SUI Group Holdings Ltd. 10-Q

ITEM 1. FINANCIAL STATEMENTS MILL CITY VENTURES III, LTD. CONDENSED BALANCE SHEETS June 30, 2025 (unaudited) December 31, 2024 ASSETS Investments, at fair value (cost: $ 17,641,707 and $ 13,717,089 , respectively) $ 17,854,961 $ 13,453,561 Cash and cash equivalents 1,497,009 6,026,110 Prepaid expenses 34,598 31,848 Interest and dividend receivables 419,857 191,917 Deferred taxes 641,000 770,000 Total Assets $ 20,447,425 $ 20,473,436 LIABILITIES Accounts payable $ 37,680 $ 41,105 Accrued payroll liabilities 8,911 527,142 Accrued income tax 144,500 147,200 Total Liabilities 191,091 715,447 Commitments and Contingencies SHAREHOLDERS EQUITY (NET ASSETS) Common stock, par value $ 0.001 per share ( 111,111,111 authorized; 6,063 6,385 6,062,773 and 6,385,255 issued and outstanding, respectively) Additional paid-in capital 14,843,007 15,473,121 Additional paid-in capital - stock options 1,460,209 1,460,209 Accumulated deficit ( 1,159,665 ) ( 1,159,665 ) Accumulated undistributed investment gain (loss) 499,406 ( 152,389 ) Accumulated undistributed net realized gains on investment transactions 4,394,060 4,393,855 Net unrealized appreciation (depreciation) in value of investments 213,254 ( 263,527 ) Total Shareholders' Equity (Net Assets) 20,256,334 19,757,989 Total Liabilities and Shareholders' Equity $ 20,447,425 $ 20,473,436 Net Asset Value Per Common Share $ 3.34 $ 3.09 See accompanying Notes to Financial Statements 3 Table of Contents MILL CITY VENTURES III, LTD. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Six Months Ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Investment Income Interest income $ 948,034 $ 888,629 $ 1,726,061 $ 1,721,296 Total Investment Income 948,034 888,629 1,726,061 1,721,296 Operating Expenses Professional fees 98,764 174,098 241,420 312,469 Payroll 160,230 145,859 323,499 296,925 Insurance 482 24,602 24,253 51,492 Occupancy 16,663 9,545 33,224 20,222 Director's fees 30,000 30,000 60,000 60,000 Interest expense — — — 320 Other general and administrative 10,044 13,955 13,570 17,718 Total Operating Expenses 316,183 398,059 695,966 759,146 Net Investment Gain $ 631,851 $ 490,570 1,030,095 962,150 Realized and Unrealized Gain on Investments Net realized gain (loss) on investments ( 31 ) 346,745 205 371,240 Net change in unrealized appreciation (depreciation) on investments 314,515 ( 289,641 ) 476,781 ( 237,890 ) Net Realized and Unrealized Gain on Investments 314,484 57,104 476,986 133,350 Net Increase in Net Assets Resulting from Operations Before Taxes $ 946,335 $ 547,674 $ 1,507,081 $ 1,095,500 Provision for Income Taxes 269,300 134,738 378,300 300,461 Net Increase in Net Assets Resulting from Operations $ 677,035 $ 412,936 $ 1,128,781 $ 795,039 Net Increase in Net Assets Resulting from Operations per share: Basic $ 0.11 $ 0.06 $ 0.18 $ 0.12 Diluted $ 0.11 $ 0.06 $ 0.18 $ 0.12 Weighted-average number of common shares outstanding - basic 6,062,773 6,385,255 6,190,941 6,385,255 Weighted-average number of common shares outstanding - diluted 6,062,773 6,501,823 6,190,941 6,501,823 See accompanying Notes to Financial Statements 4 Table of Contents MILL CITY VENTURES III, LTD. CONDENSED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED) Three Months Ended June 30, 2025 Common Shares Par Value Additional Paid In Capital 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 6,062,773 $ 6,063 $ 16,303,216 $ ( 1,159,665 ) $ 136,855 $ 4,394,091 $ ( 101,261 ) $ 19,579,299 Undistributed net investment gain — — — 362,551 — — 362,551 Undistributed net realized loss on investment transactions — — — — ( 31 ) — ( 31 ) Appreciation in value of investments — — — — — 314,515 314,515 Balance as of June 30, 2025 6,062,773 $ 6,063 $ 16,303,216 $ ( 1,159,665 ) $ 499,406 $ 4,394,060 $ 213,254 $ 20,256,334 Three Months Ended June 30, 2024 Common Shares Par Value 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 6,385,255 $ 6,385 $ 16,933,330 $ ( 1,159,665 ) $ ( 746,326 ) $ 5,179,695 $ ( 1,241,053 ) $ 18,972,366 Undistributed net investment gain — — — 355,832 — — 355,832 Undistributed net realized gain on investment transactions — — — — 346,745 — 346,745 Depreciation in value of investments — — — — — ( 289,641 ) ( 289,641 ) Balance as of June 30, 2024 6,385,255 $ 6,385 $ 16,933,330 $ ( 1,159,665 ) $ ( 390,494 ) $ 5,526,440 $ ( 1,530,694 ) $ 19,385,302 Six Months Ended June 30, 2025 Common Shares Par Value 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 Total Shareholders' Equity Balance as of December 31, 2024 6,385,255 $ 6,385 $ 16,933,330 $ ( 1,159,665 ) $ ( 152,389 ) $ 4,393,855 $ ( 263,527 ) $ 19,757,989 Repurchase of common shares ( 322,482 ) ( 322 ) ( 630,114 ) — — — — ( 630,436 ) Undistributed net investment gain — — — 651,795 — — 651,795 Undistributed net realized gain on investment transactions — — — — 205 — 205 Appreciation in value of investments — — — — — 476,781 476,781 Balance as of June 30, 2025 6,062,773 $ 6,063 $ 16,303,216 $ ( 1,159,665 ) $ 499,406 $ 4,394,060 $ 213,254 $ 20,256,334 Six Months Ended June 30, 2024 Common Shares Par Value 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 December 31, 2023 6,385,255 $ 6,385 $ 16,933,330 $ ( 1,159,665 ) $ ( 1,052,183 ) $ 5,155,200 $ ( 1,292,804 ) $ 18,590,263 Undistributed net investment gain — — — 661,689 — — 661,689 Undistributed net realized gain on investment transactions — — — — 371,240 — 371,240 Depreciation in value of investments — — — — — ( 237,890 ) ( 237,890 ) Balance as of June 30, 2024 6,385,255 $ 6,385 $ 16,933,330 $ ( 1,159,665 ) $ ( 390,494 ) $ 5,526,440 $ ( 1,530,694 ) $ 19,385,302 See accompanying Notes to Financial Statements 5 Table of Contents MILL CITY VENTURES III, LTD. CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) Six Months Ended June 30, 2025 June 30, 2024 Cash flows from operating activities: Net increase in net assets resulting from operations $ 1,128,781 $ 795,039 Adjustments to reconcile net increase in net assets resulting from operations to net cash provided (used) in operating activities: Net change in unrealized appreciation (depreciation) on investments ( 476,781 ) 237,890 Net realized gain on investments ( 205 ) ( 371,240 ) Purchases of investments ( 4,428,530 ) ( 973,438 ) Proceeds from sales of investments 504,116 5,461,479 Deferred income taxes 129,000 ( 15,000 ) Changes in operating assets and liabilities: Prepaid expenses and other assets ( 2,750 ) 70,822 Interest and dividends receivable ( 227,940 ) 86,621 Accounts payable and other liabilities ( 524,356 ) ( 243,586 ) Net cash provided by (used in) operating activities ( 3,898,665 ) 5,048,587 Cash flows from financing activities: Payments for repurchase of common stock ( 630,436 ) — Net cash used by financing activities ( 630,436 ) — Net increase (decrease) in cash ( 4,529,101 ) 5,048,587 Cash, beginning of period 6,026,110 376,024 Cash, end of period $ 1,497,009 $ 5,424,611 See accompanying Notes to Financial Statements 6 Table of Contents MILL CITY VENTURES III, LTD. CONDENSED SCHEDULE OF INVESTMENTS (UNAUDITED) JUNE 30, 2025 Investment / Industry Cost Fair Value Percentage of Net Assets Short-Term Non-banking Loans Consumer - 18% secured loans $ 500,000 $ 500,000 2.47 % Consumer - 24% secured loans 900,100 900,515 4.45 % Real Estate - 15% secured loans Alatus Development Corp 2,500,000 2,538,018 12.53 % Real Estate - 24% secured loans Coventry Holdings LLC 2,750,000 2,746,762 13.56 % Total Short-Term Non-Banking Loans 6,650,100 6,685,295 33.01 % Commercial Business Loans Business Services - 20% secured loans Mustang Funding, LLC $ 10,000,000 $ 10,314,787 50.92 % Common Stock Financial 817,702 841,144 4.15 % Information Technology 150,000 - 0.00 % Technology 13,905 13,735 0.07 % Total Common Stock 981,607 854,879 4.22 % Other Equity Financial 10,000 - 0.00 % Total Investments $ 17,641,707 $ 17,854,961 88.15 % Total Cash and cash equivalents 1,497,009 1,497,009 7.39 % Total Investments and Cash $ 19,138,716 $ 19,351,970 95.54 % 7 Table of Contents MILL CITY VENTURES III, LTD. SCHEDULE OF INVESTMENTS DECEMBER 31, 2024 Investment / Industry Cost Fair Value Percentage of Net Assets Short-Term Non-banking Loans Business Services - 15% secured loans Mustang Litigation Funding $ 10,000,000 $ 9,985,925 50.54 % Consumer - 18% secured loans 500,000 504,308 2.55 % Real Estate - 15% secured loans Alatus Development Corp 2,000,000 2,016,636 10.21 % Real Estate - 24% secured loans Coventry Holdings LLC 500,000 499,362 2.53 % Total Short-Term Non-Banking Loans 13,000,000 13,006,231 65.83 % Common Stock Consumer 3,911 4,466 0.02 % Financial 553,178 442,864 2.24 % Information Technology 150,000 - 0.00 % Total Common Stock 707,089 447,330 2.26 % Other Equity Financial 10,000 - 0.00 % Total Investments $ 13,717,089 $ 13,453,561 68.09 % Total Cash and cash equivalents 6,026,110 6,026,110 30.50 % Total Investments and Cash $ 19,743,199 $ 19,479,671 98.59 % 8 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 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.” We follow accounting and reporting guidance in Accounting Standards (“ASC”) Topic 946 “Financial Services – Investment Companies”. We were incorporated in Minnesota in January 2006. Until December 13, 2012, we were a development-stage company that focused on promoting and placing a proprietary poker game online and into casinos and entertainment facilities nationwide. In 2013, we elected to become a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). We operated as a BDC until we withdrew our BDC election at the end of December 2019. Since that time, we have remained a public reporting company filing periodic reports with the SEC. We engage in the business of providing short-term specialty finance solutions, typically in the form of short-term loans, primarily to small businesses, both private and public, and high-net-worth individuals. To avoid regulation under the 1940 Act, we generally seek to structure our investments so they do not constitute “securities” for purposes of federal securities laws, and we monitor our investments as a whole to ensure that no more than 40% of our total assets consist of “investment securities” as defined under the 1940 Act. NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management and our independent board members to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. For more information, see the “Valuation of portfolio investments” caption below, and “Note 4 – Fair Value of Financial Instruments” below. The Company presents its financial statements as an investment company following accounting and reporting guidance in ASC 946. Cash deposits: We maintain our cash balances in financial institutions and with regulated financial investment brokers. Cash on deposit in excess of FDIC and similar coverage is subject to the usual banking risk of funds in excess of those limits. Valuation of portfolio investments: We carry our investments in accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), issued by the Financial Accounting Standards Board (“FASB”), which defines fair value, establishes a framework for measuring fair value, and requires disclosures about fair value measurements. Fair value is generally based on quoted market prices provided by independent pricing services, broker or dealer quotations, or alternative price sources. In the absence of quoted market prices, broker or dealer quotations, or alternative price sources, investments are measured at fair value as determined by our Board of Directors, based on, among other things, the input of our executive management, the Audit Committee of our Board of Directors, and any independent third-party valuation experts that may be engaged by management to assist in the valuation of our portfolio investments, but in all cases consistent with our written valuation policies and procedures. Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. In addition, such investments are generally less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. Accounting guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Observable inputs must be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available. Assets and liabilities measured at fair value are to be categorized into one of the three hierarchy levels based on the relative observability of inputs used in the valuation. The three levels are defined as follows: · Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities. · Level 2: Observable inputs based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets. · Level 3: Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances. 9 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2025 Our valuation policy and procedures: Under our valuation policies and procedures, we evaluate the source of inputs, including any markets in which our investments are trading, and then apply the resulting information in determining fair value. For our Level 1 investment assets, our valuation policy generally requires us to use a market approach, considering the last quoted closing price of a security we own that is listed on a securities exchange, and in a case where a security we own is listed on an over-the-counter market, to average the last quoted bid and ask price on the most active market on which the security is quoted. In the case of traded debt securities the prices for which are not readily available, we may value those securities using a discounted cash flows approach, at their weighted-average yield to maturity. The estimated fair value of our Level 3 investment assets is determined on a quarterly basis by our Board of Directors. In general, we value our Level 3 equity investments at cost unless circumstances warrant a different approach. Examples of these circumstances includes a situation in which a portfolio company has engaged in a subsequent financing of more than a de minimis size involving sophisticated investors (in which case we may use the price involved in that financing as a determinative input absent other known factors), or when a portfolio company is engaged in the process of a transaction that we determine is reasonably likely to occur (in which case we may use the price involved in the pending transaction as a determinative input absent other known factors). Other facts and circumstances that may serve as an input supporting a change in the valuation of our Level 3 equity investments include (i) a third-party valuation conducted by an independent and qualified professional, (ii) changes in the performance of long-term financial prospects of the portfolio company, (iii) a subsequent financing that changes the distribution rights associated with the equity security we hold, or (iv) sale transactions involving comparable companies, but only if further supported by a third-party valuation conducted by an independent and qualified professional. When valuing preferred equity investments, we generally view intrinsic value as a key input. Intrinsic value means the value of any conversion feature (if the preferred investment is convertible) or the value of any liquidation or other preference. Discounts to intrinsic value may be applied in cases where the issuer’s financial condition is impaired or, in cases where intrinsic value relating to a conversion is determined to be a key input, to account for resale restrictions applicable to the securities issuable upon conversion. When valuing warrants, our valuation policy and procedures indicate that value will generally be the difference between the closing price of the underlying equity security and the exercise price, after applying an appropriate discount for restriction, if applicable, in situations where the underlying security is marketable. If the underlying security is not marketable, then intrinsic value will be considered consistent with the principles described above. Generally, “out-of-the-money” warrants will be valued at cost or zero. For non-traded (Level 3) debt instruments with a residual maturity less than or equal to 60 days, we will generally value such instruments based on a discounted cash flows approach, considering the straight-line amortized face value of the debt unless justification for impairment exists. For level 3 non-banking loans with a maturity in excess of 60 days, fair value is determined based on the initial purchase price and adjusted as necessary to reflect any changes in the financial strength of the creditor and changes in interest rates in the high-yield credit markets. On a quarterly basis, our management provides members of our Board of Directors with recommendations, if any, to change any existing valuations of our portfolio investments or hierarchy levels for purposes of determining the fair value of such investments based upon the foregoing. In such a case, the Board of Directors would then discuss these materials and, consistent with the policies and approaches outlined above, makes final determinations respecting the valuation and hierarchy levels of our portfolio investments. We made no changes to our valuation policy and procedures during the reporting period. Income taxes: We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amount and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine we would be able to realize our deferred income tax assets in the future in excess of their recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. 10 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2025 We file income tax returns in the U.S. Federal jurisdiction and various state jurisdictions. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our evaluation was performed for the tax years ended December 31, 2021 through 2024, which are the tax years that remain subject to examination by major tax jurisdictions as of June 30, 2025. Revenue recognition : Realized gains or losses on the sale of investments are calculated using the specific investment method. Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. Discounts from and premiums to par value on securities purchased are accreted or amortized, as applicable, into interest income over the life of the related security using the effective-yield method. The amortized cost of investments represents the original cost, adjusted for the accretion of discounts and amortization of premiums, if any. Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more, or when there is reasonable doubt that principal or interest will be collected in full. Loan origination fees are recognized when loans are issued. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past-due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to the policy described above if a loan has sufficient collateral value and is in the process of collection. Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal or stated value of the investment on the respective interest- or dividend-payment dates rather than being paid in cash, and generally becomes due at maturity or upon being repurchased by the issuer. PIK interest or dividends is recorded as interest or dividend income, as applicable. If at any point we believe that PIK interest or dividends is not expected be realized, the PIK-generating investment will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment is placed on non-accrual status. Allocation of net gains and losses: All income, gains, losses, deductions and credits for any investment are allocated in a manner proportionate to the shares owned. Stock-based compensation: The Company’s stock-based compensation consists of stock options issued to certain employees and directors of the Company. The Company recognizes compensation expense based on an estimated grant date fair value using the Black Sholes option-pricing method. If the factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future. The Company recognizes stock-based compensation expense for these options on a straight-line basis over the requisite service period. The Company has elected to account for forfeitures as they occur. Management and service fees: We do not incur expenses related to management and service fees. Our executive management team manages our investments as part of their employment responsibilities. Segments: The Company has a single reportable segment based on the nature of its operations. The nature of business and the accounting policies of the segment are the same as described throughout Notes 1 and 2. The Company’s Chief Operating Decision Maker (“CODM”) is its executive team. The CODM assesses the reportable segment’s performance and allocates resources for the reportable segment based on the net income and total assets which are the same amounts in all material respects as those reported on the Statement of Operations and Balance Sheet. 11 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 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 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 Percentage of Amortized Cost Investments at Fair Value Percentage of Fair Value Short-term Non-banking Loans $ 6,650,100 37.7 % $ 6,685,295 37.4 % Commercial Business Loans 10,000,000 56.7 10,314,787 57.8 Common Stock 981,607 5.5 854,879 4.8 Other Equity 10,000 0.1 — — Total $ 17,641,707 100.0 % $ 17,854,961 100.0 % The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of December 31, 2024 (together with the corresponding percentage of the fair value of our total portfolio of investments): As of December 31, 2024 Investments at Amortized Cost Percentage of Amortized Cost Investments at Fair Value Percentage of Fair Value Short-term Non-banking Loans $ 13,000,000 94.8 % $ 13,006,231 96.7 % Common Stock 707,089 5.1 447,330 3.3 Other Equity 10,000 0.1 — — Total $ 13,717,089 100.0 % $ 13,453,561 100.0 % 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 Fair Value Percentage of Fair Value Business Services $ 10,314,787 57.8 % Consumer 1,400,515 7.8 Financial 841,144 4.7 Information Technology — — Real Estate 5,284,780 29.6 Technology 13,735 0.1 Total $ 17,854,961 100.0 % The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of December 31, 2024: As of December 31, 2024 Investments at Fair Value Percentage of Fair Value Business Services $ 9,985,925 74.2 % Consumer 508,774 3.8 Financial 442,864 3.3 Information Technology — — Real Estate 2,515,998 18.7 Total $ 13,453,561 100.0 % 12 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 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 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 Level 1 Level 2 Level 3 Total Short-term Non-banking Loans $ — $ — $ 6,685,295 $ 6,685,295 Commercial Business Loans — — 10,314,787 10,314,787 Common Stock 854,879 — — 854,879 Other Equity — — — — Total $ 854,879 $ — $ 17,000,082 $ 17,854,961 The following table presents the fair value measurements of our portfolio investments by major class, as of December 31, 2024, according to the fair value hierarchy: As of December 31, 2024 Level 1 Level 2 Level 3 Total Short-term Non-banking Loans $ — $ — $ 13,006,231 $ 13,006,231 Common Stock 447,330 — — 447,330 Other Equity — — — — Total $ 447,330 $ — $ 13,006,231 $ 13,453,561 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 Commercial Business Loans Common Stock Other Equity Balance as of January 1, 2025 $ 13,006,231 $ — $ — $ — Net change in unrealized appreciation 343,751 — — — Purchases and other adjustments to cost 4,150,100 — — — Sales and redemptions ( 500,000 ) — — Transfers between investment classifications ( 10,314,787 ) 10,314,787 — — Balance as of June 30, 2025 $ 6,685,295 $ 10,314,787 $ — $ — 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 6/30/25 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans $ 6,685,295 discounted cash flow determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness 15 - 24 % Commercial Business Loan 10,314,787 discounted cash flow determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness 20 % Other Equity — last secured funding known by company $ 17,000,082 13 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 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: For the year ended December 31, 2024 ST Non-banking Loans Preferred Stock Common Stock Other Equity Balance as of January 1, 2024 $ 16,961,766 $ 265,000 $ — $ 10,000 Net change in unrealized depreciation 401,966 785,000 ( 150,000 ) ( 10,000 ) Purchases and other adjustments to cost 4,623,437 — — — Sales and redemptions ( 8,720,000 ) — — — Realized gain (loss) ( 100,000 ) ( 900,000 ) — — Conversion from preferred to common stock — ( 150,000 ) 150,000 — Transfers between level 3 and level 1 ( 160,938 ) — — — Balance as of December 31, 2024 $ 13,006,231 $ — $ — $ — The net change in unrealized depreciation for the year ended December 31, 2024 attributable to Level 3 portfolio investments still held as of December 31, 2024 was $ 83,496 . The following table lists our Level 3 investments held as of December 31, 2024 and the unobservable inputs used to determine their valuation: Security Type 12/31/24 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans $ 13,006,231 discounted cash flow determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness 15 - 24 % Other Equity — last secured funding known by company economic changes since last funding Common Stock — last funding secured by company economic changes since last funding $ 13,006,231 NOTE 5 – RELATED-PARTY TRANSACTIONS We maintain a conflicts of interest and related-party transactions policy requiring (i) certain disclosures be made to our Board of Directors in relation to situations where officers, directors, significant shareholders, or any of their affiliates may enter into transactions with us, and (ii) certain disclosures appear in the reports we prepare and file with the SEC. In this regard, during the period covered by this report we entered into, or remained a party to, the following related-party transactions: · We held a promissory note with two shareholders in the principal amount of $ 250,000 . The promissory note bore interest payable monthly at the rate of 10 % per annum. The note was secured by the debtors’ pledge to us of 277,778 shares of common stock. The note was paid in full including all accrued interest on September 26, 2024. · As disclosed in Note 7, a component of our now terminated loan agreement was with a director of our Company. NOTE 6 – INCOME TAXES Presently, we are a C-Corporation for tax purposes and have booked an income tax provision for the periods described below. Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate. 14 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 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 We had a Loan and Security Agreement (the “Loan Agreement”) with a third party and director (collectively, the Lenders). 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, of which our director was required to fund one half of the amount. Amounts drawn under the Loan Agreement accrued interest at the per annum rate of 8 %, through January 3, 2027, subject to early termination provisions at the Lender’s right at any time after January 3, 2023. Our obligations under the Loan Agreement were secured by a grant of a collateral security interest in substantially all of our assets. In January 2024, we terminated the Loan Agreement. Any applicable fees related to early termination of the Agreement were waived. NOTE 8 – STOCK-BASED COMPENSATION Our 2022 Stock Incentive Plan (the “Plan”) authorized the issuance of incentives relating to 900,000 shares of common stock. 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 six months ended June 30, 2025: Shares Weighted Average Exercise Price Options outstanding at beginning of year 670,000 $ 2.11 Granted — — Exercised — — Forfeited — — Options outstanding at end of period 670,000 $ 2.11 Options exercisable at June 30, 2025: 670,000 $ 2.11 The following table summarizes additional information about stock options outstanding and exercisable at June 30, 2025: Options Outstanding Options Exercisable Options Outstanding Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Options Exercisable Weighted Average Exercise Price Aggregate Intrinsic Value 670,000 7.42 $ 2.11 $ — 670,000 $ 2.11 $ — 15 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 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 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, 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. This warrant is exercisable after 180 days, and expires on August 8, 2027 . This warrant is equity-classified and the fair value was $ 201,173 on the offering date. NOTE 10 – PER-SHARE INFORMATION Basic net gain per common share is computed by dividing net increase in net assets resulting from operations by the weighted-average number of common shares outstanding during the period. Diluted net gain per common share is computed by dividing net increase in net assets resulting from operations by the weighted-average number of dilutive common shares outstanding during the period calculated using the Treasury Stock method. The Treasury Stock method assumes that the proceeds received upon exercise of stock options are used to repurchase stock at the average market price during the period, thereby increasing the number of shares to be added in computing diluted earnings per share. 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 June 30, 2025 2024 Basic Diluted Basic Diluted Numerator: Net increase in net assets resulting from operations $ 677,035 $ 677,035 $ 412,936 $ 412,936 Denominator: Weighted-average number of common shares outstanding 6,062,773 6,062,773 6,385,255 6,501,823 Basic and diluted net gain (loss) per common share $ 0.11 $ 0.11 $ 0.06 $ 0.06 For the Six Months Ended June 30, 2025 2024 Basic Diluted Basic Diluted Numerator: Net increase (decrease) in net assets resulting from operations $ 1,128,781 $ 1,128,781 $ 795,039 $ 795,039 Denominator: Weighted-average number of common shares outstanding 6,190,941 6,190,941 6,385,255 6,501,823 Basic and diluted net gain (loss) per common share $ 0.18 $ 0.18 $ 0.12 $ 0.12 16 Table of Contents MILL CITY VENTURES III, LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) June 30, 2025 NOTE 11 – FINANCIAL HIGHLIGHTS The following is a schedule of financial highlights for the six months ended June 30, 2025 through 2021: Six Months Ended June 30, 2025 2024 2023 2022 2021 Per Share Data (1) Net asset value at beginning of period $ 3.09 2.91 2.89 1.24 1.08 Net investment income (loss) 0.17 0.15 ( 0.11 ) 0.11 0.04 Net realized and unrealized gains (losses) 0.08 0.02 0.01 0.01 0.28 (Provision for) benefit from income taxes ( 0.06 ) ( 0.04 ) ( 0.01 ) ( 0.04 ) ( 0.09 ) Issuance of stock options 0.00 0.00 0.24 0.01 0.00 Repurchase of common stock 0.10 0.00 0.00 0.00 0.00 Other changes in equity ( 0.04 ) 0.00 0.00 0.00 0.00 Net asset value at end of period $ 3.34 3.04 3.02 1.33 1.31 Ratio / Supplemental Data Per share market value of investments at end of period $ 2.95 2.02 2.67 1.41 1.22 Shares outstanding at end of period 6,062,773 6,385,255 6,185,255 4,824,628 4,795,739 Average weighted shares outstanding for the period - basic 6,190,941 6,385,255 6,185,255 4,808,508 4,794,744 Average weighted shares outstanding for the period - diluted 6,190,941 6,385,255 6,185,255 4,808,508 4,794,744 Net assets at end of period $ 20,256,334 19,385,302 — 14,426,607 14,188,588 Average net assets (2) $ 19,864,540 18,982,643 18,389,910 13,888,938 13,073,718 Total investment return 6.15 % 4.47 % ( 3.81 )% 6.45 % 21.30 % Portfolio turnover rate (3) 2.54 % 5.13 % 48.40 % 65.55 % 75.65 % Ratio of operating expenses to average net assets (3) ( 6.94 )% ( 7.90 )% ( 25.16 )% ( 14.63 )% ( 11.72 )% Ratio of net investment income (loss) to average net assets (3) 10.73 % 10.46 % ( 7.43 )% 18.01 % 6.88 % Ratio of realized gains (losses) to average net assets (3) 0.00 % 3.98 % ( 6.03 )% 1.94 % 61.92 % (1) Per-share data was derived using the ending number of shares outstanding for the period. (2) Based on the monthly average of net assets as of the beginning and end of each period presented. (3) Ratios are annualized. NOTE 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. 17 Table of Contents 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. Warrants At the closing of the private placement, we issued five-year warrants to purchase our common stock as follows: (i) 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 ; (ii) 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 ; (iii) 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 ; and (iv) 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. 18 Table of Contents 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. 19 Table of Contents 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. Mr. 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. Messrs. 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; and · 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. 20 Table of Contents