Form 10-Q - Quarterly report [Sections 13 or 15(d)]

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 September 30, 2023
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)

__________________________

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 and posted on its corporate Web site, if any, 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 November 15, 2023, Mill City Ventures III, Ltd. had 6,385,255 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 September 30, 2023

PART I.	FINANCIAL INFORMATION	Page No.

Item 1.	Financial Statements (unaudited)	3

	Condensed Balance Sheets – September 30, 2023 and December 31, 2022	3

	Condensed Statements of Operations – Three and nine months ended September 30, 2023 and September 30, 2022	4

	Condensed Statements of Shareholders’ Equity – Three and nine months ended September 30, 2023 and September 30, 2022	5

	Condensed Statements of Cash Flows – Nine months ended September 30, 2023 and September 30, 2022	6

	Condensed Schedule of Investments – September 30, 2023 and Schedule of Investments – December 31, 2022	7

	Condensed Notes to Financial Statements – September 30, 2023	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 4.	Controls and Procedures	22

PART II.	OTHER INFORMATION

Item 5.	Other Information

Item 6.	Exhibits	23

SIGNATURES		24

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MILL CITY VENTURES III, LTD.

CONDENSED BALANCE SHEETS

	September 30, 2023 (unaudited)			December 31, 2022
ASSETS
Investments, at fair value:	$	17,555,601		$	16,708,432
Non-control/non-affiliate investments (cost: $17,577,481 and $17,359,804 respectively)
Cash		962,860			1,089,641
Note receivable		250,000			250,000
Prepaid expenses		217,422			218,440
Interest and dividend receivables		219,205			250,879
Right-of-use lease asset		14,716			16,398
Deferred taxes		397,000			201,000
Total Assets	$	19,616,804		$	18,734,790

LIABILITIES
Accounts payable	$	124,082		$	776,514
Operating lease liability		14,716			16,562
Deferred interest income		—			70,154
Total Liabilities		138,798			863,230

SHAREHOLDERS EQUITY (NET ASSETS)
Common stock, par value $0.001 per share (111,111,111 authorized; 6,385,255 and 6,185,255 outstanding)		12,415			12,215
Additional paid-in capital		15,467,091			15,043,291
Additional paid-in capital - stock options		1,460,209			—
Accumulated deficit		(1,159,665	)		(1,159,665	)
Accumulated undistributed investment loss		(1,435,364	)		(1,086,739	)
Accumulated undistributed net realized gains on investment transactions		5,155,200			5,713,829
Net unrealized depreciation in value of investments		(21,880	)		(651,371	)
Total Shareholders' Equity (Net Assets)		19,478,006			17,871,560
Total Liabilities and Shareholders' Equity	$	19,616,804		$	18,734,790
Net Asset Value Per Common Share	$	3.05		$	2.89

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Investment Income
Interest income	$	725,158		$	1,115,224		$	2,496,688		$	3,351,935
Total Investment Income		725,158			1,115,224			2,496,688			3,351,935
Operating Expenses
Professional fees		184,008			916,359			601,184			1,309,348
Payroll		141,040			122,477			1,418,640			433,461
Insurance		26,452			27,016			79,974			84,092
Occupancy		14,890			18,589			55,005			54,542
Director's fees		30,000			30,000			592,968			147,073
Interest expense		—			46,779			78,000			164,632
Other general and administrative		24,983			18,572			57,464			34,717
Total Operating Expenses		421,373			1,179,792			2,883,235			2,227,865
Net Investment Gain (Loss)		303,785			(64,568	)		(386,547	)	$	1,124,070
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on investments		—			—			(558,629	)		133,020
Net change in unrealized appreciation (depreciation) on investments		2,175			—			629,491			(16,297	)
Net Realized and Unrealized Gain (Loss) on Investments		2,175			—			70,862			116,723
Net Increase (Decrease) in Net Assets Resulting from Operations Before Taxes	$	305,960		$	(64,568	)	$	(315,685	)	$	1,240,793

Provision for (Benefit from) Income Taxes		(63,600	)		(28,442	)		(37,922	)		346,800
Net Increase (Decrease) in Net Assets Resulting from Operations	$	369,560		$	(36,126	)	$	(277,763	)		893,993

Net Increase (Decrease) in Net Assets Resulting from Operations per share:
Basic	$	0.06		$	(0.01	)	$	(0.04	)	$	0.18
Diluted	$	0.06		$	(0.01	)	$	(0.04	)	$	0.18

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.

CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

Three Months Ended September 30, 2023	Common Shares		Par Value		Additional Paid In Capital		Accumulated Deficit			Accumulated Undistributed Net Investment Loss			Accumulated Undistributed Net Realized Gain (Loss) on Investments Transactions		Net Unrealized Appreciation in value of Investments			Total Shareholders' Equity
Balance as of June 30, 2023		6,185,255	$	12,215	$	16,503,500	$	(1,159,665	)	$	(1,802,749	)	$	5,155,200	$	(24,055	)	$	18,684,446
Exercise of stock options		200,000		200		423,800		—			—			—		—			424,000
Undistributed net investment gain				—		—		—			367,385			—		—			367,385
Depreciation in value of investments				—		—		—			—			—		2,175			2,175
Balance as of September 30, 2023		6,385,255	$	12,415	$	16,927,300	$	(1,159,665	)	$	(1,435,364	)	$	5,155,200	$	(21,880	)	$	19,478,006

Three Months Ended September 30, 2022	Common Shares		Par Value		Additional Paid In Capital		Accumulated Deficit			Accumulated Undistributed Net Investment Loss			Accumulated Undistributed Net Realized Gain on Investments Transactions		Net Unrealized Appreciation in value of Investments		Total Shareholders' Equity
Balance as of June 30, 2022		4,824,628	$	10,855	$	10,776,537	$	(1,159,665	)	$	(1,064,271	)	$	5,713,830	$	149,321	$	14,426,607
Common shares issued in public offering		1,250,000		1,250		4,040,545		—			—			—		—		4,041,795
Common shares issued in reverse stock split rounding		735		—		—		—			—			—		—		—
Common shares issued in stock-based compensation		32,115		32		66,844		—			—			—		—		66,876
Common shares issued in consideration for expense payment		77,777		78		159,365		—			—			—		—		159,443
Undistributed net investment loss				—		—		—			(36,126	)		—		—		(36,126	)
Balance as of September 30, 2022		6,185,255	$	12,215	$	15,043,291	$	(1,159,665	)	$	(1,100,397	)	$	5,713,830	$	149,321	$	18,658,595

Nine Months Ended September 30, 2023	Common Shares		Par Value		Additional Paid In Capital		Accumulated Deficit			Accumulated Undistributed Net Investment Loss			Accumulated Undistributed Net Realized Gain on Investments Transactions			Net Unrealized Appreciation (Depreciation) in value of Investments			Total Shareholders' Equity
Balance as of December 31, 2022		6,185,255	$	12,215	$	15,043,291	$	(1,159,665	)	$	(1,086,739	)	$	5,713,829		$	(651,371	)	$	17,871,560
Issuance of stock options				—		1,460,209		—			—			—			—			1,460,209
Exercise of stock options		200,000		200		423,800		—			—			—			—			424,000
Net investment loss, net of tax benefit of $139,300				—		—		—			(348,625	)		—			—			(348,625	)
Undistributed net realized loss on investment transactions				—		—		—			—			(558,629	)		—			(558,629	)
Appreciation in value of investments				—		—		—			—			—			629,491			629,491
Balance as of September 30, 2023		6,385,255	$	12,415	$	16,927,300	$	(1,159,665	)	$	(1,435,364	)	$	5,155,200		$	(21,880	)	$	19,478,006

Nine Months Ended September 30, 2022	Common Shares		Par Value		Additional Paid In Capital		Accumulated Deficit			Accumulated Undistributed Net Investment Loss			Accumulated Undistributed Net Realized Gain on Investments Transactions		Net Unrealized Appreciation in value of Investments			Total Shareholders' Equity
Balance as of December 31, 2021		4,795,739	$	10,790	$	10,694,163	$	(1,159,665	)	$	(1,877,667	)	$	5,580,810	$	165,618		$	13,414,049
Common shares issued in public offering		1,250,000		1,250		4,040,545		—			—			—		—			4,041,795
Common shares issued in reverse stock split rounding		735		—		—		—			—			—		—			—
Common shares issued in stock-based compensation		31,248		97		149,218		—			—			—		—			149,315
Common shares issued in consideration for expense payment		107,533		78		159,365		—			—			—		—			159,443
Undistributed net investment gain				—		—		—			777,270			—		—			777,270
Undistributed net realized gain on investment transactions				—		—		—			—			133,020		—			133,020
Depreciation in value of investments				—		—		—			—			—		(16,297	)		(16,297	)
Balance as of September 30, 2022		6,185,255	$	12,215	$	15,043,291	$	(1,159,665	)	$	(1,100,397	)	$	5,713,830	$	149,321		$	18,658,595

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

STATEMENT OF CASH FLOWS

	Nine Months Ended
	September 30, 2023			September 30, 2022
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	(277,763	)	$	893,993
Adjustments to reconcile net increase (decrease) in net assets resulting
from operations to net cash used in operating activities:
Net change in unrealized (appreciation) depreciation on investments		(629,491	)		16,297
Net realized (gain) loss on investments		558,629			(133,020	)
Purchases of investments		(11,900,500	)		(13,924,333	)
Proceeds from sales of investments		11,124,193			10,076,483
Issuance of stock options		1,460,209			—
Deferred income taxes		(196,000	)		—
Common shares issued as consideration for expense payment		—			308,758
Changes in operating assets and liabilities:
Prepaid expenses and other assets		2,700			(21,225	)
Interest and dividends receivable		31,674			(614,949	)
Payable for investment purchase		—			(1,900,000	)
Accounts payable and other liabilities		(654,278	)		53,903
Income taxes payable		—			(1,185,200	)
Deferred interest income		(70,154	)		—
Net cash used in operating activities		(550,781	)		(6,429,293	)
Cash flows from financing activities:
Proceeds from public offering		—			4,041,795
Proceeds from stock option exercise		424,000
Proceeds from line of credit		2,750,000			8,414,000
Repayments on line of credit		(2,750,000	)		(6,101,000	)
Net cash provided by financing activities		424,000			6,354,795
Net increase (decrease) in cash		(126,781	)		(74,498	)
Cash, beginning of period		1,089,641			1,936,148
Cash, end of period	$	962,860		$	1,861,650

Supplemental disclosure of cash flow information:
Cash paid for interest	$	78,010		$	—

Non-cash investing activities:

See accompanying Notes to Financial Statements

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MILL CITY VENTURES III, LTD.

CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)

SEPTEMBER 30, 2023

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	$	10,030,569		51.50	%
Consumer - 18% secured loans
Intelligent Mapping, LLC		2,900,000		2,899,757		14.89	%
Financial - 12% secured loans		500,000		405,166		2.08	%
Information Technology - 15% convertible note		212,500		214,021		1.10	%
Real Estate - 18% secured loans		745,000		745,650		3.82	%
Real Estate - 12% secured loans
Alatus Development Corp		2,000,000		2,001,823		10.28	%
Total Short-Term Non-Banking Loans		16,357,500		16,296,986		83.67	%

Preferred Stock
Consumer
Wisdom Gaming, Inc		900,000		900,000		4.62	%
Information Technology		150,000		300,000		1.54	%
Total Preferred Stock		1,050,000		1,200,000		6.16	%

Common Stock
Consumer		159,302		48,615		0.25	%

Warrants
Healthcare		679		—		0.00	%

Other Equity
Financial		10,000		10,000		0.05	%

Total Investments	$	17,577,481	$	17,555,601		90.13	%

Total Cash		962,860		962,860		4.94	%

Total Investments and Cash	$	$18,540,341	$	$18,518,461		95.07	%

See accompanying Notes to the Financial Statements

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MILL CITY VENTURES III, LTD.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 2022

Investment / Industry	Cost		Fair Value		Percentage of Net Assets

Short-Term Non-banking Loans
Business Services - 18% secured loans
Liberated Syndication Inc.	$	2,250,000	$	2,255,625		12.62	%
Business Services - 15% secured loans
Mustang Litigation Funding		5,000,000		4,975,955		27.84	%
Consumer - 15% secured loans		400,000		398,635		2.23	%
Intelligent Mapping, LLC		2,900,000		2,873,893		16.08	%
Financial - 33% secured loans
Benton Financial, LLC		2,479,125		2,478,030		13.87	%
Financial - 12% secured loans		500,000		345,421		1.93	%
Information Technology - 15% convertible note		212,500		213,656		1.20	%
Real Estate - 15% secured loans		745,000		746,354		4.17	%
Real Estate - 12% secured loans
Alatus Development Corp		1,000,000		998,363		5.59	%
Total Short-Term Non-Banking Loans		15,486,625		15,285,932		85.53	%

Preferred Stock
Consumer
Wisdom Gaming, Inc		900,000		900,000		5.04	%
Information Technology		150,000		300,000		1.68	%
Total Preferred Stock		1,050,000		1,200,000		6.72	%

Warrants
Healthcare		679		—		0.00	%

Other Equity
Consumer		212,500		212,500		1.19	%
Financial		610,000		10,000		0.06	%
Total Other Equity		822,500		222,500		1.25	%

Total Investments	$	17,359,804	$	16,708,432		93.50	%

Total Cash		1,089,641		1,089,641		6.10	%

Total Investments and Cash	$	$18,449,445	$	$17,798,073		99.60	%

See accompanying Notes to the Financial Statements

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NOTE 1 – ORGANIZATION

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

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

Basis of presentation: The accompanying unaudited condensed financial statements of Mill City Ventures have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (GAAP) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the quarter ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The condensed balance sheet as of December 31, 2022 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in our Annual Report on Form 10-K/A for the year ended December 31, 2022.

Use of estimates: The preparation of financial statements in conformity with 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:

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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.

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 fair value certain circumstances however, impact the qualitative factors that we use in determining fair value. 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 approach indicates 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.

We value Level 2 investments based on quoted prices for similar instruments or investments traded in active markets. If there are no active markets for similar instruments or investments, then we value our Level 2 investments based on quoted prices not traded in active markets, or on valuation models whose inputs or significant value drivers consist of observable market data.

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.

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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.

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, 2020 through 2022, which are the tax years that remain subject to examination by major tax jurisdictions as of September 30, 2023.

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

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

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

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

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

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

Management and service fees:

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

NOTE 3 – INVESTMENTS

The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of September 30, 2023 (together with the corresponding percentage of the fair value of our total portfolio of investments):

	As of September 30, 2023
	Investments at Amortized Cost		Percentage of Amortized Cost			Investments at Fair Value		Percentage of Fair Value

Short-term Non-banking Loans	$	16,357,500		93.0	%	$	16,296,986		92.8	%
Preferred Stock		1,050,000		6.0			1,200,000		6.8
Common Stock		159,302		0.9			48,615		0.3
Warrants		679		—			—		—
Other Equity		10,000		0.1			10,000		0.1
Total	$	17,577,481		100.0	%	$	17,555,601		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, 2022 (together with the corresponding percentage of the fair value of our total investments):

	As of December 31, 2022
	Investments at Amortized Cost		Percentage of Amortized Cost			Investments at Fair Value		Percentage of Fair Value

Short-term Non-banking Loans	$	15,486,625		89.2	%	$	15,285,932		91.5	%
Preferred Stock		1,050,000		6.1			1,200,000		7.2
Common Stock		—		—			—		—
Warrants		679		—			—		—
Other Equity		822,500		4.7			222,500		1.3
Total	$	17,359,804		100.0	%	$	16,708,432		100.0	%

The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of September 30, 2023:

	As of September 30, 2023
	Investments at Fair Value		Percentage of Fair Value

Business Services	$	10,030,569		57.1	%
Consumer		3,848,372		21.9
Financial		415,166		2.4
Information Technology		514,021		2.9
Real Estate		2,747,473		15.7
Total	$	17,555,601		100.0	%

The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of December 31, 2022:

	As of December 31, 2022
	Investments at Fair Value		Percentage of Fair Value

Business Services	$	7,231,580		43.3	%
Consumer		4,385,028		26.2
Financial		2,833,451		17.0
Information Technology		513,656		3.1
Real Estate		1,744,717		10.4
Total	$	16,708,432		100.0	%

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 investments portfolio as of September 30, 2023 may differ materially from values that would have been used had a readily available market for the investments existed.

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The following table presents the fair value measurements of our portfolio investments by major class, as of September 30, 2023, according to the fair value hierarchy:

	As of September 30, 2023
	Level 1		Level 2		Level 3		Total
Short-term Non-banking Loans	$	—	$	—	$	16,296,986	$	16,296,986
Preferred Stock						1,200,000		1,200,000
Common Stock		48,615		—		—		48,615
Warrants		—		—		—		—
Other Equity		—		—		10,000		10,000
Total	$	48,615	$	—	$	17,506,986	$	17,555,601

The following table presents the fair value measurements of our investment portfolio by major class, as of December 31, 2022, according to the fair value hierarchy:

	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Short-term Non-banking Loans	$	—	$	—	$	15,285,932	$	15,285,932
Preferred Stock		—		—		1,200,000		1,200,000
Common Stock		—		—		—		—
Other Equity		—		—		222,500		222,500
Total	$	—	$	—	$	16,708,432	$	16,708,432

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the nine months ended September 30, 2023:

	For the nine months ended September 30, 2023
	ST Non-banking Loans			Preferred Stock		Common Stock		Warrants		Other Equity
Balance as of January 1, 2023	$	15,285,932		$	1,200,000	$	—	$	—	$	222,500
Net change in unrealized appreciation		140,179			—		—		—		600,000
Purchases and other adjustments to cost		11,900,500			—		—		—		—
Sales and redemptions		(11,029,625	)		—		—		—		—
Net realized loss		—			—		—		—		(600,000	)
Transfers out of level 3		—			—		—		—		(212,500	)
Balance as of September 30, 2023	$	16,296,986		$	1,200,000	$	—	$	—	$	10,000

The net change in unrealized appreciation for the nine months ended September 30, 2023 attributable to Level 3 portfolio investments still held as of September 30, 2023 is $89,486.

The following table lists our Level 3 investments held as of September 30, 2023 and the unobservable inputs used to determine their valuation:

Investement Type	9/30/23 FMV		Valuation Technique	Unobservable Inputs	Range
ST Non-banking Loans	$	16,296,986	discounted cash flow	determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness	12-18	%
Other Equity		10,000	last secured funding known by company	data obtained from issuer, and stated value of instrument (if any), less assumed transaction costs.
Preferred Stock		1,200,000	last funding secured by company	data obtained from issuer, and stated value of instrument (if any), less assumed transaction costs.
	$	17,506,986

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The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the year ended December 31, 2022:

	For the year ended December 31, 2022
	ST Non-banking Loans			Preferred Stock		Common Stock		Warrants		Other Equity
Balance as of January 1, 2022	$	11,650,000		$	1,200,000	$	—	$	—	$	812,500
Net change in unrealized depreciation		(200,693	)		—		—		—		(600,000	)
Purchases and other adjustments to cost		23,548,458			—		—		—		10,000
Sales and redemptions		(19,711,833	)		—		—		—		—
Balance as of December 31, 2022	$	15,285,932		$	1,200,000	$	—	$	—	$	222,500

The net change in unrealized depreciation for the year ended December 31, 2022 attributable to Level 3 portfolio investments still held as of December 31, 2022 was $651,371.

The following table lists our Level 3 investments held as of December 31, 2022 and the unobservable inputs used to determine their valuation:

Security Type	12/31/22 FMV		Valuation Technique	Unobservable Inputs	Range
ST Non-banking Loans	$	15,285,932	discounted cash flow	determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness	12-33	%
Other Equity		222,500	last secured funding known by company
Preferred Stock		1,200,000	last funding secured by company	economic changes since last funding
	$	16,708,432

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:

	·	· On August 10, 2018, we entered into a loan transaction with Elizabeth Zbikowski who, along with her husband Scott Zbikowski, owned and continues to own approximately 534,445 shares of our common stock. In the transaction, we obtained a two-year promissory note in the principal amount of $250,000, which was subsequently amended such that the note presently matures on December 31, 2023. The promissory note bears interest payable monthly at the rate of 10% per annum. The note is secured by the debtors’ pledge to us of 277,778 shares of our common stock. The pledged shares are held in physical custody for us by Millennium Trust Company, as our custodial agent.

	·	· On January 3, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Eastman Investment, Inc., a Nevada corporation, and Lyle A. Berman, as trustee of the Lyle A. Berman Revocable Trust (collectively, the “Lenders”). Mr. Berman is a director of our Company. 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. See note 7 below for further details.

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NOTE 6 – INCOME TAXES

We are a C-Corporation for tax purposes and have booked an income tax provision for the periods described below.

As of September 30, 2023 and December 31, 2022, we have a deferred tax asset of $397,000 and $201,000, respectively. As of September 2023, our net deferred tax asset consists of foreign tax credit carryforwards, unrealized investment gain/loss, non-qualified stock option expenses, net operating losses (NOL), and right of use 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 September 30, 2023 and December 31, 2022 we had prepaid income taxes of $139,200 and $179,300, respectively. We recorded a decrease of income taxes of $38,000 (27 percent effective tax rate) and an increase of income taxes of $346,000 (27 percent effective tax rate) during the nine months ended September 2023 and September 2022, respectively.

As of September 30, 2023, we had a federal NOL of approximately $277,000. The federal NOL may be carried forward to offset future taxable income, subject to applicable provisions of the Internal Revenue Code. Due to tax reform enacted in 2017, NOLs created after 2017 carry forward indefinitely. The estimated federal NOL that does not expire included in the total above is $277,000. States vary in their treatment of post-2017 NOLs. The state NOL of $200,000 is expected to be used by December 31, 2024. The remaining state NOL carryforwards may expire in 2038 if not used.

NOTE 7 – LINE OF CREDIT

On January 3, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Eastman Investment, Inc., a Nevada corporation, and Lyle A. Berman, as trustee of the Lyle A. Berman Revocable Trust (collectively, the “Lenders”). Mr. Berman is a director of our Company. 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. Amounts drawn under the Loan Agreement accrue interest at the per annum rate of 8%, and all our obligations under the Loan Agreement are secured by a grant of a collateral security interest in substantially all of our assets.

As a Lender, Mr. Berman is obligated to furnish only one-half of the aggregate $5 million available under the Loan Agreement. The Loan Agreement has a five-year term ending on January 3, 2027, at which time all amounts owing under the Loan Agreement will become due and payable; subject, however, to each Lender’s right, including Mr. Berman, to terminate the Loan Agreement, solely with respect to such Lender’s obligation to provide further credit, at any time after January 3, 2023. In the event that a Lender, including Mr. Berman, terminates its lending obligations, the Loan Agreement requires that we repay such Lender, prior to the five-year maturity date, with the proceeds derived from specified investments.

During the period January 3 to September 30, 2022, the Loan Agreement provided for us to pay a quarterly unused commitment fee equal to one-quarter of one percent of the amount of credit available but unused under the Loan Agreement in the form of shares of our common stock based on our net asset value per share on the last day of the applicable fiscal quarter. The Loan Agreement grants the Lenders piggyback registration rights subject to customary terms, conditions and exceptions. Beginning July 1, 2022, we became obligated under the Loan Agreement to pay the quarterly unused commitment fee in cash.

As of September 30, 2023 and December 31, 2022, there was no balance outstanding on the line.

NOTE 8 – STOCK-BASED COMPENSATION

The Company’s 2022 Stock Incentive Plan (the “Plan”) authorized the issuance of incentives relating to 900,000 shares of common stock. As of September 30, 2023, 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 nine months ended September 30, 2023:

	Shares			Weighted Average Exercise Price
Options outstanding at beginning of year		—		$	—
Granted		870,000			2.11
Exercised		(200,000	)		2.12
Forfeited		—			—
Balance at September 30, 2023		670,000		$	2.11

Options exercisable at September 30:		670,000		$	2.11

Grant Date Fair Value for options granted during the period:	$	1,242,902

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The following table summarizes additional information about stock options outstanding and exercisable at September 30, 2023:

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		9.17	$	2.11	$	632,900		670,000	$	2.11	$	632,900

The Company recognized stock-based compensation expense for stock options of $1,460,209 for the nine months ended September 30, 2023.

The Black-Scholes option-pricing model was used to estimate the fair value of equity-based awards with the following weighted-average assumptions for the nine months ended September 30, 2023:

	2023
Risk-free interest rate		4.59	%
Expected volatility		90.00	%
Expected life (years)		5.0
Expected dividend yield		—	%

The inputs for the Black-Scholes valuation model require management’s significant assumptions. The price per share of common stock is determined by using the closing market price on the Nasdaq Capital Market on the grant date. The risk-free interest rates are based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant date. The expected life is based on the simplified method in accordance with the SEC Staff Accounting Bulletin Nos. 107 and 110. The expected volatility is estimated based on historical volatility information of peer companies that are publicly available in combination with the Company’s calculated volatility.

NOTE 9 – SHAREHOLDERS’ EQUITY

At September 30, 2023, we had 6,385,255 shares of common stock issued and outstanding.

On August 9, 2022, the Company effected a stock combination (reverse stock split) of its common shares on a 1-for-2.25 basis such that every 2.25 shares of common stock issued and outstanding on that date were combined into one share of common stock. Any fractional share resulting from the reverse stock split was rounded up to the nearest whole share. The reverse stock split was approved by the Company's board of directors in accordance with Minnesota law and resulted in a proportionate reduction in the number of authorized shares of capital stock available for issuance under the Company's articles of incorporation. This reduction was affected pursuant to the filing of articles of amendment with the Minnesota Secretary of State indicating that the Company, on a post-reverse-split basis, is authorized to issue up to 111,111,111 shares of capital stock. All share and per share information has been retrospectively adjusted to reflect the reverse stock split.

NOTE 10 – PER-SHARE INFORMATION

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

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	For the Three Months Ended September 30,
	2023				2022
	Basic		Diluted		Basic			Diluted
Numerator: Net increase in net assets resulting from operations	$	369,560	$	369,560	$	(36,126	)	$	(36,126	)
Denominator: Weighted-average number of common shares outstanding		6,241,777		6,358,345		5,512,737			5,512,737
Basic and diluted net gain (loss) per common share	$	0.06	$	0.06	$	(0.01	)	$	(0.01	)

	For the Nine Months Ended September 30,
	2023						2022
	Basic			Diluted			Basic		Diluted
Numerator: Net increase (decrease) in net assets resulting from operations	$	(277,763	)	$	(277,763	)	$	893,993	$	893,993
Denominator: Weighted-average number of common shares outstanding		6,204,303			6,204,303			5,045,830		5,045,830
Basic and diluted net gain (loss) per common share	$	(0.04	)	$	(0.04	)	$	0.18	$	0.18

NOTE 11 – OPERATING LEASES

We are a party to two non-cancelable operating leases for office space expiring May 31, 2024. These leases do not have significant lease escalations, holidays, concessions, leasehold improvements, or other build-out clauses. Further, the leases do not contain contingent rent provisions. The leases do not include options to renew.

Because our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of the lease payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The weighted-average discount rate as of September 30, 2023 and September 30, 2022 was 4.5% and the weighted-average remaining lease term is one year.

Rent expense for office facilities for the nine months ended September 30, 2023 and September 30, 2022 was $55,005 and $54,542, respectively.

The components of our operating lease were as follows for the three and nine months ended September 30, 2023:

	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2023

Operating lease costs	$	5,504	$	16,512
Variable lease cost		4,886		14,619
Short-term lease cost		4,500		23,874
Total	$	14,890	$	55,005

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Supplemental balance sheet information consisted of the following at September 30:

Operating Lease	2023			2022
Right-of-use assets	$	14,716		$	21,563

Operating Lease Liability	$	14,716		$	21,672
Less: short term portion		(14,716	)		(21,672	)
Long term portion	$	—		$	—

Maturity analysis under lease agreements consisted of the following as of September 30:

	2023			2022
2022	$	—		$	6,357
2023		7,428			14,859
2024		7,482			—
Total lease payments		14,910			21,216
Less: Present value discount		(194	)		456
Present value of lease liabilities	$	14,716		$	21,672

NOTE 12 – FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the nine months ended September 30, 2023 through 2019:

	Nine Months Ended September 30,
	2023			2022			2021			2020			2019
Per Share Data ⁽¹⁾
Net asset value at beginning of period	$	2.89			2.80			2.43			2.05			2.30
Net investment income (loss)		(0.06	)		0.18			0.20			0.05			(0.11	)
Net realized and unrealized gains (losses)		0.01			0.02			0.54			0.14			0.02
Provision for income taxes		0.01			(0.05	)		(0.20	)		0.00			0.00
Issuance of stock options		0.24			0.00			0.00			0.00			0.00
Issuance of common stock		0.05			0.00			0.00			0.00			0.00
Stock-based compensation		0.00			0.05			0.00			0.00			0.00
Repurchase of common stock		0.00			0.00			0.00			0.05			0.00
Other changes in equity		(0.09	)		0.02			0.00			0.00			0.00
Payment of common stock dividend		0.00			0.00			(0.23	)		0.00			(0.11	)
Net asset value at end of period	$	3.05			3.02			2.74			2.29			2.10

Ratio / Supplemental Data
Per share market value of investments at end of period	$	2.75			2.92			2.30			1.71			1.58
Shares outstanding at end of period		6,385,255			6,185,255			4,795,739			4,754,104			4,918,845
Average weighted shares outstanding for the period - basic		6,204,303			5,045,830			4,795,075			4,836,170			4,918,845
Average weighted shares outstanding for the period - diluted		6,320,871			5,045,830			4,795,075			4,836,170			4,918,845
Net assets at end of period	$	19,478,006			18,658,595			13,140,835			10,805,062			10,588,689
Average net assets ⁽²⁾	$	18,661,934			15,081,352			13,090,497			10,220,482			12,304,975
Total investment return (loss)		(2.76	)%		6.07	%		22.22	%		8.79	%		(8.82	)%
Portfolio turnover rate (3)		59.61	%		66.81	%		124.55	%		18.18	%		7.11	%
Ratio of operating expenses to average net assets ⁽³⁾		(20.10	)%		(19.24	)%		(10.31	)%		(6.49	)%		(7.70	)%
Ratio of net investment income (loss) to average net assets⁽³⁾		(2.76	)%		10.09	%		9.87	%		3.35	%		(6.40	)%

(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 13 – Subsequent Events

At the Company's 2023 annual shareholder meeting held on October 31, 2023, the shareholders of the Company re-elected all directors to serve another term on our Board of Directors, approved on an advisory basis the executive compensation paid to the Company's named executives, and voted on an advisory basis in favor of future advisory votes on the Company's executive compensation every three years.

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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, 2022, 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.

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PORTFOLIO AND INVESTMENT ACTIVITY

During the nine months ended September 30, 2023, we made $11,900,500 of investment purchases and had $11,124,193 of redemptions and repayments, resulting in net investments at amortized cost of $17,577,481 at the end of the period.

During the nine months ended September 30, 2022, we made $9,103,580 of investment purchases and had $7,977,898 of redemptions and repayments, resulting in net investments at amortized cost of $15,191,759 at the end of that period.

Our portfolio composition by major class, based on fair value at September 30, 2023, was as follows:

	Investments at Fair Value		Percentage of Fair Value
Short-term Non-banking Loans	$	16,296,986		92.8	%
Equity/Other		1,258,615		7.2
Total	$	17,555,601		100.0	%

RESULTS OF OPERATIONS

Our operating results for the three and nine months ended September 30, 2023 and September 30, 2022 were as follows:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Investment Income:	$	725,158		$	1,115,224		$	2,496,688		$	3,351,935
Operating Expenses:		(421,373	)		(1,179,792	)		(2,883,235	)		(2,227,865	)
Net Investment Gain (Loss)	$	303,785		$	(64,568	)	$	(386,547	)	$	1,124,070

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 nine months ended September 30, 2023, our total investment income was $725,158 and $2,496,688, respectively. For the three and nine months ended September 30, 2022, our total investment income was $1,115,224 and $3,351,935, respectively. The decrease is due to an overall reduction in our short-term non-bank lending activity. Our loan portfolio generates interest income, with an average rate on the loans of 15.2%.

Professional Fees

For the three and nine months ended September 30, 2023, we had $184,008 and $601,184 professional fees expense, respectively. For the three and nine months ended September 30, 2022, we had $916,359 and $1,309,348 professional fees expense, respectively. The decrease is due to the significant costs we incurred during and in conjunction with our public offering of common stock in 2022, partially offset by our costs incurred to amend our Form 10K filing for December 31, 2022 during 2023.

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Payroll and Directors Fees

For the three and nine months ended September 30, 2023, we had $141,040 and $1,418,640 of payroll expense, respectively, and we had $30,000 and $592,968 of directors fees, respectively. For the three and nine months ended September 30, 2022, we had $122,477 and $433,461 of payroll expense, respectively, and we had $30,000 and $147,073 of directors fees, respectively. The increase in the current period was due in large part to the company’s issuance of 870,000 10-year options to directors, officers and consultants in November and December 2022 (which were issued subject to shareholder approval). On January 20, 2023 company shareholders approved the options and the related incentive plan at a special meeting held for that purpose. These options generated a noncash expense of $1,460,209.

Interest Expense

For the three and nine months ended September 30, 2023, we had $0 and $78,000 of interest expense, respectively. For the three and nine months ended September 30, 2022, we had $46,779 and $164,632 of interest expense, respectively. The decrease is due to our reduced borrowing on the line of credit during the current period.

Net Realized Gain (Loss) from Investments

For the three and nine months ended September 30, 2023, we had $0 and $94,569, respectively, of sales of investments and $1,975,000 and 11,029,625, respectively, of repayments on short-term loans, resulting in $0 and $558,629 of realized losses, respectively. For the three and nine months ended September 30, 2022, we had $0 and $552,898, respectively, of sales of investments and $2,098,585 and $9,523,585, respectively, of repayments on short-term loans, resulting in $0 and $133,020 of realized gains, respectively.

Net Change in Unrealized Appreciation (Depreciation) on Investments

For the three and nine months ended September 30, 2023, our investments had $2,175 and $629,491 of unrealized appreciation, respectively. For the three and nine months ended September 30, 2022, our investments had $0 and $16,297 of unrealized depreciation, respectively.

Changes in Net Assets from Operations

For the three and nine months ended September 30, 2023, we recorded a net increase in net assets from operations of $369,560 and a net decrease in net assets from operations of $277,763, respectively. Based on the weighted-average number of shares of common stock outstanding for the three and nine months ended September 30, 2023, our per-share net increase in net assets from operations was $0.06 and our per share net decrease in net assets from operations was $0.04, respectively. For the three and nine months ended September 30, 2022, we recorded a net decrease in net assets from operations of $36,126 and a net increase in net assets from operations of $893,993, respectively. Based on the weighted-average number of shares of common stock outstanding for the three and nine months ended September 30, 2022, our per-share net decrease in net assets from operations was $0.01 and our per share net increase in net assets from operations was $0.18, respectively.

Cash Flows for the Nine months Ended September 30, 2023 and 2022

The level of cash flows used in or provided by operating activities is affected primarily by our provision of short-term loans, purchases of other investments, redemptions and repayments of our loans or investments, and other related factors. For the nine months ended September 30, 2023, net cash used in operating activities was $550,781. Cash flows used in operating activities for the nine months ended September 30, 2023 were primarily related to the funding of our short-term loans and purchases of investments aggregating $11,900,500, offset mostly by redemptions and repayments of short-term loans and investments totaling $11,124,193. For the nine months ended September 30, 2022, net cash used in operating activities was $6,429,293. Cash flows used in operating activities for the nine months ended September 30, 2022 were primarily related to the funding of our short-term loans and purchases of investments aggregating $13,924,333, offset mostly by redemptions and repayments of short-term loans and investments totaling $10,076,483.

FINANCIAL CONDITION

As of September 30, 2023, we had cash of $962,860, a decrease of $126,781 from December 31, 2022. 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.”

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On August 9, 2022, we effected a stock combination (reverse stock split) of our common shares on a 1-for-2.25 basis such that every 2.25 shares of common stock issued and outstanding on that date were combined into one share of common stock. Any fractional share resulting from the reverse stock split was rounded up to the nearest whole share. The reverse stock split was approved by our Board of Directors in accordance with Minnesota law, and resulted in a proportionate reduction in the number of authorized shares of capital stock available for issuance under our articles of incorporation. On a post-reverse-split basis, we are authorized to issue up to 111,111,111 shares of capital stock.

On August 11, 2022, we completed a public offer and sale of 1,250,000 common shares pursuant to a registration statement filed with the SEC and declared effective on August 9, 2022. We sold these shares at $4.00 per share, resulting in gross proceeds of $5,000,000. As part of the registered public offering, we granted the underwriters a 45-day option to purchase up to 187,500 additional common shares at the offering price, less underwriting discounts, which option was not exercised. In connection with the offering, we issued the underwriter a five-year warrant to purchase up to 75,000 common shares at the per-share price of $5.00. Our net proceeds after the payment of underwriting discounts, underwriting expenses, and offering-related expenses we incurred were otherwise obligated to pay, were approximately $4,041,000.

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, 2022.

OFF-BALANCE-SHEET ARRANGEMENTS

During the nine months ended September 30, 2023, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

FORWARD-LOOKING STATEMENTS

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

	·	our future operating results;
	·	the success of our investments;
	·	our relationships with third parties;
	·	the dependence of our success on the general economy and its impact on the industries in which we invest;
	·	the ability of our portfolio companies to achieve their objectives;
	·	our expected financings and investments;
	·	our regulatory structure and tax treatment;
	·	the adequacy of our cash resources and working capital; and
	·	the timing of cash flows, if any, we receive from our investments.

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The foregoing list is not exhaustive. For a more complete summary of the risks and uncertainties facing our company and its business and relating to our forward-looking statements, please refer to our Annual Report on Form 10-K filed on April 17, 2023 (related to our year ended December 31, 2022) 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 September 30, 2023, 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 September 30, 2023 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, 2022.

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 5. EXHIBITS

Exhibit Number		Description
3.1		Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed January 23, 2013)
3.2		Amended and Restated Bylaws of Mill City Ventures III, Ltd. (incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form 10-SB filed on January 29, 2008)
10.1		Amendment to 2022 Stock Incentive Plan, dated August 14, 2023 (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 10-Q filed August 15, 2023)
31.1*		Section 302 Certification of the Chief Executive Officer
31.2*		Section 302 Certification of the Chief Financial Officer
32.1*		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

_______________

* Filed herewith

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SIGNATURES

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

	MILL CITY VENTURES III, LTD.

Date: November 17, 2023	By:	/s/ Douglas M. Polinsky
		DOUGLAS M. POLINSKY Chief Executive Officer

Date: November 17, 2023	By:	/s/ Joseph A. Geraci, II
		JOSEPH A. GERACI, II Chief Financial Officer

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Nov. 15, 2023
Cover [Abstract]
Entity Registrant Name	MILL CITY VENTURES III, LTD.
Entity Central Index Key	0001425355
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Sep. 30, 2023
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2023
Entity Common Stock Shares Outstanding		6,385,255
Entity File Number	001-41472
Entity Incorporation State Country Code	MN
Entity Tax Identification Number	90-0316651
Entity Address Address Line 1	1907 Wayzata Blvd, #205
Entity Address Address Line 2	Suite 205
Entity Address City Or Town	Wayzata
Entity Address State Or Province	MN
Entity Address Postal Zip Code	55391
City Area Code	952
Local Phone Number	479-1923
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes

CONDENSED BALANCE SHEETS - USD ($)	Sep. 30, 2023	Dec. 31, 2022
ASSETS
Investments, at fair value:	$ 17,555,601	$ 16,708,432
Cash	962,860	1,089,641
Note receivable	250,000	250,000
Prepaid expenses	217,422	218,440
Interest and dividend receivables	219,205	250,879
Right-of-use lease asset	14,716	16,398
Deferred taxes	397,000	201,000
Total Assets	19,616,804	18,734,790
LIABILITIES
Accounts payable	124,082	776,514
Operating lease liability	14,716	16,562
Deferred interest income	0	70,154
Total Liabilities	138,798	863,230
SHAREHOLDERS EQUITY (NET ASSETS)
Common stock, par value $0.001 per share (111,111,111 authorized; 6,385,255 and 6,185,255 outstanding)	12,415	12,215
Additional paid-in capital	15,467,091	15,043,291
Additional paid-in capital - stock options	1,460,209	0
Accumulated deficit	(1,159,665)	(1,159,665)
Accumulated undistributed investment loss	(1,435,364)	(1,086,739)
Accumulated undistributed net realized gains on investment transactions	5,155,200	5,713,829
Net unrealized depreciation in value of investments	(21,880)	(651,371)
Total Shareholders' Equity (Net Assets)	19,478,006	17,871,560
Total Liabilities and Shareholders' Equity	$ 19,616,804	$ 18,734,790
Net Asset Value Per Common Share	$ 3.05	$ 2.89

CONDENSED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
CONDENSED BALANCE SHEETS
Non control/non affiliate investment cost	$ 17,577,481	$ 17,359,804
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	111,111,111	111,111,111
Common stock, shares outstanding	6,385,255	6,185,255

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Investment Income
Interest income	$ 725,158	$ 1,115,224	$ 2,496,688	$ 3,351,935
Total Investment Income	725,158	1,115,224	2,496,688	3,351,935
Operating Expenses
Professional fees	184,008	916,359	601,184	1,309,348
Payroll	141,040	122,477	1,418,640	433,461
Insurance	26,452	27,016	79,974	84,092
Occupancy	14,890	18,589	55,005	54,542
Director's fees	30,000	30,000	592,968	147,073
Interest expense	0	46,779	78,000	164,632
Other general and administrative	24,983	18,572	57,464	34,717
Total Operating Expenses	421,373	1,179,792	2,883,235	2,227,865
Net Investment Gain (Loss)	303,785	(64,568)	(386,547)	1,124,070
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on investments	0	0	(558,629)	133,020
Net change in unrealized appreciation (depreciation) on investments	2,175	0	629,491	(16,297)
Net Realized and Unrealized Gain (Loss) on Investments	2,175	0	70,862	116,723
Net Increase (Decrease) in Net Assets Resulting from Operations Before Taxes	305,960	(64,568)	(315,685)	1,240,793
Provision for (Benefit from) Income Taxes	(63,600)	(28,442)	(37,922)	346,800
Net Increase (Decrease) in Net Assets Resulting from Operations	$ 369,560	$ (36,126)	$ (277,763)	$ 893,993
Net Increase (Decrease) in Net Assets Resulting from Operations per share:
Basic	$ 0.06	$ (0.01)	$ (0.04)	$ 0.18
Diluted	$ 0.06	$ (0.01)	$ (0.04)	$ 0.18

CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($)	Total	Common Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Accumulated Undistributed Net Investment Loss	Accumulated Undistributed Net Realized Gain On Investments Transaction	Net Unrealized Appreciation Depreciation In Value Of Investments
Balance, shares at Dec. 31, 2021		4,795,739
Balance, amount at Dec. 31, 2021	$ 13,414,049	$ 10,790	$ 10,694,163	$ (1,159,665)	$ (1,877,667)	$ 5,580,810	$ 165,618
Common shares issued in public offering, shares		1,250,000
Common shares issued in public offering, amount	4,041,795	$ 1,250	4,040,545	0	0	0	0
Common shares issued in reverse stock split rounding, shares		735
Common shares issued in reverse stock split rounding, amount	0	$ 0	0	0	0	0	0
Common shares issued in stock-based compensation, shares		31,248
Common shares issued in stock-based compensation, amount	149,315	$ 97	149,218	0	0	0	0
Common shares issued in consideration for expense payment, shares		107,533
Common shares issued in consideration for expense payment, amount	159,443	$ 78	159,365	0	0	0	0
Undistributed net investment gain	777,270	0	0	0	777,270	0	0
Undistributed net realized gain on investment transactions	133,020	0	0	0	0	133,020	0
Depreciation in value of investments	(16,297)	$ 0	0	0	0	0	(16,297)
Balance, shares at Sep. 30, 2022		6,185,255
Balance, amount at Sep. 30, 2022	18,658,595	$ 12,215	15,043,291	(1,159,665)	(1,100,397)	5,713,830	149,321
Balance, shares at Jun. 30, 2022		4,824,628
Balance, amount at Jun. 30, 2022	14,426,607	$ 10,855	10,776,537	(1,159,665)	(1,064,271)	5,713,830	149,321
Common shares issued in public offering, shares		1,250,000
Common shares issued in public offering, amount	4,041,795	$ 1,250	4,040,545	0	0	0	0
Common shares issued in reverse stock split rounding, amount	0	0	0	0	0	0	0
Common shares issued in stock-based compensation, amount	66,876	$ 32	66,844	0	0	0	0
Common shares issued in consideration for expense payment, shares		77,777
Common shares issued in consideration for expense payment, amount	159,443	$ 78	159,365	0	0	0	0
Common shares issued in reverse stock split rounding, shares		735
Common shares issued in stock-based compensation, shares		32,115
Undistributed net investment loss	(36,126)	$ 0	0	0	(36,126)	0	0
Balance, shares at Sep. 30, 2022		6,185,255
Balance, amount at Sep. 30, 2022	18,658,595	$ 12,215	15,043,291	(1,159,665)	(1,100,397)	5,713,830	149,321
Balance, shares at Dec. 31, 2022		6,185,255
Balance, amount at Dec. 31, 2022	17,871,560	$ 12,215	15,043,291	(1,159,665)	(1,086,739)	5,713,829	(651,371)
Issuance of stock options	1,460,209	$ 0	1,460,209	0	0	0	0
Exercise of stock options, shares		200,000
Exercise of stock options, amount	424,000	$ 200	423,800	0	0	0	0
Net investment loss, net of tax benefit of $139,300	(348,625)	0	0	0	(348,625)	0	0
Undistributed net realized loss on investment transactions	(558,629)	0	0	0	0	(558,629)	0
Appreciation in value of investments	629,491	$ 0	0	0	0	0	629,491
Balance, shares at Sep. 30, 2023		6,385,255
Balance, amount at Sep. 30, 2023	19,478,006	$ 12,415	16,927,300	(1,159,665)	(1,435,364)	5,155,200	(21,880)
Balance, shares at Jun. 30, 2023		6,185,255
Balance, amount at Jun. 30, 2023	18,684,446	$ 12,215	16,503,500	(1,159,665)	(1,802,749)	5,155,200	(24,055)
Undistributed net investment gain	367,385	0	0	0	367,385	0	0
Depreciation in value of investments	2,175	$ 0	0	0	0	0	2,175
Exercise of stock options, shares		200,000
Exercise of stock options, amount	424,000	$ 200	423,800	0	0	0	0
Balance, shares at Sep. 30, 2023		6,385,255
Balance, amount at Sep. 30, 2023	$ 19,478,006	$ 12,415	$ 16,927,300	$ (1,159,665)	$ (1,435,364)	$ 5,155,200	$ (21,880)

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$ (277,763)	$ 893,993
from operations to net cash used in operating activities:
Net change in unrealized (appreciation) depreciation on investments	629,491	(16,297)
Net realized (gain) loss on investments	(558,629)	133,020
Purchases of investments	(11,900,500)	(13,924,333)
Proceeds from sales of investments	11,124,193	10,076,483
Issuance of stock options	1,460,209	0
Deferred income taxes	(196,000)	0
Common shares issued as consideration for expense payment	0	308,758
Changes in operating assets and liabilities:
Prepaid expenses and other assets	2,700	(21,225)
Interest and dividends receivable	31,674	(614,949)
Payable for investment purchase	0	(1,900,000)
Accounts payable and other liabilities	(654,278)	53,903
Income taxes payable	0	(1,185,200)
Deferred interest income	(70,154)	0
Net cash used in operating activities	(550,781)	(6,429,293)
Cash flows from financing activities:
Proceeds from public offering	0	4,041,795
Proceeds from stock option exercise	424,000
Proceeds from line of credit	2,750,000	8,414,000
Repayments on line of credit	(2,750,000)	(6,101,000)
Net cash provided by financing activities	424,000	6,354,795
Net increase (decrease) in cash	(126,781)	(74,498)
Cash, beginning of period	1,089,641	1,936,148
Cash, end of period	962,860	1,861,650
Supplemental disclosure of cash flow information:
Cash paid for interest	$ 78,010	$ 0

CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED) - USD ($)	9 Months Ended	12 Months Ended
CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Total Cash, Percentage of Net Assets	4.94%	6.10%
Total Investment, Percentage of Net Assets	90.13%	93.50%
Total Investments, Cost	$ 17,577,481	$ 17,359,804
Total Investments at Fair Value	17,555,601	16,708,432
Total Cash, Cost	962,860	1,089,641
Total Cash, Fair Value	962,860	1,089,641
Total Investments and Cash, Cost	18,540,341	18,449,445
Total Investments and Cash, Fair Value	$ 18,518,461	$ 17,798,073
Total Investments and Cash, Percentage of Net Assets	95.07%	99.60%
Consumer \| Represents the member information pertaining to 15% secured loan.
Total Investments, Cost		$ 2,900,000
Total Investments at Fair Value		$ 2,873,893
Total Investments, Percentage of Net Assets		16.08%
Consumer \| Represents the member information pertaining to 18% secured loans.
Total Investments, Cost	$ 2,900,000
Total Investments at Fair Value	$ 2,899,757
Total Investments, Percentage of Net Assets	14.89%
Consumer \| Represents the member information pertaining to 15% secured loans
Total Investments, Cost		$ 400,000
Total Investments at Fair Value		$ 398,635
Total Investments, Percentage of Net Assets		2.23%
Information Technology \| Represents the member information pertaining to 15% convertible note
Total Investments, Cost	$ 212,500	$ 212,500
Total Investments at Fair Value	$ 214,021	$ 213,656
Total Investments, Percentage of Net Assets	1.10%	1.20%
Common Stock \| Consumer
Total Investments, Cost	$ 159,302
Total Investments at Fair Value	$ 48,615
Total Investments, Percentage of Net Assets	0.25%
Preferred Stock \| Represents information pertaining to the Wisdom Gaming, Inc.
Total Investments, Cost	$ 900,000	$ 900,000
Total Investments at Fair Value	$ 900,000	$ 900,000
Total Investments, Percentage of Net Assets	4.62%	5.04%
Preferred Stock \| Information Technology
Total Investments, Cost	$ 150,000	$ 150,000
Total Investments at Fair Value	$ 300,000	$ 300,000
Total Investments, Percentage of Net Assets	1.54%	1.68%
Preferreds Stock [Member][
Total Investments, Cost	$ 1,050,000	$ 1,050,000
Total Investments at Fair Value	$ 1,200,000	$ 1,200,000
Total Investments, Percentage of Net Assets	6.16%	6.72%
Represents the member information pertaining to short term banking loans.
Total Investments, Cost	$ 16,357,500	$ 15,486,625
Total Investments at Fair Value	$ 16,296,986	$ 15,285,932
Total Investments, Percentage of Net Assets	83.67%	85.53%
Represents the member information pertaining to short term banking loans. \| Represents the member information pertaining to 15% secured loans \| Real Estate
Total Investments, Cost		$ 745,000
Total Investments at Fair Value		$ 746,354
Total Investments, Percentage of Net Assets		4.17%
Represents the member information pertaining to short term banking loans. \| Represents the member information pertaining to 18% secured loans \| Real Estate
Total Investments, Cost	$ 745,000
Total Investments at Fair Value	$ 745,650
Total Investments, Percentage of Net Assets	3.82%
Represents the member information pertaining to short term banking loans. \| Represents the member information pertaining to Alatus Development, Corp. \| Represents the member information pertaining to 15% secured loans \| Real Estate
Total Investments, Cost	$ 2,000,000	$ 1,000,000
Total Investments at Fair Value	$ 2,001,823	$ 998,363
Total Investments, Percentage of Net Assets	10.28%	5.59%
Represents the member information pertaining to short term banking loans. \| Financial \| Represents the member information pertaining to 33% secured loans
Total Investments, Cost		$ 2,479,125
Total Investments at Fair Value		$ 2,478,030
Total Investments, Percentage of Net Assets		13.87%
Represents the member information pertaining to short term banking loans. \| Consumer \| Represents the member information pertaining to 15% secured loans
Total Investments, Cost	$ 10,000,000	$ 5,000,000
Total Investments at Fair Value	$ 10,030,569	$ 4,975,955
Total Investments, Percentage of Net Assets	51.50%	27.84%
Represents the member information pertaining to short term banking loans. \| Consumer \| Represents the member information pertaining to 18% secured loans
Total Investments, Cost		$ 2,250,000
Total Investments at Fair Value		$ 2,255,625
Total Investments, Percentage of Net Assets		12.62%
Represents the member information pertaining to short term banking loans. \| Financial \| Represents the member information pertaining to 12% secured loans
Total Investments, Cost	$ 500,000	$ 500,000
Total Investments at Fair Value	$ 405,166	$ 345,421
Total Investments, Percentage of Net Assets	2.08%	1.93%
Warrants One \| Healthcare
Total Investments, Cost	$ 679	$ 679
Total Investments, Percentage of Net Assets	0.00%	0.00%
Represents the member information pertaining to other equity securities.
Total Investments, Cost		$ 822,500
Total Investments at Fair Value		$ 222,500
Total Investments, Percentage of Net Assets		1.25%
Represents the member information pertaining to other equity securities. \| Financial
Total Investments, Cost	$ 10,000	$ 610,000
Total Investments at Fair Value	$ 10,000	$ 10,000
Total Investments, Percentage of Net Assets	0.05%	0.06%
Represents the member information pertaining to other equity securities. \| Consumer
Total Investments, Cost		$ 212,500
Total Investments at Fair Value		$ 212,500
Total Investments, Percentage of Net Assets		1.19%

ORGANIZATION

9 Months Ended

Sep. 30, 2023

ORGANIZATION

ORGANIZATION

NOTE 1 – ORGANIZATION

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

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.

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

Income taxes:

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

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.

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.

INVESTMENTS

9 Months Ended

Sep. 30, 2023

INVESTMENTS

INVESTMENTS

NOTE 3 – INVESTMENTS

	As of September 30, 2023
	Investments at Amortized Cost		Percentage of Amortized Cost			Investments at Fair Value		Percentage of Fair Value

Short-term Non-banking Loans	$	16,357,500		93.0	%	$	16,296,986		92.8	%
Preferred Stock		1,050,000		6.0			1,200,000		6.8
Common Stock		159,302		0.9			48,615		0.3
Warrants		679		—			—		—
Other Equity		10,000		0.1			10,000		0.1
Total	$	17,577,481		100.0	%	$	17,555,601		100.0	%

	As of December 31, 2022
	Investments at Amortized Cost		Percentage of Amortized Cost			Investments at Fair Value		Percentage of Fair Value

Short-term Non-banking Loans	$	15,486,625		89.2	%	$	15,285,932		91.5	%
Preferred Stock		1,050,000		6.1			1,200,000		7.2
Common Stock		—		—			—		—
Warrants		679		—			—		—
Other Equity		822,500		4.7			222,500		1.3
Total	$	17,359,804		100.0	%	$	16,708,432		100.0	%

The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of September 30, 2023:

	As of September 30, 2023
	Investments at Fair Value		Percentage of Fair Value

Business Services	$	10,030,569		57.1	%
Consumer		3,848,372		21.9
Financial		415,166		2.4
Information Technology		514,021		2.9
Real Estate		2,747,473		15.7
Total	$	17,555,601		100.0	%

The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of December 31, 2022:

	As of December 31, 2022
	Investments at Fair Value		Percentage of Fair Value

Business Services	$	7,231,580		43.3	%
Consumer		4,385,028		26.2
Financial		2,833,451		17.0
Information Technology		513,656		3.1
Real Estate		1,744,717		10.4
Total	$	16,708,432		100.0	%

FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2023

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the fair value measurements of our portfolio investments by major class, as of September 30, 2023, according to the fair value hierarchy:

	As of September 30, 2023
	Level 1		Level 2		Level 3		Total
Short-term Non-banking Loans	$	—	$	—	$	16,296,986	$	16,296,986
Preferred Stock						1,200,000		1,200,000
Common Stock		48,615		—		—		48,615
Warrants		—		—		—		—
Other Equity		—		—		10,000		10,000
Total	$	48,615	$	—	$	17,506,986	$	17,555,601

The following table presents the fair value measurements of our investment portfolio by major class, as of December 31, 2022, according to the fair value hierarchy:

	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Short-term Non-banking Loans	$	—	$	—	$	15,285,932	$	15,285,932
Preferred Stock		—		—		1,200,000		1,200,000
Common Stock		—		—		—		—
Other Equity		—		—		222,500		222,500
Total	$	—	$	—	$	16,708,432	$	16,708,432

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the nine months ended September 30, 2023:

	For the nine months ended September 30, 2023
	ST Non-banking Loans			Preferred Stock		Common Stock		Warrants		Other Equity
Balance as of January 1, 2023	$	15,285,932		$	1,200,000	$	—	$	—	$	222,500
Net change in unrealized appreciation		140,179			—		—		—		600,000
Purchases and other adjustments to cost		11,900,500			—		—		—		—
Sales and redemptions		(11,029,625	)		—		—		—		—
Net realized loss		—			—		—		—		(600,000	)
Transfers out of level 3		—			—		—		—		(212,500	)
Balance as of September 30, 2023	$	16,296,986		$	1,200,000	$	—	$	—	$	10,000

The net change in unrealized appreciation for the nine months ended September 30, 2023 attributable to Level 3 portfolio investments still held as of September 30, 2023 is $89,486.

The following table lists our Level 3 investments held as of September 30, 2023 and the unobservable inputs used to determine their valuation:

Investement Type	9/30/23 FMV		Valuation Technique	Unobservable Inputs	Range
ST Non-banking Loans	$	16,296,986	discounted cash flow	determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness	12-18	%
Other Equity		10,000	last secured funding known by company	data obtained from issuer, and stated value of instrument (if any), less assumed transaction costs.
Preferred Stock		1,200,000	last funding secured by company	data obtained from issuer, and stated value of instrument (if any), less assumed transaction costs.
	$	17,506,986

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the year ended December 31, 2022:

	For the year ended December 31, 2022
	ST Non-banking Loans			Preferred Stock		Common Stock		Warrants		Other Equity
Balance as of January 1, 2022	$	11,650,000		$	1,200,000	$	—	$	—	$	812,500
Net change in unrealized depreciation		(200,693	)		—		—		—		(600,000	)
Purchases and other adjustments to cost		23,548,458			—		—		—		10,000
Sales and redemptions		(19,711,833	)		—		—		—		—
Balance as of December 31, 2022	$	15,285,932		$	1,200,000	$	—	$	—	$	222,500

The net change in unrealized depreciation for the year ended December 31, 2022 attributable to Level 3 portfolio investments still held as of December 31, 2022 was $651,371.

The following table lists our Level 3 investments held as of December 31, 2022 and the unobservable inputs used to determine their valuation:

Security Type	12/31/22 FMV		Valuation Technique	Unobservable Inputs	Range
ST Non-banking Loans	$	15,285,932	discounted cash flow	determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness	12-33	%
Other Equity		222,500	last secured funding known by company
Preferred Stock		1,200,000	last funding secured by company	economic changes since last funding
	$	16,708,432

RELATEDPARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2023

RELATEDPARTY TRANSACTIONS

RELATED-PARTY TRANSACTIONS

NOTE 5 – RELATED-PARTY TRANSACTIONS

	·	· On August 10, 2018, we entered into a loan transaction with Elizabeth Zbikowski who, along with her husband Scott Zbikowski, owned and continues to own approximately 534,445 shares of our common stock. In the transaction, we obtained a two-year promissory note in the principal amount of $250,000, which was subsequently amended such that the note presently matures on December 31, 2023. The promissory note bears interest payable monthly at the rate of 10% per annum. The note is secured by the debtors’ pledge to us of 277,778 shares of our common stock. The pledged shares are held in physical custody for us by Millennium Trust Company, as our custodial agent.

	·	· On January 3, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Eastman Investment, Inc., a Nevada corporation, and Lyle A. Berman, as trustee of the Lyle A. Berman Revocable Trust (collectively, the “Lenders”). Mr. Berman is a director of our Company. 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. See note 7 below for further details.

INCOME TAXES

9 Months Ended

Sep. 30, 2023

INCOME TAXES

INCOME TAXES

NOTE 6 – INCOME TAXES

We are a C-Corporation for tax purposes and have booked an income tax provision for the periods described below.

LINE OF CREDIT

9 Months Ended

Sep. 30, 2023

LINE OF CREDIT

LINE OF CREDIT

NOTE 7 – LINE OF CREDIT

As of September 30, 2023 and December 31, 2022, there was no balance outstanding on the line.

STOCKBASED COMPENSATION

9 Months Ended

Sep. 30, 2023

STOCKBASED COMPENSATION

STOCK-BASED COMPENSATION

NOTE 8 – STOCK-BASED COMPENSATION

The following table summarizes the activity for all stock options outstanding for the nine months ended September 30, 2023:

	Shares			Weighted Average Exercise Price
Options outstanding at beginning of year		—		$	—
Granted		870,000			2.11
Exercised		(200,000	)		2.12
Forfeited		—			—
Balance at September 30, 2023		670,000		$	2.11

Options exercisable at September 30:		670,000		$	2.11

Grant Date Fair Value for options granted during the period:	$	1,242,902

The following table summarizes additional information about stock options outstanding and exercisable at September 30, 2023:

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		9.17	$	2.11	$	632,900		670,000	$	2.11	$	632,900

The Company recognized stock-based compensation expense for stock options of $1,460,209 for the nine months ended September 30, 2023.

The Black-Scholes option-pricing model was used to estimate the fair value of equity-based awards with the following weighted-average assumptions for the nine months ended September 30, 2023:

	2023
Risk-free interest rate		4.59	%
Expected volatility		90.00	%
Expected life (years)		5.0
Expected dividend yield		—	%

SHAREHOLDERS EQUITY

9 Months Ended

Sep. 30, 2023

SHAREHOLDERS EQUITY

SHAREHOLDERS' EQUITY

NOTE 9 – SHAREHOLDERS’ EQUITY

At September 30, 2023, we had 6,385,255 shares of common stock issued and outstanding.

PER SHARE INFORMATION

9 Months Ended

Sep. 30, 2023

PER SHARE INFORMATION

PER-SHARE INFORMATION

NOTE 10 – PER-SHARE INFORMATION

	For the Three Months Ended September 30,
	2023				2022
	Basic		Diluted		Basic			Diluted
Numerator: Net increase in net assets resulting from operations	$	369,560	$	369,560	$	(36,126	)	$	(36,126	)
Denominator: Weighted-average number of common shares outstanding		6,241,777		6,358,345		5,512,737			5,512,737
Basic and diluted net gain (loss) per common share	$	0.06	$	0.06	$	(0.01	)	$	(0.01	)

	For the Nine Months Ended September 30,
	2023						2022
	Basic			Diluted			Basic		Diluted
Numerator: Net increase (decrease) in net assets resulting from operations	$	(277,763	)	$	(277,763	)	$	893,993	$	893,993
Denominator: Weighted-average number of common shares outstanding		6,204,303			6,204,303			5,045,830		5,045,830
Basic and diluted net gain (loss) per common share	$	(0.04	)	$	(0.04	)	$	0.18	$	0.18

OPERATING LEASES

9 Months Ended

Sep. 30, 2023

OPERATING LEASES

OPERATING LEASES

NOTE 11 – OPERATING LEASES

Rent expense for office facilities for the nine months ended September 30, 2023 and September 30, 2022 was $55,005 and $54,542, respectively.

The components of our operating lease were as follows for the three and nine months ended September 30, 2023:

	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2023

Operating lease costs	$	5,504	$	16,512
Variable lease cost		4,886		14,619
Short-term lease cost		4,500		23,874
Total	$	14,890	$	55,005

Supplemental balance sheet information consisted of the following at September 30:

Operating Lease	2023			2022
Right-of-use assets	$	14,716		$	21,563

Operating Lease Liability	$	14,716		$	21,672
Less: short term portion		(14,716	)		(21,672	)
Long term portion	$	—		$	—

Maturity analysis under lease agreements consisted of the following as of September 30:

	2023			2022
2022	$	—		$	6,357
2023		7,428			14,859
2024		7,482			—
Total lease payments		14,910			21,216
Less: Present value discount		(194	)		456
Present value of lease liabilities	$	14,716		$	21,672

FINANCIAL HIGHLIGHTS

9 Months Ended

Sep. 30, 2023

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS

NOTE 12 – FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the nine months ended September 30, 2023 through 2019:

	Nine Months Ended September 30,
	2023			2022			2021			2020			2019
Per Share Data ⁽¹⁾
Net asset value at beginning of period	$	2.89			2.80			2.43			2.05			2.30
Net investment income (loss)		(0.06	)		0.18			0.20			0.05			(0.11	)
Net realized and unrealized gains (losses)		0.01			0.02			0.54			0.14			0.02
Provision for income taxes		0.01			(0.05	)		(0.20	)		0.00			0.00
Issuance of stock options		0.24			0.00			0.00			0.00			0.00
Issuance of common stock		0.05			0.00			0.00			0.00			0.00
Stock-based compensation		0.00			0.05			0.00			0.00			0.00
Repurchase of common stock		0.00			0.00			0.00			0.05			0.00
Other changes in equity		(0.09	)		0.02			0.00			0.00			0.00
Payment of common stock dividend		0.00			0.00			(0.23	)		0.00			(0.11	)
Net asset value at end of period	$	3.05			3.02			2.74			2.29			2.10

Ratio / Supplemental Data
Per share market value of investments at end of period	$	2.75			2.92			2.30			1.71			1.58
Shares outstanding at end of period		6,385,255			6,185,255			4,795,739			4,754,104			4,918,845
Average weighted shares outstanding for the period - basic		6,204,303			5,045,830			4,795,075			4,836,170			4,918,845
Average weighted shares outstanding for the period - diluted		6,320,871			5,045,830			4,795,075			4,836,170			4,918,845
Net assets at end of period	$	19,478,006			18,658,595			13,140,835			10,805,062			10,588,689
Average net assets ⁽²⁾	$	18,661,934			15,081,352			13,090,497			10,220,482			12,304,975
Total investment return (loss)		(2.76	)%		6.07	%		22.22	%		8.79	%		(8.82	)%
Portfolio turnover rate (3)		59.61	%		66.81	%		124.55	%		18.18	%		7.11	%
Ratio of operating expenses to average net assets ⁽³⁾		(20.10	)%		(19.24	)%		(10.31	)%		(6.49	)%		(7.70	)%
Ratio of net investment income (loss) to average net assets⁽³⁾		(2.76	)%		10.09	%		9.87	%		3.35	%		(6.40	)%

(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.

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2023

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 13 – Subsequent Events

SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

Use of estimates

Cash deposits

Valuation of portfolio investments

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.

Our valuation policy and procedures

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

Income taxes

Income taxes:

Revenue recognition

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

Allocation of net gains and losses

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

Management and service fees

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.

INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2023

INVESTMENTS

Schedule of investments by major class, at amortized cost and fair value

	As of September 30, 2023
	Investments at Amortized Cost		Percentage of Amortized Cost			Investments at Fair Value		Percentage of Fair Value

Short-term Non-banking Loans	$	16,357,500		93.0	%	$	16,296,986		92.8	%
Preferred Stock		1,050,000		6.0			1,200,000		6.8
Common Stock		159,302		0.9			48,615		0.3
Warrants		679		—			—		—
Other Equity		10,000		0.1			10,000		0.1
Total	$	17,577,481		100.0	%	$	17,555,601		100.0	%

	As of December 31, 2022
	Investments at Amortized Cost		Percentage of Amortized Cost			Investments at Fair Value		Percentage of Fair Value

Short-term Non-banking Loans	$	15,486,625		89.2	%	$	15,285,932		91.5	%
Preferred Stock		1,050,000		6.1			1,200,000		7.2
Common Stock		—		—			—		—
Warrants		679		—			—		—
Other Equity		822,500		4.7			222,500		1.3
Total	$	17,359,804		100.0	%	$	16,708,432		100.0	%

Schedule of investments by industry grouping, based on fair value

	As of September 30, 2023
	Investments at Fair Value		Percentage of Fair Value

Business Services	$	10,030,569		57.1	%
Consumer		3,848,372		21.9
Financial		415,166		2.4
Information Technology		514,021		2.9
Real Estate		2,747,473		15.7
Total	$	17,555,601		100.0	%

	As of December 31, 2022
	Investments at Fair Value		Percentage of Fair Value

Business Services	$	7,231,580		43.3	%
Consumer		4,385,028		26.2
Financial		2,833,451		17.0
Information Technology		513,656		3.1
Real Estate		1,744,717		10.4
Total	$	16,708,432		100.0	%

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2023

FAIR VALUE OF FINANCIAL INSTRUMENTS

Schedule of fair value measurements of our investments by major class according to the fair value hierarchy

	As of September 30, 2023
	Level 1		Level 2		Level 3		Total
Short-term Non-banking Loans	$	—	$	—	$	16,296,986	$	16,296,986
Preferred Stock						1,200,000		1,200,000
Common Stock		48,615		—		—		48,615
Warrants		—		—		—		—
Other Equity		—		—		10,000		10,000
Total	$	48,615	$	—	$	17,506,986	$	17,555,601

	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Short-term Non-banking Loans	$	—	$	—	$	15,285,932	$	15,285,932
Preferred Stock		—		—		1,200,000		1,200,000
Common Stock		—		—		—		—
Other Equity		—		—		222,500		222,500
Total	$	—	$	—	$	16,708,432	$	16,708,432

Schedule of reconciliation of the beginning and ending fair value balances for our Level 3 investment assets

	For the nine months ended September 30, 2023
	ST Non-banking Loans			Preferred Stock		Common Stock		Warrants		Other Equity
Balance as of January 1, 2023	$	15,285,932		$	1,200,000	$	—	$	—	$	222,500
Net change in unrealized appreciation		140,179			—		—		—		600,000
Purchases and other adjustments to cost		11,900,500			—		—		—		—
Sales and redemptions		(11,029,625	)		—		—		—		—
Net realized loss		—			—		—		—		(600,000	)
Transfers out of level 3		—			—		—		—		(212,500	)
Balance as of September 30, 2023	$	16,296,986		$	1,200,000	$	—	$	—	$	10,000

Schedule of Level 3 investments held and the unobservable inputs used to determine their valuation

Investement Type	9/30/23 FMV		Valuation Technique	Unobservable Inputs	Range
ST Non-banking Loans	$	16,296,986	discounted cash flow	determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness	12-18	%
Other Equity		10,000	last secured funding known by company	data obtained from issuer, and stated value of instrument (if any), less assumed transaction costs.
Preferred Stock		1,200,000	last funding secured by company	data obtained from issuer, and stated value of instrument (if any), less assumed transaction costs.
	$	17,506,986

	For the year ended December 31, 2022
	ST Non-banking Loans			Preferred Stock		Common Stock		Warrants		Other Equity
Balance as of January 1, 2022	$	11,650,000		$	1,200,000	$	—	$	—	$	812,500
Net change in unrealized depreciation		(200,693	)		—		—		—		(600,000	)
Purchases and other adjustments to cost		23,548,458			—		—		—		10,000
Sales and redemptions		(19,711,833	)		—		—		—		—
Balance as of December 31, 2022	$	15,285,932		$	1,200,000	$	—	$	—	$	222,500

Security Type	12/31/22 FMV		Valuation Technique	Unobservable Inputs	Range
ST Non-banking Loans	$	15,285,932	discounted cash flow	determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness	12-33	%
Other Equity		222,500	last secured funding known by company
Preferred Stock		1,200,000	last funding secured by company	economic changes since last funding
	$	16,708,432

STOCKBASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2023

STOCKBASED COMPENSATION

Schedule of stock options activity

	Shares			Weighted Average Exercise Price
Options outstanding at beginning of year		—		$	—
Granted		870,000			2.11
Exercised		(200,000	)		2.12
Forfeited		—			—
Balance at September 30, 2023		670,000		$	2.11

Options exercisable at September 30:		670,000		$	2.11

Grant Date Fair Value for options granted during the period:	$	1,242,902

Schedule of stock options outstanding and exercisable

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		9.17	$	2.11	$	632,900		670,000	$	2.11	$	632,900

Schedule of fair value of equity-based awards

	2023
Risk-free interest rate		4.59	%
Expected volatility		90.00	%
Expected life (years)		5.0
Expected dividend yield		—	%

PER SHARE INFORMATION (Tables)

9 Months Ended

Sep. 30, 2023

PER SHARE INFORMATION

Summary of reconciliation of the numerator and denominator used in the calculation of basic and diluted net gain (loss) per common share

	For the Three Months Ended September 30,
	2023				2022
	Basic		Diluted		Basic			Diluted
Numerator: Net increase in net assets resulting from operations	$	369,560	$	369,560	$	(36,126	)	$	(36,126	)
Denominator: Weighted-average number of common shares outstanding		6,241,777		6,358,345		5,512,737			5,512,737
Basic and diluted net gain (loss) per common share	$	0.06	$	0.06	$	(0.01	)	$	(0.01	)

	For the Nine Months Ended September 30,
	2023						2022
	Basic			Diluted			Basic		Diluted
Numerator: Net increase (decrease) in net assets resulting from operations	$	(277,763	)	$	(277,763	)	$	893,993	$	893,993
Denominator: Weighted-average number of common shares outstanding		6,204,303			6,204,303			5,045,830		5,045,830
Basic and diluted net gain (loss) per common share	$	(0.04	)	$	(0.04	)	$	0.18	$	0.18

OPERATING LEASES (Tables)

9 Months Ended

Sep. 30, 2023

OPERATING LEASES

Summary of components of operating lease

	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2023

Operating lease costs	$	5,504	$	16,512
Variable lease cost		4,886		14,619
Short-term lease cost		4,500		23,874
Total	$	14,890	$	55,005

Summary of supplemental balance sheet information

Operating Lease	2023			2022
Right-of-use assets	$	14,716		$	21,563

Operating Lease Liability	$	14,716		$	21,672
Less: short term portion		(14,716	)		(21,672	)
Long term portion	$	—		$	—

Summary of maturity analysis under lease agreements

	2023			2022
2022	$	—		$	6,357
2023		7,428			14,859
2024		7,482			—
Total lease payments		14,910			21,216
Less: Present value discount		(194	)		456
Present value of lease liabilities	$	14,716		$	21,672

FINANCIAL HIGHLIGHTS (Tables)

9 Months Ended

Sep. 30, 2023

FINANCIAL HIGHLIGHTS

Schedule of financial highlights

	Nine Months Ended September 30,
	2023			2022			2021			2020			2019
Per Share Data ⁽¹⁾
Net asset value at beginning of period	$	2.89			2.80			2.43			2.05			2.30
Net investment income (loss)		(0.06	)		0.18			0.20			0.05			(0.11	)
Net realized and unrealized gains (losses)		0.01			0.02			0.54			0.14			0.02
Provision for income taxes		0.01			(0.05	)		(0.20	)		0.00			0.00
Issuance of stock options		0.24			0.00			0.00			0.00			0.00
Issuance of common stock		0.05			0.00			0.00			0.00			0.00
Stock-based compensation		0.00			0.05			0.00			0.00			0.00
Repurchase of common stock		0.00			0.00			0.00			0.05			0.00
Other changes in equity		(0.09	)		0.02			0.00			0.00			0.00
Payment of common stock dividend		0.00			0.00			(0.23	)		0.00			(0.11	)
Net asset value at end of period	$	3.05			3.02			2.74			2.29			2.10

Ratio / Supplemental Data
Per share market value of investments at end of period	$	2.75			2.92			2.30			1.71			1.58
Shares outstanding at end of period		6,385,255			6,185,255			4,795,739			4,754,104			4,918,845
Average weighted shares outstanding for the period - basic		6,204,303			5,045,830			4,795,075			4,836,170			4,918,845
Average weighted shares outstanding for the period - diluted		6,320,871			5,045,830			4,795,075			4,836,170			4,918,845
Net assets at end of period	$	19,478,006			18,658,595			13,140,835			10,805,062			10,588,689
Average net assets ⁽²⁾	$	18,661,934			15,081,352			13,090,497			10,220,482			12,304,975
Total investment return (loss)		(2.76	)%		6.07	%		22.22	%		8.79	%		(8.82	)%
Portfolio turnover rate (3)		59.61	%		66.81	%		124.55	%		18.18	%		7.11	%
Ratio of operating expenses to average net assets ⁽³⁾		(20.10	)%		(19.24	)%		(10.31	)%		(6.49	)%		(7.70	)%
Ratio of net investment income (loss) to average net assets⁽³⁾		(2.76	)%		10.09	%		9.87	%		3.35	%		(6.40	)%

ORGANIZATION (Details Narrative)	9 Months Ended
ORGANIZATION (Details Narrative)	Sep. 30, 2023
ORGANIZATION
Maximuum percentage total assets of investment securities	40.00%

INVESTMENTS (Details) - USD ($)	9 Months Ended	12 Months Ended
INVESTMENTS (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Investments at amortized cost	$ 17,577,481	$ 17,359,804
Percentage of amortized cost	100.00%	100.00%
Investment at fair value	$ 17,555,601	$ 16,708,432
Percentage of fair value	100.00%	100.00%
Preferreds Stock [Member][
Investments at amortized cost	$ 1,050,000	$ 1,050,000
Percentage of amortized cost	6.00%	6.10%
Investment at fair value	$ 1,200,000	$ 1,200,000
Percentage of fair value	6.80%	7.20%
Represents the member information pertaining to short term banking loans.
Investments at amortized cost	$ 16,357,500	$ 15,486,625
Percentage of amortized cost	93.00%	89.20%
Investment at fair value	$ 16,296,986	$ 15,285,932
Percentage of fair value	92.80%	91.50%
Common Stocks [Member]
Investments at amortized cost	$ 159,302
Percentage of amortized cost	0.90%
Investment at fair value	$ 48,615
Percentage of fair value	0.30%
Warrants [Member]
Investments at amortized cost	$ 679	$ 679
Percentage of amortized cost	0.00%	0.00%
Investment at fair value	$ 0	$ 0
Percentage of fair value	0.00%	0.00%
Other Equity [Member]
Investments at amortized cost	$ 10,000	$ 822,500
Percentage of amortized cost	0.10%	4.70%
Investment at fair value	$ 10,000	$ 222,500
Percentage of fair value	0.10%	1.30%

INVESTMENTS (Details 1) - USD ($)	9 Months Ended	12 Months Ended
INVESTMENTS (Details 1) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Percentage of fair value	100.00%	100.00%
Investment at fair value	$ 17,555,601	$ 16,708,432
Business Services
Percentage of fair value	57.10%	43.30%
Investment at fair value	$ 10,030,569	$ 7,231,580
Consumer
Percentage of fair value	21.90%	26.20%
Investment at fair value	$ 3,848,372	$ 4,385,028
Financial
Percentage of fair value	2.40%	17.00%
Investment at fair value	$ 415,166	$ 2,833,451
Information Technology
Percentage of fair value	2.90%	3.10%
Investment at fair value	$ 514,021	$ 513,656
Real Estate
Percentage of fair value	15.70%	10.40%
Investment at fair value	$ 2,747,473	$ 1,744,717

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	Sep. 30, 2023	Dec. 31, 2022
Short-term Non-banking Loans	$ 16,296,986	$ 15,285,932
Preferred stock	1,200,000	1,200,000
Common Stock	48,615	0
Warrants	0
Other Equity	10,000	222,500
Total	17,555,601	16,708,432
Level 1
Short-term Non-banking Loans	0	0
Preferred stock		0
Common Stock	48,615	0
Warrants	0
Other Equity	0	0
Total	48,615	0
Level 2
Short-term Non-banking Loans	0	0
Preferred stock		0
Common Stock	0	0
Warrants	0
Other Equity	0	0
Total	0	0
Level 3
Short-term Non-banking Loans	16,296,986	15,285,932
Preferred stock	1,200,000	1,200,000
Common Stock	0	0
Warrants	0
Other Equity	10,000	222,500
Total	$ 17,506,986	$ 16,708,432

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Net realized loss	$ 0	$ 0	$ (558,629)	$ 133,020
Preferreds Stock [Member][
Balance at the beginning balance			1,200,000	1,200,000	$ 1,200,000
Purchases and other adjustments to cost			0		0
Balance at the ending balance	1,200,000		1,200,000		1,200,000
Represents the member information pertaining to short term banking loans.
Balance at the beginning balance			15,285,932	11,650,000	11,650,000
Net change in unrealized appreciation			(140,179)		200,693
Purchases and other adjustments to cost			11,900,500		23,548,458
Sales and redemptions			11,029,625		19,711,833
Balance at the ending balance	16,296,986		16,296,986		15,285,932
Represents the member information pertaining to other equity securities.
Balance at the beginning balance			222,500	$ 812,500	812,500
Net change in unrealized appreciation			(600,000)		600,000
Purchases and other adjustments to cost			0		10,000
Sales and redemptions					0
Net realized loss			(600,000)
Transfers out of level 3			(212,500)
Balance at the ending balance	$ 10,000		$ 10,000		$ 222,500

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2)	Sep. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Investment at fair value	$ 17,555,601	$ 16,708,432
Total Lable [Member]
Investment at fair value	17,506,986	16,708,432
Preferred Stock
Investment at fair value	1,200,000	1,200,000
Represents the member information pertaining to short term banking loans.
Investment at fair value	$ 16,296,986	$ 15,285,932
Represents the member information pertaining to short term banking loans. \| Minimum \| Level 3 \| Interest rate
Interest rate	12	12
Represents the member information pertaining to short term banking loans. \| Maximum \| Level 3 \| Interest rate
Interest rate	18	33
Represents the member information pertaining to other equity securities.
Investment at fair value	$ 10,000	$ 222,500

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Attributable To Level 3 Portfolio Investment [Member]
Net change in unrealized depreciation	$ 89,486	$ 651,371

RELATEDPARTY TRANSACTIONS (Details Narrative) - USD ($)	Aug. 10, 2018	Jan. 03, 2022
Ms Zbikowski Along With Her Husband Scott Zbikowsk
Promissory note term	two-year
Shares of common stock owned by related party	534,445
Interest payable monthly (as a percent)	10.00%
Principal amount of note obtained	$ 250,000
Debtors' pledge in number of common stock	277,778
Lyle A. Berman \| Revolving line of credit
Line of credit facility maximum borrowing capacity		$ 5,000,000

INCOME TAXES (Details Narrative) - USD ($)	9 Months Ended
INCOME TAXES (Details Narrative) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
INCOME TAXES
Deferred tax liability	$ 397,000		$ 201,000
Income taxes payable	$ 38,000	$ 346,000
Effective Income Tax Rate Reconciliation, Percent	27.00%	27.00%
Description of federeal NOL	federal NOL of approximately $277,000. The federal NOL may be carried forward to offset future taxable income, subject to applicable provisions of the Internal Revenue Code. Due to tax reform enacted in 2017, NOLs created after 2017 carry forward indefinitely. The estimated federal NOL that does not expire included in the total above is $277,000. States vary in their treatment of post-2017 NOLs. The state NOL of $200,000 is expected to be used by December 31, 2024. The remaining state NOL carryforwards may expire in 2038 if not used
Prepaid income taxes	$ 139,200		$ 179,300

LINE OF CREDIT (Details Narrative)	Jan. 03, 2022 USD ($)
Revolving line of credit \| This member stands for Eastman Investment, Inc. \| Represents information pertaining to the loan and security agreement.
Line of credit facility maximum borrowing capacity	$ 5,000,000
Interest rate at per annum	8.00%
Lyle A. Berman \| Revolving line of credit
Line of credit facility maximum borrowing capacity	$ 5,000,000
Lyle A. Berman \| Revolving line of credit \| Revolving line of credit
Line of credit facility maximum borrowing capacity	$ 5,000,000

STOCKBASED COMPENSATION (Details)	9 Months Ended
STOCKBASED COMPENSATION (Details)	Sep. 30, 2023 USD ($) $ / shares shares
STOCKBASED COMPENSATION
Shares, Options outstanding at beginning of year \| shares	0
Exercised \| shares	(200,000)
Granted \| shares	870,000
Shares, Options outstanding at end of year \| shares	670,000
Shares, Options exercisable at end of year \| shares	670,000
Weighted Average Exercise Price, Options outstanding at beginning of year	$ 0.00
Weighted Average Exercise Price, Granted	2.11
Weighted Average Exercise Price, Exercised	2.12
Weighted Average Exercise Price, Forfeited	0.00
Weighted Average Exercise Price, Options outstanding at end of year	2.11
Weighted Average Exercise Price, Options exercisable at end of year	$ 2.11
Weighted Average Grant Date Fair Value for options granted during the period \| $	$ 1,242,902

STOCKBASED COMPENSATION (Details 1) - USD ($)	9 Months Ended
STOCKBASED COMPENSATION (Details 1) - USD ($)	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Options Outstanding	670,000	870,000	0
Options Outstanding, Weighted Average Exercise Price	$ 2.11	$ 2.11	$ 0.00
Options Exercisable	670,000	870,000
Options Exercisable, Weighted Average Exercise Price	$ 2.11	$ 2.11
Options [Member]
Options Outstanding	670,000
Options Outstanding, Weighted Average Exercise Price	$ 2.11
Options Outstanding, Weighted Average Remaining Contractual Life	9 years 2 months 1 day
Options Outstanding, Aggregate Intrinsic Value	$ 632,900
Options Exercisable	670,000
Options Exercisable, Weighted Average Exercise Price	$ 2.11
Options Exercisable, Aggregate Intrinsic Value	$ 632,900

STOCKBASED COMPENSATION (Details 2)	9 Months Ended
STOCKBASED COMPENSATION (Details 2)	Sep. 30, 2023
STOCKBASED COMPENSATION
Risk-free interest rate	4.59%
Expected volatility	90.00%
Expected life (years)	5 years
Expected dividend yield	0.00%

STOCKBASED COMPENSATION (Details Narrative) - shares	9 Months Ended
STOCKBASED COMPENSATION (Details Narrative) - shares	Sep. 30, 2023	Dec. 31, 2022
Authorized shares of common stock	111,111,111	111,111,111
2022 Stock Incentive Plan [Member]
Stock-based compensation expense	1,460,209
Authorized shares of common stock	900,000
Shares issued	870,000
Leaving shares available for issuance	30,000

SHAREHOLDERS EQUITY (Details Narrative) - shares	Aug. 09, 2022	Sep. 30, 2023
SHAREHOLDERS EQUITY
Common stock issued		6,385,255
Reverse stock split Description	common shares on a 1-for-2.25 basis such that every 2.25 shares of common stock
Post reverse split share issue	111,111,111

PERSHARE INFORMATION (Details) - USD ($)	3 Months Ended		9 Months Ended
PERSHARE INFORMATION (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019
Denominator: Weighted-average number of common shares outstanding, basic			6,204,303	5,045,830	4,795,075	4,836,170	4,918,845
Basic and diluted net gain per common share	$ 0.06	$ (0.01)	$ (0.04)	$ 0.18
Basic [Member]
Numerator: Net increase in net assets resulting from operations	$ 369,560	$ (36,126)	$ (277,763)	$ 893,993
Denominator: Weighted-average number of common shares outstanding, basic	6,241,777	5,512,737	6,204,303	5,045,830
Basic and diluted net gain per common share	$ 0.06	$ (0.01)	$ (0.04)	$ 0.18
Diluted [Member]
Numerator: Net increase in net assets resulting from operations	$ 369,560	$ (36,126)	$ (277,763)	$ 893,993
Denominator: Weighted-average number of common shares outstanding, diluted	6,358,345	5,512,737	6,204,303	5,045,830
Basic and diluted net gain per common share	$ 0.06	$ (0.01)	$ (0.04)	$ 0.18

OPERATING LEASES (Details) - USD ($)	3 Months Ended	9 Months Ended
OPERATING LEASES (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2023
OPERATING LEASES
Operating lease costs	$ 5,504	$ 16,512
Variable lease cost	4,886	14,619
Short-term lease cost	4,500	23,874
Total	$ 14,890	$ 55,005

OPERATING LEASES (Details 1) - USD ($)	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022
OPERATING LEASES
Right-of-use assets	$ 14,716	$ 16,398	$ 21,563
Operating Leases Liability	14,716		21,672
Less: short term portion	14,716		21,672
Long term portion	$ 0		$ 0

OPERATING LEASES (Details 2) - USD ($)	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022
Maturity analysis under lease agreements
2022	$ 0		$ 6,357
2023	7,428		14,859
2024	7,482		0
Total lease payments	14,910		21,216
Plus: interest	(194)		456
Present value of lease liabilities	$ 14,716	$ 16,562	$ 21,672

OPERATING LEASES (Details Narrative) - USD ($)	9 Months Ended
OPERATING LEASES (Details Narrative) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
OPERATING LEASES
Rent expense	$ 55,005	$ 54,542
Lease Term	one year
Weighted-average discount rate	4.50%	4.50%

FINANCIAL HIGHLIGHTS (Details) - USD ($)	3 Months Ended	9 Months Ended
FINANCIAL HIGHLIGHTS (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2020	Sep. 30, 2019
Per Share Data
Net asset value at beginning of period	$ 3.02	$ 2.89	$ 2.80	$ 2.43	$ 2.05	$ 2.30
Net investment income (loss)		(0.06)	0.18	0.20	0.05	(0.11)
Net realized and unrealized gains(losses)		0.01	0.02	0.54	0.14	0.02
Provision for income taxes		0.01	(0.05)	(0.20)	0.00	0.00
Issuance of stock options		0.24	0.00	0.00	0.00	0.00
Issuance of common stock		0.05	0.00	0.00	0.00	0.00
Stock-based compensation		0.00	0.05	0.00	0.00	0.00
Repurchase of common stock		0.00	0.00	0.00	0.05	0.00
Other changes in equity		(0.09)	0.02	0.00	0.00	0.00
Payment of common stock dividend		(0.00)	(0.00)	(0.23)	(0.00)	(0.11)
Net asset value at end of period	3.05	3.05	3.02	2.74	2.29	2.10
Ratio / Supplemental Data
Per share market value of investments at end of period	$ 2.75	$ 2.75	$ 2.92	$ 2.30	$ 1.71	$ 1.58
Shares outstanding at end of period	6,385,255	6,385,255	6,185,255	4,795,739	4,754,104	4,918,845
Average weighted shares outstanding for the period basic		6,204,303	5,045,830	4,795,075	4,836,170	4,918,845
Average weighted shares outstanding for the period diluted		6,320,871	5,045,830	4,795,075	4,836,170	4,918,845
Net assets at end of period	$ 19,478,006	$ 19,478,006	$ 18,658,595	$ 13,140,835	$ 10,805,062	$ 10,588,689
Average net assets		$ 18,661,934	$ 15,081,352	$ 13,090,497	$ 10,220,482	$ 12,304,975
Total investment return		(2.76%)	6.07%	22.22%	(8.79%)	(8.82%)
Portfolio turnover rate		59.61%	66.81%	124.55%	18.18%	7.11%
Ratio of operating expenses to average net assets		(20.10%)	(19.24%)	(10.31%)	(6.49%)	(7.70%)
Ratio of net investment income (loss) to average net assets		(2.76%)	10.09%	9.87%	3.35%	(6.40%)