Equibles

10-Q

SUI Group Holdings Ltd. (SUIG)

10-Q 2025-05-13 For: 2025-03-31
View Original
Added on April 06, 2026

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

__________________________

FORM 10-Q

__________________________

(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________ to ___________________

Commission File Number 001-41472

__________________________

MILL CITY VENTURES III, LTD.
(Exact name of registrant as specified in its charter)

__________________________

Minnesota 90-0316651
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1907 Wayzata Blvd, #205, Wayzata, Minnesota 55391
(Address of principal executive offices) (Zip Code)

(952) 479-1923

(Registrant’s telephone number, including area code)

__________________________

N/A

(Former name, former address and former fiscal year, if changed since last report)

__________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.001 par value MCVT The Nasdaq Stock Market LLC<br><br>(Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes     ☒ No

As of May 15, 2025, Mill City Ventures III, Ltd. had 6,062,773 shares of common stock, and no other classes of capital stock, outstanding.

MILL CITY VENTURES III, LTD.

Index to Form 10-Q

for the Quarter Ended March 31, 2025

PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements (unaudited) 3
Condensed Balance Sheets – March 31, 2025 and December 31, 2024 3
Condensed Statements of Operations – Three months ended March 31, 2025 and March 31, 2024 4
Condensed Statements of Shareholders’ Equity – Three months ended March 31, 2025 and March 31, 2024 5
Condensed Statements of Cash Flows – Three months ended March 31, 2025 and March 31, 2024 6
Condensed Schedule of Investments – March 31, 2025 and Schedule of Investments – December 31, 2024 7
Condensed Notes to Financial Statements – March 31, 2025 9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18
Item 4. Controls and Procedures 21
PART II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 5. Other Information 22
Item 6. Exhibits 23
SIGNATURES 24
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PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MILL CITY VENTURES III, LTD.<br><br>CONDENSED BALANCE SHEETS
December 31, 2024
--- --- --- --- --- ---
ASSETS
Investments, at fair value (cost: 17,079,421 and 13,717,089, respectively) 16,978,160 $ 13,453,561
Cash and cash equivalents 1,749,089 6,026,110
Prepaid expenses 47,848 31,848
Interest and dividend receivables 341,919 191,917
Deferred taxes 732,000 770,000
Total Assets 19,849,016 $ 20,473,436
LIABILITIES
Accounts payable 42,606 $ 41,105
Accrued payroll liabilities 8,911 527,142
Accrued income tax 218,200 147,200
Total Liabilities 269,717 715,447
SHAREHOLDERS EQUITY (NET ASSETS)
Common stock, par value 0.001 per share (111,111,111 authorized; 6,062,773 and 6,385,255 issued and outstanding, respectively) 6,063 6,385
Additional paid-in capital 14,843,007 15,473,121
Additional paid-in capital - stock options 1,460,209 1,460,209
Accumulated deficit (1,159,665 ) (1,159,665 )
Accumulated undistributed investment loss 136,855 (152,389 )
Accumulated undistributed net realized gains on investment transactions 4,394,091 4,393,855
Net unrealized appreciation (depreciation) in value of investments (101,261 ) (263,527 )
Total Shareholders' Equity (Net Assets) 19,579,299 19,757,989
Total Liabilities and Shareholders' Equity 19,849,016 $ 20,473,436
Net Asset Value Per Common Share 3.23 $ 3.09

All values are in US Dollars.

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.<br><br>CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
---
Three Months Ended
--- --- --- --- ---
March 31, 2025 March 31, 2024
Investment Income
Interest income $ 778,027 $ 832,667
Total Investment Income 778,027 832,667
Operating Expenses
Professional fees 142,656 138,371
Payroll 163,269 151,066
Insurance 23,771 26,890
Occupancy 16,561 10,677
Director's fees 30,000 30,000
Interest expense — 320
Other general and administrative 3,526 3,763
Total Operating Expenses 379,783 361,087
Net Investment Gain 398,244 471,580
Realized and Unrealized Gain on Investments
Net realized gain on investments 236 24,495
Net change in unrealized appreciation on investments 162,266 51,751
Net Realized and Unrealized Gain on Investments 162,502 76,246
Net Increase in Net Assets Resulting from Operations Before Taxes $ 560,746 $ 547,826
Provision for Income Taxes 109,000 165,723
Net Increase in Net Assets Resulting from Operations $ 451,746 $ 382,103
Net Increase in Net Assets Resulting from Operations per share:
Basic $ 0.07 $ 0.06
Basic $ 0.07 $ 0.06
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

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.<br><br>CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
---
Three Months Ended March 31, 2025 Common Shares Par Value Additional Paid In Capital Accumulated Deficit Accumulated Undistributed Net Investment Gain (Loss) Accumulated Undistributed Net Realized Gain on Investments Transactions Net Unrealized Appreciation (Depreciation) in Value of Investments Total Shareholders' Equity
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Balance as of December 31, 2024 6,385,255 $ 6,385 $ 16,933,330 $ (1,159,665 ) $ (152,389 ) $ 4,393,855 $ (263,527 ) $ 19,757,989
Repurchase of common shares (322,482 ) (322 ) (630,114 ) — — — — (630,436 )
Undistributed net investment gain — — — 289,244 — — 289,244
Undistributed net realized gain on investment transactions — — — — 236 — 236
Appreciation in value of investments — — — — — 162,266 162,266
Balance as of March 31, 2025 6,062,773 $ 6,063 $ 16,303,216 $ (1,159,665 ) $ 136,855 $ 4,394,091 $ (101,261 ) $ 19,579,299
Three Months Ended March 31, 2024 Common Shares Par Value Additional Paid In Capital Accumulated Deficit Accumulated Undistributed Net Investment Gain (Loss) Accumulated Undistributed Net Realized Gain on Investments Transactions Net Unrealized Appreciation (Depreciation) in Value of Investments Total Shareholders' Equity
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Balance as of December 31, 2023 6,385,255 $ 6,385 $ 16,933,330 $ (1,159,665 ) $ (1,052,183 ) $ 5,155,200 $ (1,292,804 ) $ 18,590,263
Undistributed net investment gain — — — 305,857 — — 305,857
Undistributed net realized gain on investment transactions — — — — 24,495 — 24,495
Appreciation in value of investments — — — — — 51,751 51,751
Balance as of March 31, 2024 6,385,255 $ 6,385 $ 16,933,330 $ (1,159,665 ) $ (746,326 ) $ 5,179,695 $ (1,241,053 ) $ 18,972,366

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.<br><br>CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
---
Three Months Ended
--- --- --- --- --- --- ---
March 31, 2025 March 31, 2024
Cash flows from operating activities:
Net increase in net assets resulting from operations $ 451,746 $ 382,103
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided (used) in operating activities:
Net change in unrealized appreciation on investments (162,266 ) (51,751 )
Net realized gain on investments (236 ) (24,495 )
Purchases of investments (3,366,196 ) (73,438 )
Proceeds from sales of investments 4,099 308,797
Deferred income taxes 38,000 97,000
Changes in operating assets and liabilities:
Prepaid expenses and other assets (16,000 ) (36,738 )
Interest and dividends receivable (150,002 ) (4,177 )
Accounts payable and other liabilities (445,730 ) (468,600 )
Net cash provided by (used in) operating activities (3,646,585 ) 128,701
Cash flows from financing activities:
Payments for repurchase of common stock (630,436 ) —
Net cash used by financing activities (630,436 ) —
Net increase (decrease) in cash (4,277,021 ) 128,701
Cash, beginning of period 6,026,110 376,024
Cash, end of period $ 1,749,089 $ 504,725

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.<br><br>CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)<br><br>MARCH 31, 2025
---
Investment / Industry Cost Fair Value Percentage of Net Assets
--- --- --- --- --- --- --- ---
Short-Term Non-banking Loans
Consumer - 18% secured loans $ 500,000 $ 500,374 2.56 %
Consumer - 24% secured loans 500,100 496,765 2.54 %
Real Estate - 15% secured loans
Alatus Development Corp 2,000,000 2,003,217 10.23 %
Real Estate - 24% secured loans
Coventry Holdings LLC 3,250,000 3,232,304 16.51 %
Total Short-Term Non-Banking Loans 6,250,100 6,232,660 31.84 %
Commercial Business Loans
Business Services - 20% secured loans
Mustang Funding, LLC $ 10,000,000 $ 10,247,854 52.34 %
Common Stock
Consumer 47 41 0.00 %
Financial 669,274 497,605 2.54 %
Information Technology 150,000 - 0.00 %
Total Common Stock 819,321 497,646 2.54 %
Other Equity
Financial 10,000 - 0.00 %
Total Investments $ 17,079,421 $ 16,978,160 86.72 %
Total Cash and cash equivalents 1,749,089 1,749,089 8.93 %
Total Investments and Cash $ 18,828,510 $ 18,727,249 95.65 %
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MILL CITY VENTURES III, LTD.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 2024

Investment / Industry Cost Fair Value Percentage of Net Assets
Short-Term Non-banking Loans
Business Services - 15% secured loans
Mustang Litigation Funding $ 10,000,000 $ 9,985,925 50.54 %
Consumer - 18% secured loans 500,000 504,308 2.55 %
Real Estate - 15% secured loans
Alatus Development Corp 2,000,000 2,016,636 10.21 %
Real Estate - 24% secured loans
Coventry Holdings LLC 500,000 499,362 2.53 %
Total Short-Term Non-Banking Loans 13,000,000 13,006,231 65.83 %
Common Stock
Consumer 3,911 4,466 0.02 %
Financial 553,178 442,864 2.24 %
Information Technology 150,000 - 0.00 %
Total Common Stock 707,089 447,330 2.26 %
Other Equity
Financial 10,000 - 0.00 %
Total Investments $ 13,717,089 $ 13,453,561 68.09 %
Total Cash and cash equivalents 6,026,110 6,026,110 30.50 %
Total Investments and Cash $ 19,743,199 $ 19,479,671 98.59 %
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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

NOTE 1 – ORGANIZATION

In this report, we generally refer to Mill City Ventures III, Ltd. in the first person “we.” On occasion, we refer to our company in the third person as “Mill City Ventures” or the “Company.”  The Company follows accounting and reporting guidance in Accounting Standards (“ASC”) Topic 946 “Financial Services – Investment Companies”.

We were incorporated in Minnesota in January 2006. Until December 13, 2012, we were a development-stage company that focused on promoting and placing a proprietary poker game online and into casinos and entertainment facilities nationwide. In 2013, we elected to become a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). We operated as a BDC until we withdrew our BDC election at the end of December 2019. Since that time, we have remained a public reporting company filing periodic reports with the SEC. We engage in the business of providing short-term specialty finance solutions, typically in the form of short-term loans, primarily to small businesses, both private and public, and high-net-worth individuals. To avoid regulation under the 1940 Act, we generally seek to structure our investments so they do not constitute “securities” for purposes of federal securities laws, and we monitor our investments as a whole to ensure that no more than 40% of our total assets consist of “investment securities” as defined under the 1940 Act.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management and our independent board members to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. For more information, see the “Valuation of portfolio investments” caption below, and “Note 4 – Fair Value of Financial Instruments” below. The Company presents its financial statements as an investment company following accounting and reporting guidance in ASC 946.

***Cash deposits:***We maintain our cash balances in financial institutions and with regulated financial investment brokers. Cash on deposit in excess of FDIC and similar coverage is subject to the usual banking risk of funds in excess of those limits.

Valuation of portfolio investments: We carry our investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), issued by the Financial Accounting Standards Board (“FASB”), which defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations, or alternative price sources. In the absence of quoted market prices, broker or dealer quotations, or alternative price sources, investments are measured at fair value as determined by our Board of Directors, based on, among other things, the input of our executive management, the Audit Committee of our Board of Directors, and any independent third-party valuation experts that may be engaged by management to assist in the valuation of our portfolio investments, but in all cases consistent with our written valuation policies and procedures.

Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. In addition, such investments are generally less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it.

Accounting guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Observable inputs must be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available. Assets and liabilities measured at fair value are to be categorized into one of the three hierarchy levels based on the relative observability of inputs used in the valuation. The three levels are defined as follows:

· Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
· Level 2: Observable inputs based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets.
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· Level 3: Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances.
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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

Our valuation policy and procedures:  Under our valuation policies and procedures, we evaluate the source of inputs, including any markets in which our investments are trading, and then apply the resulting information in determining fair value.  For our Level 1 investment assets, our valuation policy generally requires us to use a market approach, considering the last quoted closing price of a security we own that is listed on a securities exchange, and in a case where a security we own is listed on an over-the-counter market, to average the last quoted bid and ask price on the most active market on which the security is quoted.  In the case of traded debt securities the prices for which are not readily available, we may value those securities using a discounted cash flows approach, at their weighted-average yield to maturity.

The estimated fair value of our Level 3 investment assets is determined on a quarterly basis by our Board of Directors. In general, we value our Level 3 equity investments at cost unless circumstances warrant a different approach.  Examples of these circumstances includes a situation in which a portfolio company has engaged in a subsequent financing of more than a de minimis size involving sophisticated investors (in which case we may use the price involved in that financing as a determinative input absent other known factors), or when a portfolio company is engaged in the process of a transaction that we determine is reasonably likely to occur (in which case we may use the price involved in the pending transaction as a determinative input absent other known factors). Other facts and circumstances that may serve as an input supporting a change in the valuation of our Level 3 equity investments include (i) a third-party valuation conducted by an independent and qualified professional, (ii) changes in the performance of long-term financial prospects of the portfolio company, (iii) a subsequent financing that changes the distribution rights associated with the equity security we hold, or (iv) sale transactions involving comparable companies, but only if further supported by a third-party valuation conducted by an independent and qualified professional.

When valuing preferred equity investments, we generally view intrinsic value as a key input. Intrinsic value means the value of any conversion feature (if the preferred investment is convertible) or the value of any liquidation or other preference. Discounts to intrinsic value may be applied in cases where the issuer’s financial condition is impaired or, in cases where intrinsic value relating to a conversion is determined to be a key input, to account for resale restrictions applicable to the securities issuable upon conversion.

When valuing warrants, our valuation policy and procedures indicate that value will generally be the difference between the closing price of the underlying equity security and the exercise price, after applying an appropriate discount for restriction, if applicable, in situations where the underlying security is marketable. If the underlying security is not marketable, then intrinsic value will be considered consistent with the principles described above. Generally, “out-of-the-money” warrants will be valued at cost or zero.

For non-traded (Level 3) debt instruments with a residual maturity less than or equal to 60 days, we will generally value such instruments based on a discounted cash flows approach, considering the straight-line amortized face value of the debt unless justification for impairment exists. For level 3 non-banking loans with a maturity in excess of 60 days, fair value is determined based on the initial purchase price and adjusted as necessary to reflect any changes in the financial strength of the creditor and changes in interest rates in the high-yield credit markets.

On a quarterly basis, our management provides members of our Board of Directors with recommendations, if any, to change any existing valuations of our portfolio investments or hierarchy levels for purposes of determining the fair value of such investments based upon the foregoing.  In such a case, the Board of Directors would then discuss these materials and, consistent with the policies and approaches outlined above, makes final determinations respecting the valuation and hierarchy levels of our portfolio investments.

We made no changes to our valuation policy and procedures during the reporting period.

Income taxes:

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.  Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amount and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine we would be able to realize our deferred income tax assets in the future in excess of their recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

We file income tax returns in the U.S. Federal jurisdiction and various state jurisdictions.  We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months.  Our evaluation was performed for the tax years ended December 31, 2021 through 2024, which are the tax years that remain subject to examination by major tax jurisdictions as of March 31, 2025.

Revenue recognition:  Realized gains or losses on the sale of investments are calculated using the specific investment method.

Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. Discounts from and premiums to par value on securities purchased are accreted or amortized, as applicable, into interest income over the life of the related security using the effective-yield method. The amortized cost of investments represents the original cost, adjusted for the accretion of discounts and amortization of premiums, if any. Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more, or when there is reasonable doubt that principal or interest will be collected in full. Loan origination fees are recognized when loans are issued. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past-due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to the policy described above if a loan has sufficient collateral value and is in the process of collection.

Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal or stated value of the investment on the respective interest- or dividend-payment dates rather than being paid in cash, and generally becomes due at maturity or upon being repurchased by the issuer. PIK interest or dividends is recorded as interest or dividend income, as applicable. If at any point we believe that PIK interest or dividends is not expected be realized, the PIK-generating investment will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual status.

Allocation of net gains and losses:  All income, gains, losses, deductions and credits for any investment are allocated in a manner proportionate to the shares owned.

Stock-based compensation:  The Company’s stock-based compensation consists of stock options issued to certain employees and directors of the Company. The Company recognizes compensation expense based on an estimated grant date fair value using the Black Sholes option-pricing method. If the factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The Company recognizes stock-based compensation expense for these options on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as they occur.

Management and service fees:

We do not incur expenses related to management and service fees. Our executive management team manages our investments as part of their employment responsibilities.

Segments:

The Company has a single reportable segment based on the nature of its operations. The nature of business and the accounting policies of the segment are the same as described throughout Notes 1 and 2. The Company’s Chief Operating Decision Maker (“CODM”) is its executive team. The CODM assesses the reportable segment’s performance and allocates resources for the reportable segment based on the net income and total assets which are the same amounts in all material respects as those reported on the Statement of Operations and Balance Sheet.

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

NOTE 3 – INVESTMENTS

The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of March 31, 2025 (together with the corresponding percentage of the fair value of our total portfolio of investments):

As of March 31, 2025
Investments at Amortized Cost Percentage of Amortized Cost Investments at<br><br>Fair Value Percentage of<br><br>Fair Value
Short-term Non-banking Loans $ 6,250,100 36.6 % $ 6,232,660 36.7 %
Commercial Business Loans 10,000,000 58.5 10,247,854 60.4
Common Stock 819,321 4.8 497,646 2.9
Other Equity 10,000 0.1 — —
Total $ 17,079,421 100.0 % $ 16,978,160 100.0 %

The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of December 31, 2024 (together with the corresponding percentage of the fair value of our total portfolio of investments):

As of December 31, 2024
Investments at Amortized Cost Percentage of Amortized Cost Investments at<br><br>Fair Value Percentage of<br><br>Fair Value
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 — —
Total $ 13,717,089 100.0 % $ 13,453,561 100.0 %

The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of March 31, 2025:

As of March 31, 2025
Investments at<br><br>Fair Value Percentage of<br><br>Fair Value
Business Services $ 10,247,854 60.4 %
Consumer 997,180 5.9
Financial 497,605 2.9
Information Technology — —
Real Estate 5,235,521 30.8
Total $ 16,978,160 100.0 %

The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of December 31, 2024:

As of December 31, 2024
Investments at<br><br>Fair Value Percentage of<br><br>Fair Value
Business Services $ 9,985,925 74.2 %
Consumer 508,774 3.8
Financial 442,864 3.3
Information Technology — —
Real Estate 2,515,998 18.7
Total $ 13,453,561 100.0 %
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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Level 3 valuation information:  Due to the inherent uncertainty in the valuation process, the estimate of the fair value of our investment portfolio as of March 31, 2025 may differ materially from values that would have been used had a readily available market for those investments existed.

The following table presents the fair value measurements of our portfolio investments by major class, as of March 31, 2025, according to the fair value hierarchy:

As of March 31, 2025
Level 1 Level 2 Level 3 Total
Short-term Non-banking Loans $ — $ — $ 6,232,660 $ 6,232,660
Commercial Business Loans — — 10,247,854 10,247,854
Common Stock 497,646 — — 497,646
Other Equity — — — —
Total $ 497,646 $ — $ 16,480,514 $ 16,978,160

The following table presents the fair value measurements of our portfolio investments by major class, as of December 31, 2024, according to the fair value hierarchy:

As of December 31, 2024
Level 1 Level 2 Level 3 Total
Short-term Non-banking Loans $ — $ — $ 13,006,231 $ 13,006,231
Common Stock 447,330 — — 447,330
Other Equity — — — —
Total $ 447,330 $ — $ 13,006,231 $ 13,453,561

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the three months ended March 31, 2025:

For the three months ended March 31, 2025
ST Non-banking Loans Commercial Business Loans Common Stock Other Equity
Balance as of January 1, 2025 $ 13,006,231 $ — $ — $ —
Net change in unrealized appreciation 224,183 — — —
Purchases and other adjustments to cost 3,250,100 — — —
Transfers between investment classifications (10,247,854 ) 10,247,854 — —
Balance as of March 31, 2025 $ 6,232,660 $ 10,247,854 $ — $ —

The net change in unrealized appreciation for the three months ended March 31, 2025 attributable to Level 3 portfolio investments still held as of March 31, 2025 was $224,183.

The following table lists our Level 3 investments held as of March 31, 2025 and the unobservable inputs used to determine their valuation:

Security Type 3/31/25 FMV Valuation Technique Unobservable Inputs Range
ST Non-banking Loans $ 6,232,660 discounted cash flow determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness 15-24%
Commercial Business Loan 10,247,854 discounted cash flow determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness 20%
Other Equity — last secured funding known by company
$ 16,480,514
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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the period ended December 31, 2024:

For the year ended December 31, 2024
ST Non-banking Loans Preferred<br><br>Stock Common<br><br>Stock Other<br><br>Equity
Balance as of January 1, 2024 $ 16,961,766 $ 265,000 $ — $ 10,000
Net change in unrealized depreciation 401,966 785,000 (150,000 ) (10,000 )
Purchases and other adjustments to cost 4,623,437 — — —
Sales and redemptions (8,720,000 ) — — —
Realized gain (loss) (100,000 ) (900,000 ) — —
Conversion from preferred to common stock — (150,000 ) 150,000 —
Transfers between level 3 and level 1 (160,938 ) — — —
Balance as of December 31, 2024 $ 13,006,231 $ — $ — $ —

The net change in unrealized depreciation for the year ended December 31, 2024 attributable to Level 3 portfolio investments still held as of December 31, 2024 was $83,496.

The following table lists our Level 3 investments held as of December 31, 2024 and the unobservable inputs used to determine their valuation:

Security Type 12/31/24 FMV Valuation Technique Unobservable Inputs Range
ST Non-banking Loans $ 13,006,231 discounted cash flow determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness 12-23%
Other Equity — last secured funding known by company economic changes since last funding
Common Stock — last funding secured by company economic changes since last funding
$ 13,006,231

NOTE 5 – RELATED-PARTY TRANSACTIONS

We maintain a conflicts of interest and related-party transactions policy requiring (i) certain disclosures be made to our Board of Directors in relation to situations where officers, directors, significant shareholders, or any of their affiliates may enter into transactions with us, and (ii) certain disclosures appear in the reports we prepare and file with the SEC.  In this regard, during the period covered by this report we entered into, or remained a party to, the following related-party transactions:

· We held a promissory note with two shareholders in the principal amount of $250,000. The promissory note bore interest payable monthly at the rate of 10% per annum. The note was secured by the debtors’ pledge to us of 277,778 shares of common stock. The note was paid in full including all accrued interest on September 26, 2024.
· As disclosed in Note 7, a component of our now terminated loan agreement was with a director of our Company.

NOTE 6 – INCOME TAXES

Presently, we are a C-Corporation for tax purposes and have booked an income tax provision for the periods described below. Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate.

As of March 31, 2025 and December 31, 2024, we have a deferred tax asset of $732,000 and $770,000, respectively. As of March 31, 2025, our net deferred tax asset consists of foreign tax credit carryforwards, unrealized investment gain/loss, non-qualified stock option expenses, capital loss carryforwards, and depreciable assets.  Our determination of the realizable deferred tax assets and liabilities requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes.

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

As of March 31, 2025 and December 31, 2024 we had accrued taxes of $218,200 and $147,200, respectively. We recorded an increase of income taxes of $109,000 (28 percent effective tax rate) and $166,000 (26 percent effective tax rate) during the three months ended March 2025 and March 2024, respectively.  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.

NOTE 7 – LINE OF CREDIT

We had a Loan and Security Agreement (the “Loan Agreement”) with a third party and director (collectively, the Lenders). Under the Loan Agreement, the Lenders made available to us a $5 million revolving line of credit for us to use in the ordinary course of our short-term specialty finance business, of which our director was required to fund one half of the amount. Amounts drawn under the Loan Agreement accrued interest at the per annum rate of 8%, through January 3, 2027, subject to early termination provisions at the Lender’s right at any time after January 3, 2023. Our obligations under the Loan Agreement were secured by a grant of a collateral security interest in substantially all of our assets.

In January 2024, we terminated the Loan Agreement. Any applicable fees related to early termination of the Agreement were waived.

NOTE 8 – STOCK-BASED COMPENSATION

Our 2022 Stock Incentive Plan (the “Plan”) authorized the issuance of incentives relating to 900,000 shares of common stock. As of March 31, 2025, incentives relating to the issuance of 870,000 shares have been issued under the Plan, leaving 30,000 shares available for issuance. The Plan was amended by the Board of Directors on August 14, 2023, and a registration statement on Form S-8 respecting the Plan was filed with the SEC on August 23, 2023.

The following table summarizes the activity for all stock options outstanding for the three months ended March 31, 2025:

Shares Weighted Average Exercise Price
Options outstanding at beginning of year 670,000 $ 2.11
Granted — —
Exercised — —
Forfeited — —
Options outstanding at end of period 670,000 $ 2.11
Options exercisable at March 31, 2025: 670,000 $ 2.11

The following table summarizes additional information about stock options outstanding and exercisable at March 31, 2025:

Options Outstanding Options Exercisable
Options Outstanding Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Options<br><br>Exercisable Weighted Average Exercise Price Aggregate Intrinsic Value
670,000 7.67 $ 2.11 $ — 670,000 $ 2.11 $ —

The Company recognized stock-based compensation expense for stock options of $0 and $0 for the three months ended March 31, 2025 and 2024, respectively.

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

NOTE 9 – SHAREHOLDERS’ EQUITY

At March 31, 2025, we had 6,062,773 shares of common stock issued and outstanding.

During the first quarter we repurchased 322,482 shares of common stock.

In connection with the 2022 public offering, the Company issued a five-year warrant to the underwriter. The warrant allows the underwriter to purchase up to 75,000 common shares at $5.00 per share. This warrant is exercisable after 180 days, and expires on August 8, 2027. This warrant is equity-classified and the fair value was $201,173 on the offering date.

NOTE 10 – PER-SHARE INFORMATION

Basic net gain per common share is computed by dividing net increase in net assets resulting from operations by the weighted-average number of common shares outstanding during the period. Diluted net gain per common share is computed by dividing net increase in net assets resulting from operations by the weighted-average number of dilutive common shares outstanding during the period calculated using the Treasury Stock method. The Treasury Stock method assumes that the proceeds received upon exercise of stock options are used to repurchase stock at the average market price during the period, thereby increasing the number of shares to be added in computing diluted earnings per share. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net gain per common share is set forth below:

For the Three Months Ended March 31,
2025 2024
Basic Diluted Basic Diluted
Numerator:  Net increase in net assets resulting from operations $ 451,746 $ 451,746 $ 382,103 $ 382,103
Denominator:  Weighted-average number of common shares outstanding 6,320,533 6,371,849 6,385,255 6,501,823
Basic and diluted net gain (loss) per common share $ 0.07 $ 0.07 $ 0.06 $ 0.06
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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

NOTE 11 – FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the three months ended March 31, 2025 through 2021:

Three Months Ended March 31,
2025 2024 2023 2022 2021
Per Share Data ^(1)^
Net asset value at beginning of period $ 3.09 2.91 2.89 2.79 2.43
Net investment income (loss) 0.06 0.07 (0.17 ) 0.09 0.00
Net realized and unrealized gains (losses) 0.03 0.01 0.01 0.02 0.50
(Provision for) benefit from income taxes (0.02 ) (0.02 ) 0.04 (0.02 ) (0.14 )
Issuance of stock options 0.00 0.00 0.24 0.00 0.00
Repurchase of common stock 0.10 0.00 0.00 0.00 0.00
Other changes in equity (0.03 ) 0.00 0.00 0.00 0.00
Net asset value at end of period $ 3.23 2.97 3.01 2.88 2.79
Ratio / Supplemental Data
Per share market value of investments at end of period $ 2.80 2.68 3.19 4.19 2.81
Shares outstanding at end of period 6,062,773 6,385,255 6,185,255 4,795,739 4,794,184
Average weighted shares outstanding for the period - basic 6,320,533 6,385,255 6,185,255 4,795,739 4,793,739
Average weighted shares outstanding for the period - diluted 6,371,849 6,501,823 6,185,255 4,795,739 4,793,739
Net assets at end of period $ 19,579,299 19,757,989 18,613,725 13,826,160 13,391,679
Average net assets ^(2)^ $ 19,668,643 18,781,314 18,242,642 13,620,104 12,516,283
Total investment return 2.27 % 2.06 % (4.15 )% 3.23 % 14.81 %
Portfolio turnover rate (3) 0.37 % 0.39 % 21.63 % 8.46 % 40.24 %
Ratio of operating expenses to average net assets ^(3)^ (7.60 )% (7.57 )% (35.82 )% (15.28 )% (16.20 )%
Ratio of net investment income (loss) to average net assets^(3)^ 8.47 % 10.58 % (20.92 )% 14.24 % 0.42 %
Ratio of realized gains (losses) to average net assets ^(3)^ 0.00 % 0.53 % (12.68 )% 4.20 % 133.32 %
(1) Per-share data was derived using the ending number of shares outstanding for the period.
--- ---
(2) Based on the monthly average of net assets as of the beginning and end of each period presented.
(3) Ratios are annualized.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. In addition, unless expressly stated otherwise, the comparisons presented in this MD&A refer to the same period in the prior year. Our MD&A is presented in seven sections:

· Overview
· Portfolio and Investment Activity
· Results of Operations
· Financial Condition
· Critical Accounting Estimates
· Off-Balance Sheet Arrangements
· Forward Looking Statements

OVERVIEW

Mill City Ventures III, Ltd. was incorporated in the State of Minnesota on January 10, 2006. In this report, we generally refer to Mill City Ventures III, Ltd. in the first person “we.” On occasion, we refer to our company in the third person as “Mill City Ventures” or the “company.”

We are engaged in the business of providing short-term non-bank lending and specialty finance solutions to companies and individuals, generally on a secured basis. The loans we provide typically have maturities that are nine months or shorter, highly illiquid, and ordinarily involve a pledge of collateral or, in the case of loans made to companies, personal guarantees by the principals of the borrower.  Our loans may be made for real estate acquisitions, renovation and sale, or other projects relating to real estate, title loans, inventory needs, inventory financing, solve for short-term liquidity needs, or for other similar purposes. We intend to remain opportunistic, however, and may occasionally engage in transactions that involve our acquisition of other rights (such as stock, warrants or other equity-linked investments) or that are structured differently or uniquely.  Our business objective is to generate revenues from the interest and fees we charge, and capital appreciation from any related investments we make.

Our principal sources of income are interest and fees associated with our loans such as origination fees, closing fees or exit fees.  In connection with the short-term non-bank specialty finance loans we provide, we may receive reimbursement of legal costs associated with loan documentation. We occasionally derive income from dividends paid on equity securities we hold from time to time, or from the sale of our equity securities.  Our statement of operations also reflect increases and decreases in the carrying value of our assets and investments (i.e., unrealized appreciation and depreciation). Our principal expenses relate to operating expenses, the largest components of which are generally professional fees, payroll, occupancy, and insurance expenses.

Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2024, as well as our reports on Forms 10-Q and 8-K and other publicly available information. All amounts herein are unaudited.  In addition, the following discussion of our results of operations and financial condition should be read in the context of this overview.

PORTFOLIO AND INVESTMENT ACTIVITY

During the three months ended March 31, 2025, we made $3,366,196 of investment purchases and had $4,099 of redemptions and repayments, resulting in net investments at amortized cost of $17,079,421 as of March 31, 2025.

During the three months ended March 31, 2024, we made $73,438 of investment purchases and had $308,797 of redemptions and repayments, resulting in net investments at amortized cost of $18,366,616 as of March 31, 2024.

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Our portfolio composition by major class, based on fair value at March 31, 2025, was as follows:

Investments at<br><br>Fair Value Percentage of<br><br>Fair Value
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

Our operating results for the three months ended March 31, 2025 and March 31, 2024 were as follows:

For the Three Months Ended<br><br>March 31,
2025 2024
Investment Income: $ 778,027 $ 832,667
Operating Expenses: (379,783 ) (361,087 )
Net Investment Gain $ 398,244 $ 471,580

Investment Income

We generate revenue primarily in the form of interest income derived from the short-term non-banking loans we provide, together with fees we charge in connection with those loans, such as commitment, origination, structuring, diligence, or consulting fees. Any such fees will be recognized as earned. In some cases, the interest payable to us on the short-term loans we provide may accrue or be paid in the form of additional debt. The principal amount of the debt instruments, together with any accrued but unpaid interest thereon, will generally become due at the maturity date of those debt instruments. On occasion, we may also generate revenue from dividends and capital gains on equity investments we make, if any, or on warrants or other equity interests that we may acquire.

For the three months ended March 31, 2025 and 2024, our total investment income was $778,027 and $832,667, respectively. Our loan portfolio generates interest income, with an average rate on the loans of 20.25%.

Professional Fees

For the three months ended March 31, 2025 and 2024, we had $142,656 and $138,371 of professional fees expense, respectively.

Payroll and Directors Fees

For the three months ended March 31, 2025 and 2024, we had $163,269 and $151,066 of payroll expense, respectively. In addition, director fees were $30,000 and $30,000 for the three months ended March 31, 2025 and 2024, respectively.

Interest Expense

For the three months ended March 31, 2025 and 2024, we had $0 and $320 of interest expense, respectively. The decrease is due to the termination of the line of credit agreement in January 2024.

Net Realized Gain (Loss) from Investments

For the three months ended March 31, 2025, we had $4,099 of proceeds from sale of investments, resulting in $236 of realized gains. For the three months ended March 31, 2024, we had $308,797 of proceeds from sale of investments, resulting in $24,495 of realized gains.

Net Change in Unrealized Appreciation (Depreciation) on Investments

For the three months ended March 31, 2025, our investments included $162,266 of unrealized appreciation. For the three months ended March 31, 2024, our investments included $51,751 of unrealized appreciation.

Changes in Net Assets from Operations

For the three months ended March 31, 2025, we recorded a net increase in net assets from operations of $451,746. Based on the weighted-average number of shares of common stock outstanding for the three months ended March 31, 2025, our per-share net increase in net assets from operations was $0.07. For the three months ended March 31, 2024, we recorded a net increase in net assets from operations of $382,103. Based on the weighted-average number of shares of common stock outstanding for the three months ended March 31, 2024, our per-share net increase in net assets from operations was $0.06.

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Cash Flows for the Three Months Ended March 31, 2025 and 2024

The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and repayments of portfolio investments, among other factors. For the three months ended March 31, 2025, net cash used in operating activities was $3,646,585. Cash flows used in operating activities for the three months ended March 31, 2025 were primarily related to purchasing of investments totaling $3,366,196. For the three months ended March 31, 2024, net cash provided in operating activities was $128,701. Cash flows provided in operating activities for the three months ended March 31, 2024 were primarily related to redemptions and repayments of investments totaling $308,797. Cash flows used in our financing activities during the current period were due to the repurchase and retirement of 322,482 of our common shares for $630,436.

FINANCIAL CONDITION

As of March 31, 2025, we had cash of $1,749,089, a decrease of $4,277,021 from December 31, 2024. The primary use of our existing funds and any funds raised in the future is expected to be for our investments in portfolio companies or for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities. Pending investment in portfolio companies, our investments may consist of cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment, which we refer to collectively as “temporary investments.”

CRITICAL ACCOUNTING ESTIMATES

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Critical accounting policies are those that require the application of management’s most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods.

In preparing the financial statements, management will make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. In preparing the financial statements, management also will utilize available information, including our past history, industry standards and the current economic environment, among other factors, in forming its estimates and judgments, giving due consideration to materiality. Actual results will almost certainly differ from these estimates. In addition, other companies may utilize different estimates, which may impact the comparability of our results of operations to those of companies in similar businesses. As our expected operating results occur, we will describe additional critical accounting policies in the notes to our financial statements. Our most critical accounting policies relate to the valuation of our portfolio investments, and revenue recognition. For more information, refer to our Annual Report on Form 10-K for the year ended December 31, 2024.

OFF-BALANCE-SHEET ARRANGEMENTS

During the three months ended March 31, 2025, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

FORWARD-LOOKING STATEMENTS

Some of the statements made in this section of our report are forward-looking statements based on our management’s current expectations for our company.  These expectations involve assumptions and are subject to substantial risks and uncertainties that could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance, and can ordinarily be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words.  Important assumptions include our ability to identify and consummate new investments, achieve certain margins and levels of profitability, the availability of any needed additional capital, and the ability to maintain compliance with regulations applicable to us.  Some of the forward-looking statements contained in this report relate to, and are based our current assumptions regarding, the following:

· our future operating results;
· the success of our investments;
· our relationships with third parties;
· the dependence of our success on the general economy and its impact on the industries in which we invest;
· the ability of our portfolio companies to achieve their objectives;
· our expected financings and investments;
· our regulatory structure and tax treatment;
· the adequacy of our cash resources and working capital; and
· the timing of cash flows, if any, we receive from our investments.
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The foregoing list is not exhaustive.  For a more complete summary of the risks and uncertainties facing our company and its business and relating to our forward-looking statements, please refer to our Annual Report on Form 10-K filed on April 17, 2023 (related to our year ended December 31, 2024) and in particular the section thereof entitled “Risk Factors.” Because of the significant uncertainties inherent in forward-looking statements pertaining to our company, the inclusion of those statements should not be regarded as a representation or warranty by us or any other person that our objectives, plans, expectations or projections that are contained in this filing will be achieved in any specified time frame, if ever. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date of this filing. The forward-looking statements made in this report relate only to events as of the date on which the statements are made, and are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance the objectives of the control system are met.

As of March 31, 2025, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of our disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were not effective as of March 31, 2025 due to the material weakness in our internal control over financial reporting identified and disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2024.

There were no significant changes in our internal controls over financial reporting that occurred during the fiscal quarter covered by this report that materially affected, or were reasonably likely to materially affect such controls.

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PART II. OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On October 4, 2024, our Board of Directors authorized the repurchase of up to $2 million of our outstanding common stock from time to time in open market purchases and private transactions, ending on December 31, 2025.  Repurchases under this repurchase authorization are subject to the discretion of the senior management team and market conditions, and as permitted by securities laws and other legal, regulatory and contractual requirements and covenants.

Our common stock repurchase activity for the three months ended March 31, 2025 was as follows:

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate DollarValue of SharesThat May Yetbe Purchased UnderProgram
January 2025 — $ — —
February 2025 — $ — —
March 2025 322,482 $ 1.95 322,482

All values are in US Dollars.

ITEM 5. OTHER ITEMS

During the three months ended March 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

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ITEM 6. EXHIBITS

Exhibit<br><br>Number Description
3.1 Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed January 23, 2013)
3.2 Amended and Restated Bylaws of Mill City Ventures III, Ltd. (incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form 10-SB filed on January 29, 2008)
10.1 Amendment No. 4 to Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note with Mustang Funding, LLC, dated January 7, 2025 (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on January 7, 2025)
10.2 Amendment No. 5 to Fourth Short-Term Loan Agreement and Fourth Short-Term Promissory Note with Mustang Funding, LLC, dated January 22, 2025 (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on February 3, 2025)
10.3 Amended and Restated Subordination and Intercreditor Agreement with Orion Pip, LLC, dated January 24, 2025 (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on February 3, 2025)
10..4 Security Agreement with Mustang Funding, LLC, dated January 24, 2025 (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed on February 3, 2025)
10.5 Executive Employment Agreement with Douglas M. Polinsky, dated effective January 1, 2025 (incorporated by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K filed on February 3, 2025)
10.6 Executive Employment Agreement with Joseph A. Geraci II, dated effective January 1, 2025 (incorporated by reference to Exhibit 10.5 to the registrant's Current Report on Form 8-K filed on February 3, 2025)
31.1 * Section 302 Certification of the Chief Executive Officer
31.2 * Section 302 Certification of the Chief Financial Officer
32.1 * Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

_____________

* Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MILL CITY VENTURES III, LTD.
Date: May 12, 2025 By: /s/ Douglas M. Polinsky
Douglas M. Polinsky
Chief Executive Officer
Date: May 12, 2025 By: /s/ Joseph A. Geraci, II
Joseph A. Geraci, II
Chief Financial Officer
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mcvt_ex311.htm

EXHIBIT 31.1

SECTION 302 CERTIFICATION

I, Douglas M. Polinsky, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Mill City Ventures III, Ltd.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 12, 2025 /s/ Douglas M. Polinsky

| | Chief Executive Officer |

mcvt_ex312.htm

EXHIBIT 31.2

SECTION 302 CERTIFICATION

I, Joseph A. Geraci, II, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Mill City Ventures III, Ltd.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:  May 12, 2025 /s/ Joseph A. Geraci, II

| | Chief Financial Officer |

mcvt_ex321.htm

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Mill City Ventures III, Ltd. (the “Company”) on Form 10-Q for the period ended March 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas M. Polinsky, Chief Executive Officer of the Company, and I, Joseph A. Geraci, II, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act of 1934; and

  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Douglas M. Polinsky

| Douglas M. Polinsky<br> <br>Chief Executive Officer<br> <br><br> <br>May 12, 2025 | | /s/ Joseph A. Geraci, II |

| Joseph A. Geraci, II<br> <br>Chief Financial Officer<br> <br><br> <br>May 12, 2025 |

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