MCVT 10-Q: Large Private Placement and Warrant Issuance Raise Capital

Q: What financing did MCVT disclose in the 10-Q?

MCVT completed a private placement of 75,881,625 common shares at $5.42 and pre-funded warrants for up to 7,144,205 shares at $5.4199, closing July 27, 2025.

Q: How many placement agent warrants were issued and what is their exercise price?

3,113,469 Placement Agent Warrants (3.75% of the placement) exercisable six months after issuance for five years at $5.962 per share.

Q: What are the terms of the company鈥檚 revolving credit facility?

$5 million revolver with amounts accruing interest at 8% per annum through January 3, 2027, secured by substantially all assets and subject to lender termination rights.

Q: How many shares remain available under the equity plan?

30,000 shares remained available under the Plan as of June 30, 2025, after issuance of 870,000 incentives out of 900,000 authorized.

Q: What compensation disclosures are included in the excerpt?

Executive base salary cited as $450,000 with a bonus opportunity up to 100% of base pay and standard health and 401(k) benefits.

[10-Q] Mill City Ventures III, Ltd. Quarterly Earnings Report

Filing Impact

(Neutral)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

Mill City Ventures III, Ltd. (MCVT) disclosed multiple financing and equity arrangements in its Form 10-Q excerpt. The company completed a private placement offering of 75,881,625 common shares at $5.42 each and pre-funded warrants for up to 7,144,205 shares at $5.4199 (exercisable at $0.0001 per share), with closing on July 27, 2025. Placement agent warrants total 3,113,469 shares (3.75% of the placement) exercisable at $5.962 after six months for five years. A separate warrant (75,000 shares at $5.00) was issued, valued at $201,173 on the offering date and exercisable after 180 days until August 8, 2027. The company referenced a $5 million revolving credit facility with 8% interest per annum (subject to lender termination rights and secured by substantially all assets). Equity plan activity shows 900,000 shares under the plan with 870,000 issued and 30,000 remaining available. State apportionment changes moved a percentage from 26.52% to 28.25% between Dec 31, 2024 and June 30, 2025. Compensation terms cited a $450,000 base salary plus up to 100% bonus for an executive, and director warrants vesting over 24 months.

Positive

Successful capital raise via a private placement of 75,881,625 shares at $5.42 and pre-funded warrants, providing immediate liquidity.
Registered equity plan amendment and Form S-8 filing support transparent issuance of employee/share-based incentives.
Asset management arrangement establishes a fee structure (0.60%鈥�0.80% with $1,000,000 minimum) that can generate recurring fee revenue if assets grow.

Negative

Significant potential dilution from the large private placement, pre-funded warrants, placement agent warrants (3,113,469 shares) and other exercisable warrants.
Secured credit facility grants the lender a security interest in substantially all assets and includes termination rights, increasing creditor control risk.
Related-party funding requirement for a director to fund half of the $5 million revolver could raise governance and conflict-of-interest concerns.

Insights

TL;DR Substantial equity issuance and placement-agent warrants create dilution risk but raise significant capital for the company.

The 10-Q excerpt documents a large private placement (75.9 million shares) and additional pre-funded warrants, which materially increase outstanding equity and potential dilution if warrants are exercised. Placement agent warrants equal to 3.75% of the offering and multiple exercise price tranches for over 3.1 million shares add further dilution potential. The $5 million revolving credit facility at 8% is modest but secured by substantially all assets, indicating leverage availability with tight lender rights. The asset management arrangement referencing custody and a fee schedule suggests new fee-based revenue potential tied to digital assets, but contractual fee minimums and performance depend on asset growth. Overall, financing events are material to capital structure and shareholder dilution considerations.

TL;DR Governance actions show active share-based compensation and director-linked financing with typical vesting and control provisions.

The Board amended its equity plan and filed an S-8 for registration, with most plan shares already issued (870,000 of 900,000). Director warrants include 24-month vesting tied to continued service and removal conditions, reflecting retention alignment. The involvement of a director in funding half of the revolving credit facility implies related-party dynamics that should be documented and disclosed fully. Compensation disclosure (base salary and potential bonus up to 100%) is standard but material for executive cost structure. Documentation of collateral security interests and lender termination rights are governance-relevant for creditor priority and board oversight.

08/14/2025 - 05:03 PM

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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 June 30, 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

(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 August 14, 2025, Mill City Ventures III, Ltd. had 82,110,648 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 June 30, 2025

PART I.	FINANCIAL INFORMATION	Page No.

Item 1.	Financial Statements (unaudited)	3

	Condensed Balance Sheets – June 30, 2025 and December 31, 2024	3

	Condensed Statements of Operations – Three and six months ended June 30, 2025 and June 30, 2024	4

	Condensed Statements of Shareholders’ Equity – Three and six months ended June 30, 2025 and June 30, 2024	5

	Condensed Statements of Cash Flows – Six months ended June 30, 2025 and June 30, 2024	6

	Condensed Schedule of Investments – June 30, 2025 and Schedule of Investments – December 31, 2024	7

	Condensed Notes to Financial Statements – June 30, 2025	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 5.	Other Information	25

Item 6.	Exhibits	26

SIGNATURES		27

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MILL CITY VENTURES III, LTD.

CONDENSED BALANCE SHEETS



	June 30, 2025 (unaudited)			December 31, 2024
ASSETS
Investments, at fair value (cost: $17,641,707 and $13,717,089, respectively)	$	17,854,961		$	13,453,561
Cash and cash equivalents		1,497,009			6,026,110
Prepaid expenses		34,598			31,848
Interest and dividend receivables		419,857			191,917
Deferred taxes		641,000			770,000
Total Assets	$	20,447,425		$	20,473,436

LIABILITIES
Accounts payable	$	37,680		$	41,105
Accrued payroll liabilities		8,911			527,142
Accrued income tax		144,500			147,200
Total Liabilities		191,091			715,447
Commitments and Contingencies
SHAREHOLDERS EQUITY (NET ASSETS)
Common stock, par value $0.001 per share (111,111,111 authorized;		6,063			6,385
6,062,773 and 6,385,255 issued and outstanding, respectively)
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 gain (loss)		499,406			(152,389	)
Accumulated undistributed net realized gains on investment transactions		4,394,060			4,393,855
Net unrealized appreciation (depreciation) in value of investments		213,254			(263,527	)
Total Shareholders' Equity (Net Assets)		20,256,334			19,757,989
Total Liabilities and Shareholders' Equity	$	20,447,425		$	20,473,436
Net Asset Value Per Common Share	$	3.34		$	3.09

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)




	Three Months Ended						Six Months Ended
	June 30, 2025			June 30, 2024			June 30, 2025		June 30, 2024
Investment Income
Interest income	$	948,034		$	888,629		$	1,726,061	$	1,721,296
Total Investment Income		948,034			888,629			1,726,061		1,721,296
Operating Expenses
Professional fees		98,764			174,098			241,420		312,469
Payroll		160,230			145,859			323,499		296,925
Insurance		482			24,602			24,253		51,492
Occupancy		16,663			9,545			33,224		20,222
Director's fees		30,000			30,000			60,000		60,000
Interest expense		—			—			—		320
Other general and administrative		10,044			13,955			13,570		17,718
Total Operating Expenses		316,183			398,059			695,966		759,146
Net Investment Gain	$	631,851		$	490,570			1,030,095		962,150
AG真人官方ized and Unrealized Gain on Investments
Net realized gain (loss) on investments		(31	)		346,745			205		371,240
Net change in unrealized appreciation (depreciation) on investments		314,515			(289,641	)		476,781		(237,890	)
Net AG真人官方ized and Unrealized Gain on Investments		314,484			57,104			476,986		133,350
Net Increase in Net Assets Resulting from Operations Before Taxes	$	946,335		$	547,674		$	1,507,081	$	1,095,500

Provision for Income Taxes		269,300			134,738			378,300		300,461
Net Increase in Net Assets Resulting from Operations	$	677,035		$	412,936		$	1,128,781	$	795,039

Net Increase in Net Assets Resulting from Operations per share:
Basic	$	0.11		$	0.06		$	0.18	$	0.12
Diluted	$	0.11		$	0.06		$	0.18	$	0.12

Weighted-average number of common shares outstanding - basic		6,062,773			6,385,255			6,190,941		6,385,255
Weighted-average number of common shares outstanding - diluted		6,062,773			6,501,823			6,190,941		6,501,823

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.

CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)



Three Months Ended June 30, 2025	Common Shares			Par Value			Additional Paid In Capital			Accumulated Deficit			Accumulated Undistributed Net Investment Gain			Accumulated Undistributed Net AG真人官方ized Gain (Loss) on Investments Transactions			Net Unrealized Appreciation (Depreciation) in Value of Investments			Total Shareholders' Equity
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
Undistributed net investment gain					—			—			—			362,551			—			—			362,551
Undistributed net realized loss on investment transactions					—			—			—			—			(31	)		—			(31	)
Appreciation in value of investments					—			—			—			—			—			314,515			314,515
Balance as of June 30, 2025		6,062,773		$	6,063		$	16,303,216		$	(1,159,665	)	$	499,406		$	4,394,060		$	213,254		$	20,256,334

Three Months Ended June 30, 2024	Common Shares			Par Value			Additional Paid In Capital			Accumulated Deficit			Accumulated Undistributed Net Investment Gain (Loss)			Accumulated Undistributed Net AG真人官方ized Gain on Investments Transactions			Net Unrealized Depreciation in Value of Investments			Total Shareholders' Equity
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
Undistributed net investment gain					—			—			—			355,832			—			—			355,832
Undistributed net realized gain on investment transactions					—			—			—			—			346,745			—			346,745
Depreciation in value of investments					—			—			—			—			—			(289,641	)		(289,641	)
Balance as of June 30, 2024		6,385,255		$	6,385		$	16,933,330		$	(1,159,665	)	$	(390,494	)	$	5,526,440		$	(1,530,694	)	$	19,385,302


Six Months Ended June 30, 2025	Common Shares			Par Value			Additional Paid In Capital			Accumulated Deficit			Accumulated Undistributed Net Investment Gain (Loss)			Accumulated Undistributed Net AG真人官方ized 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					—			—			—			651,795			—			—			651,795
Undistributed net realized gain on investment transactions					—			—			—			—			205			—			205
Appreciation in value of investments					—			—			—			—			—			476,781			476,781
Balance as of June 30, 2025		6,062,773		$	6,063		$	16,303,216		$	(1,159,665	)	$	499,406		$	4,394,060		$	213,254		$	20,256,334

Six Months Ended June 30, 2024	Common Shares			Par Value			Additional Paid In Capital			Accumulated Deficit			Accumulated Undistributed Net Investment Gain (Loss)			Accumulated Undistributed Net AG真人官方ized Gain on Investments Transactions			Net Unrealized 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					—			—			—			661,689			—			—			661,689
Undistributed net realized gain on investment transactions					—			—			—			—			371,240			—			371,240
Depreciation in value of investments					—			—			—			—			—			(237,890	)		(237,890	)
Balance as of June 30, 2024		6,385,255		$	6,385		$	16,933,330		$	(1,159,665	)	$	(390,494	)	$	5,526,440		$	(1,530,694	)	$	19,385,302

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)



	Six Months Ended
	June 30, 2025			June 30, 2024
Cash flows from operating activities:
Net increase in net assets resulting from operations	$	1,128,781		$	795,039
Adjustments to reconcile net increase in net assets resulting
from operations to net cash provided (used) in operating activities:
Net change in unrealized appreciation (depreciation) on investments		(476,781	)		237,890
Net realized gain on investments		(205	)		(371,240	)
Purchases of investments		(4,428,530	)		(973,438	)
Proceeds from sales of investments		504,116			5,461,479
Deferred income taxes		129,000			(15,000	)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(2,750	)		70,822
Interest and dividends receivable		(227,940	)		86,621
Accounts payable and other liabilities		(524,356	)		(243,586	)
Net cash provided by (used in) operating activities		(3,898,665	)		5,048,587
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		(4,529,101	)		5,048,587
Cash, beginning of period		6,026,110			376,024
Cash, end of period	$	1,497,009		$	5,424,611

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.

CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)

JUNE 30, 2025



Investment / Industry	Cost		Fair Value		Percentage of Net Assets

Short-Term Non-banking Loans
Consumer - 18% secured loans	$	500,000	$	500,000		2.47	%
Consumer - 24% secured loans		900,100		900,515		4.45	%
AG真人官方 Estate - 15% secured loans
Alatus Development Corp		2,500,000		2,538,018		12.53	%
AG真人官方 Estate - 24% secured loans
Coventry Holdings LLC		2,750,000		2,746,762		13.56	%
Total Short-Term Non-Banking Loans		6,650,100		6,685,295		33.01	%

Commercial Business Loans
Business Services - 20% secured loans
Mustang Funding, LLC	$	10,000,000	$	10,314,787		50.92	%

Common Stock
Financial		817,702		841,144		4.15	%
Information Technology		150,000		-		0.00	%
Technology		13,905		13,735		0.07	%
Total Common Stock		981,607		854,879		4.22	%

Other Equity
Financial		10,000		-		0.00	%

Total Investments	$	17,641,707	$	17,854,961		88.15	%

Total Cash and cash equivalents		1,497,009		1,497,009		7.39	%

Total Investments and Cash	$	19,138,716	$	19,351,970		95.54	%

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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	%
AG真人官方 Estate - 15% secured loans
Alatus Development Corp		2,000,000		2,016,636		10.21	%
AG真人官方 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)

June 30, 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.” We follow 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.

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)

June 30, 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)

June 30, 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 June 30, 2025.

Revenue recognition: AG真人官方ized 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)

June 30, 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 June 30, 2025 (together with the corresponding percentage of the fair value of our total portfolio of investments):

	As of June 30, 2025
	Investments at Amortized Cost		Percentage of Amortized Cost			Investments at Fair Value		Percentage of Fair Value

Short-term Non-banking Loans	$	6,650,100		37.7	%	$	6,685,295		37.4	%
Commercial Business Loans		10,000,000		56.7			10,314,787		57.8
Common Stock		981,607		5.5			854,879		4.8
Other Equity		10,000		0.1			—		—
Total	$	17,641,707		100.0	%	$	17,854,961		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 Fair Value		Percentage of 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 June 30, 2025:

	As of June 30, 2025
	Investments at Fair Value		Percentage of Fair Value

Business Services	$	10,314,787		57.8	%
Consumer		1,400,515		7.8
Financial		841,144		4.7
Information Technology		—		—
AG真人官方 Estate		5,284,780		29.6
Technology		13,735		0.1
Total	$	17,854,961		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 Fair Value		Percentage of Fair Value

Business Services	$	9,985,925		74.2	%
Consumer		508,774		3.8
Financial		442,864		3.3
Information Technology		—		—
AG真人官方 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)

June 30, 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 June 30, 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 June 30, 2025, according to the fair value hierarchy:

	As of June 30, 2025
	Level 1		Level 2		Level 3		Total

Short-term Non-banking Loans	$	—	$	—	$	6,685,295	$	6,685,295
Commercial Business Loans		—		—		10,314,787		10,314,787
Common Stock		854,879		—		—		854,879
Other Equity		—		—		—		—
Total	$	854,879	$	—	$	17,000,082	$	17,854,961

The 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 six months ended June 30, 2025:

	For the six months ended June 30, 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		343,751			—		—		—
Purchases and other adjustments to cost		4,150,100			—		—		—
Sales and redemptions		(500,000	)		—		—
Transfers between investment classifications		(10,314,787	)		10,314,787		—		—
Balance as of June 30, 2025	$	6,685,295		$	10,314,787	$	—	$	—

The net change in unrealized appreciation for the six months ended June 30, 2025 attributable to Level 3 portfolio investments still held as of June 30, 2025 was $343,751.

The following table lists our Level 3 investments held as of June 30, 2025 and the unobservable inputs used to determine their valuation:

Security Type	6/30/25 FMV		Valuation Technique	Unobservable Inputs	Range
ST Non-banking Loans	$	6,685,295	discounted cash flow	determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness	15-24		%
Commercial Business Loan		10,314,787	discounted cash flow	determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness		20	%
Other Equity		—	last secured funding known by company
	$	17,000,082

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 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 Stock			Common Stock			Other 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	)		—			—			—
AG真人官方ized 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	15-24	%
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.

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

As of June 30, 2025 and December 31, 2024, we have a deferred tax asset of $641,000 and $770,000, respectively. As of June 30, 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.

As of June 30, 2025 and December 31, 2024 we had accrued taxes of $144,500 and $147,200, respectively. We recorded an increase of income taxes of $191,500 (28 percent effective tax rate) and $133,300 (26 percent effective tax rate) during the six months ended June 30 2025 and June 30 2024, respectively. The deferred tax rate changed from 26.52% as of December 31, 2024 to 28.25% as of June 30, 2025 due to changes in state apportionment.

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 June 30, 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 six months ended June 30, 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 June 30, 2025:		670,000	$	2.11

The following table summarizes additional information about stock options outstanding and exercisable at June 30, 2025:

Options Outstanding								Options Exercisable
Options Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Aggregate Intrinsic Value		Options Exercisable		Weighted Average Exercise Price		Aggregate Intrinsic Value
	670,000		7.42	$	2.11	$	—		670,000	$	2.11	$	—

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

The Company recognized stock-based compensation expense for stock options of $0 and $0 for the three and six months ended June 30, 2025 and 2024, respectively.

NOTE 9 – SHAREHOLDERS’ EQUITY

At June 30, 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, we 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. For the three and six month periods ended June 30, 2025, 670,000 stock options were excluded from the diluted net gain per common share calculation because their effect would be anti-dilutive. 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 June 30,
	2025				2024
	Basic		Diluted		Basic		Diluted
Numerator: Net increase in net assets resulting from operations	$	677,035	$	677,035	$	412,936	$	412,936
Denominator: Weighted-average number of common shares outstanding		6,062,773		6,062,773		6,385,255		6,501,823
Basic and diluted net gain (loss) per common share	$	0.11	$	0.11	$	0.06	$	0.06

	For the Six Months Ended June 30,
	2025				2024
	Basic		Diluted		Basic		Diluted
Numerator: Net increase (decrease) in net assets resulting from operations	$	1,128,781	$	1,128,781	$	795,039	$	795,039
Denominator: Weighted-average number of common shares outstanding		6,190,941		6,190,941		6,385,255		6,501,823
Basic and diluted net gain (loss) per common share	$	0.18	$	0.18	$	0.12	$	0.12

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

NOTE 11 – FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the six months ended June 30, 2025 through 2021:

	Six Months Ended June 30,
	2025			2024			2023			2022			2021
Per Share Data ⁽¹⁾
Net asset value at beginning of period	$	3.09			2.91			2.89			1.24			1.08
Net investment income (loss)		0.17			0.15			(0.11	)		0.11			0.04
Net realized and unrealized gains (losses)		0.08			0.02			0.01			0.01			0.28
(Provision for) benefit from income taxes		(0.06	)		(0.04	)		(0.01	)		(0.04	)		(0.09	)
Issuance of stock options		0.00			0.00			0.24			0.01			0.00
Repurchase of common stock		0.10			0.00			0.00			0.00			0.00
Other changes in equity		(0.04	)		0.00			0.00			0.00			0.00
Net asset value at end of period	$	3.34			3.04			3.02			1.33			1.31

Ratio / Supplemental Data
Per share market value of investments at end of period	$	2.95			2.02			2.67			1.41			1.22
Shares outstanding at end of period		6,062,773			6,385,255			6,185,255			4,824,628			4,795,739
Average weighted shares outstanding for the period - basic		6,190,941			6,385,255			6,185,255			4,808,508			4,794,744
Average weighted shares outstanding for the period - diluted		6,190,941			6,385,255			6,185,255			4,808,508			4,794,744
Net assets at end of period	$	20,256,334			19,385,302			—			14,426,607			14,188,588
Average net assets ⁽²⁾	$	19,864,540			18,982,643			18,389,910			13,888,938			13,073,718
Total investment return		6.15	%		4.47	%		(3.81	)%		6.45	%		21.30	%
Portfolio turnover rate (3)		2.54	%		5.13	%		48.40	%		65.55	%		75.65	%
Ratio of operating expenses to average net assets ⁽³⁾		(6.94	)%		(7.90	)%		(25.16	)%		(14.63	)%		(11.72	)%
Ratio of net investment income (loss) to average net assets⁽³⁾		10.73	%		10.46	%		(7.43	)%		18.01	%		6.88	%
Ratio of realized gains (losses) to average net assets ⁽³⁾		0.00	%		3.98	%		(6.03	)%		1.94	%		61.92	%

(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.

NOTE 12 – SUBSEQUENT EVENTS

Private Placement and SUI Strategy

Securities Purchase Agreements and SUI Strategy

On July 31, 2025, we completed a private placement of 75,881,625 shares of our common stock at an offering price of $5.42 per share, and pre-funded warrants to purchase up to 7,144,205 shares of our common stock at an offering price of $5.4199 per share, exercisable at a per-share price of $0.0001. We consummated the offer and sale of our securities pursuant to securities purchase agreements that we entered into with the investors on July 27, 2025.

The securities offered and sold in the private placement, including the shares of common stock, the pre-funded warrants, the Placement Agent Warrants, Lead Investor Warrants, Foundation Investor Warrants, Management Warrants, and the Advisor Warrants (all as such warrants are defined in the disclosure below), and all of the shares of common stock issuable upon the exercise of all such warrants, were offered and sold in reliance upon the exemption from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof and/or Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws. The offer and sale of all of the above-described securities were not registered under the Securities Act, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

Simultaneously with the closing of the private placement, we adopted a new treasury policy and strategy under which the principal holding in our treasury reserve on the balance sheet will be allocated to the native cryptocurrency of the Sui blockchain commonly referred to as “SUI.” The Sui Foundation is an independent organization dedicated to the advancement and adoption of the Sui network. The Board of Directors approved our treasury policy on July 27, 2025, authorizing the long-term accumulation of SUI. We believe our position as a public company with an official Sui Foundation relationship provides us institutional-grade exposure to the SUI blockchain, and that Sui is well positioned for large-scale adoption with the speed and efficiency institutions require for crypto at scale, plus the technical architecture capable of supporting AI workloads while maintaining security and decentralization. Our approach involves acquiring SUI directly—both through market purchases and direct purchases from the Sui Foundation. This treasury initiative seeks to enhance our capital allocation strategy and does not affect our core commercial short-term non-bank lending and specialty finance business, which remains fully operational and a central part of our business.

Warrants

At the closing of the private placement, we issued five-year warrants to purchase our common stock as follows:

	(i)	warrants (the “Lead Investor Warrants”) to Karatage Opportunities (“Karatage”), to purchase 3,113,469 shares of common stock at various exercise prices as follows: (i) 1,245,387 common shares at an exercise price of $5.42 per share; (ii) 1,245,387 common shares at an exercise price of $5.962 per share; (iii) 415,129 common shares at an exercise price of $6.504 per share; and (iv) 207,565 common shares at an exercise price of $7.046 per share;

	(ii)	warrants (the “Foundation Investor Warrants”) to the Sui Foundation (the “Foundation Investor”), to purchase 3,113,469 shares of common stock at various exercise prices as follows: (i) 1,245,387 common shares at an exercise price of $5.42 per share; (ii) 1,245,387 common shares at an exercise price of $5.962 per share; (iii) 415,129 common shares at an exercise price of $6.504 per share; and (iv) 207,565 common shares at an exercise price of $7.046 per share;

	(iii)	warrants (the “Management Warrants”) to certain members of the management of the Company to purchase 1,245,388 shares of common stock at various exercise prices as follows: (i) 622,694 common shares at an exercise price of $5.42 per share; (ii) 415,130 common shares at an exercise price of $6.504 per share; and (iii) 207,564 common shares at an exercise price of $7.046 per share; and

	(iv)	warrants (the “Advisor Warrants”) to certain advisors of the Company to purchase 207,565 shares of common stock at an exercise price of $5.962 per share.

All of the above-described warrants, other than the Advisor Warrants, will vest over a 24-month period starting six months from the Issue Date (as defined therein) in four equal installments (being 25% every six months), and in the case of the Management Warrants, subject to the relevant holder still being employed by the Company at each respective vesting date. In the event that a member of the management team is terminated by the Company other than for cause or resigns for good reason (as defined in the individual’s employment agreement), the vesting of all of such individual’s Management Warrants will immediately accelerate and be fully vested as of the date of such termination. The Advisor Warrants are fully exercisable beginning as of January 31, 2026.

Placement Agency Agreement

On July 27, 2025, and in connection with the private placement, we entered into a Placement Agency Agreement with A.G.P., pursuant to which A.G.P. agreed to serve as our exclusive placement agent in connection with the private placement. Under the terms of the Placement Agency Agreement, we paid A.G.P. a cash fee of $18,000,000. We also issued to A.G.P. warrants (the “Placement Agent Warrants”) to purchase up to 3,113,469 shares of our common stock (equal to 3.75% of the securities sold in the private placement). The Placement Agent Warrants will become exercisable six months following the issuance date and will be exercisable for a period of five years following the issuance date, at an exercise price of $5.962 per share. In addition, we agreed to reimburse A.G.P. for accountable expenses in an amount of $200,000 for its legal fees in connection with the private placement, as well as non-accountable expenses incurred by A.G.P. for up to $25,000 in connection with the private placement.

Registration Rights Agreement

On July 27, 2025, and in connection with the private placement, we entered into a Registration Rights Agreement with the investors and A.G.P. pursuant to which we agreed to file a registration statement, within 10 days of the closing (i.e., on or before August 10, 2025), providing for the resale by the investors of the common shares and shares of common stock issuable upon exercise of the pre-funded warrants, and the shares of common stock issuable upon exercise of the Lead Investor Warrant, Foundation Investor Warrant, Management Warrants and the Placement Agent Warrants, and to have such registration statement declared effective within 30 days of its filing date (or 60 days, if the SEC conducts a full review), and to maintain the effectiveness of such registration statement until all securities registered pursuant thereto (i) shall have been sold, either thereunder or pursuant to Rule 144, or (ii) starting from the third anniversary of the Registration Rights Agreement, may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 under the Securities Act, and without the requirement for our Company to be in compliance with the current public information requirement Rule 144.

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

Strategic Advisor Agreement

On July 27, 2025, we entered into a Strategic Advisor Agreement (the “Strategic Advisor Agreement”) with Karatage to expand and diversify our business operations through the integration of cryptocurrency and digital asset strategies in both our product offerings and as part of our treasury management strategy. Pursuant to the Strategic Advisor Agreement, Karatage will provide us with technical advisory services regarding the digital asset ecosystem, including SUI and related technologies, developments in the digital asset and crypto gaming industries, the selection of third-party vendors with respect to asset management and related digital asset services, and other strategic advice regarding our digital assets treasury operations.

We will pay Karatage a tiered asset-based fee ranging from 0.0% to 0.80% per annum of the assets managed by the Company or an asset manager engaged by the Company, excluding the assets of the Company’s short-term lending business.

The Strategic Advisor Agreement will, unless earlier terminated in accordance with its terms, continue in effect for a period of ten years beginning on July 27, 2025, after which time the Strategic Advisor Agreement will automatically renew for a successive period of five years each, subject to the mutual agreement between the parties. Either the Company or Karatage may terminate the Strategic Advisor Agreement for cause immediately upon written notice if the other party: (i) materially breaches the Strategic Advisor Agreement; and (ii) fails to cure such breach within 30 days after receiving written notice of the breach. If the Strategic Advisor Agreement is terminated by the Company for cause or by Karatage other than for cause, Karatage will cease providing such technical advisory services and the Company will pay Karatage any fees due and payable under the Strategic Advisor Agreement up to the date of termination, provided that if the Strategic Advisor Agreement is terminated by the Company for any other reason or by the Advisor for cause, Karatage will cease providing such technical advisory services and the Company will pay Karatage any fees that would be due and payable under the Strategic Advisor Agreement for the remainder of the term of the agreement, as if the Strategic Advisor Agreement had not been terminated.

Asset Management Agreement

On July 27, 2025, we entered into an Asset Management Agreement (the “Asset Management Agreement”) with Galaxy Digital Capital Management LP (the “Asset Manager”). The Asset Manager will provide discretionary investment management services with respect to, among other assets (including without limitation certain subsequently raised funds), our proceeds from the private placement (the “Account Assets”), and will have exclusive right to manage the first $750 million of our digital assets or cryptocurrencies and at least 50% of our digital assets or cryptocurrencies in excess of $750 million in accordance with the terms of the Asset Management Agreement. The Asset Manager will pursue a long-only investment strategy investing primarily in SUI, which strategy may include staking and restaking SUI to improve returns (the “SUI Strategy”). The custodians under the Asset Management Agreement will consist of cryptocurrency wallet providers agreed to by us and the Asset Manager.

We will pay the Asset Manager a tiered asset-based fee (the “Asset-based Fee”) ranging from 0.60% to 0.80% per annum of the Account Assets under management, in each case based on the value of Account Assets as of the applicable calculation date, as determined by a third-party administrator in accordance with the Asset Manager’s valuation policy; subject, however, to a minimum Asset-based Fee of $1,000,000 per year.

The Asset Management Agreement will, unless terminated earlier in accordance with its terms, remain in effect for five years, after which time it will automatically renew for one-year terms, subject to mutual agreement between the Company and the Asset Manager. Beginning on the second anniversary of the Asset Management Agreement, such agreement may be terminated by us upon at least 90 days prior written notice to the Asset Manager at the good faith discretion of our Chief Investment Officer (“CIO”) or our Board of Directors if the Asset Manager has underperformed according to such CIO’s internal objective metrics, as agreed with the Asset Manager. Additionally, the Asset Management Agreement may be terminated at any time for cause by us or the Asset Manager upon at least 30 days prior written notice to the other party. Additionally, the Asset Management Agreement may be terminated immediately by us if we determine in good faith after consultation with counsel, reasonably acceptable to the Asset Manager, that the Asset Management Agreement is prohibited or otherwise required to be terminated by applicable law.

Digital Asset Purchase and Sale Agreement

On July 27, 2025, we also entered into a Digital Asset Purchase and Sale Agreement (the “Digital Asset Purchase and Sale Agreement”) with the Foundation Investor, pursuant to which we agreed to purchase and the Foundation Investor agreed to sell and transfer certain SUI tokens as set forth in one or more confirmations. The USD price per SUI token purchased pursuant to the Digital Asset Purchase and Sale Agreement will be equal to the product of (i) 0.85 multiplied by (ii) the 24-hour time weighted-average price on the closing date (as defined in the securities purchase agreements entered into in the private placement), as reasonably calculated by the Company. Pursuant to the terms of the Digital Asset Purchase and Sale Agreement, the SUI tokens purchased will be subject to transfer restrictions for a period of two years following purchase. Notwithstanding the foregoing, the transfer restrictions will not apply to the extent necessary to enable us to comply, or to be in compliance with, the provisions of the U.S. Investment Company Act of 1940, as amended. The Digital Asset Purchase and Sale Agreement also provides us with certain preemptive rights to purchase additional SUI tokens through July 31, 2027.

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MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

Executive Employment Agreements

On July 31, 2025, we entered into new executive employments with Douglas M. Polinsky, our Chief Executive Officer, and Joseph A. Geraci II, our Chief Financial Officer. Each new employment agreement has a three-year term (subject to certain early-termination rights). Each employment agreement provides the executive with a base annual salary of $450,000 and a bonus up to 100% of the base salary, at the discretion of the Compensation Committee of the Board of Directors. Each executive is also entitled to have health insurance provided by the Company and the ability to contribute to its 401(k) plan.

Each employment agreement contains a non-solicitation covenant effective during the term of the agreement and one year thereafter, as well as customary confidentiality covenants relating to the confidentiality of the Company information. In the event that an executive is terminated for cause, as defined in the employment agreements, or in the event that an executive’s services are terminated due to death or disability, the terminated executive will be entitled to receive only his base annual salary through the date of termination. In the event of other non-cause terminations, or in the event the executive resigns for good reason, as defined in the employment agreements, the Company will be obligated to pay the terminated executive’s base annual salary through the remainder of the employment term.

Change in Directors

On July 27, 2025, Mr. Lyle Berman resigned his position as a director on our Board of Directors. On the same day, the Board approved, subject to the closing of the private placement (which occurred on July 31, 2025), to set the size of the Board of Directors to five members, and appoint Messrs. Marius Barnett and Dana Wagner to serve as directors. Mr. Barnett is expected to serve as Chairman of the Board, and Mr. Wagner is expected to serve as a member of the Audit Committee of the Board. The Board believes that Messrs. Wagner and Barnett are qualified to serve as directors due to their extensive experience with SUI and cryptocurrency technology. Messrs. Wagner and Barnett are also regarded as leaders in financial investments and treasury strategies.

As compensation for his services on the Board, Mr. Wagner will receive an annual director fee of $250,000 to be paid on a quarterly basis. In addition, we agreed to grant to Mr. Wagner five-year warrants (the “Director Warrants”) to purchase 207,565 shares of common stock at various prices per share as follows: (i) 83,026 common shares at an exercise price of $5.42 per share; (ii) 41,513 common shares at an exercise price of $5.962 per share; (iii) 41,513 common shares at an exercise price of $6.504 per share; and (iv) 41,513 common shares at an exercise price of $7.046 per share. The Director Warrants will vest over a period of 24 months starting six months from their issuance date (as defined therein) in four equal instalments (being 25% every six months), subject to Mr. Wagner (i) being a director of the Company at each respective vesting date and (ii) not having been legally and validly terminated or removed as a director pursuant to the Company’s bylaws and applicable law.

Amended and Restated Bylaws

On July 27, 2025, the Board of Directors amended and restated our Company’s bylaws, effective immediately. The principal changes to the bylaws are to:

	·	permit the Board to take action without a meeting by less than unanimous written consent;

	·	establish the rights of shareholders to nominate directors for election at shareholder meetings pursuant to a written agreement, approved by the Board, as well as to include supporting materials in the Company’s proxy statement; and

	·	provide for the ability of the Board to increase or decrease the size of the Board.

Common Stock Purchase Agreement

On August 1, 2025, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with A.G.P./Alliance Global Partners (the “Investor”), pursuant to which we have the right, but not the obligation, to direct the Investor to purchase the lesser of (i) $500,000,000 or (ii) a number of shares not to exceed 19.99% of our shares of common stock outstanding on August 1, 2025, unless our shareholders shall have approved the issuance of common stock in excess of such percentage, upon satisfaction of certain terms and conditions contained in the Purchase Agreement, including but not limited to an effective resale registration statement filed with the SEC. In this regard, we also entered into a Registration Rights Agreement with the Investor on August 1, 2025, pursuant to which we agreed to file a resale registration statement registering the resale of shares of common stock that may be purchased by the Investor pursuant to the Purchase Agreement.

Any purchases and sales under the Purchase Agreement will be at a per-share purchase price equal 95% of the volume-weighted average price for the applicable period, as calculated pursuant to the Purchase Agreement.

Any proceeds from sales of common stock under the Purchase Agreement will be used in the manner set forth in the prospectus included in the related registration statement (and any post-effective amendment thereto), and any prospectus supplement thereto, filed pursuant to the registration rights agreement.

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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 six months ended June 30, 2025, we made $4,428,530 of investment purchases and had $504,116 of redemptions and repayments, resulting in net investments at amortized cost of $17,641,707 as of June 30, 2025.

During the six months ended June 30, 2024, we made $973,438 of investment purchases and had $5,461,479 of redemptions and repayments, resulting in net investments at amortized cost of $14,460,679 as of June 30, 2024.

Our portfolio composition by major class, based on fair value at June 30, 2025, was as follows:

	Investments at Fair Value		Percentage of Fair Value

Short-term Non-banking Loans	$	6,685,295		37.4	%
Commercial Business Loans		10,314,787		57.8
Common Stock		854,879		4.8
Other Equity		—		—
Total	$	17,854,961		100.0	%

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RESULTS OF OPERATIONS

Our operating results for the three and six months ended June 30, 2025 and June 30, 2024 were as follows:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2025			2024			2025			2024
Investment Income:	$	948,034		$	888,629		$	1,726,061		$	1,721,296
Operating Expenses:		(316,183	)		(398,059	)		(695,966	)		(759,146	)
Net Investment Gain	$	631,851		$	490,570		$	1,030,095		$	962,150

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 and six months ended June 30, 2025, our total investment income was $948,034 and $1,726,061, respectively. For the three and six months ended June 30, 2024 our total investment income was $888,629 and $1,721,296, respectively. Our loan portfolio generates interest income, with an average rate on the loans of 20%.

Professional Fees

For the three and six months ended June 30, 2025, we had $98,764 and $241,420 professional fees expense, respectively. For the three and six months ended June 30, 2024, we had $174,098 and $312,469 professional fees expense, respectively. The decrease is due to the decrease in loan activity during the current year.

Payroll and Directors Fees

For the three and six months ended June 30, 2025, we had $160,230 and $323,499 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively. For the three and six months ended June 30, 2024, we had $145,859 and $296,925 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively.

Interest Expense

For the three and six months ended June 30, 2025, we had $0 and $0 of interest expense, respectively. For the three and six months ended June 30, 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 AG真人官方ized Gain (Loss) from Investments

For the three and six months ended June 30, 2025, we had $500,017 and $504,116, respectively, of sales of investments resulting in $31 of realized losses and $205 of realized gains, respectively. For the three and six months ended June 30, 2024, we had $5,152,682 and $5,461,479, respectively, of sales of investments resulting in $346,745 and $371,240 of realized gains, respectively.

Net Change in Unrealized Appreciation (Depreciation) on Investments

For the three and six months ended June 30, 2025, our investments had $314,515 and $476,781 of unrealized appreciation, respectively. For the three and six months ended June 30, 2024, our investments had $289,641 and $237,890 of unrealized depreciation, respectively.

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Changes in Net Assets from Operations

For the three and six months ended June 30, 2025, we recorded a net increase in net assets from operations of $677,035 and $1,128,781, respectively. Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2025, our per-share net increase in net assets from operations was $0.11 and $0.18, respectively. For the three and six months ended June 30, 2024, we recorded a net increase in net assets from operations of $412,936 and $795,039, respectively. Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2024, our per-share net increase in net assets from operations was $0.06 and $0.12, respectively.

Cash Flows for the Six Months Ended June 30, 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 six months ended June 30, 2025, net cash used in operating activities was $3,898,665. Cash flows used in operating activities for the six months ended June 30, 2025 were primarily related to purchasing of investments totaling $4,428,530. Cash flows used in our financing activities for the six months ended June 30, 2025 were due to the repurchase and retirement of 322,482 of our common shares for $630,436. For the six months ended June 30, 2024, net cash provided in operating activities was $5,048,587. Cash flows provided in operating activities for the six months ended June 30, 2024 were primarily related to the funding of our short-term loans and purchases of investments aggregating $973,438, offset mostly by redemptions and repayments of short-term loans and investments totaling $5,461,479.

FINANCIAL CONDITION

As of June 30, 2025, we had cash of $1,497,009, a decrease of $4,529,101 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.”

Private Placement of Securities and SUI Strategy

On July 31, 2025, we closed on a private placement offer and sale of 75,881,625 shares of our common stock at an offering price of $5.42 per share, and pre-funded warrants to purchase up to 7,144,205 shares of our common stock at an offering price of $5.4199 per share, exercisable at a per-share price of $0.0001.

On July 27, 2025, and in connection with the private placement, we entered into a Placement Agency Agreement with A.G.P., pursuant to which A.G.P. agreed to serve as our exclusive placement agent in connection with the private placement. Pursuant to the Placement Agency Agreement, we paid A.G.P. a cash placement agent fee of $18,000,000. We also issued to A.G.P. warrants (the “Placement Agent Warrants”) to purchase up to 3,113,469 shares of our common stock (equal to 3.75% of the securities sold in the private placement). The Placement Agent Warrants will become exercisable six months following the issuance date and will be exercisable for a period of five years following the issuance date, at an exercise price of $5.962 per share. In addition, we agreed to reimburse A.G.P. for accountable expenses in an amount of $200,000 for its legal fees in connection with the private placement, as well as non-accountable expenses incurred by A.G.P. for up to $25,000 in connection with the private placement.

At the closing of the private placement, we also issued five-year warrants to purchase our common stock as follows:

	(i)	warrants (the “Lead Investor Warrants”) to Karatage Opportunities (“Karatage”), to purchase 3,113,469 shares of common stock at various exercise prices as follows: (i) 1,245,387 common shares at an exercise price of $5.42 per share; (ii) 1,245,387 common shares at an exercise price of $5.962 per share; (iii) 415,129 common shares at an exercise price of $6.504 per share; and (iv) 207,565 common shares at an exercise price of $7.046 per share;

	(ii)	warrants (the “Foundation Investor Warrants”) to the Sui Foundation (the “Foundation Investor”), to purchase 3,113,469 shares of common stock at various exercise prices as follows: (i) 1,245,388 common shares at an exercise price of $5.42 per share; (ii) 1,245,387 common shares at an exercise price of $5.962 per share; (iii) 415,129 common shares at an exercise price of $6.504 per share; and (iv) 207,565 common shares at an exercise price of $7.046 per share;

	(iii)	warrants (the “Management Warrants”) to certain members of the management of the Company to purchase 1,245,388 shares of common stock at various exercise prices as follows: (i) 622,694 common shares at an exercise price of $5.42 per share; (ii) 415,130 common shares at an exercise price of $6.504 per share; and (iii) 207,564 common shares at an exercise price of $7.046 per share; and

	(iv)	warrants (the “Advisor Warrants”) to certain advisors of the Company to purchase 207,565 shares of common stock at an exercise price of $5.962 per share.

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All of the above-described warrants, other than that Advisor Warrants, will vest over a 24-month period starting six months from the issue date (as defined therein) in four equal installments (being 25% every six months), and in the case of the Management Warrants, subject to the relevant holder still being employed by the Company at each respective vesting date. In the event that a member of the management team is terminated by the Company other than for cause or resigns for good reason (as defined in the individual’s employment agreement), the vesting of all of such individual’s Management Warrants will immediately accelerate and be fully vested as of the date of such termination. The Advisor Warrants are fully exercisable beginning as of January 31, 2026.

On July 27, 2025, and in connection with the private placement, we entered into a Registration Rights Agreement with the investors and A.G.P. pursuant to which we agreed to file a registration statement, within 10 days of the closing (i.e., on or before August 10, 2025), providing for the resale by the investors of the common shares and shares of common stock issuable upon exercise of the pre-funded warrants, and the shares of common stock issuable upon exercise of the Lead Investor Warrant, Foundation Investor Warrant, Management Warrants and the Placement Agent Warrants, and to have such registration statement declared effective within 30 days of its filing date (or 60 days, if the SEC conducts a full review), and to maintain the effectiveness of such registration statement until all securities registered pursuant thereto (i) shall have been sold, either thereunder or pursuant to Rule 144, or (ii) starting from the third anniversary of the registration rights agreement, may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 under the Securities Act, and without the requirement for our Company to be in compliance with the current public information requirement Rule 144.

Common Stock Purchase Agreement

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 six months ended June 30, 2025, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

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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.

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 June 30, 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 June 30, 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. In order to remediate this matter, we have retained the assistance of an accounting firm to assist in the accounting and reporting of transactions as needed, and have implemented other remedial disclosure procedures. We will consider the material weakness to be fully remediated once the applicable controls operate for a sufficient period of time and our management has concluded, through testing, that these controls are operating effectively.

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 6. EXHIBITS

Exhibit No.		Description
3.1 *		Bylaws (as amended and restated through July 27, 2025)
10.1 *		Executive Employment Agreement with Douglas M. Polinsky, dated July 31, 2025
10.2 *		Executive Employment Agreement with Joseph A. Geraci II, dated July 31, 2025
31.1 *		Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 *		Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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
101.INS *		Inline XBRL Instance Document
101.SCH *		Inline XBRL Taxonomy Extension Schema Document
101.CAL *		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF *		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB *		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE *		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 *		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* 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: August 14, 2025	By:	/s/ Douglas M. Polinsky
		Douglas M. Polinsky Chief Executive Officer

Date: August 14, 2025	By:	/s/ Joseph A. Geraci, II
		Joseph A. Geraci, II Chief Financial Officer

Source:

FAQ

What financing did MCVT disclose in the 10-Q?

MCVT completed a private placement of 75,881,625 common shares at $5.42 and pre-funded warrants for up to 7,144,205 shares at $5.4199, closing July 27, 2025.

How many placement agent warrants were issued and what is their exercise price?

3,113,469 Placement Agent Warrants (3.75% of the placement) exercisable six months after issuance for five years at $5.962 per share.

What are the terms of the company鈥檚 revolving credit facility?

$5 million revolver with amounts accruing interest at 8% per annum through January 3, 2027, secured by substantially all assets and subject to lender termination rights.

How many shares remain available under the equity plan?

30,000 shares remained available under the Plan as of June 30, 2025, after issuance of 870,000 incentives out of 900,000 authorized.

What compensation disclosures are included in the excerpt?

Executive base salary cited as $450,000 with a bonus opportunity up to 100% of base pay and standard health and 401(k) benefits.

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[10-Q] Mill City Ventures III, Ltd. Quarterly Earnings Report

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How many placement agent warrants were issued and what is their exercise price?

What are the terms of the company鈥檚 revolving credit facility?

How many shares remain available under the equity plan?

What compensation disclosures are included in the excerpt?

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[10-Q] Mill City Ventures III, Ltd. Quarterly Earnings Report

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Financial Analyst positive

Corporate Governance Expert positive

FAQ

What financing did MCVT disclose in the 10-Q?

How many placement agent warrants were issued and what is their exercise price?

What are the terms of the company鈥檚 revolving credit facility?

How many shares remain available under the equity plan?

What compensation disclosures are included in the excerpt?

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