Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 31, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Registrant Name | MILL CITY VENTURES III, LTD. | ||
Entity Central Index Key | 0001425355 | ||
Document Type | 10-K/A | ||
Amendment Flag | true | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Common Stock Shares Outstanding | 6,185,255 | ||
Entity Public Float | $ 5,625,200 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-41472 | ||
Entity Incorporation State Country Code | MN | ||
Entity Tax Identification Number | 90-0316651 | ||
Entity Address Address Line 1 | 1907 Wayzata Blvd | ||
Entity Address Address Line 2 | #205 | ||
Entity Address City Or Town | Wayzata | ||
Entity Address State Or Province | MN | ||
Entity Address Postal Zip Code | 55391 | ||
City Area Code | 952 | ||
Local Phone Number | 479-1923 | ||
Entity Interactive Data Current | Yes | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | Boulay PLLP | ||
Auditor Location | Minneapolis, Minnesota | ||
Security 12g Title | Common stock, $0.001 par value per share | ||
Auditor Firm Id | 542 | ||
Amendment Description | Mill City Ventures III, Ltd. is filing this Amendment No. 1 on Form 10-K/A (this “Form 10-K/A”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, originally filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 17, 2023 (the “Original Filing”), to restate and amend its previously issued audited consolidated financial statements and related financial information for the fiscal year ended December 31, 2022. The restatement and amendment was undertaken to correct an error arising from the failure to accrue certain cash bonus payments declared and paid to officers and directors in January 2023 but which related to service provided during 2022. The failure to accrue bonuses as described has also given rise to a conclusion that the company has a material weakness in its internal controls over financial reporting and disclosure controls. |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ASSETS | ||
Investments, at fair value: Non-control/non-affiliate investments (cost: $17,359,804 and $13,933,057 respectively) | $ 16,708,432 | $ 14,098,675 |
Cash | 1,089,641 | 1,936,148 |
Note receivable, related party | 250,000 | 250,000 |
Prepaid expenses | 218,440 | 83,674 |
Interest and dividend receivables | 250,879 | 324,350 |
Right-of-use operating lease asset | 16,398 | 4,984 |
Deferred taxes | 201,000 | 0 |
Total Assets | 18,734,790 | 16,697,831 |
LIABILITIES | ||
Accounts payable | 776,514 | 64,028 |
Dividend payable | 0 | 100 |
Payable for purchase of investments | 0 | 1,900,000 |
Operating lease liability | 16,562 | 5,654 |
Deferred interest income | 70,154 | 0 |
Accrued income tax | 0 | 1,269,000 |
Deferred taxes | 0 | 45,000 |
Total Liabilities | 863,230 | 3,283,782 |
SHAREHOLDERS EQUITY (NET ASSETS) | ||
Common stock, par value $0.001 per share (111,111,111 authorized; 6,185,255 and 4,795,739 outstanding) | 0 | 0 |
Additional paid-in capital | 15,043,291 | 10,694,163 |
Accumulated deficit | (1,159,665) | (1,159,665) |
Accumulated undistributed investment loss | (1,086,739) | (1,877,667) |
Accumulated undistributed net realized gains on investment transactions | 5,713,829 | 5,580,810 |
Net unrealized appreciation (depreciation) in value of investments | (651,371) | 165,618 |
Total Shareholders' Equity (Net Assets) | 17,871,560 | 13,414,049 |
Total Liabilities and Shareholders' Equity | $ 18,734,790 | $ 16,697,831 |
Net Asset Value Per Common Share | $ 2.89 | $ 2.80 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Balance Sheets | ||
Investments at Amortized Cost | $ 17,359,804 | $ 13,933,057 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 111,111,111 | 111,111,111 |
Common stock, shares outstanding | 6,185,255 | 4,795,739 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Investment Income | ||
Interest income | $ 4,199,453 | $ 2,656,201 |
Total Investment Income | 4,199,453 | 2,656,201 |
Operating Expenses | ||
Professional fees | 1,592,218 | 453,440 |
Payroll | 941,590 | 556,432 |
Insurance | 111,110 | 108,165 |
Occupancy | 73,146 | 66,459 |
Director's fees | 417,073 | 120,000 |
Interest expense | 195,893 | 9,511 |
Other general and administrative | 67,847 | 40,744 |
Total Operating Expenses | 3,398,877 | 1,354,751 |
Net Investment Gain | 800,576 | 1,301,450 |
Realized and Unrealized Gain (Loss) on Investments | ||
Net realized gain on investments | 133,019 | 4,118,001 |
Net change in unrealized depreciation on investments | (816,989) | (1,533,703) |
Net Realized and Unrealized Gain (Loss) on Investments | (683,970) | 2,584,298 |
Net Increase in Net Assets Resulting from Operations Before Taxes | 116,606 | 3,885,748 |
Provision For Income Taxes | 9,648 | 1,054,698 |
Net Increase in Net Assets Resulting from Operations | $ 106,958 | $ 2,831,050 |
Net Increase in Net Assets Resulting from Operations per share: | ||
Basic and diluted | $ 0.02 | $ 0.59 |
Weighted-average number of common shares outstanding - basic and diluted | 5,333,028 | 4,795,242 |
Statements of Shareholders' Equ
Statements of Shareholders' Equity - USD ($) | Total | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated Undistributed Net Investment Loss [Member] | Accumulated Undistributed Net Realized Gain on Investments Transactions | Net Unrealized Appreciation (Depreciation) in value of Investments | Common Stock |
Balance, shares at Dec. 31, 2020 | 4,793,739 | ||||||
Balance, amount at Dec. 31, 2020 | $ 11,640,887 | $ 10,673,014 | $ (1,159,665) | $ (2,124,419) | $ 2,541,850 | $ 1,699,321 | $ 10,786 |
Dividend Declared | (1,079,041) | 0 | 0 | 0 | (1,079,041) | 0 | $ 0 |
Common shares issued in consideration for expense payment, shares | 2,000 | ||||||
Common shares issued in consideration for expense payment, amount | 21,153 | 21,149 | 0 | 0 | $ 4 | ||
Undistributed net investment gain | 246,752 | 0 | 0 | 246,752 | 0 | 0 | 0 |
Undistributed net realized gain on investment transactions | 4,118,001 | 0 | 0 | 0 | 4,118,001 | 0 | 0 |
Depreciation in value of investments | (1,533,703) | 0 | 0 | 0 | 0 | (1,533,703) | $ 0 |
Balance, shares at Dec. 31, 2021 | 4,795,739 | ||||||
Balance, amount at Dec. 31, 2021 | 13,414,049 | 10,694,163 | (1,159,665) | (1,877,667) | 5,580,810 | 165,618 | $ 10,790 |
Common shares issued in consideration for expense payment, shares | 77,777 | ||||||
Common shares issued in consideration for expense payment, amount | 159,443 | 159,365 | 0 | 0 | $ 78 | ||
Undistributed net investment gain | 790,928 | 0 | 0 | 790,928 | 0 | 0 | 0 |
Undistributed net realized gain on investment transactions | 133,019 | 0 | 0 | 0 | 133,019 | 0 | 0 |
Depreciation in value of investments | (816,989) | 0 | 0 | 0 | 0 | (816,989) | $ 0 |
Common shares issued in public offering net of underwriting costs and warrants, shares | 1,250,000 | ||||||
Common shares issued in public offering net of underwriting costs and warrants, amount | 3,840,622 | 3,839,372 | 0 | 0 | $ 1,250 | ||
Warrants issued to underwriter | 201,173 | 201,173 | |||||
Common shares issued in reverse stock split rounding, shares | 735 | ||||||
Common shares issued in reverse stock split rounding, amount | 0 | 0 | $ 0 | ||||
Common shares issued in stock-based compensation, shares | 61,004 | ||||||
Common shares issued in stock-based compensation, amount | 149,315 | 149,218 | 0 | 0 | $ 97 | ||
Balance, shares at Dec. 31, 2022 | 6,185,255 | ||||||
Balance, amount at Dec. 31, 2022 | $ 17,871,560 | $ 15,043,291 | $ (1,159,665) | $ (1,086,739) | $ 5,713,829 | $ (651,371) | $ 12,215 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities: | ||
Net increase in net assets resulting from operations | $ 106,958 | $ 2,831,050 |
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: | ||
Net change in unrealized depreciation on investments | 816,989 | 1,533,703 |
Net realized gain on investments | (133,019) | (4,118,001) |
Purchases of investments | (23,558,458) | (27,029,292) |
Proceeds from sales of investments | 20,264,731 | 22,188,562 |
Deferred income taxes | (246,000) | (213,000) |
Stock-based compensation to employees and vendors | 308,758 | 15,403 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (146,180) | (21,475) |
Interest and dividends receivable | 73,471 | (258,439) |
Receivable for investment sales | 0 | 19,313 |
Payable for investment purchase | (1,900,000) | 1,900,000 |
Accounts payable and other liabilities | 723,294 | 10,804 |
Deferred interest income | 70,154 | 0 |
Accrued income taxes | (1,269,000) | 1,255,278 |
Net cash used in operating activities | (4,888,302) | (1,886,094) |
Cash flows from financing activities: | ||
Proceeds from public offering, net of underwriting discounts and offering costs | 4,041,795 | 0 |
Proceeds from line of credit | 9,793,800 | 0 |
Repayments on line of credit | (9,793,800) | 0 |
Payments for common stock dividend | 0 | (1,618,337) |
Net cash provided (used) by financing activities | 4,041,795 | (1,618,337) |
Net decrease in cash | (846,507) | (3,504,431) |
Cash, beginning of period | 1,936,148 | 5,440,579 |
Cash, end of period | 1,089,641 | 1,936,148 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 428,948 | 32,398 |
Cash paid for interest | 195,894 | 9,511 |
Non-cash financing activities: | ||
Common shares issued as consideration for investment | $ 0 | $ 5,750 |
Investment Schedule
Investment Schedule - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Total Cash, Percentage of Net Assets | 6.10% | 14.43% |
Total Investment, Percentage of Net Assets | 93.50% | 105.10% |
Total Investments, Cost | $ 17,359,804 | $ 13,933,057 |
Total Investments at Fair Value | 16,708,432 | 14,098,675 |
Total Cash, Cost | 1,089,641 | 1,936,148 |
Total Cash, Fair Value | 1,089,641 | 1,936,148 |
Total Investments and Cash, Cost | 18,449,445 | 15,869,205 |
Total Investments and Cash, Fair Value | $ 17,798,073 | $ 16,034,823 |
Total Investments and Cash, Percentage of Net Assets | 99.60% | 119.53% |
Represents the member information pertaining to short term banking loans. | ||
Total Investments, Cost | $ 15,486,625 | $ 11,655,750 |
Total Investments at Fair Value | $ 15,285,932 | $ 11,650,000 |
Total Investments, Percentage of Net Assets | 85.53% | 86.85% |
Represents the member information pertaining to other equity securities. | ||
Total Investments, Cost | $ 822,500 | $ 812,500 |
Total Investments at Fair Value | $ 222,500 | $ 812,500 |
Total Investments, Percentage of Net Assets | 1.25% | 6.05% |
Represents the member information pertaining to other equity securities. | Consumer | ||
Total Investments, Cost | $ 212,500 | $ 212,500 |
Total Investments at Fair Value | $ 212,500 | $ 212,500 |
Total Investments, Percentage of Net Assets | 1.19% | 1.58% |
Represents the member information pertaining to other equity securities. | Financial | ||
Total Investments, Cost | $ 610,000 | $ 600,000 |
Total Investments at Fair Value | $ 10,000 | $ 600,000 |
Total Investments, Percentage of Net Assets | 0.06% | 4.47% |
Healthcare | Warrants One | ||
Total Investments, Cost | $ 679 | $ 679 |
Total Investments, Percentage of Net Assets | 0% | 0% |
Represents the member information pertaining to 23% secured loans. | Represents the member information pertaining to litigation financing. | Represents the member information pertaining to short term banking loans. | ||
Total Investments, Cost | $ 1,805,750 | |
Total Investments at Fair Value | $ 1,800,000 | |
Total Investments, Percentage of Net Assets | 13.42% | |
Represents the member information pertaining to 15% secured loans. | Consumer | ||
Total Investments, Cost | $ 2,900,000 | |
Total Investments at Fair Value | $ 2,873,893 | |
Total Investments, Percentage of Net Assets | 16.08% | |
Represents the member information pertaining to 15% secured loans. | Represents the member information pertaining to short term banking loans. | Consumer | ||
Total Investments, Cost | $ 5,000,000 | $ 1,250,000 |
Total Investments at Fair Value | $ 4,975,955 | $ 1,250,000 |
Total Investments, Percentage of Net Assets | 27.84% | 9.32% |
Represents the member information pertaining to 15% secured loans. | Represents the member information pertaining to short term banking loans. | Consumer | ||
Total Investments, Cost | $ 400,000 | |
Total Investments at Fair Value | $ 398,635 | |
Total Investments, Percentage of Net Assets | 2.23% | |
Represents the member information pertaining to 15% secured loans. | Represents the member information pertaining to short term banking loans. | Tailwinds LLC Member | ||
Total Investments, Cost | $ 3,000,000 | |
Total Investments at Fair Value | $ 3,000,000 | |
Total Investments, Percentage of Net Assets | 22.36% | |
Represents the member information pertaining to 15% secured loans. | Represents the member information pertaining to short term banking loans. | Real Estate | ||
Total Investments, Cost | $ 745,000 | $ 700,000 |
Total Investments at Fair Value | $ 746,354 | $ 700,000 |
Total Investments, Percentage of Net Assets | 4.17% | 5.22% |
Represents the member information pertaining to 18% secured loans. | Represents the member information pertaining to short term banking loans. | Consumer | ||
Total Investments, Cost | $ 2,250,000 | |
Total Investments at Fair Value | $ 2,255,625 | |
Total Investments, Percentage of Net Assets | 12.62% | |
Represents the member information pertaining to 52% secured loans | Represents the member information pertaining to short term banking loans. | Financial | ||
Total Investments, Cost | $ 500,000 | |
Total Investments at Fair Value | $ 500,000 | |
Total Investments, Percentage of Net Assets | 3.73% | |
Represents the member information pertaining to 12% secured loans. | Represents the member information pertaining to short term banking loans. | Financial | ||
Total Investments, Cost | $ 500,000 | $ 500,000 |
Total Investments at Fair Value | $ 345,421 | $ 500,000 |
Total Investments, Percentage of Net Assets | 1.93% | 3.73% |
Represents the member information pertaining to 33% secured loans. | Represents the member information pertaining to short term banking loans. | Financial | ||
Total Investments, Cost | $ 2,479,125 | |
Total Investments at Fair Value | $ 2,478,030 | |
Total Investments, Percentage of Net Assets | 13.87% | |
Represents the member information pertaining to 15% convertible note. | Information Technology | ||
Total Investments, Cost | $ 212,500 | |
Investments at Fair Value | $ 213,656 | |
Total Investments, Percentage of Net Assets | 1.20% | |
Represents the member information pertaining to Alatus Development, Corp. | Represents the member information pertaining to 15% secured loans. | Represents the member information pertaining to short term banking loans. | Real Estate | ||
Total Investments, Cost | $ 1,000,000 | |
Total Investments at Fair Value | $ 998,363 | |
Total Investments, Percentage of Net Assets | 5.59% | |
Represents the member information pertaining to Alatus Development, LLC. | Represents the member information pertaining to 15% secured loans. | Represents the member information pertaining to short term banking loans. | Real Estate | ||
Total Investments, Cost | $ 3,900,000 | |
Total Investments at Fair Value | $ 3,900,000 | |
Total Investments, Percentage of Net Assets | 29.07% | |
Preferred Stock | ||
Total Investments, Cost | $ 1,050,000 | $ 1,050,000 |
Total Investments at Fair Value | $ 1,200,000 | $ 1,200,000 |
Total Investments, Percentage of Net Assets | 6.72% | 8.95% |
Preferred Stock | Information Technology | ||
Total Investments, Cost | $ 150,000 | $ 150,000 |
Investments at Fair Value | $ 300,000 | $ 300,000 |
Total Investments, Percentage of Net Assets | 5.04% | 2.24% |
Preferred Stock | Represents information pertaining to the Wisdom Gaming, Inc. | ||
Total Investments, Cost | $ 900,000 | $ 900,000 |
Total Investments at Fair Value | $ 900,000 | $ 900,000 |
Total Investments, Percentage of Net Assets | 1.68% | 6.71% |
Common Stock | Financial | ||
Total Investments, Cost | $ 414,128 | |
Total Investments at Fair Value | $ 436,175 | |
Total Investments, Percentage of Net Assets | 3.25% |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 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 filing periodic reports with the SEC. We engage in the business of providing short-term specialty finance solutions, typically in the form of short-term loans, primarily to small businesses, both private and public, and high-net-worth individuals. To avoid regulation under the 1940 Act, we generally seek to structure our investments so they do not constitute “securities” for purposes of federal securities laws, and we monitor our investments as a whole to ensure that no more than 40% of our total assets consist of “investment securities” as defined under the 1940 Act. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of estimates: The presentation of certain items in the financial statements for the year ended December 31, 2021, has been changed to conform to the classifications used in 2022. These reclassifications had no effect on shareholders’ equity or net increase in net assets as previously recorded. 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: · Level 2: · Level 3: Our valuation policy and procedures The estimated fair value of our Level 3 investment assets is determined on a quarterly basis by our Board of Directors. In general, we value our Level 3 equity investments at cost unless circumstances warrant a different approach. Examples of these circumstances includes a situation in which a portfolio company has engaged in a subsequent financing of more than a de minimis When valuing preferred equity investments, we generally view intrinsic value as a key input. Intrinsic value means the value of any conversion feature (if the preferred investment is convertible) or the value of any liquidation or other preference. Discounts to intrinsic value may be applied in cases where the issuer’s financial condition is impaired or, in cases where intrinsic value relating to a conversion is determined to be a key input, to account for resale restrictions applicable to the securities issuable upon conversion. When valuing warrants, our valuation policy and procedures indicate that value will generally be the difference between the closing price of the underlying equity security and the exercise price, after applying an appropriate discount for restriction, if applicable, in situations where the underlying security is marketable. If the underlying security is not marketable, then intrinsic value will be considered consistent with the principles described above. Generally, “out-of-the-money” warrants will be valued at cost or zero. For non-traded (Level 3) debt instruments with a residual maturity less than or equal to 60 days, we will generally value such instruments based on a discounted cash flows approach, considering the straight-line amortized face value of the debt unless justification for impairment exists. For level 3 non-banking loans with a maturity in excess of 60 days, fair value is determined based on the initial purchase price and adjusted as necessary to reflect any changes in the financial strength of the creditor and changes in interest rates in the high-yield credit markets. On a quarterly basis, our management provides members of our Board of Directors with recommendations, if any, to change any existing valuations of our portfolio investments or hierarchy levels for purposes of determining the fair value of such investments based upon the foregoing. In such a case, the Board of Directors would then discuss these materials and, consistent with the policies and approaches outlined above, makes final determinations respecting the valuation and hierarchy levels of our portfolio investments. We made no changes to our valuation policy and procedures during the reporting period. Income taxes: We 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 not be able to realize our deferred income tax assets, 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. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months. Our evaluation was performed for the tax years ended December 31, 2019 through 2021, which are the tax years that remain subject to examination by the tax jurisdictions as of December 31, 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: |
NET GAIN PER COMMON SHARE
NET GAIN PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2022 | |
NET GAIN PER COMMON SHARE | |
NET GAIN PER COMMON SHARE | NOTE 3 — NET GAIN PER COMMON SHARE Basic net gain (loss) per common share is computed by dividing net increase (decrease) 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 per common share follows: For the Year Ended December 31, 2022 2021 Numerator: Net increase in net assets resulting from operations $ 106,958 $ 2,831,050 Denominator: Weighted-average number of common shares outstanding 5,333,028 4,795,242 Basic and diluted net gain per common share $ 0.02 $ 0.59 At December 31, 2022 and 2021, the Company did not have any options or warrants outstanding or any other dilutive common equivalent shares other than conditional option grants (for an aggregate of 870,000 shares of common stock) that were, at December 31, 2022, unexercisable and subject to voiding in the absence of shareholder approval of the related 2022 Stock Incentive Plan. The Company’s shareholders subsequently approved the plan on January 20, 2023 at a special meeting of shareholders called for that purpose. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
LEASES | NOTE 4 — 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, 2022 and December 31, 2021 was 4.5% and the weighted-average remaining lease term is one year. Rent expense for office facilities for the year ended December 31, 2022 and 2021 was $73,146 and $66,459, respectively. The components of our operating leases were as follows for the years ended December 31: 2022 2021 Operating lease costs $ 21,291 $ 19,116 Variable lease cost 18,325 17,613 Short-term lease cost 33,530 29,730 Total $ 73,146 $ 66,459 Supplemental balance sheet information consisted of the following at December 31: Operating Lease 2022 2021 Right-of-use assets $ 16,398 $ 4,984 Operating Lease Liability $ 16,562 $ 5,654 Less: short term portion (16,562 ) (5,654 ) Long term portion $ — $ — Maturity analysis under lease agreements consisted of the following as of December 31: 2022 2021 2022 $ — $ 5,698 2023 16,675 — Total lease payments 16,675 5,698 Less: Present value discount (113 ) (44 ) Present value of lease liabilities $ 16,562 $ 5,654 Supplemental cash flow information related to leases for the years ended December 31: 2022 2021 Operating cash outflow from operating leases $ 75,146 $ 66,459 |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
SHAREHOLDERS EQUITY | |
SHAREHOLDERS' EQUITY | NOTE 5—SHAREHOLDERS’ EQUITY At December 31, 2022 a total of 6,185,255 shares of common stock were issued and outstanding. At December 31, 2021 a total of 4,795,739 shares of common stock were issued and outstanding. 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 affected 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. 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 which option was not exercised. 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. In connection with the public offering, the Company issued a five-year warrant to the underwriter. The warrant allows the underwriter to purchase up to 75,000 common shares at $5.00 per share. This warrant is exercisable after 180 days, and expires on August 8, 2027. This warrant is equity-classified and the fair value was $201,173 on the offering date. During 2022, there were 1,389,516 shares issued by the Company. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENTS | |
INVESTMENTS | NOTE 6 — INVESTMENTS The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of December 31, 2022 (together with the corresponding percentage of total portfolio investments): As of December 31, 2022 Investments at Amortized Cost Percentage of Amortized Cost Investments at Fair Value Percentage of Fair Value Short-term Non-banking Loans $ 15,486,625 89.2 % $ 15,285,932 91.5 % Preferred Stock 1,050,000 6.1 1,200,000 7.2 Warrants 679 — — — Other Equity 822,500 4.7 222,500 1.3 Total $ 17,359,804 100.0 % $ 16,708,432 100.0 % The following table shows the composition of our investment portfolio by major class, at amortized cost and fair value, as of December 31, 2021 (together with the corresponding percentage of total portfolio investments): As of December 31, 2021 Investments at Amortized Cost Percentage of Amortized Cost Investments at Fair Value Percentage of 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 investment portfolio by industry grouping, based on fair value as of December 31, 2022: As of December 31, 2022 Investments at Fair Value Percentage of Fair Value Business Services $ 7,231,580 43.3 % Consumer 4,385,028 26.2 Financial 2,833,451 17.0 Information Technology 513,656 3.1 Real Estate 1,744,717 10.4 Total $ 16,708,432 100.0 % The following table shows the composition of our investment portfolio by industry grouping, based on fair value as of December 31, 2021: As of December 31, 2021 Investments at Fair Value Percentage of 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 | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 7 — FAIR VALUE OF FINANCIAL INSTRUMENTS Level 3 valuation information The following table presents the fair value measurements of our portfolio investments by major class, as of December 31, 2022, according to the fair value hierarchy: As of December 31, 2022 Level 1 Level 2 Level 3 Total Short-term Non-banking Loans $ — $ — $ 15,285,932 $ 15,285,932 Preferred Stock — — 1,200,000 1,200,000 Warrants — — — — Other Equity — — 222,500 222,500 Total $ — $ — $ 16,708,432 $ 16,708,432 The following table presents the fair value measurements of our portfolio investments 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 Warrants — — — — 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 portfolio investment assets for the year ended December 31, 2022: For the year ended December 31, 2022 ST Non-banking Loans Preferred Stock Common Stock Warrants Other Equity Balance as of January 1, 2022 $ 11,650,000 $ 1,200,000 $ — $ — $ 812,500 Net change in unrealized depreciation (200,693 ) — — — (600,000 ) Purchases and other adjustments to cost 23,548,458 — — — 10,000 Sales and redemptions (19,711,833 ) — — — — Balance as of December 31, 2022 $ 15,285,932 $ 1,200,000 $ — $ — $ 222,500 The net change in unrealized depreciation for the year ended December 31, 2022 attributable to Level 3 portfolio investments still held as of December 31, 2022 is $651,371, and is included in net change in unrealized depreciation on investments on the statement of operations. The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the year ended December 31, 2021: For the year ended December 31, 2021 ST Non-banking Loans Preferred Stock Common 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 ) Balance as of December 31, 2021 $ 11,650,000 $ 1,200,000 $ — $ — $ 812,500 The net change in unrealized appreciation for the year ended December 31, 2021 attributable to Level 3 portfolio investments 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, 2022 and the unobservable inputs used to determine their valuation: Security Type 12/31/22 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans $ 15,285,932 discounted cash flow determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness 12-33% Other Equity 222,500 last secured funding known by company Preferred Stock 1,200,000 last funding secured by company economic changes since last funding $ 16,708,432 The following table presents a reconciliation of the beginning and ending fair value balances for our Level 3 portfolio investment assets for the year ended December 31, 2021: 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 There were no transfers between levels during the years ended December 31, 2022 and 2021. |
LINE OF CREDIT
LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2022 | |
LINE OF CREDIT | |
LINE OF CREDIT | NOTE 8 – 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. During the period January 3 to June 30, 2022, the Loan Agreement provided 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. Beginning July 1, 2022, we became obligated under the Loan Agreement to pay the quarterly unused commitment fee in cash. At December 31, 2022, the balance outstanding on the line was $0. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | NOTE 9 – RELATED-PARTY TRANSACTIONS We maintain a conflicts of interest and related-party transactions policy requiring (i) certain disclosures be made to our Board of Directors in relation to situations where officers, directors, significant shareholders, or any of their affiliates may enter into transactions with us, and (ii) certain disclosures appear in the reports we prepare and file with the SEC. In this regard, during the period covered by this report we entered into, or remained a party to, the following related-party transactions: · 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 534,445 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 on August 30, 2023. 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 277,778 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 8 above for further details. |
RETIREMENT SAVINGS PLANS
RETIREMENT SAVINGS PLANS | 12 Months Ended |
Dec. 31, 2022 | |
RETIREMENT SAVINGS PLANS | |
RETIREMENT SAVINGS PLANS | NOTE 10 — RETIREMENT SAVINGS PLANS Our three full-time employees are eligible to participate in a qualified defined contribution 401(k) plan whereby they may elect to have a specified portion of their salary contributed to the plan. We will make a safe harbor match equal to 100% of their elective deferrals up to a maximum of 5% of eligible earnings in addition to our option to make discretionary contributions to the plan. We made aggregate contributions to the plan totaling $14,063 and $11,250 for the years ended 2022 and 2021, respectively. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11 — INCOME TAXES Presently, we are a “C-corporation” for tax purposes and have booked an income tax provision for the years ended December 31, 2022 and 2021. Income taxes for the year ended December 31, 2022, and 2021 are described below. December 31 2022 2021 Current taxes Federal $ 268,803 $ 909,530 State (13,155 ) 357,168 Deferred taxes Federal (246,000 ) (212,000 ) State — — Provision for income taxes $ 9,648 $ 1,054,698 A reconciliation of income tax provisions at the U.S. statutory rate for fiscal year 2022 and 2021 is as follows: 2022 2021 Rate reconciliation: Tax expense at U.S. statutory rate $ 97,503 $ 1,080,213 Change in deferred tax rate 450 (8,796 ) Provision-to-return reconciliation (18,536 ) (14,743 ) Temporary differences (71,856 ) — Other 2,087 (1,976 ) Income tax provision $ 9,648 $ 1,054,698 As of December 31, 2022 and 2021 we had a deferred tax asset of $201,000 and a deferred tax liability of $45,000, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities as of December 31, 2022 and 2021 were as follows: December 31 2022 2021 Deferred tax components Unrealized (gain) loss on marketable securities $ 156,590 $ (46,660 ) Depreciation 1,781 2,458 R&D and foreign credits 43,828 — Lease liability (39 ) — Other (1,160 ) (798 ) Net deferred tax asset (liability) $ 201,000 $ (45,000 ) |
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS | 12 Months Ended |
Dec. 31, 2022 | |
FINANCIAL HIGHLIGHTS | |
FINANCIAL HIGHLIGHTS | NOTE 12 — FINANCIAL HIGHLIGHTS The following is a schedule of financial highlights for the years ended December 31, 2022 through 2018: Year Ended December 31, 2022 Restated 2021 2020 2019 2018 Per Share Data (1) Net asset value at beginning of period $ 2.80 2.44 2.05 2.30 1.96 Net investment gain (loss) 0.13 0.27 0.11 (0.14 ) (0.11 ) Net realized and unrealized gains (0.11 ) 0.54 0.41 0.00 0.45 Provision for income taxes 0.00 (0.23 ) (0.05 ) 0.00 0.00 Stock-based compensation 0.05 0.00 (0.02 ) 0.00 0.00 Repurchase of common stock 0.00 0.00 0.05 0.00 0.00 Other changes in equity 0.02 0.00 0.00 0.00 0.00 Payment of common stock dividend 0.00 (0.22 ) (0.11 ) (0.11 ) 0.00 Net asset value at end of period $ 2.89 2.80 2.44 2.05 2.30 Ratio / Supplemental Data Per share market value of investments at end of period $ 2.70 2.95 1.40 0.36 2.03 Shares outstanding at end of period 6,185,255 4,795,739 4,793,739 4,918,845 4,918,845 Average weighted shares outstanding for the period 5,333,028 4,795,242 4,830,691 4,918,845 4,918,845 Net assets at end of period $ 17,871,560 13,414,049 11,640,887 10,068,533 11,278,889 Average net assets (2) $ 15,639,394 13,155,207 10,504,563 11,473,535 10,341,702 Total investment return 1.43 % 24.07 % 23.08 % (5.88 )% 17.24 % Portfolio turnover rate (3) 129.57 % 168.67 % 61.11 % 7.63 % 26.93 % Ratio of operating expenses to average net assets (3) (21.73 )% (10.30 )% (7.16 )% (7.27 )% (6.59 )% Ratio of net investment income (loss) to average net assets (3) 5.12 % 9.89 % 5.35 % (5.86 )% (5.13 )% Ratio of realized gains (losses) to average net assets (3) 0.85 % 31.30 % 0.05 % 28.35 % (5.62 )% (1) Per-share data was derived using the weighted-average 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. |
RESTATEMENT OF PREVIOUSLY ISSUE
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | |
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | NOTE 13 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS The Company has restated the accompanying financial statements for the year ended December 31, 2022. The restatement reflects adjustments to correct for a misstatement related to the accounting for a cash bonus paid to management and directors of the Company. The bonus was approved and paid in January, 2023 for services rendered by the employees and directors during 2022. The Company has determined the bonus should have been accrued for as of December 31, 2022 and expensed during the year ended December 31, 2022. The impact of this correction on the 2022 financial statements is as follows: December 31, 2022 As Reported As Restated Balance Sheet Prepaid expenses $ 49,219 $ 218,440 Accounts payable 136,514 776,514 Accumulated undistributed investment loss (615,960 ) (1,086,739 ) Total Shareholders' Equity (Net Assets) 18,342,339 17,871,560 Net Asset Value Per Common Share $ 2.97 $ 2.89 Statement of Operations Payroll $ 541,590 $ 941,590 Director's fees 177,073 417,073 Net Increase in Net Assets Resulting from Operations Before Taxes 756,606 116,606 Provision For Income Taxes 178,869 9,648 Net Increase in Net Assets Resulting from Operations 577,737 106,958 There was no impact on cash as a result of this misstatement, and, as such, the statement of cash flows for the corresponding adjustments reflects an adjustment to net income and to the balance sheet items, resulting in no change to cash flows from operations for the period impacted. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 14 — SUBSEQUENT EVENTS On January 26, 2022, we made a loan in the principal amount of $2,500,000 and obtained a 180-day promissory note bearing interest at 18% per annum. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of estimates | Use of estimates: The presentation of certain items in the financial statements for the year ended December 31, 2021, has been changed to conform to the classifications used in 2022. These reclassifications had no effect on shareholders’ equity or net increase in net assets as previously recorded. |
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: · Level 2: · Level 3: |
Our valuation policy and procedures | Our valuation policy and procedures The estimated fair value of our Level 3 investment assets is determined on a quarterly basis by our Board of Directors. In general, we value our Level 3 equity investments at cost unless circumstances warrant a different approach. Examples of these circumstances includes a situation in which a portfolio company has engaged in a subsequent financing of more than a de minimis When valuing preferred equity investments, we generally view intrinsic value as a key input. Intrinsic value means the value of any conversion feature (if the preferred investment is convertible) or the value of any liquidation or other preference. Discounts to intrinsic value may be applied in cases where the issuer’s financial condition is impaired or, in cases where intrinsic value relating to a conversion is determined to be a key input, to account for resale restrictions applicable to the securities issuable upon conversion. When valuing warrants, our valuation policy and procedures indicate that value will generally be the difference between the closing price of the underlying equity security and the exercise price, after applying an appropriate discount for restriction, if applicable, in situations where the underlying security is marketable. If the underlying security is not marketable, then intrinsic value will be considered consistent with the principles described above. Generally, “out-of-the-money” warrants will be valued at cost or zero. For non-traded (Level 3) debt instruments with a residual maturity less than or equal to 60 days, we will generally value such instruments based on a discounted cash flows approach, considering the straight-line amortized face value of the debt unless justification for impairment exists. For level 3 non-banking loans with a maturity in excess of 60 days, fair value is determined based on the initial purchase price and adjusted as necessary to reflect any changes in the financial strength of the creditor and changes in interest rates in the high-yield credit markets. On a quarterly basis, our management provides members of our Board of Directors with recommendations, if any, to change any existing valuations of our portfolio investments or hierarchy levels for purposes of determining the fair value of such investments based upon the foregoing. In such a case, the Board of Directors would then discuss these materials and, consistent with the policies and approaches outlined above, makes final determinations respecting the valuation and hierarchy levels of our portfolio investments. We made no changes to our valuation policy and procedures during the reporting period. |
Income taxes | Income taxes: 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 not be able to realize our deferred income tax assets, 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. The Company does not believe there will be any material changes in its unrecognized tax positions over the next 12 months. Our evaluation was performed for the tax years ended December 31, 2019 through 2021, which are the tax years that remain subject to examination by the tax jurisdictions as of December 31, 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: |
NET GAIN PER COMMON SHARE (Tabl
NET GAIN PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
NET GAIN PER COMMON SHARE | |
Summary of reconciliation of the numerator and denominator used in the calculation of basic and diluted net gain (loss) per common share | For the Year Ended December 31, 2022 2021 Numerator: Net increase in net assets resulting from operations $ 106,958 $ 2,831,050 Denominator: Weighted-average number of common shares outstanding 5,333,028 4,795,242 Basic and diluted net gain per common share $ 0.02 $ 0.59 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
LEASES | |
Summary of components of our operating lease | 2022 2021 Operating lease costs $ 21,291 $ 19,116 Variable lease cost 18,325 17,613 Short-term lease cost 33,530 29,730 Total $ 73,146 $ 66,459 |
Summary of supplemental balance sheet information | Operating Lease 2022 2021 Right-of-use assets $ 16,398 $ 4,984 Operating Lease Liability $ 16,562 $ 5,654 Less: short term portion (16,562 ) (5,654 ) Long term portion $ — $ — |
Summary of maturity analysis under lease agreements | 2022 2021 2022 $ — $ 5,698 2023 16,675 — Total lease payments 16,675 5,698 Less: Present value discount (113 ) (44 ) Present value of lease liabilities $ 16,562 $ 5,654 |
Schedule of Supplemental cash flow information related to leases | 2022 2021 Operating cash outflow from operating leases $ 75,146 $ 66,459 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENTS | |
Schedule of investments by major class, at amortized cost and fair value | As of December 31, 2022 Investments at Amortized Cost Percentage of Amortized Cost Investments at Fair Value Percentage of Fair Value Short-term Non-banking Loans $ 15,486,625 89.2 % $ 15,285,932 91.5 % Preferred Stock 1,050,000 6.1 1,200,000 7.2 Warrants 679 — — — Other Equity 822,500 4.7 222,500 1.3 Total $ 17,359,804 100.0 % $ 16,708,432 100.0 % |
Schedule of investments by industry grouping, based on fair value | As of December 31, 2021 Investments at Amortized Cost Percentage of Amortized Cost Investments at Fair Value Percentage of 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 % As of December 31, 2022 Investments at Fair Value Percentage of Fair Value Business Services $ 7,231,580 43.3 % Consumer 4,385,028 26.2 Financial 2,833,451 17.0 Information Technology 513,656 3.1 Real Estate 1,744,717 10.4 Total $ 16,708,432 100.0 % As of December 31, 2021 Investments at Fair Value Percentage of 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) | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Schedule of fair value measurements of our investments by major class according to the fair value hierarchy | As of December 31, 2022 Level 1 Level 2 Level 3 Total Short-term Non-banking Loans $ — $ — $ 15,285,932 $ 15,285,932 Preferred Stock — — 1,200,000 1,200,000 Warrants — — — — Other Equity — — 222,500 222,500 Total $ — $ — $ 16,708,432 $ 16,708,432 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 Warrants — — — — 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 year ended December 31, 2022 ST Non-banking Loans Preferred Stock Common Stock Warrants Other Equity Balance as of January 1, 2022 $ 11,650,000 $ 1,200,000 $ — $ — $ 812,500 Net change in unrealized depreciation (200,693 ) — — — (600,000 ) Purchases and other adjustments to cost 23,548,458 — — — 10,000 Sales and redemptions (19,711,833 ) — — — — Balance as of December 31, 2022 $ 15,285,932 $ 1,200,000 $ — $ — $ 222,500 For the year ended December 31, 2021 ST Non-banking Loans Preferred Stock Common 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 ) 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 12/31/22 FMV Valuation Technique Unobservable Inputs Range ST Non-banking Loans $ 15,285,932 discounted cash flow determining private company interest rate based on changes in market rates of instruments with comparable creditworthiness 12-33% Other Equity 222,500 last secured funding known by company Preferred Stock 1,200,000 last funding secured by company economic changes since last funding $ 16,708,432 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 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of C-corporation Income Tax Provision | December 31 2022 2021 Current taxes Federal $ 268,803 $ 909,530 State (13,155 ) 357,168 Deferred taxes Federal (246,000 ) (212,000 ) State — — Provision for income taxes $ 9,648 $ 1,054,698 |
Schedule of reconciliation of income tax provisions | 2022 2021 Rate reconciliation: Tax expense at U.S. statutory rate $ 97,503 $ 1,080,213 Change in deferred tax rate 450 (8,796 ) Provision-to-return reconciliation (18,536 ) (14,743 ) Temporary differences (71,856 ) — Other 2,087 (1,976 ) Income tax provision $ 9,648 $ 1,054,698 |
Schedule of deferred tax assets and liabilities | December 31 2022 2021 Deferred tax components Unrealized (gain) loss on marketable securities $ 156,590 $ (46,660 ) Depreciation 1,781 2,458 R&D and foreign credits 43,828 — Lease liability (39 ) — Other (1,160 ) (798 ) Net deferred tax asset (liability) $ 201,000 $ (45,000 ) |
FINANCIAL HIGHLIGHTS (Tables)
FINANCIAL HIGHLIGHTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
FINANCIAL HIGHLIGHTS | |
Schedule of financial highlights | Year Ended December 31, 2022 Restated 2021 2020 2019 2018 Per Share Data (1) Net asset value at beginning of period $ 2.80 2.44 2.05 2.30 1.96 Net investment gain (loss) 0.13 0.27 0.11 (0.14 ) (0.11 ) Net realized and unrealized gains (0.11 ) 0.54 0.41 0.00 0.45 Provision for income taxes 0.00 (0.23 ) (0.05 ) 0.00 0.00 Stock-based compensation 0.05 0.00 (0.02 ) 0.00 0.00 Repurchase of common stock 0.00 0.00 0.05 0.00 0.00 Other changes in equity 0.02 0.00 0.00 0.00 0.00 Payment of common stock dividend 0.00 (0.22 ) (0.11 ) (0.11 ) 0.00 Net asset value at end of period $ 2.89 2.80 2.44 2.05 2.30 Ratio / Supplemental Data Per share market value of investments at end of period $ 2.70 2.95 1.40 0.36 2.03 Shares outstanding at end of period 6,185,255 4,795,739 4,793,739 4,918,845 4,918,845 Average weighted shares outstanding for the period 5,333,028 4,795,242 4,830,691 4,918,845 4,918,845 Net assets at end of period $ 17,871,560 13,414,049 11,640,887 10,068,533 11,278,889 Average net assets (2) $ 15,639,394 13,155,207 10,504,563 11,473,535 10,341,702 Total investment return 1.43 % 24.07 % 23.08 % (5.88 )% 17.24 % Portfolio turnover rate (3) 129.57 % 168.67 % 61.11 % 7.63 % 26.93 % Ratio of operating expenses to average net assets (3) (21.73 )% (10.30 )% (7.16 )% (7.27 )% (6.59 )% Ratio of net investment income (loss) to average net assets (3) 5.12 % 9.89 % 5.35 % (5.86 )% (5.13 )% Ratio of realized gains (losses) to average net assets (3) 0.85 % 31.30 % 0.05 % 28.35 % (5.62 )% |
RESTATEMENT OF PREVIOUSLY ISS_2
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS | |
Schedule of financial highlights | December 31, 2022 As Reported As Restated Balance Sheet Prepaid expenses $ 49,219 $ 218,440 Accounts payable 136,514 776,514 Accumulated undistributed investment loss (615,960 ) (1,086,739 ) Total Shareholders' Equity (Net Assets) 18,342,339 17,871,560 Net Asset Value Per Common Share $ 2.97 $ 2.89 Statement of Operations Payroll $ 541,590 $ 941,590 Director's fees 177,073 417,073 Net Increase in Net Assets Resulting from Operations Before Taxes 756,606 116,606 Provision For Income Taxes 178,869 9,648 Net Increase in Net Assets Resulting from Operations 577,737 106,958 |
ORGANIZATION (Details Narrative
ORGANIZATION (Details Narrative) | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION | |
Maximuum percentage total assets of investment securities | 40% |
NET GAIN PER COMMON SHARE (Deta
NET GAIN PER COMMON SHARE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
NET GAIN PER COMMON SHARE | ||
Numerator: Net increase in net assets resulting from operations | $ 106,958 | $ 2,831,050 |
Denominator: Weighted-average number of common shares outstanding, basic | 5,333,028 | 4,795,242 |
Basic and diluted net gain per common share | $ 0.02 | $ 0.59 |
NET GAIN PER COMMON SHARE (De_2
NET GAIN PER COMMON SHARE (Details Narrative) | Dec. 31, 2022 shares |
NET GAIN PER COMMON SHARE | |
common stock outstanding | 870,000 |
LEASES (Details)
LEASES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||
Operating lease costs | $ 21,291 | $ 19,116 |
Variable lease cost | 18,325 | 17,613 |
Short-term lease cost | 33,530 | 29,730 |
Total | $ 73,146 | $ 66,459 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
LEASES | ||
Right-of-use assets | $ 16,398 | $ 4,984 |
Operating Leases Liability | 16,562 | 5,654 |
Less: short term portion | (16,562) | (5,654) |
Long term portion | $ 0 | $ 0 |
LEASES (Details 2)
LEASES (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Maturity analysis under lease agreements | ||
2022 | $ 0 | $ 5,698 |
2023 | 16,675 | 0 |
Total lease payments | 16,675 | 5,698 |
Plus: interest | (113) | (44) |
Present value of lease liabilities | $ 16,562 | $ 5,654 |
LEASES (Details 3)
LEASES (Details 3) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
LEASES | ||
Operating cash outflow from operating leases | $ 75,146 | $ 66,459 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
LEASES | ||
Rent expense | $ 73,146 | $ 66,459 |
Lease Term | 1 year | |
Weighted-average discount rate | 4.50% | 4.50% |
SHAREHOLDERS EQUITY (Details Na
SHAREHOLDERS EQUITY (Details Narrative) - USD ($) | 12 Months Ended | ||||||
Aug. 11, 2022 | Aug. 09, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock issued | 6,185,255 | 4,795,739 | |||||
Common stock issued | 1,389,516 | ||||||
Reverse stock split Description | 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. | ||||||
Fair value of warrants | $ 201,173 | ||||||
Common stock, shares outstanding | 6,185,255 | 4,795,739 | 4,793,739 | 4,918,845 | 4,918,845 | ||
Post reverse split share issue | 111,111,111 | ||||||
Number of common shares sale | 1,250,000 | ||||||
Share issue price public offer | $ 4 | $ 5 | |||||
Share gross proceed | $ 5,000,000 | ||||||
Net proceeds amount after expenses | $ 4,041,000 | ||||||
Purchase of common shares | 75,000 | ||||||
Underwriter 45 Day [Member] | |||||||
Share issue price public offer | $ 5 | ||||||
Purchase of common shares | 187,500 | ||||||
Underwriter 5 Year [Member] | |||||||
Purchase of common shares | 75,000 |
INVESTMENTS (Details)
INVESTMENTS (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Investments at amortized cost | $ 17,359,804 | $ 13,933,057 |
Percentage of amortized cost | 100% | 100% |
Investment at fair value | $ 16,708,432 | $ 14,098,675 |
Percentage of fair value | 100% | 100% |
Represents the member information pertaining to short term banking loans. | ||
Investments at amortized cost | $ 15,486,625 | $ 11,655,750 |
Percentage of amortized cost | 89.20% | 83.70% |
Investment at fair value | $ 15,285,932 | $ 11,650,000 |
Percentage of fair value | 91.50% | 82.60% |
Warrants [Member] | ||
Investments at amortized cost | $ 679 | $ 679 |
Preferred Stock | ||
Investments at amortized cost | $ 1,050,000 | $ 1,050,000 |
Percentage of amortized cost | 6.10% | 7.50% |
Investment at fair value | $ 1,200,000 | $ 1,200,000 |
Percentage of fair value | 7.20% | 8.50% |
Other Equity [Member] | ||
Investments at amortized cost | $ 822,500 | $ 812,500 |
Percentage of amortized cost | 4.70% | 5.80% |
Investment at fair value | $ 222,500 | $ 812,500 |
Percentage of fair value | 1.30% | 5.80% |
INVESTMENTS (Details 1)
INVESTMENTS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Percentage of Fair Value | 100% | 100% |
Investment at fair value | $ 16,708,432 | $ 14,098,675 |
Consumer | ||
Percentage of Fair Value | 26.20% | 16.80% |
Investment at fair value | $ 4,385,028 | $ 2,362,500 |
Financial | ||
Percentage of Fair Value | 17% | 27.20% |
Investment at fair value | $ 2,833,451 | $ 3,836,175 |
Information Technology | ||
Percentage of Fair Value | 3.10% | 2.10% |
Investment at fair value | $ 513,656 | $ 300,000 |
Real Estate | ||
Percentage of Fair Value | 10.40% | 53.90% |
Investment at fair value | $ 1,744,717 | $ 7,600,000 |
Business Services | ||
Percentage of Fair Value | 43.30% | |
Investment at fair value | $ 7,231,580 |
FAIR VALUE OF FINANCIAL INSTR_3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Other Equity | $ 222,500 | $ 812,500 |
Warrants | 0 | 0 |
Preferred stock | 1,200,000 | 1,200,000 |
Common Stock | 436,175 | |
Short-term Non-banking Loans | 15,285,932 | 11,650,000 |
Investment at fair value | 16,708,432 | 14,098,675 |
Level 2 | ||
Other Equity | 0 | 0 |
Warrants | 0 | 0 |
Preferred stock | 0 | 0 |
Common Stock | 0 | |
Short-term Non-banking Loans | 0 | 0 |
Investment at fair value | 0 | 0 |
Level 3 | ||
Other Equity | 222,500 | 812,500 |
Warrants | 0 | 0 |
Preferred stock | 1,200,000 | 1,200,000 |
Common Stock | 0 | |
Short-term Non-banking Loans | 15,285,932 | 11,650,000 |
Investment at fair value | 16,708,432 | 13,662,500 |
Level 1 | ||
Other Equity | 0 | 0 |
Warrants | 0 | 0 |
Preferred stock | 0 | 0 |
Common Stock | 436,175 | |
Short-term Non-banking Loans | 0 | 0 |
Investment at fair value | $ 0 | $ 436,175 |
FAIR VALUE OF FINANCIAL INSTR_4
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) - Level 3 - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Preferred Stock | ||
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 |
Represents the member information pertaining to other equity securities. | ||
Balance at the beginning | 812,500 | 278,897 |
Net change in unrealized appreciation | 600,000 | |
Purchases and other adjustments to cost | 10,000 | 812,500 |
Sales and redemptions | 278,897 | |
Balance at the end | 222,500 | 812,500 |
Represents the member information pertaining to short term banking loans. | ||
Balance at the beginning | 11,650,000 | 2,789,000 |
Net change in unrealized appreciation | 200,693 | |
Purchases and other adjustments to cost | 23,548,458 | 24,765,333 |
Sales and redemptions | (19,711,833) | (15,904,333) |
Balance at the end | $ 15,285,932 | $ 11,650,000 |
FAIR VALUE OF FINANCIAL INSTR_5
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Investment at fair value | $ 16,708,432 | $ 14,098,675 |
Level 3 | ||
Investment at fair value | 16,708,432 | 13,662,500 |
Represents the member information pertaining to short term banking loans. | ||
Investment at fair value | $ 15,285,932 | $ 11,650,000 |
Represents the member information pertaining to short term banking loans. | Level 3 | Minimum | Interest rate | ||
Interest rate | 12% | 12% |
Represents the member information pertaining to short term banking loans. | Level 3 | Maximum | Interest rate | ||
Interest rate | 33% | 44% |
Represents the member information pertaining to other equity securities. | ||
Investments at Fair Value | $ 222,500 | $ 812,500 |
Preferred Stock | ||
Investment at fair value | $ 1,200,000 | $ 1,200,000 |
FAIR VALUE OF FINANCIAL INSTR_6
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Attributable To Level 3 Portfolio Investment [Member] | ||
Net change in unrealized appreciation | $ 651,371 | $ 0 |
LINE OF CREDIT (Details Narrati
LINE OF CREDIT (Details Narrative) - USD ($) | Dec. 31, 2022 | Jan. 03, 2022 | Dec. 31, 2021 |
Line of credit, outstanding | $ 0 | $ 0 | |
Revolving line of credit | This member stands for Eastman Investment, Inc. | Represents information pertaining to the loan and security agreement. | |||
Line of credit facility maximum borrowing capacity | $ 5,000,000 | ||
Interest rate at per annum | 8% | ||
Lyle A. Berman | Revolving line of credit | |||
Line of credit facility maximum borrowing capacity | $ 5,000,000 | $ 5,000,000 | |
Lyle A. Berman | Revolving line of credit | Revolving line of credit | |||
Line of credit facility maximum borrowing capacity | $ 5,000,000 |
RELATEDPARTY TRANSACTIONS (Deta
RELATEDPARTY TRANSACTIONS (Details Narrative) - USD ($) | Aug. 10, 2018 | Dec. 31, 2022 | Jan. 03, 2022 |
Lyle A. Berman | Revolving line of credit | |||
Maximum borrowing capacity | $ 5,000,000 | $ 5,000,000 | |
Ms Zbikowski Along With Her Husband Scott Zbikowsk | |||
Promissory note term | two-year | ||
Shares of common stock owned by related party | 534,445 | ||
Principal amount of note obtained | $ 250,000 | ||
Debtors' pledge in number of common stock | 277,778 | ||
Interest payable monthly (as a percent) | 10% |
RETIREMENT SAVINGS PLANS (Detai
RETIREMENT SAVINGS PLANS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
RETIREMENT SAVINGS PLANS | ||
aggregate contributions For Retirement Plan | $ 14,063 | $ 11,250 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current taxes | ||
Federal | $ 268,803 | $ 909,530 |
State | (13,155) | 357,168 |
Deferred taxes | ||
Federal | (246,000) | (212,000) |
State | 0 | 0 |
Provision for (benefit from) income taxes | $ 9,648 | $ 1,054,698 |
INCOME TAXES (Details 1)
INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
INCOME TAXES | ||
Tax expense at U.S.statutory rate | $ 97,503 | $ 1,080,213 |
Change in valuation allowance | 450 | (8,796) |
Provision-to-return reconciliation | (18,536) | (14,743) |
Temporary differences | (71,856) | 0 |
Other | 2,087 | (1,976) |
Provision for (benefit from) income taxes | $ 9,648 | $ 1,054,698 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
INCOME TAXES | ||
Unrealized (gain) loss on marketable securities | $ 156,590 | $ (46,660) |
Depreciation | 1,781 | 2,458 |
R&D and foreign credits | 43,828 | 0 |
Lease liability | (39) | 0 |
Other | (1,160) | (798) |
Net deferred tax asset (liability) | $ 201,000 | $ (45,000) |
INCOME TAXES (Details And Narra
INCOME TAXES (Details And Narrative) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
INCOME TAXES | ||
Deferred tax assets and Liability | $ 201,000 | $ 45,000 |
FINANCIAL HIGHLIGHTS (Details)
FINANCIAL HIGHLIGHTS (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Per Share Data (1) | |||||
Net asset value at beginning of period | $ 2.80 | $ 2.44 | $ 2.05 | $ 2.30 | $ 1.96 |
Net investment income (loss) | 0.23 | 0.27 | 0.11 | (0.14) | (0.11) |
Net realized and unrealized gains | (0.11) | 0.54 | 0.41 | 0 | 0.45 |
Provision for income taxes | 0 | (0.23) | (0.05) | 0 | 0 |
Stock based compensation | 0.05 | 0 | (0.02) | 0 | 0 |
Repurchase of common stock | 0 | 0 | 0.05 | 0 | 0 |
Other changes in equity | 0.02 | 0 | 0 | 0 | 0 |
Payment of common stock dividend | 0 | (0.22) | (0.11) | (0.11) | 0 |
Net asset value at end of period | 2.89 | 2.80 | 2.44 | 2.05 | 2.30 |
Ratio / Supplemental Data | |||||
Per share market value of investments at end of period | $ 2.70 | $ 2.95 | $ 1.40 | $ 0.36 | $ 2.03 |
Shares outstanding at end of period | 6,185,255 | 4,795,739 | 4,793,739 | 4,918,845 | 4,918,845 |
Average weighted shares outstanding for the period | 5,333,028 | 4,795,242 | 4,830,691 | 4,918,845 | 4,918,845 |
Net assets at end of period | $ 17,871,560 | $ 13,414,049 | $ 11,640,887 | $ 10,068,533 | $ 11,278,889 |
Average net assets | $ 15,639,394 | $ 13,155,207 | $ 10,504,563 | $ 11,473,535 | $ 10,341,702 |
Total investment return | 1.43% | 24.07% | 23.08% | (5.88%) | 17.24% |
Portfolio turnover rate | 129.57% | 168.67% | 61.11% | 7.63% | 26.93% |
Ratio of operating expenses to average net assets | (21.73%) | (10.30%) | (7.16%) | (7.27%) | (6.59%) |
Ratio of net investment income (loss) to average net assets | 5.12% | 9.89% | 5.35% | (5.86%) | (5.13%) |
Ratio of realized gains (losses) to average net assets | 0.85% | 31.30% | 0.05% | 28.35% | 5.62% |
RESTATEMENT OF PREVIOUSLY ISS_3
RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Details) - USD ($) | 12 Months Ended | |||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accounts payable | $ 776,514 | $ 64,028 | ||||
Accumulated undistributed investment loss | (1,086,739) | (1,877,667) | ||||
Total Shareholders' Equity (Net Assets) | $ 17,871,560 | $ 13,414,049 | $ 11,640,887 | |||
Net Asset Value Per Common Share | $ 2.89 | $ 2.80 | $ 2.44 | $ 2.05 | $ 2.30 | $ 1.96 |
Payroll | $ 941,590 | $ 556,432 | ||||
Director's fees | 417,073 | 120,000 | ||||
Net Increase in Net Assets Resulting from Operations Before Taxes | 116,606 | 3,885,748 | ||||
Provision For Income Taxes | 9,648 | 1,054,698 | ||||
Net Increase in Net Assets Resulting from Operations | (106,958) | (2,831,050) | ||||
Prepaid expenses | 218,440 | 83,674 | ||||
Restated of Blance sheet | ||||||
Accounts payable | 776,514 | |||||
Accumulated undistributed investment loss | (1,086,739) | |||||
Total Shareholders' Equity (Net Assets) | $ 17,871,560 | |||||
Net Asset Value Per Common Share | $ 2.89 | |||||
Prepaid expenses | $ 49,219 | $ 218,440 | ||||
Reported of Operations | ||||||
Payroll | 541,590 | |||||
Director's fees | 177,073 | |||||
Net Increase in Net Assets Resulting from Operations Before Taxes | 756,606 | |||||
Provision For Income Taxes | 178,869 | |||||
Net Increase in Net Assets Resulting from Operations | 577,737 | |||||
Reported of Blance sheet | ||||||
Accounts payable | 136,514 | |||||
Accumulated undistributed investment loss | (615,960) | |||||
Total Shareholders' Equity (Net Assets) | $ 18,342,339 | |||||
Net Asset Value Per Common Share | $ 2.97 | |||||
Restated of Operation | ||||||
Payroll | $ 941,590 | |||||
Director's fees | 417,073 | |||||
Net Increase in Net Assets Resulting from Operations Before Taxes | 116,606 | |||||
Provision For Income Taxes | 9,648 | |||||
Net Increase in Net Assets Resulting from Operations | $ 106,958 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | 1 Months Ended |
Jan. 26, 2022 USD ($) | |
SUBSEQUENT EVENTS | |
Loan Of Principal Amount | $ 2,500,000 |
Interest Rate | 18% |