Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 15, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2022 | |
Entity File Number | 001-41472 | |
Entity Registrant Name | MILL CITY VENTURES III, LTD. | |
Entity Incorporation, State or Country Code | MN | |
Entity Tax Identification Number | 90-0316651 | |
Entity Address, Address Line One | 1907 Wayzata Blvd | |
Entity Address, Address Line 2 | #205 | |
Entity Address State Or Province | MN | |
Entity Address, City or Town | Wayzata | |
Entity Address, Postal Zip Code | 55391 | |
City Area Code | 952 | |
Local Phone Number | 479-1923 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,074,725 | |
Entity Central Index Key | 0001425355 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
ASSETS | ||
Investments, at fair value: | $ 15,341,080 | $ 14,098,675 |
Cash | 629,572 | 1,936,148 |
Note receivable | 250,000 | 250,000 |
Prepaid expenses | 133,613 | 83,674 |
Interest and dividend receivables | 439,422 | 324,350 |
Right-of-use lease asset | 26,804 | 4,984 |
Total Assets | 16,820,491 | 16,697,831 |
LIABILITIES | ||
Line of credit | 2,075,000 | |
Accounts payable | 51,783 | 64,028 |
Dividend payable | 100 | |
Payable for purchase of investments | 1,900,000 | |
Lease liability | 26,859 | 5,654 |
Accrued income tax | 201,242 | 1,269,000 |
Deferred taxes | 39,000 | 45,000 |
Total Liabilities | 2,393,884 | 3,283,782 |
Commitments and Contingencies | ||
SHAREHOLDERS EQUITY (NET ASSETS) | ||
Common stock, par value $0.001 per share (250,000,000 authorized; 10,855,413 and 10,790,413 outstanding) | 10,855 | 10,790 |
Additional paid-in capital | 10,776,537 | 10,694,163 |
Accumulated deficit | (1,159,665) | (1,159,665) |
Accumulated undistributed investment loss | (1,064,271) | (1,877,667) |
Accumulated undistributed net realized gains on investment transactions | 5,713,830 | 5,580,810 |
Net unrealized appreciation in value of investments | 149,321 | 165,618 |
Total Shareholders' Equity (Net Assets) | 14,426,607 | 13,414,049 |
Total Liabilities and Shareholders' Equity | $ 16,820,491 | $ 16,697,831 |
Net Asset Value Per Common Share | $ 1.33 | $ 1.24 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
CONDENSED BALANCE SHEETS | ||
Investments at Amortized Cost | $ 15,191,759 | $ 13,933,057 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares outstanding | 10,855,413 | 10,790,413 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Investment Income | ||||
Interest income | $ 1,236,505 | $ 675,549 | $ 2,236,711 | $ 1,222,391 |
Total Investment Income | 1,236,505 | 675,549 | 2,236,711 | 1,222,391 |
Operating Expenses | ||||
Professional fees | 197,591 | 77,539 | 392,989 | 220,347 |
Payroll | 114,542 | 85,346 | 310,984 | 387,426 |
Insurance | 26,979 | 27,854 | 57,076 | 52,133 |
Occupancy | 19,141 | 16,337 | 35,953 | 33,026 |
Director's fees | 87,073 | 30,000 | 117,073 | 60,000 |
Interest expense | 47,794 | 117,853 | ||
Other general and administrative | 9,135 | 13,080 | 16,145 | 31,082 |
Total Operating Expenses | 502,255 | 250,156 | 1,048,073 | 784,014 |
Net Investment Gain | 734,250 | 425,393 | 1,188,638 | 438,377 |
Realized and Unrealized Gain on Investments | ||||
Net realized gain (loss) on investments | (5,750) | 621,600 | 133,020 | 3,529,599 |
Net change in unrealized appreciation (depreciation) on investments | 5,750 | 83,100 | (16,297) | (430,150) |
Net Realized and Unrealized Gain on Investments | 704,700 | 116,723 | 3,099,449 | |
Net Increase in Net Assets Resulting from Operations Before Taxes | 734,250 | 1,130,093 | 1,305,361 | 3,537,826 |
Provision for Income Taxes | 216,242 | 348,587 | 375,242 | 1,011,278 |
Net Increase in Net Assets Resulting from Operations | $ 518,008 | $ 781,506 | $ 930,119 | $ 2,526,548 |
Net Increase in Net Assets Resulting from Operations per share: | ||||
Basic net income per share | $ 0.05 | $ 0.07 | $ 0.09 | $ 0.23 |
Diluted net income per share | $ 0.05 | $ 0.07 | $ 0.09 | $ 0.23 |
Weighted-average number of common shares outstanding - basic | 10,847,556 | 10,790,413 | 10,819,142 | 10,788,175 |
Weighted-average number of common shares outstanding - diluted | 10,847,556 | 10,790,413 | 10,819,142 | 10,788,175 |
CONDENSED STATEMENTS OF SHAREHO
CONDENSED STATEMENTS OF SHAREHOLDERS EQUITY (UNAUDITED) - USD ($) | Common Stock | Additional Paid In Capital. | Accumulated Deficit | Accumulated Undistributed Net Investment Loss | Accumulated Undistributed Net Realized Gain on Investments Transactions | Net Unrealized Appreciation (Depreciation) in Value of Investments | Total |
Balance as of beginning at Dec. 31, 2020 | $ 10,786 | $ 10,673,014 | $ (1,159,665) | $ (2,124,419) | $ 2,541,850 | $ 1,699,321 | $ 11,640,887 |
Balance as of beginning (in shares) at Dec. 31, 2020 | 10,785,913 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Undistributed net realized gain (loss) on investment transactions | 3,529,599 | 3,529,599 | |||||
Undistributed net investment gain (loss) | (572,901) | (572,901) | |||||
Depreciation in value of investments | (430,150) | (430,150) | |||||
Issuance of shares | $ 4 | 21,149 | 21,153 | ||||
Issuance of shares (in shares) | 4,500 | ||||||
Balance as of ending at Jun. 30, 2021 | $ 10,790 | 10,694,163 | (1,159,665) | (2,697,320) | 6,071,449 | 1,269,171 | $ 14,188,588 |
Balance as of ending (in shares) at Jun. 30, 2021 | 10,790,413 | 10,790,413 | |||||
Balance as of beginning at Mar. 31, 2021 | $ 10,787 | 10,678,763 | (1,159,665) | (2,774,126) | 5,449,849 | 1,186,071 | $ 13,391,679 |
Balance as of beginning (in shares) at Mar. 31, 2021 | 10,786,913 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common shares issued in stock based compensation | $ 3 | 15,400 | 15,403 | ||||
Common shares issued in stock based compensation (Share) | 3,500 | ||||||
Undistributed net realized gain (loss) on investment transactions | 621,600 | 621,600 | |||||
Undistributed net investment gain (loss) | 76,806 | 76,806 | |||||
Depreciation in value of investments | 83,100 | 83,100 | |||||
Balance as of ending at Jun. 30, 2021 | $ 10,790 | 10,694,163 | (1,159,665) | (2,697,320) | 6,071,449 | 1,269,171 | $ 14,188,588 |
Balance as of ending (in shares) at Jun. 30, 2021 | 10,790,413 | 10,790,413 | |||||
Balance as of beginning at Dec. 31, 2021 | $ 10,790 | 10,694,163 | (1,159,665) | (1,877,667) | 5,580,810 | 165,618 | $ 13,414,049 |
Balance as of beginning (in shares) at Dec. 31, 2021 | 10,790,413 | 10,790,413 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common shares issued in stock based compensation | $ 65 | 82,374 | $ 82,439 | ||||
Common shares issued in stock based compensation (Share) | 65,000 | ||||||
Undistributed net realized gain (loss) on investment transactions | 133,020 | 133,020 | |||||
Undistributed net investment gain (loss) | 813,396 | 813,396 | |||||
Depreciation in value of investments | (16,297) | (16,297) | |||||
Balance as of ending at Jun. 30, 2022 | $ 10,855 | 10,776,537 | (1,159,665) | (1,064,271) | 5,713,830 | 149,321 | $ 14,426,607 |
Balance as of ending (in shares) at Jun. 30, 2022 | 10,855,413 | 10,855,413 | |||||
Balance as of beginning at Mar. 31, 2022 | $ 10,790 | 10,694,163 | (1,159,665) | (1,582,279) | 5,719,580 | 143,571 | $ 13,826,160 |
Balance as of beginning (in shares) at Mar. 31, 2022 | 10,790,413 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Common shares issued in stock based compensation | $ 65 | 82,374 | 82,439 | ||||
Common shares issued in stock based compensation (Share) | 65,000 | ||||||
Undistributed net realized gain (loss) on investment transactions | (5,750) | (5,750) | |||||
Undistributed net investment gain (loss) | 518,008 | 518,008 | |||||
Depreciation in value of investments | 5,750 | 5,750 | |||||
Balance as of ending at Jun. 30, 2022 | $ 10,855 | $ 10,776,537 | $ (1,159,665) | $ (1,064,271) | $ 5,713,830 | $ 149,321 | $ 14,426,607 |
Balance as of ending (in shares) at Jun. 30, 2022 | 10,855,413 | 10,855,413 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash flows from operating activities: | ||
Net increase in net assets resulting from operations | $ 930,119 | $ 2,526,548 |
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: | ||
Net change in unrealized appreciation on investments | 16,297 | 430,150 |
Net realized gain on investments | (133,020) | (3,529,599) |
Purchases of investments | (9,103,580) | (13,250,664) |
Proceeds from sales of investments | 7,977,898 | 9,889,827 |
Deferred income taxes | (1,073,758) | 1,011,278 |
Common shares issued as consideration for expense payment | 82,439 | 15,403 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (39,772) | (135,934) |
Interest and dividends receivable | (115,072) | (265,504) |
Receivable for investment sales | (75,465) | |
Payable for investment purchase | (1,900,000) | |
Accounts payable and other liabilities | (23,127) | (2,318) |
Net cash used in operating activities | (3,381,576) | (3,386,278) |
Cash flows from financing activities: | ||
Proceeds from line of credit | 6,075,000 | |
Repayments on line of credit | (4,000,000) | |
Payments for common stock dividend | (539,296) | |
Net cash provided (used) by financing activities | 2,075,000 | (539,296) |
Net decrease in cash | (1,306,576) | (3,925,574) |
Cash, beginning of period | 1,936,148 | 5,440,579 |
Cash, end of period | $ 629,572 | 1,515,005 |
Non-cash financing activities: | ||
Common shares issued as consideration for investment | $ 5,750 |
CONDENSED SCHEDULE OF INVESTMEN
CONDENSED SCHEDULE OF INVESTMENTS - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 15,191,759 | $ 13,933,057 |
Investments at Fair Value | $ 15,341,080 | $ 14,098,675 |
Total Investments, Percentage of Net Assets | 106.32% | 105.10% |
Total Cash, Cost | $ 629,572 | $ 1,936,148 |
Total Cash, Fair Value | $ 629,572 | $ 1,936,148 |
Total Cash, Percentage of Net Assets | 4.36% | 14.43% |
Total Investments and Cash, Cost | $ 15,821,331 | $ 15,869,205 |
Total Investments and Cash, Fair Value | $ 15,970,652 | $ 16,034,823 |
Total Investments and Cash, Percentage of Net Assets | 110.68% | 119.53% |
Consumer | ||
Investment Holdings [Line Items] | ||
Investments at Fair Value | $ 5,662,500 | $ 2,362,500 |
Consumer | Other | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | 212,500 | 212,500 |
Investments at Fair Value | $ 212,500 | $ 212,500 |
Total Investments, Percentage of Net Assets | 1.47% | 1.58% |
Financial | ||
Investment Holdings [Line Items] | ||
Investments at Fair Value | $ 1,698,580 | $ 3,836,175 |
Financial | Other | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | 600,000 | 600,000 |
Investments at Fair Value | $ 600,000 | $ 600,000 |
Total Investments, Percentage of Net Assets | 4.16% | 4.47% |
Information Technology | ||
Investment Holdings [Line Items] | ||
Investments at Fair Value | $ 300,000 | $ 300,000 |
Real Estate | ||
Investment Holdings [Line Items] | ||
Investments at Fair Value | 7,680,000 | 7,600,000 |
15% secured loans | Consumer | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | 400,000 | |
Investments at Fair Value | $ 400,000 | |
Total Investments, Percentage of Net Assets | 2.77% | |
15% secured loans | Consumer | AirDog Supplies, Inc | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | 1,250,000 | |
Investments at Fair Value | $ 1,250,000 | |
Total Investments, Percentage of Net Assets | 9.32% | |
Short-Term Non-banking Loans | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 13,328,580 | $ 11,655,750 |
Investments at Fair Value | $ 13,328,580 | $ 11,650,000 |
Total Investments, Percentage of Net Assets | 92.37% | 86.85% |
Short-Term Non-banking Loans | Tailwinds, LLC | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 3,000,000 | $ 3,000,000 |
Investments at Fair Value | $ 3,000,000 | $ 3,000,000 |
Total Investments, Percentage of Net Assets | 20.79% | 22.36% |
Short-Term Non-banking Loans | 15% secured loans | Consumer | AirDog Supplies, Inc | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 1,250,000 | |
Investments at Fair Value | $ 1,250,000 | |
Total Investments, Percentage of Net Assets | 8.66% | |
Short-Term Non-banking Loans | 15% secured loans | Consumer | Intelligent Mapping, LLC | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 2,900,000 | |
Investments at Fair Value | $ 2,900,000 | |
Total Investments, Percentage of Net Assets | 20.10% | |
Short-Term Non-banking Loans | 15% secured loans | Real Estate | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 1,280,000 | $ 700,000 |
Investments at Fair Value | $ 1,280,000 | $ 700,000 |
Total Investments, Percentage of Net Assets | 8.87% | 5.22% |
Short-Term Non-banking Loans | 33.33% secured loans | Financial | Benton Financial, LLC | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 598,580 | |
Investments at Fair Value | $ 598,580 | |
Total Investments, Percentage of Net Assets | 4.15% | |
Short-Term Non-banking Loans | 12% secured loans | Financial | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 500,000 | $ 500,000 |
Investments at Fair Value | $ 500,000 | $ 500,000 |
Total Investments, Percentage of Net Assets | 3.46% | 3.73% |
Short-Term Non-banking Loans | 12% secured loans | Real Estate | Alatus Development, LLC | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 3,900,000 | |
Investments at Fair Value | $ 3,900,000 | |
Total Investments, Percentage of Net Assets | 29.07% | |
Short-Term Non-banking Loans | 23% secured loans | Litigation Financing | The Cross Law Firm, LLC | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 1,805,750 | |
Investments at Fair Value | $ 1,800,000 | |
Total Investments, Percentage of Net Assets | 13.42% | |
Short-Term Non-banking Loans | 48% secured loans | Real Estate | Villas at 79th LLC | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 3,400,000 | |
Investments at Fair Value | $ 3,400,000 | |
Total Investments, Percentage of Net Assets | 23.57% | |
Short-Term Non-banking Loans | 52% secured loans | Financial | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 500,000 | |
Investments at Fair Value | $ 500,000 | |
Total Investments, Percentage of Net Assets | 3.73% | |
Common Stock | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 414,128 | |
Investments at Fair Value | 436,175 | |
Common Stock | Financial | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | 414,128 | |
Investments at Fair Value | $ 436,175 | |
Total Investments, Percentage of Net Assets | 3.25% | |
Preferred Stock | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 1,050,000 | $ 1,050,000 |
Investments at Fair Value | 1,200,000 | 1,200,000 |
Preferred Stock | Consumer | Other | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | 1,050,000 | 1,050,000 |
Investments at Fair Value | $ 1,200,000 | $ 1,200,000 |
Total Investments, Percentage of Net Assets | 8.32% | 8.95% |
Preferred Stock | Consumer | Wisdom Gaming, Inc | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 900,000 | $ 900,000 |
Investments at Fair Value | $ 900,000 | $ 900,000 |
Total Investments, Percentage of Net Assets | 6.24% | 6.71% |
Preferred Stock | Information Technology | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 150,000 | $ 150,000 |
Investments at Fair Value | $ 300,000 | $ 300,000 |
Total Investments, Percentage of Net Assets | 2.08% | 2.24% |
Warrants | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 679 | $ 679 |
Warrants | Healthcare | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 679 | $ 679 |
Total Investments, Percentage of Net Assets | 0% | 0% |
Other Equity | ||
Investment Holdings [Line Items] | ||
Total Investments, Cost | $ 812,500 | $ 812,500 |
Investments at Fair Value | $ 812,500 | $ 812,500 |
Total Investments, Percentage of Net Assets | 5.63% | 6.05% |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2022 | |
ORGANIZATION | |
ORGANIZATION | NOTE 1 – ORGANIZATION In this report, we generally refer to Mill City Ventures III, Ltd. in the first person “we.” On occasion, we refer to our company in the third person as “Mill City Ventures” or the “Company.” The Company follows accounting and reporting guidance in Accounting Standards (“ASC”) 946. We were incorporated in Minnesota in January 2006. Until December 13, 2012, we were a development-stage company that focused on promoting and placing a proprietary poker game online and into casinos and entertainment facilities nationwide. In 2013, we elected to become a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). We operated as a BDC until we withdrew our BDC election at the end of December 2019. Since that time, we have remained a public reporting company that files periodic reports with the SEC. We engaged in the business of providing short-term specialty finance solutions primarily to small businesses, both private and public, and high-net-worth individuals. To avoid regulation under the 1940 Act, we generally seek to structure our investments so they do not constitute “securities” for purposes of federal securities laws, and we monitor our investments as a whole to ensure that no more than 40% of our total assets consist of “investment securities” as defined under the 1940 Act. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The condensed balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. Use of estimates: Cash deposits: Valuation of portfolio investments: Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. In addition, such investments are generally less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. Accounting guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Observable inputs must be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available. Assets and liabilities measured at fair value are to be categorized into one of the three hierarchy levels based on the relative observability of inputs used in the valuation. The three levels are defined as follows: ● Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2: Observable inputs based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets. ● Level 3: Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances. Under our valuation policies and procedures, we evaluate the source of inputs, including any markets in which our investments are trading, and then apply the resulting information in determining fair value. For our Level 1 investment assets, our valuation policy generally requires us to use a market approach, considering the last quoted closing price of a security we own that is listed on a securities exchange, and in a case where a security we own is listed on an over-the-counter market, to average the last quoted bid and ask price on the most active market on which the security is quoted. In the case of traded debt securities the prices for which are not readily available, we may value those securities using a present value approach, at their weighted-average yield to maturity. The estimated fair value of our Level 3 investment assets is determined on a quarterly basis by our Board of Directors, pursuant to our written valuation policy and procedures. These policies and procedures generally require that we value our Level 3 equity investments at cost plus any accrued interest, unless circumstances warrant a different approach. An example of such circumstances may include a situation in which a portfolio company has engaged in a subsequent financing of more than a de minimis When valuing preferred equity investments, we generally view intrinsic value as a key input. Intrinsic value means the value of any conversion feature (if the preferred investment is convertible) or the value of any liquidation or other preference. Discounts to intrinsic value may be applied in cases where the issuer’s financial condition is impaired or, in cases where intrinsic value relating to a conversion is determined to be a key input, to account for resale restrictions applicable to the securities issuable upon conversion. When valuing warrants, our valuation policy and procedures indicate that value will generally be the difference between closing price of the underlying equity security and the exercise price, after applying an appropriate discount for restriction, if applicable, in situations where the underlying security is marketable. If the underlying security is not marketable, then intrinsic value will be considered consistent with the principles described above. Generally, “out-of-the-money” warrants will be valued at cost or zero. For non-traded (Level 3) debt securities with a residual maturity less than or equal to 60 days, the value will generally be based on a present value approach, considering the straight-line amortized face value of the debt unless justification for impairment exists. The fair value for short-term non-banking loans is determined as the present value of future contractual cash flows discounted at an interest rate that reflects the risks inherent to those cash flows. The applied discount ranges from 12% to 53% and approximate rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk. On a quarterly basis, our management provides members of our Board of Directors with (i) valuation updates for each investment and loan we hold; (ii) Mill City Ventures’ bank and other statements pertaining to our cash and cash equivalents; (iii) quarter- or period-end statements from custodial firms holding any of our investments; and (iv) recommendations to change any existing valuations of our investments or loans, or hierarchy levels, for purposes of determining the fair value of such investments or loans based upon the foregoing. The board then discusses these materials and, consistent with the policies and approaches outlined above, makes final determinations respecting the valuation and hierarchy levels of our portfolio investments. Income taxes: We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amount and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine we would be able to realize our deferred income tax assets in the future in excess of their recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our evaluation was performed for the tax years ended December 31, 2019 through 2021, which were the tax years that remain subject to examination by major tax jurisdictions as of June 30, 2022. Revenue recognition Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. Discounts from and premiums to par value on securities purchased are accreted or amortized, as applicable, into interest income over the life of the related security using the effective-yield method. The amortized cost of investments represents the original cost, adjusted for the accretion of discounts and amortization of premiums, if any. Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more, or when there is reasonable doubt that principal or interest will be collected in full. Loan origination fees are recognized when loans are issued. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past-due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to the policy described above if a loan has sufficient collateral value and is in the process of collection. Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal or stated value of the investment on the respective interest- or dividend-payment dates rather than being paid in cash, and generally becomes due at maturity or upon being repurchased by the issuer. PIK interest or dividends is recorded as interest or dividend income, as applicable. If at any point we believe that PIK interest or dividends is not expected be realized, the PIK-generating investment will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment in placed on non-accrual status. Allocation of net gains and losses: Management and service fees: |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2022 | |
INVESTMENTS | |
INVESTMENTS | NOTE 3 – INVESTMENTS AND LOANS The following table shows the composition of our investments and loans by major class, at amortized cost and fair value, as of June 30, 2022 (together with the corresponding percentage of the fair value of our total investments): As of June 30, 2022 Investments at Percentage of Investments at Percentage of Amortized Cost Amortized Cost Fair Value Fair Value Short-term Non-banking Loans $ 13,328,580 87.7 % $ 13,328,580 86.9 % Preferred Stock 1,050,000 6.9 1,200,000 7.8 Warrants 679 — — — Other Equity 812,500 5.4 812,500 5.3 Total $ 15,191,759 100.0 % $ 15,341,080 100.0 % The following table shows the composition of our investments by major class, at amortized cost and fair value, as of December 31, 2021 (together with the corresponding percentage of the fair value of our total investments): As of December 31, 2021 Investments at Percentage of Investments at Percentage of Amortized Cost Amortized Cost Fair Value Fair Value Short-term Non-banking Loans $ 11,655,750 83.7 % $ 11,650,000 82.6 % Preferred Stock 1,050,000 7.5 1,200,000 8.5 Common Stock 414,128 3.0 436,175 3.1 Warrants 679 — — — Other Equity 812,500 5.8 812,500 5.8 Total $ 13,933,057 100.0 % $ 14,098,675 100.0 % The following table shows the composition of our investments and loans by industry grouping, based on fair value as of June 30, 2022: As of June 30, 2022 Investments at Percentage of Fair Value Fair Value Consumer $ 5,662,500 36.9 % Financial 1,698,580 11.0 Information Technology 300,000 2.0 Real Estate 7,680,000 50.1 Total $ 15,341,080 100.0 % The following table shows the composition of our investments by industry grouping, based on fair value as of December 31, 2021: As of December 31, 2021 Investments at Percentage of Fair Value Fair Value Consumer $ 2,362,500 16.8 % Financial 3,836,175 27.2 Information Technology 300,000 2.1 Real Estate 7,600,000 53.9 Total $ 14,098,675 100.0 % |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS Level 3 valuation information The following table presents the fair value measurements of our investments and loans by major class, as of June 30, 2022, according to the fair value hierarchy: As of June 30, 2022 Level 1 Level 2 Level 3 Total Short-term Non-banking Loans $ — $ — $ 13,328,580 $ 13,328,580 Preferred Stock — — 1,200,000 1,200,000 Other Equity — — 812,500 812,500 Total $ — $ — $ 15,341,080 $ 15,341,080 The following table presents the fair value measurements of our investments and loans by major class, as of December 31, 2021, according to the fair value hierarchy: As of December 31, 2021 Level 1 Level 2 Level 3 Total Short-term Non-banking Loans $ — $ — $ 11,650,000 $ 11,650,000 Preferred Stock — — 1,200,000 1,200,000 Common Stock 436,175 — — 436,175 Other Equity — — 812,500 812,500 Total $ 436,175 $ — $ 13,662,500 $ 14,098,675 The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 investment and loan assets for the six months ended June 30, 2022: For the six months ended June 30, 2022 ST Non-banking Common Loans Preferred Stock Stock Warrants Other Equity Balance as of January 1, 2022 $ 11,650,000 $ 1,200,000 $ — $ — $ 812,500 Net change in unrealized appreciation — — — — — Purchases and other adjustments to cost 9,103,580 — — — — Sales and redemptions (7,425,000) — — — — Net realized loss — — — — — Balance as of June 30, 2021 $ 13,328,580 $ 1,200,000 $ — $ — $ 812,500 The net change in unrealized appreciation for the six months ended June 30, 2022 attributable to Level 3 investments and loans still held as of June 30, 2022 is $0, and is included in net change in unrealized appreciation (depreciation) on investments on the statement of operations. The following table lists our Level 3 investments held as of June 30, 2022 and the unobservable inputs used to determine their valuation: Security Type 6/30/22 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans $ 13,328,580 discounted cash flow determining private company interest rate based on credit 12-53 % Other Equity 812,500 last secured funding known by company economic changes since last funding Preferred Stock 1,200,000 last funding secured by company economic changes since last funding $ 15,341,080 The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 investment and loan assets for the year ended December 31, 2021: For the year ended December 31, 2021 ST Non-banking Preferred Common Loans Stock Stock Warrants Other Equity Balance as of January 1, 2021 $ 2,789,000 $ 300,000 $ — $ — $ 278,897 Net change in unrealized appreciation — — — — — Purchases and other adjustments to cost 24,765,333 900,000 — — 812,500 Sales and redemptions (15,904,333) — — — (278,897) Net realized loss — — — — — Balance as of December 31, 2021 $ 11,650,000 $ 1,200,000 $ — $ — $ 812,500 The net change in unrealized depreciation for the year ended December 31, 2021 attributable to Level 3 investments and loans still held as of December 31, 2021 is $0, and is included in net change in unrealized appreciation (depreciation) on investments on the statement of operations. The following table lists our Level 3 investments held as of December 31, 2021 and the unobservable inputs used to determine their valuation: Security Type 12/31/21 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans $ 11,650,000 discounted cash flow determining private company credit rating 12-44 % Other Equity 812,500 last secured funding known by company economic changes since last funding Preferred Stock 1,200,000 last funding secured by company economic changes since last funding $ 13,662,500 |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2022 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | NOTE 5 – RELATED-PARTY TRANSACTIONS We maintain a conflicts of interest and related-party transactions policy. Nevertheless, from time to time we may hold investments in portfolio companies in which certain members of our management, our Board of Directors, or significant shareholders of ours, are also directly or indirectly invested. In this regard, we entered into the following related-party transactions: ● On August 10, 2018, we entered into a loan transaction with Elizabeth Zbikowski who, along with her husband Scott Zbikowski, owned and continues to own approximately 1,765,000 shares of our common stock. In the transaction, we obtained a two-year promissory note in the principal amount of $250,000 , which was subsequently amended such that the note presently matures in December 2022. The promissory note bears interest payable monthly at the rate of 10% per annum. The note is secured by the debtors’ pledge to us of 625,000 shares of our common stock. The pledged shares are held in physical custody for us by Millennium Trust Company, as our custodial agent. ● On January 3, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Eastman Investment, Inc., a Nevada corporation, and Lyle A. Berman, as trustee of the Lyle A. Berman Revocable Trust (collectively, the “Lenders”). Mr. Berman is a director of our Company. Under the Loan Agreement, the Lenders made available to us a $5 million revolving line of credit for us to use in the ordinary course of our short-term specialty finance business. See note 7 for further details. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 6 – INCOME TAXES Presently, we are a C-corporation for tax purposes and have booked an income tax provision for the periods described below. As of June 30, 2022 and December 31, 2021, we had a net deferred tax liability of $39,000 and $45,000, respectively. Our determination of the realizable deferred tax assets and liabilities requires the exercise of significant judgment, based in part on business plans and expectations about future outcomes. In the event the actual results differ from these estimates in future periods, we may need to record a valuation allowance, which could materially impact our financial position and results of operations. We will continue to assess the need for a valuation allowance in future periods. As of June 30, 2022 and December 31, 2021 we had accrued income taxes of $201,242 and $1,269,000, respectively. The change in accrued income taxes was driven by $1,449,000 of federal and state tax payments made shortly after quarter one of 2022 ended. We recorded income taxes of $216,242 (29 percent effective tax rate) and $348,587 (29 percent effective tax rate) during the three months ended June 30, 2022 and June 30, 2021, respectively. As of December 31, 2020, we had a federal NOL of approximately $350,000. The remaining federal NOL was used in its entirety to offset taxable income during the 2021 tax year. At June 30, 2022, we have no federal or state NOLs available to offset taxable income, as all NOLs have been exhausted. Due to tax reform enacted in 2017, any newly created NOLs will carry forward indefinitely. |
LINE OF CREDIT
LINE OF CREDIT | 6 Months Ended |
Jun. 30, 2022 | |
LINE OF CREDIT | |
LINE OF CREDIT | NOTE 7 – LINE OF CREDIT On January 3, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Eastman Investment, Inc., a Nevada corporation, and Lyle A. Berman, as trustee of the Lyle A. Berman Revocable Trust (collectively, the “Lenders”). Mr. Berman is a director of our Company. Under the Loan Agreement, the Lenders made available to us a $5 million revolving line of credit for us to use in the ordinary course of our short-term specialty finance business. Amounts drawn under the Loan Agreement accrue interest at the per annum rate of 8%, and all our obligations under the Loan Agreement are secured by a grant of a collateral security interest in substantially all of our assets. As a Lender, Mr. Berman is obligated to furnish only one-half of the aggregate $5 million available under the Loan Agreement. The Loan Agreement has a five-year term ending on January 3, 2027, at which time all amounts owing under the Loan Agreement will become due and payable; subject, however, to each Lender’s right, including Mr. Berman, to terminate the Loan Agreement, solely with respect to such Lender’s obligation to provide further credit, at any time after January 3, 2023. In the event that a Lender, including Mr. Berman, terminates its lending obligations, the Loan Agreement requires that we repay such Lender, prior to the five-year maturity date, with the proceeds derived from specified investments. The Loan Agreement provides for us to pay a quarterly unused commitment fee equal to one-quarter of one percent of the amount of credit available but unused under the Loan Agreement, and requires us to pay such fee in the form of shares of our common stock based on our net asset value per share on the last day of the applicable fiscal quarter. The Loan Agreement grants the Lenders piggyback registration rights subject to customary terms, conditions and exceptions. At June 30, 2022, the balance outstanding on the line was $2,075,000 with a maturity date of January 3, 2027. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2022 | |
SHAREHOLDERS' EQUITY | |
SHAREHOLDERS' EQUITY | NOTE 8 – SHAREHOLDERS’ EQUITY At June 30, 2022, we had 10,855,413 shares of common stock issued and outstanding On April 11, 2022, we issued 15,000 shares of restricted common stock to each of our three independent directors, and 10,000 shares of restricted common stock to our two non-independent directors. The shares are subject to forfeiture in the event the recipients are terminated from their board positions or employment, if applicable, on or prior to January 23, 2023. |
PER-SHARE INFORMATION
PER-SHARE INFORMATION | 6 Months Ended |
Jun. 30, 2022 | |
PER-SHARE INFORMATION | |
PER-SHARE INFORMATION | NOTE 9 – PER-SHARE INFORMATION Basic net gain per common share is computed by dividing net increase in net assets resulting from operations by the weighted-average number of common shares outstanding during the period. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net gain (loss) per common share is set forth below: For the Three Months Ended June 30, 2022 2021 Numerator: Net increase in net assets resulting from operations $ 518,008 $ 781,506 Denominator: Weighted-average number of common shares outstanding 10,847,556 10,790,413 Basic and diluted net gain per common share $ 0.05 $ 0.07 For the Six Months Ended June 30, 2022 2021 Numerator: Net increase in net assets resulting from operations $ 930,119 $ 2,526,548 Denominator: Weighted-average number of common shares outstanding 10,819,142 10,788,175 Basic and diluted net gain per common share $ 0.09 $ 0.23 |
OPERATING LEASES
OPERATING LEASES | 6 Months Ended |
Jun. 30, 2022 | |
OPERATING LEASES | |
OPERATING LEASES | NOTE 10 – OPERATING LEASES We are subject to two non-cancelable operating leases for office space expiring April 2, 2023. These leases do not have significant lease escalations, holidays, concessions, leasehold improvements, or other build-out clauses. Further, the leases do not contain contingent rent provisions. The leases do not include options to renew. Because our lease does not provide an implicit rate, we use our incremental borrowing rate in determining the present value of the lease payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The weighted-average discount rate as of December 31, 2021 was 4.5% and the weighted-average remaining lease term is one year. Under ASC 840, rent expense for office facilities for the three months ended June 30, 2022 and June 30, 2021 was $19,141 and $16,337, respectively. The components of our operating lease were as follows for the three and six months ended June 30, 2022: Three Months Ended Six Months Ended June 30, 2022 June 30, 2022 Operating lease costs $ 5,504 $ 10,283 Variable lease cost 4,522 9,123 Short-term lease cost 9,115 16,547 Total $ 19,141 $ 35,953 Supplemental balance sheet information consisted of the following at June 30, 2022: Operating Lease Right-of-use assets $ 26,804 Operating Lease Liability $ 26,859 Less: short term portion (23,832) Long term portion $ 3,027 Maturity analysis under lease agreements consisted of the following as of June 30, 2022: Operating Leases 2022 $ 12,715 2023 14,859 Total lease payments 27,574 Less: interest (715) Present value of lease liabilities $ 26,859 |
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS | 6 Months Ended |
Jun. 30, 2022 | |
FINANCIAL HIGHLIGHTS | |
FINANCIAL HIGHLIGHTS | NOTE 11 – FINANCIAL HIGHLIGHTS The following is a schedule of financial highlights for the six months ended June 30, 2022 through 2018: Six Months Ended June 30, 2022 2021 2020 2019 2018 Per Share Data (1) Net asset value at beginning of period $ 1.24 1.08 0.91 1.02 0.87 Net investment income (loss) 0.11 0.04 0.01 (0.03) (0.02) Net realized and unrealized gains (losses) 0.01 0.28 0.02 0.02 0.09 Provision for income taxes (0.04) (0.09) 0.00 0.00 0.00 Stock based compensation 0.01 0.00 0.00 0.00 0.00 Repurchase of common stock 0.00 0.00 0.02 0.00 0.00 Payment of common stock dividend 0.00 0.00 0.00 (0.05) 0.00 Net asset value at end of period $ 1.33 1.31 0.96 0.96 0.94 Ratio / Supplemental Data Per share market value of investments at end of period $ 1.41 1.22 0.65 0.70 0.82 Shares outstanding at end of period 10,855,413 10,790,413 10,696,735 11,067,402 11,067,402 Average weighted shares outstanding for the period 10,819,142 10,788,175 10,974,721 11,067,402 11,067,402 Net assets at end of period $ 14,426,607 14,188,588 10,221,718 10,588,689 11,278,889 Average net assets (2) $ 13,888,938 13,073,718 10,025,622 12,304,975 9,955,674 Total investment return 6.45 % 21.30 % 3.30 % (5.88) % 8.05 % Portfolio turnover rate (3) 65.55 % 75.65 % 11.90 % 7.11 % 11.55 % Ratio of operating expenses to average net assets (3) (14.63) % (11.72) % (9.41) % (7.70) % (6.98) % Ratio of net investment income (loss) to average net assets (3) 18.01 % 6.88 % 3.02 % (6.40) % (5.53) % Ratio of realized gains (losses) to average net assets (3) 1.94 % 61.92 % 4.06 % 57.36 % (12.79) % (1) Per-share data was derived using the ending number of shares outstanding for the period. (2) Based on the monthly average of net assets as of the beginning and end of each period presented. (3) Ratios are annualized. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 12 – Subsequent Events On August 9, 2022, the Company effected a stock combination (reverse stock split) of its common shares on a 1-for-2.25 basis such that every 2.25 shares of common stock issued and outstanding on that date were combined into one share of common stock. Any fractional share resulting from the reverse stock split was rounded up to the nearest whole share. The reverse stock split was approved by the Company’s board of directors in accordance with Minnesota law, and resulted in a proportionate reduction in the number of authorized shares of capital stock available for issuance under the Company's articles of incorporation. This reduction was effected pursuant to the filing of articles of amendment with the Minnesota Secretary of State indicating that the Company, on a post-reverse-split basis, is authorized to issue up to 111,111,111 shares of capital stock. The condensed financial statements included herein have not been adjust for the August 9, 2022 reverse stock split. Also on August 9, 2022, the Company’s common stock was listed and began trading on the Nasdaq Capital Market under the same ticker symbol MCVT. On August 11, 2022, the Company completed its public offer and sale of 1,250,000 common shares pursuant to a registration statement filed with the SEC and declared effective on August 9, 2022. Shares were sold by the Company at $4.00 per share, resulting in gross proceeds of $5,000,000. As part of the registered public offering, the Company granted the underwriters a 45-day option to purchase up to 187,500 additional common shares at the offering price, less underwriting discounts. In connection with the offering, the Company issued the underwriter a five-year warrant to purchase up to 75,000 common shares at the per-share price of $5.00. Net proceeds to the Company after the payment of underwriting discounts, underwriting expenses, and the Company’s own offering-related expenses were approximately $4,041,000. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation: | Basis of presentation The condensed balance sheet as of December 31, 2021 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. |
Use of estimates: | Use of estimates: |
Cash deposits: | Cash deposits: |
Valuation of portfolio investments: | Valuation of portfolio investments: Due to the inherent uncertainties of valuation, certain estimated fair values may differ significantly from the values that would have been realized had a ready market for these investments existed, and these differences could be material. In addition, such investments are generally less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. Accounting guidance establishes a hierarchal disclosure framework that prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. Observable inputs must be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability based upon the best information available. Assets and liabilities measured at fair value are to be categorized into one of the three hierarchy levels based on the relative observability of inputs used in the valuation. The three levels are defined as follows: ● Level 1: Observable inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2: Observable inputs based on quoted prices for similar assets and liabilities in active markets, or quoted prices for identical assets and liabilities in inactive markets. ● Level 3: Unobservable inputs that reflect an entity’s own assumptions about what inputs a market participant would use in pricing the asset or liability based on the best information available in the circumstances. Under our valuation policies and procedures, we evaluate the source of inputs, including any markets in which our investments are trading, and then apply the resulting information in determining fair value. For our Level 1 investment assets, our valuation policy generally requires us to use a market approach, considering the last quoted closing price of a security we own that is listed on a securities exchange, and in a case where a security we own is listed on an over-the-counter market, to average the last quoted bid and ask price on the most active market on which the security is quoted. In the case of traded debt securities the prices for which are not readily available, we may value those securities using a present value approach, at their weighted-average yield to maturity. The estimated fair value of our Level 3 investment assets is determined on a quarterly basis by our Board of Directors, pursuant to our written valuation policy and procedures. These policies and procedures generally require that we value our Level 3 equity investments at cost plus any accrued interest, unless circumstances warrant a different approach. An example of such circumstances may include a situation in which a portfolio company has engaged in a subsequent financing of more than a de minimis When valuing preferred equity investments, we generally view intrinsic value as a key input. Intrinsic value means the value of any conversion feature (if the preferred investment is convertible) or the value of any liquidation or other preference. Discounts to intrinsic value may be applied in cases where the issuer’s financial condition is impaired or, in cases where intrinsic value relating to a conversion is determined to be a key input, to account for resale restrictions applicable to the securities issuable upon conversion. When valuing warrants, our valuation policy and procedures indicate that value will generally be the difference between closing price of the underlying equity security and the exercise price, after applying an appropriate discount for restriction, if applicable, in situations where the underlying security is marketable. If the underlying security is not marketable, then intrinsic value will be considered consistent with the principles described above. Generally, “out-of-the-money” warrants will be valued at cost or zero. For non-traded (Level 3) debt securities with a residual maturity less than or equal to 60 days, the value will generally be based on a present value approach, considering the straight-line amortized face value of the debt unless justification for impairment exists. The fair value for short-term non-banking loans is determined as the present value of future contractual cash flows discounted at an interest rate that reflects the risks inherent to those cash flows. The applied discount ranges from 12% to 53% and approximate rates currently observed in publicly traded debt markets for debt of similar terms issued by companies with comparable credit risk. On a quarterly basis, our management provides members of our Board of Directors with (i) valuation updates for each investment and loan we hold; (ii) Mill City Ventures’ bank and other statements pertaining to our cash and cash equivalents; (iii) quarter- or period-end statements from custodial firms holding any of our investments; and (iv) recommendations to change any existing valuations of our investments or loans, or hierarchy levels, for purposes of determining the fair value of such investments or loans based upon the foregoing. The board then discusses these materials and, consistent with the policies and approaches outlined above, makes final determinations respecting the valuation and hierarchy levels of our portfolio investments. |
Income taxes: | Income taxes: We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amount and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine we would be able to realize our deferred income tax assets in the future in excess of their recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We do not believe there will be any material changes in our unrecognized tax positions over the next 12 months. Our evaluation was performed for the tax years ended December 31, 2019 through 2021, which were the tax years that remain subject to examination by major tax jurisdictions as of June 30, 2022. |
Revenue recognition: | Revenue recognition Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. Discounts from and premiums to par value on securities purchased are accreted or amortized, as applicable, into interest income over the life of the related security using the effective-yield method. The amortized cost of investments represents the original cost, adjusted for the accretion of discounts and amortization of premiums, if any. Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more, or when there is reasonable doubt that principal or interest will be collected in full. Loan origination fees are recognized when loans are issued. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past-due principal and interest is paid and, in management’s judgment, are likely to remain current. We may make exceptions to the policy described above if a loan has sufficient collateral value and is in the process of collection. Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies. Certain investments may have contractual payment-in-kind (“PIK”) interest or dividends. PIK represents accrued interest or accumulated dividends that are added to the loan principal or stated value of the investment on the respective interest- or dividend-payment dates rather than being paid in cash, and generally becomes due at maturity or upon being repurchased by the issuer. PIK interest or dividends is recorded as interest or dividend income, as applicable. If at any point we believe that PIK interest or dividends is not expected be realized, the PIK-generating investment will be placed on non-accrual status. Accrued PIK interest or dividends are generally reversed through interest or dividend income, respectively, when an investment in placed on non-accrual status. |
Allocation of net gains and losses: | Allocation of net gains and losses: |
Management and service fees | Management and service fees: |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
INVESTMENTS | |
Schedule of investments by major class, at amortized cost and fair value | The following table shows the composition of our investments and loans by major class, at amortized cost and fair value, as of June 30, 2022 (together with the corresponding percentage of the fair value of our total investments): As of June 30, 2022 Investments at Percentage of Investments at Percentage of Amortized Cost Amortized Cost Fair Value Fair Value Short-term Non-banking Loans $ 13,328,580 87.7 % $ 13,328,580 86.9 % Preferred Stock 1,050,000 6.9 1,200,000 7.8 Warrants 679 — — — Other Equity 812,500 5.4 812,500 5.3 Total $ 15,191,759 100.0 % $ 15,341,080 100.0 % The following table shows the composition of our investments by major class, at amortized cost and fair value, as of December 31, 2021 (together with the corresponding percentage of the fair value of our total investments): As of December 31, 2021 Investments at Percentage of Investments at Percentage of Amortized Cost Amortized Cost Fair Value Fair Value Short-term Non-banking Loans $ 11,655,750 83.7 % $ 11,650,000 82.6 % Preferred Stock 1,050,000 7.5 1,200,000 8.5 Common Stock 414,128 3.0 436,175 3.1 Warrants 679 — — — Other Equity 812,500 5.8 812,500 5.8 Total $ 13,933,057 100.0 % $ 14,098,675 100.0 % |
Schedule of investments by industry grouping, based on fair value | The following table shows the composition of our investments and loans by industry grouping, based on fair value as of June 30, 2022: As of June 30, 2022 Investments at Percentage of Fair Value Fair Value Consumer $ 5,662,500 36.9 % Financial 1,698,580 11.0 Information Technology 300,000 2.0 Real Estate 7,680,000 50.1 Total $ 15,341,080 100.0 % The following table shows the composition of our investments by industry grouping, based on fair value as of December 31, 2021: As of December 31, 2021 Investments at Percentage of Fair Value Fair Value Consumer $ 2,362,500 16.8 % Financial 3,836,175 27.2 Information Technology 300,000 2.1 Real Estate 7,600,000 53.9 Total $ 14,098,675 100.0 % |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Schedule of fair value measurements of our investments by major class according to the fair value hierarchy | The following table presents the fair value measurements of our investments and loans by major class, as of June 30, 2022, according to the fair value hierarchy: As of June 30, 2022 Level 1 Level 2 Level 3 Total Short-term Non-banking Loans $ — $ — $ 13,328,580 $ 13,328,580 Preferred Stock — — 1,200,000 1,200,000 Other Equity — — 812,500 812,500 Total $ — $ — $ 15,341,080 $ 15,341,080 The following table presents the fair value measurements of our investments and loans by major class, as of December 31, 2021, according to the fair value hierarchy: As of December 31, 2021 Level 1 Level 2 Level 3 Total Short-term Non-banking Loans $ — $ — $ 11,650,000 $ 11,650,000 Preferred Stock — — 1,200,000 1,200,000 Common Stock 436,175 — — 436,175 Other Equity — — 812,500 812,500 Total $ 436,175 $ — $ 13,662,500 $ 14,098,675 |
Schedule of reconciliation of the beginning and ending fair value balances for our Level 3 investment assets | For the six months ended June 30, 2022 ST Non-banking Common Loans Preferred Stock Stock Warrants Other Equity Balance as of January 1, 2022 $ 11,650,000 $ 1,200,000 $ — $ — $ 812,500 Net change in unrealized appreciation — — — — — Purchases and other adjustments to cost 9,103,580 — — — — Sales and redemptions (7,425,000) — — — — Net realized loss — — — — — Balance as of June 30, 2021 $ 13,328,580 $ 1,200,000 $ — $ — $ 812,500 For the year ended December 31, 2021 ST Non-banking Preferred Common Loans Stock Stock Warrants Other Equity Balance as of January 1, 2021 $ 2,789,000 $ 300,000 $ — $ — $ 278,897 Net change in unrealized appreciation — — — — — Purchases and other adjustments to cost 24,765,333 900,000 — — 812,500 Sales and redemptions (15,904,333) — — — (278,897) Net realized loss — — — — — Balance as of December 31, 2021 $ 11,650,000 $ 1,200,000 $ — $ — $ 812,500 |
Schedule of Level 3 investments held and the unobservable inputs used to determine their valuation | Security Type 6/30/22 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans $ 13,328,580 discounted cash flow determining private company interest rate based on credit 12-53 % Other Equity 812,500 last secured funding known by company economic changes since last funding Preferred Stock 1,200,000 last funding secured by company economic changes since last funding $ 15,341,080 Security Type 12/31/21 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans $ 11,650,000 discounted cash flow determining private company credit rating 12-44 % Other Equity 812,500 last secured funding known by company economic changes since last funding Preferred Stock 1,200,000 last funding secured by company economic changes since last funding $ 13,662,500 |
PER-SHARE INFORMATION (Tables)
PER-SHARE INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
PER-SHARE INFORMATION | |
Summary of reconciliation of the numerator and denominator used in the calculation of basic and diluted net gain (loss) per common share | For the Three Months Ended June 30, 2022 2021 Numerator: Net increase in net assets resulting from operations $ 518,008 $ 781,506 Denominator: Weighted-average number of common shares outstanding 10,847,556 10,790,413 Basic and diluted net gain per common share $ 0.05 $ 0.07 For the Six Months Ended June 30, 2022 2021 Numerator: Net increase in net assets resulting from operations $ 930,119 $ 2,526,548 Denominator: Weighted-average number of common shares outstanding 10,819,142 10,788,175 Basic and diluted net gain per common share $ 0.09 $ 0.23 |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
OPERATING LEASES | |
Summary of components of our operating lease | Under ASC 840, rent expense for office facilities for the three months ended June 30, 2022 and June 30, 2021 was $19,141 and $16,337, respectively. The components of our operating lease were as follows for the three and six months ended June 30, 2022: Three Months Ended Six Months Ended June 30, 2022 June 30, 2022 Operating lease costs $ 5,504 $ 10,283 Variable lease cost 4,522 9,123 Short-term lease cost 9,115 16,547 Total $ 19,141 $ 35,953 |
Summary of supplemental balance sheet information | Supplemental balance sheet information consisted of the following at June 30, 2022: Operating Lease Right-of-use assets $ 26,804 Operating Lease Liability $ 26,859 Less: short term portion (23,832) Long term portion $ 3,027 |
Summary of maturity analysis under lease agreements | Maturity analysis under lease agreements consisted of the following as of June 30, 2022: Operating Leases 2022 $ 12,715 2023 14,859 Total lease payments 27,574 Less: interest (715) Present value of lease liabilities $ 26,859 |
FINANCIAL HIGHLIGHTS (Tables)
FINANCIAL HIGHLIGHTS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
FINANCIAL HIGHLIGHTS | |
Schedule of financial highlights | Six Months Ended June 30, 2022 2021 2020 2019 2018 Per Share Data (1) Net asset value at beginning of period $ 1.24 1.08 0.91 1.02 0.87 Net investment income (loss) 0.11 0.04 0.01 (0.03) (0.02) Net realized and unrealized gains (losses) 0.01 0.28 0.02 0.02 0.09 Provision for income taxes (0.04) (0.09) 0.00 0.00 0.00 Stock based compensation 0.01 0.00 0.00 0.00 0.00 Repurchase of common stock 0.00 0.00 0.02 0.00 0.00 Payment of common stock dividend 0.00 0.00 0.00 (0.05) 0.00 Net asset value at end of period $ 1.33 1.31 0.96 0.96 0.94 Ratio / Supplemental Data Per share market value of investments at end of period $ 1.41 1.22 0.65 0.70 0.82 Shares outstanding at end of period 10,855,413 10,790,413 10,696,735 11,067,402 11,067,402 Average weighted shares outstanding for the period 10,819,142 10,788,175 10,974,721 11,067,402 11,067,402 Net assets at end of period $ 14,426,607 14,188,588 10,221,718 10,588,689 11,278,889 Average net assets (2) $ 13,888,938 13,073,718 10,025,622 12,304,975 9,955,674 Total investment return 6.45 % 21.30 % 3.30 % (5.88) % 8.05 % Portfolio turnover rate (3) 65.55 % 75.65 % 11.90 % 7.11 % 11.55 % Ratio of operating expenses to average net assets (3) (14.63) % (11.72) % (9.41) % (7.70) % (6.98) % Ratio of net investment income (loss) to average net assets (3) 18.01 % 6.88 % 3.02 % (6.40) % (5.53) % Ratio of realized gains (losses) to average net assets (3) 1.94 % 61.92 % 4.06 % 57.36 % (12.79) % (1) Per-share data was derived using the ending number of shares outstanding for the period. (2) Based on the monthly average of net assets as of the beginning and end of each period presented. (3) Ratios are annualized. |
ORGANIZATION (Details)
ORGANIZATION (Details) | 6 Months Ended |
Jun. 30, 2022 | |
ORGANIZATION | |
Maximum percentage of total assets of investment securities | 40% |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details) - Discount rate | Jun. 30, 2022 |
Minimum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 12 |
Maximum | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Measurement input | 53 |
INVESTMENTS - Composition of ou
INVESTMENTS - Composition of our investments by major class (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Investment Holdings [Line Items] | ||
Investments at Amortized Cost | $ 15,191,759 | $ 13,933,057 |
Percentage of Amortized Cost | 100% | 100% |
Investments at Fair Value | $ 15,341,080 | $ 14,098,675 |
Percentage of Fair Value | 100% | 100% |
Consumer | ||
Investment Holdings [Line Items] | ||
Investments at Fair Value | $ 5,662,500 | $ 2,362,500 |
Percentage of Fair Value | 36.90% | 16.80% |
Financial | ||
Investment Holdings [Line Items] | ||
Investments at Fair Value | $ 1,698,580 | $ 3,836,175 |
Percentage of Fair Value | 11% | 27.20% |
Information Technology | ||
Investment Holdings [Line Items] | ||
Investments at Fair Value | $ 300,000 | $ 300,000 |
Percentage of Fair Value | 2% | 2.10% |
Real Estate | ||
Investment Holdings [Line Items] | ||
Investments at Fair Value | $ 7,680,000 | $ 7,600,000 |
Percentage of Fair Value | 50.10% | 53.90% |
Short-Term Non-banking Loans | ||
Investment Holdings [Line Items] | ||
Investments at Amortized Cost | $ 13,328,580 | $ 11,655,750 |
Percentage of Amortized Cost | 87.70% | 83.70% |
Investments at Fair Value | $ 13,328,580 | $ 11,650,000 |
Percentage of Fair Value | 86.90% | 82.60% |
Preferred Stock | ||
Investment Holdings [Line Items] | ||
Investments at Amortized Cost | $ 1,050,000 | $ 1,050,000 |
Percentage of Amortized Cost | 6.90% | 7.50% |
Investments at Fair Value | $ 1,200,000 | $ 1,200,000 |
Percentage of Fair Value | 7.80% | 8.50% |
Preferred Stock | Information Technology | ||
Investment Holdings [Line Items] | ||
Investments at Amortized Cost | $ 150,000 | $ 150,000 |
Investments at Fair Value | 300,000 | 300,000 |
Common Stock | ||
Investment Holdings [Line Items] | ||
Investments at Amortized Cost | $ 414,128 | |
Percentage of Amortized Cost | 3% | |
Investments at Fair Value | $ 436,175 | |
Percentage of Fair Value | 3.10% | |
Common Stock | Financial | ||
Investment Holdings [Line Items] | ||
Investments at Amortized Cost | $ 414,128 | |
Investments at Fair Value | 436,175 | |
Warrants | ||
Investment Holdings [Line Items] | ||
Investments at Amortized Cost | 679 | 679 |
Other Equity | ||
Investment Holdings [Line Items] | ||
Investments at Amortized Cost | $ 812,500 | $ 812,500 |
Percentage of Amortized Cost | 5.40% | 5.80% |
Investments at Fair Value | $ 812,500 | $ 812,500 |
Percentage of Fair Value | 5.30% | 5.80% |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | $ 15,341,080 | $ 14,098,675 |
Short-Term Non-banking Loans | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 13,328,580 | 11,650,000 |
Common Stock | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 436,175 | |
Preferred Stock | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 1,200,000 | 1,200,000 |
Other Equity | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 812,500 | 812,500 |
Level 1 | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 436,175 | |
Level 1 | Common Stock | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 436,175 | |
Level 3 | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 15,341,080 | 13,662,500 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Net change in unrealized appreciation attributable to Level 3 investments still held | 0 | 0 |
Level 3 | Short-Term Non-banking Loans | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 13,328,580 | 11,650,000 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at the beginning | 11,650,000 | 2,789,000 |
Purchases and other adjustments to cost | 9,103,580 | 24,765,333 |
Sales and redemptions | (7,425,000) | (15,904,333) |
Balance at the end | $ 13,328,580 | $ 11,650,000 |
Level 3 | Short-Term Non-banking Loans | Interest rate | Minimum | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Interest rate | 12 | 12 |
Level 3 | Short-Term Non-banking Loans | Interest rate | Maximum | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Interest rate | 53 | 44 |
Level 3 | Preferred Stock | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | $ 1,200,000 | $ 1,200,000 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at the beginning | 1,200,000 | 300,000 |
Purchases and other adjustments to cost | 900,000 | |
Balance at the end | 1,200,000 | 1,200,000 |
Level 3 | Other Equity | ||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Investments at Fair Value | 812,500 | 812,500 |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at the beginning | 812,500 | 278,897 |
Purchases and other adjustments to cost | 812,500 | |
Sales and redemptions | (278,897) | |
Balance at the end | $ 812,500 | $ 812,500 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) | Aug. 10, 2018 | Jan. 03, 2022 |
Ms. Zbikowski, along with her husband Scott Zbikowski | ||
Related Party Transaction [Line Items] | ||
Shares of common stock owned by related party | 1,765,000 | |
Promissory note term | 2 years | |
Principal amount of note obtained | $ 250,000 | |
Interest payable monthly (as a percent) | 10% | |
Debtors' pledge in number of common stock | 625,000 | |
Lyle A. Berman | Revolving line of credit | ||
Related Party Transaction [Line Items] | ||
Maximum borrowing capacity | $ 5,000,000 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
INCOME TAXES | ||||||
Deferred tax liability | $ 39,000 | $ 39,000 | $ 45,000 | |||
Accrued income taxes | 201,242 | 201,242 | $ 1,269,000 | |||
Income taxes payable | $ 216,242 | $ 348,587 | 375,242 | $ 1,011,278 | ||
Effective tax rate | 29% | 29% | ||||
Federal NOL | $ 350,000 | |||||
Federal and state tax payments | $ 1,449,000 | $ 1,449,000 |
LINE OF CREDIT - Additional Inf
LINE OF CREDIT - Additional Information (Details) - USD ($) | 6 Months Ended | |
Jan. 03, 2022 | Jun. 30, 2022 | |
LINE OF CREDIT | ||
Line of credit, outstanding | $ 2,075,000 | |
Line of credit, maturity date | Jan. 03, 2027 | |
Loan Agreement | Eastman Investment, Inc. | Revolving line of credit | ||
LINE OF CREDIT | ||
Line of credit facility maximum borrowing capacity | $ 5,000,000 | |
Interest rate at per annum | 8% | |
Line of credit facility term | 5 years |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) - shares | Apr. 11, 2022 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 |
Common stock issued | 10,855,413 | ||||||
Common stock, shares outstanding | 10,855,413 | 10,790,413 | 10,790,413 | 10,696,735 | 11,067,402 | 11,067,402 | |
Three Independent directors | |||||||
Number of shares issued during the period | 15,000 | ||||||
Two Non Independent directors | |||||||
Number of shares issued during the period | 10,000 |
PER-SHARE INFORMATION (Details)
PER-SHARE INFORMATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | |
PER-SHARE INFORMATION | |||||||
Numerator: Net increase in net assets resulting from operations | $ 518,008 | $ 781,506 | $ 930,119 | $ 2,526,548 | |||
Denominator: Weighted-average number of common shares outstanding, basic | 10,847,556 | 10,790,413 | 10,819,142 | 10,788,175 | |||
Weighted-average number of common shares outstanding - diluted | 10,847,556 | 10,790,413 | 10,819,142 | 10,788,175 | 10,974,721 | 11,067,402 | 11,067,402 |
Basic net gain per common share | $ 0.05 | $ 0.07 | $ 0.09 | $ 0.23 | |||
Diluted net gain per common share | $ 0.05 | $ 0.07 | $ 0.09 | $ 0.23 |
OPERATING LEASES - Additional I
OPERATING LEASES - Additional Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) lease | Dec. 31, 2021 | |
OPERATING LEASES | ||||
Number of non-cancelable operating leases | lease | 2 | |||
Weighted-average discount rate | 4.50% | |||
Weighted-average remaining lease term | 1 year | |||
Rent expense under ASC 840 | $ | $ 19,141 | $ 16,337 | $ 35,953 |
OPERATING LEASES - components o
OPERATING LEASES - components of our operating lease (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | |
Components of our operating lease | |||
Operating lease costs | $ 5,504 | $ 10,283 | |
Variable lease cost | 4,522 | 9,123 | |
Short-term lease cost | 9,115 | 16,547 | |
Total | $ 19,141 | $ 16,337 | $ 35,953 |
OPERATING LEASES - Supplemental
OPERATING LEASES - Supplemental balance sheet information (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Supplemental balance sheet information | ||
Right-of-use assets | $ 26,804 | $ 4,984 |
Operating Lease Liability | 26,859 | |
Less: short term portion | (23,832) | |
Long term portion | $ 3,027 |
OPERATING LEASES - Maturity ana
OPERATING LEASES - Maturity analysis under lease agreements (Details) | Jun. 30, 2022 USD ($) |
Maturity analysis under lease agreements | |
2022 | $ 12,715 |
2023 | 14,859 |
Total lease payments | 27,574 |
Less: interest | (715) |
Present value of lease liabilities | $ 26,859 |
FINANCIAL HIGHLIGHTS (Details)
FINANCIAL HIGHLIGHTS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2021 | |
Per Share Data (1) | ||||||||
Net asset value at beginning of period | $ 1.24 | $ 1.08 | $ 0.91 | $ 1.02 | $ 0.87 | |||
Net investment income (loss) | 0.11 | 0.04 | 0.01 | (0.03) | (0.02) | |||
Net realized and unrealized gains (losses) | 0.01 | 0.28 | 0.02 | 0.02 | 0.09 | |||
Provision for income taxes | (0.04) | (0.09) | 0 | 0 | 0 | |||
Stock based compensation | 0.01 | 0 | 0 | 0 | 0 | |||
Repurchase of common stock | 0 | 0 | 0.02 | 0 | 0 | |||
Payment of common stock dividend | 0 | 0 | 0 | (0.05) | 0 | |||
Net asset value at end of period | $ 1.33 | $ 1.31 | 1.33 | 1.31 | ||||
Ratio / Supplemental Data | ||||||||
Per share market value of investments at end of period | $ 1.41 | $ 1.22 | $ 1.41 | $ 1.22 | $ 0.65 | $ 0.70 | $ 0.82 | |
Shares outstanding at end of period | 10,855,413 | 10,790,413 | 10,855,413 | 10,790,413 | 10,696,735 | 11,067,402 | 11,067,402 | 10,790,413 |
Average weighted shares outstanding for the period | 10,847,556 | 10,790,413 | 10,819,142 | 10,788,175 | 10,974,721 | 11,067,402 | 11,067,402 | |
Net assets at end of period | $ 14,426,607 | $ 14,188,588 | $ 14,426,607 | $ 14,188,588 | $ 10,221,718 | $ 10,588,689 | $ 11,278,889 | |
Average net assets | $ 13,888,938 | $ 13,073,718 | $ 13,888,938 | $ 13,073,718 | $ 10,025,622 | $ 12,304,975 | $ 9,955,674 | |
Total investment return | 6.45% | 21.30% | 3.30% | (5.88%) | 8.05% | |||
Portfolio turnover rate | 65.55 | 75.65 | 11.90 | 7.11 | 11.55 | |||
Ratio of operating expenses to average net assets | (14.63%) | (11.72%) | (9.41%) | (7.70%) | (6.98%) | |||
Ratio of net investment income (loss) to average net assets | 18.01% | 6.88% | 3.02% | (6.40%) | (5.53%) | |||
Ratio of realized gains (losses) to average net assets | 1.94 | 61.92 | 4.06 | 57.36 | (12.79) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Aug. 11, 2022 | Aug. 09, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Subsequent Event [Line Items] | ||||
Post-reverse-split basis authorized shares issue. | 250,000,000 | 250,000,000 | ||
Investment Owned, at Cost | $ 15,191,759 | $ 13,933,057 | ||
Subsequent events. | ||||
Subsequent Event [Line Items] | ||||
Reverse stock split common shares | 2.25 | |||
Post-reverse-split basis authorized shares issue. | 111,111,111 | |||
Subsequent events. | IPO | ||||
Subsequent Event [Line Items] | ||||
Company public offer and sale shares | 1,250,000 | |||
Price per share | $ 4 | |||
Gross proceeds | $ 5,000,000 | |||
Subsequent events. | Over-Allotment Option | ||||
Subsequent Event [Line Items] | ||||
Company public offer and sale shares | 187,500 | |||
Price per share | $ 5 | |||
Underwriters option | 45 days | |||
Underwriter warrant | 5 years | |||
Company purchase common shares | 75,000 | |||
Investment Owned, at Cost | $ 4,041,000 |