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Operator: 00:03 Greetings, and welcome to the Rand Capital Corporation Third Quarter twenty twenty one 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. 00:26 I would now like to turn the call over to Craig Mychajluk of Investor Relations. Thank you. You may be begin.

Craig Mychajluk: 00:32 Yeah. Thank you, Darryl, and good afternoon, everyone. We appreciate your interest in Rand Capital and joining us today for our third quarter twenty twenty one financial results conference call. Here with me today are Pete Grum, our Chief Executive Officer; and Dan Penberthy, our Executive Vice President and Chief Financial Officer. You should have a copy of the release that crossed the wires this morning as well as our slides that accompany our conversation today. If not, they are available on our website at randcapital.com. 00:59 If you are following along in the slide deck, please turn to slide two, I would like to point out some important information around our safe harbor. As you are aware, we may make some forward-looking statements during this presentation and 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. 01:23 You can find a summary of these risks and uncertainties and other factors in the earnings release as well as other documents filed by the company with the Securities and Exchange Commission. These documents can be found on our website or at sec.gov. 01:35 During today's call, we will also discuss some non-GAAP measures. We believe that these will be useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results in accordance with GAAP. We’ve provided reconciliations of non-GAAP measures with comparable GAAP measures in the tables that accompany today’s release and in the slides. 01:59 So with that, if you turn to slide three, and I will hand the discussion over to Pete to begin. Pete?

Pete Grum: 02:04 Thank you, Craig. Good afternoon, everyone. Before we get into the financials and our results, I want to take a moment to acknowledge that yesterday, on November fourth, Rand marked fifty years of Rand Capital trading on the NASDAQ. We were one of the inaugural group of people that traded on there. We celebrated this milestone earlier this year by ringing the closing bell at the exchange. I have proudly served as CEO for twenty five of these years, a period in which we’ve transformed Rand from a small venture capital business to a growing dividend paying business development company. 02:45 As part of my planned retirement, we announced about two weeks ago our leadership and board transition that I believe will allow us to continue to execute on the strategic plan. Effective December first, Dan will take over as President and CEO; and Margaret Brechtel, our VP of Finance will be promoted to Executive Vice President and CFO and will be the Treasurer and Secretary of the company. 03:13 Additionally, Robert Zak will succeed Erkie Kailbourne as Board Chair. It’s been my honor to serve as CEO for the last twenty five years. And I will continue as Vice Chair of the Board. I look forward to supporting Dan and Margaret as they continue our strong legacy and take Rand to the next level. 03:35 The success of our strategy to transform Rand into to an income producing business development company is evident in our results. We continue to move our portfolio from equity investments into income producing investments. As a BDC, we intend to drive investment income and grow our shareholder dividends. 03:59 Let's turn to slide five and we will get into our results. For the quarter, our total investment income grew by thirty seven percent to one million dollars over the prior year period. Net asset value per share of twenty two point three one dollars was also up four percent sequentially and thirty one percent for the year-to-date period. 04:24 The sequential increase largely reflects the realized gain from the sale of our equity positions in Centivo Corporation and an increase in unrealized appreciation of our investment in Tilson Technology, offset by a reduction of ACV Auctions. This increase from year-end was mostly due to the fair market value increases in investments in open exchange Tilson Technologies and ACV Auctions. 04:58 As previously announced, at the end of September, we exited our position in Centivo, a health care company Rand originally invested in twenty eighteen. As a result, we recognized a gain of one point six million dollars during the third quarter. This is consistent with our strategy to exit our equity positions when opportunities exist and reinvest those proceeds into income producing vehicles. 05:28 During the quarter, we incurred four hundred and fifty four thousand of capital gains, incentive fee accruals, which were primarily result of the realized gain for the sale of Centivo, and an increase in unrealized appreciation mostly related to Tilson. As a result, we reported GAAP net investment income of zero point zero two dollars per share. 05:54 Excluding this capital gain incentive fee accrual, adjusted net investment income was zero point two zero dollars per share compared to zero point one one dollars per share in last year period. We paid our regular quarterly dividend of zero point ten dollars per share during the third quarter and so far this year, we have paid to shareholders one point six three dollars per share in dividends, including one point three three dollars per share that was paid in January. 06:24 After the quarter closed, we have paid off our eleven million dollars SBIC loan, with the intent to simplify a regulatory lending and portfolio reporting process. Our fifteen million dollars in highly liquid BDC and ACV stock and the continued liquidity of Rand’s legacy investment portfolio is expected to provide the near term capital for our investments. Ultimately, we believe our actions will provide more investment capital to drive our growth. 07:00 If you turn to slide six, we can discuss the progress we have made regarding the evolution of our investment portfolio to support our strategy. The fifty five percent increase in fair value this year reflects valuation adjustments and no investments offset by sales and payoffs. At quarter end, our thirty four portfolio companies comprised of approximately forty percent at fixed rate debt investments, thirty five percent in equity investments, sixteen percent in ACV stock and nine percent in dividend paying publicly traded BDCs. 07:43 During the quarter, we made one new investment of three point eight million dollars and received three point eight million dollars from one exit we discussed and other loan repayments transactions highlighted in slide seven. The investment was in Dealers Solutions & Design, or DSD had a total three point eight million dollars consisting of two point seven million dollars in twelve percent term notes and one point one million dollars in equity. DSD is a proven leader and fixed operation design, development and equipment specifications and installations as well as the project manager for auto dealers. 08:28 On the bottom half of this slide, let's see exits and payouts. We sold fifty thousand shares of ACV during the quarter at an average price of nineteen point four four dollars per share for total process -- proceeds excuse of nine hundred and seventy two thousand dollars. This represented a gain of approximately nine hundred and fifty eight thousand. As a reminder, any proceeds for us above our one hundred and sixty three thousand initial investment will be a capital gain and treated as such as it relates to any dividend or distribution. At quarter end, our ACV holdings consisted of five hundred and forty thousand, five hundred and eighty shares of Class A common stock, which is freely tradable. 09:20 The charts on slide eight, illustrate the diversity of our portfolio and the change in industry mix since twenty twenty year end. With the investment we recently made the impact of exits and fair value changes, professional services and automotive saw notable changes, while most of the other industries were relatively consistent within a point or two. We like the diversity of our portfolio and believe it reduces our exposure to market risk. 09:54 Slide nine lists our top five portfolio companies at quarter end, which represent more than half of our total portfolio assets. These five are the same as the second quarter ranking. Although, Tilson moving up to the second spot after a fair value adjustment during the third quarter, based on a significant equity financing the company received. ACV maintained the top spot though as fair value came down four point three million dollars during the quarter. Their valuation in our portfolio represents sixteen percent of our net assets. 10:33 With that, I'm going to turn it over to Dan to review our financials in greater depth.

Dan Penberthy: 10:40 Thanks, Pete, and good afternoon, everyone. Slide eleven provides an overview of our financial summary and our operational highlights. Total investment income for the quarter was just north of one million dollars, a thirty seven percent increase over last year and reflects the continued shift in our portfolio profile to more interest yielding assets. 11:01 In total, twenty three portfolio companies generated income compared with twenty in the prior year period. This quarter's total investment income also benefited from approximately two hundred and thirty thousand dollars of dividend income, which was up one hundred and forty six percent over last year's third quarter. This was primarily comprised of dividends received from our BDC investment portfolio and Knoa Software. 11:31 Total expenses in the quarter were nine hundred and sixty two thousand dollars up from four hundred and fifty six thousand dollars in last year's third quarter, largely reflecting the capital gains incentive fee accrual which Pete has already discussed. Again, as a reminder, a capital gains incentive fee accrual under GAAP is calculated using the cumulative aggregate realized capital gains and losses, and the aggregate net change in unrealized capital appreciation and depreciation at the close of the period. 12:05 Operating expenses, which is a non-GAAP financial measure and excludes the capital gains accrual increased fifty two thousand dollars or eleven percent, mostly due to the increase in the base management fee payable to Rand’s investment adviser resulting from the increased portfolio asset values. Even with the increase in expenses, net assets from operations increased to two point three million dollars or zero point nine zero dollars per share. 12:36 Slide twelve provides a waterfall graph for the change in NAV for the year-to-date period. This increase was largely due to the change in fair value of Rand’s investment in Open Exchange, Tilson and ACV, which were reflected in the thirteen million dollars net change in unrealized appreciation on the portfolio investments. Also contributing to the NAV increase was a net realized capital gain on the sale of Centivo, which Pete has already discussed and our second quarter sale of GiveGab. We have also declared a paid out approximately seven hundred and seventy thousand dollars of cash dividends. 13:17 Slide thirteen highlights the strength of our balance sheet. Cash and cash equivalents at the end of the quarter was thirteen point three million dollars and approximated twenty two percent of net assets. As Pete mentioned, earlier this week, we used our excess liquidity to repay our eleven million dollars of SBA obligations. In addition, Rand submitted a request to SBA to surrender its SBIC license. This will also terminate the availability of the three million dollars of available undrawn SBA leverage. We believe that these actions will simplify our regulatory reporting and our lending processes by eliminating these heavy regulatory burdens of operating as an SBIC. 14:07 As highlighted in the table on the slide, we have well over fifteen million dollars in liquid BDC stocks, ACV stock, which can provide near term funding capital for these investments. As required to maintain our RIC status, we will continue to distribute at least ninety percent of our calendar year qualified income to our shareholders in the form of dividends. Rand has distributed zero point one zero dollars per quarter through September thirty, which was based off our initial conservative estimates of our twenty twenty one net investment income. 14:43 We do review these calculations quarterly based on our actual year-to-date GAAP and estimated tax results. I will note that during the fourth quarter, we expect to record significant one-time write-off costs related to the SBA debt repayment and final interest payments, and this is all part of the SBA debt repayment process. Later this fourth quarter, we will again review all sources of GAAP and tax-based income, including those from short and long term capital gains, which may result in additional twenty twenty one distributions over the previously distributed regularly quarterly zero point three zero dollars of cash dividends that were paid out. 15:27 The final determination and calculation of our tax based distributable income for each year is finalized in September of the following year, in conjunction with our tax return filings. This is commonly referred to as a spillback dividend. Our current share repurchase program has authorized the purchase of up to one point five million dollars in stock and expires next year in April of twenty twenty two. We did purchase one thousand one hundred and forty eight shares during the third quarter at an average purchase price of eight zero nine dollars per share and total cost of about twenty one thousand dollars. 16:06 That completes our prepared remarks. Operator, please open the line for questions.

Operator: 16:13 Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] There are no questions at this time. I'd like to hand the call back over to management for any closing comments.

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Pete Grum: 17:01 Thank you everyone for joining us on today's call and for your interest in Rand Capital. As always, please feel free to reach out to us at any time and we look forward to talking to with you all again after our fourth quarter twenty twenty one results. Thank you for your participation, and have a great day.

Operator: 17:22 This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Have a great day.