Mill City Ventures III(MCVT) - 2024 Q4 - Annual Report

Financial Performance - For the year ended December 31, 2024, the company earned $3,301,119 in interest income, a slight increase from$3,298,635 in 2023[102]. - The net investment gain for 2024 was $1,325,244, a substantial recovery from a net investment loss of$419,998 in 2023[109]. - The net increase in net assets resulting from operations for 2024 was $1,167,726, compared to a decrease of$1,165,506 in 2023, showing a positive shift in financial health[141]. - The net asset value per common share rose to $3.09 in 2024 from$2.91 in 2023, an increase of approximately 6.2%[139]. - The total investment return for 2024 was 6.19%, recovering from a loss of 7.27% in 2023[203]. - The net investment gain for 2024 was $0.21 per share, a recovery from a loss of$0.07 per share in 2023[203]. Operating Expenses - Total operating expenses decreased significantly to $1,975,875 in 2024 from$3,718,633 in 2023, primarily due to reduced legal, accounting, and payroll expenses[102][103]. - Operating expenses decreased to $1,975,875 in 2024 from$3,718,633 in 2023, a reduction of approximately 46.5%[141]. - Director's fees decreased to $300,000 in 2024 from$722,968 in 2023, reflecting the absence of stock-based compensation expenses[107]. - Interest expense dropped to $320 in 2024 from$78,000 in 2023 due to the termination of the line of credit arrangement[108]. - The ratio of operating expenses to average net assets improved to (10.23)% in 2024 from (19.94)% in 2023[203]. Cash Flow and Liquidity - Cash flows from operating activities improved dramatically to $5,650,086 in 2024, compared to a cash outflow of$1,137,617 in 2023[111]. - The company ended 2024 with cash of $6,026,110, a significant increase from$376,024 at the beginning of the year[111]. - The company reported a net cash provided by operating activities of $5,650,086 for 2024, a significant improvement from the net cash used of$1,137,617 in 2023[145]. - The company’s cash position improved significantly to $6,026,110 in 2024 from$376,024 in 2023, reflecting a substantial increase in liquidity[137]. Investments - The company made new investments totaling $5,665,526 in 2024 and refinanced investments amounting to$17,795,000[112]. - As of December 31, 2024, the company's investments at fair value totaled $13,006,231, down from$17,284,676 in 2023, reflecting a decrease of approximately 24.5%[127]. - Total investments as of December 31, 2024, amounted to $19,743,199, with total cash and cash equivalents at$6,026,110, representing 30.50% of total assets[148]. - The fair value of investments categorized as Level 3 was $13,006,231 as of December 31, 2024, with significant unobservable inputs used for valuation[130]. - The fair value of short-term non-banking loans was$13,006,231, accounting for 65.83% of total assets as of December 31, 2024[147]. - The fair value of short-term non-banking loans was $13,006,231, representing 96.7$20,473,436 in 2024 from $19,106,697 in 2023, representing an increase of about 7.1$715,447 in 2024 from $516,434 in 2023, an increase of approximately 38.5$19,743,199, reflecting a slight increase from the previous year[148]. - The company’s accumulated deficit as of December 31, 2024, was $(1,159,665), unchanged from 2023[145]. Tax and Deferred Tax - For the year ended December 31, 2024, the federal current tax provision was$325,172, compared to $83,402 for 2023, reflecting a significant increase of 290$770,000 as of December 31, 2024, an increase from $757,000 in 2023[202]. - The company accounts for income taxes under the asset and liability method, recognizing deferred tax assets and liabilities for expected future tax consequences[167]. Stock and Compensation - The company recognized stock-based compensation expense for stock options on a straight-line basis over the requisite service period[175]. - The company recognized stock-based compensation expense of$1,460,209 for the year ended December 31, 2023[195]. - The company issued new executive employment agreements with a base salary increase to $220,000 per year for key executives[208]. - The weighted average exercise price of stock options outstanding as of December 31, 2024 was$2.11, with 670,000 options outstanding[195]. - The company issued incentives for 870,000 shares under the 2022 Stock Incentive Plan, leaving 30,000 shares available for issuance as of December 31, 2024[194]. Miscellaneous - The company adopted ASU 2023-07 on January 1, 2024, which did not have a material impact on the financial statements[177]. - The company maintains cash balances in financial institutions and regulated financial investment brokers, with excess deposits subject to usual banking risks[154]. - The estimated fair value of Level 3 investment assets is determined quarterly, generally valuing equity investments at cost unless circumstances warrant a different approach[161]. - The company held a promissory note with two shareholders amounting to $250,000, which was paid in full on September 26, 2024[201]. - The company entered into an amendment to its loan agreement extending the maturity date to March 28, 2027, with an increased interest rate of 20%[205].