Greetings and welcome to the Rand Capital Corporation Fourth Quarter and Full-Year 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'll now turn the conference over to your host Karen Howard. Thank you. You may begin.

Thank you, operator, and good afternoon, everyone. We certainly appreciate your time today for Rand's fourth quarter and full-year 2017 financial results conference call. On the line with me today are Pete Grum, our Chief Executive Officer; and Dan Penberthy, our Executive Vice President and Chief Financial Officer. Pete and Dan will be reviewing the results that were published in the press release distributed this morning. If you don't have that release, it is available on our website at www.randcapital.com. The slides that will accompany our discussions today are also posted on the website. If you look at the slide deck, and turn to Slide 2, we will discuss our Safe Harbor Statement. As you're likely aware, we may make some forward-looking statements during this presentation and also during the question-and-answer session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ from where we are today. These risks and uncertainties and other factors are provided in the earnings release as well as in other documents filed by the Company with the Securities and Exchange Commission. These documents can be found on our website, or at www.sec.gov. And with that, let me turn it over to Pete who is going to summarize highlights for the fourth quarter and the year and then Dan who will add more detail regarding the financials. It is now my pleasure to introduce Pete.

Good afternoon, everyone, and thank you for all joining us. We are happy to have this opportunity to update you on Rand's fourth quarter activities and begin with reflection on the full-year of 2017. For those of you who are following along, I am going to start on Slide 3, which highlights our fourth quarter. At the end of the year, our net asset value as we referred to either NAV grew to $5.05 per share, up from $5.01 per share at the end of September. Due to the portfolio activities, we grew by $0.09, but that was partially offset by a $0.05 impact of the Tax Cuts and Jobs Act. Dan during his financial presentation will go over that in more detail. During the fourth quarter, we invested $1.5 million in Tilson Technology. Half of that was in the form of preferred shares and half of that was a loan. I will talk more about this exciting growing company in a few momentums. During the quarter, we had one access. We liquidated our entire position in Athenex. Recall from previous conversation, we mentioned that that company went public in June. After waiting for the expiration of our lockup period, we have sold all of our shares in the open market. We generated approximately 781,000 of proceeds. It realized about 638,000 pretax gains. I want to update you at this point on the status as far as our ongoing discussions with the Small Business Administration. We continue to work with them and anticipate concluding this work in the next several months. Our goal is to get more leverage and continue our mutually successful relationship with the SBA. Let's now turn to Slide 4, where I'll summarize some highlights for the year. We had a solid year of investment totaling $5.4…

Thanks Pete, and good afternoon, everyone. If you could please turn to Slide 11, I'll start with net asset value per share or NAV. As Pete mentioned, and I am also very pleased to report, we finished the year with net asset value at $5.05 per share. As you can see NAV increased $0.04 per share over the trailing quarter. I'll break this down into two separate pieces. Our operational results drove over $0.09 per share increase, but that was partially offset by a $0.05 per share for the one-time impact of adopting the new Tax Cuts and Jobs Act. Basically we had to revalue our deferred tax assets at the new lower federal tax rates. Going forward, Rand's will benefit from this slower rate when we will be taxed at 21% for U.S. federal purposes. Please turn to Slide 12. Here I've summarized our operating performance for the fourth quarter 2017 and 2016 as well as comparable full-year periods. As we've previously mentioned, we've been investing in more financial instruments over the past year or so, which has increased our interest income. You can see the results here. Our fourth quarter investment income of $379,000 is up 26% over last year and our full-year 2017 investment income of $1.455 million is up 41%. Our fourth quarter expenses of $448,000 or 8% below last year. Full-year 2017 total expenses were 41% lower than last year. The 2017 expenses do include approximately $133,000 rather related to our SBIC application process. Last year's our 2016 expenses did include Gemcor exit related transaction expenses, certain taxes and incentive compensation costs. In the fourth quarter of 2017, we recorded approximately $347,000 of one-time tax expense to implement this Tax Cuts and Jobs Act reform. This resulted from lowering the federal tax rate on our…

Thanks, Dan. Before we open the lines for questions, I just want to say that I hope you can say there is a lot of excitement going on with Rand and its portfolio companies. We has a management team are working hard to take the Company to the next level by driving our growth strategy. We help to soon have additional SBA capital to put to work has we a wide variety of opportunity in our pipeline. With that, let me open it up for questions.

Thank you. At this time we will conduct a question-and-answer session. [Operator Instructions] Our first question is from Sam Rebotsky from SER Asset Management. Please go ahead.

Yes, good afternoon, Pete and Dan. It seems to been a pretty busy year. The SBA you say that it could be two months before you resolve the issue. How much are we seeking and what would we - and how much have we invested so far of what we expected to receive from the SBA?

That's one of the things we're working on. As you know they have a new leader and he's got some call. We are working to make sure what we end up with workable for both Rand and for the SBA. We have not invested any of it because we're seeking new leverage. We have invested cash of $5.4 million.

$4.6 million of total investments has been made out of those proceeds.

Out of those proceeds. So $4.6 million is one answer. We are negotiating with them for additional leverage. I think we're going to be able to wrap that up fairly soon, but we've been working on it for well over a year.

For example, initially did you get a 2:1 ratio? Are you seeking more than that because you're doing basically more debt, would that be a way to look at it?

It won't be more than 2:1, but we are negotiating with some of the proper amount for the way that we invest.

Okay. So another is to the extent you plan to do more debt. I assume there would be less risk going forward.

Well, I would hope so that tends to be risky, but the SBA really I've never seen them get more than 2:1 and we're certainly not thinking that.

Okay. Now do we expect to have any significant transactions in the year ending December 31, 2018 based on your knowledge of the companies that you're invested in?

Well, that's kind of a loaded question Sam.

Okay.

We have some companies that are seeking - they all have an exit strategy. When it happens I can't really tell you when, but there are a handful that we now have active discussion. I can't tell you historically once they get solved there is probably more than half comes out an unanticipated results or either a customer or competitors comes to them. And so they want to buy them, but we have a portfolio. Do we expect access? Sure we do. And I'll tell you which one, not at this point.

Okay. So we have a book value of 505 and we have a depreciation - unrealized depreciation of about $0.70 a share assuming that utilizable against gains or there's a way of wiping out the losses to make them breakeven, and yet we're trading even though it's up at 265, it got below - it's basically 50% below the valuation, and it would appear the market is not responsive to what you're doing. And I have discussed about a dividend or some way of buying some stock. And if we get this loan in place, is there any way is the board has thought more about what you might do so that you get more attention of the investors to invest in stock like Rand because there has been less and less interest in these type of stock of late based on the size you are in?

You are correct. We had a call with an investment banker and the board that we used this morning and that was one of the issues. The BDC space has certainly been under pressure and certainly when you get to our size and I think there is only four, five left that are equity based and don't pay a dividend and they're not trading well. We have some ideas that we are pursuing. The loan that we are discussing with the SBA is to be used for investments. That to be used to buy shares of company dividend. We are looking at it. If we have free cash flow, whether it can be used for dividend or to buy shares back and we have the right answer, you will be the first to know.

All right. Looking forward for the market to know and I see you are having an LD Micro Conference today.

Yes. Friday afternoon.

Okay. That's good. And I will step back into the queue. If there were nobody else, I will come back. Good luck.

Sam, you can always call us.

Okay. Thank you.

[Operator Instructions] And the next question is from Sam Rebotsky from SER. Please go ahead.

Okay. All right. Look, do we know - I think, I guess I don't know it's kind of late. I have not seen website that you had this conference with LD Micro. Is it too late to put a press release out or is there ever been press release on that?

I think there has been one that will spin out and I believe that it's on the website.

Yes. I saw that on the website. Okay, hopefully some new investors - it appears based on the cheapness of the stock as long as that the potential inventor could expect something as you discussed with your outside banker, they would be willing to hold the stock. And I know one of the company's - the safeguard has been under pressure and they're trying to get them to do something and that's - but they haven't functioned as well as you have. They've spent a lot of money and you spent less and you've been very profitable relative to increasing the value of your investments. So hopefully, if the story becomes better known and as long as you could do something is the stock should trade in higher valuation. So good luck on the conference with LD Micro, and hopefully the outside bankers could come up with something to work for you. Good luck.

Thank you, Sam.

Our next question is from [indiscernible]. Please go ahead.

Hey, good afternoon. How are you?

Hi, Bill.

I got a question. Are you - is Rand stock considered a penny stock under current SEC pronouncements?

I don't know the answer, Bill.

All right. I have had some experiences lately that frankly are disturbing in that the penny stock, according to what I read at the SEC, and what I've been told. The SEC now says a penny stock can be considered anything to $5 or less and your stock trades under $5 to build the SEC where we only - I guess government believes that $5 only were the penny, I have no idea. But if it is considered a penny stock, it's problematic in the sense that clearing firms are cracking down on the transfers of penny stocks because it appears that there been a lot of fake stock or people owning stock is not registered in the SEC's with them, they've just thrown everybody into one basket. And because of the Athenex with an ongoing trend, many broker terms won't even allow their customers to buy penny stocks and the custodians for a [indiscernible] so forthwon't even take accounts in that have penny stocks in them. And in my personal experience, when you get fortunate enough to find the high quality custodian that will take demand. They've then make you go back and produce every trade confirmation for when the position was acquired. So you can see there is a whole group of stocks out there, who were let's say in the dog house, where there are sellers from people being put into the situation by the custodian and no buyers because the broker dealers are making it extremely difficult for customers of any time to even buy penny stocks. So I'm kind of on a mini crusade here to trying to figure out, I know why that is, but probably not for this call. But anyway there maybe something you might later take a look at, and if you're not considered a penny stock then that's terrific if you are it maybe where it's exploring how they have to fix.

Okay. I look into that.

Okay. On that nice work. We just have to trigger out a way to put it unfold display and make somebody care.

Thank you. Thanks for your support.

Thank you. This concludes the question-and-answer session. I'd like to turn the floor back over to management for any closing comments.

Sure. Thank you. We enjoyed talking to you today. As you know you can call us in between quarters at any time. We're always happy to talk about what's going on with our business. And we look forward to talking to you again in May with our first quarter results.

This concludes today's teleconference. Thank you again for your participation. You may disconnect your lines at this time.