Core Viewpoint - Mill City Ventures III, Ltd. is undergoing a corporate rebrand to SUI Group Holdings Limited, with a new ticker symbol "SUIG" set to begin trading on August 26, 2025, reflecting its strategic focus on the SUI treasury strategy [1][2][3] Group 1: Corporate Rebranding - The rebranding aims to align the company's identity with its mission as a foundation-backed SUI treasury company [3] - The new ticker symbol "SUIG" will replace "MCVT" on the Nasdaq Capital Market and Cboe Global Markets [1][3] - No action is required from stockholders regarding the name or ticker symbol change [3] Group 2: Strategic Direction - SUI Group's strategy is centered on the Sui blockchain, providing institutional-grade exposure to the SUI digital asset [2][4] - The company emphasizes transparency, open communication, and community engagement as part of its alignment with the Sui Foundation's principles [2] - The SUI treasury strategy is designed for scale, transparency, and long-term value creation, positioning SUI Group as a leader in the blockchain space [4] Group 3: Future Operations - SUI Group plans to continue its specialty finance operations while executing its SUI treasury strategy [4] - The company aims to support the advancement and adoption of the Sui network through the long-term accumulation and activation of SUI [3]

Core Viewpoint - Mill City Ventures III, Ltd. has initiated options trading for its common stock on Cboe Global Markets, which is expected to enhance investor participation and liquidity while providing new risk management tools [1][2][3]. Company Overview - Mill City Ventures III, Ltd. is the only publicly traded company with an official relationship with the Sui Foundation, offering institutional-grade exposure to the SUI blockchain [4]. - The company is implementing an industry-first SUI treasury strategy aimed at creating a scalable, transparent digital asset treasury platform focused on long-term value [4]. - SUI's architecture is designed for mass adoption, supporting applications in finance, gaming, AI, and more [4]. Options Trading Details - The options trading for Mill City is available through the Options Clearing Corporation and adheres to the standard rules and regulations of the Nasdaq Capital Market and the OCC [3]. - The introduction of listed options includes a variety of expiration dates and strike prices, which is anticipated to broaden investor engagement and support liquidity [2][3]. Management Commentary - The Chief Investment Officer of Mill City highlighted that the commencement of options trading reflects the company's growth and the increasing recognition of its SUI treasury strategy in capital markets [3]. - This development is seen as a way to empower investors with more tools to engage with the company's innovative strategy [3].

Core Insights - Mill City Ventures III, Ltd. has established itself as the largest publicly traded SUI treasury, backed by an exclusive relationship with the Sui Foundation, and aims to provide institutional-grade access to the SUI blockchain [2][7] - The company has scaled its total treasury holdings to approximately 81.9 million SUI as of August 10, 2025, and is currently staking all SUI in the treasury, earning about $26,000 per day [7][8] - Mill City reported a 64% increase in net assets resulting from operations for Q2 2025, amounting to approximately $677,000, or $0.11 per share, compared to $413,000, or $0.06 per share in Q2 2024 [10] Company Developments - The company launched the first publicly traded, Foundation-backed SUI treasury strategy on July 31, 2025, focusing on acquiring SUI tokens through various channels [1][2] - Mill City has raised $450 million in capital through a PIPE offering as of August 1, 2025, with Galaxy appointed as Asset Management to manage the SUI treasury [7][10] - The company plans to continue its existing commercial short-term non-bank lending and specialty finance business while executing its SUI treasury strategy [1][8] Industry Context - SUI is positioned as a next-generation Layer 1 blockchain designed for scalability, speed, and security, enabling decentralized applications across various sectors including finance and gaming [3][4] - The Sui Foundation is dedicated to the advancement and adoption of the SUI network, providing Mill City with insights and access to strategic network growth initiatives [2][7] - The architecture of SUI is designed to support mass market consumer applications in Web3, potentially transforming the global economy [4][6]

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed financial statements, management's discussion, and controls and procedures for Mill City Ventures III, Ltd [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) Unaudited condensed financial statements, including balance sheets, operations, equity, cash flows, and investment schedules, with explanatory notes [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets%20%E2%80%93%20June%2030%2C%202025%20and%20December%2031%2C%202024) Presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (unaudited) ($) | December 31, 2024 ($) | Change (2025 vs 2024) ($) | | :--------------------------------------- | :------------------------ | :------------------ | :-------------------- | | Investments, at fair value | $17,854,961 | $13,453,561 | +$4,401,400 | | Cash and cash equivalents | $1,497,009 | $6,026,110 | -$4,529,101 | | Total Assets | $20,447,425 | $20,473,436 | -$26,011 | | Total Liabilities | $191,091 | $715,447 | -$524,356 | | Total Shareholders' Equity (Net Assets) | $20,256,334 | $19,757,989 | +$498,345 | | Net Asset Value Per Common Share | $3.34 | $3.09 | +$0.25 | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations%20%E2%80%93%20Three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Details the company's revenues, expenses, and net income for the three and six months ended June 30, 2025 and 2024 | Metric | 3 Months Ended June 30, 2025 ($) | 3 Months Ended June 30, 2024 ($) | 6 Months Ended June 30, 2025 ($) | 6 Months Ended June 30, 2024 ($) | | :------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Investment Income | $948,034 | $888,629 | $1,726,061 | $1,721,296 | | Total Operating Expenses | $316,183 | $398,059 | $695,966 | $759,146 | | Net Investment Gain | $631,851 | $490,570 | $1,030,095 | $962,150 | | Net realized gain (loss) on investments | $(31) | $346,745 | $205 | $371,240 | | Net change in unrealized appreciation (depreciation) on investments | $314,515 | $(289,641) | $476,781 | $(237,890) | | Net Increase in Net Assets Resulting from Operations | $677,035 | $412,936 | $1,128,781 | $795,039 | | Basic EPS | $0.11 | $0.06 | $0.18 | $0.12 | | Diluted EPS | $0.11 | $0.06 | $0.18 | $0.12 | [Condensed Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Statements%20of%20Shareholders'%20Equity%20%E2%80%93%20Three%20and%20six%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Outlines changes in shareholders' equity, including common shares and total equity, for the periods ended June 30, 2025 and 2024 | Metric | Balance as of Dec 31, 2024 ($) | Repurchase of common shares ($) | Undistributed net investment gain ($) | Undistributed net realized gain on investment transactions ($) | Appreciation in value of investments ($) | Balance as of June 30, 2025 ($) | | :-------------------------------- | :------------------------- | :-------------------------- | :-------------------------------- | :------------------------------------------------------- | :--------------------------------- | :-------------------------- | | Common Shares (Units) | 6,385,255 | (322,482) | — | — | — | 6,062,773 | | Total Shareholders' Equity | $19,757,989 | $(630,436) | $651,795 | $205 | $476,781 | $20,256,334 | [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Six%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Reports cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 | Metric | Six Months Ended June 30, 2025 ($) | Six Months Ended June 30, 2024 ($) | | :------------------------------------------------- | :----------------------------- | :----------------------------- | | Net increase in net assets resulting from operations | $1,128,781 | $795,039 | | Net change in unrealized appreciation (depreciation) on investments | $(476,781) | $237,890 | | Purchases of investments | $(4,428,530) | $(973,438) | | Proceeds from sales of investments | $504,116 | $5,461,479 | | Net cash provided by (used in) operating activities | $(3,898,665) | $5,048,587 | | Payments for repurchase of common stock | $(630,436) | — | | Net increase (decrease) in cash | $(4,529,101) | $5,048,587 | | Cash, end of period | $1,497,009 | $5,424,611 | [Condensed Schedule of Investments](index=7&type=section&id=Condensed%20Schedule%20of%20Investments%20%E2%80%93%20June%2030%2C%202025%20and%20Schedule%20of%20Investments%20%E2%80%93%20December%2031%2C%202024) Provides a detailed breakdown of the company's investment portfolio by type and industry as of June 30, 2025, and December 31, 2024 | Investment / Industry | Fair Value (June 30, 2025) ($) | Percentage of Net Assets (June 30, 2025) (%) | Fair Value (Dec 31, 2024) ($) | Percentage of Net Assets (Dec 31, 2024) (%) | | :-------------------------------- | :------------------------- | :--------------------------------------- | :------------------------ | :-------------------------------------- | | Short-Term Non-banking Loans | $6,685,295 | 33.01% | $13,006,231 | 65.83% | | Commercial Business Loans | $10,314,787 | 50.92% | — | 0.00% | | Common Stock | $854,879 | 4.22% | $447,330 | 2.26% | | Other Equity | — | 0.00% | — | 0.00% | | Total Investments | $17,854,961 | 88.15% | $13,453,561 | 68.09% | | Total Cash and cash equivalents | $1,497,009 | 7.39% | $6,026,110 | 30.50% | | Industry Grouping | Fair Value (June 30, 2025) ($) | Percentage of Fair Value (June 30, 2025) (%) | Fair Value (Dec 31, 2024) ($) | Percentage of Fair Value (Dec 31, 2024) (%) | | :------------------------ | :------------------------- | :--------------------------------------- | :------------------------ | :-------------------------------------- | | Business Services | $10,314,787 | 57.8% | $9,985,925 | 74.2% | | Consumer | $1,400,515 | 7.8% | $508,774 | 3.8% | | Financial | $841,144 | 4.7% | $442,864 | 3.3% | | Real Estate | $5,284,780 | 29.6% | $2,515,998 | 18.7% | | Information Technology | — | 0.0% | — | 0.0% | | Technology | $13,735 | 0.1% | — | 0.0% | [Condensed Notes to Financial Statements](index=9&type=section&id=Condensed%20Notes%20to%20Financial%20Statements%20%E2%80%93%20June%2030%2C%202025) Provides detailed explanations and disclosures supporting the condensed financial statements for the period ended June 30, 2025 [NOTE 1 – ORGANIZATION](index=9&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION) Describes the company's business model, focusing on short-term specialty finance and its regulatory compliance strategy - The company provides short-term specialty finance solutions, mainly secured loans to small businesses and high-net-worth individuals[19](index=19&type=chunk)[102](index=102&type=chunk) - The company structures investments to ensure no more than **40% of total assets** consist of "investment securities" to avoid regulation under the 1940 Act[21](index=21&type=chunk) [NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=NOTE%202%20%E2%80%93%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines the key accounting principles, including GAAP, investment valuation, and revenue recognition, applied in preparing financial statements - Financial statements conform to GAAP and ASC Topic 946 for investment companies, requiring estimates for assets and liabilities[22](index=22&type=chunk) - Investment valuation follows ASC Topic 820, using a fair value hierarchy (Level 1, 2, 3) based on market price observability, with Level 3 valuations determined quarterly by the Board of Directors[24](index=24&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - Revenue recognition for interest income is on an accrual basis, with discounts/premiums amortized using the effective-yield method. Loans are placed on non-accrual status if payments are 30+ days past due or collectability is doubtful[40](index=40&type=chunk)[41](index=41&type=chunk) [NOTE 3 – INVESTMENTS](index=11&type=section&id=NOTE%203%20%E2%80%93%20INVESTMENTS) Details the company's investment portfolio by class, amortized cost, and fair value for June 30, 2025, and December 31, 2024 | Investment Class | Amortized Cost (June 30, 2025) ($) | % of Amortized Cost (June 30, 2025) (%) | Fair Value (June 30, 2025) ($) | % of Fair Value (June 30, 2025) (%) | | :------------------------ | :----------------------------- | :---------------------------------- | :------------------------- | :-------------------------------- | | Short-term Non-banking Loans | $6,650,100 | 37.7% | $6,685,295 | 37.4% | | Commercial Business Loans | $10,000,000 | 56.7% | $10,314,787 | 57.8% | | Common Stock | $981,607 | 5.5% | $854,879 | 4.8% | | Other Equity | $10,000 | 0.1% | — | 0.0% | | Total | $17,641,707 | 100.0% | $17,854,961 | 100.0% | | Investment Class | Amortized Cost (Dec 31, 2024) ($) | % of Amortized Cost (Dec 31, 2024) (%) | Fair Value (Dec 31, 2024) ($) | % of Fair Value (Dec 31, 2024) (%) | | :------------------------ | :----------------------------- | :---------------------------------- | :------------------------- | :-------------------------------- | | Short-term Non-banking Loans | $13,000,000 | 94.8% | $13,006,231 | 96.7% | | Common Stock | $707,089 | 5.1% | $447,330 | 3.3% | | Other Equity | $10,000 | 0.1% | — | 0.0% | | Total | $13,717,089 | 100.0% | $13,453,561 | 100.0% | [NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS](index=12&type=section&id=NOTE%204%20%E2%80%93%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Explains the fair value hierarchy and valuation techniques used for financial instruments, particularly Level 3 investments | Investment Class | Level 1 (June 30, 2025) ($) | Level 2 (June 30, 2025) ($) | Level 3 (June 30, 2025) ($) | Total (June 30, 2025) ($) | | :------------------------ | :------------------------ | :------------------------ | :------------------------ | :------------------------ | | Short-term Non-banking Loans | — | — | $6,685,295 | $6,685,295 | | Commercial Business Loans | — | — | $10,314,787 | $10,314,787 | | Common Stock | $854,879 | — | — | $854,879 | | Other Equity | — | — | — | — | | Total | $854,879 | — | $17,000,082 | $17,854,961 | - The net change in unrealized appreciation for Level 3 portfolio investments still held as of June 30, 2025, was **$343,751**[52](index=52&type=chunk) | Security Type | FMV (June 30, 2025) ($) | Valuation Technique | Unobservable Inputs | Range (%) | | :------------------------ | :------------------ | :------------------ | :-------------------------------------------------------------------------------- | :------ | | ST Non-banking Loans | $6,685,295 | discounted cash flow | determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness | 15-24% | | Commercial Business Loan | $10,314,787 | discounted cash flow | determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness | 20% | [NOTE 5 – RELATED-PARTY TRANSACTIONS](index=13&type=section&id=NOTE%205%20%E2%80%93%20RELATED-PARTY%20TRANSACTIONS) Discloses transactions with related parties, including a promissory note and a terminated loan agreement involving a director - A **$250,000** promissory note with two shareholders, bearing **10% interest** and secured by common stock, was paid in full on September 26, 2024[62](index=62&type=chunk) - A terminated loan agreement, as disclosed in Note 7, involved a company director[62](index=62&type=chunk) [NOTE 6 – INCOME TAXES](index=13&type=section&id=NOTE%206%20%E2%80%93%20INCOME%20TAXES) Provides details on deferred tax assets, accrued income tax, and changes in the deferred tax rate for the reporting periods | Metric | June 30, 2025 ($) | December 31, 2024 ($) | | :-------------------- | :-------------- | :---------------- | | Deferred tax asset | $641,000 | $770,000 | | Accrued income tax | $144,500 | $147,200 | - The deferred tax rate changed from **26.52%** as of December 31, 2024, to **28.25%** as of June 30, 2025, due to changes in state apportionment[60](index=60&type=chunk) [NOTE 7 – LINE OF CREDIT](index=13&type=section&id=NOTE%207%20%E2%80%93%20LINE%20OF%20CREDIT) Details the termination of a $5 million revolving line of credit in January 2024, which involved a company director - A **$5 million** revolving line of credit, secured by company assets and bearing **8% interest**, was terminated in January 2024[61](index=61&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) - The loan agreement involved a company director, and all early termination fees were waived[62](index=62&type=chunk)[64](index=64&type=chunk) [NOTE 8 – STOCK-BASED COMPENSATION](index=14&type=section&id=NOTE%208%20%E2%80%93%20STOCK-BASED%20COMPENSATION) Reports on outstanding stock options, weighted average exercise price, and the absence of compensation expense for the period | Metric | June 30, 2025 | | :------------------------------------ | :------------ | | Options outstanding at end of period (Units) | 670,000 | | Weighted Average Exercise Price ($) | $2.11 | | Weighted Average Remaining Contractual Life (Years) | 7.42 years | - No stock-based compensation expense was recognized for the three and six months ended June 30, 2025 and 2024[67](index=67&type=chunk) [NOTE 9 – SHAREHOLDERS' EQUITY](index=14&type=section&id=NOTE%209%20%E2%80%93%20SHAREHOLDERS'%20EQUITY) Summarizes outstanding common shares, share repurchases, and details of a five-year warrant issued to an underwriter - As of June 30, 2025, **6,062,773 shares** of common stock were outstanding[68](index=68&type=chunk) - The company repurchased **322,482 shares** of common stock during the first quarter[69](index=69&type=chunk) - A five-year warrant for **75,000 common shares** at **$5.00 per share**, issued to the underwriter in 2022, expires on August 8, 2027[69](index=69&type=chunk) [NOTE 10 – PER-SHARE INFORMATION](index=14&type=section&id=NOTE%2010%20%E2%80%93%20PER-SHARE%20INFORMATION) Presents basic and diluted net gain per common share and weighted-average shares outstanding for the reported periods | Metric | 3 Months Ended June 30, 2025 ($) | 3 Months Ended June 30, 2024 ($) | 6 Months Ended June 30, 2025 ($) | 6 Months Ended June 30, 2024 ($) | | :------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic Net Gain (Loss) Per Common Share | $0.11 | $0.06 | $0.18 | $0.12 | | Diluted Net Gain (Loss) Per Common Share | $0.11 | $0.06 | $0.18 | $0.12 | | Weighted-average number of common shares outstanding - basic (Units) | 6,062,773 | 6,385,255 | 6,190,941 | 6,385,255 | | Weighted-average number of common shares outstanding - diluted (Units) | 6,062,773 | 6,501,823 | 6,190,941 | 6,501,823 | - **670,000 stock options** were excluded from diluted net gain per common share calculations for both periods due to their anti-dilutive effect[70](index=70&type=chunk) [NOTE 11 – FINANCIAL HIGHLIGHTS](index=15&type=section&id=NOTE%2011%20%E2%80%93%20FINANCIAL%20HIGHLIGHTS) Summarizes key financial performance metrics, including net asset value, investment income, and total investment return | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :----------------------------- | :----------------------------- | | Net asset value at beginning of period ($) | $3.09 | $2.91 | | Net asset value at end of period ($) | $3.34 | $3.04 | | Net investment income (loss) per share ($) | $0.17 | $0.15 | | Net realized and unrealized gains (losses) per share ($) | $0.08 | $0.02 | | Repurchase of common stock per share ($) | $0.10 | $0.00 | | Total investment return (%) | 6.15% | 4.47% | | Ratio of net investment income (loss) to average net assets (%) | 10.73% | 10.46% | | Portfolio turnover rate (%) | 2.54% | 5.13% | [NOTE 12 – SUBSEQUENT EVENTS](index=16&type=section&id=NOTE%2012%20%E2%80%93%20SUBSEQUENT%20EVENTS) Details significant events after the reporting period, including a private placement, new treasury policy, and executive changes - On July 31, 2025, the company completed a private placement of **75,881,625 common shares** at **$5.42/share** and pre-funded warrants for **7,144,205 shares** at **$5.4199/share**[74](index=74&type=chunk) - The company adopted a new treasury policy to allocate its principal treasury reserve to the native cryptocurrency of the Sui blockchain ("SUI"), acquiring SUI through market and direct purchases from the Sui Foundation[76](index=76&type=chunk) - The company entered into a Strategic Advisor Agreement with Karatage and an Asset Management Agreement with Galaxy Digital Capital Management LP to manage digital assets, primarily SUI, with a long-only investment strategy including staking[82](index=82&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) - New executive employment agreements were signed with the CEO and CFO, and two new directors with cryptocurrency experience were appointed to the Board, with Mr. Lyle Berman resigning[90](index=90&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk) - The company entered into a Common Stock Purchase Agreement with A.G.P./Alliance Global Partners, granting the right to sell up to **$500,000,000** or **19.99% of outstanding common stock** at **95% of the volume-weighted average price**[95](index=95&type=chunk)[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operations, and liquidity, highlighting the core lending business, investment activity, and post-period digital asset strategy [Overview](index=21&type=section&id=OVERVIEW) Describes the company's core business of secured short-term non-bank lending, its income sources, and principal operating expenses - The company provides secured short-term non-bank lending and specialty finance solutions, typically with maturities of nine months or shorter, often involving collateral or personal guarantees[102](index=102&type=chunk) - Principal income sources are interest and fees (origination, closing, exit fees) from loans, with occasional income from dividends and capital gains on equity investments[103](index=103&type=chunk) - Principal expenses include professional fees, payroll, occupancy, and insurance[103](index=103&type=chunk) [Portfolio and Investment Activity](index=21&type=section&id=PORTFOLIO%20AND%20INVESTMENT%20ACTIVITY) Summarizes investment purchases, redemptions, and the composition of the investment portfolio by fair value for the period | Investment Activity (6 Months Ended June 30) | 2025 ($) | 2024 ($) | | :----------------------------------------- | :----------- | :----------- | | Investment purchases | $4,428,530 | $973,438 | | Redemptions and repayments | $504,116 | $5,461,479 | | Net investments at amortized cost (period end) | $17,641,707 | $14,460,679 | | Portfolio Composition (Fair Value, June 30, 2025) | Amount ($) | Percentage (%) | | :------------------------------------------------ | :----------- | :----------- | | Short-term Non-banking Loans | $6,685,295 | 37.4% | | Commercial Business Loans | $10,314,787 | 57.8% | | Common Stock | $854,879 | 4.8% | | Other Equity | — | — | | Total | $17,854,961 | 100.0% | [Results of Operations](index=21&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes investment income, operating expenses, net investment gain, and net increase in net assets for the reported periods | Metric | 3 Months Ended June 30, 2025 ($) | 3 Months Ended June 30, 2024 ($) | 6 Months Ended June 30, 2025 ($) | 6 Months Ended June 30, 2024 ($) | | :------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Investment Income | $948,034 | $888,629 | $1,726,061 | $1,721,296 | | Operating Expenses | $(316,183) | $(398,059) | $(695,966) | $(759,146) | | Net Investment Gain | $631,851 | $490,570 | $1,030,095 | $962,150 | | Net realized gain (loss) from investments | $(31) | $346,745 | $205 | $371,240 | | Net change in unrealized appreciation (depreciation) on investments | $314,515 | $(289,641) | $476,781 | $(237,890) | | Net Increase in Net Assets from Operations | $677,035 | $412,936 | $1,128,781 | $795,039 | - Professional fees decreased due to reduced loan activity[110](index=110&type=chunk) - Interest expense decreased to **$0** for the six months ended June 30, 2025, due to the termination of the line of credit agreement in January 2024[112](index=112&type=chunk) [Financial Condition](index=22&type=section&id=FINANCIAL%20CONDITION) Examines the company's cash position, primary use of funds, and significant post-period financing activities and agreements | Metric | June 30, 2025 ($) | December 31, 2024 ($) | Change ($) | | :-------------------- | :-------------- | :---------------- | :----- | | Cash | $1,497,009 | $6,026,110 | -$4,529,101 | - The primary use of funds is for investments in portfolio companies or general corporate purposes, including operating expenses or debt service[118](index=118&type=chunk) - On July 31, 2025, the company closed a private placement of **75,881,625 common shares** and pre-funded warrants for **7,144,205 shares**, and issued various warrants (Lead Investor, Foundation Investor, Management, Advisor, Placement Agent)[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) - On August 1, 2025, the company entered into a Common Stock Purchase Agreement with A.G.P./Alliance Global Partners, allowing it to sell up to **$500,000,000** or **19.99% of outstanding common stock**[123](index=123&type=chunk)[124](index=124&type=chunk) [Critical Accounting Estimates](index=23&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Highlights management's subjective judgments in valuing portfolio investments and recognizing revenue as critical accounting policies - Critical accounting policies involve management's difficult, subjective, or complex judgments, especially for the valuation of portfolio investments and revenue recognition[127](index=127&type=chunk)[128](index=128&type=chunk) [Off-Balance Sheet Arrangements](index=23&type=section&id=OFF-BALANCE-SHEET%20ARRANGEMENTS) Confirms the absence of off-balance sheet arrangements during the six months ended June 30, 2025 - No off-balance sheet arrangements were engaged in during the six months ended June 30, 2025[129](index=129&type=chunk) [Forward-Looking Statements](index=23&type=section&id=FORWARD-LOOKING%20STATEMENTS) Addresses the inherent risks and uncertainties in forward-looking statements, emphasizing no obligation to update them post-filing - Forward-looking statements are based on management's current expectations and involve substantial risks and uncertainties, including the ability to identify new investments, achieve profitability, and maintain regulatory compliance[130](index=130&type=chunk) - Key areas of forward-looking statements include future operating results, investment success, relationships with third parties, economic dependence, portfolio company objectives, expected financings, regulatory structure, cash resources, and timing of cash flows[131](index=131&type=chunk) - The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances occurring after the filing date[132](index=132&type=chunk) [Item 4. Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Reports that disclosure controls were ineffective due to a material weakness, with remediation efforts underway and no significant changes in controls - Disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[134](index=134&type=chunk) - Remediation efforts include retaining an accounting firm and implementing new disclosure procedures, with full remediation expected after sufficient effective operation and testing of controls[134](index=134&type=chunk) - No significant changes in internal controls over financial reporting occurred during the fiscal quarter[135](index=135&type=chunk) [PART II. OTHER INFORMATION](index=25&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes additional information such as exhibits and signatures related to the Form 10-Q filing [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including bylaws, employment agreements, and regulatory certifications - Exhibits include amended bylaws, executive employment agreements for the CEO and CFO, certifications under Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL documents[138](index=138&type=chunk) [SIGNATURES](index=27&type=section&id=SIGNATURES) Confirms the official signing of the report by the Chief Executive Officer and Chief Financial Officer on August 14, 2025 - The report was signed on August 14, 2025, by Douglas M. Polinsky (CEO) and Joseph A. Geraci, II (CFO)[142](index=142&type=chunk)

Nasdaq-Listed Firm Raises $450M To Launch SUI TreasuryMill City Ventures III, a Nasdaq-listed specialty finance firm ($MCVT), announced a $450M private placement to launch a corporate SUI treasury strategy, with lead investments from London-based hedge fund Karatage and the Sui Foundation.As part of the deal, the Karatage founders will join Mill City’s leadership.The raise included backing from top crypto investors like Galaxy Digital and Pantera Capital.Source: The Block ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Mill City Ventures III, Ltd.'s unaudited condensed financial statements and detailed notes for Q1 2025 and Q4 2024 [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) Balance sheets show decreased total assets and equity from Q4 2024 to Q1 2025, due to reduced cash despite increased investments Condensed Balance Sheet Highlights | Metric | March 31, 2025 | December 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Investments, at fair value | $16,978,160 | $13,453,561 | +$3,524,599 | +26.19% | | Cash and cash equivalents | $1,749,089 | $6,026,110 | -$4,277,021 | -70.98% | | Total Assets | $19,849,016 | $20,473,436 | -$624,420 | -3.05% | | Total Liabilities | $269,717 | $715,447 | -$445,730 | -62.29% | | Total Shareholders' Equity | $19,579,299 | $19,757,989 | -$178,690 | -0.90% | | Net Asset Value Per Common Share | $3.23 | $3.09 | +$0.14 | +4.53% | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) Net assets from operations increased in Q1 2025 vs Q1 2024, driven by unrealized appreciation despite lower investment income Condensed Statements of Operations Highlights | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Total Investment Income | $778,027 | $832,667 | -$54,640 | -6.56% | | Total Operating Expenses | $379,783 | $361,087 | +$18,696 | +5.18% | | Net Investment Gain | $398,244 | $471,580 | -$73,336 | -15.55% | | Net realized gain on investments | $236 | $24,495 | -$24,259 | -99.04% | | Net change in unrealized appreciation on investments | $162,266 | $51,751 | +$110,515 | +213.55% | | Net Increase in Net Assets Resulting from Operations | $451,746 | $382,103 | +$69,643 | +18.22% | | Basic Net Increase in Net Assets Resulting from Operations per share | $0.07 | $0.06 | +$0.01 | +16.67% | [Condensed Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Statements%20of%20Shareholders%27%20Equity) Shareholders' equity slightly decreased from Q4 2024 to Q1 2025, mainly due to share repurchases, partially offset by gains Changes in Shareholders' Equity (Three Months Ended March 31, 2025) | Metric | Balance as of Dec 31, 2024 | Repurchase of common shares | Undistributed net investment gain | Undistributed net realized gain on investment transactions | Appreciation in value of investments | Balance as of Mar 31, 2025 | |---|---|---|---|---|---|---| | Common Shares | 6,385,255 | (322,482) | — | — | — | 6,062,773 | | Total Shareholders' Equity | $19,757,989 | $(630,436) | $289,244 | $236 | $162,266 | $19,579,299 | - The company repurchased **322,482 shares** of common stock for **$630,436** during the three months ended March 31, 2025[15](index=15&type=chunk)[64](index=64&type=chunk) [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash decreased significantly in Q1 2025 due to investment purchases and share repurchases, contrasting with prior year cash generation Condensed Statements of Cash Flows Highlights | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |---|---|---| | Net cash provided by (used in) operating activities | $(3,646,585) | $128,701 | | Net cash used by financing activities | $(630,436) | $0 | | Net increase (decrease) in cash | $(4,277,021) | $128,701 | | Cash, end of period | $1,749,089 | $504,725 | - Cash flows used in operating activities for Q1 2025 were primarily related to purchasing investments totaling **$3,366,196**[16](index=16&type=chunk)[85](index=85&type=chunk) - Cash flows used in financing activities during Q1 2025 were due to the repurchase of **322,482 common shares** for **$630,436**[16](index=16&type=chunk)[85](index=85&type=chunk) [Condensed Schedule of Investments](index=6&type=section&id=Condensed%20Schedule%20of%20Investments) Investment portfolio shifted from Q4 2024 to Q1 2025, increasing Commercial Business Loans and decreasing Short-Term Non-banking Loans Investment Portfolio Composition by Major Class (Fair Value) | Investment / Industry | Fair Value (Mar 31, 2025) | % of Net Assets (Mar 31, 2025) | Fair Value (Dec 31, 2024) | % of Net Assets (Dec 31, 2024) | |---|---|---|---|---| | Short-Term Non-banking Loans | $6,232,660 | 31.84% | $13,006,231 | 65.83% | | Commercial Business Loans | $10,247,854 | 52.34% | $0 | 0.00% | | Common Stock | $497,646 | 2.54% | $447,330 | 2.26% | | Total Investments | $16,978,160 | 86.72% | $13,453,561 | 68.09% | Investment Portfolio Composition by Industry Grouping (Fair Value) | Industry Grouping | Fair Value (Mar 31, 2025) | % of Fair Value (Mar 31, 2025) | Fair Value (Dec 31, 2024) | % of Fair Value (Dec 31, 2024) | |---|---|---|---|---| | Business Services | $10,247,854 | 60.4% | $9,985,925 | 74.2% | | Real Estate | $5,235,521 | 30.8% | $2,515,998 | 18.7% | | Consumer | $997,180 | 5.9% | $508,774 | 3.8% | | Financial | $497,605 | 2.9% | $442,864 | 3.3% | | Information Technology | $0 | 0.0% | $0 | 0.0% | | Total | $16,978,160 | 100.0% | $13,453,561 | 100.0% | [Condensed Notes to Financial Statements](index=7&type=section&id=Condensed%20Notes%20to%20Financial%20Statements) Notes detail the company's business, accounting policies, investment composition, fair value, related parties, taxes, credit, stock, and highlights [NOTE 1 – ORGANIZATION](index=7&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION) Mill City Ventures III, Ltd. provides short-term secured finance solutions, avoiding 1940 Act regulation, incorporated in 2006 - Mill City Ventures III, Ltd. was incorporated in Minnesota in **January 2006**[21](index=21&type=chunk) - The company provides short-term specialty finance solutions, typically secured loans, to small businesses and high-net-worth individuals[21](index=21&type=chunk) - The company monitors its investments to ensure no more than **40% of total assets** consist of 'investment securities' to avoid regulation under the 1940 Act[21](index=21&type=chunk) [NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=NOTE%202%20%E2%80%93%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Financial statements follow GAAP and ASC Topic 946, using fair value hierarchy for investments and accrual-based revenue recognition - The company follows accounting and reporting guidance in **ASC Topic 946 'Financial Services – Investment Companies'**[20](index=20&type=chunk)[22](index=22&type=chunk) - Investments are carried at fair value in accordance with **ASC Topic 820**, using a hierarchal disclosure framework (Level 1, 2, 3) based on market price observability[24](index=24&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - Interest income is recorded on an accrual basis, with loans generally placed on non-accrual status when payments are past due **30 days or more**, or collectability is doubtful[40](index=40&type=chunk) [NOTE 3 – INVESTMENTS](index=9&type=section&id=NOTE%203%20%E2%80%93%20INVESTMENTS) Investment portfolio shifted from Q4 2024 to Q1 2025, with Commercial Business Loans becoming 60.4% and Short-term Non-banking Loans decreasing Investment Portfolio Composition by Major Class | Investment Class | Fair Value (Mar 31, 2025) | % of Fair Value (Mar 31, 2025) | Fair Value (Dec 31, 2024) | % of Fair Value (Dec 31, 2024) | |---|---|---|---|---| | Short-term Non-banking Loans | $6,232,660 | 36.7% | $13,006,231 | 96.7% | | Commercial Business Loans | $10,247,854 | 60.4% | — | 0.0% | | Common Stock | $497,646 | 2.9% | $447,330 | 3.3% | | Other Equity | — | 0.0% | — | 0.0% | | Total | $16,978,160 | 100.0% | $13,453,561 | 100.0% | Investment Portfolio Composition by Industry Grouping | Industry Grouping | Fair Value (Mar 31, 2025) | % of Fair Value (Mar 31, 2025) | Fair Value (Dec 31, 2024) | % of Fair Value (Dec 31, 2024) | |---|---|---|---|---| | Business Services | $10,247,854 | 60.4% | $9,985,925 | 74.2% | | Real Estate | $5,235,521 | 30.8% | $2,515,998 | 18.7% | | Consumer | $997,180 | 5.9% | $508,774 | 3.8% | | Financial | $497,605 | 2.9% | $442,864 | 3.3% | | Information Technology | — | 0.0% | — | 0.0% | | Total | $16,978,160 | 100.0% | $13,453,561 | 100.0% | [NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS](index=11&type=section&id=NOTE%204%20%E2%80%93%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Investment portfolio primarily Level 3 assets, totaling $16.48 million with $224,183 unrealized appreciation in Q1 2025 Fair Value Measurements by Hierarchy Level (March 31, 2025) | Investment Class | Level 1 (Mar 31, 2025) | Level 3 (Mar 31, 2025) | Total (Mar 31, 2025) | |---|---|---|---| | Short-term Non-banking Loans | $0 | $6,232,660 | $6,232,660 | | Commercial Business Loans | $0 | $10,247,854 | $10,247,854 | | Common Stock | $497,646 | $0 | $497,646 | | Total | $497,646 | $16,480,514 | $16,978,160 | - The net change in unrealized appreciation for Level 3 portfolio investments still held as of March 31, 2025, was **$224,183**[50](index=50&type=chunk) - Unobservable inputs for Level 3 ST Non-banking Loans and Commercial Business Loans include determining private company interest rates based on changes in market rates of instruments with comparable creditworthiness, ranging from **15-24%** and **20%** respectively[51](index=51&type=chunk) [NOTE 5 – RELATED-PARTY TRANSACTIONS](index=12&type=section&id=NOTE%205%20%E2%80%93%20RELATED-PARTY%20TRANSACTIONS) Related-party transactions policy requires disclosures; a $250,000 shareholder note was paid, and a director-involved loan terminated - The company has a conflicts of interest and related-party transactions policy requiring disclosures to the Board of Directors and in SEC reports[54](index=54&type=chunk) - A **$250,000 promissory note** with two shareholders, bearing **10% interest**, was paid in full on **September 26, 2024**[57](index=57&type=chunk) - A component of the company's now-terminated loan agreement was with a director of the company[57](index=57&type=chunk) [NOTE 6 – INCOME TAXES](index=12&type=section&id=NOTE%206%20%E2%80%93%20INCOME%20TAXES) Deferred tax asset was $732,000 in Q1 2025, down from Q4 2024, with effective tax rate increasing to 28% due to apportionment Income Tax Balances | Metric | March 31, 2025 | December 31, 2024 | |---|---|---| | Deferred tax asset | $732,000 | $770,000 | | Accrued taxes | $218,200 | $147,200 | - The company recorded an increase of income taxes of **$109,000** (**28% effective tax rate**) for the three months ended March 31, 2025, compared to **$166,000** (**26% effective tax rate**) for the same period in 2024[58](index=58&type=chunk) - The deferred tax rate changed from **26.52%** as of December 31, 2024, to **28.35%** as of March 31, 2025, due to changes in state apportionment[58](index=58&type=chunk) [NOTE 7 – LINE OF CREDIT](index=13&type=section&id=NOTE%207%20%E2%80%93%20LINE%20OF%20CREDIT) The $5 million revolving line of credit, secured by assets and involving a director, was terminated in January 2024 - The company had a **$5 million revolving line of credit** with a third party and a director, accruing interest at **8% per annum**[59](index=59&type=chunk) - The Loan Agreement was terminated in **January 2024**, and all applicable early termination fees were waived[60](index=60&type=chunk) [NOTE 8 – STOCK-BASED COMPENSATION](index=13&type=section&id=NOTE%208%20%E2%80%93%20STOCK-BASED%20COMPENSATION) The 2022 Stock Incentive Plan authorized 900,000 shares; 670,000 options outstanding at $2.11 exercise price in Q1 2025 Stock Option Activity and Status | Metric | March 31, 2025 | |---|---| | Options outstanding at end of period | 670,000 | | Weighted-average exercise price | $2.11 | | Options exercisable at March 31, 2025 | 670,000 | | Weighted-average remaining contractual life | 7.67 years | - The **2022 Stock Incentive Plan** authorized **900,000 shares**, with **870,000 issued** and **30,000 available** for issuance[61](index=61&type=chunk) - No stock-based compensation expense was recognized for the three months ended March 31, 2025, or 2024[62](index=62&type=chunk) [NOTE 9 – SHAREHOLDERS' EQUITY](index=13&type=section&id=NOTE%209%20%E2%80%93%20SHAREHOLDERS%27%20EQUITY) As of Q1 2025, 6,062,773 common shares were outstanding, with 322,482 repurchased and a 75,000-share warrant issued - As of March 31, 2025, the company had **6,062,773 shares** of common stock issued and outstanding[63](index=63&type=chunk) - During the first quarter, **322,482 shares** of common stock were repurchased[64](index=64&type=chunk) - A five-year warrant was issued to the underwriter in connection with the 2022 public offering, allowing purchase of up to **75,000 common shares** at **$5.00 per share**, expiring **August 8, 2027**[65](index=65&type=chunk) [NOTE 10 – PER-SHARE INFORMATION](index=14&type=section&id=NOTE%2010%20%E2%80%93%20PER-SHARE%20INFORMATION) Basic and diluted net gain per common share increased to $0.07 in Q1 2025 from $0.06 in Q1 2024 Per-Share Information | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |---|---|---| | Net increase in net assets resulting from operations | $451,746 | $382,103 | | Weighted-average number of common shares outstanding - basic | 6,320,533 | 6,385,255 | | Weighted-average number of common shares outstanding - diluted | 6,371,849 | 6,501,823 | | Basic and diluted net gain per common share | $0.07 | $0.06 | [NOTE 11 – FINANCIAL HIGHLIGHTS](index=14&type=section&id=NOTE%2011%20%E2%80%93%20FINANCIAL%20HIGHLIGHTS) NAV per share increased to $3.23 in Q1 2025, with a total investment return of 2.27% and portfolio turnover of 0.37% Financial Highlights (Per Share and Ratios) | Metric | March 31, 2025 | March 31, 2024 | |---|---|---| | Net asset value at beginning of period | $3.09 | $2.91 | | Net asset value at end of period | $3.23 | $2.97 | | Net investment income (loss) per share | $0.06 | $0.07 | | Net realized and unrealized gains (losses) per share | $0.03 | $0.01 | | Repurchase of common stock per share | $0.10 | $0.00 | | Total investment return | 2.27% | 2.06% | | Portfolio turnover rate | 0.37% | 0.39% | | Ratio of operating expenses to average net assets | (7.60)% | (7.57)% | | Ratio of net investment income (loss) to average net assets | 8.47% | 10.58% | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=15&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses Q1 2025 financial performance, condition, and liquidity, covering business, investments, operations, and estimates [OVERVIEW](index=15&type=section&id=OVERVIEW) Mill City Ventures III, Ltd. provides secured short-term non-bank lending, generating revenue from interest and fees on illiquid loans - Mill City Ventures III, Ltd. provides short-term non-bank lending and specialty finance solutions, generally on a secured basis, to companies and individuals[69](index=69&type=chunk) - Loans typically have maturities of **nine months or shorter**, are highly illiquid, and involve collateral pledges or personal guarantees[69](index=69&type=chunk) - Principal income sources are interest and fees (origination, closing, exit fees) associated with loans, with occasional revenue from dividends and capital gains on equity investments[70](index=70&type=chunk) [PORTFOLIO AND INVESTMENT ACTIVITY](index=15&type=section&id=PORTFOLIO%20AND%20INVESTMENT%20ACTIVITY) Q1 2025 saw significant investment purchases of $3.37 million, resulting in $17.08 million net investments at amortized cost Investment Activity | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | |---|---|---| | Investment purchases | $3,366,196 | $73,438 | | Redemptions and repayments | $4,099 | $308,797 | | Net investments at amortized cost (period end) | $17,079,421 | $18,366,616 | Portfolio Composition by Major Class (Fair Value, March 31, 2025) | Investment Class | Fair Value (Mar 31, 2025) | % of Fair Value (Mar 31, 2025) | |---|---|---| | Short-term Non-banking Loans | $6,232,660 | 36.7% | | Commercial Business Loans | $10,247,854 | 60.4% | | Common Stock | $497,646 | 2.9% | | Other Equity | — | — | | Total | $16,978,160 | 100.0% | [RESULTS OF OPERATIONS](index=16&type=section&id=RESULTS%20OF%20OPERATIONS) Q1 2025 operating results show a net increase in assets from operations to $451,746, driven by unrealized appreciation Operating Results Summary | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Investment Income | $778,027 | $832,667 | -$54,640 | -6.56% | | Operating Expenses | $(379,783) | $(361,087) | -$18,696 | +5.18% | | Net Investment Gain | $398,244 | $471,580 | -$73,336 | -15.55% | | Net Increase in Net Assets Resulting from Operations | $451,746 | $382,103 | +$69,643 | +18.22% | [Investment Income](index=16&type=section&id=Investment%20Income) Total investment income decreased to $778,027 in Q1 2025, with the loan portfolio yielding an average 20.25% interest rate Investment Income | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Total Investment Income | $778,027 | $832,667 | -$54,640 | -6.56% | - The loan portfolio generates interest income with an average rate of **20.25%**[78](index=78&type=chunk) [Professional Fees](index=16&type=section&id=Professional%20Fees) Professional fees expense slightly increased to $142,656 in Q1 2025 from $138,371 in the prior year Professional Fees Expense | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Professional fees expense | $142,656 | $138,371 | +$4,285 | +3.10% | [Payroll and Directors Fees](index=16&type=section&id=Payroll%20and%20Directors%20Fees) Payroll expense increased to $163,269 in Q1 2025, while director fees remained constant at $30,000 Payroll and Directors Fees Expense | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Payroll expense | $163,269 | $151,066 | +$12,203 | +8.08% | | Director's fees | $30,000 | $30,000 | $0 | 0.00% | [Interest Expense](index=16&type=section&id=Interest%20Expense) Interest expense was $0 in Q1 2025, down from $320 in Q1 2024, due to the line of credit termination Interest Expense | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Interest expense | $0 | $320 | -$320 | -100.00% | - The decrease in interest expense is due to the termination of the line of credit agreement in **January 2024**[81](index=81&type=chunk) [Net Realized Gain (Loss) from Investments](index=16&type=section&id=Net%20Realized%20Gain%20%28Loss%29%20from%20Investments) Net realized gain on investments significantly decreased to $236 in Q1 2025 from $24,495 in Q1 2024 due to lower sales proceeds Net Realized Gain from Investments | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Proceeds from sale of investments | $4,099 | $308,797 | -$304,698 | -98.67% | | Net realized gain on investments | $236 | $24,495 | -$24,259 | -99.04% | [Net Change in Unrealized Appreciation (Depreciation) on Investments](index=16&type=section&id=Net%20Change%20in%20Unrealized%20Appreciation%20%28Depreciation%29%20on%20Investments) Net unrealized appreciation on investments substantially increased to $162,266 in Q1 2025 from $51,751 in Q1 2024 Net Change in Unrealized Appreciation on Investments | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Net unrealized appreciation on investments | $162,266 | $51,751 | +$110,515 | +213.55% | [Changes in Net Assets from Operations](index=16&type=section&id=Changes%20in%20Net%20Assets%20from%20Operations) Net assets from operations increased to $451,746 in Q1 2025, resulting in a basic per-share net increase of $0.07 Changes in Net Assets from Operations | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Net increase in net assets from operations | $451,746 | $382,103 | +$69,643 | +18.22% | | Per-share net increase in net assets from operations | $0.07 | $0.06 | +$0.01 | +16.67% | [FINANCIAL CONDITION](index=17&type=section&id=FINANCIAL%20CONDITION) Cash balance significantly decreased to $1.75 million in Q1 2025, primarily used for portfolio investments and corporate purposes Cash Position | Metric | March 31, 2025 | December 31, 2024 | Change | Percentage Change | |---|---|---|---|---| | Cash | $1,749,089 | $6,026,110 | -$4,277,021 | -70.98% | - The primary use of existing and future funds is for investments in portfolio companies or other general corporate purposes, including operating expenses or debt service[86](index=86&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=17&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Financial statements rely on critical estimates for investment valuation and revenue recognition, which are inherently uncertain - Critical accounting policies relate to the valuation of portfolio investments and revenue recognition[88](index=88&type=chunk) - Management's estimates and assumptions, based on past history, industry standards, and the economic environment, affect reported asset/liability amounts and revenues/expenses[87](index=87&type=chunk)[88](index=88&type=chunk) [OFF-BALANCE-SHEET ARRANGEMENTS](index=17&type=section&id=OFF-BALANCE-SHEET%20ARRANGEMENTS) The company had no off-balance sheet arrangements during the three months ended March 31, 2025 - The company did not engage in any off-balance sheet arrangements during the three months ended March 31, 2025[89](index=89&type=chunk) [FORWARD-LOOKING STATEMENTS](index=17&type=section&id=FORWARD-LOOKING%20STATEMENTS) Forward-looking statements involve risks and uncertainties, based on assumptions about investments, profitability, capital, and compliance - Forward-looking statements are based on management's current expectations and involve assumptions, risks, and uncertainties that could cause actual results to differ materially[90](index=90&type=chunk) - Important assumptions include the ability to identify and consummate new investments, achieve profitability, secure additional capital, and maintain regulatory compliance[90](index=90&type=chunk) - The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances occurring after the filing date[91](index=91&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=18&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls were ineffective as of Q1 2025 due to a material weakness in internal control over financial reporting - As of March 31, 2025, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were not effective[93](index=93&type=chunk) - The ineffectiveness is due to a material weakness in internal control over financial reporting, identified and disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[93](index=93&type=chunk) - There were no significant changes in internal controls over financial reporting during the fiscal quarter covered by this report[94](index=94&type=chunk) [PART II. OTHER INFORMATION](index=18&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=18&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Board authorized a $2 million stock repurchase program; 322,482 shares repurchased in March 2025 at $1.95 per share - On October 4, 2024, the Board authorized the repurchase of up to **$2 million** of outstanding common stock, ending **December 31, 2025**[97](index=97&type=chunk) Common Stock Repurchase Activity (Three Months Ended March 31, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet be Purchased Under Program | |---|---|---|---|---| | January 2025 | — | $— | — | $2,000,000 | | February 2025 | — | $— | — | $2,000,000 | | March 2025 | 322,482 | $1.95 | 322,482 | $1,369,564 | [ITEM 5. OTHER INFORMATION](index=19&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q1 2025 - None of the company's directors or officers adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended March 31, 2025[99](index=99&type=chunk) [ITEM 6. EXHIBITS](index=19&type=section&id=ITEM%206.%20EXHIBITS) Exhibits filed with Form 10-Q include organizational documents, loan agreements, employment agreements, and officer certifications - Exhibits include Amended and Restated Articles of Incorporation and Bylaws, amendments to the Fourth Short-Term Loan Agreement with Mustang Funding, LLC, a Security Agreement, and Executive Employment Agreements for Douglas M. Polinsky and Joseph A. Geraci II[100](index=100&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer (Section 302 and Section 906) are filed herewith[100](index=100&type=chunk) [SIGNATURES](index=19&type=section&id=SIGNATURES) The report was signed on May 12, 2025, by the CEO and CFO, confirming compliance with the Securities and Exchange Act - The report was signed on **May 12, 2025**, by Douglas M. Polinsky, Chief Executive Officer, and Joseph A. Geraci, II, Chief Financial Officer[105](index=105&type=chunk)

Financial Performance - For the year ended December 31, 2024, the company earned $3,301,119 in interest income, a slight increase from $3,298,635 in 2023[102]. - The net investment gain for 2024 was $1,325,244, a substantial recovery from a net investment loss of $419,998 in 2023[109]. - The net increase in net assets resulting from operations for 2024 was $1,167,726, compared to a decrease of $1,165,506 in 2023, showing a positive shift in financial health[141]. - The net asset value per common share rose to $3.09 in 2024 from $2.91 in 2023, an increase of approximately 6.2%[139]. - The total investment return for 2024 was 6.19%, recovering from a loss of 7.27% in 2023[203]. - The net investment gain for 2024 was $0.21 per share, a recovery from a loss of $0.07 per share in 2023[203]. Operating Expenses - Total operating expenses decreased significantly to $1,975,875 in 2024 from $3,718,633 in 2023, primarily due to reduced legal, accounting, and payroll expenses[102][103]. - Operating expenses decreased to $1,975,875 in 2024 from $3,718,633 in 2023, a reduction of approximately 46.5%[141]. - Director's fees decreased to $300,000 in 2024 from $722,968 in 2023, reflecting the absence of stock-based compensation expenses[107]. - Interest expense dropped to $320 in 2024 from $78,000 in 2023 due to the termination of the line of credit arrangement[108]. - The ratio of operating expenses to average net assets improved to (10.23)% in 2024 from (19.94)% in 2023[203]. Cash Flow and Liquidity - Cash flows from operating activities improved dramatically to $5,650,086 in 2024, compared to a cash outflow of $1,137,617 in 2023[111]. - The company ended 2024 with cash of $6,026,110, a significant increase from $376,024 at the beginning of the year[111]. - The company reported a net cash provided by operating activities of $5,650,086 for 2024, a significant improvement from the net cash used of $1,137,617 in 2023[145]. - The company’s cash position improved significantly to $6,026,110 in 2024 from $376,024 in 2023, reflecting a substantial increase in liquidity[137]. Investments - The company made new investments totaling $5,665,526 in 2024 and refinanced investments amounting to $17,795,000[112]. - As of December 31, 2024, the company's investments at fair value totaled $13,006,231, down from $17,284,676 in 2023, reflecting a decrease of approximately 24.5%[127]. - Total investments as of December 31, 2024, amounted to $19,743,199, with total cash and cash equivalents at $6,026,110, representing 30.50% of total assets[148]. - The fair value of investments categorized as Level 3 was $13,006,231 as of December 31, 2024, with significant unobservable inputs used for valuation[130]. - The fair value of short-term non-banking loans was $13,006,231, accounting for 65.83% of total assets as of December 31, 2024[147]. - The fair value of short-term non-banking loans was $13,006,231, representing 96.7% of the total fair value of investments[182]. Assets and Liabilities - Total assets increased to $20,473,436 in 2024 from $19,106,697 in 2023, representing an increase of about 7.1%[137]. - The total liabilities increased to $715,447 in 2024 from $516,434 in 2023, an increase of approximately 38.5%[139]. - The company’s total assets as of December 31, 2024, were $19,743,199, reflecting a slight increase from the previous year[148]. - The company’s accumulated deficit as of December 31, 2024, was $(1,159,665), unchanged from 2023[145]. Tax and Deferred Tax - For the year ended December 31, 2024, the federal current tax provision was $325,172, compared to $83,402 for 2023, reflecting a significant increase of 290%[200]. - The company reported a net deferred tax asset of $770,000 as of December 31, 2024, an increase from $757,000 in 2023[202]. - The company accounts for income taxes under the asset and liability method, recognizing deferred tax assets and liabilities for expected future tax consequences[167]. Stock and Compensation - The company recognized stock-based compensation expense for stock options on a straight-line basis over the requisite service period[175]. - The company recognized stock-based compensation expense of $1,460,209 for the year ended December 31, 2023[195]. - The company issued new executive employment agreements with a base salary increase to $220,000 per year for key executives[208]. - The weighted average exercise price of stock options outstanding as of December 31, 2024 was $2.11, with 670,000 options outstanding[195]. - The company issued incentives for 870,000 shares under the 2022 Stock Incentive Plan, leaving 30,000 shares available for issuance as of December 31, 2024[194]. Miscellaneous - The company adopted ASU 2023-07 on January 1, 2024, which did not have a material impact on the financial statements[177]. - The company maintains cash balances in financial institutions and regulated financial investment brokers, with excess deposits subject to usual banking risks[154]. - The estimated fair value of Level 3 investment assets is determined quarterly, generally valuing equity investments at cost unless circumstances warrant a different approach[161]. - The company held a promissory note with two shareholders amounting to $250,000, which was paid in full on September 26, 2024[201]. - The company entered into an amendment to its loan agreement extending the maturity date to March 28, 2027, with an increased interest rate of 20%[205].

Investment Performance - For the nine months ended September 30, 2024, the company made $5,106,503 in investment purchases and had $6,614,573 in redemptions and repayments, resulting in net investments at amortized cost of $17,208,066[85]. - The company's total investment income for the three months ended September 30, 2024, was $711,022, a decrease of 1.6% from $725,158 in the same period of 2023[89]. - The company experienced $530,693 in unrealized appreciation for the three months ended September 30, 2024, compared to $2,175 in the same period of 2023[94]. Financial Position - As of September 30, 2024, the company had cash and cash equivalents of $3,132,877, an increase of $2,756,853 from December 31, 2023[97]. - The company's portfolio composition by fair value as of September 30, 2024, included 97.0% in short-term non-banking loans and 3.0% in common stock[86]. - The company did not engage in any off-balance sheet arrangements during the nine months ended September 30, 2024[100]. Operational Results - For the nine months ended September 30, 2024, the company recorded a net increase in net assets from operations of $1,258,822, compared to a net decrease of $277,763 in the same period of 2023[95]. - The company had $0 in interest expense for the three months ended September 30, 2024, and $320 for the nine months ended September 30, 2024, a significant decrease from $78,000 in the same period of 2023[92]. - Professional fees for the nine months ended September 30, 2024, were $502,838, a decrease from $601,184 in the same period of 2023, attributed to reduced loan activity[90]. Loan Portfolio - The average interest rate on the company's loan portfolio is 16.2%[89].

Financial Performance - Investment income for the three months ended June 30, 2024, was $888,629, a decrease of 2.9% compared to $907,502 for the same period in 2023[6] - Net investment gain for the three months ended June 30, 2024, was $490,570, an increase of 45.3% from $337,457 for the same period in 2023[6] - The net increase in net assets resulting from operations for the six months ended June 30, 2024, was $795,039, compared to a loss of $647,323 for the same period in 2023[6] - Net investment income for the six months ended June 30, 2024, was $0.15, an increase from a loss of $0.11 in the same period in 2023[57] - Total investment income for the six months ended June 30, 2024, was $1,721,296, down from $1,771,530 in the same period in 2023[66] - Total investment return for the six months ended June 30, 2024, was 4.47%[58] - The company experienced a realized gain of $346,745 from investments for the six months ended June 30, 2024, compared to a realized loss of $558,629 in the same period of 2023[72] Assets and Liabilities - Total assets as of June 30, 2024, were $19,658,150, an increase from $19,106,697 as of December 31, 2023, representing a growth of approximately 2.89%[5] - Cash and cash equivalents increased significantly to $5,424,611 as of June 30, 2024, from $376,024 as of December 31, 2023[4] - Total liabilities decreased to $272,848 as of June 30, 2024, from $516,434 as of December 31, 2023, a reduction of approximately 47.3%[5] - As of June 30, 2024, total shareholders' equity increased to $19,385,302 from $18,972,366 as of March 31, 2024, reflecting a growth of approximately 2.17%[10] - The company had a deferred tax asset of $772,000, up from $757,000 as of December 31, 2023[50] Cash Flow - The company reported net cash provided by operating activities of $5,048,587 for the six months ended June 30, 2024, compared to $11,886 for the same period in 2023[14] - The total cash flow from financing activities was reported as zero for the six months ended June 30, 2024, indicating no new financing activities during this period[14] - As of June 30, 2024, the company had cash and cash equivalents of $5,424,611, reflecting an increase of $5,048,587 from December 31, 2023[76] Investment Portfolio - Total investments as of June 30, 2024, were valued at $12,929,985, representing 66.70% of total assets[16] - The company experienced a net unrealized depreciation in the value of investments amounting to $1,530,694 as of June 30, 2024[10] - The investment portfolio composition as of December 31, 2023, shows total investments at fair value of $17,284,676, with short-term non-banking loans representing 98.1%[40] - The fair value of short-term non-banking loans decreased from $16,961,766 on December 31, 2023, to $12,929,985 by June 30, 2024, indicating a decline of approximately 23.5%[39][40] - The investment portfolio is primarily concentrated in business services, which account for 77.5% of the fair value as of June 30, 2024[41] Shareholder Information - The company had 6,385,255 shares of common stock outstanding as of August 15, 2024[2] - The net asset value per common share increased to $3.04 as of June 30, 2024, up from $2.91 as of December 31, 2023[5] - The per-share net increase in net assets from operations was $0.12 for the six months ended June 30, 2024, compared to a per-share net decrease of $0.10 in the same period in 2023[74] Operating Expenses - Total operating expenses for the six months ended June 30, 2024, were $759,146, down 69.1% from $2,461,862 for the same period in 2023[6] - The ratio of operating expenses to average net assets was (7.90)% for the six months ended June 30, 2024[58] Management and Governance - The management identified a material weakness in internal control over financial reporting as of June 30, 2024[81] - The company does not incur expenses related to management and service fees, as the executive management team manages investments as part of their employment responsibilities[38] Future Outlook - The company anticipates future operating results will depend on the success of its investments and the general economy[79]

Financial Performance - For the three months ended March 31, 2024, the company reported total investment income of $832,667, a decrease from $864,028 in the same period of 2023[87]. - The company recorded a net increase in net assets from operations of $382,103 for the three months ended March 31, 2024, compared to a net decrease of $718,044 in the same period of 2023[93]. - The company had $308,797 in proceeds from the sale of investments for the three months ended March 31, 2024, resulting in $24,495 of realized gains[91]. Cash and Investments - As of March 31, 2024, the company had cash of $504,725, reflecting an increase of $128,701 from December 31, 2023[95]. - The company made $73,438 in investment purchases and had $308,797 in redemptions and repayments during the three months ended March 31, 2024[83]. - The portfolio composition as of March 31, 2024, included $16,770,508 in short-term non-banking loans, representing 97.9% of total investments[84]. Expenses - Professional fees for the three months ended March 31, 2024, were $138,371, compared to $129,851 in the same period of 2023[88]. - Payroll expenses decreased significantly to $151,066 in the three months ended March 31, 2024, from $1,130,439 in the same period of 2023[89]. Loan Portfolio - The average interest rate on the company's loan portfolio was 16.2%[87]. Off-Balance Sheet Arrangements - The company did not engage in any off-balance sheet arrangements during the three months ended March 31, 2024[98].