What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-04-17 compared with 2022-03-14 · 89 added, 78 removed, 223 unchanged (43% of the section changed)

17 unchanged sentences

Boulay PLLP, an independent registered public accounting firm, is not required to issue, and thus has not issued, an attestation report on the Company’s internal control over financial reporting as of December 31, 2022.

Changes in Internal Control

There were no changes in our internal control over financial reporting during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

/s/ Douglas M.

2 unchanged sentences

Chief Financial Officer

Changes in Internal Control

There were no changes in our internal control over financial reporting during the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

16 unchanged sentences

Polinsky earned a Bachelor of Science degree in hotel administration at the University of Nevada, Las Vegas in 1981.

Geraci, II cofounded the Company in January 2006 and has been a director and the Chief Financial Officer of the Company since that time.

Geraci, II co-founded the Company in January 2006 and has been a director and the Chief Financial Officer of the

Company since that time.

Since February 2002 through the present time, Mr.

7 unchanged sentences

Geraci’s business was focused on structuring and negotiating debt and equity private placements with both private and publicly held companies.

Geraci was employed at other Minneapolie brokerage firms from July 1991 to June 2000.

Geraci was employed at other Minneapolis brokerage firms from July 1991 to June 2000.

From his career and investment experiences, Mr.

18 unchanged sentences

In October 1995, Mr.

Berman was honored with the B'nai B'rith "Great American Traditions Award."

In April 1996, he received the Gaming Executive of the Year Award; in 2004, Mr.

Berman was honored with the B'nai B'rith "Great American Traditions Award." In April 1996, he received the Gaming Executive of the Year Award; in 2004, Mr.

Berman was inducted into the Poker Hall of Fame; and in 2009, he received the Casino Lifetime Achievement Award from Raving Consulting & Casino Journal.

33 unchanged sentences

The charter alters the manner in which candidates for service as directors will be nominated for election or re-election and delegates that authority to the committee in lieu of the entire Board of Directors.

Communication with Board Members

Our Board of Directors has provided the following process for shareholders and interested parties to send communications to our board and/or individual directors.

All communications should be addressed to Mill City Ventures III, Ltd., 1907 Wayzata Boulevard, Ste.

205, Wayzata, MN 55391, Attention:

Chief Executive Officer.

Communications to individual directors may also be made to such director at our company’s address.

All communications sent to any individual director will be received directly by such individuals and will not be screened or reviewed by any company personnel.

Any communications sent to the board in the care of the Chief Executive Officer will be reviewed by that officer to ensure that such communications relate to the business of the Company before being reviewed by the board.

Committees of the Board of Directors; Audit Committee Financial Expert

The Board of Directors has an Audit Committee, a Compensation Committee, a Valuation Committee and a Nominating and Governance Committee.

The Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating and Governance Committee.

The members of the Audit Committee are Laurence Zipkin, Howard Liszt and Lyle Berman., each of whom is independent for purposes of the Securities Exchange Act of 1934.

12 unchanged sentences

The board has adopted a charter for the Compensation Committee, a copy of which is available at www.millcityventures3.com.

The members of the Valuation Committee are Messrs.

Zipkin, Liszt and Berman, each of whom is independent for purposes of the Securities Exchange Act of 1934.

Zipkin currently serves as chair of the Valuation Committee.

The Valuation Committee is responsible for approving the fair value of debt and equity securities comprising the Company’s investment portfolio pursuant to the Company’s written valuation policy and procedures.

The members of the Nominating and Corporate Governance Committee are Messrs.

2 unchanged sentences

The Nominating and Corporate Governance committee is responsible for advising the Board on a broad range of issues surrounding the composition and operation of the Board of Directors and its committees, specifically including identifying criteria for suitable board candidates, identifying individuals suited to service on the board (consistent with those criteria), recommending director candidates to the board and to the shareholders, conducting annual reviews of corporate governance matters and making related recommendations to the Board of Directors and its committees.

Of the directors presently serving on the board, Messrs.

Berman, Liszt and Zipkin are “independent” as that term is defined in Section 4200(a)(15) of National Association of Securities Dealers’ listing standards.

While the Company is not presently subject to the Nasdaq listing standards because its common stock is not listed for trading on any Nasdaq market tier, the Company has submitted an application to have its common stock listed on the Nasdaq Capital Markets.

The board has adopted a charter for the Nominating and Corporate Governance Committee, a copy of which is available at www.millcityventures3.com.

Section 16(a) Beneficial Ownership Reporting Compliance

1 unchanged sentence

Based on our own review, we believe that there were no late filings during 2022 other than:

Form 4s filed by directors and officers on May 19 and 20, 2022, reporting Compensation Committee- and board-approved stock grants made on April 11, 2022;

a Form 4 filed by Mr.

Geraci on April 9, 2021, reporting a gift of 2,000 shares of common stock made on March 25, 2021;

and a Form 4 filed by Mr.

Zipkin on December 13, 2021, reporting open-market purchases of common stock back to November 18, 2021.

Polinsky on August 22, 2022, reporting open-market purchases of common stock on August 18 and 19, 2022.

ITEM 11 EXECUTIVE AND DIRECTOR COMPENSATION

2 unchanged sentences

Name and Principal Position

All Other Compensation

Chief Executive Officer

1 unchanged sentence

*includes additional compensation of payment of health insurance premiums and 401(k) matching contributions under the employment retirement program.

On February 20, 2023, we entered into new executive employment agreements with Mr.

Polinsky, our Chief Executive Officer, and Mr.

Geraci, II, our Chief Financial Officer.

Those two executives have been executive officers of our company since its founding.

Each employment agreement was effective as of January 1, 2023, and has a term that lasts for two full years thereafter, ending on December 31, 2024 (subject to extension by mutual agreement of the parties).

Each employment agreement provides the executive with a base annual salary of $200,000.

Each executive is also entitled to have health insurance provided by us and the ability to contribute to our 401(k) plan.

Each employment agreement contains two-year non-competition and non-solicitation covenants, as well as a customary covenants relating to the confidentiality of our company information.

In the event that an executive is terminated for cause, as defined in the employment agreements, or in the event that an executive’s services are terminated due to death or disability, the terminated executive will be entitled to receive only his base annual salary through the date of termination.

In the event of other non-cause terminations, we will be obligated to pay the terminated executive’s base annual salary through the remainder of the employment term.

Outstanding Equity Awards at Fiscal Year End

We had no outstanding options, warrants, unvested stock awards or equity incentive plan awards as of December 31, 2021 held by any named executive.

In addition, we have no options, warrants, unvested stock awards or equity incentive plan awards outstanding and held by any named executive as of the date of this filing.

At December 31, 2022, we had issued to our named executive, and there were outstanding, an aggregate of 500,000 non-statutory ten-year stock options to purchase common stock at the purchase price of $2.12 per share, under our 2022 Stock Incentive Plan.

These stock options and the plan itself were, at that time, subject to the approval of our shareholders.

Subsequently, our shareholders did approve the plan on January 20, 2023, at a special shareholder meeting called for that purpose.

Director Compensation

For 2022, we paid a total of $177,072 in director fees to our independent directors.

Presently, each such director receives an annualized fee of $40,000.

Presently, each such director receives an annualized cash fee of $40,000, generally paid in quarterly installments.

Option Awards (1)

(1) Amount represents the grant date fair value in accordance with FASB ASC Topic 718.

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The table below sets forth certain information with respect to beneficial ownership of our common stock as of December 31, 2021 (on which date there were 10,790,413 shares of common stock outstanding), by:

• each director of the Company

• each named executive (see Item 11 above)

• all current directors and executive officers of the Company as a group, and

• each person or entity known by the Company to beneficially own more than 5% of our common stock.

The following table sets forth certain information, as of the date of this report, with respect to any person (including any “group,” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who is known to us to be the beneficial owner of more than 5% of any class of our voting securities, and as to those shares of our equity securities beneficially owned by each of our directors and executive officers and all of our directors and executive officers as a group.

As of the date of this report, we had 6,185,255 shares of common stock outstanding.

Unless otherwise indicated in the table or its footnotes, the business address of each of the following persons or entities is 1907 Wayzata Blvd., Suite 205, Wayzata, Minnesota 55391, and each such person or entity has sole voting and investment power with respect to the shares of common stock set forth opposite their respective name.

Number of Shares Beneficially Owned (1)

Percentage of Outstanding Shares (1)

Geraci, II (3)

4 unchanged sentences

Scott and Elizabeth Zbikowski (9)

David Bester (10)

Patrick Kinney (11)

William Hartzell

All current directors and executive officers as a group (7) (five persons)

*less than one percent

(1) Beneficial ownership is determined in accordance with the rules of the SEC and includes general voting power and/or investment power with respect to securities.

Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days of the applicable record date, are deemed outstanding for computing the beneficial ownership percentage of the person holding such options or warrants but are not deemed outstanding for computing the beneficial ownership percentage of any other person.

The number of shares of common stock beneficially owned by each person is determined under the rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose.

Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after the date hereof, through the exercise of any stock option, warrant or other right.

Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table.

The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

Polinsky is our Chairman and Chief Executive Officer.

Figure includes 290,055 common shares held by Lantern Advisers, LLC, a Minnesota limited liability company co-owned by Messrs.

Figure includes 128,915 shares of common stock held by Lantern Advisers, LLC, a Minnesota limited liability company co-owned by Messrs.

Polinsky and Geraci;

528,705 common shares held individually and directly by Mr.

69,411 common shares held by or on behalf of Great North Capital Corp.;

and 12,728 common shares Mr.

Polinsky holds as a custodian for his children (beneficial ownership of which Mr.

Polinsky disclaims).

Geraci is a director and our Chief Financial Officer.

Figure includes 290,055 common shares held by Lantern Advisers, LLC, a Minnesota limited liability company co-owned by Messrs.

292,407 shares of common stock held individually and directly by Mr.

The reported figure also includes a presently exercisable non-statutory stock option for the purchase of up to 250,000 shares of common stock.

Geraci is a director our company and our Chief Financial Officer.

Figure includes 128,915 shares of common stock held by Lantern Advisers, LLC, a Minnesota limited liability company co-owned by Messrs.

Geraci and Polinsky;

700,500 common shares held individually and directly by Mr.

17,273 common shares held individually by Mr.

Geraci’s spouse, and 1,000 shares held by Mr.

325,481 shares of common stock held individually and directly by Mr.

7,677 shares of common stock held individually by Mr.

Geraci’s spouse, and 445 shares of common stock held by Mr.

Geraci’s minor child.

Liszt is a director of the Company.

Berman is a director of the Company.

Zipkin is a director of the Company.

(7) Based upon a Schedule 13G filed by Mr.

Zbikowski, Mr.

Zbikowski is the beneficial owner of 1,140,000 shares, and Mrs.

Zbikowski is the beneficial owner of 625,000 shares.

Zbikowski are husband and wife.

(8) Based upon a Schedule 13G filed by Mr.

Kinney on March 19, 2013, Mr.

Kinney may be deemed to be the beneficial owner of 933,187 shares, which includes 3,640 shares that are held in custodial accounts for the benefit of his grandchildren.

The reported figure also includes a presently exercisable non-statutory stock option for the purchase of up to 250,000 shares of common stock.

Liszt is a director of our Company.

The reported figures include a presently exercisable non-statutory stock option for the purchase of up to 100,000 shares of common stock.

Berman is a director of our Company.

The reported figures include a presently exercisable non-statutory stock option for the purchase of up to 100,000 shares of common stock.

Zipkin is a director of our Company.

The reported figures include a presently exercisable non-statutory stock option for the purchase of up to 100,000 shares of common stock.

Consists of Messrs.

Polinsky, Geraci, Liszt, Berman and Zipkin.

Based upon a Schedule 13G filed by Mr.

Linnihan, and subsequent information obtained by the Company.

Based upon a Schedule 13G filed by Mr.

Zbikowski, and subsequent information obtained by the Company.

Based upon a Schedule 13G filed by Mr.

Bester, and subsequent information obtained by the Company.

Based upon a Schedule 13G filed by Mr.

Kinney (including shares held by Mr.

Kinney as a custodian for grandchildren), and subsequent information obtained by the Company.

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

7 unchanged sentences

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.

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").

Berman Revocable Trust (collectively, the “Lenders”).

Berman is a director of our company.

15 unchanged sentences

The entire Board of Directors administers the policy and approves any related-party transactions.

In general, after full disclosure of all material facts, review and discussion, the board approves or disapproves related-party transactions by a vote of a majority of the directors who have no interest in such transaction, direct or indirect.

Procedurally, no director is allowed vote in any approval of a related-party transaction for which he or she is the related party, except that such a director may otherwise participate in a related discussion and shall provide to the board all material information concerning the related-party transaction and the director’s interest therein.

1 unchanged sentence

Director Independence

The Company currently has five directors, three of whom—Messrs.

Liszt, Berman and Zipkin, are “independent” as that term is defined in Section 4200(a)(15) of National Association of Securities Dealers’ listing standards.

The Company is not subject to those listing standards, however, because its common stock is presently not listed for trading on a Nasdaq market.

The Company has, however, submitted an application for its common stock to be listed and traded on the Nasdaq Capital Markets.

Based upon information requested

from each such director concerning his background, employment and affiliations, the board has affirmatively determined that none of the independent directors has a material business or professional relationship with the Company, other than in his or her capacity as a member of the board or any committee thereof.

The Company currently has five directors, and our Board of Directors has determined that three of our directors—Messrs.

Liszt, Berman and Zipkin—qualify as independent directors in accordance with the published listing requirements of the Nasdaq Capital Market.

The Nasdaq independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us.

In addition, our Board of Directors has made a subjective determination as to each director that no relationships exist which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES

11 unchanged sentences

ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statements

Report of Independent Registered Public Accounting Firm on Financial Statements

Balance Sheets — December 31, 2021 and December 31, 2020

Statements of Operations — Year ended December 31, 2021 and December 31, 2020

Statements of Shareholders’ Equity (Deficit) — Years ended December 31, 2021 and December 31, 2020

Statements of Cash Flows — Year ended December 31, 2021 and December 31, 2020

Notes to Financial Statements

Amended and Restated Articles of Incorporation of Mill City Ventures III, Ltd.

(incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed January 23, 2013)

Articles of Amendment to Amended and Restated Articles of Incorporation of Mill City Ventures III, Ltd.

(incorporated by reference to Exhibit 3.1 to the registrant’s current report on Form 8-K filed on August 11, 2022)

Amended and Restated Bylaws of Mill City Ventures III, Ltd.

4 unchanged sentences

Berman Revocable Trust, dated January 3, 2022 (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed on January 10, 2022)

Employment agreement with Douglas Polinsky (incorporated by reference to Exhibit 10.1 to the registrant’s current report on Form 8-K filed on February 1, 2019)

Employment agreement with Joseph Geraci (incorporated by reference to Exhibit 10.2 to the registrant’s current report on Form 8-K filed on February 1, 2019)

Code of Ethics *

Employment agreement with Douglas Polinsky

Employment agreement with Joseph Geraci

Stock Incentive Plan (incorporated by reference to the registrant’s definitive proxy statement filed on December 15, 2022)

Code of Ethics (incorporated by reference to Exhibit 14.1 to the registrant’s registration statement on Form S-1/A filed on July 28, 2022)

Section 302 Certification of the Chief Executive Officer *

1 unchanged sentence

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 *

§1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

_______________

* Filed electronically herewith.

4 unchanged sentences

Chief Executive Officer

March 14 th , 2022

April 17, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

1 unchanged sentence

Chief Executive Officer, President and

March 14 th , 2022

April 17, 2023

Director (principal executive officer)

1 unchanged sentence

Chief Financial Officer and Director

March 14 th , 2022

April 17, 2023

(principal accounting and financial officer)

/s/ Lyle Berman

March 14 th , 2022

April 17, 2023

/s/ Howard Liszt

March 14 th , 2022

April 17, 2023

/s/ Laurence Zipkin

March 14 th , 2022

April 17, 2023

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures