RAND 10-K & 10-Q changes, risk factors and insider trading

Investing in our securities involves a high degree of risk. In addition to the other information contained in this Annual Report, including the financial statements and related notes contained in Part II, Item 88, – “Financial Statements and Supplementary Data”Data, and the discussion in Part II, Item 77, – “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations, of this Annual Report, the following information should be carefully considered before making an investment in our common stock. The risk factors described below are the principal risk factors associated with an investment in our securities, as well as those factors generally associated with a business development company with investment objectives, investment policies, capital structure or trading markets similar to ours. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance. If any of the following events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, our NAV and the trading price of our common stock could decline, and you could lose all or part of your investment in our common stock.

We have listed below the risk factors applicable to us grouped into the following categories: Risks relatedRelated to our Business and Structure, Risks relatedRelated to our Investments, Risks relatedRelated to our Indebtedness, Risks relatedRelated to our Common Stock and Risks RelatingRelated to U.S. Federal Income Tax.

Our day-to-day investment operations are managed by our investment adviser and administrator, RCM, pursuant to the terms of the Investment Management Agreement and Administration Agreement and subject to oversight by our Board. After the completion of the Transaction, we no longerWe have anyno employees, and, as a result, RCM’s investment team evaluates, negotiates, structures, closes and monitors our investments. We depend on the diligence, skill, investment expertise and network of business contacts of RCM’s investment professionals and the Investment Committee to source appropriate investments for us. We also depend on members of RCM’s investment team and the Investment Committee to analyze potential investments for us and monitor those investments,investments and on members of the Investment Committee to make investment decisions for us. Our future success depends on the continued availability of members of RCM’s investment team and the Investment Committee and the other investment professionals available to RCM. The Corporation does not have any employment agreements with key personnel of RCM, including members of the Investment Committee, and we cannot provide any assurance that unforeseen business, medical, personal or other circumstances would not lead any such individual to terminate his or her relationship with RCM. In addition, we do not expect that members of RCM's investment team and the Investment Committee will devote all of their business time to our operations, and, as a result, eachthese such personpersons will have other demands on their time as a result of their other business activities and obligations. Therefore, RCM may need to hire, train, supervise and manage new investment professionals to participate in our investment selection and monitoring process and may not be able to find suitable investment professionals in a timely manner or at all. The loss of a material number of investment professionals that RCM currently has access to, or the loss of a material number of members of the Investment Committee, could have a material adverse effect on our ability to achieve our investment objectives as well as on our financial condition and results of operations.

Accomplishing this investment objective effectively and on a cost-effective basis will be based on RCM’s handling of the investment process, including its ability to continue to find investments that offer favorable terms and meet our investment objective, and its ability to provide competent, attentive and efficient services to us. RCM will also need to continue to monitor our portfolio companies’ performanceperformance, and has been in the past, and may continue to be, called upon to provide managerial assistance. These competing demands on theirRCM’s time may slow the rate of investment or negatively impact the effective deployment of capital.

Even if RCM is able to grow and build on our investment portfolio, any failure by RCM to manage the growth of our portfolio effectively could have a material adverse effect on our business, financial condition, results of operations and investment prospects. IfRCM’s RCMinability cannotto successfully manage our investment portfolio or implement our investment objectives, thisobjectives could negatively impact our results of operation and financial condition.

We are regulated by the SEC as a BDC and subject to the requirements applicable to BDCs under the 1940 Act. The 1940 Act imposes numerous constraints on the operations of BDCs and their external advisers. Changes in the laws or regulations that govern BDCs could significantly affect our business. Regulations and laws may be changed periodically, and the interpretations of the relevant regulations and laws are also subject to change. Any change in the regulations and laws governing our business could have a material adverse impact on our financial condition and our results of operations. Moreover, the laws and regulations that govern BDCs may place conflicting demands on the manner in which we operate, and the resolution of those conflicts may restrict or otherwise materially adversely affect our operations. Furthermore, any failure to comply with the requirements imposed on BDCs by the 1940 Act could cause the SEC to bring an enforcement action against us and/or expose us to claims of private litigants.

Political and regulatory conditions that contribute to uncertainty and market volatility, including the impact of the 2024 U.S. presidential election and legislative, regulatory, trade and policy changes associated with the new administration,volatility could materially adversely impact our business operations and financial performance and business and financial performance of our portfolio companies.

The political and economic environment in the U.S. has resulted in, and willis expected to continue to result in, an uncertain business climate. Changing economic and regulatory policies because ofunder the recentlycurrent changedPresidential political environmentadministration could negatively impact our regulatory and compliance costscosts, our future revenues and futurethe revenues,performance of our portfolio companies, all of which could materially and adversely affect our business, financial condition and results of operations. Failure to adapt to or comply with evolving regulatory requirements or investor or stakeholder expectations and standards could negatively impact our reputation and ability to do business with certain partners. Further, the recent change in the U.S. presidential administration and the U.S. Congress as a result of the 2024 election cycle may result in increased regulatory and economic uncertainty. Changes in federal economic policy byunder the executiveTrump branchadministration and regulatory agencies mayhave occur over time through the new presidential administration’s and/or Congress’s policyoccurred, and personnelmay changes,continue to occur, which could lead to changes involving the level of oversight and focus on our industry; however,and the nature,industries timingin andwhich economicour andportfolio politicalcompanies effectsoperate. For example, existing or new tariffs imposed on foreign goods imported by the U.S. or on U.S. goods imported by foreign countries could subject us or our portfolio companies to additional risks. Among other effects, tariffs may increase the cost of suchproduction potentialfor changescertain remainof highlyour uncertain.portfolio companies or reduce demand for their products, which could adversely affect their results of operations. We cannot predict whether, or to what extent, any tariff or other trade protections may affect us or our portfolio companies. Any future changes in federal and state laws and regulations, as well as the interpretation and implementation of such laws and regulations, could affect us and our portfolio companies in substantial and unpredictable ways. AtIn thisaddition, time,over itthe ispast unclearseveral whatyears, laws,there regulationsalso andhas policiesbeen increasing regulatory attention to the extension of credit outside of the traditional banking sector, raising the possibility that some portion of the non-bank financial sector may changebe andsubject whetherto futurenew changesregulation. orIncreased uncertaintyregulation surroundingof futurenon-bank changeslending willcould adverselybe affectmaterially ouradverse operating environment and thereforeto our business, the business of our portfolio companies, our financial conditionconditions and resultsresult of operations.

At December 31, 2024,2025, all of our investments are in private securities that are not publicly traded. There is typically no public market for securities of the small privately heldprivately-held companies in which we typically invest. InvestmentsOur investments are valued by RCM on a quarterly basis in good faith and in accordance with our established valuation policy and are stated at fair value and approved by our Board. The inputs into the determination of fair value of these investments may require significant judgment or estimation. In the absence of a readily ascertainable market value, the estimated value of our investment portfolio may differ significantly, favorably or unfavorably, from the values that would be placed on the portfolio if a ready market for the securities existed and may fluctuate significantly over short periods of time. Any changes in estimated value of our investments are recorded in our consolidated statement of operations as “Net change in unrealized appreciation/depreciation on investments.” In addition, the participation of RCM’s investment professionals in our valuation process may result in a conflict of interest, as RCM’s Base Management Fee under the Investment Management Agreement is based, in part, on the value of our gross assets, and the Incentive Fees payable under the Investment Management Agreement are based, in part, on realized gains and realized and unrealized losses.

RCM faces significant competition in effecting investing activities on our behalf from many entities, including private venture capital funds, other providers of private credit, investment affiliates of large companies, wealthy individuals and other domestic or foreign investors. The competition is not limited to entities that operate in the same general geographical areas as we do. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors have a lower cost of capital and access to funding sources that are not available to us, including from the Small Business Administration. In addition, increased competition for attractive investment opportunities allows debtors to demand more favorable terms and offer fewer contractual protections to creditors. Some of our competitors have higher risk tolerances or different risk assessments than we do. These characteristics have allowedallowed, and could continue to allowallow, our competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than we are able to offer. We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure. If we choose to match our competitors’ pricing, terms and structure, we may not be able to achieve acceptable returns on our investments or may bear substantial risk of capital loss. As a regulated BDC, we are also required to disclose quarterly and annually the name and business description of our portfolio companies and the value of their portfolio securities. Most of our competitors are not subject to this public disclosure requirement or similar types of disclosure requirements. This obligation to disclose this information could hinder RCM’s ability to invest in potential portfolio companies on our behalf. Additionally, other regulations, current and future, may make us less attractive as a potential investor to a given portfolio company than a private fund that is not subject to these regulations.

There are potential conflicts of interest, including the management of other investment funds and accounts by the principals and certain members of the Investment Committee of RCM, which could negatively impact our investment returns.

The principals and certain members of the Investment Committee of RCM manage other funds and accounts, including for entities affiliated with members of the Investment Committee. Accordingly, they have obligations to those investors, the fulfillment of which may not be in the best interests of, or may be adverse to the interests of, us or our shareholders. Although the principals, members of the Investment Committee and other professional staff of RCM are expected to devote as much time to our management as appropriate to enable RCM to perform its duties in accordance with the Investment Management Agreement, the members of the Investment Committee and other investment professionals of RCM may have conflicts in allocating their time and services among RCM, on the one hand, and the other managed investment vehicles, on the other hand.

RCM and its affiliates receive fees from us in return for their services, including certain incentive fees based on the performance of our investments. These fees could influence the investment advice provided to us. Generally, the greater the risk assumed by us with respect to our investments, the greater the potential for growth in our assets and profits, and, correlatively, the fees payable by us to RCM under the terms of the Investment Management Agreement. These compensation arrangements could affect RCM or its affiliates’ judgment with respect to investments made on our behalf, which wouldcould allowadversely RCMimpact toour earnfinancial increasedcondition assetand managementresults fees.of operations.

In situations whenwhere co-investment with funds managed by RCM or its affiliates is not permitted under the 1940 Act and related rules, existing or future SEC staff guidance, or the terms and conditions of the exemptive relief granted to us by the SEC, RCM and its affiliates will need to decide which client or clients (including us) will proceed with the investment. Generally, we will not be entitled to make a co-investment in these circumstances and, to the extent that a client (other than us) is granted the opportunity to proceed with the investment, we will not be permitted to participate in the investment we otherwise may have made.

RCM has the right to resign on 60 days’ written notice, and we may not be able to find a suitable replacement within that time, resulting in a disruption in our operations that could materially adversely affect our financial condition, business and results of operations.

RCM has the right, under both the Investment Management Agreement and the Administration Agreement, to resign at any time upon not less than 60 days’ written notice, regardless of whether we have found a replacement or not.replacement. If RCM resigns, we may not be able to find a new investment adviser or administrator or hire internal management with similar expertise and ability to provide the same or equivalent services on acceptable terms within 60 days, or at all. If we are unable to do so quickly, our operations are likely to experience a disruption, our financial condition, business and results of operations are likely to be adversely affected and the market price of our common stock may decline. Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objectives may result in additional costs and time delays that may materially adversely affect our financial condition, business and results of operations.us.

We believe that most of the investments that we may acquire in the future will constitute qualifying assets. However, we may be precluded from investing in what we believe to be attractive investments if suchthose investments are not qualifying assets for purposes of the 1940 Act. If we do not invest a sufficient portion of our assets in qualifying assets, we could violate the 1940 Act provisions applicable to BDCs. As a result of such violation, specific rules under the 1940 Act could prevent us, for example, from making follow-on investments in existing portfolio companies (which could result in the dilution of our position) or could require us to dispose of investments at inappropriate times to comply with the 1940 Act. If we need to dispose of such investments quickly, it could be difficult to dispose of such investments on favorable terms. We may not be able to find a buyer for such investments and, even if we do find a buyer, we may have to sell the investments at a substantial loss. Any such outcomes could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The fee structure under the Investment Management Agreement may induce RCM to pursue investments and incur leverage,leverage whichthat may not be in the best interests of the shareholders.

We may need additional capital to fund new investments and grow. We may access the capital markets periodically to issue equity or debt securities as a means to raise additional capital. Pursuant to the restrictions of the 1940 Act, we are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock at a price below the then-current net asset value of our common stock if our Board determines that such sale is in the best interests of the Corporation, and our shareholders also approve the sale, giving us the authority to do so. Although we currently do not have such authorization, we may seek such authorization in the future. In addition, we are required to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our shareholders to maintain our RIC election. As a result, our earnings may not be able to be retained by the Corporation to fund new investments and, instead, may need to be distributed to shareholders.

In addition to amounts available to be borrowed under our Credit Facility, we may also issue debt securities or borrow additional amounts from financial institutions in order to obtain such additional capital, up to the maximum amount permitted by the 1940 Act. The 1940 Act permits us to issue debt securities or incur indebtedness only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150% immediately after such issuance or incurrence. Unfavorable economic conditions could increase our funding costs and limit our access to the capital markets or result in a decision by lenders not to extend credit to us. Furthermore, the debt capital that may be available to us in the future, if any is available at all, may be at a higher cost and on less favorable terms and conditions. A reduction in the availability of new capital could limit our ability to grow. In addition, we are required to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our shareholders to maintain our RIC election. As a result, our earnings may not be able to be retained by the Corporation to fund new investments and, instead, may need to be distributed to shareholders.

If we are unable to access the capital markets or if we are unable to borrow from financial institutions,institutions on terms acceptable to us, we may be unable to grow our business and execute our business strategy fully, and our earnings, if any, could decrease, which could have ana material adverse effect on the value of our common stock.

We are subject to cybersecurity risks and incidents that may materially adversely affect our operations, the operations of RCM or the companies in which we invest. A failure in our, or RCM’s, cybersecurity systems could impair our ability to conduct business and damage our business relationships, compromise or corrupt our confidential information and ultimately negativelymaterially adversely impact our business, financial condition and operating results.

Our and RCM’s operations are dependent on secure information technology systems for data processing, storage and reporting. Increased cybersecurity vulnerabilities, threats and more sophisticated and targeted cyber-attacks pose a risk to the security of our and RCM’s information and the information of our portfolio companies. Like other companies, we or RCM may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information stored in, or transmitted through, our or RCM’s computer systems and networks, or otherwise cause interruptions or malfunctions in our or RCM’s operations, which could result in damage to our or RCM’s reputation, financial losses, litigation, increased costs or regulatory penalties. Furthermore, if one of these events were to occur at one of our portfolio companies, it could materially adversely impact their business, financial condition and results of operations, which could negativelyhave a corresponding negative impact on our investment. In addition, these cyber-attacks could affect our and RCM’s computer network, our website or our other service providers (such as, but not limited to, accountants, lawyers, transfer agents and our third-party IT service provider) and could result in operating disruptions or information misappropriation, which could have a material adverse effect on our business operations and the integrity and availability of our financial information. We and RCM have attempted to mitigate these cybersecurity risks by employing a number of processes, procedures and internal controls within our organization and RCM, but we remain potentially vulnerable to additional known and unknown threats. For more information regarding how we oversee, assess and manage cybersecurity risks, see Item 1C – “—Cybersecurity.”

Our business and the businesses of our portfolio companies are facingface increasing public scrutiny related to environmental, social and governance (“ESG”) activities. We risk damage to our reputation if we fail to act responsibly in several areas, such as diversity, equity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency, and having RCM consider ESG factors in their investment processes on our behalf. Failure to act responsibly with respect to ESG activities could negatively impact our reputation, our relationship with existing and future portfolio companies, and our relationships with our investors, all of which could materially adversely affect our business and results of operations. Additionally, new regulatory initiatives related to ESG could materially adversely affect our business and the businesses of our portfolio companies. New lawsLaws and regulations increase our regulatory burden and could make compliance more difficult and expensive, affect the manner in which we or our portfolio companies conduct our businesses and materially adversely affect our results of operation.

We have a limited number of companies in our portfolio of investmentsinvestments, and we may be subjected to greater risk if any of these companies default.perform poorly, go out of business or default on their repayment obligations under any of their debt instruments.

Our portfolio investment values are concentrated in a small number of companies and as such, we may experience a significant loss in our net asset value if one or more of these companies performs poorly orpoorly, goes out of business.business or defaults on its repayment obligations under its debt instruments. As our portfolio is less diversified than the portfolios of some larger funds, we are more susceptible to failure if a single loan fails. As a result, if a significant loan fails to perform as expected, our business, financial condition, results of operation and cash flows could be more negatively affected and the magnitude of the loss could be more significant than if we had made smaller investments in more companies. Similarly, the aggregate returns we realize may be materially adversely affected if a small number of investments perform poorly or if we need to write down the value of any one investment. The unrealized or realized depreciation in the value of the securities of any one of these companies would negatively impact our net asset value.NAV.

The lack of liquidity in our investments may materially adversely affect our business.

RCM,RCM invests on our behalf, invests, and weis expectexpected thatto RCMcontinue willto continue,invest on our behalf, to invest, primarily in portfolio companies whose securities are not publicly traded and may be subject to restrictions on resale, and as a result willour investments are expected to be less liquid than publicly traded securities. Most of our investments are, and are orexpected willto becontinue to be, either equity securities or debt securities acquired directly from small, private companies. The illiquidity of most of our portfolio may materially adversely affect our ability to dispose of the securities at times when it may be advantageous for us to liquidate investments. In addition, we may not realize the full value of these private investments if we have to liquidate all or a part of our portfolio investment quickly, given the lack of available markets for their sale.

Economic downturns or recessions may materially adversely affect our portfolio companies’ financial performance and therefore harm our operating results.

We typicallyhave in the past invested, and expect to continue to invest in the future, a substantial portion of our assets in small private companies. These private businesses may be thinly capitalized, unproven companies with risky technologies, products or services, may lack management depth, and may not have attained profitability. Because of the speculative nature and the lack of a public market for these investments, there is significantly greater risk of loss than is the case with securities traded publicly. We expect that some of our investments will become worthless and that some will appear likely to become successful but will never realize their potential. We have historically been risk seeking rather than risk averse in our approach to our investments. Given the incentive compensation components of our arrangement with RCM under the Investment Management Agreement, including the Capital Gains Fee, RCM may havebe similar incentivesincentivized to be risk seeking rather than risk averse in making its investment decisions on our behalf. See “—Risks Related to our Business and Structure—The fee structure under the Investment Management Agreement may induce RCM to pursue investments and incur leverage, which may not be in the best interests of the shareholders.”

We have originated or invested in, and may in the future originate or invest in, covenant-lite loans to our portfolio companies, which means the loan agreement or other debt instrument governing these debt obligations contains fewer maintenance covenants than other loan agreements or debt obligations, or no maintenance covenants, and may not include covenants that we could use to monitor the financial performance of the portfolio company borrower, including covenants based upon compliance with financial ratios, and declare a default under the loan agreement or other debt instrument if the specified covenants are breached. While these loans or other debt obligations to portfolio company borrowers may still contain other collateral protections, a covenant-lite loan may carry more risk than a covenant-heavy loan made to the same portfolio company borrower as it does not require this borrower to provide affirmation that certain specific financial tests have been satisfied on a routine basis, as is generally required under a covenant-heavy loan agreement or other debt instrument. Generally, covenant-lite loans or other debt instruments provide borrowers more freedom, which may negatively impact lenders because these covenants, if any, tend to be occurrence-based, meaning they are only tested and can only be breached following an affirmative action of the borrower, rather than by deterioration in the borrower’s financial condition. Should the financial condition of a portfolio company borrower begin to deteriorate, our investment in or origination of covenant-lite loans or other debt instruments to suchthat portfolio company borrower may potentially reduce our ability to restructure suchthe problematic loan and mitigate potential loss. As a result of our investment in or origination of covenant-lite loans, our exposure to losses may be increased, which could resulthave ina anmaterial adverse impact on the Corporation’s revenues, net income and NAV per share.

may from time to time be parties to litigation and may have fewer resources than larger companies to handle suchthat litigation;

Any of these factors or changes thereto could impair a small company’s financial condition, results of operation, cash flow or result in other material adverse events, such as bankruptcy, any of which could limit a borrower’s ability to make scheduled payments on our debt securities. This, in turn, could result in losses in our investments and a decrease in our net interest income and NAV per share.

We may have limited access to information about privately heldprivately-held companies in which we invest.

We invest primarily in privately heldprivately-held companies. Generally, little public information exists about these companies, and we are required to rely on the ability of RCM’s investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. These companies and their financial informationstatements are not subject to the Sarbanes-Oxley Act of 2002, as amended, andthe Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act or other rules and regulations that govern public companies. If we are unable to uncoverobtain allsufficient material information about these companies, RCM may not make a fully informed investment decision, and we may lose money on our investment.

Our portfolio companies may incur debt that ranks equal with, or senior to, our investments in suchthese companies.

We invest primarily in debt securities issued by our portfolio companies. In many cases, portfolio companies are permitted to have other debt that ranks equal with, or senior to, the debt securities in which we invest. By their terms, such debt instruments often provide that the holders thereof are entitled to receive payment of interest or principal on or before the dates on which we are entitled to receive payments in respect of the debt securities in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution in respect of our investment. After repaying such senior creditors, sucha portfolio company may not have sufficient remaining assets to use for repaying its obligation to us. In the case of debt ranking equal with debt securities in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company.

We do not have an expectation to control the decision making in our portfolio companies, even thoughif we may have a board seat or board observation rights. Rather, we typically invest as a minority shareholder in our portfolio companies in connection with equity investments. Because of this, we are subject to the risk that our portfolio companies will make business decisions with which we disagree or will incur risks or otherwise act in ways that do not maximize their value and serve our interests as minority debt and equity holders. Due to the lack of liquidity in our investments in these private companies, we may not be able to dispose of our investment in these portfolio companies as freely as we would like or at a valuation that we believe is appropriate. As a result, a portfolio company may make decisions that could decrease its value and thus the value of our portfolio holdings. In addition, as a minority shareholder in our equity investments, we are generally unable to require the portfolio company to seek or entertain liquidity events as a way to exit our equity investments. This may cause us to hold equity investments longer than planned or to seek a sale that may not reflect the full value of our equity investment.

We have outstandingpreviously existingborrowed, indebtednessand and,will subject to the limitations imposed under our Credit Agreement, maylikely in the future borrow additionalborrow, money under our Credit Facility with M&T Bank, as lender (the "“Lender"”), which magnifies the potential for gain or loss on amounts invested and may increase the risk of investing with us. Our ability to service our existing and potential future debt depends largely on our financial performance, which is impacted by the financial performance of our portfolio companies and is subject to prevailing economic conditions and competitive pressures.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes included within Item 88, Financial Statements and Supplementary Data, of this Annual Report.

Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this reportAnnual Report that do not relate to present or historical conditions are “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21E of the Exchange Act, and are subject to the safe harbor provisions of the Private Securities ExchangeLitigation Reform Act of 1934, as amended.1995. Additional oral or written forward-looking statements may be made by us from time to time, and forward-looking statements may be included in documents that are filed with the SEC. Forward-looking statements involve risks and uncertainties that could cause our results or outcomes to differ materially from those expressed in the forward-looking statements. Forward-looking statements may include, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions, including certain forward-looking statements included below in the “Outlook” section of this Item 7, and including statements related to our investment strategies and our intention to co-invest with certain of our affiliates; the impact of our election as a RIC for U.S. federal tax purposes on the payment of corporate level U.S. federal income taxes by Rand; statements regarding our liquidity and financial resources; statements regarding any capitalCapital gainsGains feeFee that may be due to RCM upon a hypothetical liquidation of our portfolio and the amount of the capitalCapital gainsGains feeFee that may be payable to RCM for 20252026; and statements regarding our compliance with the RIC requirements as of December 31, 20242025; and statements regarding future dividend payments, and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.payments. Words such as “believes,” “forecasts,” “intends,” “possible,” “expects,” “estimates,” “anticipates,” or “plans” and similar expressions (including their negative counterparts or other various or comparable terminology) are intended to identify forward-looking statements. AmongAll the important factors on which suchforward-looking statements are based are assumptions concerning the state of the United States economy and the local markets in which our portfolio companies operate, the state of the securities markets in which the securities of our portfolio companies could be traded, liquidity within the United States financial markets, and inflation. Forward-looking statements are also subject to the risks and uncertainties describedthat undermay thecause captionactual “Riskresults Factors”to containeddiffer inmaterially Partfrom I,those Itemthat 1Awe ofcurrently thisexpect, Annual Report.including:

There may be other factors not identified that affect the accuracy of our forward-looking statements. Further, anyAny forward-looking statement speaks only as of the date when it is made and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time that may cause our business not to develop as we expect, and we cannot predict all of them.

In November 2019, Rand completed a stock sale transaction (the “Closing”) with East Asset Management (“East”). The transaction consisted of a $25 million investment in Rand by East, in the form of cash and contributed portfolio assets, in exchange for approximately 8.3 million shares of Rand common stock. East owns approximately 64% of Rand’s outstanding common stock at December 31, 2025. Concurrent with the Closing, RCM, a registered investment advisor,adviser, was retained by Rand as its external investment adviser and administrator (the Closing and the retention of RCM as our investment adviser and administrator are collectively referred to herein as the “Transaction”). The term of the new investment advisory and management agreement (the “Investment Management Agreement”) with RCM was extended after approval of its renewal was approved by our Board of Directors (the “Board”) in October 20242025 and willis currently scheduled to expire on December 31, 2025.2026. In addition, the term of the administration agreement (the “Administration Agreement”) with RCM was extended after approval of its renewal was approved by the Board in October 20242025 and willis currently scheduled to expire on December 31, 2025.2026. The Investment Management Agreement and Administration Agreement can continue for successive annual periods after December 31, 20252026 provided that such continuance is specifically approved at least annually by (i) (A) the affirmative vote of a majority of the Board or (B) the affirmative vote of a majority of our outstanding voting securities, and (ii) the affirmative vote of a majority of our directors who are not “interested persons,” as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "“1940 Act"”), of us, RCM or our respective affiliates.

On January 24, 2024, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, our asset coverage requirement under the 1940 Act for senior securities was changed from 200% to 150%, effective January 24, 2025. We monitor our compliance with this coverage ratio on a regular basis. As of December 31, 2025, we had no senior securities outstanding and, as a result, our asset coverage ratio for senior securities as of December 31, 2025 is incalculable.

On December 5, 2024, our Board declared a dividend of $4.20 per share. The dividend was paid in the aggregate combination of 20% in cash and 80% in newly issued shares of our common stock on or about January 24, 2025 to shareholders of record as of December 16, 2024. The stock dividend increased the number of issued and outstanding shares of our common stock from 2,648,916 shares and 2,581,021 shares, respectively, to 3,037,709 shares and 2,969,814 shares, respectively, as ofon January 24, 2025.

During 2024,2025, we monetized select equity investments, exited our remaining publicly traded securities,investments and received loan repayments that generated approximately $27$18 million in aggregate cash proceeds. We strategically allocated these funds,funds usingby approximately $15.7 million to reducereducing outstanding borrowings under our senior secured revolving credit facility (the "“Credit Facility"”). Additionally, we investedby approximately $13.9$0.6 million, and investing approximately $6.6 million into income-producing investments as a means to further increasesupport investment income. At December 31, 2024,2025, after capital deployment and distributing an aggregate of $4.3$7.3 million in cash dividends to shareholders,shareholders during 2025, we had approximately $835,000$4.2 million in cash on hand and $24.4$19.2 million in available capacity under our Credit Facility to support future investments. Entering 2025,2026, we believe we have a strong and flexible balance sheet supported by multiple sources of capital.

Our portfolio composition continued shifting toward debt investments in 2024,2025, areflecting trendour wefocus anticipateon continuingexpanding inour 2025.base of interest-yielding assets. As of December 31, 2024,2025, 75%79% of our portfolio consisted of interest-yielding debt instruments, up from 64%75% at the end of 2023.2024. This shift has contributed to an improved portfolio yield and increased net interest income, with our annualizedOur weighted average portfolio yield increasingin 2025 decreased to 13.8%11.3% from 13.6%13.8% in the prior year.year, primarily due to increased non-accrual rates on debt investments during 2025 and changes in portfolio mix following repayments and new investment activity.

Supported by our strong liquidity position,position and access to capital, we believe we are well-positioned to continue executing our strategy of portfolio expansion, investment income growth, and sustainable dividend increases.distributions. Market conditions during 2025 contributed to slower industry-wide origination activity and an increased use of payment-in-kind (“PIK”) interest structures. We monitor these dynamics closely, remain disciplined in underwriting, and expect to deploy capital opportunistically as attractive risk-adjusted opportunities arise.

As a lender, we remain exposed to market risks, particularlyincluding ininterest periodsrate and refinancing risks that can affect borrowers’ cost of risingcapital, interestcredit rates.performance, and overall portfolio returns. As of December 31, 2024,2025, all of our debt investments carried fixed interest rates, whereas borrowings under our Credit Facility bear interest at a variable rate equal to 3.50 percentage points above the greater of (i) the applicable daily simple secured overnight financing rate (SOFR) and (ii) 0.25%. In rising interest rate environments, our fixed-rate debt investments generate stable returns, but our cost of capital under the Credit Facility increases.increases, Thiswhich could impact net investment income and overall returns. At the same time, further interest rate reductions could improve refinancing and transaction activity in the lower middle market, potentially supporting origination levels or result in prepayments from our portfolio companies, which could potentially adversely affect us. The timing and magnitude of any such changes remain uncertain. See “Part I, Item 1A, Risk Factors—Risks Related to Our Indebtedness” for further discussion of interest rate risk.

We believe our combination of cash on hand, Credit Facility availability, proceeds from portfolio exits, and anticipated investment income provides the liquidity necessary to capitalize on new investment opportunities and reinvest in high-performing portfolio companies. RCM continues to build a strong pipeline of potential investments on our behalf, whichand shouldwe allow usexpect to remain well-positionedselective toand deploydisciplined capitalas effectively.we evaluate investment opportunities. Key trends and strategic advantages that support our growth outlook include:

We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles, or GAAP, which require the use of estimates and assumptions that affect the reported amounts of assets and liabilities. For a summary of all significant accounting policies, including critical accounting policies, see Note 1—Summary of Significant Accounting Policies to the consolidatedConsolidated financialFinancial statementsStatements in Item 88, Financial Statements and Supplementary Data, of this Annual Report.

Our investments are carried at fair value in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures”, which defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements.

Loan investments are defined as traditional loan financings typically with no equity features or required equity co-investment. Debt investments are defined as debt financings that include one or more equity features such as conversion rights, stock purchase warrants, and/or stock purchase options. Equity investments will beare direct investments into a portfolio company and may include preferred stock, common stock, warrants and limited liability company membership interests.

Loan and debt securities are generally valued using a cost approach and will be valued at cost when representative of the fair value of the investment or sufficient assets or liquidation proceeds are expected to exist from a sale of a portfolio company at its estimated fair value. The valuation may also consider the carrying interest rate versus the related inherent portfolio risk of the investment. A loan or debt instrument may be reduced in value if it is judged to be of poor quality, collection is in doubt or insufficient liquidation proceeds exist.

Cost approach - The cost approach uses estimates of the liquidation value of the portfolio companies’company’s assets in relation to the cost of the respective security. This approach values the equity at the value remaining after the portfolio company pays off its debt and loan balances and its outstanding liabilities.

At December 31, 2025 and 2024, all of our investments were Level 3 investments. At December 31, 2023, 9% of our investmentsThere were no Level 1 investments and 91% were Level 3 investments. There were noor Level 2 investments at December 31, 20242025 or 2023.2024.

See the information provided under the heading “Risk Factors” in ourPart annualI, reportItem on1A Form 10-K forof the year2025 ended10-K. DecemberThere 31,have 2025.been no material changes from the risk factors as previously disclosed in the 2025 10-K.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes included elsewhere in this report.Quarterly Report on Form 10-Q (this “Form 10-Q”). Historical results and percentage relationships among any amounts in the consolidated financial statements are not necessarily indicative of trends in operating results for any future periods.

Statements included in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of OperationsOperations,” and elsewhere in this reportForm 10-Q that do not relate to present or historical conditions are “forward-looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933, as amended, and in Section 21E of the Securities Exchange Act of 1934, as amended. Additional oral or written forward-looking statements may be made by us from time to time, and forward-looking statements may be included in documents that are filed with the SEC. Forward-looking statements involve risks and uncertainties that could cause our results or outcomes to differ materially from those expressed in the forward-looking statements. Forward-looking statements may include, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions, including statements related to our investment strategies and our intention to co-invest with certain of our affiliates; the impact of our election as a RIC for U.S. federal tax purposes on the payment of corporate level U.S. federal income taxes by Rand; statements regarding our liquidity and financial resources; statements regarding any Capital Gains Fee that may be due to RCM upon a hypothetical liquidation of our portfolio and the amount of the Capital Gains Fee that may be payable to RCM for 2026; and statements regarding our compliance with the RIC requirements as of MarchJune 31,30, 2026; and statements regarding future dividend payments, and are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “forecasts,” “intends,” “possible,” “expects,” “estimates,” “anticipates,” or “plans” and similar expressions (including their negative counterparts or other various or comparable terminology) are intended to identify forward-looking statements. Among the important factors on which such statements are based are assumptions concerning the state of the United States economy and the local markets in which our portfolio companies operate, the state of the securities markets in which the securities of our portfolio companies could be traded, liquidity within the United States financial markets, and inflation. All forward-looking statements are subject to risks and uncertainties described under the caption “Risk Factors” contained in Part II, Item 1A of this reportForm 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K for the year2025 ended December 31, 2025.10-K.

On January 24, 2024, the Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, our asset coverage requirement under the 1940 Act for senior securities was changed from 200% to 150%, effective January 24, 2025. We monitor our compliance with this coverage ratio on a regular basis. As of MarchJune 31,30, 2026, our asset coverage ratio for senior securities as of March 31, 2026 was substantially in excess of 150%.1,109%. For a discussion of the risks associated with our adoption of a modified asset coverage requirement of 150%, please see the discussion of risks under the caption “Risk Factors – Risks related to our Indebtedness” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year2025 ended December 31, 2025.10-K. Notwithstanding the reduction of our asset coverage requirement under the 1940 Act from 200% to 150% effective January 24, 2025, under the terms of the Credit Agreement, we are required to maintain an Asset Coverage Ratio (defined in the Credit Agreement as the ratio of the fair market value of all of the Corporation’s assets to the sum of all of the Corporation’s obligations for borrowed money plus all capital lease obligations) of not less than 300%.

We elected U.S. federal tax treatment as a regulated investment company (“RIC”) under subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). To maintain our qualification as a RIC, we must, among other things, meet certain source of income and asset diversification requirements. As of MarchJune 31,30, 2026, we believe we were in compliance with the RIC requirements. As a RIC, we generally will not be subject to corporate-level U.S. federal income taxes on any net ordinary income or capital gains that we timely distribute to our shareholders as dividends. In addition, as a RIC, we must distribute annually to our shareholders at least 90% of our ordinary net income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Accordingly, our Board has regularly declared a quarterly cash dividend since our RIC election.

Our Board declared the following dividenddividends during the threesix months ended MarchJune 31,30, 2026:

We may co-invest, subject to the conditions included in the exemptive relief order we received from the SEC, with certain of our affiliates. See the disclosure under the caption “SEC Exemptive Order” below. We believe these types of co-investments are likely to afford us additional investment opportunities and provide an ability to achieve greater diversification in our investment portfolio.

We prepare our consolidated financial statements in accordance with United States generally accepted accounting principles (GAAP), which require the use of estimates and assumptions that affect the reported amounts of assets and liabilities. For a summary of all significant accounting policies, including critical accounting policies, see Note 2—Summary of Significant Accounting Policies to the Consolidated Financial Statements in Item 1, Financial Statements and Supplementary Data,Statements, of this QuarterlyForm Report.10-Q.

At MarchJune 31,30, 2026 and December 31, 2025, all of our investments were Level 3 investments. There were no Level 1 or Level 2 investments at MarchJune 31,30, 2026 or December 31, 2025.

When appropriate the Black-Scholes pricing model is used to estimate the fair value of warrants for accounting purposes. This model requires the use of highly subjective inputs including expected volatility and expected life, in addition to variables for the valuation of minority equity positions in small private and early stageearly-stage companies. Significant changes in any of these unobservable inputs may result in a significantly higher or lower fair value estimate.

Net asset value per share (NAV) was $17.16$17.33 at MarchJune 31,30, 2026 and $17.57 at December 31, 2025.

Cash and cash equivalents approximated 0.6%0.8% of net assets at MarchJune 31,30, 2026, as compared to 8.1% of net assets at December 31, 2025.

During 2022, we entered into a $25 million senior secured revolving credit facility (the “Credit Facility”) with M&T Bank, as lender (the “Lender”), with the amount that we can borrow thereunder, at any given time, determined based upon a borrowing base formula. The Credit Facility has a 5-year term with a maturity date of June 27, 2027. Our borrowings under the Credit Facility bear interest at a variable rate per annum equal to 3.50 percentage points above the greater of (i) the applicable daily simple secured overnight financing rate (SOFR) or (ii) 0.25%. At MarchJune 31,30, 2026, there was $500,000$5,100,000 drawn on the Credit Facility and the applicable interest rate was 7.18%. See “Note 6. 6—Senior Secured Revolving Credit Facility” in the Notes to the Consolidated Financial Statements in Item 1, Financial Statements, of this Form 10-Q for additional information regarding the terms of our Credit Facility.

Our total investments at fair value, as determined by RCM and approved by our Board, approximated 101%110% of net assets at MarchJune 31,30, 2026 as compared to approximately 93% of net assets at December 31, 2025.

The change in investments during the threesix months ended MarchJune 31,30, 2026, at cost, is comprised of the following:

Comparison of the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025:

The total investment income during the three months ended MarchJune 31,30, 2026 was received from 1516 portfolio companies. For the three months ended MarchJune 31,30, 2025, total investment income was received from 1814 portfolio companies.

Interest from portfolio companies – Interest from portfolio companies was approximately 29%23% lower during the three months ended MarchJune 31,30, 2026 versus the same period in 2025 due to repayment of several interest-yielding investments being placed on non-accrual status during the last year, without corresponding new debt instrument originations in replacement.year. Debt instruments werein repaid by HDI Acquisition LLC (Hilton), Lumious, Mattison Avenue Holdings LLC (Mattison), Pressure Pro, Inc. (Pressure Pro), and Seybert’s. In addition, our debt investments inAutotality, FSS, ITA Acquisition, LLC (ITA), MRES, and MRESSwanson were placed on non-accrual status during 2025.status.

We hold debt securities in our investment portfolio that contain payment-in-kind (“PIK”) interest provisions. PIK interest, computed at the contractual rate specified in each debt agreement, is added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Interest can also be shifted from current cash payment to PIK as part of a loan modification. For the three months ended MarchJune 31,30, 2026 and 2025, 19.7%8.3% and 31.1%,37.4%, respectively, of our total investment income was attributable to non-cash PIK interest income.

Interest from other investments - The increasedecrease in interest from other investments is primarily due to higherlower average cash balances during the three months ended MarchJune 31,30, 2026 versus the same period in 2025.

Dividend and other investment income - Dividend income is comprised of cash distributions from limited liability companies (LLCs) and corporations in which we have invested. Our investment agreements with certain LLCs require those LLCs to distribute funds to us for payment of income taxes on our allocable share of the LLC’s profits. These portfolio companies may also elect to make additional discretionary distributions or dividends. Dividend income will fluctuate based upon the profitability of these LLCs and corporations and the timing of the distributions. During the three months ended June 30, 2026, we recognized $141,206 in dividend income from EFINEA and $11,307 in dividend income from Carolina Skiff LLC (Carolina Skiff). No dividend income was recognized during the three months ended MarchJune 31,30, 2026. During the three months ended March 31, 2025, we recognized $13,125 in dividend income from Tilson Technology Management, Inc. (Tilson).2025.

The income associated with the amortization of financing fees was $43,289$63,152 and $87,777$51,179 for the three months ended MarchJune 31,30, 2026 and 2025, respectively. During the three months ended MarchJune 31,30, 2025,2026, we recognized a prepaymentloan modification fee of $167,187$5,000 from our debt investment in Mattison, a loan monitoring fee of $20,000 from our debt investment in Pressure Pro, a prepayment fee of $17,266 from our debt investment in Pressure Pro, and a loan modification fee of $15,000 from our investment in MRES.GoNoodle. No similar fees were received during the three months ended MarchJune 31,30, 2026.2025.

The decreaseincrease in total expenses during the three months ended MarchJune 31,30, 2026 versus the same period in 2025 was primarily due to a $119,673$1,490,000 decreaseincrease in the incomecapital basedgains incentive fee expense and a $62,513$47,059 decreaseincrease in base management feeinterest expense.

The excess of investment income over total expenses, including income taxes, represents net investment income. The net investment income for the three months ended MarchJune 31,30, 2026 and 2025 was $545,027$709,661 and $1,218,115,$2,478,234, respectively.

The change in net unrealized (depreciation) appreciation, before income taxes, for the three months ended MarchJune 31,30, 2026, was comprised of the following:

In accordance with the Corporation’s valuation policy, we increased the value of our investments in AllVerta, AboutEFINEA, PeopleOpen Exchange, BlackJet, 4 Seasons, and BauerCaitec during the three months ended MarchJune 31,30, 2026 after a financial analysis of each of the portfolio companies indicated continued improved performance.

During the three months ended MarchJune 31,30, 2025,2026, the valuation of our investmentsinvestment in FSS and ITA wereSwanson decreased afteras athe reviewcompany ofhas theirceased operations and financial condition.operations.

Net Increase (Decrease) Increase in Net Assets from Operations

We account for our operations under GAAP for investment companies. The principal measure of our financial performance is “Net increase (decrease) increase in net assets from operations” on our consolidated statements of operations. The net increase (decrease) increase in net assets from operations for the three months ended MarchJune 31,30, 2026 and 2025 was ($367,469)$1,366,278 and $841,447,($7,736,154), respectively.