SUI Group Holdings Ltd. 10-K

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Item Page Reports of Independent Registered Public Accounting Firm (PCAOB ID is 542 ) 19 Balance Sheets — December 31, 2021 and December 31, 2020 21 Statements of Operations — Years ended December 31, 2021 and December 31, 2020 22 Statements of Shareholders’ Equity — Years ended December 31, 2021 and December 31, 2020 23 Statements of Cash Flows — Years ended December 31, 2021 and December 31, 2020 24 Notes to Financial Statements 27 ​ ​ ​ 18 ​ Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders ’ of Mill City Ventures III, Ltd. Opinion on the Financial Statements We have audited the accompanying balance sheets of Mill City Ventures III, Ltd. (the Company) as of December 31, 2021 and 2020, including the investment schedules and the related statements of operations, shareholders ’ equity, and cash flows for each of the years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company ’ s management. Our responsibility is to express an opinion on the Company ’ s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company ’ s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Emphasis of Matter – Investment Valuation As explained in Note 7 to the financial statements, the accompanying financial statements include investments valued at $13,662,500 and $3,367,897 for 2021 and 2020, respectively, whose fair values have been estimated by the valuation committee and management in absence of readily determinable fair values. Such estimates are based on financial and other information provided by management in absence of readily determinable fair values. Such estimates are based on financial and other information provided by management of its portfolio companies and pertinent market and industry data. These investments are valued in accordance with FASB ASC 820, “ Fair Value Measurement ” , which requires the Company to assume that the portfolio investments are sold in a principal market to market participants. The Company has considered its principal market as the market in which the Company exits its portfolio investments with the greatest volume and level of activity. ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to these valuation techniques are observable or unobservable. The investments are valued based on unobservable inputs as of December 31, 2021 and 2020 of $13,662,500 and $3,367,897, respectively. Because such valuations, and particularly valuations of private investments and private companies, are inherently uncertain, they may fluctuate significantly over short periods of time. These determinations of fair value could differ materially from the values that would have been utilized had a ready market for these investments existed. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 19 ​ Table of Contents Valuation of investments which utilize significant unobservable inputs Description of the Matter At December 31, 2021, the balances of the Company ’ s investments, at fair value, categorized as Level 3 within the fair value hierarchy totaled $13,663,500. The fair value of these investments is determined by management using the valuation techniques and significant unobservable inputs described in Notes 6 and 7 to the financial statements. Auditing the fair value of the Company ’ s investments categorized as Level 3 within the fair value hierarchy was complex and involved a high degree of auditor subjectivity due to the estimation uncertainty resulting from the unobservable nature of the inputs used in the valuations and the limited number of comparable market transactions for the same or similar investments. How We Addressed the Matter in Our Audit We obtained an understanding and evaluated the design of controls over the Company ’ s valuation process, including management ’ s assessment of the significant inputs and estimates used in the fair value measurements. We performed the following procedures, among others, for the Company ’ s Level 3 investments: · We evaluated the valuation techniques used by the Company and considered the consistency in application of the valuation techniques to each subject investment and investment class. · We involved senior, more experienced audit team members to perform audit procedures. · We evaluated the reasonableness of the significant unobservable inputs by comparing the inputs used by the Company to third-party sources, if available, such as market indexes or other market data. · We considered other information obtained during the audit that corroborated or contradicted the Company ’ s inputs or fair value measurements. · For investments sold during the year, we compared the transaction price to the Company ’ s fair value estimate to assess the reasonableness of management ’ s fair value estimates. ​ ​ Boulay PLLP We have served as the Company ’ s auditor since 2019 Minneapolis, Minnesota March 14, 2022 ​ ​ 20 ​ Table of Contents Mill City Ventures III, Ltd. Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 December 31, 2020 ASSETS ​ ​ ​ ​ Investments, at fair value: ​ $ 14,098,675 ​ $ 6,667,897 Non-control/non-affiliate investments (cost: $ 13,933,057 and $ 4,968,576 respectively) ​ ​ Cash ​ 1,936,148 ​ 5,440,579 Note receivable ​ 250,000 ​ 250,000 Prepaid expenses ​ 83,674 ​ 43,838 Receivable for sale of investments ​ — ​ 19,313 Interest and dividend receivables ​ 324,350 ​ 65,911 Right-of-use lease asset ​ 4,984 ​ 23,345 Total Assets ​ $ 16,697,831 ​ $ 12,510,883 ​ ​ ​ ​ ​ ​ ​ LIABILITIES ​ ​ Accounts payable ​ $ 64,028 ​ $ 32,917 Dividend payable ​ 100 ​ 539,296 Payable for purchase of investments ​ ​ 1,900,000 ​ ​ — Lease liability ​ 5,654 ​ 26,061 Accrued income tax expense ​ 1,269,000 ​ 13,722 Deferred taxes ​ 45,000 ​ 258,000 Total Liabilities ​ 3,283,782 ​ 869,996 Commitments and Contingencies ​ ​ ​ ​ ​ ​ ​ ​ ​ SHAREHOLDERS EQUITY (NET ASSETS) ​ ​ Common stock, par value $ 0.001 per share ( 250,000,000 authorized;  10,790,413 and 10,785,913 outstanding) ​ 10,790 ​ 10,786 Additional paid-in capital ​ 10,694,163 ​ 10,673,014 Accumulated deficit ​ ( 1,159,665 ) ​ ( 1,159,665 ) Accumulated undistributed investment loss ​ ( 1,877,667 ) ​ ( 2,124,419 ) Accumulated undistributed net realized gains on investment transactions ​ 5,580,810 ​ 2,541,850 Net unrealized appreciation in value of investments ​ 165,618 ​ 1,699,321 Total Shareholders' Equity (Net Assets) ​ 13,414,049 ​ 11,640,887 Total Liabilities and Shareholders' Equity ​ $ 16,697,831 ​ $ 12,510,883 Net Asset Value Per Common Share ​ $ 1.24 ​ $ 1.08 ​ The accompanying notes are an integral part of these financial statements. ​ 21 ​ Table of Contents ​ Mill City Ventures III, Ltd. Statements of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ December 31, ​ 2021 2020 Investment Income ​ ​ Interest income ​ $ 2,656,201 ​ $ 1,282,175 Dividend income ​ — ​ 15,462 Total Investment Income ​ 2,656,201 ​ 1,297,637 ​ ​ ​ ​ ​ ​ ​ Operating Expenses ​ ​ Professional fees ​ 453,440 ​ 175,612 Payroll ​ 556,432 ​ 301,494 Insurance ​ 108,165 ​ 85,237 Occupancy ​ 66,459 ​ 66,307 Director's fees ​ 120,000 ​ 90,000 Depreciation and amortization ​ — ​ 2,071 Other general and administrative ​ 50,255 ​ 15,069 Total Operating Expenses ​ 1,354,751 ​ 735,790 Net Investment Gain ​ 1,301,450 ​ 561,847 ​ ​ ​ ​ ​ ​ ​ Realized and Unrealized Gain (Loss) on Investments ​ ​ Net realized gain on investments ​ 4,118,001 ​ 5,330 Net change in unrealized appreciation (depreciation) on investments ​ ( 1,533,703 ) ​ 1,934,794 Net Realized and Unrealized Gain (Loss) on Investments ​ 2,584,298 ​ 1,940,124 Net Increase in Net Assets Resulting from Operations Before Taxes ​ ​ 3,885,748 ​ ​ 2,501,971 Provision For Income Taxes ​ 1,054,698 ​ 288,401 Net Increase in Net Assets Resulting from Operations ​ $ 2,831,050 ​ $ 2,213,570 ​ ​ ​ ​ ​ ​ ​ Net Increase in Net Assets Resulting from Operations per share: ​ ​ Basic and diluted ​ $ 0.26 ​ $ 0.20 Weighted-average number of common shares outstanding - basic and diluted ​ 10,789,294 ​ 10,869,054 ​ The accompanying notes are an integral part of these financial statements. ​ 22 ​ Table of Contents ​ Mill City Ventures III, Ltd. Statements of Shareholders’ Equity For the years ended December 31, 2021 and 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ Undistributed ​ Unrealized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Undistributed ​ Net Realized Gain ​ Appreciation ​ Total ​ ​ Common ​ ​ ​ Paid In ​ Accumulated ​ Net Investment ​ on Investments ​ in value of ​ Shareholders' Year Ended December 31, 2021 Shares Par Value Capital Deficit Loss Transactions Investments Equity Balance as of December 31, 2020 ​ 10,785,913 ​ $ 10,786 ​ $ 10,673,014 ​ $ ( 1,159,665 ) ​ $ ( 2,124,419 ) ​ $ 2,541,850 ​ $ 1,699,321 ​ $ 11,640,887 Common shares issued in consideration for expense payment 4,500 ​ 4 ​ 21,149 ​ — ​ — ​ — ​ — ​ 21,153 Dividend declared — ​ — ​ — ​ — ​ — ​ ( 1,079,041 ) ​ — ​ ( 1,079,041 ) Undistributed net investment gain ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 246,752 ​ ​ — ​ ​ — ​ ​ 246,752 Undistributed net realized gain on investment transactions — ​ — ​ — ​ — ​ — ​ 4,118,001 ​ — ​ 4,118,001 Depreciation in value of investments — ​ — ​ — ​ — ​ — ​ — ​ ( 1,533,703 ) ​ ( 1,533,703 ) Balance as of December 31, 2021 10,790,413 ​ $ 10,790 ​ $ 10,694,163 ​ $ ( 1,159,665 ) ​ $ ( 1,877,667 ) ​ $ 5,580,810 ​ $ 165,618 ​ $ 13,414,049 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ Undistributed ​ Net Unrealized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Undistributed ​ Net Realized Gain ​ Appreciation ​ Total ​ ​ Common ​ ​ ​ ​ Paid In ​ Accumulated ​ Net Investment ​ on Investments ​ in value ​ Shareholders' Year Ended December 31, 2020 Shares Par Value Capital Deficit Loss Transactions of Investments Equity Balance as of December 31, 2019 ​ 11,067,402 ​ $ 11,067 ​ $ 10,774,653 ​ $ ( 1,159,665 ) ​ $ ( 2,397,865 ) ​ $ 3,075,816 ​ $ ( 235,473 ) ​ $ 10,068,533 Repurchase of shares ​ ( 381,489 ) ​ ​ ( 381 ) ​ ​ ( 162,539 ) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ( 162,920 ) Stock based compensation ​ 100,000 ​ ​ 100 ​ ​ 60,900 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 61,000 Dividends declared ​ — ​ ​ — ​ ​ — ​ ​ ​ ​ ​ — ​ ​ ( 539,296 ) ​ ​ — ​ ​ ( 539,296 ) Undistributed net investment gain — ​ — ​ — ​ — ​ 273,446 ​ — ​ — ​ 273,446 Undistributed net realized gain on investment transactions — ​ — ​ — ​ — ​ — ​ 5,330 ​ — ​ 5,330 Appreciation in value of investments — ​ — ​ — ​ — ​ — ​ — ​ 1,934,794 ​ 1,934,794 Balance as of December 31, 2020 10,785,913 ​ $ 10,786 ​ $ 10,673,014 ​ $ ( 1,159,665 ) ​ $ ( 2,124,419 ) ​ $ 2,541,850 ​ $ 1,699,321 ​ $ 11,640,887 ​ The accompanying notes are an integral part of these financial statements. ​ ​ 23 ​ Table of Contents Mill City Ventures III, Ltd. Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, 2021 December 31, 2020 Cash flows from operating activities: ​ ​ Net increase in net assets resulting from operations ​ $ 2,831,050 ​ $ 2,213,570 ​ ​ ​ ​ ​ ​ ​ Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: ​ ​ Net change in unrealized (appreciation) depreciation on investments ​ 1,533,703 ​ ( 1,934,794 ) Net realized gain on investments ​ ( 4,118,001 ) ​ ( 5,330 ) Purchases of investments ​ ( 27,029,292 ) ​ ( 9,405,802 ) Proceeds from sales of investments ​ 22,188,562 ​ 6,418,926 Stock-based compensation ​ ​ — ​ ​ 61,000 Depreciation & amortization expense ​ — ​ 2,071 Income taxes payable ​ 1,255,278 ​ — Deferred income taxes ​ ​ ( 213,000 ) ​ ​ 271,722 Common shares issued as consideration for expense payment ​ 15,403 ​ — ​ ​ ​ ​ ​ ​ ​ Changes in operating assets and liabilities: ​ ​ Prepaid expenses and other assets ​ ( 21,475 ) ​ 5,197 Interest and dividends receivable ​ ( 258,439 ) ​ ( 59,411 ) Receivable for investment sales ​ 19,313 ​ ( 19,313 ) Accounts payable and other liabilities ​ 10,804 ​ ( 10,993 ) Payable for investment purchase ​ 1,900,000 ​ — Net cash used in operating activities ​ ( 1,886,094 ) ​ ( 2,463,157 ) ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ Payments for repurchase of common stock ​ — ​ ( 162,920 ) Payments for common stock dividend ​ ( 1,618,337 ) ​ — Net cash used by financing activities ​ ( 1,618,337 ) ​ ( 162,920 ) Net decrease in cash ​ ( 3,504,431 ) ​ ( 2,626,077 ) Cash, beginning of period ​ 5,440,579 ​ 8,066,656 Cash, end of period ​ $ 1,936,148 ​ $ 5,440,579 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ Cash paid for income taxes ​ $ 32,398 ​ $ 16,679 ​ ​ ​ ​ ​ ​ ​ Non-cash financing activities: ​ ​ Common shares issued as consideration for investment ​ $ 5,750 ​ $ — Dividend declared to common stock shareholders ​ ​ — ​ 539,296 ​ The accompanying notes are an integral part of these financial statements. ​ ​ 24 ​ Table of Contents ​ Mill City Ventures III, Ltd. Investment Schedule As of December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ of Net ​ Investment / Industry Cost Fair Value Assets ​ Short-Term Non-banking Loans ​ ​ ​ ​ ​ Consumer - 15% secured loans ​ ​ ​ ​ ​ ​ ​ ​ ​ AirDog Supplies, Inc. ​ $ 1,250,000 ​ $ 1,250,000 9.32 % Financial - 52% secured loans ​ 500,000 ​ 500,000 3.73 % Financial - 12% secured loans ​ 500,000 ​ 500,000 3.73 % Litigation Financing - 23% secured loans ​ ​ ​ The Cross Law Firm, LLC ​ 1,805,750 ​ 1,800,000 13.42 % Real Estate - 15% secured loans ​ 700,000 ​ 700,000 5.22 % Tailwinds, LLC ​ 3,000,000 ​ 3,000,000 22.36 % Real Estate - 12% secured loans ​ ​ ​ Alatus Development, LLC ​ 3,900,000 ​ 3,900,000 29.07 % Total Short-Term Non-Banking Loans ​ 11,655,750 ​ 11,650,000 86.85 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ Financial Services ​ 414,128 ​ 436,175 3.25 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ ​ ​ Consumer ​ ​ ​ ​ ​ ​ ​ ​ ​ Wisdom Gaming, Inc ​ ​ 900,000 ​ ​ 900,000 ​ 6.71 % Information Technology ​ ​ 150,000 ​ ​ 300,000 ​ 2.24 % Total Other Equity ​ 1,050,000 ​ 1,200,000 8.95 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrants ​ ​ ​ Healthcare ​ 679 ​ — 0.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Equity ​ ​ ​ Consumer ​ ​ 212,500 ​ ​ 212,500 ​ 1.58 % Financial ​ 600,000 ​ 600,000 4.47 % Total Other Equity ​ ​ 812,500 ​ ​ 812,500 ​ 6.05 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Investments ​ $ 13,933,057 ​ $ 14,098,675 105.10 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Cash ​ 1,936,148 ​ 1,936,148 14.43 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Investments and Cash ​ $ 15,869,205 ​ $ 16,034,823 119.53 % ​ The accompanying notes are an integral part of these financial statements. ​ 25 ​ Table of Contents ​ Investment Schedule As of December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ ​ of Net ​ Investment / Industry Cost Fair Value Assets Short-Term Non-banking Loans ​ ​ ​ ​ ​ Consumer - 20% secured loans ​ $ 400,000 ​ $ 400,000 3.44 % Financial - 44% secured loans ​ 400,000 ​ 400,000 3.44 % Financial - 36% secured loans ​ 500,000 ​ 500,000 4.30 % Real Estate - 15% secured loans ​ ​ ​ Alatus Development, LLC ​ 1,250,000 ​ 1,250,000 10.74 % Other ​ 239,000 ​ 239,000 2.05 % Total Short-Term Non-Banking Loans ​ 2,789,000 ​ 2,789,000 23.97 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ Consumer ​ ​ ​ Ammo, Inc. ​ 1,750,000 ​ 3,300,000 28.34 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ ​ ​ Information Technology ​ 150,000 ​ 300,000 2.58 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Warrants ​ ​ ​ Healthcare ​ 679 ​ — 0.00 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Equity ​ ​ ​ Leisure & Hospitality ​ 278,897 ​ 278,897 2.40 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Investments ​ $ 4,968,576 ​ $ 6,667,897 57.30 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Cash ​ 5,440,579 ​ 5,440,579 46.74 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Investments and Cash ​ $ 10,409,155 ​ $ 12,108,476 104.04 % ​ The accompanying notes are an integral part of these financial statements. ​ ​ ​ ​ 26 ​ Table of Contents 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 1940 Act . We operated as a BDC until we withdrew our BDC election on December 27, 2019. As of the time of this filing, we remain a public reporting company that files periodic reports with the SEC. We offer short-term specialty finance solutions primarily to private businesses, small-cap public companies and high-net-worth individuals. To avoid regulation under the 1940 Act, we generally seek to structure our investments so they do not constitute “investment securities” for purposes of federal securities law, and we monitor our investments as a whole to ensure that no more than 40 % of our total assets may consist of investment securities. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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 7 – 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 the Valuation Committee of our Board of Directors based on, among other things, the input of our executive management, the Audit Committee of our Board of Directors, and any independent third-party valuation experts that may be engaged by management to assist in the valuation of our portfolio investments, but in all cases consistent with our written valuation policies and procedures. Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. In addition, such investments are generally less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. Accounting guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Observable inputs must be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available. Assets and liabilities measured at fair value are to be categorized into one of the three hierarchy levels based on the relative observability of inputs used in the valuation. The three levels are defined as follows: ● Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2: Observable inputs based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets. 27 ​ Table of Contents ● 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 present value 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 the Valuation Committee of our Board of Directors, pursuant to our written Valuation Policy and Procedures. These policies and procedures generally require that we value our Level 3 equity investments at cost plus any accrued interest, unless circumstances warrant a different approach. Our Valuation Policy and Procedures provide examples of these circumstances, such as when 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 situations identified in our Valuation Policy and Procedures that may serve as input supporting a change in the valuation of our Level 3 equity investments include (i) a third-party valuation conducted by an independent and qualified professional, (ii) changes in the performance of long-term financial prospects of the portfolio company, (iii) a subsequent financing that changes the distribution rights associated with the equity security we hold, or (iv) sale transactions involving comparable companies, but only if further supported by a third-party valuation conducted by an independent and qualified professional. When valuing preferred equity investments, we generally view intrinsic value as a key input. Intrinsic value means the value of any conversion feature (if the preferred investment is convertible) or the value of any liquidation or other preference. Discounts to intrinsic value may be applied in cases where the issuer’s financial condition is impaired or, in cases where intrinsic value relating to a conversion is determined to be a key input, to account for resale restrictions applicable to the securities issuable upon conversion. When valuing warrants, our Valuation Policy and Procedures indicate that value will generally be the difference between 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 securities with a residual maturity less than or equal to 60 days, the value will generally be based on a present value approach, considering the straight-line amortized face value of the debt unless justification for impairment exists. On a quarterly basis, our management provides members of our Valuation Committee with (i) valuation reports for each portfolio investment (which reports include our cost,, the most recent prior valuation and any current proposed valuation, and an indication of the valuation methodology used, together with any other supporting materials); (ii) Mill City Ventures’ bank and other statements pertaining to our cash and cash equivalents; (iii) quarter- or period-end statements from our custodial firms holding any of our portfolio investments; and (iv) recommendations 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. The committee then discusses 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 amounts and 28 ​ Table of Contents tax basis of assets and liabilities using enacted tax rates in effect for the tax 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 for the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and recent financial operations. In the event we were to determine we would not be able to realize our deferred income tax assets, 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. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months. Our evaluation was performed for the tax years ended December 31, 2018 through 2020, which are the tax years that remain subject to examination by the tax jurisdictions as of December 31, 2021. 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 in 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. 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. 29 ​ Table of Contents NOTE 3 – NET GAIN PER COMMON SHARE Basic net gain (loss) per common share is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted­average number of vested common shares outstanding during the period. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net gain per common share follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2021 2020 Numerator: Net increase in net assets resulting from operations ​ $ 2,831,050 ​ $ 2,213,570 Denominator: Weighted-average number of common shares outstanding ​ 10,789,294 ​ 10,869,054 Basic and diluted net gain per common share ​ $ 0.26 ​ $ 0.20 ​ At December 31, 2021 and 2020, the Company did not have any options or warrants outstanding or any other dilutive common equivalent shares. NOTE 4—LEASES We are subject to two non-cancelable operating leases for office space expiring March 31, 2022. 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 lease does 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 December 31, 2021 was 4.5 % and the weighted average remaining lease term is one year . Under ASC 840, rent expense for office facilities for the year ended December 31, 2021 and December 31, 2020 was $ 66,459 and $ 66,307 , respectively. The components of our operating leases were as follows for the three and twelve months ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ Year Ended ​ ​ December 31, ​ December 31, ​ 2021 2020 Operating lease costs ​ $ 19,116 ​ $ 19,116 Variable lease cost ​ 17,613 ​ 17,461 Short-term lease cost ​ 29,730 ​ 29,730 Total ​ $ 66,459 ​ $ 66,307 ​ Supplemental balance sheet information consisted of the following at December 31, 2021: ​ ​ ​ ​ ​ Operating Lease ​ Right-of-use assets ​ $ 4,984 ​ ​ ​ ​ Operating Lease Liability ​ $ 5,654 Less: short term portion ​ ( 5,654 ) Long term portion ​ $ — ​ 30 ​ Table of Contents Maturity analysis under lease agreements consisted of the following as of December 31, 2021: ​ ​ ​ ​ ​ ​ Operating ​ Leases 2022 ​ $ 5,449 Total lease payments ​ 5,449 Plus: interest ​ 205 Present value of lease liabilities ​ $ 5,654 ​ ​ ​ NOTE 5—SHAREHOLDERS’ EQUITY At December 31, 2021 a total of 10,790,413 shares of common stock were issued and outstanding. At December 31, 2020 a total of 10,785,913 shares of common stock were issued and outstanding. During 2021, there were 4,500 shares issued by the Company. On October 26, 2020, the Board of Directors approved a stock repurchase program of up to $ 400,000 of the Company’s outstanding shares of common stock. Repurchases may be completed in public or private transactions. The repurchase program does not require the Company to acquire any specific number of shares, and may be suspended from time to time in accordance with the Company's insider trading policy and existing best practices, or it may be discontinued. Repurchases completed under the program are expected to be funded from available working capital. NOTE 6— INVESTMENTS The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of December 31, 2021 (together with the corresponding percentage of total portfolio investments): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2021 ​ Investments at Percentage of Investments at Percentage of ​ Amortized Cost Amortized Cost Fair Value Fair Value ​ Short-term Non-banking Loans ​ $ 11,655,750 83.7 % $ 11,650,000 82.6 % Preferred Stock ​ 1,050,000 7.5 ​ 1,200,000 8.5 ​ Common Stock ​ 414,128 3.0 ​ 436,175 3.1 ​ Warrants ​ 679 — ​ — — ​ Other Equity ​ 812,500 5.8 ​ 812,500 5.8 ​ Total ​ $ 13,933,057 100.0 % $ 14,098,675 100.0 % ​ The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of December 31, 2020 (together with the corresponding percentage of total portfolio investments): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2020 ​ Investments at Percentage of Investments at Percentage of ​ Amortized Cost Amortized Cost Fair Value Fair Value ​ Short-term Non-banking Loans ​ $ 2,789,000 56.2 % $ 2,789,000 41.8 % Preferred Stock ​ 150,000 3.0 ​ 300,000 4.5 ​ Common Stock ​ 1,750,000 35.2 ​ 3,300,000 49.5 ​ Warrants ​ 679 — ​ — — ​ Other Equity ​ 278,897 5.6 ​ 278,897 4.2 ​ Total ​ $ 4,968,576 100.0 % $ 6,667,897 100.0 % ​ 31 ​ Table of Contents The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2021 ​ Investments at Percentage of ​ Fair Value Fair Value ​ Consumer ​ $ 2,362,500 16.8 % Financial ​ 3,836,175 27.2 ​ Information Technology ​ 300,000 2.1 ​ Real Estate ​ 7,600,000 53.9 ​ Total ​ $ 14,098,675 100.0 % ​ The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2020 ​ Investments at Percentage of ​ Fair Value Fair Value ​ Consumer ​ $ 3,700,000 55.5 % Financial ​ 900,000 13.5 ​ Information Technology ​ 300,000 4.5 ​ Leisure & Hospitality ​ 278,897 4.2 ​ Real Estate ​ 1,489,000 22.3 ​ Total ​ $ 6,667,897 100.0 % ​ ​ ​ NOTE 7 – FAIR VALUE OF FINANCIAL INSTRUMENTS Level 3 valuation information : Due to the inherent uncertainty in the valuation process, the estimate of the fair value of our investment portfolio as of December 31, 2021 and 2020 may differ materially from values that would have been used had a readily available market for the securities existed. The following table presents the fair value measurements of our portfolio investments by major class, as of December 31, 2021, according to the fair value hierarchy: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2021 ​ Level 1 Level 2 Level 3 Total Short-term Non-banking Loans ​ $ — ​ $ — ​ $ 11,650,000 ​ $ 11,650,000 Preferred Stock ​ — ​ — ​ 1,200,000 ​ 1,200,000 Common Stock ​ 436,175 ​ — ​ — ​ 436,175 Other Equity ​ — ​ — ​ 812,500 ​ 812,500 Total ​ $ 436,175 ​ $ — ​ $ 13,662,500 ​ $ 14,098,675 ​ The following table presents the fair value measurements of our portfolio investments by major class, as of December 31, 2020, according to the fair value hierarchy: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2020 ​ Level 1 Level 2 Level 3 Total Short-term Non-banking Loans ​ $ — ​ $ — ​ $ 2,789,000 ​ $ 2,789,000 Preferred Stock ​ — ​ — ​ 300,000 ​ 300,000 Common Stock ​ 3,300,000 ​ — ​ — ​ 3,300,000 Other Equity ​ — ​ — ​ 278,897 ​ 278,897 Total ​ $ 3,300,000 ​ $ — ​ $ 3,367,897 ​ $ 6,667,897 ​ 32 ​ Table of Contents 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, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2021 ​ ​ ​ ​ ST ​ ​ ​ ​ ​ ​ ​ ​ ​ Non-banking Preferred Common ​ ​ ​ ​ ​ ​ ​ Loans ​ Stock ​ Stock ​ Warrants ​ Other Equity Balance as of January 1, 2021 ​ $ 2,789,000 ​ $ 300,000 ​ $ — ​ $ — ​ $ 278,897 Net change in unrealized appreciation ​ — ​ — ​ — ​ — ​ — Purchases and other adjustments to cost ​ 24,765,333 ​ 900,000 ​ — ​ — ​ 812,500 Sales and redemptions ​ ( 15,904,333 ) ​ — ​ — ​ — ​ ( 278,897 ) Net realized loss ​ — ​ — ​ — ​ — ​ — Balance as of December 31, 2021 ​ $ 11,650,000 ​ $ 1,200,000 ​ $ — ​ $ — ​ $ 812,500 ​ The net change in unrealized appreciation for the year ended December 31, 2021 attributable to Level 3 portfolio investments still held as of December 31, 2021 is $ 0 , and is included in net change in unrealized appreciation (depreciation) on investments on the statement of operations. 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, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the year ended December 31, 2020 ​ ​ ​ ​ ST Non-banking Preferred Common ​ ​ ​ ​ Loans ​ Stock ​ Stock ​ Warrants ​ Other Equity Balance as of January 1, 2020 ​ $ — ​ $ 300,000 ​ $ — ​ $ — ​ $ 534,200 Net change in unrealized appreciation ​ — ​ — ​ — ​ — ​ 486,018 Purchases and other adjustments to cost ​ 7,543,000 ​ — ​ — ​ — ​ — Sales and redemptions ​ ( 4,754,000 ) ​ — ​ — ​ — ​ ( 91,313 ) Net realized loss ​ — ​ — ​ — ​ — ​ ( 650,008 ) Balance as of December 31, 2020 ​ $ 2,789,000 ​ $ 300,000 ​ $ — ​ $ — ​ $ 278,897 ​ The net change in unrealized appreciation for the year ended December 31, 2020 attributable to Level 3 portfolio investments still held as of December 31, 2020 is $ 0 , and is included in net change in unrealized appreciation (depreciation) on investments on the statement of operations. 33 ​ Table of Contents The following table lists our Level 3 investments held as of December 31, 2021 and the unobservable inputs used to determine their valuation: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Security Type 12/31/21 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans ​ $ 11,650,000 ​ discounted cash flow ​ determining private company interest rate based on credit ​ 12 - 44 % Other Equity ​ 812,500 last secured funding known by company economic changes since last funding ​ Preferred Stock ​ 1,200,000 last funding secured by company economic changes since last funding ​ ​ ​ $ 13,662,500 ​ ​ 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, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Security Type 12/31/20 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans ​ $ 2,789,000 discounted cash flow determining private company interest rate based on credit 14 - 44 % Other Equity ​ 278,897 last secured funding known by company economic changes since purchase ​ Preferred Stock ​ 300,000 last funding secured by company economic changes since last funding ​ ​ ​ $ 3,367,897 ​ ​ ​ ​ ​ ​ ​ ​ ​ There were no transfers between levels during the years ended December 31, 2021 and 2020. ​ ​ ​ ​ NOTE 8 – RELATED-PARTY TRANSACTIONS We maintain a conflicts of interest and related-party transactions policy. Nevertheless, from time to time we may hold investments in portfolio companies in which certain members of our management, our Board of Directors, or significant shareholders of ours, are also directly or indirectly invested. In this regard, during the period covered by this report we entered into 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 1,765,000 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 in August 2022. 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 625,000 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. 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 34 ​ Table of Contents 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. ● The Loan Agreement provides 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, and requires us to pay such fee 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. NOTE 9 - RETIREMENT SAVINGS PLANS Our two employees, Messrs. Geraci and Polinsky, are eligible to participate in a qualified defined contribution 401(k) plan whereby they may elect to have a specified portion of their salary contributed to the plan. We will make a safe harbor match equal to 100 % of their elective deferrals up to 5 % of eligible earnings in addition to our option to make discretionary contributions to the plan. We made contributions totaling $ 11,250 and $ 10,550 to the plans for the years ended 2021 and 2020, respectively. NOTE 10 – INCOME TAXES Presently, we are a “C-corporation” for tax purposes and have booked an income tax provision for the year ended December 31, 2021. Income taxes as of December 31, 2021, and 2020 are described below. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ 2021 2020 Current taxes ​ ​ ​ ​ Federal ​ $ 909,530 ​ $ — State ​ 357,168 ​ 16,679 Deferred taxes ​ ​ Federal ​ ( 212,000 ) ​ 258,000 Stae ​ — ​ 13,722 Provision for (benefit from) income taxes ​ $ 1,054,698 ​ $ 288,401 ​ A reconciliation of income tax provisions at the U.S. statutory rate for fiscal year 2021 and 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2020 Rate reconciliation: ​ ​ ​ ​ Tax expense at U.S.statutory rate ​ $ 1,017,417 ​ $ 716,966 Change in valuation allowance ​ — ​ ( 446,000 ) Provision-to-return reconciliation ​ ( 14,743 ) ​ 21,657 Other ​ ( 1,976 ) ​ ( 4,222 ) Income tax provision ​ $ 1,054,698 ​ $ 288,401 ​ The Company had Federal net operating loss carryforwards of approximately $ 350,000 at December 31, 2020. We expect the Federal net operating loss to be completely used and offset taxable income by December 31, 2021. The federal NOL may be carried forward to offset future taxable income, subject to applicable provisions of the Internal Revenue Code. Certain federal NOLs will expire in years 2036 and 2037 if not used. 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 $ 350,000 . The Company had Minnesota net operating loss carryforwards of approximately $ 1,330,000 at December 31, 2020. We expect the state net operating loss to be completely used and offset taxable income by December 31, 2021. States may vary in their treatment of post-2017 NOLs. We lost some state NOL carryforwards when we filed final 2019 tax returns in several states. The remaining state NOL carryforwards may expire in 2036 and 2037 if not used. 35 ​ Table of Contents Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities as of December 31, 2021 and 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ 2021 2020 Deferred tax components ​ ​ ​ ​ Unrealized (gain) loss on marketable securities ​ $ ( 46,552 ) ​ $ ( 488,419 ) Depreciation ​ 2,458 ​ 3,002 Net operating loss carryforwards ​ — ​ 180,460 R&D and foreign credits ​ — ​ 46,957 Other ​ ( 906 ) ​ — Net deferred tax asset (liability) ​ $ ( 45,000 ) ​ $ ( 258,000 ) ​ ​ NOTE 11 – FINANCIAL HIGHLIGHTS The following is a schedule of financial highlights for the years ended December 31, 2021 through 2017: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 2019 2018 2017 Per Share Data (1) ​ ​ Net asset value at beginning of period ​ $ 1.08 0.91 1.02 0.87 0.77 ​ Net investment gain (loss) ​ 0.12 0.05 ( 0.06 ) ( 0.05 ) ( 0.05 ) ​ Net realized and unrealized gains (losses) ​ 0.24 0.18 0.00 0.20 0.11 ​ Provision for income taxes ​ ( 0.10 ) ( 0.02 ) 0.00 0.00 0.00 ​ Stock based compensation ​ ​ 0.00 ​ ( 0.01 ) ​ 0.00 ​ 0.00 ​ 0.00 ​ Repurchase of common stock ​ 0.00 0.02 0.00 0.00 0.04 ​ Payment of common stock dividend ​ ( 0.10 ) ( 0.05 ) ( 0.05 ) 0.00 0.00 ​ Net asset value at end of period ​ $ 1.24 1.08 0.91 1.02 0.87 ​ ​ ​ ​ Ratio / Supplemental Data ​ ​ Per share market value of investments at end of period ​ $ 1.31 0.62 0.16 0.90 0.65 ​ Shares outstanding at end of period ​ 10,790,413 10,785,913 11,067,402 11,067,402 11,067,402 ​ Average weighted shares outstanding for the period ​ 10,789,294 10,869,054 11,067,402 11,067,402 11,863,392 ​ Net assets at end of period ​ $ 13,414,049 11,640,887 10,068,533 11,278,889 9,629,215 ​ Average net assets (2) ​ $ 13,155,207 10,504,563 11,473,535 10,341,702 9,444,440 ​ Total investment return ​ 24.07 % 23.08 % ( 5.88 ) % 17.24 % 7.79 % Portfolio turnover rate (3) ​ 168.67 % 61.11 % 7.63 % 26.93 % 35.03 % Ratio of operating expenses to average net assets (3) ​ ( 10.30 ) % ( 7.16 ) % ( 7.27 ) % ( 6.59 ) % ( 7.30 ) % Ratio of net investment income (loss) to average net assets (3) ​ 9.89 % 5.35 % ( 5.86 ) % ( 5.13 ) % ( 5.45 ) % Ratio of realized gains (losses) to average net assets (3) ​ 31.30 % 0.05 % 28.35 % ( 5.62 ) % 5.71 % (1) Per-share data was derived using the weighted-average number of shares outstanding for the period. (2) Based on the monthly average of net assets as of the beginning and end of each period presented. (3) Ratios are annualized. NOTE 12 – SUBSEQUENT EVENTS 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 36 ​ Table of Contents 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 will 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. ​ Each Lender 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 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 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. ​ The Loan Agreement provides 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, and requires us to pay such fee 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. ​ The Loan Agreement contains other provisions, such as representations, warranties, terms and conditions, that are customary for revolving credit facilities. Promissory notes, evidencing amounts owing under the Loan Agreement and conforming to the terms and conditions of the Loan Agreement, were also executed by us and delivered to the Lenders as contemplated under the Loan Agreement. ​ On January 12, 2022, we entered into a $ 2,500,000 revolving credit and security loan investment bearing interest at 15 %. On January 12, 2022, we advanced $ 1,250,000 under this loan, and an additional $ 960,000 on January 26, 2022. ​ On January 26, 2022, we invested $ 1,125,000 in a 120-day promissory note bearing interest at 33.33 %. ​ On February 11, 2022, we filed a registration statement on Form S-1 seeking to register an offering of five-year common stock warrants we intend to distribute to our shareholders as a dividend, and up to 2,697,603 shares of our common stock purchasable upon the exercise of the warrants. The warrants are contemplated to be exercisable at a price of $ 4.00 per share of common stock. We intend to apply to have the warrants listed for trading on the OTC Markets. ​ The offering is subject to the effectiveness of the S-1 registration statement. Accordingly, no record date has been established for the associated dividend contemplated as part of the offering. The warrants will not be issued until the registration statement is declared effective, and the warrants will not be exercisable unless such registration statement remains effective. If the offering is consummated, we expect to use net proceeds from the offering for general corporate purposes, including but not limited to extending specialty finance solutions and credit to borrowers and repaying credit facility borrowings. ​ On March 7, 2022, the company funded a $ 3.4 million short-term loan, the proceeds of which will be used to acquire real estate located in Glendale, Arizona, where 139 townhouse units are expected to be developed by the borrower. The short-term loan accrues interest at the per annum rate of 48 %, and the loan is due on May 30, 2022. ​ ​ 37 ​ Table of Contents ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.