Greetings, and welcome to Rand Capital Corporation Fourth Quarter and Full Year 2018 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. It is now my pleasure to introduce your host Deborah Pawlowski, Investor Relations for Rand. Please go ahead.

Thank you, Kevin, and good afternoon, everyone. We certainly appreciate your time today for Rand’s fourth quarter 2018 financial results conference call. On the line with me 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 discussion today are also posted on the website. If you look at the slide deck and turn to Slide 2, we will review our Safe Harbor statement. As you are 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 Securities and Exchange Commission. These documents can be found either on our website or at sec.gov. Before I turn it over to Pete, let me point out that we are restricted in what we can discuss in regard to the proposed strategic investment by East Asset Management into Rand that we announced on Friday, January 25. We anticipate that the preliminary proxy will be filed within the next week or so with the SEC. Until it is filed, we're not really in a position to provide any more details. As a result we would, we will not be taking any questions relating to the transaction on today's call. So to avoid any confrontation regarding this, I ask you to please limit your questions today to Rand performance and current business. With that, let me turn it over to Pete who is going to summarize the highlights for the quarter and the year as well as feature some of our portfolio of companies, and then Dan will follow with more details regarding the financial. Pete?

Thanks, Dan. Good afternoon everyone. Happy to have this opportunity to update you on Rand’s fourth quarter and reflect on the 2018 full year. We’ll start on Slide 3, we can summarize some of the highlights of the fourth quarter. As previously announced it’s a very long process pending over the past two years, in December we announced that we have successfully secured an additional $6 million leverage commitment from the United States Small Business Administration. This demonstrates the SBA’s confidence in Rand and the important role we serve in the funding cycle of young businesses in underserved markets. We have a healthy pipeline of deserving opportunities and have already begun putting some of the capital to work. During the quarter we invested $1.1 million consisting almost all of loan instruments. I'll review these details of those investments with you on the next slide. At the end of the quarter, our net asset value or as we call it NAV increased to $4.99 per share up from $4.84 at the end of September. This increase was driven by net appreciation and certain portfolio investments. Dan during this discussion will provide further details on them. We are pleased to see our investment income up considerably again this quarter growing 76% above last year's fourth quarter. A benefit from a couple of items that don't necessarily recur each quarter including a $60,000 one-time distribution from one portfolio and an increase of $95,000 in the year-end distribution from another which also provide quarterly dividends. Excluding those fourth quarter items, the investment income was up 39% benefiting from our strategy to include more loan and debt instruments in our portfolio. Regarding the balance between investment income and expenses. We finished the quarter close to break even, which is our goal. Subsequent to the end…

Thanks Pete and good afternoon everyone. If you could please turn to Slide 14, I’ll start with the net asset value per share or NAV. As Pete mentioned, we finished the year with net asset value at $4.99 per share. As you see on the chart, NAV increased $0.15 per share over the trailing quarter. This increase is attributable primarily to net increase in the valuations of certain of our portfolio investments, driven by the appreciation recorded for ACV Auctions and Microcision and partially offset by depreciation recorded on other investments within our portfolio. Please turn to Slide 15. Here, we summarize our operating performance for the fourth quarters of 2018 and 2017, and also the comparable full year periods. Investment income increased significantly to $668,000 in the fourth quarter. This is a 76% increase over the prior year's quarter. Incremental investment income drove a 35% increase and nonrecurring distributions drove a 41% increase. As we previously mentioned, we have been investing in more income-producing instruments over the past few years, and that has driven increased investment income. On a year-to-date basis, investment income was up $652,000, or 45% to $2.1 million. In addition to the fourth quarter nonrecurring distributions, we had nonrecurring loan restructuring income in the third quarter. To give you a sense for the increase in our investment income driven by our investment strategy. Excluding those nonrecurring items, investment income grew by 18% in 2018 over 2017, our fourth quarter expenses of $684,000 or 53% above the same quarter of last year, but our full year expenses are up only 9%. Excluding bonus fourth quarter expenses were up $123,000 and full year expenses were up $70,000. The increase was driven by higher professional fees, primarily due to the pending strategic investments by East. Net investment loss before…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] My first question today is coming from MJ Bartlett [ph] from IIU. Your line is now live.

Hello gentlemen, thanks for taking my call. Congratulations on bringing the NAV up to just under $5 a share. Am I right in understanding that that is generally what you would call the orderly liquidation value of the portfolio today?

That's not really a defined term that we use. I think our term is a fair value and that's a GAAP term.

So you'd say that the portfolio and net of all that is $5 a share or $4.99 a share?

Correct.

So given that I'm struggling to understand why you would contemplate a change of control transaction at $2 discount to that value when change of control transaction is normally happen at a premium and that $2 discount will be highly dilutive to all of your shareholders?

As we talked about earlier, that'll all be described in the proxy, which should be out shortly. And then once that's out, I'd be happy to talk to you.

Okay. But I'm not asking for any new information, this is the information that's already been released by the company, your idea is to issue shares at $3 a share, which by your own accounting is it $2 per share discount to the current NAV or?

MJ, this is Deborah Pawlowski here. So in the proxy statement, what you're going to find is all of the discussions regarding the board's decision on the price per share. And it will go through exactly the answer to your question. That's why until the proxy is filed, we're kind of restricted as to what we can talk to.

Yes. I think that's rationalization, we all know what the rules are around in S-1 and you're more than in a position to answer my question now but clearly you don't want to. So I'll relinquish the line to somebody else.

Thank you.

Thank you. [Operator Instructions] Our next question is coming from Sam Rebotsky from S.E.R. Asset Management. Your line is now live.

Yes, hi. Good quarter, Pete and Dan. To the previous gentleman's question, my understanding the $1.50 dividend, there will be a $1.50 dividend and I assume that dividend is prior to the new investment of $3. I think that was described previously. Am I incorrect on that, Pete?

Sam, I think you're right on weighting and reading the proxy.

Okay. Okay. That was my understanding because if the new investors were putting in $3, they're not getting a buck and a half back. That's just my understanding. Do we have a date for the annual – the meeting to vote on the proxy or we don't have that yet?

We don't have that and until the SEC reviews and gives us feedback…

Okay. The ACV Auctions, we have 1% and so they raised $93 million, is that values that company at $288 million. Is that a fair assumption?

I think it's higher than that.

Okay. Okay. The increase in this valuation only came about because of the $93 million raise.

Yes, they’ve had previous money raise, primarily with insiders and that is not – we don't look at that as a basis to increase our value. This was and I think you can get it on the web, you can Google it. This is primarily on new investors.

Okay. Do we have any other investments where the insiders have been putting money in and the possibility there is raises going to be needed or might happen that's similar to this ACV transaction?

Yeah, we do, Sam, as you and I have talked there the two or three, not a handful than the insiders and it is very common. The insiders will continue to fund it and we do not reflect to write up when they do it at a higher valuation.

Okay. Well this was because this is basically of all the transactions this covered all, whatever write-downs there were and towards that $0.15 increase, which is very good. Alright and the proxy will be filed in a week, or two weeks, or something, that's what we expect to file.

Yes, I think that’s a good answer.

Okay. Alright, looking forward to receiving it.

Thanks Sam.

Thank you. [Operator Instructions] Our next question is coming from Brett Reiss from Janney Montgomery Scott. Your line is now live.

Yes, hi Pete. Hi Dan.

Hi Brett.

The $6 million you're getting from the SBIC, what is the cost of that capital? And then can you use that to make equity or debt investment? And how much leverage are you able to employ with that?

So what happens is our borrowings along with all the other SBAs get full and it gets priced in the agency market. This is a 10-year interest on the instrument and against price in general, also 10-year treasury. I would guess it would be in the mid three, you say maybe you’re closer to four all in. And we can use it for any of our portfolio investments. And it's not really technically done on a deal-by-deal basis. It's done on a portfolio basis. So I guess the answer is yes, you can use this for debt or equity. We're mindful though that we have enough interest income to pay for expenses.

Right. Any restrictions on the leverage?

Not sure what you mean by leverage.

Well, if you’re borrowing $6 million, can you only make $6 million in investments or can you make $12 million in investments?

If you’re borrowing $6 million, you really only have $6 million to deploy.

Okay. And the SBIC that's the same as the SBA?

Yes, we use them phenomenally.

Okay. Alright, thank you.

Thank you. We reached end of our question-and-answer session. Let's turn the floor back over to management for any further or closing comments.

Thank you for your time and attention this afternoon. Hope you can see a lot of excitement going on with Rand and a lot of underlying value in our portfolio. We're really excited about our investment by EAM and we believe this will take us to a new level for the benefit of all stakeholders. Look forward to updating you as we progress with that process and have a great evening.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time. And have a wonderful day.