As filed with the Securities and Exchange Commission on August 8, 2025. Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________ FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ____________________ MILL CITY VENTURES III, LTD. (Exact name of registrant as specified in its charter) ____________________ | Minnesota | 6153 | 90-0316651 | | --- | --- | --- | | (State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Emplo ...

As filed with the Securities and Exchange Commission on August 1, 2025. Registration No. 333- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 _________________________ MILL CITY VENTURES III, LTD. (Exact name of registrant as specified in its charter) _________________________ (I.R.S. Employer Identification Number) 1907 Wayzata Boulevard, Suite 205 Wayzata, MN 55391 Telephone: (952) 479-1923 (Address, including zip cod ...

Funding & Investment - Mill City Ventures III (MCVT) raised $450 million to launch a corporate SUI treasury strategy [1] - The private placement included lead investments from Karatage and the Sui Foundation [1] - Top crypto investors like Galaxy Digital and Pantera Capital also backed the raise [1] Leadership Changes - Karatage founders will join Mill City's leadership as part of the deal [1] Company Strategy - The company is launching a corporate SUI treasury strategy [1]

[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].

Financial Performance - For the year ended December 31, 2023, the company earned $3,298,635 in interest income, a decrease of approximately 21.5% from $4,199,453 in 2022[91]. - The company reported a net investment loss of $419,998 for 2023, contrasting with a net investment gain of $800,576 in 2022[100]. - The company reported a net investment loss of $1,165,506 for the year ended December 31, 2023, compared to a net increase of $106,958 in 2022, indicating a significant decline in performance[129]. - The total investment return for 2023 was -7.27%, compared to 1.43% in 2022[205]. - For the year ended December 31, 2023, the net increase in net assets resulting from operations was $(1,165,506), a decrease from $106,958 in 2022[136]. Operating Expenses - Total operating expenses for 2023 were $3,718,633, an increase of about 9.4% compared to $3,398,877 in 2022[93]. - The ratio of operating expenses to average net assets was -19.94% in 2023, compared to -21.73% in 2022[205]. - Rent expense for office facilities decreased from $73,146 in 2022 to $68,421 in 2023[172]. - The company recorded operating lease costs of $21,975 and variable lease costs of $19,572 for the year ended December 31, 2023[173]. Cash Flow and Liquidity - Cash flows from operating activities were $(1,137,617) in 2023, an improvement from $(4,888,302) in 2022[102]. - The company had a net decrease in cash of $713,617 for 2023, compared to a decrease of $846,507 in 2022[102]. - The company expects its current liquidity sources to be sufficient to fund operations through fiscal 2024, following the termination of its $5 million revolving line of credit[104]. - The company reported a net cash decrease of $(713,617) for the year, with cash at the end of the period totaling $376,024, down from $1,089,641 at the end of 2022[136]. Investments - The company made new investments totaling $12,900,500 in 2023 and refinanced investments amounting to $10,857,500[105]. - As of December 31, 2023, the company's investments at fair value totaled $17,284,676, an increase from $16,708,432 in 2022, reflecting a growth of approximately 3.4%[123]. - Total investments as of December 31, 2023, amounted to $18,577,481, with a fair value of $17,284,676, representing 92.97% of total assets[139]. - The company’s investment in Mustang Litigation Funding was $10,000,000, with a fair value of $10,069,354, accounting for 54.16% of total assets[139]. - The company’s investment in Intelligent Mapping, LLC was $2,900,000, with a fair value of $2,906,464, representing 15.63% of total assets[139]. - The company’s investment in short-term non-banking loans increased to $16,961,766 as of December 31, 2023, from $15,285,932 in 2022[186]. Assets and Liabilities - Total assets increased to $19,106,697 in 2023 from $18,734,790 in 2022, representing a growth of about 2%[126]. - The company’s total liabilities decreased to $516,434 in 2023 from $863,230 in 2022, a reduction of about 40%[126]. - The net asset value per common share slightly increased to $2.91 in 2023 from $2.89 in 2022[126]. - The net assets at the end of 2023 were $18,590,263, an increase from $17,871,560 in 2022[205]. Management and Compensation - Executive management compensation rose to $1,848,393 in 2023, up 96.4% from $941,590 in 2022, primarily due to stock option issuance[98]. - The company recognized stock-based compensation expense of $1,460,209 for stock options for the year ended December 31, 2023[194]. - The company did not incur management and service fees, as investments are managed by the executive management team as part of their employment responsibilities[168]. Taxation - The company had a provision for income taxes of -$454,554 in 2023, compared to $9,648 in 2022[200]. - The current federal tax was $83,402 in 2023, down from $268,803 in 2022[200]. - The deferred tax asset increased to $757,000 in 2023 from $201,000 in 2022[204]. Stock and Shareholder Information - The total number of common shares issued and outstanding increased from 6,185,255 at December 31, 2022, to 6,385,255 at December 31, 2023[175]. - The company completed a public offering of 1,250,000 common shares at $4.00 per share, generating gross proceeds of $5,000,000, with net proceeds of approximately $4,041,000 after expenses[177]. - During 2023, the company issued 200,000 shares related to the exercise of stock options, while 1,389,516 shares were issued in 2022[179]. - The company had 30,000 shares available for issuance under the 2022 Stock Incentive Plan as of December 31, 2023[191].

Investment Performance - For the nine months ended September 30, 2023, the company made investment purchases totaling $11,900,500 and had redemptions and repayments of $11,124,193, resulting in net investments at amortized cost of $17,577,481[91] - Total investment income for the three months ended September 30, 2023, was $725,158, a decrease of 35% compared to $1,115,224 for the same period in 2022[98] - For the nine months ended September 30, 2023, total investment income was $2,496,688, down 25.5% from $3,351,935 in the prior year[98] Financial Position - As of September 30, 2023, the company had cash of $962,860, a decrease of $126,781 from December 31, 2022[106] - For the nine months ended September 30, 2023, net cash used in operating activities was $550,781, compared to $6,429,293 for the same period in 2022[105] - The average interest rate on the company's loan portfolio is 15.2%[98] Operational Results - The company recorded a net increase in net assets from operations of $369,560 for the three months ended September 30, 2023[104] - Professional fees for the three months ended September 30, 2023, were $184,008, significantly lower than $916,359 for the same period in 2022[99] - The company had $0 interest expense for the three months ended September 30, 2023, compared to $46,779 for the same period in 2022[101] Portfolio Composition - The portfolio composition as of September 30, 2023, included 92.8% in short-term non-banking loans, totaling $16,296,986[93] Reporting and Compliance - The company filed its Annual Report on Form 10-K on April 17, 2023, related to the year ended December 31, 2022[21] - The report includes a section entitled "Risk Factors" detailing significant uncertainties facing the company[21] - Forward-looking statements in the report are subject to significant uncertainties and should not be regarded as guarantees of future performance[21] - The company undertakes no obligation to update any forward-looking statements after the filing date[21] - The forward-looking statements relate only to events as of the date they are made[21] - The report is excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934[21]