UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

(Amendment No. 2)

Proxy Statement Pursuant to Section 14(a) of the

the Securities Exchange Act of 1934

Check the appropriate box:

Mill City Ventures III, Ltd.

(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box)all boxes that apply):

MILL CITY VENTURES III, LTD.

1907 Wayzata Boulevard, Suite 205

Wayzata, MN 55391

NOTICE OF SPECIALANNUAL MEETING OF SHAREHOLDERS

SHAREHOLDERS TO BE HELD ON DECEMBER 23, 2019

OCTOBER 31, 2023

TO THE SHAREHOLDERS OF MILL CITY VENTURES III, LTD.:

Please take notice that an annual meeting of shareholders of Mill City Ventures III, Ltd. (the “Company”) will be held, pursuant to due call by the Board of Directors (the “Board”), on October 31, 2023, at 8:30 a.m. local time at 1907 Wayzata Boulevard, Suite 205, Wayzata, MN 55391, or at any adjournment or adjournments thereof, for the purpose of considering and taking appropriate action with respect to the following:

These items of business are more fully described in the proxy statement accompanying this notice. The record date for the annual meeting is September 28, 2023. Only shareholders of record at the close of business on that date may vote at the annual meeting or any adjournment or postponement thereof.

Approximate date of mailing of proxy materials: October 6, 2023

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIALANNUAL SHAREHOLDER MEETING OF SHAREHOLDERS TO BE HELD ON DECEMBER 23, 2019 OCTOBER 31, 2023:

This Proxy StatementThe proxy statement for the annual meeting and the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2022, each of which is included herewith, are also available freeto you on the Internet. We encourage you to review all of chargethe important information contained in the proxy materials before voting. To view the proxy statement and Annual Report on Form 10-K/A on the Internet, at the website address identified on the enclosed proxy card.

visit www.annualgeneralmeetings.com/mcvt2023.

PROXY STATEMENT

TABLE OF CONTENTS

SPECIAL MEETING OF THE SHAREHOLDERS OF

MILL CITY VENTURES III, LTD.

1907 Wayzata Boulevard, Suite 205

Wayzata, MN 55391

This Proxy Statement contains information about the special meeting of Shareholders of Mill City Ventures III, Ltd. (“Mill City,” the “Company,” “we,” “our” and “us”).PROXY STATEMENT

FOR THE ANNUAL MEETING OF SHAREHOLDERS

Forward-Looking Statements 

All statements contained herein that are not historical facts, including but not limited to statements regarding anticipated activity, are forward-looking in nature and involve a number of risks and uncertainties. We caution you that forward-looking statements are not guarantees. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, our actual results could differ materially from those set forth in the forward-looking statements. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time unless otherwise required by law. You are advised to consult any additional disclosures that we may make directly to you or through reports that we file with the SEC in the future, including annual reportsTo Be Held on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.October 31, 2023

QUESTIONS AND ANSWERS
ABOUT THE SPECIAL MEETING AND VOTING

OurThe Board of Directors has approved a plan for Mill Citycalled an annual meeting in conformity with Minnesota Statutes, Section 302A.431, and the requirements of the Nasdaq listing rules. The purpose of the annual meeting is to withdraw its election to be treatedconsider and regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”), and to immediately or shortly thereafter fall outside the definition of an “investment company” under the 1940 Act. This plan is generically referred to in this Proxy Statement as the “Plan.”vote on whether:

VOTING

After the full implementationThe presence, in person or by proxy, of the Plan, Mill Cityholders of a majority of the total number of outstanding shares of common stock entitled to vote constitutes a quorum for the transaction of business at the meeting. Votes cast by proxy or in person at the meeting will (a) remainbe tabulated by the election inspector appointed for the meeting, and that inspector will determine whether a publicly reporting company that files reports withquorum is present. Assuming a quorum is present, the SEC pursuantvotes required to approve the matters coming before the meeting are as described below:

Under applicable rules of the New York Stock Exchange, or NYSE, relating to the Securities Exchange Actdiscretionary voting of 1934 (and may have a ticker onproxies by brokers, banks and other securities intermediaries that are subject to NYSE rules, such brokers, banks and other securities intermediaries are not permitted to vote shares with respect to certain matters, including the OTC Marketselection of directors and executive compensation matters, without instructions from the beneficial owner. Accordingly, street name holders of shares held in broker accounts are advised that, if they do not timely provide instructions to their broker, bank or otherwise), (b) no longer be a BDC, and (c)other securities intermediary, their shares will not be an investment company. In addition, but subjectvoted in connection with Proposals 1, 2 or 3, and will be considered to shareholder approvalbe broker non-votes.  Such shares will not be considered as present and entitled to vote with respect to those matters. Because NYSE rules relating to discretionary voting by brokers apply to all brokers that are members of the proposalNYSE, the prohibition on discretionary voting applies to withdraw our BDC election, the Board of Directors is seeking to change the nature of the business ofmeeting even though the Company in order to ensure that, inis not listed on the future, the Company will not once again be an “investment company.”New York Stock Exchange.

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why am I receiving this proxy statement?

In furtherance

This proxy statement contains information relating to the solicitation of the Plan, Mill City is proposing that its shareholders approve the withdrawal of the Company’s electionproxies for use at our annual meeting to be regulated as a BDC under the 1940 Act.

Our Board of Directors is furnishing this Proxy Statement to you to solicit proxiesheld at 8:30 a.m., local time, on its behalf to be voted on these mattersOctober 31, 2023, at the special meeting on December 23, 2019 at 8:00 a.m., Central Time,our offices located at 1907 Wayzata Boulevard, Suite 205, Wayzata MinnesotaMN 55391,. The proxies also may be voted at any adjournments or postponements for the purpose stated in the Notice of Annual Meeting of Shareholders. We, the meeting.

This Proxy Statement contains important information about the special meeting and the proposals to be voted on at that meeting. You should readCompany, are making this Proxy Statement and the exhibits hereto carefully and in their entirety. By submitting a proxy, the enclosed voting materials allow you to have your shares voted at the special meeting without attending in person.solicitation.

All properly executed written proxies, and all properly completed proxies submitted by telephone, by the Internet or by mail that are delivered pursuantWho is entitled to this solicitation will be votedvote at the special meeting in accordance with the directions given in the proxy, unless the proxy is revoked before the completion of voting at the special meeting.

annual meeting?

Mill City intends to effect the Plan through (1) the continued dispositionOnly holders of its investment securities, (2) subject to receiving shareholder approval of the proposal contained herein, the disposition of sufficient investment securities so as to cause Mill City to fall outside the definition of an “investment company” under the 1940 Act, and (3) the withdrawal of Mill City’s BDC election through a filing to be made with the SEC.

In addition and as explained elsewhere in this Proxy Statement, the Board of Directors is seeking to change the nature of the business of the Company. This will most likely take the form of the Company becoming a holding company or pursuing a new specific line of business. Changing the nature of the Company’s business will help ensure that the Company will not be (or inadvertently become) an “investment company.” At this time, no specific new line of business for the Company has been determined. However, any business that the Board of Directors chooses to pursue or acquire will necessarily involve its own unique set of risks operational and acquisition or development risks. The investment risks to shareholders presented by operating a business could significant, and will in any event differ materially from the nature and kind of risks presented to shareholders and arising from Mill City’s operations as a BDC and ownership of a generally diversified pool of investments.

Our Board of Directors has determined that the Plan is in the best interests of Mill City and its shareholders because the Company has concluded that it does not have the staffing and resources sufficient to ensure compliance with federal securities law requirements relating to policies and procedures designed to ensure compliance primarily with the rules and regulations issued under 1940 Act. In this way, the Plan will eliminate the risk to the Company and its shareholders that the Company’s failure to comply with these rules will redound to the detriment of the Company and shareholders through the issuance of cease-and-desist orders, the payment of fines, or other negative outcomes resulting from the Company’s failure to achieve satisfactory 1940 Act compliance. Any of these outcomes could have a material and adverse effect on the pricerecord of our common stock.

Our Board of Directors does not intend to bring other matters before the special meeting except items incidental to the conduct of the meeting.

It is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. Each of Douglas M. Polinsky and Joseph A. Geraci, II, have been designated as proxies by the Board of Directors for the special meeting.

The record date for the special meeting is November 26, 2019 (the “record date”). The record date is established by the Board of Directors and only shareholders of record at the close of business on September 28, 2023, the record date for the annual meeting, are entitled to: (a)to receive notice of the meeting; and (b)to vote at the annual meeting andor any adjournmentsadjournment or postponementspostponement of the annual meeting.

What are the voting rights of shareholders?

Each shareholdershare of recordcommon stock outstanding on the record date is entitledentitles its holder to cast one vote for each shareon the matter to be voted upon.

Who can attend the annual meeting?

Only holders of our common stock held. Onat the close of business on September 28, 2023, the record date for the annual meeting, or their duly appointed proxies, are authorized to attend the annual meeting. Cameras, recording devices, and other electronic devices will not be permitted at the annual meeting. If you hold your shares in “street name” (that is, through a bank, broker or other nominee), you will need to bring either a copy of the brokerage statement reflecting your stock ownership as of the record date or a legal proxy from your bank or broker.

What will constitute a quorum at the annual meeting?

The presence at the annual meeting, in person or by proxy, of a majority of the voting power of the shares of common stock outstanding at the close of business on September 28, 2023, will constitute a quorum permitting our shareholders to conduct business at the annual meeting. We will include abstentions in the number of shares of common stock present at the annual meeting for purposes of determining a quorum. As of the record date, there were 11,067,4026,385,255 shares of our common stock issued and legally outstanding.

If yourHow do I vote my shares of common stock that are registered in your name on the books and records of our transfer agent, you are a shareholder of record. If you are a shareholder of record you may provide a proxy to vote your shares and may attend the special meeting in person and vote your shares at the special meeting.held by my bank, broker or other nominee?

If your shares of stock are held for you through an intermediary in the name of your broker, bank or other nominee, your shares are held in street name and you are a beneficial owner, not a shareholder of record. Shares beneficially owned through an intermediary in the name of your broker, bank or other nominee may be voted only by the record holder, so you will need to provide voting instructions to the record holder as to how your shares are to be voted at the special meeting. While the holders of shares in street name can attend the special meeting with proper identification as described below, such holders may not vote at the special meeting unless they have a proxy from the record holder to vote at the special meeting.

It is important that you vote your shares or submit a proxy if you are a shareholder of record and, if you hold shares in street name, that you provide appropriate voting instructions to your broker, bankany or other nominee as discussed in the answer to Question 12 below.

You may submit your proxy or vote your shares of our common stock by any of the following methods:

By Telephone or the Internet—Shareholders can have their shares voted by submitting a proxy via telephone or the Internet. The telephone and Internet procedures are designed to authenticate a shareholder’s identity, to allow shareholders to vote their shares and to confirm that their instructions have been properly recorded.

By Mail—A shareholder who receives a paper proxy card or voting instruction form or requests a paper proxy card or voting instruction form by telephone or Internet may elect to submit a proxy by mail and should complete, sign and date the proxy card or voting instruction form and mail it in the pre-addressed envelope that accompanies the delivery of the proxy card or voting instruction form. For shareholders of record, proxy cards submitted by mail must be received by the date and time of the special meeting. For shareholders who hold their shares through an intermediary, such as a broker, bank or other nominee, the voting instruction form submitted by mail must be mailed by the deadline imposed by your broker, bank or other nominee for your shares to be voted.

In Person—Shares held in your name as the shareholder of record on the record date may be voted by you in person at the special meeting. Shares held beneficially by you in street name on the record date may be voted by you in person at the special meeting only if you obtain a legal proxy from the broker, bank or other nominee that holds your shares giving you the right to vote the shares and bring that proxy to the meeting. 

Shareholders should specify their voting choice for each matter on the accompanying proxy. If no specific choice is made for one or more matters, proxies that are signed and returned will be voted “FOR” each of the proposals that are not marked.

It means that you have multiple accounts with brokers and/or our transfer agent. Please submit proxies with respect to all of these shares. 

We recommend that you contact your broker and/or our transfer agent to consolidate as many accounts as possible under the same name and address. Our transfer agent is Pacific Stock Transfer. Pacific Stock Transfer’s address is 6725 Via Austi Parkway, Suite 300, Las Vegas, Nevada 89119; you can reach Pacific Stock Transfer at 1-800-785-7782. 

Shareholders of Record: If you are a shareholder of record (see Question 8 above), your shares of common stock will not be voted if you do not provide your proxy unless you vote in person at the meeting.  It is important that your shares are voted in person or by proxy.

Street Name Holders: If your shares are held in street name (see Question 8 above) and you do not provide your signed and dated voting instruction form to yourthrough a bank, broker bank or other nominee, you should follow the voting instructions provided to you by the bank, broker or nominee. Specific voting procedures relating to your shares of common stock may not be voted by yourheld through a bank, broker bank or other nominee because nonewill depend on their particular voting arrangements and procedures.

How do I vote?

If you are a holder of the proposals to be voted upon at the special meeting is considered “routine” under applicable rules. It is, therefore, important thatrecord of our common stock, then you or your duly authorized agent may vote your shares. by:

AbstentionsIf you are voting online, you will haveneed the same effect as aunique 15-digit control number printed on your proxy card. For Proposal 1, you may either vote against the proposals at the special meeting. Because none of these proposals are considered “routine” matters for which brokers, banks or other“For” nominees may vote uninstructed shares, there will be no broker non-votes. 

The enclosed proxy is solicited on behalf ofto the Board of Directors and is revocableor you may “Withhold” your votes for any nominee you specify. For Proposal 2, you may vote “For” or “Against” or abstain from voting.  For Proposal 3, you may “abstain,” or vote to evaluate on a non-binding advisory basis the compensation of the Company’s executive officers every “3 years,” “2 years,” or “1 year.”

May I change my vote after I return my proxy card?

Yes. You may revoke a previously granted proxy, at any time on or prior to the votingclose of the proxybusiness on October 30, 2023, by submitting to our Chief Financial Officer, Mr. Joseph A. Geraci II, at the special meeting, by the filing1907 Wayzata Boulevard, Suite 205, Wayzata MN 55391, a notice of an instrument revoking it,revocation or a duly executed proxy bearing a later date. You may also revoke a previously granted proxy by attending the annual meeting and voting in person. If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

How are votes counted?

If the accompanying proxy card is properly signed and returned to us, and not revoked, it will be voted AS DIRECTED BY YOU. If you hold your shares as a direct registered owner and return a proxy card but do not indicate how your shares are to be voted, your proxy card will be voted FOR all proposals at the annual meeting. If, however, you hold your shares in “street name” then your broker’s ability to vote shares in any instance where you do not indicate how your shares are to be voted will be limited by applicable rules relating to the discretionary voting of proxies by brokers.

How does the Board of Directors recommend that shareholders vote on the proposals?

Our Board of Directors recommends a vote “FOR” the election of each of the nominees named in Proposal 1, “For” the non-binding advisory resolution to approve the compensation of the Company’s named executive officers in Proposal 2, and with respect to Proposal 3, to vote for holding a non-binding advisory vote on the overall compensation of the Company’s executive officers every THREE YEARS.

Who pays the costs of soliciting proxies?

We will pay the costs of soliciting proxies. Presently, we do not anticipate that we will solicit proxies by any means other than mail. We expect that banks, brokers, fiduciaries, custodians and nominees will forward proxy soliciting materials to their principals and that we will reimburse such persons’ out-of-pocket expenses.

How can I determine the results of the voting at the annual meeting?

Preliminary voting results will be announced at the annual meeting, if available. Final results will be reported on a Form 8-K filed with the Securities and Exchange Commission (the “SEC”) within four business days of the date of the annual meeting.

What does it mean if I receive more than one proxy card?

If you receive more than one proxy card, then your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.

Are proxy materials available on the Internet?

To view this proxy statement on the Internet, please visit www.annualgeneralmeetings.com/mcvt2023.

Are there dissenters’ or appraisal rights?

No.

Whom should I contact if I have any questions?

If you have any questions about the annual meeting, the proxy materials or your ownership of our common stock, please contact our Chief Financial Officer, Joseph A. Geraci II, at (952) 479-1920.

When are shareholder proposals due for the 2024 annual meeting?

Except as noted below, to be timely, proposals and nominations with respect to the 2024 annual meeting of shareholders must be delivered to us no later than 5:00 p.m., Central Time, on the 120th day prior to the anniversary date of the mailing of the notice for the preceding year’s annual meeting. If the date of the annual meeting has been changed by more than 30 calendar days from the first anniversary of the date of the preceding year’s annual meeting, then shareholder proposals or director nominations must be so received no later than 5:00 p.m., Central Time, on the later of (i) the 120th day prior to the date of such annual meeting or (ii) the tenth day following the day on which public announcement of the date of such meeting is first made.

Notices of business proposals or a nomination(s) of individuals for election as a director at the 2024 annual meeting, other than shareholder proposals to be included in our corporate office,proxy statement pursuant to Rule 14a-8, should be addressed to our principal executive offices atChief Financial Officer, Mill City Ventures III, Ltd., 1907 Wayzata Boulevard, Suite 205, Wayzata, Minnesota 55391. If you areWe reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with all applicable requirements.

RECENT DEVELOPMENTS

Non-Binding Letter of Intent

In December 2022, we announced that we had entered into a holdernon-binding letter of record,intent with Mustang Funding, LLC dba Mustang Litigation Funding (“Mustang”) contemplating a combination transaction in which the Company would be the surviving entity, but the owners of Mustang would thereby own a substantial majority of the Company’s issued and outstanding common stock after consummation of the transaction.  We continue to work with Mustang on that potential transaction, and since entering into the non-binding letter of intent we have made short-term loans to Mustang aggregating to $8 million in principal amount. 

As of the date of this proxy statement, we have not yet entered into a definitive agreement with Mustang and we cannot be certain that we will do so.  In the event that you attend the special meeting, you may

revoke your proxy and cast your vote personally. Simply attending the special meeting will not revokewe are able to enter into a prior proxy.

The cost of this solicitation of proxies will be paid by Mill City. In additiondefinitive agreement with Mustang contemplating a transaction similar to the useone originally contemplated in the non-binding letter of mail,intent, the consummation of that transaction would be subject to the satisfaction of certain conditions, including the approval of our officers and employees may solicit proxies by telephone or facsimile. Upon request,shareholders.  In such a case, we will reimburse brokers, dealers, banks,prepare, file with the SEC and trustees, or their nominees, for reasonable expenses incurred by them in forwardingdistribute to our shareholders a proxy materials to beneficial ownersstatement soliciting the approval of that transaction, together with any related items requiring the approval of our common stock.

In order for us to conduct the special meeting, holders representing a majority of our outstanding shares of common stock entitled to vote as of November 26, 2019, must be present in person or by proxy at the special meeting. This is referred to as a quorum. Your shares are counted as present at the meeting if you attend the meeting in person or if you properly return a proxy by Internet, telephone or mail.

shareholders.

Abstentions and sharesThis proxy statement, however, does not relate to our efforts to negotiate or enter into a definitive agreement, or consummate any related transaction, with Mustang.  This proxy statement relates to the 2023 annual shareholder meeting.  Our shareholders should understand that the slate of record held by a broker, bank or other nominee that are instructeddirectors nominated for re-election to be voted on any matter are included in determining the number of shares present. However, because no routine discretionary matters for which broker non-votes may be submitted will be considered at the special meeting, broker non-votes, if any, will not be treated as present at the special meeting or entitled to vote and will not be included in determining whether a quorum is present.

No.

PROPOSAL 1

APPROVAL OF THE WITHDRAWAL OF OUR

ELECTION TO BE REGULATED AS A BUSINESS DEVELOPMENT COMPANY

UNDER THE INVESTMENT COMPANY ACT OF 1940

Introduction 

In February 2013, we elected to be regulated under the 1940 Act as a BDC. At that time, we operated as a closed-end investment company primarily engaged in the business of making loans to and investing in small- and medium-sized private U.S. companies and small- and micro-cap public companies. We have operated as a BDC since that time.

Following an evaluation of our operations and resources, our Board of Directors has determined that it is inat the best interest of our Company and our shareholders to cease operating as a BDC and to avoid2023 annual shareholder meeting will, if they are re-elected at the additional regulation and compliance-related efforts and expenses required under 1940 Act. In sum, the Board of Directors has concluded that the Company lacks the proper resources, staffing and expertise to effectively ensure compliance with the various requirements under the 1940 Act. This conclusion was not reached arbitrarily. The Company’s management and legal counsel have recommended that the Company seek to withdraw its election to be treated as a BDC. As a consequence,2023 annual shareholder meeting, continue serving on our Board of Directors until the earlier of their death, disqualification, removal, resignation or the election of their respective successors.  If we successfully enter into a definitive agreement with Mustang, we expect that the definitive agreement will contemplate the resignation, in connection with consummating the transaction, of at least some, or perhaps all, of the directors nominated for re-election as described in this proxy statement.  In such a case, either the above-described proxy statement or a Schedule 14F-1 information statement will disclose the changes to our Board of Directors contemplated by the definitive agreement.

Additional Information and Where to Find It

This “Recent Developments” communication has recommendedbeen prepared in respect of the approval of a proposal to withdraw our electionpotential transaction involving the Company and Mustang, and may be deemed to be regulated assoliciting material relating to that transaction.  As explained above, if the Company enters into a BDC. Pursuantdefinitive agreement with Mustang with respect to the 1940 Act, such election cannot be withdrawn without the approval of the holders ofproposed transaction, we will file a “majority”proxy statement on Schedule 14A relating to a special meeting of our outstanding voting securities, as such term is defined in the 1940 Act.  For an explanation of how the 1940 Act defines the word “majority,” please see Question 18 above.

We have undertaken several steps to prepare for the withdrawal of our election to be regulated as a BDC. Among these steps, we (i) have been thoughtfully disposing of our positions in investment securities (without reinvestment) so that our mix of balance sheet assets will soon, after the receipt of approval for this proposal, cause us to fall outside the definition of an “investment company,” (ii) have consulted with legal counsel as to the requirements for withdrawing our election as a BDC, and (iii) are considering other business pursuits to undertake so as to ensure that we will not be classified as an “investment company” under the 1940 Act in the future. In this latter regard, we have not yet formalized a definitive plan to undertake a new business.

If our shareholders approve this proposal, we anticipate withdrawing our election to be regulated as a BDC by filing a Form N-54C with the SEC.  We anticipate that this filing would be made at or effective upon the end of calendar year 2019. Immediately following our withdrawal of the BDC election,In addition, we will continue to be a reporting company under the Exchange Act, but we will no longer be a BDC and, assuming that we complete the disposition of certain of our assets (i.e., investment securities) and begin pursuing a new line of business, we will not again become subject to the provisions of the 1940 Act.

Effect on the Company and Shareholders 

Upon the withdrawal of our election to be treated as a BDC, we will no longer be subject to regulation under the 1940 Act. The regulation of BDC’s under the 1940 Act is designed to protect the interests of investors in investment companies. Consequently, if and when we are no longer a BDC, the special protections for our shareholders under the 1940 Act will no longer apply to us or protect our investors. Our shareholders will instead be substantively protected only by state corporate law. In our case, we are a Minnesota corporation and the corporate laws of that state will be the basis for most, if not all, substantive protections for our shareholders.

More specifically, if this proposal is approved and we withdraw our BDC election, then our shareholders would no longer have the following protections under the 1940 Act and the regulations issued thereunder: 

Participants in the Solicitation

The following table outlines certain key similarities and differences in our structure and governance if the proposal is approved: they become available.

PROPOSAL 1

In addition to eliminationELECTION OF DIRECTORS

Nominees

Five persons have been nominated for election as directors at the annual meeting, all of whom currently serve as directors. Our directors are elected annually, by a majority of the substantive protections for investors arising undervotes cast, to serve until the 1940 Act (summarized above), the withdrawalnext annual meeting of Mill City’s BDC election, its ceasing to be an investment company, and its ultimate decision to pursue a new operating business through acquisition or development will necessarily involve its own unique set of risks operational and acquisition or development risks. The investment risks to shareholders presented by operating a business could significant, and will in any event differ materially from the nature and kind of risks presented to shareholders and arising from Mill City’s operations as a BDCuntil their respective successors are elected and ownership of a generally diversified pool of investments. You should understand that Mill City does not intend to seek shareholder approval for the specific business operations that it may undertake in the future. The decision as to what business operation to acquireduly qualified. There are no familial relationships between any director or develop, and when, is expected to be made by the Board of Directors.

officer.

Effect on Financial Statements and Tax Status Vote Required

Our change in business so as not to be an investment company and our election to withdraw asNominees receiving a BDC under the 1940 Act will result in a significant change in our required methodmajority of accounting.

Our BDC financial statements are presented and accounted for under the specialized method of accounting applicable to investment companies, which requires us to recognize our investments, including controlled investments, at fair value. As a BDC, we are precluded from consolidating any entity other than another investment company that acts as an extension of our investment operations and facilitates the execution of our investment strategy or an investment in a controlled operating company that provides substantially all of its services to us. Operating companies are required to account for investments based on the degree of control or influence they can exert over the entity and therefore are required to consolidate controlled entities and use either the equity method of accounting, fair value option or historical cost method of accounting for the financial statement presentation and accounting of other securities held. Following implementationaffirmative votes of the Plan, we expect to elect the fair value option for our investments in other securities. Accordingly, the change in our accounting method could have a material impact on the presentation of our financial statements commencing on the day we withdraw our BDC election.

We do not believe that the withdrawal of our election to be treated as a BDC will have any impact on our federal income-tax status, since we are currently not treated as a “registered investment company” or “RIC” under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), but rather are subject to corporate-level federal-income tax on our income (without regard to any distributions we make to our shareholders) as a “regular” corporation under Subchapter C of the Code.

Anticipated Timeline

If this proposal is approved at the special meeting, the withdrawal will become effective upon receipt by the SEC of the filing of our “Notification of Withdrawal” on Form N-54C, which we anticipate will be filed before the end of calendar year 2019. After the Notification of Withdrawal of our BDC election is filed with the SEC, we will no longer be subject to the regulatory provisions of the 1940 Act applicable to BDCs generally, including regulations related to insurance, custody, composition of its board of directors, affiliated transactions and any compensation arrangements.

Vote Required

Under the 1940 Act, approval of the withdrawal of our election to be regulated as a BDC requires an affirmative vote of a “majority” of all of the Company’s outstanding voting securities, regardless of whether the holders of such shares are present and entitled to vote at the special meeting.annual meeting shall be elected to the Board of Directors. Set forth below is certain information concerning the director-nominees.

The biographies of the above-identified individuals are set forth below:

Douglas M. Polinsky co-founded the Company in January 2006 and since that time has been the Chairman and Chief Executive Officer of the Company.  Since 1994, Mr. Polinsky has been the President of Great North Capital Consultants, Inc., a financial advisory and investment company that he founded. Great North Capital Consultants, Inc. primarily engages in the business of investing in hard money lending with collateral on the loans being first or second mortgages in both residential and commercial properties. In addition, Great North Capital Consultants, Inc. makes direct investments into public and private companies. Since 2015, Mr. Polinsky has been an independent director of Liberated Syndication, Inc., a Nevada corporation with its operations in Pennsylvania. Liberated Syndication, Inc. is a host and publisher of podcasts. Mr. Polinsky is a member of the Audit and Compensation Committees of the Board of Directors of Liberated Syndication. Mr. Polinsky earned a Bachelor of Science degree in hotel administration at the University of Nevada, Las Vegas in 1981.

Joseph A. Geraci, II co-founded the Company in January 2006 and has been a director and the Chief Financial Officer of the Company since that time. Since February 2002 through the present time, Mr. Geraci has been managing member of Isles Capital, LLC, an advisory and consulting firm that assists small businesses, both public and private, in business development. In March 2005, Mr. Geraci also became the managing member of Mill City Advisors, LLC, the general partner of Mill City Ventures, LP, and Mill City Ventures II, LP, each a Minnesota limited partnership that invested directly into both private and public companies. From January 2005 until August 2005, Mr. Geraci served as the Director of Finance for Gelstat Corporation, a purveyor of homeopathic remedies, based in Bloomington, Minnesota.  Mr. Geraci provided investment advice to clients as a stockbroker and Vice President of Oak Ridge Financial Services, Inc., a Minneapolis-based broker-dealer firm, from June 2000 to December 2004. While at Oak Ridge Financial Services, Mr. Geraci’s business was focused on structuring and negotiating debt and equity private placements with both private and publicly held companies. Mr. Geraci was employed at other Minneapolis brokerage firms from July 1991 to June 2000. From his career and investment experiences, Mr. Geraci has established networks of colleagues, clients, co-investors, and the officers and directors of public and private companies. These networks offer a range of contacts across a number of sectors and companies that may provide opportunities for investment, including many that meet the Company’s screening criteria.

In August 2003, the National Association of Securities Dealers (NASD) found in an administrative hearing that Mr. Geraci, while employed by and affiliated with a NASD member, had violated NASD Conduct Rule 2110 and SEC Rule 10b-5 in August 1999, and barred him from associating with any NASD member in the future.

Howard P. Liszt served as Chief Executive Officer of Campbell Mithun, a national marketing communications agency he joined in 1976, until 2001. Under his leadership, Campbell Mithun grew to be one of the 20 largest agencies in the world. He currently serves on the board of Wisdom Gaming.  Mr. Liszt has served as a Board member for several industry-leading companies including Land O’ Lakes, ShuffleMaster, Ocular Sciences, Coleman Natural Foods, and Eggland’s Best. Mr. Liszt holds a Bachelor of Arts in Journalism and Marketing and a Masters of Science in Marketing from the University of Minnesota, Minneapolis.

Lyle A. Berman is a 1964 graduate of the University of Minnesota with a degree in Business Administration. Mr. Berman began his career with Berman Buckskin, his family’s leather business. He helped grow the business into a major specialty retailer with 27 outlets. In 1990, Mr. Berman participated in the founding of Grand Casinos, Inc. Mr. Berman is credited as one of the early visionaries in the development of casinos outside of the traditional gaming markets of Las Vegas and Atlantic City. In less than five years, the company opened eight casino resorts in four states. In 1994, Mr. Berman financed the initial development of Rainforest Cafe. He served as the Chairman and CEO from 1994 until 2000. In October 1995, Mr. Berman was honored with the B’nai B’rith “Great American Traditions Award.” In April 1996, he received the Gaming Executive of the Year Award; in 2004, Mr. Berman was inducted into the Poker Hall of Fame; and in 2009, he received the Casino Lifetime Achievement Award from Raving Consulting & Casino Journal. In 1998, Lakes Entertainment, Inc. was formed. In 2002, as Chairman of the Board and CEO of Lakes Entertainment, Inc., Mr. Berman was instrumental in creating the World Poker Tour. Since January 2005, Mr. Berman has also served as Chairman of the Board of Pokertek, Inc.

Laurence S. Zipkin is nationally recognized for his expertise in the gaming industry, restaurants, and emerging small growth companies. From 1996 to 2006, Mr. Zipkin owned Oakridge Securities, Inc. where, as an investment banker, he successfully raised capital for various early growth-stage companies and advising clients with regard to private placements, initial public offerings, mergers, debt offerings, bridge and bank financings, developing business plans and evaluating cash needs and resources. He has extensive experience in the merger and acquisition field and has represented companies on both the buy and sell side. Since 2006, Mr. Zipkin has been self-employed, engaging in various consulting activities, owning and operating two restaurant properties, and purchasing distressed real estate. Mr. Zipkin is a licensed insurance agent for both life and health insurance. Mr. Zipkin attended the University of Pennsylvania Wharton School of Finance. 

Under our bylaws, directors serve for annual terms expiring upon the 1940 Act,next annual meeting of our shareholders.

When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable the Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board of Directors focuses primarily on the industry and transactional experience, in addition to any unique skills or attributes associated with a “majority”director.  With regard to Messrs. Polinsky and Geraci, the board considered their significant experience, expertise and background with regard to investing in general and the Company in particular. With regard to Mr. Berman, the board considered his background and experience with the public securities markets and his former employment and experience in operational capacities. With regard to Mr. Liszt, the board considered his experience on other boards of public companies, his past experience in the communications and advertising fields, and his organizational experience. With regard to Mr. Zipkin, the board considered his knowledge, experience and skills in the finance, public securities and investment banking fields.

The Board of Directors has determined that three of our directors—Messrs. Liszt, Berman and Zipkin—qualify as independent directors in accordance with the published listing requirements of the outstanding voting securities meansNasdaq Capital Market. The Nasdaq independence definition includes a series of objective tests, such as that the vote of (i) 67% or more of the shares presentdirector is not, and has not been for at the special meeting, if the holders of 50% or moreleast three years, one of our outstanding sharesemployees and that neither the director, nor any of common stock are present or represented by proxy, or (ii) more than 50%his family members has engaged in various types of business dealings with us. In addition, our Board of Directors has made a subjective determination as to each director that no relationships exist which, in the opinion of our outstanding sharesBoard of common stock, whichever is less. Abstentions will not count as affirmative votes and will therefore count againstDirectors, would interfere with the proposal.exercise of independent judgment in carrying out the responsibilities of a director.

RecommendationThe Board of Directors recommends that you vote “FOR” the election of each director-nominee named above.

INFORMATION REGARDING THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE WITHDRAWAL OF OUR ELECTION TO BE REGULATED AS A BUSINESS DEVELOPMENT COMPANY UNDER THE 1940 ACT.AND CORPORATE GOVERNANCE

INFORMATION REGARDING COMPANY COMMON STOCKBoard Leadership Structure and Role in Risk Oversight

Security OwnershipMr. Douglas M. Polinsky serves as the Chairman of Managementthe Board of Directors, and Certain Beneficial Owners also as our Chief Executive Officer. Presently, we believe that this board structure is effective in supporting and governing the Company. In this regard, the Board of Directors has determined in its judgment that the Company benefits from having a combined Chairman and CEO position at this time due to Mr. Polinsky’s unique experience and perspective stemming from his involvement in the founding of the Company. As a result of his leadership since our inception, Mr. Polinsky has unparalleled knowledge of our business, products, and operations, as well as experience exercising his judgment regarding the various opportunities and challenges particular to our Company. In addition, Mr. Polinsky is also deeply invested in our long-term success through his position as one of the Company’s largest shareholders. Finally, we believe that Mr. Polinsky’s dual roles as Chairman and CEO is counter-balanced by the strong and experienced independent directors on our board who comprise a majority of our directors.

During the fiscal year ended December 31, 2022, the Board of Directors held four meetings, including telephonic meetings, and took action in writing on three occasions. During that year, all directors attended board meetings and meetings of all committees on which he served at the time. We encourage, but do not require, our directors to attend annual shareholder meetings.  No directors attended our most recent annual shareholder meeting.

Although risk management is a core responsibility of the Company’s management, the Board of Directors recognizes that it plays a critical role in oversight of risk. The Board of Directors, in order to more specifically carry out this responsibility, has assigned the Audit Committee the primary duty to periodically review the Company’s policies and practices with respect to risk assessment and risk management, including discussing with management the Company’s major risk exposures and the steps that have been taken to monitor and control those exposures. Those risks include Company risks, such as the collectability of loans made by the Company, and industry and general risks, such as risks related to the impact of the general economy on our business, all as further identified in our Annual Report.

Board Committee Membership

Our Board of Directors has a standing Audit Committee, a Compensation Committee, and a Nominating and Governance Committee.  Each committee has a written charter that is available on the Company’s website at http://www.millcityventures3.com.

Audit Committee Information. The members of the Audit Committee are Laurence Zipkin, Howard Liszt and Lyle Berman, each of whom is independent for purposes of the Securities Exchange Act of 1934 and applicable Nasdaq rules.  Mr. Berman is the chairperson of the Audit Committee.  The Audit Committee met four times during the fiscal year ended December 31, 2022.

The Audit Committee’s charter makes the committee responsible, among other things, for:

The Audit Committee is also responsible for discussing with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk-assessment and risk-management policies.

The board has determined that Mr. Berman is an “audit committee financial expert” within the meaning of applicable SEC rules. Mr. Berman’s relevant experience is detailed in his biography above. The Board of Directors has determined that each of the Audit Committee members is able to read and understand fundamental financial statements and that at least one member of the Audit Committee has past employment experience in finance or accounting.

Compensation Committee Information.  The members of the Compensation Committee are Messrs. Zipkin, Liszt and Berman, each of whom is independent for purposes of the Securities Exchange Act of 1934 and applicable Nasdaq rules. Mr. Liszt is the chairperson of the Compensation Committee. The Compensation Committee is responsible for approving the Company’s compensation arrangements with its executive management, including bonus-related decisions and employment agreements with respect to such individuals.  The Compensation Committee met two times during the fiscal year ended December 31, 2022.

The Compensation Committee’s duties, which are specified in the Compensation Committee charter, include, but are not limited to:

Nominating and Governance Committee.  The members of the Nominating and Corporate Governance Committee are Messrs. Zipkin, Liszt and Berman, each of whom is independent for purposes of the Securities Exchange Act of 1934 and applicable Nasdaq rules.  Mr. Liszt is the chairperson of the Nominating and Corporate Governance Committee.  The Nominating and Corporate Governance Committee is responsible for advising the Board of Directors on a broad range of issues surrounding the composition and operation of the Board of Directors and its committees, specifically including identifying criteria for suitable board candidates, identifying individuals suited to service on the board (consistent with those criteria), recommending director candidates to the board and to the shareholders, conducting annual reviews of corporate governance matters and making related recommendations to the Board of Directors and its committees.  The Nominating and Corporate Governance Committee did not meeting during 2022, as it was only recently formed in August 2022.

Communications with Board Members

Our Board of Directors has provided the following process for shareholders and interested parties to send communications to our board or individual directors. All communications should be addressed to Mill City Ventures III, Ltd., 1907 Wayzata Boulevard, Suite 205, Wayzata, MN 55391, Attention: Chief Executive Officer. Communications to individual directors may also be made to such director at our Company’s address. All communications sent to any individual director will be received directly by such individuals and will not be screened or reviewed by any Company personnel. Any communications sent to the board in the care of the Chief Executive Officer will be reviewed by that officer to ensure that such communications relate to the business of the Company before being reviewed by the Board of Directors.

Code of Ethics

Our Board of Directors adopted a revised Code of Ethics in March 2021.  Our Code of Ethics is available at our website, www.millcityventures3.com, or without charge, to any shareholder upon written request made to Mill City Ventures III, Ltd., Attention: Chief Financial Officer, 1907 Wayzata Blvd., Suite 205, Wayzata, MN 55391.

Derivatives Trading, Hedging, and Pledging Policies

Our Policy on Avoidance of Insider Trading provides that none of our executive officers, directors or employees, or household and immediate family members of such individuals and entities that such individuals influence or control (collectively, “Insiders”) may acquire, sell, or trade in any interest or position relating to the future price of Company securities, such as a put option, a call option, or execute a short sale, or engage in hedging or monetization transactions or similar arrangements with respect to Company securities. These prohibitions apply to avoid any appearance that an Insider is trading based on material non-public information and focus his or her attention on short-term performance at the expense of the Company’s long-term objectives.

Nominating Process and Board Diversity

In compliance with Nasdaq Rules 5605(f) and 5606, our Board of Directors has self-reported the diversity characteristics summarized in the Board Diversity Matrix table below.  The Company does not have a member of its Board of Directors who currently qualifies as “diverse” under Nasdaq Rules.

The Nominating and Corporate Governance Committee is responsible for recommending nominees for board membership to fill vacancies or newly created positions, and for recommending the persons to be nominated for election to the Board of Directors. In connection with the selection and nomination process, the Nominating and Corporate Governance Committee expects to review the desired experience, skills, diversity and other qualities to ensure appropriate Board of Directors composition, taking into account the current board members and the specific needs of the Company and our board.  The Board of Directors does not have a formal policy specifying how diversity of background and personal experience should be applied in identifying or evaluating director candidates.

Board Diversity Matrix (as of August 22, 2023)

In compliance with Nasdaq’s “Board Diversity Rule,” the table below provides information regarding the diversity of our directors as of the date indicated below. The information presented below is based on voluntary self-identification responses we received from each director.  Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f).

Total Number of Directors: 5

EXECUTIVE AND DIRECTOR COMPENSATION

Summary Compensation Table

The following table sets forth the total compensation paid by the Company during its two most recent fiscal years ended December 31, 2022 and 2021 to those persons who served as the Company’s Chief Executive Officer and Chief Financial Officer during such periods (collectively, the “named executives”).

____________

Our named executive officers are eligible for retirement benefits under the Company’s defined contribution 401(k) retirement plan. Under this plan, these officers may contribute pre-tax or after-tax compensation to the plan in accordance with current maximum contribution levels proscribed by the Internal Revenue Service. The Company matches voluntary contributions by its named executive officers up to 5% of their base annual salary, subject to applicable regulatory limitations.

The material terms of employment agreements we have with Douglas M. Polinsky, Chief Executive Officer, and Joseph A. Geraci, II, Chief Financial Officer, are discussed below.

Employment Agreements with Named Executives

We entered into new employment agreements with each of the named executives—Messrs. Polinsky and Geraci—that were effective as of November 20, 2019 (unless otherwise indicated),January 1, 2023. Each employment agreement has a term that lasts for two full years thereafter, and ending on December 31, 2024, subject to extension by mutual agreement of the beneficial ownershipparties. Each employment agreement provides the executive with a base annual salary of each current director, each$200,000. Each executive is also entitled to have health insurance provided by us and the ability to contribute to our 401(k) retirement plan.

Each employment agreement contains two-year non-competition and non-solicitation covenants, as well as a customary covenants relating to the confidentiality of Company information. In the event that an executive is terminated for cause, as defined in the employment agreements, or in the event that an executive’s services are terminated due to death or disability, the terminated executive will be entitled to receive only his base annual salary through the date of termination. In the event of other non-cause terminations, we will be obligated to pay the terminated executive’s base annual salary through the remainder of the employment term. Neither employment agreement contains any change-in-control provisions.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information concerning outstanding stock options and restricted stock awards held by our named executive officers as of December 31, 2022:

____________

Director Compensation

During 2022, we paid a total of $417,072 in director fees to our independent directors. Presently, each such director receives an annualized cash fee of $40,000, generally paid in quarterly installments.  In addition, the Compensation Committee awarded each independent director options to acquire 100,000 shares of common stock, with an exercise price of $2.12, each of which became exercisable on the date of grant.

____________

Pay Versus Performance

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive officerscompensation actually paid and directorscertain financial performance of the Company.

____________

____________

____________

Analysis of the Information Presented in the Pay versus Performance Table

In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table above.

Compensation Actually Paid and Cumulative TSR

The following graph sets forth the relationship between Compensation Actually Paid to our PEO, the Compensation Actually Paid to our Non-PEO NEO, and the Company’s cumulative TSR over the two most recently completed fiscal years.

Compensation Actually Paid and Net Income

The graph below sets forth the relationship between Compensation Actually Paid to our PEO, and our Non-PEO NEO, and the Company’s “net income” over the two most recently completed fiscal years.  Because the Company presents its financial statements as a group,an investment company in accordance with the accounting and each shareholderreporting guidance of ASC 946, “net income” in the table is the “net increase in net assets resulting from operations” as reflected in the Company’s audited financial statements for the applicable year.

* Please see the narrative preceding the chart for an explanation of the presentation of the Company’s net income.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED SHAREHOLDER MATTERS

The following table sets forth certain information, as of the date of this proxy statement, with respect to any person (including any “group,” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who is known to managementus to own beneficiallybe the beneficial owner of more than 5% of the issuedany class of our voting securities, and outstandingas to those shares of our equity securities beneficially owned by each of our directors and executive officers and all of our directors and executive officers as a group.  As of the date of this proxy statement, we had 6,385,255 shares of common stock. stock outstanding.

Unless otherwise indicated we believe that the beneficial owners set forth in the table below have sole voting and investment power, andor its footnotes, the business address of each of the following persons or entities is 1907 Wayzata Blvd., Suite 205, Wayzata, Minnesota 55391.

55391, and each such person or entity has sole voting and investment power with respect to the shares of common stock set forth opposite their respective name:

____________

Section 16(a) Beneficial Ownership Reporting Compliance PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

Section 16(a) ofThe federal Dodd-Frank Act requires us to provide our shareholders with an opportunity to cast an advisory vote on the Exchange Act and the disclosure requirements of Item 405 of SEC Regulation S-K require that our directors and executive officers, and any persons holding more than 10% of any class of our equity securities report their ownership of such equity securities and any subsequent changes in that ownershipcompensation we pay to the SEC and to us. Based on a review of the written statements and copies of such reports furnished to us by our executive officers directorsas disclosed in this proxy statement.

We have structured our executive compensation to motivate and greater-than-10% beneficial owners,retain our executive management and thereby increase long-term shareholder value.  See “Executive Compensation” above for a description of the compensation arrangements we have in place with our executives. The Compensation Committee of our Board of Directors intends to continue examining the Company’s executive compensation program periodically as part of its principal goals.

This advisory vote, commonly known as a “say-on-pay” proposal, gives you as a shareholder the opportunity to vote on the compensation of our executive officers through the following resolution:

“RESOLVED, that the shareholders of Mill City Ventures III, Ltd., approve the compensation of its executive officers as described in the proxy statement for its 2023 Annual Meeting.”

Under the Dodd-Frank Act, your vote on this matter is advisory and will therefore not be binding upon the Board of Directors, its Compensation Committee, or our company generally.  Nevertheless, the Compensation Committee will take the outcome of the vote into account when considering executive compensation arrangements in the future.

The Board of Directors recommends that you vote “FOR” approval of the executive compensation disclosed in this Proxy Statement. 

PROPOSAL 3

ADVISORY VOTE ON FREQUENCY OF FUTURE ADVISORY “SAY-ON-PAY” VOTES

Under the Section 14A of the Securities Exchange Act, our shareholders are periodically entitled to cast an advisory vote to indicate the frequency with which we should hold future non-binding votes to approve our executive compensation, or to abstain from voting.  Our shareholders last voted on such a resolution in 2014 (which was the last year in which we held an annual meeting of shareholders), with the majority voting for a frequency of every three years.

At the annual meeting, we are requesting your non-binding vote to determine whether the frequency of our shareholders’ advisory vote to approve the compensation of our named executive officers should be every year, every two years, or every three years.  The Board of Directors and the Compensation Committee believe that during fiscal year 2018 all Section 16(a) filing requirements applicableyour input will allow the Compensation Committee, management, and our shareholders to thecontinue to engage in a timely, open and meaningful dialogue regarding our executive officers, directorscompensation philosophy, policies and shareholders were timely satisfied.practices.

While the Board of Directors intends to carefully consider the shareholder vote resulting from the proposal, the final vote will not be binding on us and is advisory in nature.

OTHER MATTERS

The Board of Directors isbelieves that a three-year vote cycle will balance the interest of the view that management is primarily responsible for all communicationsshareholders in providing regular input on behalf of Mill City with shareholdersexecutive compensation, and the public at large.

Shareholders who wish to communicate with the Board of Directors or with a particular director may send a letter to our any of our executive officers at Mill City Ventures III, Ltd., 1907 Wayzata Boulevard, Suite 205, Wayzata, Minnesota 55391. Any communication should clearly specify that it is intended to be made to the entire Board of Directors or to one or more particular director(s).

Under this process, our officers review all such correspondence and will forward to the Board of Directors a summary of all such correspondence and copies of all correspondence that deals with the functionsinterests of the Board of Directors or committees thereof or thatand shareholders in allowing sufficient time to evaluate the officers otherwise determine requires their attention. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attentionlong-term effectiveness of the ChairmanCompany’s executive compensation philosophy, policies and practices.

The Board of Directors recommends that you vote to hold an advisory vote on the overall compensation of the Audit Committee and Valuation Committee. Company’s executive officers every THREE YEARS.

ANNUAL REPORT ON FORM 10-K/A

A copy of the committee charters and our Code of Ethics is available at our web site atwww.millcityventures3.com.COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022 (WITHOUT EXHIBITS) ACCOMPANIES THIS PROXY STATEMENT. NO PART OF THE ANNUAL REPORT IS INCORPORATED HEREIN AND NO PART THEREOF IS TO BE CONSIDERED PROXY SOLICITING MATERIAL. THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING SOLICITED, UPON WRITTEN REQUEST OF ANY SUCH PERSON, ANY EXHIBIT DESCRIBED IN THE LIST ACCOMPANYING THE FORM 10-K/A. REQUESTS FOR COPIES OF SUCH EXHIBIT(S) SHOULD BE DIRECTED TO THE COMPANY’S CHIEF FINANCIAL OFFICER AT 1907 WAYZATA BOULEVARD, SUITE 205, WAYZATA MN 55391.

Shareholder proposals or nominees forDISCRETIONARY PROXY VOTING AUTHORITY/

UNTIMELY SHAREHOLDER PROPOSALS

Rule 14a-4(c) promulgated under the BoardSecurities Exchange Act of Directors must1934 governs our use of discretionary proxy voting authority with respect to a shareholder proposal that a shareholder has not sought to include in our proxy statement. The Rule provides that if a proponent of a proposal fails to notify us of the proposal at least 45 days before the date of mailing of the prior year’s proxy statement, then the management proxies will be made in accordance withallowed to use their discretionary voting authority when the procedures describedproposal is raised at the meeting, without any discussion of the matter in the following question. proxy statement.

Proposals received from shareholders in accordance with Rule 14a-8 under the Exchange ActWith respect to our 2024 annual shareholder meeting, if we are given careful consideration by our Boardnot provided notice of Directors. If a shareholder intendsproposal which the shareholder has not previously sought to present a proposal atinclude in our nextproxy statement by September 16, 2024, then our management proxies will be allowed to use their discretionary authority as outlined above.  If, however, the date of our 2024 annual shareholder meeting is changed by more than 30 days from the date of this annual meeting of shareholders pursuant to Rule 14a-8 under(i.e., if it is held earlier than October 1, 2024, or later than December 1, 2024), then the Exchange Act, in orderdeadline for suchsubmitting a shareholder proposal to be included in our Proxy Statement for that meeting, the proposal must be received by us at Mill City Ventures III, Ltd., 1907 Wayzata Boulevard, Suite 205, Wayzata, Minnesota 55391, a reasonable amount of time prior to that meeting.  If such proposal is in compliance with all of the requirements of Rule 14a-8 under the Exchange Act, the proposal will be included ina reasonable time before we begin to print and send our Proxy Statement and proxy card relating to suchmaterials for our 2024 annual shareholder meeting. Nothing in the response to this question shall be deemed to require us to include any shareholder proposal that does not meet all the requirements for such inclusion established by the SEC in effect at that time. 

In order for a shareholder proposal submitted outsideSOLICITATION

We will bear the cost of Rule 14a-8, including any nominations forpreparing, assembling and mailing the Boardnotice of Directors made bymeeting, proxy statement, proxy, Annual Report and other material that may be sent to the shareholders in connection with this solicitation. Brokerage houses and other custodians, nominees and fiduciaries may be requested to forward soliciting material to the beneficial owners of Company stock, in which case they may be considered at our next annual meeting of shareholders, such proposal must be made by written notice and receivedreimbursed by us not less than 60 daysfor their expenses in advance of an annual meeting.  Such proposals shoulddoing so. Proxies may be submittedsolicited personally, by certified mail, return-receipt requested.email or by special letter.

OTHER MATTERS/PROPOSALS

Our 2018 Annual Report on Form 10-K containing audited financial statements, and Quarterly Report on Form 10-Q for the periods ended March 31 and June 30, 2019, are available both on our website atwww.millcityventures3.com and at the SEC’s website at www.sec.gov. Additional copies of those reports (without exhibits, unless otherwise requested) are available in print, free of charge, to shareholders requesting a copy by writing to: Mill City Ventures III, Ltd., Investor Relations, 1907 Wayzata Boulevard, Suite 205, Wayzata, Minnesota 55391, or by calling us at (952) 479-1920.

The Board of Directors does not intend to bringand management know of no other matters beforethat will be presented for consideration at the special meeting except items incidental to the conductannual meeting. Nevertheless, because it is possible that matters of the meeting. However, on all other matters properly brought before the meeting, or any adjournments or postponements thereof, bywhich the Board of Directors or others,and management are presently unaware may come before the meeting (or any adjournments), the proxies confer discretionary authority with respect to acting thereon, and the persons named in such properly executed proxies intend to vote, act and consent in accordance with their best judgment with respect thereto. Upon receipt of such proxies (in the form enclosed) in time for voting, the shares represented thereby will be voted as proxiesindicated thereon and in the accompanying proxy or their substitutes, will vote in their discretion.statement.

MILL CITY VENTURES III, LTD.HOUSEHOLDING OF MATERIALS

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 23, 2019
8:00 a.m.

Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement may have been sent to multiple Company shareholders in each household unless otherwise instructed by such Company shareholders. We will deliver promptly a separate copy of the proxy statement to any Company shareholder upon written or oral request to our Chief Financial Officer, at 1907 Wayzata Boulevard, Suite 205, Wayzata MN 55391, telephone: (952) 479-1920. Any shareholder wishing to receive separate copies of our proxy statement or annual report in the future, or any shareholder receiving multiple copies and who would like to receive only one copy per household, should contact their bank, broker, or other nominee record holder, or they may contact us at the above address and phone number.

MILL CITY VENTURES III, LTD.

Annual Meeting of Shareholders

October 31, 2023 at 8:30 a.m. Local Time

THIS PROXY IS SOLICITED ON BEHALF OFBY THE BOARD OF DIRECTORS

The undersigned, a shareholder of Mill City Ventures III, Ltd..,revoking all prior proxies, hereby appoints Douglas M. Polinsky and Joseph A. Geraci, II, and each of them, as proxies, with full power of substitution, as proxy to represent and re-substitution, to vote on behalfall shares of the undersigned the numberCommon Stock of sharesMill City Ventures III, Ltd. (the “Company”), which the undersigned is thenwill be entitled to vote if personally present at the special meetingAnnual Meeting of the shareholders of the companyCompany to be held on October 31, 2023, at the address and8:30 a.m. local time indicated above, and at any and all adjournments thereof.1907 Wayzata Boulevard, Suite 205, Wayzata MN 55391. Each share of Common Stock is entitled to one vote. THE PROXIES ARE FURTHER AUTHORIZED TO VOTE, IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

see reverse for voting instructions.

PROPOSAL: The BoardThis proxy, when properly executed, will be voted as directed. If no direction is made, the proxy shall be voted FOR all nominees, FOR Proposal 2, and 3 YEARS on Proposal 3, and, in the case of Directors recommends a vote FORother matters that legally come before the approval of the withdrawal of the company’s election to be regulatedmeeting, as a business development company under the Investment Company Act of 1940.

said proxies may deem advisable.

The undersigned hereby revokes all previous proxies relating to the shares covered hereby and acknowledges receipt of the Notice and Proxy Statement relating to the special meeting of shareholders. When properly executed,Please date this proxy willand sign your name exactly as it appears hereon.

Signature

Signature (Co-owner)

Dated:

Note: This proxy card must be votedsigned exactly as the name appears hereon. When shares are held jointly, each holder should sign. When signing as an executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by a duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by an authorized person.

VOTING INSTRUCTIONS ON REVERSE

YOUR VOTE IS IMPORTANT

Voting Instructions

You may vote your proxy in the following ways:

CONTROL NUMBER

You may vote by Internet 24 hours a day, 7 days a week. Internet voting is available through 11:59 p.m., Local Time, on the proposal set forth herein as directed by the shareholder. The undersignedOctober 30, 2023.

Your Internet vote authorizes the named proxies to vote in their discretion upon such other businessthe same manner as may properly come before the meeting.if you marked, signed and returned your proxy card.