Mill City Ventures III Ltd

Previous wording

For the year ended December 31, 2022, we earned $3,397,443 from 31 different short-term loans; and an aggregate of $802,010 in related origination fees.

Current wording

For the year ended December 31, 2024, we earned $2,758,744 from 10 different short-term loans; and an aggregate of $542,375 in related origination fees.

Previous wording

As the table above indicates, we incurred operating expenses aggregating $3,718,633 for the year ended December 31, 2023, and $3,398,877 for the year ended December 31, 2022. A summary of the various components of our operating expenses for these periods is set forth below.

Current wording

As the table above indicates, we incurred operating expenses aggregating $1,975,875 for the year ended December 31, 2024, and $3,718,633 for the year ended December 31, 2023. A summary of the various components of our operating expenses for these periods is set forth below.

Previous wording

General Operating Expenses. Our general operating expenses were $149,708 for the year ended December 31, 2023 and $140,993 for the year ended December 31, 2022. The increase in the current period is primarily related to higher fees incurred in relation to the unused portion on our line of credit (see Liquidity and Capital Resources below for more information).

Current wording

General Operating Expenses. Our general operating expenses were $92,214 for the year ended December 31, 2024 and $149,708 for the year ended December 31, 2023. The decrease in the current period results primarily from higher fees we incurred in 2023 for the unused portion on our line of credit (see Liquidity and Capital Resources below for more information).

Previous wording

Legal and Accounting Expenses. Our legal and accounting expenses were $761,525 for the year ended December 31, 2023 and $1,592,218 for the year ended December 31, 2022. The decrease in the current period is primarily related to a decrease in legal, consulting and marketing costs incurred.

Current wording

Legal and Accounting Expenses. Our legal and accounting expenses were $550,248 for the year ended December 31, 2024 and $761,525 for the year ended December 31, 2023. The decrease in the current period results primarily to a decreased need for legal and consulting services, and the decision to spend less on marketing.

Previous wording

Executive Management Compensation. Our executive management compensation was $1,848,393 for the year ended December 31, 2023 and $941,590 for the year ended December 31, 2022. The increase in 2023 over 2022 is due to a stock option issuance recognized in January 2023.

Current wording

Executive Management Compensation. Our executive management compensation was $933,157 for the year ended December 31, 2024 and $1,848,393 for the year ended December 31, 2023. The decrease in the current period results from the absence of any stock-based compensation expense in the current period.

Previous wording

Interest Expense. Our interest expense was $78,000 for the year ended December 31, 2023 and $195,893 for the year ended December 31, 2022. The 2023 decrease from 2022 is due to a lower use of the line of credit arrangement we entered into in 2022 (see Liquidity and Capital Resources below for more information).

Current wording

Interest Expense. Our interest expense was $320 for the year ended December 31, 2024 and $78,000 for the year ended December 31, 2023. The decrease in the current period results from our repayment in full and termination of the line of credit arrangement in January 2024. (see Liquidity and Capital Resources below for more information).

Previous wording

For the year ended December 31, 2023 our net investment loss was $419,998. For the year ended December 31, 2022, our net investment gain was $800,576. The increased net investment loss during 2023 was primarily the result of the stock option issuance and recognition in January 2023 that was primarily to our officers and directors, in addition to lower interest income earned during the course of 2023, including related origination fees.

Current wording

For the year ended December 31, 2024 our net investment gain was $1,325,244. For the year ended December 31, 2023, our net investment loss was $419,998. The increased net investment gain during 2024 results primarily from the absence of stock-based compensation expense in 2024 compared to significant stock-based compensation expense in 2023 from the issuance of stock options to our officers and directors.

Previous wording

At December 31, 2023, we had an increase in net assets of $718,703 as compared to December 31, 2022. This increase in net assets was primarily due to the issuance and exercise of stock options, partially offset by the decrease in the fair value of our investments and reduced cash and cash equivalents. Our net assets increased by $4,457,511 at December 31, 2022 as compared to December 31, 2021, due to the capital we raised during our August 2022 public offering and an increase in our interest income earned from the short-term loans we provided.

Current wording

At December 31, 2024, we had an increase in net assets of $1,167,726 as compared to December 31, 2023. This increase in net assets was primarily due to the overall reduction in operating expenses. Our net assets increased by $718,703 at December 31, 2023 as compared to December 31, 2022, due to the capitalized issuance and exercise of stock options, partially offset by the decrease in the fair value of our investments and reduced cash and cash equivalents.

Previous wording

During the course of 2023, the Loan Agreement, together with our cash and cash equivalents, were our primary sources of liquidity. With the termination of the Loan Agreement, however, our cash and cash equivalents are our remaining sources of liquidity as of the date of this report. In addition, we expect that some of our investment positions will mature, resulting in additional available cash. Management believes that these sources of liquidity, will be sufficient for the Company to fund its operations through the entirety of fiscal 2024. Accordingly, at present we have no definitive plans to obtain other sources of liquidity through borrowing or otherwise.

Current wording

During the course of 2023, the Loan Agreement, together with our cash and cash equivalents, were our primary sources of liquidity. With the termination of the Loan Agreement, however, our cash and cash equivalents are our remaining sources of liquidity. In addition, we expect that some of our investment positions will mature, resulting in additional available cash. Management believes that these sources of liquidity, will be sufficient for the Company to fund its operations through the entirety of fiscal 2025. Accordingly, at present we have no definitive plans to obtain other sources of liquidity through borrowing or otherwise.

Previous wording

In 2023, we made new investments aggregating $12,900,500, and refinanced or otherwise extended the term to maturity of investments aggregating $10,857,500. Of these amounts, $5 million were initially loaned to Mustang Funding, LLC in 2023, and another of $5 million earlier loaned in 2022 was refinanced, such that we had an aggregate of $10 million invested in Mustang Funding, LLC at December 31, 2023, all of which was due to mature at May 31, 2024.

Current wording

In 2024, we made new investments aggregating $5,665,526, and refinanced or otherwise extended the term to maturity of investments aggregating $17,795,000. Of these amounts, $5 million in principal amount was initially loaned to Mustang Funding, LLC in 2023, while another $5 million in principal amount (earlier been loaned in 2022) was refinanced, such that we had an aggregate of $10 million invested in Mustang Funding, LLC at December 31, 2024, all of which is currently due to mature at March 28, 2027.

Previous wording

In 2023, we also wrote-down (i.e., reduced the fair market value of our short-term loans) an aggregate of $935,000 of our investments in preferred stock and $345,421 in one of our short-term loan investments. In general, these write-downs occurred due to our judgment that some aspect of our investment was no longer likely collectible in full on account of the borrower’s financial condition, prospects, or both. The write-downs were offset by an increase in market valuations of our remaining short-term loan portfolio as well as market changes in our common stock and other equity holdings, resulting in a net change in unrealized depreciation of $641,433 as reflected in the statement of operations.

Current wording

In 2024, we also recognized as worthless one of our preferred stock investments. This investment had been de-valued in previous years by $635,000, and we recognized an additional loss in 2024 of $265,000. We also settled through litigation on one of our short-term loans and recognized a loss of $100,000. This was offset by $500,000 of valuation losses recorded in prior years, resulting in a net gain of $400,000 in 2024. The write-offs were offset by an increase in market valuations of our remaining short-term loan portfolio as well as market changes in our common stock and other equity holdings, resulting in a net change in unrealized depreciation of $1,029,277 as reflected in the statement of operations.