What changed in this filing

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Item 1. Financial Statements

2025-08-14 compared with 2025-05-13 · 225 added, 57 removed, 404 unchanged (41% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

March 31, 2025 (unaudited)

June 30, 2025 (unaudited)

December 31, 2024

9 unchanged sentences

Total Liabilities

Commitments and Contingencies

SHAREHOLDERS EQUITY (NET ASSETS)

6 unchanged sentences

( 1,159,665 )

Accumulated undistributed investment loss

Accumulated undistributed investment gain (loss)

Accumulated undistributed net realized gains on investment transactions

7 unchanged sentences

Three Months Ended

March 31, 2025

March 31, 2024

Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Investment Income

9 unchanged sentences

Realized and Unrealized Gain on Investments

Net realized gain on investments

Net change in unrealized appreciation on investments

Net realized gain (loss) on investments

Net change in unrealized appreciation (depreciation) on investments

Net Realized and Unrealized Gain on Investments

8 unchanged sentences

CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Common Shares

1 unchanged sentence

Accumulated Deficit

Accumulated Undistributed Net Investment Gain

Accumulated Undistributed Net Realized Gain (Loss) on Investments Transactions

Net Unrealized Appreciation (Depreciation) in Value of Investments

Total Shareholders' Equity

Balance as of March 31, 2025

$ ( 1,159,665 )

$ ( 101,261 )

Undistributed net investment gain

Undistributed net realized loss on investment transactions

Appreciation in value of investments

Balance as of June 30, 2025

$ ( 1,159,665 )

Three Months Ended June 30, 2024

Common Shares

Additional Paid In Capital

Accumulated Deficit

Accumulated Undistributed Net Investment Gain (Loss)

Accumulated Undistributed Net Realized Gain on Investments Transactions

Net Unrealized Depreciation in Value of Investments

Total Shareholders' Equity

Balance as of March 31, 2024

$ ( 1,159,665 )

$ ( 746,326 )

$ ( 1,241,053 )

Undistributed net investment gain

Undistributed net realized gain on investment transactions

Depreciation in value of investments

Balance as of June 30, 2024

$ ( 1,159,665 )

$ ( 390,494 )

$ ( 1,530,694 )

Six Months Ended June 30, 2025

Common Shares

Additional Paid In Capital

Accumulated Deficit

Accumulated Undistributed Net Investment Gain (Loss)

Accumulated Undistributed Net Realized Gain on Investments Transactions

Net Unrealized Appreciation (Depreciation) in value of Investments

8 unchanged sentences

Appreciation in value of investments

Balance as of March 31, 2025

$ ( 1,159,665 )

Balance as of June 30, 2025

$ ( 1,159,665 )

Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

Common Shares

3 unchanged sentences

Accumulated Undistributed Net Realized Gain on Investments Transactions

Net Unrealized Appreciation (Depreciation) in Value of Investments

Net Unrealized Depreciation in value of Investments

Total Shareholders' Equity

5 unchanged sentences

Undistributed net realized gain on investment transactions

Appreciation in value of investments

Balance as of March 31, 2024

Depreciation in value of investments

Balance as of June 30, 2024

$ ( 1,159,665 )

4 unchanged sentences

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended

March 31, 2025

March 31, 2024

Six Months Ended

June 30, 2025

June 30, 2024

Cash flows from operating activities:

2 unchanged sentences

from operations to net cash provided (used) in operating activities:

Net change in unrealized appreciation on investments

Net change in unrealized appreciation (depreciation) on investments

Net realized gain on investments

19 unchanged sentences

CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED)

MARCH 31, 2025

JUNE 30, 2025

Investment / Industry

37 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

June 30, 2025

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”) Topic 946 “Financial Services – Investment Companies”.

in the first person “we.” On occasion, we refer to our company in the third person as “Mill City Ventures” or the “Company.” We follow accounting and reporting guidance in Accounting Standards (“ASC”) Topic 946 “Financial Services – Investment Companies”.

We were incorporated in Minnesota in January 2006.

32 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

June 30, 2025

Our valuation policy and procedures:

26 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

June 30, 2025

We file income tax returns in the U.S.

1 unchanged sentence

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, 2021 through 2024, which are the tax years that remain subject to examination by major tax jurisdictions as of March 31, 2025.

Our evaluation was performed for the tax years ended December 31, 2021 through 2024, which are the tax years that remain subject to examination by major tax jurisdictions as of June 30, 2025.

Revenue recognition :

33 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

June 30, 2025

NOTE 3 – INVESTMENTS

The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of March 31, 2025 (together with the corresponding percentage of the fair value of our total portfolio of investments):

As of March 31, 2025

The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of June 30, 2025 (together with the corresponding percentage of the fair value of our total portfolio of investments):

As of June 30, 2025

Investments at Amortized Cost

11 unchanged sentences

Short-term Non-banking Loans

The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of March 31, 2025:

As of March 31, 2025

The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of June 30, 2025:

As of June 30, 2025

Investments at

10 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

June 30, 2025

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 investment portfolio as of March 31, 2025 may differ materially from values that would have been used had a readily available market for those investments existed.

The following table presents the fair value measurements of our portfolio investments by major class, as of March 31, 2025, according to the fair value hierarchy:

As of March 31, 2025

Due to the inherent uncertainty in the valuation process, the estimate of the fair value of our investment portfolio as of June 30, 2025 may differ materially from values that would have been used had a readily available market for those investments existed.

The following table presents the fair value measurements of our portfolio investments by major class, as of June 30, 2025, according to the fair value hierarchy:

As of June 30, 2025

Short-term Non-banking Loans

3 unchanged sentences

Short-term Non-banking Loans

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the three months ended March 31, 2025:

For the three months ended March 31, 2025

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the six months ended June 30, 2025:

For the six months ended June 30, 2025

ST Non-banking Loans

3 unchanged sentences

Purchases and other adjustments to cost

Sales and redemptions

Transfers between investment classifications

( 10,314,787 )

Balance as of March 31, 2025

The net change in unrealized appreciation for the three months ended March 31, 2025 attributable to Level 3 portfolio investments still held as of March 31, 2025 was $ 224,183 .

The following table lists our Level 3 investments held as of March 31, 2025 and the unobservable inputs used to determine their valuation:

Balance as of June 30, 2025

The net change in unrealized appreciation for the six months ended June 30, 2025 attributable to Level 3 portfolio investments still held as of June 30, 2025 was $ 343,751 .

The following table lists our Level 3 investments held as of June 30, 2025 and the unobservable inputs used to determine their valuation:

Security Type

10 unchanged sentences

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

June 30, 2025

The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the period ended December 31, 2024:

1 unchanged sentence

ST Non-banking Loans

Preferred Stock

Balance as of January 1, 2024

30 unchanged sentences

Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate.

As of March 31, 2025 and December 31, 2024, we have a deferred tax asset of $ 732,000 and $ 770,000 , respectively.

As of March 31, 2025, our net deferred tax asset consists of foreign tax credit carryforwards, unrealized investment gain/loss, non-qualified stock option expenses, capital loss carryforwards, and depreciable 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.

MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

As of March 31, 2025 and December 31, 2024 we had accrued taxes of $ 218,200 and $ 147,200 , respectively.

We recorded an increase of income taxes of $ 109,000 (28 percent effective tax rate) and $ 166,000 (26 percent effective tax rate) during the three months ended March 2025 and March 2024, respectively.

The deferred tax rate changed from 26.52 % as of December 31, 2024 to 28.35 % as of March 31, 2025 due to changes in state apportionment.

June 30, 2025

As of June 30, 2025 and December 31, 2024, we have a deferred tax asset of $ 641,000 and $ 770,000 , respectively.

As of June 30, 2025, our net deferred tax asset consists of foreign tax credit carryforwards, unrealized investment gain/loss, non-qualified stock option expenses, capital loss carryforwards, and depreciable 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 June 30, 2025 and December 31, 2024 we had accrued taxes of $ 144,500 and $ 147,200 , respectively.

We recorded an increase of income taxes of $ 191,500 (28 percent effective tax rate) and $ 133,300 (26 percent effective tax rate) during the six months ended June 30 2025 and June 30 2024, respectively.

The deferred tax rate changed from 26.52 % as of December 31, 2024 to 28.25 % as of June 30, 2025 due to changes in state apportionment.

NOTE 7 – LINE OF CREDIT

7 unchanged sentences

Our 2022 Stock Incentive Plan (the “Plan”) authorized the issuance of incentives relating to 900,000 shares of common stock.

As of March 31, 2025, incentives relating to the issuance of 870,000 shares have been issued under the Plan, leaving 30,000 shares available for issuance.

As of June 30, 2025, 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 three months ended March 31, 2025:

The following table summarizes the activity for all stock options outstanding for the six months ended June 30, 2025:

Weighted Average Exercise Price

1 unchanged sentence

Options outstanding at end of period

Options exercisable at March 31, 2025:

The following table summarizes additional information about stock options outstanding and exercisable at March 31, 2025:

Options exercisable at June 30, 2025:

The following table summarizes additional information about stock options outstanding and exercisable at June 30, 2025:

Options Outstanding

4 unchanged sentences

Aggregate Intrinsic Value

Options Exercisable

Weighted Average Exercise Price

Aggregate Intrinsic Value

The Company recognized stock-based compensation expense for stock options of $ 0 and $ 0 for the three months ended March 31, 2025 and 2024, respectively.

MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

June 30, 2025

The Company recognized stock-based compensation expense for stock options of $ 0 and $ 0 for the three and six months ended June 30, 2025 and 2024, respectively.

NOTE 9 – SHAREHOLDERS’ EQUITY

At March 31, 2025, we had 6,062,773 shares of common stock issued and outstanding.

At June 30, 2025, we had 6,062,773 shares of common stock issued and outstanding.

During the first quarter we repurchased 322,482 shares of common stock.

In connection with the 2022 public offering, the Company issued a five-year warrant to the underwriter.

In connection with the 2022 public offering, we issued a five-year warrant to the underwriter.

The warrant allows the underwriter to purchase up to 75,000 common shares at $ 5.00 per share.

5 unchanged sentences

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.

For the three and six month periods ended June 30, 2025, 670,000 stock options were excluded from the diluted net gain per common share calculation because their effect would be anti-dilutive.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net gain per common share is set forth below:

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Net increase in net assets resulting from operations

1 unchanged sentence

Basic and diluted net gain (loss) per common share

For the Six Months Ended June 30,

Net increase (decrease) in net assets resulting from operations

Weighted-average number of common shares outstanding

Basic and diluted net gain (loss) per common share

MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2025

June 30, 2025

NOTE 11 – FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the three months ended March 31, 2025 through 2021:

Three Months Ended March 31,

The following is a schedule of financial highlights for the six months ended June 30, 2025 through 2021:

Six Months Ended June 30,

Per Share Data (1)

22 unchanged sentences

Ratios are annualized.

NOTE 12 – SUBSEQUENT EVENTS

Private Placement and SUI Strategy

Securities Purchase Agreements and SUI Strategy

On July 31, 2025, we completed a private placement of 75,881,625 shares of our common stock at an offering price of $5.42 per share, and pre-funded warrants to purchase up to 7,144,205 shares of our common stock at an offering price of $5.4199 per share, exercisable at a per-share price of $0.0001 .

We consummated the offer and sale of our securities pursuant to securities purchase agreements that we entered into with the investors on July 27, 2025.

The securities offered and sold in the private placement, including the shares of common stock, the pre-funded warrants, the Placement Agent Warrants, Lead Investor Warrants, Foundation Investor Warrants, Management Warrants, and the Advisor Warrants (all as such warrants are defined in the disclosure below), and all of the shares of common stock issuable upon the exercise of all such warrants, were offered and sold in reliance upon the exemption from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof and/or Rule 506(b) of Regulation D promulgated thereunder, and applicable state securities laws.

The offer and sale of all of the above-described securities were not registered under the Securities Act, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.

MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

Simultaneously with the closing of the private placement, we adopted a new treasury policy and strategy under which the principal holding in our treasury reserve on the balance sheet will be allocated to the native cryptocurrency of the Sui blockchain commonly referred to as “SUI.” The Sui Foundation is an independent organization dedicated to the advancement and adoption of the Sui network.

The Board of Directors approved our treasury policy on July 27, 2025, authorizing the long-term accumulation of SUI.

We believe our position as a public company with an official Sui Foundation relationship provides us institutional-grade exposure to the SUI blockchain, and that Sui is well positioned for large-scale adoption with the speed and efficiency institutions require for crypto at scale, plus the technical architecture capable of supporting AI workloads while maintaining security and decentralization.

Our approach involves acquiring SUI directly—both through market purchases and direct purchases from the Sui Foundation.

This treasury initiative seeks to enhance our capital allocation strategy and does not affect our core commercial short-term non-bank lending and specialty finance business, which remains fully operational and a central part of our business.

At the closing of the private placement, we issued five-year warrants to purchase our common stock as follows:

warrants (the “Lead Investor Warrants”) to Karatage Opportunities (“Karatage”), to purchase 3,113,469 shares of common stock at various exercise prices as follows:

(i) 1,245,387 common shares at an exercise price of $5.42 per share;

(ii) 1,245,387 common shares at an exercise price of $5.962 per share;

(iii) 415,129 common shares at an exercise price of $6.504 per share;

and (iv) 207,565 common shares at an exercise price of $7.046 per share ;

warrants (the “Foundation Investor Warrants”) to the Sui Foundation (the “Foundation Investor”), to purchase 3,113,469 shares of common stock at various exercise prices as follows:

(i) 1,245,387 common shares at an exercise price of $5.42 per share;

(ii) 1,245,387 common shares at an exercise price of $5.962 per share;

(iii) 415,129 common shares at an exercise price of $6.504 per share;

and (iv) 207,565 common shares at an exercise price of $7.046 per share ;

warrants (the “Management Warrants”) to certain members of the management of the Company to purchase 1,245,388 shares of common stock at various exercise prices as follows:

(i) 622,694 common shares at an exercise price of $5.42 per share;

(ii) 415,130 common shares at an exercise price of $6.504 per share;

and (iii) 207,564 common shares at an exercise price of $7.046 per share ;

warrants (the “Advisor Warrants”) to certain advisors of the Company to purchase 207,565 shares of common stock at an exercise price of $5.962 per share .

All of the above-described warrants, other than the Advisor Warrants, will vest over a 24-month period starting six months from the Issue Date (as defined therein) in four equal installments (being 25% every six months), and in the case of the Management Warrants, subject to the relevant holder still being employed by the Company at each respective vesting date.

In the event that a member of the management team is terminated by the Company other than for cause or resigns for good reason (as defined in the individual’s employment agreement), the vesting of all of such individual’s Management Warrants will immediately accelerate and be fully vested as of the date of such termination.

The Advisor Warrants are fully exercisable beginning as of January 31, 2026.

Placement Agency Agreement

On July 27, 2025, and in connection with the private placement, we entered into a Placement Agency Agreement with A.G.P., pursuant to which A.G.P.

agreed to serve as our exclusive placement agent in connection with the private placement.

Under the terms of the Placement Agency Agreement, we paid A.G.P.

a cash fee of $ 18,000,000 .

We also issued to A.G.P.

warrants (the “Placement Agent Warrants”) to purchase up to 3,113,469 shares of our common stock (equal to 3.75% of the securities sold in the private placement).

The Placement Agent Warrants will become exercisable six months following the issuance date and will be exercisable for a period of five years following the issuance date, at an exercise price of $ 5.962 per share.

In addition, we agreed to reimburse A.G.P.

for accountable expenses in an amount of $ 200,000 for its legal fees in connection with the private placement, as well as non-accountable expenses incurred by A.G.P.

for up to $ 25,000 in connection with the private placement.

Registration Rights Agreement

On July 27, 2025, and in connection with the private placement, we entered into a Registration Rights Agreement with the investors and A.G.P.

pursuant to which we agreed to file a registration statement, within 10 days of the closing (i.e., on or before August 10, 2025), providing for the resale by the investors of the common shares and shares of common stock issuable upon exercise of the pre-funded warrants, and the shares of common stock issuable upon exercise of the Lead Investor Warrant, Foundation Investor Warrant, Management Warrants and the Placement Agent Warrants, and to have such registration statement declared effective within 30 days of its filing date (or 60 days, if the SEC conducts a full review), and to maintain the effectiveness of such registration statement until all securities registered pursuant thereto (i) shall have been sold, either thereunder or pursuant to Rule 144, or (ii) starting from the third anniversary of the Registration Rights Agreement, may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 under the Securities Act, and without the requirement for our Company to be in compliance with the current public information requirement Rule 144.

MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

Strategic Advisor Agreement

On July 27, 2025, we entered into a Strategic Advisor Agreement (the “Strategic Advisor Agreement”) with Karatage to expand and diversify our business operations through the integration of cryptocurrency and digital asset strategies in both our product offerings and as part of our treasury management strategy.

Pursuant to the Strategic Advisor Agreement, Karatage will provide us with technical advisory services regarding the digital asset ecosystem, including SUI and related technologies, developments in the digital asset and crypto gaming industries, the selection of third-party vendors with respect to asset management and related digital asset services, and other strategic advice regarding our digital assets treasury operations.

We will pay Karatage a tiered asset-based fee ranging from 0.0 % to 0.80 % per annum of the assets managed by the Company or an asset manager engaged by the Company, excluding the assets of the Company’s short-term lending business.

The Strategic Advisor Agreement will, unless earlier terminated in accordance with its terms, continue in effect for a period of ten years beginning on July 27, 2025, after which time the Strategic Advisor Agreement will automatically renew for a successive period of five years each, subject to the mutual agreement between the parties.

Either the Company or Karatage may terminate the Strategic Advisor Agreement for cause immediately upon written notice if the other party:

(i) materially breaches the Strategic Advisor Agreement;

and (ii) fails to cure such breach within 30 days after receiving written notice of the breach.

If the Strategic Advisor Agreement is terminated by the Company for cause or by Karatage other than for cause, Karatage will cease providing such technical advisory services and the Company will pay Karatage any fees due and payable under the Strategic Advisor Agreement up to the date of termination, provided that if the Strategic Advisor Agreement is terminated by the Company for any other reason or by the Advisor for cause, Karatage will cease providing such technical advisory services and the Company will pay Karatage any fees that would be due and payable under the Strategic Advisor Agreement for the remainder of the term of the agreement, as if the Strategic Advisor Agreement had not been terminated.

Asset Management Agreement

On July 27, 2025, we entered into an Asset Management Agreement (the “Asset Management Agreement”) with Galaxy Digital Capital Management LP (the “Asset Manager”).

The Asset Manager will provide discretionary investment management services with respect to, among other assets (including without limitation certain subsequently raised funds), our proceeds from the private placement (the “Account Assets”), and will have exclusive right to manage the first $750 million of our digital assets or cryptocurrencies and at least 50% of our digital assets or cryptocurrencies in excess of $750 million in accordance with the terms of the Asset Management Agreement .

The Asset Manager will pursue a long-only investment strategy investing primarily in SUI, which strategy may include staking and restaking SUI to improve returns (the “SUI Strategy”).

The custodians under the Asset Management Agreement will consist of cryptocurrency wallet providers agreed to by us and the Asset Manager.

We will pay the Asset Manager a tiered asset-based fee (the “Asset-based Fee”) ranging from 0.60 % to 0.80 % per annum of the Account Assets under management, in each case based on the value of Account Assets as of the applicable calculation date, as determined by a third-party administrator in accordance with the Asset Manager’s valuation policy;

subject, however, to a minimum Asset-based Fee of $ 1,000,000 per year.

The Asset Management Agreement will, unless terminated earlier in accordance with its terms, remain in effect for five years, after which time it will automatically renew for one-year terms, subject to mutual agreement between the Company and the Asset Manager.

Beginning on the second anniversary of the Asset Management Agreement, such agreement may be terminated by us upon at least 90 days prior written notice to the Asset Manager at the good faith discretion of our Chief Investment Officer (“CIO”) or our Board of Directors if the Asset Manager has underperformed according to such CIO’s internal objective metrics, as agreed with the Asset Manager.

Additionally, the Asset Management Agreement may be terminated at any time for cause by us or the Asset Manager upon at least 30 days prior written notice to the other party.

Additionally, the Asset Management Agreement may be terminated immediately by us if we determine in good faith after consultation with counsel, reasonably acceptable to the Asset Manager, that the Asset Management Agreement is prohibited or otherwise required to be terminated by applicable law.

Digital Asset Purchase and Sale Agreement

On July 27, 2025, we also entered into a Digital Asset Purchase and Sale Agreement (the “Digital Asset Purchase and Sale Agreement”) with the Foundation Investor, pursuant to which we agreed to purchase and the Foundation Investor agreed to sell and transfer certain SUI tokens as set forth in one or more confirmations.

The USD price per SUI token purchased pursuant to the Digital Asset Purchase and Sale Agreement will be equal to the product of (i) 0.85 multiplied by (ii) the 24-hour time weighted-average price on the closing date (as defined in the securities purchase agreements entered into in the private placement), as reasonably calculated by the Company.

Pursuant to the terms of the Digital Asset Purchase and Sale Agreement, the SUI tokens purchased will be subject to transfer restrictions for a period of two years following purchase.

Notwithstanding the foregoing, the transfer restrictions will not apply to the extent necessary to enable us to comply, or to be in compliance with, the provisions of the U.S.

Investment Company Act of 1940, as amended.

The Digital Asset Purchase and Sale Agreement also provides us with certain preemptive rights to purchase additional SUI tokens through July 31, 2027.

MILL CITY VENTURES III, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

June 30, 2025

Executive Employment Agreements

On July 31, 2025, we entered into new executive employments with Douglas M.

Polinsky, our Chief Executive Officer, and Joseph A.

Geraci II, our Chief Financial Officer.

Each new employment agreement has a three-year term (subject to certain early-termination rights).

Each employment agreement provides the executive with a base annual salary of $ 450,000 and a bonus up to 100% of the base salary , at the discretion of the Compensation Committee of the Board of Directors.

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

Each employment agreement contains a non-solicitation covenant effective during the term of the agreement and one year thereafter, as well as customary confidentiality covenants relating to the confidentiality of the 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, or in the event the executive resigns for good reason, as defined in the employment agreements, the Company will be obligated to pay the terminated executive’s base annual salary through the remainder of the employment term.

Change in Directors

On July 27, 2025, Mr.

Lyle Berman resigned his position as a director on our Board of Directors.

On the same day, the Board approved, subject to the closing of the private placement (which occurred on July 31, 2025), to set the size of the Board of Directors to five members, and appoint Messrs.

Marius Barnett and Dana Wagner to serve as directors.

Barnett is expected to serve as Chairman of the Board, and Mr.

Wagner is expected to serve as a member of the Audit Committee of the Board.

The Board believes that Messrs.

Wagner and Barnett are qualified to serve as directors due to their extensive experience with SUI and cryptocurrency technology.

Wagner and Barnett are also regarded as leaders in financial investments and treasury strategies.

As compensation for his services on the Board, Mr.

Wagner will receive an annual director fee of $ 250,000 to be paid on a quarterly basis.

In addition, we agreed to grant to Mr.

Wagner five-year warrants (the “Director Warrants”) to purchase 207,565 shares of common stock at various prices per share as follows:

(i) 83,026 common shares at an exercise price of $5.42 per share;

(ii) 41,513 common shares at an exercise price of $5.962 per share;

(iii) 41,513 common shares at an exercise price of $6.504 per share;

and (iv) 41,513 common shares at an exercise price of $7.046 per share .

The Director Warrants will vest over a period of 24 months starting six months from their issuance date (as defined therein) in four equal instalments (being 25% every six months) , subject to Mr.

Wagner (i) being a director of the Company at each respective vesting date and (ii) not having been legally and validly terminated or removed as a director pursuant to the Company’s bylaws and applicable law.

Amended and Restated Bylaws

On July 27, 2025, the Board of Directors amended and restated our Company’s bylaws, effective immediately.

The principal changes to the bylaws are to:

permit the Board to take action without a meeting by less than unanimous written consent;

establish the rights of shareholders to nominate directors for election at shareholder meetings pursuant to a written agreement, approved by the Board, as well as to include supporting materials in the Company’s proxy statement;

provide for the ability of the Board to increase or decrease the size of the Board.

Common Stock Purchase Agreement

On August 1, 2025, we entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with A.G.P./Alliance Global Partners (the “Investor”), pursuant to which we have the right, but not the obligation, to direct the Investor to purchase the lesser of (i) $500,000,000 or (ii) a number of shares not to exceed 19.99% of our shares of common stock outstanding on August 1, 2025 , unless our shareholders shall have approved the issuance of common stock in excess of such percentage, upon satisfaction of certain terms and conditions contained in the Purchase Agreement, including but not limited to an effective resale registration statement filed with the SEC.

In this regard, we also entered into a Registration Rights Agreement with the Investor on August 1, 2025, pursuant to which we agreed to file a resale registration statement registering the resale of shares of common stock that may be purchased by the Investor pursuant to the Purchase Agreement.

Any purchases and sales under the Purchase Agreement will be at a per-share purchase price equal 95% of the volume-weighted average price for the applicable period, as calculated pursuant to the Purchase Agreement.

Any proceeds from sales of common stock under the Purchase Agreement will be used in the manner set forth in the prospectus included in the related registration statement (and any post-effective amendment thereto), and any prospectus supplement thereto, filed pursuant to the registration rights agreement.

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-Q

Item 1. Financial Statements