UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

Filed by the Registrant     x

Filed by Party other than the Registrant     ¨

Check the appropriate box:

MILL CITY VENTURES III, LTD.

(Name of Registrant As Specified In Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

POKER MAGIC, INC.

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

August 31, 2012

Notice is hereby given that a special meeting of the shareholders of Poker Magic, Inc. (the “Company”) will be held at the offices of Maslon Edelman Borman & Brand, LLP, counsel to the Company, at 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota, on Friday, September 7, 2012 at 9:00 a.m. Central Standard Time, for the purpose of considering and voting on a proposal to amend the Articles of Incorporation of the Company, as amended, to effect a 1-for-11 combination (reverse split) of the Company’s common stock.

Shareholders of record at the close of business on August 8, 2012 are entitled to notice of and to vote at the meeting. Under Minnesota law, approval of the proposal at the shareholder meeting requires the affirmative vote of the holders of the greater of a majority of the voting power of the shares present and entitled to vote,ora majority of the voting power of the minimum number of the shares entitled to vote that would constitute a quorum for the transaction of business at the meeting.

The accompanying Proxy Statement contains more information relating to the special meeting.

Approximate date of mailing of proxy materials:

August 20, 2012

Important Notice Regarding the Availability of Proxy Materials for the Special Shareholder Meeting to be held on September 7, 2012:The Proxy Statement for the special meeting is available at [●].

TABLE OF CONTENTSMILL CITY VENTURES III, LTD.

328 Barry Avenue South #210

Wayzata, MN 55391

ExhibitsNOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Exhibit A – Proposed Amendment to Articles of IncorporationTO BE HELD DECEMBER 19, 2014

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

Important Note: A proxy card for votingPlease take notice that the annual meeting of shareholders of Mill City Ventures III, Ltd. will be held, pursuant to due call by the Board of Directors of the company, at the specialcompany’s office at 328 Barry Avenue South, #210, Wayzata, Minnesota 55391, at 9:00 a.m. local time, or at any adjournments thereof, for the purpose of considering and taking action on the following proposals:

Pursuant to action of the Board of Directors, shareholders of record on November 10, 2014, will be entitled to notice of and vote at the meeting is also enclosedand any adjournments or postponements thereof.

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting to be Held on December 19, 2014

The Proxy Statement for the annual meeting, the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and Quarterly Report on Form 10-Q for the period ended September 30, 2014, are included with this notice and are available to you on the Internet. We encourage you to review all of the important information contained in the included materials before voting. To view the Proxy Statement. Your vote is important. Please timely complete, execute and mailStatement on the enclosed proxy card and certification.Internet, please visit https://materials.proxyvote.com/59982U.

By Order of the Board of Directors

Douglas M. Polinsky,Chief Executive Officer

December 1, 2014

PROXY STATEMENT

OF

POKER MAGIC, INC.Mill City Ventures III, Ltd.

For a Special328 Barry Avenue South #210

Wayzata, MN 55391

Annual Meeting of Shareholders

to be held on September 7, 2012

December 19, 2014

VOTING BY PROXY AND REVOCATION OF PROXIES

This Proxy Statement is being furnished by Poker Magic, Inc., a Minnesota corporation, in connection with the solicitation of proxies by the CompanyBoard of proxiesDirectors of Mill City Ventures III, Ltd. for use at the 2014 Annual Meeting of Shareholders to be held at the company’s executive office at 328 Barry Avenue South #210, Wayzata, Minnesota 55391, at 9:00 a.m. local time, for the purpose described inof considering and taking appropriate action with respect to the following:

The approximate date on which this Proxy Statement at a special meeting of shareholders to be held on Friday, September 7, 2012, and at any and all adjournments or postponements thereof. This Proxy Statement and the accompanying proxy card are expectedwere first sent or given to be mailed to Company shareholders on or about August 20, 2012. Throughout this Proxy Statement, the terms “the Company,” “Poker Magic,” “we,” “our,” and “us” refer to Poker Magic, Inc.was December 1, 2014.

PROXIES AND VOTING

Registered shareholders may vote in one of three ways: by completing and returning the enclosed proxy card via regular mail, or by voting via the Internet or by telephone. Specific instructions for using these methods are set forth on the enclosed proxy card. The special meeting will be held atInternet and telephone procedures are designed to authenticate the offices of Maslon Edelman Borman & Brand, LLP, counsel to the Company, at 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota, on Friday, September 7, 2012 at 9:00 a.m. Central Standard Time. The Board of Directors has fixed the close of business on August 8, 2012 as the record date for determining shareholders entitled to notice ofshareholder’s identity and to allow shareholders to vote at the special meeting.

Purpose of the Special Meetingtheir shares and confirm that their instructions have been properly recorded.

The Board of Directors has called a special meeting in conformity with Minnesota Statutes, Section 302A.433, and the requirements of Section 3.2 of the Company’s Amended and Restated Bylaws. The purpose of the special meeting is to consider and vote on whether to amend the Articles of Incorporation of the Company, as amended (the “Articles of Incorporation”), to effect a 1-for-11 combination (reverse split) of the Company’s outstanding common stock (the “Stock Split”). In accordance with Minnesota law and the Company’s bylaws, no other matters may be brought before the special meeting.

Questions and Answers

Why am I receiving this Proxy Statement?

This Proxy Statement contains information related to the solicitation of proxies for use at our special meeting to be held at 9:00 a.m., Central Standard Time, on Friday, September 7, 2012, at the offices of Maslon Edelman Borman & Brand, LLP, the Company’s counsel, located at 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota, for the purpose stated in the Notice of Special Meeting of Shareholders. This solicitation is made by the Company.

Why is the Company holding this special meeting?

To vote on an amendment to the Company’s Articles of Incorporation to effect the Stock Split. The text of the proposed amendment to the Company’s Articles of Incorporation is set forth inExhibit A attached to this Proxy Statement.

Who is entitled to vote at the special meeting?

Only holders of record of our common stock at the close of business on August 8, 2012,November 10, 2014 as the “record date” for the annual meeting. Only holders of the company’s common stock as of the record date, for the special meeting, are entitled to receive notice of and to vote at the special meeting or any adjournment or postponement of the special meeting.

What are the voting rights of shareholders?

Each share of common stock outstanding on the record date entitles its holder to cast one vote on the matter to be voted upon.

Who can attend the special meeting?

Only holders of our common stock at the close of business on August 8, 2012, the record date for the special meeting, or their duly appointed proxies, are authorizedentitled to attend the special meeting. Cameras, recording devices,notice of and other electronic devices will not be permittedentitled to vote at the special meeting. If you hold your shares in “street name” (that is, through a bank, brokerannual meeting 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 special meeting?

The presence at the special 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 August 8, 2012 will constitute a quorum permitting our shareholders to conduct business at the special meeting. We will include abstentions in the number of shares of common stock present at the special meeting for purposes of determining a quorum. We will not include broker non-votes in the number of shares present at the meeting. A broker non-vote occurs when a bank, broker or other nominee holding shares for a beneficial owner has not received instructions from the beneficial owner and does not have discretionary authority to vote the shares. As ofany adjournments thereof. On the record date, there were 11,800,224 shares12,161,939shares of common stock outstanding.

How do I vote my shares of common stock that are held by my bank, broker or other nominee?

If you hold any or all of your shares of common stock through a bank, broker 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 held through a bank, broker or other nominee will depend on their particular voting arrangements.

How do I vote?

You or your duly authorized agent may vote by completing and returning the accompanying proxy card, or you may attend the special meeting and vote in person.

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

Yes. You may revoke a previously granted proxy at any time before it is exercised by submitting to our attorneys, Maslon Edelman Borman & Brand, LLP, at 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota 55402, a notice of revocation or a duly executed proxy (bearing a later date) on or prior to September 6, 2012. You may also revoke a previously granted proxy by attending the special meeting and voting in person.

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 return a proxy card but do not indicate how your shares are to be voted, your proxy card will be voted for the proposal at the special meeting.

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

Our Board of Directors recommends a vote “FOR” the proposal. The factors considered by the board in reaching this determination are described below under the section titled “Recommendation by the Board of Directors.”

Why is the Company seeking approval of the proposed amendment?

Minnesota Statutes, Section 302A.402, subdivision 2, requires an amendment to the Articles of Incorporation to be approved by shareholders in order to effect a share combination (reverse stock split) if the percentage of authorized shares remaining unissued after the combination will exceed the percentage of authorized shares unissued prior to the combination. In the case of the proposed Stock Split, the percentage of authorized shares remaining unissued after the Stock Split (if approved) will exceed the percentage of authorized shares unissued prior to the Stock Split. Accordingly, the Company is seeking shareholder approval for the Stock Split.

What if the proposed amendment is not approved?

If the proposal is not approved, the Stock Split will not be consummated.

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 special meeting?

Preliminary voting results will be announced at the special meeting, if available. Preliminary results, if necessary, and final results will be reported on a Form 8-K filed with the SEC within four days of the date of the meeting.

Whom should I contact if I have any questions?

If you have any questions about the special meeting, the proxy materials or your ownership of our common stock, please contact Lindsey R. Day of Maslon Edelman Borman & Brand, LLP, counsel to the Company, at (612) 672-8366.

Voting at the Special Meeting

At the meeting, the shareholders of the Company will be asked to approve a proposed amendment to our Articles of Incorporation that would effect a 1-for-11 combination (reverse split) of the Company’s outstanding common stock. For our shareholders to approve this proposed amendment, Minnesota law requires the affirmative vote of the holders of the greater of: (i) a majority of the voting power of the shares present and entitled to vote,or (ii) a majority of the voting power of the minimum number of the shares entitled to vote that would constitute a quorum for the transaction of business at the meeting.

If, but only if, the required vote is obtained at the special meeting, then the Company’s Articles of Incorporation will be amended by a filing with the Minnesota Secretary of State.

As of August 8, 2012, the record date for the special meeting, there were 11,800,224 shares ofcompany common stock issued and outstanding. Each such share of common stock is a voting share that entitles the holder thereof to one vote on the proposal for considerationupon each matter to be presented at the specialannual meeting.

A quorum, for the conductconsisting of business at the special meeting will exist if at least a majority of the voting power (or 5,900,113issued and outstanding shares of company common stock)stock entitled to vote at the annual meeting, is represented at the meeting, eithermust be present in person or represented by proxy. The holders of a majority of the voting power representedproxy before action may be taken at the meeting, whether in person or by proxy, and regardless of whether a quorum is present, may adjourn the special meeting from time to time.annual meeting.

Whether or not you planEach proxy returned to attend the special meeting, the board urges you to vote your shares on the accompanying proxy card and return it in the enclosed envelope. The board is recommending that you vote “FOR” the proposed amendment. You may revoke a previously granted proxy at any time before it is exercised by submitting to our attorneys, Maslon Edelman Borman & Brand, LLP, at 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota 55402, a notice of revocation or a duly executed proxy (bearing a later date) on or prior to September 6, 2012.

You may also revoke a previously submitted proxy by voting in person at the meeting, although attendance at the meeting will not, by itself, revoke a proxy. Unless revoked in the manner set forth above, proxies received by the Company on the accompanying formus will be voted at the special meeting only in accordance with the written instructions set forth onindicated thereon. If a shareholder gives no direction, the proxy card. Inshares will be voted as recommended by our Board of Directors. If any nominee for the absenceBoard of written instructions,Directors should withdraw or otherwise become unavailable for reasons not presently known, the proxies in the form accompanying this Proxy Statementthat would have otherwise been voted for such nominee will be voted for such substitute nominee as may be selected by the proposed amendment to the Company’s ArticlesBoard of Incorporation.

Any abstentionDirectors. If a shareholder abstains from voting on a proxy that has not been revokedany matter, the abstention will be included in computing the number of voting shares presentcounted for purposes of determining whether a quorum is present at the specialmeeting for the transaction of business as well as shares entitled to vote on that matter. On matters other than the election of directors, an action of the shareholders generally requires the affirmative vote of a majority of shares present in person or represented by proxy at the annual meeting and entitled to vote on the matter. Accordingly, an abstention on any matter other than the election of directors will have the same effect as a vote “AGAINST”against that matter. A non-vote occurs when a nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the proposal. When brokersnominee does not have discretionary voting power and has not received instructions from the beneficial owner. Broker non-votes on a matter are counted as present for purposes of establishing a quorum for the meeting, but are not considered entitled to vote on that particular matter. Consequently, non-votes generally do not receivehave the same effect as a negative vote on the matter.

A shareholder giving a proxy may revoke it at any time before it is exercised by (i) giving written notice of revocation to an executive officer of the company, (ii) delivering a duly executed proxy bearing a later date, or (iii) voting in person at the annual meeting. A shareholder’s mere presence at the annual meeting does not, alone, revoke a proxy previously signed and delivered by that shareholder. Instead, that shareholder must announce any revocation of the proxy at the time of the annual meeting. Unless so revoked, the shares represented by each proxy will be voted at the annual meeting and at any adjournments thereof. No dissenters’ rights of appraisal exist with respect to any matter to be voted upon at the meeting.

NOTICE TO BENEFICIAL OWNERS OF SHARES HELD IN BROKER ACCOUNTS

New York Stock Exchange Rule 452 prohibits NYSE member organizations from giving a proxy to vote with respect to an election of directors (Proposal One) without receiving voting instructions from a customer, theybeneficial owner. Because NYSE Rule 452 applies to all brokers that are permittedmembers of the NYSE, this prohibition applies to and generally do, exercise discretionary voting authority with respect toour annual meeting even though the customer’scompany’s shares are not listed on “routine” matters being voted on at a meeting. The special meeting does not involve any “routine matters.” As a result,the New York Stock Exchange. Therefore, brokers will not be permittedentitled to exercise discretionary voting authority onvote shares at the proposed amendment and there will be no “broker non-votes” involved inannual meeting with respect to Proposal One without instructions by the special meeting.beneficial owner of the shares.AS A RESULT, BENEFICIAL OWNERS OF SHARES HELD IN BROKER ACCOUNTS ARE ADVISED THAT, IF THEY DO NOT TIMELY PROVIDE INSTRUCTIONS TO THEIR BROKER, THEIR SHARES WILL NOT BE VOTED IN CONNECTION WITH THE ELECTION OF DIRECTORS.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The BoardWe have one class of Directors has appointed Maslon Edelman Borman & Brand, LLP, our legal counsel, as Inspector of Election. The board may, if it deems it appropriate, appoint a presiding inspector to oversee the Inspector of Election. The Inspector of Election will, among other things, determine whether a quorum is present, tabulate votes at the special meeting and resolve disputes.

If the Inspector of Election cannot definitively determine whether a quorum is present, the business of the special meeting will go forward, even though the final determination as to whether the quorum is present may not be completed for a number of days. If the quorum requirement is not met, the proposed amendment shall not be considered to have been approved. No other business is expected to be conducted at the special meeting.

Common Stock Outstanding and Eligible to be Voted

Allvoting securities outstanding, common stock, will be entitled to be voted at the special meeting, with each such share being entitled to one vote per share. As$0.001 par value, of August 8, 2012, the record date for the meeting, therewhich 12,161,939 shares were issued and outstanding 11,800,224 shares of common stock, all of which are eligible to be voted on the proposed amendment to the Company’s Articles of Incorporation.

~ Proposal One ~

Approval of an Amendment to the Articles of Incorporation

to Effect a Reverse Stock Split of the Company’s Outstanding Common Stock

on a 1-for-11 Share Basis

General

The Board of Directors is recommending that the Company’s shareholders approve a proposed amendment to the Articles of Incorporation to implement a reverse split of the Company’s outstanding common stock, par value $0.001 per share, on a 1-for-11 share basis, but without reducing the number of authorized shares of capital stock that the Company may issue. Here and in other parts of this Proxy Statement, we refer to this as the “Stock Split.”

Based on the number of shares currently issued and outstanding, immediately following the effectiveness of the Stock Split the Company would have approximately 1,072,748 shares of common stock issued and outstanding (without giving effect to rounding for fractional shares). If approved by the shareholders at the special meeting, the Stock Split will be effective upon the filing of an amendment to the Articles of Incorporation with the Minnesota Secretary of State. A form of the proposed amendment is attached to this Proxy Statement asExhibit A.

The Board of Directors reserves the right, notwithstanding shareholder approval and without further action by shareholders, to elect not to proceed with the Stock Split if the board should later determine that the Stock Split is no longer in the best interests of the Company.

The number of shares which will result in fractional interests cannot be precisely predicted as the Company cannot determine in advance the number of shareholders whose total shareholdings are not evenly divisible by the exchange ratio. It is not anticipated that a substantial number of shares will be required to be issued as a result of the rounding up of fractional shares that would otherwise result from the Stock Split.

Material Effects of the Stock Split

The Stock Split will be realized simultaneously for all of the Company’s common stock, and the ratio will be the same for all of the Company’s common stock. The Stock Split will affect all of the Company’s shareholders uniformly and will not affect any shareholder’s percentage ownership interest in the Company, except to the extent that the Stock Split would otherwise result in any of the Company’s shareholders owning a fractional share or option. If, as a result of the Stock Split, any shareholder is entitled to receive less than a full share of common stock (i.e., a fractional share), the fractional share to which he, she or it is entitled shall be rounded up to the nearest whole share. In addition, the Stock Split will not affect any shareholder’s proportionate voting power (subject to the treatment of fractional shares). However, because the number of authorized shares of the Company’s common stock will not be reduced, the Stock Split will increase the Board of Directors’ ability to issue authorized and unissued shares without further shareholder action.

The primary effects of the Stock Split will be that:

In addition to the foregoing, the increased proportion of unissued authorized shares to issued shares may, under certain circumstances, have an anti-takeover effect. For example, it may permit issuances of common stock that would dilute the stock ownership of a person seeking to effect a change in the composition of the Company’s Board of Directors or contemplating a tender offer or other takeover or change-in-control transaction involving the Company. Nevertheless, the Stock Split is not being proposed in response to any known effort to accumulate our common stock or obtain control of the Company, nor is it part of a plan by management to recommend to the Board of Directors or the shareholders a series of amendments to the Company’s Articles of Incorporation. Other than the Stock Split, the Board of Directors does not currently contemplate recommending the adoption of any other amendments to our Articles of Incorporation that may be construed to affect the ability of third parties to take over or change the control of the Company.

Potential Factors Weighing in Favor of the Proposed Amendment

Potential Factors Weighing Against the Proposed Amendment

Federal Income Tax Consequences of the Stock Split

The following summary of the material federal income tax consequences of a reverse stock split is based on current law, including the Internal Revenue Code of 1986, as amended (the “Code”), and is for general information only. The tax treatment of a shareholder may vary depending upon the particular facts and circumstances of such shareholder, and the discussion below may not address all the tax consequences for a particular shareholder. For example, foreign, state and local tax consequences are not discussed below. The summary does not address the tax consequences to shareholders that are subject to special tax rules, such as banks, insurance companies, regulated investment companies, personal holding companies, foreign entities, nonresident alien individuals, broker-dealers and tax-exempt entities. Accordingly, notwithstanding anything to the contrary, each shareholder should consult his, her or its tax advisor to determine the particular tax consequences of a reserve stock split to him, her or it, including the application and effect of federal, state, local and/or foreign income tax and other laws. The following summary assumes that shares of common stock are held as “capital assets” within the meaning of the Code.

We believe the Stock Split will constitute a reorganization as described in Section 368(a)(1)(E) of the Code. Accordingly, we will not recognize taxable income, gain or loss in connection with the Stock Split.

Generally, a reverse split will not result in the recognition of gain or loss or dividend income to a shareholder for federal income tax purposes. The adjusted basis of the new shares of common stock will be the same as the adjusted basis of old shares of common stock for which the new shares of common stock are exchanged. The holding period of the new, post-split shares of common stock resulting from implementation of the reverse split will include the shareholder’s respective holding period(s) for the pre-split shares of common stock for which the new shares of common stock are exchanged.

We are required to furnish to the record holders of common stock, other than corporations and other exempt holders, and to the IRS, information with respect to dividends paid on the common stock. You may be subject to backup withholding with respect to proceeds received from a disposition of the shares of common stock. Certain holders (including, among others, corporations and certain tax-exempt organizations) are generally not subject to backup withholding. You will be subject to backup withholding if you are not otherwise exempt and you (a) fail to furnish your taxpayer identification number, which, for an individual, is ordinarily his or her social security number; (b) furnish an incorrect taxpayer identification number; (c) are notified by the IRS that you have failed to properly report payments of interest or dividends; or (d) fail to certify, under penalties of perjury, that you have furnished a correct taxpayer information number and that the IRS has not notified you that you are subject to backup withholding. Backup withholding is not an additional tax but, rather, is a method of tax collection. You generally will be entitled to credit any amounts withheld under the backup withholding rules against your United States federal income tax liability provided that the required information is furnished to the IRS in a timely manner.

Recommendation by the Board of Directors

After consideration, the Board of Directors has determined to advise shareholders to vote “FOR” the proposed amendment. In evaluating the proposed amendment and determining to express this opinion, the Board of Directors considered each of the factors set forth above under the captions “Potential Factors Weighing in Favor of the Proposed Amendment” and “Potential Factors Weighing Against the Proposed Amendment.“ The board recognizes that an individual shareholder’s decision on the question is likely to depend primarily on how the shareholder weighs these factors in addition to any other factors that the shareholder may consider relevant. Accordingly, the board urges each shareholder to make his, her or its own decision regarding the proposed amendment based on all available information.

The Board of Directors did not find it practicable, and did not attempt, to quantify, rank or otherwise assign relative weight to these factors, and different members of the board may have given different weight to the different factors.

Admittance to Special Meeting

You are entitled to attend the special meeting only if you were a shareholder of the Company as of the close of business on August 8, 2012 (the record date) or hold a valid legal proxy for the special meeting. You should be prepared to present photo identification for admittance. In addition, if you are a record holder, your name will be verified against the list of record holders on the record date prior to being admitted to the special meeting. If you are not a record holder but holddate. Each share of common stock throughis entitled to one vote on all matters put to a broker or nominee (i.e., in street name), you must provide proofvote of beneficial ownership on the record date, such as your most recent account statement prior to the record date, or other similar evidence of ownership. If you do not provide photo identification or comply with the other procedures outlined above upon request, you may not be admitted to the special meeting.

Voting, Solicitation and Certain Other Information

Proxies may be solicited by mail. Presently, we do not anticipate that we will solicit proxies by any other means. No person will receive additional compensation for any proxy solicitations. The Company has requested banks, brokerage houses and other custodians, nominees and fiduciaries to forward all of its solicitation materials to the beneficial owners of the common stock they hold of record. The Company will reimburse these record holders for customary clerical and mailing expenses incurred by them in forwarding these materials to their customers.shareholders.

The entire expensefollowing table sets forth, as of November 13, 2014, the beneficial ownership of each current director, each nominee for director, our named executive officers, each person known to us to beneficially own 5% or more of the solicitation of proxies on behalf of the Company for the special meeting is being borne by the Company. The Company’s costs incidental to this proxy solicitation include expenditures for printing, postage, legal and related expenses, and are expected to be approximately $30,000.

No Dissenters’ Rights

Pursuant to Minn. Stat. 302A.471, subd. 1, dissenters’ rights are not available to the Company’s shareholders as a result of the proposed amendment to the Company’s Articles of Incorporation relating to the Stock Split.

No Other Matters at the Special Meeting

Other than the proposed amendment to our Articles of Incorporation, the Company is not aware of any other matters to be submitted at the special meeting and no other business is expected to be brought before the meeting. However, if any other matter properly comes before the meeting, the named proxies will vote all proxies granted to them in their sole discretion.

Beneficial Ownership of Securities

The table below sets forth certain information with respect to beneficial ownershipoutstanding shares of our common stock, and the executive officers and directors as of July 31, 2012, on which date there were 11,800,224 shares of common stock outstanding, by:

a group. Unless otherwise indicated in the table or its footnotes, the business address of each of the following persons or entities is 130 West Lake Street, Suite 300,328 Barry Avenue S., #210, Wayzata, Minnesota 55391, and each such person or entity has sole voting and investment power with respect to the shares of common stock set forth opposite their respective name.

_____________

PROPOSAL ONE – ELECTION OF DIRECTORS

We currently have five directors serving on our board. Each of our current directors has been nominated for re-election at the annual meeting. If elected, each nominee has consented to serve as a director and to hold office until the next annual shareholders’ meeting, until his successor is elected and shall have qualified, or until his earlier death, resignation, removal or disqualification.

The following paragraphs provide information as of the date of this Proxy Statement about each nominee. The information presented includes information that each nominee has given us about his age, all positions he holds with the company, his principal occupation and business experience for the past five years, and the names of other publicly held companies of which he currently serves as a director or has served as a director during the past five years.

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 the our business and structure, the Board of Directors focuses primarily on the industry and transactional experience, and other background, in addition to any unique skills or attributes associated with a director. With regard to Messrs. Polinsky and Geraci, the Board of Directors considered their significant experience, expertise and background with regard to investing in general and the company in particular. With regard to Mr. Larson, the Board of Directors considered his background and experience with the public securities markets and his former employment and experience in operational and financial capacities, as both a Chief Executive and Chief Financial Officer. With regard to Mr. Liszt, the Board of Directors 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 of Directors considered his knowledge, experience and skills in the finance, public securities and investment banking fields.

Of the directors presently serving on the board and the nominees, Messrs. Larson, Liszt and Zipkin are “independent” as that term is defined in Section 5205(a) of Nasdaq listing rules, and not “interested persons” as that term is defined in the Investment Company Act of 1940. Our company is not, however, subject to the Nasdaq listing rules because its common stock is not listed for trading on any Nasdaq market.

Vote Required

Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. The nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the five nominees named above. If you do not vote for a particular nominee, or you withhold authority for one or all nominees, your vote will not count either “for” or “against” the nominee, although it will be counted for purposes of determining whether there is a quorum. If any director-nominee should withdraw or otherwise become unavailable for reasons not presently known, the proxies which would have otherwise been voted for that director nominee may be voted for a substitute director nominee selected by the our Board of Directors.

The Board of Directors recommends that you vote FOR the election of

each of the above-identified director-nominees.

PROPOSAL TWO –Ratification of

Appointment of Independent Registered Public Accounting Firm

Our Board of Directors and management are committed to the quality, integrity and transparency of the company’s financial reports. In accordance with the duties set forth in its written charter, the board’s Audit Committee has appointed Baker Tilly Virchow Krause, LLP as the company’s independent registered public accounting firm for the 2014 fiscal year. A representative of Baker Tilly Virchow Krause, LLP is expected to attend this year’s annual meeting and be available to respond to appropriate questions from shareholders, and will have the opportunity to make a statement if he or she desires to do so.

Fees Billed to Company by Its Independent Registered Public Accounting Firm

The following table presents aggregate fees billed by Baker Tilly Virchow Krause, LLP for professional audit services rendered during fiscal years 2013 and 2012:

Cautionary Statement Regarding Forward-Looking InformationThe Audit Committee has reviewed the services provided by Baker Tilly Virchow Krause, LLP during fiscal year 2013 and 2014 and the fees billed for such services. After consideration, the Audit Committee has determined that the receipt of these fees by Baker Tilly Virchow Krause, LLP is compatible with the provision of independent audit services. The Audit Committee discussed these services and fees with Baker Tilly Virchow Krause, LLP and management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act of 2002, as well as the American Institute of Certified Public Accountants.

ThisPre-Approval Policy

Our Audit Committee or the entire Board of Directors endeavors to approve in advance all services provided by our independent registered public accounting firm. All engagements of our independent registered public accounting firm in years ended 2012 and 2013 were approved by the Audit Committee. The Audit Committee did not pre-approve the rendering of services during 2014, but approved such services in a December 2014 meeting held prior to the annual meeting of shareholders.

Vote Required

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to ratify the appointment of Baker Tilly Virchow Krause, LLP as the company’s independent registered public accounting firm for fiscal 2014. If the shareholders do not ratify the appointment of Baker Tilly Virchow Krause, LLP, the Audit Committee may reconsider its selection, but is not required to do so. Notwithstanding the proposed ratification of the appointment of Baker Tilly Virchow Krause, LLP by the shareholders, the Audit Committee, in its discretion, may direct the appointment of new independent auditors at any time during the year without notice to, or the consent of, the shareholders, if the Audit Committee determines that such a change would be in the best interests of the company and its shareholders.

The Board of Directors recommends that you vote FOR the ratification of Baker Tilly Virchow Krause, LLP

as the company’s independent registered public accounting firm for fiscal 2014.

PROPOSALTHREE – Approval of Amendment TO Bylaws

The Board of Directors is recommending an amendment to the company’s bylaws to ensure that the composition of the Board of Directors complies with certain requirements of the Investment Company Act of 1940. The proposed amendment provides that, subject to the exceptions set forth in Section 56(b) of the Investment Company Act of 1940, a majority of the directors comprising the Board of Directors must not be “interested persons” as that term is defined in the Investment Company Act of 1940. In this regard, Section 2(a)(19) of the Investment Company Act of 1940, in pertinent part, defines an “interested person” of our company as follows:

The Board of Directors believes that shareholders’ best interests are served by approving the proposed amendment to the bylaws. If adopted, the company does not anticipate that the newly adopted bylaw would have any impact on the Board of Directors as presently composed, and as proposed to be composed under Proposal One above.

The text of the proposed amendment, which is to be added as a new sentence to Section 4.1 of our bylaws, is set forth below:

“At all times during which the corporation shall have an effective election to be a “business development company” under Section 54 of the Investment Company Act of 1940, a majority of directors serving on the Board shall not be “interested persons” of the corporation, as such term is defined in the Investment Company Act of 1940, subject, however, to the permitted exceptions to the requirement under such Act that a majority of directors not be “interested persons” of the corporation (which exceptions are set forth in Section 56(b) of such Act).”

Section 56(b) of the Investment Company Act of 1940 presently contains the following requirements and exceptions:

“If, by reason of the death, disqualification, or bona fide resignation of any director or general partner, a business development company does not meet the requirements of subsection (a) of this section [that a majority of its directors be persons other than interested persons], or the requirements of section 15(f)(1) of this title with respect to directors, the operation of such provisions shall be suspended for a period of 90 days or for such longer period as the Commission may prescribe, upon its own motion or by order upon application, as not inconsistent with the protection of investors.”

Vote Required

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to approve the proposed amendment to the company’s bylaws. If approved, the amendment will be effective immediately.

The Board of Directors recommends that you vote FOR the proposed amendment to the bylaws.

PROPOSAL FOUR –Advisory Vote on Executive Compensation

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, our shareholders are entitled to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement contains certainin accordance with applicable SEC rules. We refer to this advisory vote as the “say-on-pay” vote. This “say-on-pay” vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the compensation philosophy, policies and practices of our company described in this Proxy Statement.

Consistent with this right to give an advisory “say-on-pay” vote, we are asking shareholders to indicate their support at the annual meeting for the compensation of our named executive officers as described in this Proxy Statement by casting an advisory vote “FOR” the following resolution:

“RESOLVED, that the shareholders approve the compensation of the “named executive officers” of Mill City Ventures III, Ltd., as disclosed in the section entitled “Executive Compensation” in the Proxy Statement for such company’s 2014 annual meeting of shareholders pursuant to the SEC’s compensation disclosure rules.”

The compensation of our named executive officers is disclosed in the section entitled “Executive Compensation” below, including the tabular and narrative disclosures set forth in such section.

Vote Required

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to approve, on an advisory basis, the compensation of our named executive officers as described herein. Because the vote is advisory, it will not be binding on the company, our Board of Directors or the Compensation Committee. Nevertheless, the views expressed by our shareholders, whether through this vote or otherwise, are important to us and, accordingly, the Board of Directors and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.

The Board recommends that you vote FOR the proposal to approve the compensation of our

named executive officers, as described in this Proxy Statement.

PROPOSAL FIVE –Advisory Vote on the

Frequency of Advisory Votes on Executive Compensation

The Dodd-Frank Act also enables our shareholders to indicate how frequently we should seek an advisory vote on the compensation of our named executive officers, as disclosed in accordance with the SEC’s compensation disclosure rules, such as Proposal Four. In particular, we are asking whether the advisory vote should occur every three years, every two years, or every year.

The optimal frequency of the advisory vote on executive compensation depends on a balancing of the benefits and burdens of more or less frequent votes. Some observers (not of our company in particular, but of the general requirement under the Dodd-Frank Act to obtain an advisory say-on-pay vote) have expressed a belief that less frequent votes are appropriate as they enable shareholders to focus on a company’s overall compensation program design, as opposed to short-term decisions, and provide sufficient time to evaluate how a company’s compensation programs drive longer-term performance and the creation of longer-term shareholder value. Many also believe that a less frequent voting cycle will give companies sufficient time to respond thoughtfully to shareholder views and to implement any necessary changes to executive compensation programs and allow shareholders to evaluate the results of these changes before the next shareholder advisory vote.

On the other hand, other observers believe more frequent shareholder votes are better since they provide shareholders with the opportunity to react promptly to emerging trends in compensation and to provide rapid feedback to companies with respect to their views on the effectiveness and appropriateness of their executive compensation programs. According to this view, more frequent feedback would provide our Board of Directors and Compensation Committee with the opportunity to evaluate individual compensation decisions each year in light of the shareholder feedback and to better incorporate current shareholder views into companies’ compensation programs.

At this time, our Board of Directors believes that the most appropriate outcome at this time is to have a shareholder advisory vote on compensation every three years, to best enable shareholders to evaluate the effect of our compensation on company performance and shareholder value.

You may cast your vote on your preferred voting frequency by choosing the option of three years, two years, one year, or abstain from voting when you vote on this proposal.

Vote Required

The option of three years, two years, or one year that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation selected by shareholders. As with your vote on Proposal Four, your vote on this Proposal Five is advisory, and therefore not binding on the company, the Compensation Committee, or our Board of Directors, and the Board of Directors may decide that it is in the best interests of our shareholders and the company to hold an advisory vote on executive compensation more or less frequently than the option approved by our shareholders. However, our Board of Directors and our Compensation Committee value the opinions of our shareholders and we will take our shareholders’ preferences into account in making determinations regarding the frequency of the say-on-pay vote.

The Board of Directors recommends that shareholders vote for a frequency of “THREE YEARS”

for future advisory shareholders votes on executive compensation.

OTHER MATTERS

The Board of Directors is not aware of any matter to be presented for action at the annual meeting other than the proposals described above. Although the Board of Directors knows of no other matters to be presented at the annual meeting, all proxies returned to us will be voted on any such matter in accordance with the judgment of the proxy holders.

EXECUTIVE OFFICERS AND DIRECTORS

Each of our current directors has been nominated for reelection at the annual meeting. We currently have five directors, three of whom—Messrs. Liszt, Larson and Zipkin—are “independent” as that term is defined in Section 5605(a) of the Nasdaq listing rules. None of our independent directors are “interested persons” as that term is defined in the Investment Company Act of 1940. We are not subject to Nasdaq listing rules, however, because our common stock is not listed for trading on a Nasdaq market. Based upon information requested from each such director concerning his background, employment and affiliations, our Board of Directors has affirmatively determined that none of the independent directors has a material business or professional relationship with the company, other than in his capacity as a director.

CORPORATE GOVERNANCE; BOARD LEADERSHIP STRUCTURE

Our business, property and affairs are managed under the direction of our Board of Directors. Members of our Board of Directors are kept informed of our business through discussions with our Chairman and Chief Executive Officer, Chief Financial Officer, our Chief Compliance Officer and any other officers and employees, and by reviewing materials provided to them and participating in meetings of our Board of Directors and its committees. Under our bylaws, directors serve for indefinite terms expiring upon the next annual meeting of our shareholders.

Our Board of Directors currently combines the role of Chairman of the Board of Directors with the role of Chief Executive Officer. Our Board of Directors believes this provides an efficient and effective leadership model for our company. Combining these roles fosters clear accountability, effective decision-making, and alignment on corporate strategy. Since 2006, Mr. Polinsky has served as both our Chairman and Chief Executive Officer. Mr. Polinsky is an “interested person” as that term is defined in the Investment Company Act of 1940.

During 2013, our Board of Directors held two full board meetings and acted by written consent on approximately 14 occasions. All of the directors attended both of the full board meetings. In addition, each committee of the Board of Directors acted by written consent during 2013. Each director makes a diligent effort to attend all board and committee meetings, as well as our annual meeting of shareholders. In furtherance of this effort and expectation, our board has adopted a Board Meeting Policy affirmatively encouraging directors to attend or participate in meetings of the board and applicable committees whenever possible, and requiring directors to cause the company to comply with the requirements under Section 32(a) of the Investment Company Act of 1940.

Board Oversight of Risk

While risk management expectationsis primarily the responsibility of our management team, our Board of Directors is responsible for oversight of the material risks faced by us at both the full board level and at the committee level. Our board’s Audit Committee has oversight responsibility not only for financial reporting with respect to our major financial exposures and the steps management has taken to monitor and control such exposures, but also for the effectiveness of management’s enterprise risk management process that monitors and manages key business risks facing our company. In addition, the other committees of our Board of Directors consider the risks within their areas of responsibility. For example, the board’s Compensation Committee considers the risks that may constitute forward-looking information withinbe implicated by our executive compensation program. Finally, management provides regular updates throughout the meaningyear to our Board of Section 27ADirectors regarding the management of the Securities Actrisks they oversee at each regular board meeting.

Board Committees

Our Board of 1933, Section 21EDirectors has established an Audit Committee, a Compensation Committee and a Valuation Committee. A brief description of each committee is included in this proxy statement and the charters of the Audit and Compensation Committees are available on the Investor Relations section of our website athttp://www.millcityventures3.com/investor-relations/.

Audit Committee

The members of the Audit Committee are Laurence S. Zipkin, Christopher M. Larson and Howard P. Liszt, each of whom is independent for purposes of the Securities Exchange Act of 1934 and not “interested persons” for purposes of the Private Securities Litigation ReformInvestment Company Act of 1995. Forward-looking1940. Mr. Zipkin currently serves as chair of the Audit Committee.

The Audit Committee (which must include a majority of the independent directors who are not “interested persons” serving on board in order to comply with applicable requirements under the Investment Company Act of 1940) is responsible for approving our independent accountants and submission to the shareholders for ratification, if any, reviewing with its independent accountants the plans and results of the audit engagement, approving professional services provided by its independent accountants, reviewing the independence of its independent accountants and reviewing the adequacy of its internal accounting controls. 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 of Directors has determined that Mr. Zipkin is an “audit committee financial expert” within the meaning of the rules of the Securities and Exchange Commission. Mr. Zipkin’s relevant experience is detailed in his biography above. The board 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

The members of the Compensation Committee are Messrs. Larson, Zipkin and Liszt, each of whom is independent for purposes of the Securities Exchange Act of 1934 and not “interested persons” for purposes of the 1940 Act. Mr. Zipkin currently serves as chair of the Compensation Committee. The Compensation Committee is responsible for approving our compensation arrangements with executive management, including bonus-related decisions and employment agreements with respect to such individuals. The committee has a Compensation Committee Charter, the purpose of which is to assist the committee and the board in fulfilling its oversight responsibilities related to our compensation and compensation structure, including equity compensation, if any, paid by us.

Our processes and procedures for consideration and determination of executive and director compensation include:

Valuation Committee

The members of the Valuation Committee are Messrs. Larson, Zipkin and Liszt, each of whom is independent for purposes of the Securities Exchange Act of 1934 and not “interested persons” for purposes of the Investment Company Act of 1940. Mr. Liszt currently serves as chair of the Valuation Committee. The Valuation Committee is responsible for approving the fair value of debt and equity securities comprising our investment portfolio, pursuant to our written valuation policy and related procedures.

Code of Ethics

On August 5, 2008, our Board of Directors adopted a Code of Ethics, which covers our principal executive and financial officers, or persons performing similar functions, as required by Sections 406 and 407 of the Sarbanes-Oxley Act of 2002. 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 Executive Officer, 328 Barry Ave. S., Suite 210, Wayzata, MN 55391. We adopted a new Code of Ethics in March, 2013 in connection with our election to become a business development company. The new Code of Ethics was prepared in order to comply with the requirements applicable to business development companies under Section 17 of the Investment Company Act of 1940. In this regard, we have also implemented procedures designed to help foster compliance with the provisions of the new Code of Ethics.

Director Nomination Procedures

Our Board of Directors does not have a nominating committee. Nevertheless, each of our directors participates in our director-nomination process, except with respect to each of his or her own nomination. 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, and other background, in addition to any unique skills or attributes associated with a particular director or nominee. We have not had any material changes to the procedures for shareholder nominations of candidates to serve on our Board of Directors during the fiscal year ended December 31, 2013.

Related-Party Transaction Policy

The Board of Directors has adopted a written Conflict of Interest and Related-Party Transaction Policy. That policy governs the approval of all related-party transactions, subject only to certain customary exceptions (e.g., compensation, certain charitable donations, transactions made available to all employees generally, etc.). The policy contains a minimum dollar threshold of $5,000.

The entire Board of Directors administers the policy and approves any related-party transactions, subject to conflicting or additional requirements under the Investment Company Act of 1940, our written Code of Ethics, or our other written policies and procedures. In general, after full disclosure of all material facts, review and discussion, the Board of Directors approves or disapproves related-party transactions by a vote of a majority of the directors who have no interest in such transaction, direct or indirect. Procedurally, no director is allowed to vote in any approval of a related-party transaction for which he is the related party, except that such a director may otherwise participate in a related discussion and shall provide to the Board of Directors all material information speaksconcerning the related-party transaction and the director’s interest therein. If a related-party transaction will be ongoing, the Board of Directors may establish guidelines for management to follow in its ongoing dealings with the related party.

Potential Conflicts of Interest

The Board of Directors has recently amended its Conflict of Interest and Related-Party Transaction Policy to require disclosure in the company’s periodic SEC filings of any potential conflicts of interest—e.g., investments by our management or our directors, directly or indirectly, in any of our portfolio companies—that are more thande minimis in nature or amount.

Communication with the Board

We believe that communications between our Board of Directors, our shareholders and other interested parties are an important part of our corporate governance process. Shareholders with questions about our company are encouraged to contact us. If shareholders believe that their questions have not been addressed, they may communicate with our Board of Directors by sending their communications to Mill City Ventures III, Ltd., Attention: Chief Executive Officer, 328 Barry Avenue South #210, Wayzata, MN 55391.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and beneficial owners of more than 10% of our common stock to file with the SEC certain reports regarding their ownership of common stock or any changes in such ownership. Based on our own review, we believe that each of the following persons made late filings with respect to events or transactions occurring during 2013, as follows: Joseph D. Hammer’s initial filing on Form 3 relating to his appointment to our Board of Directors was due on March 11, 2013, but not filed until May 9, 2013; and Neal Linnihan’s and Scott Zbikowski’s Form 3s relating to their respective acquisitions of our common stock in a private placement were due on March 18, 2013, but not filed until March 20, 2013.

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the total compensation paid by us during our two most recent fiscal years ended December 31, 2013 and 2012 to those persons who served as our President or Chief Executive Officer and Chief Financial Officer during such periods (collectively, the “named executives”).

Employment Agreements with Executives

We have employment agreements with each of Messrs. Polinsky and Geraci. The material terms and conditions of employment agreements are summarized below.

Mr. Polinsky’s Employment Agreement

Mr. Polinsky is employed as our Chief Executive Officer and co-manager of the investment portfolio of the company for a three-year term expiring on March 25, 2016, and receives an annual base salary of $50,000, which may be increased by our board’s Compensation Committee on an annual basis. Mr. Polinsky is also eligible for an annual cash bonus at the conclusion of each fiscal year up to Mr. Polinsky’s base salary, as approved by the Compensation Committee. Mr. Polinsky will also receive an amount of our net income each fiscal year which, when aggregated with the foregoing base salary and annual bonuses, if any, paid with respect to such fiscal year, and any other perquisites or benefits paid to Mr. Polinsky during such fiscal year, together with all compensation (including any perquisites and benefits) paid to all other officers and employees of the company, equals 20% of our net income after taxes for such fiscal year (such amount being referred to as “Profit-Sharing Compensation”). Profit-Sharing Compensation is calculated based upon our completed audited financials for the applicable fiscal year and paid as soon as practicable following the completion of such audit. Our officers and employees eligible to receive any Profit-Sharing Compensation will, among themselves, determine the manner in which they will participate in such compensation. At this time Messrs. Polinsky and Geraci are the only two officers or employees of the company entitled to any Profit-Sharing Compensation. Mr. Polinsky will also be entitled to reimbursements for all reasonable and appropriate business expenses incurred in connection with the performance of his duties. In our employment agreement with Mr. Polinsky, we agreed that if the company should fail to qualify as a regulated investment company for any reason under the Internal Revenue Code, our net income for purposes of the Profit-Sharing Compensation will be calculated as if we were at all times qualified as a regulated investment company.

Upon termination of Mr. Polinsky’s employment agreement, Mr. Polinsky will be entitled to receive the foregoing compensation through the date of termination, and reimbursement for any expenses incurred by Mr. Polinsky through the date of such termination. If we terminate Mr. Polinsky’s employment agreement for cause, we may offset against such payments any damages sustained by us as a result of the conduct constituting such cause.

Mr. Polinsky is prohibited from disclosing our confidential information, and has agreed not to solicit any of our employees during the term of the employment agreement and for a period of 12 months thereafter. Mr. Polinsky’s agreement contains other customary terms and conditions.

Mr. Geraci’s Employment Agreement

Mr. Geraci is employed as our Chief Financial Officer and co-manager of our investment portfolio for a three-year term expiring on March 25, 2016. Mr. Geraci receives an annual base salary of $100,000, which may be increased by our board’s Compensation Committee on an annual basis. Mr. Geraci is also eligible for an annual cash bonus at the conclusion of each fiscal year up to Mr. Geraci’s base salary, as approved by the Compensation Committee. Mr. Geraci will also receive an amount of our net income each fiscal year which, when aggregated with the foregoing base salary and annual bonuses, if any, paid with respect to such fiscal year, and any other perquisites or benefits paid to Mr. Geraci during such fiscal year, together with all compensation (including any perquisites and benefits) paid to all of our other officers and employees, equals 20% of our net income after taxes for such fiscal year (such amount being referred to as the “Profit-Sharing Compensation”). Profit-Sharing Compensation is calculated based upon our completed audited financials for the applicable fiscal year and paid as soon as practicable following the completion of such audit. Our officers and employees eligible to receive any Profit-Sharing Compensation will, among themselves, determine the manner in which they will participate in such compensation. At this time Messrs. Polinsky and Geraci are the only two officers or employees entitled to any Profit-Sharing Compensation. Mr. Geraci will also be entitled to reimbursements for all reasonable and appropriate business expenses incurred in connection with the performance of his duties. In our employment agreement with Mr. Geraci, we agreed that if the company should fail to qualify as a regulated investment company for any reason under the Internal Revenue Code, our net income for purposes of the Profit-Sharing Compensation will be calculated as if we were at all times qualified as a regulated investment company.

Upon termination of Mr. Geraci’s employment agreement, Mr. Geraci shall be entitled to receive the foregoing compensation through the date of termination, and reimbursement for any expenses incurred by Mr. Geraci through the date of such termination. If we terminate Mr. Geraci’s employment agreement for cause, we may offset against such payments any damages sustained by us as a result of the conduct constituting such cause.

Mr. Geraci is prohibited from disclosing our confidential information, and agreed not to solicit any of our employees during the term of the employment agreement and for a period of 12 months thereafter. Mr. Geraci’s agreement contains other customary terms and conditions.

Outstanding Equity Awards at Fiscal Year End

We had no outstanding options, warrants, unvested stock awards or equity incentive plan awards as of December 31, 2013 held by any named executive. In addition, we have no options, warrants, unvested stock awards or equity incentive plan awards outstanding and held by any named executive as of the date of this filing.

DIRECTOR COMPENSATION

In 2013, we paid a total of $33,400 in director fees to our independent directors, none of whom are “interested persons” under the Investment Company Act of 1940. Presently, each such director receives an annualized fee of $20,000.

SHAREHOLDER PROPOSALS

A shareholder who intends to present a proposal at our 2015 annual meeting of shareholders pursuant to the SEC’s Rule 14a-8 must submit the proposal to us in writing at our address in Wayzata, Minnesota, and we must receive the proposal on or before 120 days prior to the date of our 2015 annual meeting, in order for the proposal to be considered for inclusion in our proxy statement for that meeting. We expect that the 2015 annual meeting will be held in June 2015, but the exact date, time, and location of such meeting have yet to be determined. The submission of a proposal does not guarantee its inclusion in our proxy statement or presentation at the 2015 annual meeting of shareholders.

Except as noted below, to be timely, proposals and nominations with respect to the 2015 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 first anniversary of the 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, shareholder proposals or director nominations must be so received no later than 5:00 p.m., Central Time, on the later of the 120th day prior to the date of such annual meeting or 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 2015 annual meeting, other than shareholder proposals to be included in our proxy statement pursuant to Rule 14a-8, should be addressed to Chief Executive Officer, Mill City Ventures III, Ltd., 328 Barry Avenue South #210, Wayzata, Minnesota 55391. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.

Rule 14a-4 promulgated under the Securities Exchange Act of 1934 governs the use of discretionary proxy voting authority with respect to a shareholder proposal that the shareholder has not sought to include in our proxy statement. Rule 14a-4 provides that if a proponent of a proposal fails to notify us at least 45 days prior to the month and day of mailing of the prior year’s proxy statement, management proxies will be allowed to use their discretionary voting authority when the proposal is raised at the meeting, without any discussion of the matter.

Due to the complexity of the respective rights of the shareholders and the company in this area, any shareholder desiring to propose such an action is advised to consult with his or her legal counsel with respect to such rights. We suggest that any such proposal be submitted by certified mail, return-receipt requested.

SOLICITATION

We will bear the cost of preparing, assembling and mailing the proxy, Proxy Statement, Quarterly Report, Annual Report and other material which may be identified by use of words such as “may,” “will,” “believes,” “anticipates,” “plans,” “expects,” “estimates,” “projects,” “targets,” “forecasts,” “continues,” “seeks,” or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information, including without limitation competitive factors, disruption of markets, changes in market or economic conditions, pending or future claims or litigation, technology advances, federal or state regulation or legislation. No assurances can be provided assent to the outcomeshareholders 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 such risksstock, in which case they may be reimbursed by us for their expenses in doing so. Proxies are being solicited primarily by mail. Nevertheless, our officers and employees may solicit proxies personally, by telephone, by special letter, or via the consequences if the shareholders either approve or fail to approve the proposed amendment. Internet.

The CompanyBoard of Directors does not undertakeintend to update or revisepresent to the meeting any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, willother matter not be realized.

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not availablereferred to certain issuers, including issuers that do not have their equity traded on a recognized national exchange or the Nasdaq Capital Market. In our case, our common stockabove and does not trade onpresently know of any recognized national exchange or the Nasdaq Capital Market. As a result, we do not have the benefit of this safe harbor protection.

Other potential risks and uncertaintiesmatters that may cause actual results or outcomesbe presented to be materially different from thosethe meeting by others. If, however, other matters come before the meeting, it is the intent of the persons named in forward-looking information are described in the Company’s most recent Annual Report on Form 10-K filed with the SEC. Copies are available from the SEC athttp:www.sec.gov.

Please timely complete, sign, date and return the enclosed proxy card.

Exhibit A

Proposed Amendment to Articles of Incorporation

ARTICLES OF AMENDMENT

OFPOKER MAGIC, INC.

The Undersigned, Chief Executive Officer of Poker Magic, Inc., a Minnesota corporation (the “Corporation”), hereby certifies thatvote the following Articles of Amendment have been duly adopted by the Corporation’s Board of Directors and shareholders pursuant to the provisions of the Minnesota Business Corporation Act (the “Act”):

1. The name of the Corporation is: Poker Magic, Inc.

2. Article 3 of the Corporation’s Amended and Restated Articles of Incorporation dated as of January 10, 2006, is hereby amended by adding the following new paragraph “D” as follows:proxy in accordance with their best judgment.

3. These Articles of Amendment were adopted pursuant to the Act.

In Witness Whereof, the undersigned has set his hand as of [●], 2012.

MILL CITY VENTURES III, LTD.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
Friday, December 19, 2014
9:00 a.m.

328 Barry Avenue S., #210

Wayzata, MN 55391

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, a shareholder of Mill City Ventures III, Ltd., hereby appoints Douglas M. Polinsky and Joseph A. Geraci, II, and each of them, as proxies, with full power of substitution and re-substitution, to vote on behalf of the undersigned the number of shares which the undersigned is then entitled to vote at the annual meeting of shareholders of the company to be held at 328 Barry Avenue. S., Suite 210, Wayzata, MN 55391, on Friday, December 19, 2014, at 9:00 a.m., and at any and all adjournments thereof.

See reverse for voting instructions.

PROPOSALS: The Board of Directors recommends a voteFOR all nominees listed and FOR Proposals Two, Three and Four.

Note: the Board of Directors recommends you vote 3 YEARS on this proposal

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 annual meeting of shareholders. When properly executed, this proxy will be voted on the proposal set forth herein as directed by the shareholder. The undersigned authorizes the proxies to vote in their discretion upon such other business as may properly come before the meeting.