengageinhedgingactivitiesbutmayconsidertheminthefuturetomanageinterestratefluctuations[198].−Thecompanycarriesitsinvestmentsatfairvalue,whichinvolvesjudgmentandmaydifferfromactualliquidationvaluesduetomarketconditions[199].InvestmentStrategy−Thecompanyaimstogeneratecurrentincomeandcapitalappreciationprimarilythroughinvestmentsinhigheryieldingdebtinstruments[166].−ThecapitalgainsincentivefeeexpensedecreasedduetoanetincreaseinunrealizeddepreciationexceedingrealizedcapitalgainsduringQ12025[174].−ThebasemanagementfeepayabletoRCMdecreasedto3,031,000 in cash dividends paid to shareholders[191]. - The company anticipates continuing to fund investment activities through cash generated from operations and borrowings under the Credit Facility[192]. Risk Management - The company is subject to financial market risks, primarily from changes in interest rates and the valuation of its investment portfolio[193]. - As of March 31, 2025, all of the company's debt investments had fixed interest rates and were not directly impacted by changes in market interest rates[194]. - The company does not currently engage in hedging activities but may consider them in the future to manage interest rate fluctuations[198]. - The company carries its investments at fair value, which involves judgment and may differ from actual liquidation values due to market conditions[199]. Investment Strategy - The company aims to generate current income and capital appreciation primarily through investments in higher yielding debt instruments[166]. - The capital gains incentive fee expense decreased due to a net increase in unrealized depreciation exceeding realized capital gains during Q1 2025[174]. - The base management fee payable to RCM decreased to 252,208 in Q1 2025 from $302,595 in Q1 2024[175].