United States

Securities and Exchange Commission

Washington, D.C. 20549

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of thePROXY STATEMENT PURSUANT TO SECTION 14(A) OF

Securities Exchange Act ofTHE SECURITIES EXCHANGE ACT OF 1934

Check the appropriate box:

Mill City Ventures III, Ltd.

(Name of Registrant as Specified in its Charter)Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

MILL CITY VENTURES III, LTD.
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON                     , 2019

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON                     , 2019 

This Proxy Statement is available free of charge on the Internet athttp://www.           /specialproxymaterialsDecember ___, 2022

PROXY STATEMENTDear Shareholder:

SPECIAL MEETING OF THE SHAREHOLDERS OF

MILL CITY VENTURES III, LTD.

This Proxy Statement contains information about theYou are cordially invited to attend a special meeting of Shareholdersshareholders of Mill City Ventures III, Ltd. (“Mill City,” the “Company,”, a Minnesota corporation (which we refer to as “we,” “our” and “us”).

Forward-Looking Statements 

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

QUESTIONS AND ANSWERS
ABOUT THE SPECIAL MEETING AND VOTING

Our Board of Directors has approved a plan for Mill City to withdraw its election“Company”), to be treated and regulated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”), and to immediately thereafter qualify for an exemption from the registration requirements under that Act applicable to investment companies by virtue of a reverse stock split. This plan is generically referred to in this Proxy Statement as the “Plan.”

After the full implementation of the Plan, Mill City will (a) remain a publicly reporting company that files reports with the SEC pursuant to the Securities Exchange Act of 1934 (and may have a ticker on the OTC Markets or otherwise), (b) no longer be a BDC, and (c) will not be an investment company. In addition, but subject to shareholder approval of the proposal to withdraw our BDC election, the Board of Directors is seeking to change the nature of the business of the Company in order to ensure that, in the future, the Company will not be an “investment company.”

In furtherance of the Plan, Mill City is proposing that its shareholders approve the withdrawal ofheld at the Company’s election to be regulated as a BDC under the 1940 Act. In addition, we are seeking your approval of an amendment to our certificate of incorporation to effect a 1- for        reverse stock split of our outstanding common stock, par value $0.001 per share, as discussed further in this Proxy Statement.

Our Board of Directors is furnishing this Proxy Statement to you to solicit proxies on its behalf to be voted on these matters at the special meeting on                     at         .m., Central Time,principal offices at 1907 Wayzata Boulevard, Suite 205, Wayzata, MinnesotaMN 55391,. at 8:00 a.m. local time, on Friday, January 6, 2023.

At the special meeting, you will be asked to consider and vote upon a proposal to approve our 2022 Stock Incentive Plan, and to transact such other business as may properly come before the meeting or at any continuation, postponement or adjournment thereof. The proxies also mayaccompanying Notice of Special Meeting of Shareholders and Proxy Statement describe these matters in more detail. We urge you to read this information carefully.

The Board of Directors recommends a vote FOR the approval of our 2022 Stock Incentive Plan.

Whether or not you attend the special meeting in person, and regardless of the number of shares of the Company that you own, it is important that your shares be represented and voted at any adjournmentsthe meeting. Therefore, I urge you to vote your shares of common stock via the Internet or postponements ofby promptly marking, dating, signing, and returning the proxy card via mail or fax. Voting over the Internet, or by written proxy, will ensure that your shares are represented at the meeting.

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

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

Mill City intends to effect the Plan through (1) implementation of the reverse stock split and, once the reverse stock split has been effected, (2) withdrawal of Mill City’s BDC election through a filing to be made with the SEC.

In the reverse stock split, the outstanding shares of Mill City common stock will be combined on a 1-for [7,500] basis so that each Mill City shareholder will own one share of Mill City common stock for every [7,500] shares owned prior to the reverse stock split. Fractional shares resulting from the reverse stock split will not be issued, and shareholders will instead be paid for their fractional shares in cash as permitted under state law. For more information about how fractional shares will be treated, please see Proposal 2 below.

In addition and as explained elsewhere in this Proxy Statement, the Board of Directors is seeking to change the nature of the business of the Company. This will most likely take the form of the Company becoming a holding company or pursuing a new specific line of business. Changing the nature of the Company’s business will ensure that the Company will not be (or inadvertently become) an “investment company” even if the number of beneficial owners of the Company’s common stock were to increase, after effecting the reverse stock split, in such a way as to prevent the Company from otherwise qualifyingMill City Ventures, III, Ltd., we thank you for an exemption under the 1940 Act. At this time, no specific new line of business for the Company has been determined.your participation.

Our Board of Directors has determined that the Plan is in the best interests of Mill City and its shareholders because it will provide the following key benefits: 

MILL CITY VENTURES III, LTD.

1907 Wayzata Boulevard, Suite 205

Our BoardNOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JANUARY 6, 2023

A special meeting of Directors does not intendthe shareholders of Mill City Ventures III, Ltd., a Minnesota corporation (which we refer to bring other matters beforeas “we,” “us,” “our,” or the “Company”), will be held on Friday, January 6, 2023, at 8:00 a.m. local time, at the principal offices of the Company located at 1907 Wayzata Boulevard, Suite 205, Wayzata, MN 55391. We will consider and act on the following items of business at the special meeting except items incidental to the conduct of the meeting.meeting:

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

The record date for the special meeting is             (the “record date”). The record date is established by the BoardProxy Statement accompanying this Notice describes these items of Directors and onlybusiness in detail. Only shareholders of record at the close of business on the record dateDecember 15, 2022, are entitled to: (a) receiveto notice of, the meeting;to attend, and (b) vote at the meeting and any adjournments or postponements of the meeting. Each shareholder of record on the record date is entitled to one vote for each share of our common stock held. On the record date, there were             shares of our common stock issued and legally outstanding.

If your shares of stock are registered in your name on the books and records of our transfer agent, you are a shareholder of record. If you are a shareholder of record you may provide a proxy to vote your shares and may attend the special meeting in person and vote your shares at the special meeting.

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

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

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

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

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

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

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

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

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

Shareholders of Record: If you are a shareholder of record (see Question 8 above), your shares of common stock will not be voted if you do not providevia the Internet or by promptly marking, dating, signing, and returning the proxy card via mail or fax. Voting instructions are printed on your proxy unless youcard and included in the accompanying Proxy Statement. Any stockholder attending the special meeting may vote in person at the meeting.  It is important that your shares are voted in personeven if he or byshe previously submitted a proxy.

Street Name Holders: If your shares are held in street name (see Question 8 above) and you do not provide your signed and dated voting instruction form to your broker, bank or other nominee, your shares of common stock may not be votedare held by youra bank, broker bank or other nominee because none ofagent, please follow the proposalsinstructions from your bank, broker or other agent to be voted upon at the special meeting is considered “routine” under applicable rules. It is, therefore, important that you votehave your shares.  voted.

Abstentions will have the same effect as a vote against the proposals at the special meeting. Because none of these proposals are considered “routine” matters for which brokers, banks or other nominees may vote uninstructed shares, there will be no broker non-votes. Minneapolis, MN

December ____, 2022

The enclosedTABLE OF CONTENTS

APPENDIX A – 2022 STOCK INCENTIVE PLAN

PROXY CARD

MILL CITY VENTURES III, LTD.

1907 Wayzata Boulevard, Suite 205

Wayzata, MN 55301

(952) 479-1920

PROXY STATEMENT

FOR SPECIAL MEETING OF SHAREHOLDERS

To be held on January 6, 2023

INFORMATION ABOUT THE SPECIAL MEETING

General

Your proxy is solicited on behalf of the Board of Directors and is revocable(which we refer to as our “Board”) of Mill City Ventures III, Ltd., a Minnesota corporation (which we refer to as “we,” “us,” “our,” or the “Company”), for use at anya special meeting of shareholders to be held on Friday, January 6, 2023, at 8:00 a.m. local time, prior to the voting of the proxy at the special meeting, by the filing of an instrument revoking it, or a duly executed proxy bearing a later date, with our corporate office, addressed to ourCompany’s principal executive offices located at 1907 Wayzata Boulevard, Suite 205, Wayzata, Minnesota 55391. If youMN 55391, or at any continuation, postponement or adjournment thereof, for the purposes discussed in this Proxy Statement and in the accompanying Notice of Special Meeting. Proxies are a holdersolicited to give all shareholders of record inan opportunity to vote on matters properly presented at the event that you attendspecial meeting.

We intend to mail this Proxy Statement, the proxy card and the Notice of Special Meeting on or about December 20, 2022, to all shareholders of record entitled to vote at the special meeting.

Who Can Vote, Outstanding Shares

Record holders of our common stock as of the close of business on December 15, 2022, the record date for the special meeting, youare entitled to vote at the meeting on all matters to be voted upon. As of the record date, there were 6,185,255 shares of our common stock outstanding, each entitled to one vote.

Voting of Shares

You may

revoke your proxy and cast your vote personally. Simplyby attending the special meeting will not revokeand voting in person or you may vote by submitting a prior proxy. The method of voting by proxy differs for shares held as a record holder and shares held in “street name.”

The cost of this solicitation of proxies will be paid by Mill City. In addition to the use of mail, our officers and employees may solicit proxies by telephone or facsimile. Upon request, we will reimburse brokers, dealers, banks, and trustees, or their nominees, for reasonable expenses incurred by them in forwarding our proxy materials to beneficial owners of our common stock.

In order for us to conduct the special meeting, holders representing a majority of our outstandingIf you hold your shares of common stock entitled to vote as of         , must be present in person or by proxy at the special meeting. This is referred to as a quorum. Yourstreet name, which means that your shares are counted as present at the meeting if you attend the meeting in person or if you properly return a proxy by Internet, telephone or mail.

Abstentions and sharesheld of record held by a broker, bank or other nominee, you will receive the notice from your broker, bank or other nominee that includes instructions on how to vote your shares.

If you are instructeda shareholder of record, you may vote your shares as follows:

YOUR VOTE IS VERY IMPORTANT. You should submit your proxy even if you plan to attend the special meeting. If you properly give your proxy and submit it to us in time to vote, one of the individuals named as your proxy will vote your shares as you have directed. Any shareholder attending the special meeting may vote in person even if he or she previously submitted a proxy.

All shares entitled to vote and represented by properly submitted proxies (including those submitted electronically and in writing) received before the polls are closed at the meeting, and not revoked or superseded, will be voted at the meeting in accordance with the instructions indicated on any matter are included in determining the number ofthose proxies. If no direction is indicated on a proxy, your shares present. However, because no routine discretionary matters for which broker non-votes may be submitted will be consideredvoted FOR approval of our 2022 Stock Incentive Plan.  With respect to any other matter that properly comes before the meeting or any continuation, postponement or adjournment thereof, the proxyholders will vote as recommended by our Board, or if no recommendation is given, in their own discretion.

Revocation of Proxy

If you are a shareholder of record, you may revoke your proxy at any time before your proxy is voted at the special meeting by taking any of the following actions:

Written notices of revocation and other communications with respect to the revocation of Company proxies should be addressed to:

Mill City Ventures III, Ltd.

1907 Wayzata Boulevard, Suite 205

Wayzata, MN 55391

Attention: Corporate Secretary

If your shares are held in “street name,” you may change your vote by submitting new voting instructions to your broker, non-votes,bank or other nominee. You must contact your broker, bank or other nominee to find out how to do so. See below regarding how to vote in person if any,your shares are held in street name.

Voting in Person

If you plan to attend the special meeting and wish to vote in person, you will not be treated as presentgiven a ballot at the meeting. Please note, however, that if your shares are held in “street name,” which means your shares are held of record by a broker, bank or other nominee, and you wish to vote at the special meeting, you must bring to the special meeting a legal proxy from the record holder of the shares, which is the broker or entitledother nominee, authorizing you to vote at the special meeting.

Shareholders who wish to attend the special meeting will be required to present verification of ownership of our common stock, such as a bank or brokerage firm account statement, and will not be includedrequired to present a valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the meeting. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in determiningthe meeting.

Quorum and Votes Required

The inspector of elections appointed for the special meeting will tabulate votes cast by proxy or in person at the meeting. The inspector of elections will also determine whether a quorum is present.

Shareholders whose total shareholdings will be reduced, as a result of the reverse stock split, to less than one whole share will have the right to dissent from the proposed reverse stock split and demand payment in cash equal to the fair value of the shares as determined under Minnesota law. For a detailed description of the dissenters’ rights, see “Proposal 2 — Approval of an Amendment to our Certificate of Incorporation to Effect a Reverse Stock Split.”

PROPOSAL 1

APPROVAL OF THE WITHDRAWAL OF OUR

ELECTION TO BE REGULATED AS A BUSINESS DEVELOPMENT COMPANY

UNDER THE INVESTMENT COMPANY ACT OF 1940

Introduction 

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

Following an evaluation of our operations and resources, our Board of Directors has determined that it is in the best interest of our Company and our shareholders to cease operating as a BDC and to avoid the additional regulation and compliance-related efforts and expenses required under 1940 Act. In sum, the Board of Directors has concluded that the Company lacks the proper resources, staffing and expertise to effectively ensure compliance with the various requirements under the 1940 Act. This conclusion was not reached arbitrarily. The Company’s management and legal counsel have had discussions with the SEC’s Office of Compliance and Inspections (which office is primarily responsible for conducting periodic examinations for compliance by companies subject to regulation under the 1940 Act) as part of this evaluation and consideration, and legal counsel (including special counsel experienced in matters relating to the 1940 Act) have recommended that the Company seek to withdraw its election to be treated as a BDC. As a consequence, our Board of Directors has recommended the approval of a proposal to withdraw our election to be regulated as a BDC. Pursuant to the 1940 Act, such election cannot be withdrawn without the approval of the holders of a “majority” of our outstanding voting securities, as such term is defined in the 1940 Act.  For an explanation of how the 1940 Act defines the word “majority,” please see Question 18 above.

We have undertaken several steps to prepare for the withdrawal of our election to be regulated as a BDC. Among these steps, we (i) have prepared the proposal sets forth below (Proposal 2) to effect a reverse stock split so as to ensure that we will be entitled to an exemption from the registration requirements under 1940 Act immediately after we withdraw our election to be treated as a BDC, (ii) have consulted with legal counsel as to the requirements for withdrawing our election as a BDC, and (iii) are considering other business pursuits to undertake so as to ensure that we will not be classified as an “investment company” under the 1940 Act even if we were to have too many beneficial owners of our common stock to permit us to qualify for an exemption from the registration requirements of the 1940 Act. In this latter regard, we have not yet formalized a definitive plan to undertake a new business, or to dispose of particular investments in order to obtainconstitute a specific mix of assets.

If our shareholders approve this proposal, and if they similarly approve Proposal 2 described below, we anticipate withdrawing our election to be regulated as a BDC by filing a Form N-54C with the SEC. This filing would be made shortly after the consummation of the reverse stock split described in Proposal 2. Following our withdrawal of the BDC election, we will continue to be a reporting company under the Exchange Act, but we will have a limited number of beneficial owners. As explained throughout this Proxy Statement, we intend to dispose of certain of our assets (i.e., investment holdings), and to select a new line of business, so that we will not again become subject to the provisions of the 1940 Act.

Effect on the Company and Shareholders 

Upon the withdrawal of our election to be treated as a BDC, we will no longer be subject to regulation under the 1940 Act, which is generally designed to protect the interests of investors in investment companies. Specifically, our shareholders would no longer have the following protections that are contained within the 1940 Act or the regulations issued thereunder: 

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

Effect on Financial Statements and Tax Status 

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

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

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

Anticipated Timeline

If this proposal is approved at the special meeting, along with Proposals 2 and upon consummation of the Plan, the withdrawal will become effective upon receipt by the SEC of the filing of our “Notification of Withdrawal” on Form N-54C. As of the date hereof, the Board of Directors believes that we will meet the requirements for filing the notification to withdraw our election to be regulated as a BDC following the receipt of the approval of our shareholders. After the Notification of Withdrawal of our BDC election is filed with the SEC, we will no longer be subject to the regulatory provisions of the 1940 Act applicable to BDCs generally, including regulations related to insurance, custody, composition of its board of directors, affiliated transactions and any compensation arrangements.

Vote Not Contingent Upon Proposal 2

Our shareholders’ approval of this proposal is not contingent upon their approval of Proposal 2. This is because, as we explain elsewheremajority in this Proxy Statement, we intend over time to dispose of a sufficient number and amount of investments and to identify a new line of business, which would permit us to no longer be classified as an “investment company” under the 1940 Act. Therefore, if the shareholders approve this proposal without approving Proposal 2, we would most likely elect to file our Notification of Withdrawal only after we had identified a new business pursuit and had taken steps to ensure that the mix of our assets would not cause us to be regulated as an “investment company” under the 1940 Act.

Vote Required

Under the 1940 Act, approval of the withdrawal of our election to be regulated as a BDC requires an affirmative vote of a “majority”voting power of all of the Company’s outstandingshares of stock entitled to vote at the special meeting must be present in person or represented by proxy at the meeting. Shares that abstain from voting securities, regardless of whether the holders of suchon any proposal, or that are represented by broker non-votes (as discussed below), will be treated as shares that are present and entitled to vote at the special meeting.meeting for purposes of determining whether a quorum is present.

UnderA broker non-vote occurs when a broker, bank or other agent holding shares for a beneficial owner has not received instructions from the 1940 Act,beneficial owner and does not have discretionary authority to vote the shares for certain non-routine matters. Shares represented by proxies that reflect a “majority”broker non-vote will be counted for purposes of determining the presence of a quorum. The approval of our 2022 Stock Incentive Plan (Proposal 1), is considered a non-routine matter. Accordingly, any broker non-votes will not be counted as votes cast and will have no effect on the result of the outstanding voting securities means thevote.

Approval of our 2022 Stock Incentive Plan. The affirmative vote of (i) 67% or morethe holders of a majority of the shares presentvotes cast and entitled to vote at the special meeting ifis required for the holders of 50% or moreapproval of our outstanding2022 Stock Incentive Plan. In the event of any broker non-votes or abstentions in connection with this proposal, such broker non-votes and abstentions will be counted as not present and these shares will be deducted from the total shares of which a majority is required.

Other Business. We will also consider any other business that properly comes before the special meeting, or any adjournment or postponement thereof. As of the record date, we are not aware of any other matters to be submitted for consideration at the special meeting. If any other matters are properly brought before the meeting, the persons named on the enclosed proxy card will vote the shares as recommended by our Board, or if no recommendation is given, in their own discretion.

Solicitation of Proxies

Our Board is soliciting proxies for the special meeting from our shareholders. We will bear the entire cost of soliciting proxies from our shareholders. In addition to the solicitation of proxies by delivery of this Proxy Statement by mail, we will request that brokers, banks and other nominees that hold shares of our common stock, which are beneficially owned by our stockholders, send proxies and proxy materials to those beneficial owners and secure those beneficial owners’ voting instructions. We will reimburse those record holders for their reasonable expenses. We do not intend to hire a proxy solicitor to assist in the solicitation of proxies. We may use several of our regular employees, who will not be specially compensated, to solicit proxies from our shareholders, either personally or by Internet, facsimile or special delivery letter.  We estimate our total costs and reimbursements described herein will not exceed $20,000.

Shareholder List

A list of shareholders eligible to vote at the special meeting will be available for inspection, for any purpose germane to the meeting, at the principal office of the Company during regular business hours for a period of no less than ten days prior to the meeting.

Forward-Looking Statements

This Proxy Statement contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995). These statements are based on our current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the statements. The forward-looking statements may include statements regarding actions to be taken by us. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Forward-looking statements should be evaluated together with the many uncertainties that affect our business, particularly those mentioned in the risk factors in our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K.

PROPOSAL NO. 1

AUTHORIZE AND APPROVE OUR 2022 STOCK INCENTIVE PLAN

Introduction

Rule 5635(c) of the Nasdaq Listing Rules requires shareholder approval for the establishment or material amendment of any equity compensation arrangement, with limited exceptions. We are seeking the approval of our shareholders in accordance with Rule 5635(c) of the Nasdaq Listing Rules for the establishment of our 2022 Stock Incentive Plan (the “Plan”). Our Board has approved the Plan and recommends the approval of the Plan by our shareholders.

Our Board believes that it is advisable to adopt the Plan in order to compensate employees, officers and directors upon whose judgment, initiative and effort we depend. Furthermore, the issuance of common shares and stock options to eligible participants under the Plan is designed to align the interests of such participants with those of our shareholders.

The Plan provides for the issuance of up to 900,000 shares of common stock, are present or represented by proxy, or (ii) more than 50%approximately 14.5% of our outstandingthe 6,185,255 shares of common stock whicheveroutstanding on December 15, 2022. The major features of the Plan are summarized below. This summary is less. Abstentionsqualified in its entirety by reference to the full text of the Plan, a copy of which is attached to this Proxy Statement as Appendix A.

Board Recommendation

OUR BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF OUR 2022 STOCK INCENTIVE PLAN

Interest of Certain Persons in Matters to Be Acted Upon

Coincident with our Board’s adoption of the Plan, the Compensation Committee of the Board granted our officers and directors non-statutory stock options to purchase an aggregate of up to 800,000 shares of our common stock, exercisable at $2.12 per share, which was the closing price per share of the Company’s common stock on the date of grant, November 23, 2022.  The options expire on November 22, 2032.

The options were granted under, and are subject to the terms and conditions of, the Plan.  Nevertheless, as required by the rules and guidelines of the Nasdaq Stock Market, the options may not be exercised until such time, if ever, as the 2022 Stock Incentive Plan is approved by the shareholders of the Company.  If the shareholders do not approve this proposal, both the Plan and these option grants will not countbe null and void.

In particular, Messrs. Douglas M. Polinsky and Joseph A. Geraci each received non-statutory stock options for the purchase of up to 250,000 shares of common stock, and Messrs. Lyle A. Berman, Howard P. Liszt and Laurence S. Zipkin each received non-statutory stock options for the purchase of up to 100,000 shares of common stock.

The income tax consequences to the Company, and to the recipients, resulting from these grants, and from any future exercise of the options, are summarized below under “U.S. Income Tax Consequences - Non-Statutory Stock Options.”

Other than as affirmative votes and will therefore count againsta result of their right to participate in the 2012 Plan, no other person who is a director, officer or employee of the Company, or any of their associates, has any substantial interest in this proposal.

RecommendationGeneral Description

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE WITHDRAWAL OF OUR ELECTION TO BE REGULATED AS A BUSINESS DEVELOPMENT COMPANY UNDER THE 1940 ACT.The Plan is intended to advance the interests of the company and our stockholders by enabling us to attract and retain qualified individuals through opportunities for equity participation, and to reward those individuals who contribute to the achievement of our economic objectives. The Plan allows us to award eligible recipients incentive awards, consisting of:

All of our employees and any subsidiary employees, including officers and directors who are also employees, as well as all of our non-employee directors and our non-employee consultants, advisors and other persons who provide services to us will be eligible to receive incentive awards under the Plan.

Shares that are issued under the Plan or that are subject to outstanding incentive awards reduce the number of shares remaining available under the Plan. Any shares subject to an incentive award that lapses, expires, is forfeited, terminates unexercised or unvested, or is settled or paid in cash or other consideration will automatically again become available for issuance under the Plan.

PROPOSAL 2If the exercise price of any option or any associated tax withholding obligations are paid by a participant’s tender or attestation as to ownership of shares (as described below), or if tax withholding obligations are satisfied by the Company withholding shares otherwise issuable upon exercise of an option, then only the net number of shares issued will reduce the number of shares remaining available under the Plan.

APPROVAL OF AN AMENDMENT TO OUR
CERTIFICATE OF INCORPORATION TO EFFECT A
SHARE COMBINATION (REVERSE STOCK SPLIT),
SUBJECT TO THE ULTIMATE DISCRETION
OF OUR BOARD OF DIRECTORSIn the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, divestiture or extraordinary dividend (including a spin-off) or any other similar change in the corporate structure or shares of the Company, appropriate adjustment will be made to:

Administration

Introduction The Plan will be administered by our Compensation Committee, which we refer to hereinafter simply as “Committee.”

The Committee has the authority to determine all necessary or desirable provisions of incentive awards, including the eligible recipients who will be granted one or more incentive awards under the Plan, the nature and extent of the incentive awards to be made to each participant, the time or times when incentive awards will be granted, the duration of each incentive award, and payment or vesting restrictions and other conditions. The Committee has the authority to amend or modify the terms of outstanding incentive awards (including any “repricing” of options) so long as the amended or modified terms are permitted under the Plan and any affected participant has consented to the amendment or modification.

The Plan became effective on November 23, 2022 (subject to approval of our shareholders pursuant to this proposal) and, unless terminated earlier, the Plan will terminate at midnight on November 22, 2032. Incentive awards outstanding at the time the Plan is terminated may continue to be exercised, or become free of restriction, according to their terms. The Board may suspend or terminate the Plan or any portion of the Plan at any time, and may amend the Plan from time to time to conform incentive awards to any change in applicable laws or regulations or in any other respect that the board may deem to be in our best interests. Nevertheless, no amendments to the Plan will be effective without shareholder approval if such approval is required under Section 422 of the Internal Revenue Code or Nasdaq Listing Rules (or any other applicable laws, regulations or self-regulatory organization rules).

Termination, suspension or amendment of the Plan will not adversely affect any outstanding incentive award without the consent of the affected participant, except for adjustments in the event of changes in capitalization or a “change in control,” discussed below.

In general, no right or interest in any incentive award may be assigned or transferred by a participant, except by will or the laws of descent and distribution, or subjected to any lien or encumbrance. The Committee may, however, permit a participant to transfer of all or a portion of a non-statutory stock option, other than for value, to certain family members or related family trusts, foundations or partnerships. Any permitted transferee of a non-statutory stock option will remain subject to all the terms and conditions of the incentive award applicable to the participant.

Options

The exercise price of an incentive stock option may not be less than 100% of the fair market value of a share of our common stock on the option grant date (or 110% if the participant beneficially owns more than 10% of our outstanding stock). Under the Plan, “fair market value” means the average of the reported high and low sale prices of a share of our common stock during the regular daily trading session on the Nasdaq Stock Market.

In general, the Plan requires a participant to pay an option’s exercise price in cash. The Committee may, however, allow exercise payments to be made, in whole or in part, by delivery of a broker exercise notice (pursuant to which a broker or dealer is irrevocably instructed to sell enough shares or lend the optionee enough money to pay the exercise price and to remit such sums to the Company), by tender or attestation as to ownership of shares of common stock that have been held for the period of time necessary to avoid a charge to the Company’s earnings for financial reporting purposes and that are otherwise acceptable to the Committee, or by a combination of such methods. Any shares of common stock tendered or covered by an attestation will be valued at their fair market value on the exercise date.

The aggregate fair market value of shares of common stock with respect to which incentive stock options may become exercisable by a participant for the first time during any calendar year (and under all “incentive stock option” plans of the Company or any subsidiary) may not exceed $100,000. Any incentive stock options in excess of this amount will be treated as non-statutory stock options. Options may be exercised in whole or in installments, as determined by the Committee, and the Committee may impose conditions or restrictions to the exercisability of an option, including that the participant remain continuously employed by the Company or a subsidiary for a certain period. An option may not remain exercisable after 10 years from its date of grant (or five years from its date of grant if the participant beneficially owns more than 10% of our outstanding stock).

Restricted Stock Awards

A restricted stock award is an award of common stock vesting at such times and in such installments as may be determined by the Committee and that, until it vests, is subject to restrictions on transferability and the possibility of forfeiture. Restricted stock awards may be subject to any restrictions or vesting conditions that the Committee deems appropriate, including that the participant remain continuously employed by the Company or a subsidiary for a certain period.

Unless the Committee determines otherwise, any dividends (other than regular quarterly cash dividends) or distributions paid with respect to shares of common stock subject to the unvested portion of a restricted stock award will be subject to the same restrictions as the shares to which such dividends or distributions relate. Holders of restricted stock awards will have the same voting rights as holders of unrestricted common stock.

Restricted Stock Units

A restricted stock unit is an award that represents a promise to issue to the participant shares of common stock once certain criteria specified in the award are satisfied. The criteria may be that the participant remain employed until a specified date or dates or that various performance objectives are satisfied. No stock ownership rights are conferred upon the participant until the restricted stock unit awards are settled upon the satisfaction of the specified criteria.

Performance Awards

The Plan permits the grant of performance-based stock and cash awards. The Committee may structure awards so that the stock or cash will be issued or paid only following the achievement of certain pre-established performance goals during a designated performance period.  The Committee may establish performance goals in its discretion.

Change in Control of the Company

In the event a “change in control” of the Company occurs, then, if approved by the Committee (either at the time of the grant of the incentive award or at any time thereafter):

The Committee may also determine that some or all participants holding outstanding options will receive shares or a cash payment equal to the excess of the fair market value of the option shares immediately prior to the effective date of the change in control over the exercise price per share of the options (or, in the event that there is no excess, that such options will be terminated).

For purposes of the Plan a “change in control” of the Company generally occurs if:

Effect of Termination of Employment or Other Service

If a participant ceases to be employed by (or provide services to) the Company and all subsidiaries, then all of the participant’s incentive awards will terminate as set forth below (unless modified by the Committee in its discretion as described below).

Upon termination due to death or disability, all outstanding options then held by the participant will, to the extent exercisable as of such termination, remain exercisable for a period of six months after such termination (but in no event after the expiration date of any such option), all restricted stock awards then held by the participant that have not vested as of such termination will be terminated and forfeited; and outstanding performance awards then held by the participant that have not vested as of such termination will be terminated and forfeited.

Upon termination for any reason other than death or disability (including retirement), all outstanding options will remain exercisable to the extent exercisable as of such termination for a period of three months thereafter (but in no event after the expiration date of any such option), and all unvested restricted stock awards and performance awards will be terminated. Nevertheless, if a participant’s termination is due to “cause,” as defined in the Plan, then all rights of the participant under the Plan and any award agreements will immediately terminate without notice of any kind.

In connection with a participant’s termination, the Plan, our BoardCommittee may cause the participant’s options to become or continue to become exercisable and restricted stock awards and performance awards to vest, continue to vest, or become free of Directors is recommending that our shareholders approve an amendment to our Certificate of Incorporation (an “Amendment”) to effect a 1-for [7,500] reverse stock split of the issued and outstanding shares of our common stock so that each Mill City shareholder will own one share of Mill City common stock for every [7,500] shares owned immediately prior to the reverse stock split, at any time prior to the one-year anniversary of the date of the special meeting (the “Expiration Date”).restrictions.

We will not issue fractional shares in connection with the reverse stock split. Instead, shareholders entitled to less than a full share of common stock as a result of the reverse stock split will receive a cash payment, as permitted under state law. For more information, please see the “Fractional Shares” caption below.

Those shareholders with less than one whole share resulting from the reverse stock split (i.e., those holding fewer than [7,500] shares immediately prior to the reverse stock split) will receive only cash in lieu of any resulting fractions, and thus will have their ownership in the Company eliminated.New Plan Benefits

The reverse stock splittable below discloses the amounts that will reducebe received by each of the number of outstanding shares of our common stockfollowing under the Plan being acted upon, based on the option grants already made by combining all outstanding shares of our common stock into a proportionately fewer number of shares of common stock. This action would also result in a relative increasethe Committee, as disclosed throughout this Proxy Statement:

Other than as disclosed in the available numbertable above, the grant of authorized but unissued shares of our common stock becauseawards under the Plan is discretionary and neither the number of shares authorized for issuancesubject to awards nor the types of awards under the Plan to any particular eligible recipient(s) or group(s) of eligible recipients is not being changed by the reverse stock split. Our authorized capital stock currently consists of 250,000,000 shares of capital stock, par value $0.001 per share. The Amendment will be in the form attached asExhibit A hereto.presently determinable.

In determining the reverse stock split ratio, the Board of Directors has primarily considered the important question of ensuring that, immediately after the filing of the Company’s withdrawal of its BDC election, the Company will have an exemption available to it from the registration requirements of the 1940 Act. In this regard, Section 3(c)(1) of the 1940 Act provides an exemption from the registration requirements of that Act for any company having 100 or fewer beneficial owners. As a result, the reverse stock split ratio chosen by the Board is large, so as to ensure that, after the effectiveness of the reverse stock split, the Company will have 100 or fewer beneficial owners.  More specifically, the Company estimates that after the reverse stock split is effected the Company will have approximately [60] beneficial owners of its common stock.

If the shareholders approve the Amendment, the Board of Directors will have the authority to file the Amendment with the Minnesota Secretary of State. The reverse stock split will become effective upon the filing of the Amendment with the Minnesota Secretary of State (the “Effective Time”). After the Effective Time, the number of issued and outstanding shares of our common stock would be reduced proportionately to the 1-for [7,500] reverse stock split ratio. We will also obtain a new CUSIP number for our common stock as of the Effective Time. 

If our shareholders approve this proposal, but our Board of Directors does not affect the reverse stock split prior to the Expiration Date, the authority granted by our shareholders’ approval of this proposal would terminate automatically.

Other Reasons for the Reverse Stock SplitU.S. Income Tax Consequences

The primary purpose for effectingfollowing description of the proposed Amendment is to decrease the number of beneficial owners of our common stock so that we can qualify for an exemption from the investment company registration requirementsfederal income tax consequences under the 1940 Act. Nevertheless, in determining to recommend the reverse stock split to our shareholders for their approval, the Board of Directors also considered other benefitslaws of the reverse stock split, including reducing—on a relative basis—the high transaction costs and commissions incurred by our shareholders due to the low per-share trading price of our common stock. Trading commissions are often set at a fixed price, and tend to have a negative impact on holders of lower-priced securities because the brokerage commissions on a sale of lower-priced securities generally represent a higher percentage of the transaction prices than the commissions on relatively higher-priced issues, which may discourage trading in such lower-priced securities. In addition, many brokerage firms no longer accept securities that constitute “penny stocks” due to the increased regulatory burden associated with transacting in those securities. As a consequence of this fact, low liquidity, and the relatively high transaction costs, it is often impractical, or at the very least considerably difficult, for shareholders to sell their shares publicly.

Material Effects of a Reverse Stock Split 

If our shareholders approve this proposal and our Board of Directors files the Amendment to effect a reverse stock split, the issued and outstanding shares of our common stock would decrease in accordance with the reverse stock split ratio. Thus, the number of issued and outstanding shares of our common stock as of           2019, would decrease from              to             .

A reverse stock split would affect all of our shareholders. However, some of our shareholders will be affected differently than others due to the treatment of fractional shares, discussed below.Those shareholders with less than one whole share resulting from the reverse stock split will have their ownership in the Company eliminated. All shareholders who remain after the reverse stock split will own a fewer number of shares than they currently own (a number equal to the number of shares owned immediately prior to the Effective Time divided by [7,500] and rounded down to the nearest whole number). Although we expect that a reverse stock split would result in an increase in the per-share price of our common stock, there can be no assurance that this will be the case, and the history of similar reverse stock splits for companies in similar circumstances is varied. Even if the stock price were to increase, the increase per share may not be in proportion to the reduction in the number of shares of our common stock outstanding. Furthermore, there is no guarantee that any increase would be permanent, since our stock price is dependent on many factors that may be unrelated to the number of shares outstanding. In addition, the reverse stock split contemplated in this proposal would reduce the proportion of shares owned by our shareholders relative to the number of shares authorized for issuance, since there will be no change in the number of authorized shares of our common stock. This would effectively increase the authorized shares available for issuance and we may in the future determine it to be in the best interests of us and our shareholders to enter into transactions that may include the issuance of shares of our common stock, although we have no current plans to do so. 

A reverse stock split would not affect our securities law reporting and disclosure obligations under the Exchange Act. A reverse stock split may also result in some shareholders owning “odd lots” of fewer than 100 shares of our common stock. Brokerage commissions and other transaction costs in odd-lots are generally higher than the transaction costs in “round lots” of even multiples of 100 shares. Overall, however, the total number of shareholders owning “odd lots” of fewer than 100 shares will be less after the reverse stock split than before.

Certain U.S. Federal Income-Tax Consequences 

The discussion below is only a summary of certain U.S. federal income-tax consequences relating to the reverse stock split and does not purport to be a complete discussion of all possible tax consequences to our shareholders. This summary assumes that those shareholders who hold their pre-reverse stock split shares of common stock as “capital assets,” as defined in the Code, will also hold the post-reverse split shares of common stock as capital assets. This discussion does not address all U.S. federal income-tax considerations that may be relevant to particular shareholders in light of their individual circumstances or to shareholders that are subject to special rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, foreign shareholders, partnerships, limited liability companies and other pass-through entities, broker-dealers, shareholders subject to the alternative minimum tax provisions of the Code, shareholders who hold their stock as part of a hedge, wash sale, appreciated financial position, straddle, conversion transaction, synthetic security or other risk reduction transaction or integrated investment. The following summaryUnited States is based upon theon current provisions of the Code, applicable Treasury Regulations thereunder, judicial decisionsstatutes, regulations and administrative rulings,interpretations, all of which are subject to change, possibly on awith retroactive basis, and such a change could alter or modify the statements set forth herein. Thiseffect. The description does not include state or local income tax consequences. In addition, the description is not intended to address specific tax consequences under state, local, foreign, and other laws. Each shareholder should consult his, her or its own tax advisor asapplicable to the particular facts and circumstances that mayan individual participant who receives an incentive award.

Incentive Stock Options. There will not be unique to such shareholder and also as to any estate, gift, state, local or foreign tax considerations arising out of the reverse stock split. A reverse stock split will qualify as a recapitalization for U.S. federal income tax purposes. As a result: 

The above discussion of U.S. federal tax issues is not intended or written to be used, and cannot be used by any person, for the purpose of avoiding penalties that may be imposed under the Code. It was written solely in connection with preparing the proposal on a reverse stock split of our common stock for approval by our shareholders at the special meeting.

Procedure for Effecting a Reverse Stock Split and Exchange of Stock Certificates 

If this proposal is approved by our shareholders at the special meeting, our Board of Directors, in its sole discretion, expects to file the Amendment with the Minnesota Secretary of State within a three to four weeks of the special meeting (assuming that Proposal 1 is also approved by our shareholders). Upon the filing of the Amendment, and without any further action by us or our shareholders, the issued and outstanding shares of our common stock held by shareholders of record as of the Effective Time would be converted and reclassified into a lesser number of shares of our common stock calculated in accordance with the above reverse stock split ratio.

Certificated Shares 

After the Effective Time, our transfer agent will act as our exchange agent and assist holders of our common stock in exchanging their pre-split common stock (“Old Shares”) by sending them a letter of transmittal that will contain instructions on how a shareholder should surrender any certificates representing Old Shares to the exchange agent in exchange for the appropriate number of post-split common stock (“New Shares”). No New Shares will be issued to a shareholder until such shareholder has surrendered any Old Share certificates in their account, together with a properly completed and executed letter of transmittal to our exchange agent. From and after the Effective Time, certificates previously representing Old Shares will evidence the number of shares of common stock into which the Old Shares previously represented by such certificate were combined in the reverse stock split, and any Old Shares that are submitted for transfer, whether pursuant to a sale, disposition or otherwise, will, if properly presented, be exchanged for New Shares. As a result,SHAREHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) TO US OR OUR TRANSFER AGENT UNTIL REQUESTED TO DO SO.

Fractional Shares

We will not issue fractional sharesissued in connection with a restricted stock award as to which the reverserestrictions have lapsed, any gain or loss will be treated as long- term or short-term capital gain or loss, depending on the holding period from the date the restrictions lapse.

Restricted Stock Units. At the time of settlement of a restricted stock split. Instead, shareholders who wouldunit award, when shares of common stock are transferred to the participant, the participant will recognize ordinary taxable income equal to the fair market value of the shares on the date of transfer. The Company will be entitled to a fractioncompensation expense deduction in the year of a share as a resulttransfer of the reverseshares in an amount equal to the amount recognized by the participant as taxable income.

Performance Awards. The participant recognizes ordinary taxable income in the year in which a performance award is paid. The amount of taxable income is equal to the amount of cash paid to the participant or the fair market value of any shares of common stock splittransferred to the participant. The Company will instead be entitled to receive a cash paymentcompensation expense deduction in the year of transfer of the shares in an amount equal to the amount recognized by the participant as taxable income.

Excise Tax on Parachute Payments. The Code imposes a 20% excise tax on the recipient of “excess parachute payments,” as defined in the Code, and denies tax deductibility to the Company on excess parachute payments. Generally, parachute payments are payments in the nature of compensation to employees of a company who are officers, shareholders, or highly compensated individuals, which payments are contingent upon a change in ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company. For example, acceleration of the exercisability of options or the vesting of restricted stock awards upon a change in control of the Company may constitute parachute payments, and in certain cases, “excess parachute payments.” Excess parachute payments are generally parachute payments equal to or exceeding the recipient’s average compensation from the Company equal to the product of (i) the number of common shares held by the shareholder that would otherwise have been exchanged for the fractional share interest, multiplied by (ii) the volume-weighted average price per share over the ten trading days immediately preceding the Effective Time; provided, that if there is no trading in our common stock on any of ten trading days immediately preceding the Effective Time, then the most recent closing sales price of our common stock will be substituted for the “volume-weighted average price per share.”five years.

Interests of Directors and Executive Officers 

Our directors and executive officers do not have direct or indirect substantial interests in the matters set forth in this proposal, except to the extent of their ownership of shares of our common stock.

Dissenters’ Rights

Action Creating Right

Section 302A.471(f) of the Minnesota Business Corporation Act (“MBCA”) grants any shareholder of record of the Company, and any beneficial owner of shares of the Company, as of the record date of                  , 2019, whose shareholdings are reduced to a fraction of a share, the right to dissent and obtain payment from the Company for the fair value of their shares at the Effective Time. The Board of Directors reserves the right to abandon the reverse stock split in the event that shareholders holding 0.25% or more of the Company’s outstanding shares (pre-split) exercise their right to dissent. Only shareholders whose shareholdings in the Company will effectively be eliminated by virtue of the reverse stock split will have the right to dissent described herein.

Requirements for Exercising Right to Dissent

TO BE ENTITLED TO PAYMENT, THE DISSENTING SHAREHOLDER MUST FILE WITH THE COMPANY, BEFORE THE VOTE FOR THE REVERSE STOCK SPLIT OCCURS, A WRITTEN NOTICESECURITY OWNERSHIP OF INTENT TO DEMAND PAYMENT OF THE FAIR VALUE OF THE SHARES OWNED BY THE DISSENTING SHAREHOLDERCERTAIN BENEFICIAL OWNERS AND MUST NOT VOTE SUCH SHARES IN FAVOR OF THE REVERSE STOCK SPLIT. THIS DEMAND WILL BE OF NO FORCE AND EFFECT IF THE REVERSE STOCK SPLIT IS NOT EFFECTED. The notice must be submitted in writing to the Company at 1907 Wayzata Boulevard, Suite 205, Wayzata, Minnesota 55391, Attention: Chief Financial Officer, and must be received before the vote for the reverse stock split at the special meeting. A vote against the reverse stock split is not necessary for the shareholder to exercise dissenters’ rights. Nevertheless, a vote against the reverse stock split will not be sufficient to satisfy the notice requirements of state law. Any shareholder contemplating the exercise of these dissenters’ rights should review carefully the provisions of Sections 302A.471 and 302A.473 of the MBCA, particularly the procedural steps required to perfect such rights. YOUR DISSENTERS’ RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF SECTIONS 302A.471 AND 302A.473 ARE NOT FULLY AND PRECISELY SATISFIED. A COPY OF SECTIONS 302A.471 AND 302A.473 IS ATTACHED ASEXHIBIT B TO THIS PROXY STATEMENT.

Notice of Procedure

If and when the proposed reverse stock split is approved by shareholders, and if the reverse stock split is not then abandoned by the Board of Directors, the Company will deliver to all shareholders who have properly dissented pursuant to the provision of Sections 302A.471 and 302A.473 of the MBCA from the reverse stock split a written notice that: (1) lists the address to which demand for payment and certificates for shares must be sent to obtain payment for such shares and the date by which such certificates must be received; (2) describes any restriction on transfer of uncertificated shares that will apply after the demand for payment is received; (3) encloses a form to demand payment and to be used to certify the date on which the shareholder, or the beneficial owner on whose behalf the shareholder dissents, acquired the shares or an interest in them; and (4) encloses a copy of Sections 302A.471 and 302A.473 of the MBCA and a brief description of the procedures to be followed to dissent and obtain payment of fair value.

Demand for Payment and Submission of Share Certificates

To receive the fair value of his, her, or its shares, a dissenting shareholder must demand payment using the form described above and deposit his, her or its share certificates within 30 days after the notice described above is delivered by the Company, but the dissenting shareholder retains all other rights of a shareholder until the proposed action (i.e., the reverse stock split) takes effect. Under Minnesota law, notice by mail is made by the Company when deposited in the United States mail. A shareholder who fails to make demand for payment and fails to deposit certificates will lose the right to receive the fair value of the shares notwithstanding the timely filing of such shareholder’s notice of intent to demand payment.

Purchase of Dissenting Shares

After the Effective Time, or after the Company receives a valid demand for payment, whichever comes later, the Company shall remit to the dissenting shareholders who have complied with the above-described procedures the amount the Company estimates to be the fair value of the shares held by such shareholders, plus interest accompanied by certain financial information about the Company, an estimate of the fair value of the shares and the method used and a copy of Sections 302A.471 and 302A.473 of the MBCA, and a brief description of the procedure to be followed to demand supplemental payment.

Acceptance or Settlement of Demand

If a dissenting shareholder believes that the amount remitted by the Company is less than the fair value of the shares, with interest, then the dissenting shareholder may give written notice to the Company of his or her estimate of fair value, with interest, within 30 days after the Company mails such remittance and must demand payment of the difference. UNLESS A SHAREHOLDER MAKES SUCH A DEMAND WITHIN SUCH 30-DAY PERIOD, THE SHAREHOLDER WILL BE ENTITLED ONLY TO THE AMOUNT REMITTED BY THE COMPANY. Within 60 days after the Company receives such a demand from a shareholder, it will be required either to pay the shareholder the amount demanded (or agreed to after discussion between the shareholder and the Company) or to file in court a petition requesting that the court determine the fair value of the shares, with interest.

Court Determination

All shareholders who have demanded payment for their shares, but have not reached agreement with the Company, will be made parties to such court proceeding. The court will then determine whether the dissenting shareholders have fully complied with the provisions of Section 302A.473 of the MBCA and will determine the fair value of the shares, taking into account any and all factors the court finds relevant (including the recommendation of any appraisers appointed by the court), computed by any method that the court, in its discretion, sees fit to use, whether or not such method was used by the Company or a shareholder. The expenses of the court proceeding will be assessed against the Company, except that the court may assess part or all of those costs and expenses against a shareholder whose action in demanding payment is found to be arbitrary, vexatious, or not in good faith. The fair value of the Company’s shares means the fair value of the shares immediately before the Effective Time. Under Section 302A.471 of the MBCA, a shareholder of the Company has no right at law or equity to set aside the effect of the reverse stock split, except if such consummation is fraudulent with respect to such shareholder or the Company. Any shareholder making a demand for payment of fair value for his or her shares may withdraw the demand at any time before the determination of the fair value of the shares by filing with the Company written notice of such withdrawal.

Reservation of Right to Not Implement Reverse Stock Split 

As explained above, even if this proposal is approved by our shareholders at the special meeting, our Board of Directors will have discretion to implement the reverse stock split (prior to the Expiration Date) or abandon it. Our Board of Directors would consider abandoning the Amendment and the reverse stock split if it were to deem such action to not be in the best interests of our Company and our shareholders. To be clear, the Board of Directors may determine to abandon the reverse stock split in its discretion, for any reason, including any situation in which holders of more than 0.25% of the Company’s issued and outstanding common stock (before the reverse stock split) exercise their right to dissent. By voting in favor of this proposal to authorize our Board of Directors to file the Amendment to effect the reverse stock split prior to the Expiration Date, you are also expressly authorizing the Board of Directors to not implement the reverse stock split by abandoning the Amendment if the Board of Directors in its sole discretion should determine that such action is in the best interests of us and our shareholders.

Vote Not Contingent Upon Proposal 1

Our shareholders’ approval of this proposal is not contingent upon their approval of Proposal 1 above. Therefore, if the shareholders approve this proposal without approving Proposal 1, our Board of Directors may still determine to implement or abandon the Amendment as described herein.

Vote Required 

The affirmative vote by the holders of a majority of the votes of all outstanding shares of our common stock as of the record date is necessary for approval of this proposal. Abstentions will not count as votes cast and will therefore count against the proposal.

Recommendation

The Board of Directors believes that it is in our best interests and in the best interests of the shareholders to provide our Board of Directors with discretionary authority to amend our Certificate of Incorporation to effect a reverse stock split at any time prior to the Expiration Date, as described in this proposal.

THEREFORE, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT. 

INFORMATION REGARDING COMPANY COMMON STOCK

Security Ownership of Management and Certain Beneficial Owners MANAGEMENT

The following table sets forth certain information, as of , 2019 (unless otherwise indicated),November 30, 2022, with respect to any person (including any “group,” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) who is known to us to be the beneficial ownershipowner of each current director, each of our named executive officers, our executive officers and directors as a group, and each shareholder known to management to own beneficially more than 5% of the issuedany class of our voting securities, and outstandingas to those shares of our equity securities beneficially owned by each of our directors and executive officers and all of our directors and executive officers as a group.  As of November 30, 2022, we had 6,185,255 shares of common stock. stock outstanding.

Unless otherwise indicated we believe that the beneficial owners set forth in the table below have sole voting and investment power, andor its footnotes, the business address of each of the following persons or entities is 1907 Wayzata Blvd., Suite 205, Wayzata, Minnesota 55391.55391, and each such person or entity has sole voting and investment power with respect to the shares of common stock set forth opposite their respective name.

Unless otherwise specified in the table below, such information, other than information with respect to our directors and executive officers, is based on a review of statements filed with the SEC pursuant to Sections 13 (d), 13 (f), and 13 (g) of the Securities Exchange Act with respect to our common stock.

The number of shares of common stock beneficially owned by each person is determined under the rules of the Commission and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which such person has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days after the date hereof, through the exercise of any stock option, warrant or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with his or her spouse) with respect to the shares set forth in the following table. The inclusion herein of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares.

The following table lists, as at the date hereof, the number of shares of our common stock that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. 

* less than one percent

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes information concerning the compensation awarded to, earned by, or paid to, our Chief Executive Officer (Principal Executive Officer) and our Chief Financial Officer (Principal Financial Officer) during fiscal years 2021 and 2020 (collectively, the “Named Executive Officers”).

* includes additional compensation of payment of health insurance premiums and 401(k) matching contributions under the employment retirement program.

Outstanding Equity Awards at Fiscal Year-End

We had no outstanding options, warrants, unvested stock awards or equity incentive plan awards as of December 31, 2021, held by any named executive. As of the date of this Proxy Statement, however, we have an aggregate of 28,889 shares of restricted stock issued in April 2022 to our directors and subject to forfeiture through January 24, 2023.  In addition, on November 23, 2022, and coincident with the Board’s adoption of the 2022 Stock Incentive Plan, the Board issued non-statutory stock options to our directors and officers in the aggregate amount of 800,000 shares of common stock.  By their terms, these options are not exercisable unless and until the 2022 Stock Incentive Plan is approved by our shareholders.

Director Compensation

The following table sets forth director compensation for the year ended December 31, 2021:

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2021, we had no outstanding options, warrants or other rights to purchase any equity securities of the Company under any equity compensation plan or “individual compensation arrangement,” as defined in Item 201 of Regulation S-K.  As of the date of this Proxy Statement, however, our Board reserved 900,000 shares of common stock for issuance under the 2022 Stock Incentive Plan, subject to the approval of our shareholders at the special meeting to which this Proxy Statement relates.  Our common stock is listed for trading on the Nasdaq Capital Market, and therefore is subject to that stock exchange’s rules.  These rules require us to obtain the approval of our shareholders prior to adopting any equity compensation plans or modifying such plans, and prior to issuance any equity compensation to our officers and directors outside of an equity compensation plan that has been approved by our shareholders.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Our Board of Directors has adopted a policy to require our disclosure of instances in our periodic filings with the SEC. Our related-party transactions requiring disclosure under this policy are as follows:

OTHER MATTERS

Section 16(a)16(A) Beneficial Ownership Reporting Compliance

Rules adopted by the SEC under Section 16(a) of the Securities Exchange Act of 1934, or the “Exchange Act,” require our officers and directors, and persons who own more than 10% of the issued and outstanding shares of our equity securities, to file reports of their ownership, and changes in ownership, of such securities with the SEC on Forms 3, 4 or 5, as appropriate. Such persons are required by the regulations of the SEC to furnish us with copies of all forms they file pursuant to Section 16(a).

Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to us during our most recent fiscal year, and any written representations provided to us, we believe that all of the officers, directors, and owners of more than 10% of the outstanding shares of our common stock complied with Section 16(a) of the Exchange Act for the year ended December 31, 2021, except as follows:  Messrs. Geraci and the disclosure requirements of Item 405 of SEC Regulation S-K requireLizst each reported a transaction on May 20, 2022 that our directorsoccurred on April 11, 2022; and executive officers,Messrs. Polinsky, Berman and any persons holding more than 10% of any class of our equity securities report their ownership of such equity securities and any subsequent changes inZipkin each reported a transaction on May 19, 2022 that ownership to the SEC and to us. Basedoccurred on April 11, 2022.  Mr. Polinsky reported a review of the written statements and copies of such reports furnished to us by our executive officers, directors and greater-than-10% beneficial owners, we believetransaction on August 22, 2022 that during fiscal year 2018 all Section 16(a) filing requirements applicable to the executive officers, directors and shareholders were timely satisfied.occurred on August 18, 2022.

Shareholder Proposals and Director Nominations for 2023 Annual Meeting

OTHER MATTERSUnder SEC rules, a shareholder wishing wishes to present a proposal for inclusion in our proxy statement for our 2023 annual meeting must submit the proposal in writing to us, to the attention of our Corporate Secretary, at 1907 Wayzata Boulevard, Suite 205, Wayzata MN 55391, a reasonable amount of time prior to us printing and sending the related proxy materials. SEC rules set standards for the types of shareholder proposals and the information that must be provided by the shareholder making the proposal or nomination.

We have not set a date for our 2023 annual meeting at this time. Nevertheless, we shall inform our shareholders, in our Annual Report on Form 10-K or our earliest quarterly report on Form 10-Q, of the anticipated date of that meeting so as to facilitate the submission of shareholder proposals or director nominations in a manner consistent with SEC rules.

The chair of the 2023 annual meeting of shareholders may determine, if the facts warrant, that a matter has not been properly brought before the meeting and, therefore, may not be considered at the meeting. In addition, the proxy solicited by the Board for the 2023 annual meeting will confer discretionary voting authority with respect to (i) any proposal presented by a shareholder at that meeting for which we have not been provided with timely notice and (ii) any proposal made in accordance with our bylaws, if the annual meeting proxy statement briefly describes the matter and how management’s proxy holders intend to vote on it, and if the shareholder does not comply with the requirements of Rule 14a-4(c)(2) promulgated under the Exchange Act.

Householding of Proxy Materials

The BoardSEC has adopted rules that permit companies and intermediaries (such as banks and brokers) to satisfy the delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and cost savings for companies.

A number of Directors isbanks and brokers with account holders who are our shareholders may be householding our proxy materials. A single proxy statement will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your bank or broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, please notify your bank or broker, direct your written request to Mill City Ventures III, Ltd.., 1907 Wayzata Boulevard, Suite 205, Wayzata MN 55301, Attention:  Investor Relations, or contact us by telephone at (952) 479-1921. Shareholders who currently receive multiple copies of the viewproxy statement at their address and would like to request householding of their communications should contact their bank or broker.

Other Matters

We will also consider any other business that managementproperly comes before the meeting, or any adjournment or postponement thereof. As of the record date, we are not aware of any other matters to be submitted for consideration at the meeting. If any other matters are properly brought before the meeting, the persons named on the enclosed proxy card will vote the shares they represent using their best judgment.

Information on our website, other than our Proxy Statement, Notice of Special Meeting and form of proxy, is primarily responsible for all communications on behalfnot part of Mill City with shareholdersthe proxy soliciting materials and the public at large.is not incorporated herein by reference.

Shareholders who wish to communicate with the BoardAn additional copy of Directors or with a particular director may send a letter to our any of our executive officers atthis Proxy Statement is available without charge upon written request to: Corporate Secretary, Mill City Ventures III, Ltd., 1907 Wayzata Boulevard, Suite 205, Wayzata, MinnesotaMN 55391. Any communication should clearly specify that it is intended to be made to the entire Board of Directors or to one or more particular director(s).

Under this process, our officers review all such correspondence and will forward to the Board of Directors a summary of all such correspondence and copies of all correspondence that deals with the functions of the Board of Directors or committees thereof or that the officers otherwise determine requires their attention. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Chairman of the Audit Committee and Valuation Committee. A copy of the committee charters and our Code of Ethics is available at our web site atwww.millcityventures3.com.

Shareholder proposals or nominees for the Board of Directors must be made in accordance with the procedures described in the following question. 

Proposals received from shareholders in accordance with Rule 14a-8 under the Exchange Act are given careful consideration by our Board of Directors. If a shareholder intends to present a proposal at our next annual meeting of shareholders pursuant to Rule 14a-8 under the Exchange Act, in order for such shareholder proposal to be included in our Proxy Statement for that meeting, the proposal must be received by us at Mill City Ventures III, Ltd., 1907 Wayzata Boulevard, Suite 205, Wayzata, Minnesota 55391, a reasonable amount of time prior to that meeting.  If such proposal is in compliance with all of the requirements of Rule 14a-8 under the Exchange Act, the proposal will be included in our Proxy Statement and proxy card relating to such meeting. Nothing in the response to this question shall be deemed to require us to include any shareholder proposal that does not meet all the requirements for such inclusion established by the SEC in effect at that time. 

In order for a shareholder proposal submitted outside of Rule 14a-8, including any nominations for the Board of Directors made by shareholders, to be considered at our next annual meeting of shareholders, such proposal must be made by written notice and received by us not less than 60 days in advance of an annual meeting.  Such proposals should be submitted by certified mail, return-receipt requested.

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

The Board of Directors does not intend to bring other matters before the special meeting except items incidental to the conduct of the meeting. However, on all other matters properly brought before the meeting, or any adjournments or postponements thereof, by the Board of Directors or others, the persons named as proxies in the accompanying proxy, or their substitutes, will vote in their discretion.

ExhibitAPPENDIX A

FORM OF CERTIFICATE OF AMENDMENT

ARTICLES OF AMENDMENT

OF MILL CITY VENTURES III, LTD.

2022 STOCK INCENTIVE PLAN

1. Purpose of Plan

The Undersigned,                 Officerpurpose of this 2022 Stock Incentive Plan (the “Plan”) is to advance the interests of Mill City Ventures III, Ltd., (“Company”) and its shareholders by enabling the Company and its Subsidiaries to attract and retain qualified individuals through opportunities for equity participation in the Company, and to reward those individuals who contribute to the Company’s achievement of its economic objectives.

2. Definitions

The following terms will have the meanings set forth below, unless the context clearly requires otherwise:

2.1. “Board” means the Company’s Board of Directors.

2.2. “Broker Exercise Notice” means a Minnesota corporation (the “Corporation”), hereby certifieswritten notice pursuant to which a Participant, upon exercise of an Option, irrevocably instructs a broker or dealer to sell a sufficient number of shares or loan a sufficient amount of money to pay all or a portion of the exercise price of the Option and/or any related withholding tax obligations and remit such sums to the Company and directs the Company to deliver stock certificates to be issued upon such exercise directly to such broker or dealer or their nominee.

2.3. “Cause” means (i) dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to the Company or any Subsidiary, (ii) any unlawful or criminal activity of a serious nature, (iii) any intentional and deliberate breach of a duty or duties that, individually or in the following Articlesaggregate, are material in relation to the Participant’s overall duties, (iv) any material breach of Amendmentany confidentiality or noncompete agreement entered into with the Company or any Subsidiary, or (v) with respect to a particular Participant, any other act or omission that constitutes “cause” as may be defined in any employment, consulting or similar agreement between such Participant and the Company or any Subsidiary.

2.4. “Change in Control” means an event described in Section 11.1 of the Plan.

2.5. “Code” means the Internal Revenue Code of 1986, as amended, including any succeeding laws in replacement thereof.

2.6. “Committee” means the Compensation Committee of the Board or its delegates who are administering the Plan, as provided in Section 3 below.

2.7. “Common Stock” means the common stock of the Company, or the number and kind of shares of stock or other securities into which such Common Stock may be changed in accordance with Section 4.3 of the Plan.

2.8. “Disability” means any medically determinable physical or mental impairment resulting in the service provider’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

2.9. “Effective Date” means November 23, 2022, but no Incentive Award under this plan shall be exercised or exercisable unless and until the Plan shall have been duly adoptedapproved by the Corporation’sshareholders of the Company, which approval shall be within 12 months after the Effective Date, and in accordance with the requirements of Nasdaq Stock Market Rule 5635(c).

2.10. “Eligible Recipients” means all employees, officers and directors of the Company or any Subsidiary, and any person who has a contractual, business or professional relationship with the Company or any Subsidiary.

2.11. “Exchange Act” means the Securities Exchange Act of 1934, as amended.

2.12. “Fair Market Value” means, with respect to the Common Stock, as of any date: (i) the mean between the reported high and low sale prices of the Common Stock at the end of the regular trading session if the Common Stock is listed, admitted to unlisted trading privileges, or reported on any national securities exchange or on the NASDAQ Stock Market on such date (or, if no shares were traded on such day, as of the next preceding day on which there was such a trade); or (ii) if the Common Stock is not so listed, admitted to unlisted trading privileges, or reported on any national exchange or on the NASDAQ Stock Market, the closing bid price as of such date at the end of the regular trading session, as reported by the OTC Bulletin Board, The OTC Market or other comparable service; or (iii) if the Common Stock is not so listed or reported, such price as the Committee determines in good faith in the exercise of Directorsits reasonable discretion.

2.13. “Incentive Award” means an Option, Restricted Stock Award, Restricted Stock Unit or Performance Award granted to an Eligible Recipient pursuant to the Plan.

2.14. “Incentive Stock Option” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that qualifies as an “incentive stock option” within the meaning of Section 422 of the Code.

2.15. “Non-Statutory Stock Option” means a right to purchase Common Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that does not qualify as an Incentive Stock Option.

2.16. “Option” means an Incentive Stock Option or a Non-Statutory Stock Option.

2.17. “Participant” means an Eligible Recipient who receives one or more Incentive Awards under the Plan.

2.18. “Performance Awards” means an award of Common Stock or cash granted to an Eligible Recipient pursuant to Section 8 of the Plan and shareholderswith respect to which shares of Common Stock or cash will be transferred to the Eligible Recipient in accordance with the provisions of such Section 8 and any agreement evidencing a Performance Award.

2.19. “Performance Criteria” means the performance criteria that may be used by the Committee in granting Restricted Stock Awards or Performance Awards contingent upon achievement of such performance goals as the Committee may determine in its sole discretion. The Committee may select one criterion or multiple criteria for measuring performance, and the measurement may be based upon Company, Subsidiary or business unit performance, or the individual performance of the Eligible Recipient, either absolute or by relative comparison to other companies, other Eligible Recipients or any other external measure of the selected criteria.

2.20. “Performance Period” means, in respect of a Performance Award, a period of time established by the Committee within which the Performance Criteria relating to such Performance Award are to be achieved.

2.21. “Previously Acquired Shares” means shares of Common Stock that are already owned by the Participant or, with respect to any Incentive Award, that are to be issued upon the grant, exercise or vesting of such Incentive Award.

2.22. “Restricted Stock Award” means an award of Common Stock granted to an Eligible Recipient pursuant to Section 7 of the Plan that is subject to the restrictions on transferability and the risk of forfeiture imposed by the provisions of such Section 7.

2.23. “Restricted Stock Unit” means an award granted to an Eligible Recipient pursuant to Section 7 of the Plan that represents a contractual obligation on the part of the Company to transfer shares of Common Stock to the Eligible Participant upon the satisfaction of specified Performance Criteria and/or the completion of a specified period of employment with the Company and its Subsidiaries.

2.24. “Retirement” means normal or approved early termination of employment or service.

2.25. “Securities Act” means the Securities Act of 1933, as amended.

2.26. “Subsidiary” means any entity that is directly or indirectly controlled by the Company or any entity in which the Company has a significant equity interest, as determined by the Committee.

3. Plan Administration

3.1. The Committee. The Plan will be administered by the Committee. So long as the Company has a class of its equity securities registered under Section 12 of the Exchange Act, the Committee administering the Plan will consist of the Compensation Committee of the Board or its delegate, which will consist solely of two or more members of the Board who are “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act and who are considered “outside directors.” Such a committee, if established, will act by majority approval of the members, and a majority of the members of such a committee will constitute a quorum. To the extent consistent with applicable corporate law of the Company’s jurisdiction of incorporation, the Committee may delegate to any officers of the Company the duties, power and authority of the Committee under the Plan pursuant to such conditions or limitations as the Committee may establish; provided, however, that only the Committee may exercise such duties, power and authority with respect to Eligible Recipients who are subject to Section 16 of the Exchange Act. The Committee may exercise its duties, power and authority under the Plan in its sole and absolute discretion without the consent of any Participant or other party, unless the Plan specifically provides otherwise. Each determination, interpretation or other action made or taken by the Committee pursuant to the provisions of the Minnesota Business Corporation Act (the “Act”)Plan will be conclusive and binding for all purposes and on all persons, and no member of the Committee will be liable for any action or determination made in good faith with respect to the Plan or any Incentive Award granted under the Plan.

3.2. Authority of the Committee.

(a) In accordance with and subject to the provisions of the Plan, the Committee will have the authority to determine all provisions of Incentive Awards as the Committee may deem necessary or desirable and as consistent with the terms of the Plan, including, without limitation, the following: (i) the Eligible Recipients to be selected as Participants; (ii) the nature and extent of the Incentive Awards to be made to each Participant (including the number of shares of Common Stock to be subject to each Incentive Award, any exercise price, the manner in which Incentive Awards will vest or become exercisable and whether Incentive Awards will be granted in tandem with other Incentive Awards) and the form of written agreement, if any, evidencing such Incentive Award; (iii) any Performance Criteria applicable to any Incentive Awards; (iv) the time or times when Incentive Awards will be granted and, where applicable, settled; (v) the duration of each Incentive Award; (vi) the restrictions and other conditions to which the payment or vesting of Incentive Awards may be subject. In addition, the Committee will have the authority under the Plan in its sole discretion to pay the economic value of any Incentive Award in the form of cash, Common Stock or any combination of both.

(b) The Committee will have the authority under the Plan to amend or modify the terms of any outstanding Incentive Award in any manner, including, without limitation, the authority to modify the number of shares or other terms and conditions of an Incentive Award, extend the term of an Incentive Award, accelerate the exercisability or vesting or otherwise terminate any restrictions relating to an Incentive Award other than an Incentive Award intended to qualify as “performance-based” compensation, accept the surrender of any outstanding Incentive Award, effect any repricing of previously granted “underwater” options or, to the extent not previously exercised or vested, authorize the grant of new Incentive Awards in substitution for surrendered Incentive Awards; provided, however that the amended or modified terms are permitted by the Plan as then in effect and that any Participant adversely affected by such amended or modified terms has consented to such amendment or modification. Notwithstanding the foregoing, no Incentive Award that is subject to the requirements and restrictions of Section 409A of the Code may be amended in a manner that would violate Section 409A of the Code.

(c) In the event of (i) any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, extraordinary dividend or divestiture (including a spin-off) or any other change in corporate structure or shares; (ii) any purchase, acquisition, sale, disposition or write-down of a significant amount of assets or a significant business; (iii) any change in accounting principles or practices, tax laws or other such laws or provisions affecting reported results; or (iv) any other similar change, in each case with respect to the Company or any other entity whose performance is relevant to the grant or vesting of an Incentive Award, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) may, without the consent of any affected Participant, amend or modify the vesting criteria (including Performance Criteria) of any outstanding Incentive Award that is based in whole or in part on the financial performance of the Company (or any Subsidiary or division or other subunit thereof) or such other entity so as equitably to reflect such event, with the desired result that the criteria for evaluating such financial performance of the Company or such other entity will be substantially the same (in the sole discretion of the Committee or the board of directors of the surviving corporation) following such event as prior to such event; provided, however, that the amended or modified terms are permitted by the Plan as then in effect.

4. Shares Available for Issuance

4.1. Maximum Number of Shares Available; Certain Restrictions on Awards. Subject to adjustment as provided in Section 4.3, the maximum number of shares of Common Stock that will be available for issuance under the Plan will be 900,000, and the maximum number of shares of Common Stock that will be available for issuance in connection with Incentive Stock Options is 900,000.

4.2. Accounting for Incentive Awards. Shares of Common Stock that are issued under the Plan or that are subject to outstanding Incentive Awards will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan; provided, however, that shares subject to an Incentive Award that lapses, expires, is forfeited (including issued shares forfeited under a Restricted Stock Award) or for any reason is terminated unexercised or unvested or is settled or paid in cash or any form other than shares of Common Stock will automatically again become available for issuance under the Plan. To the extent that the exercise price of any Option or associated tax withholding obligations are paid by tender or attestation as to ownership of Previously Acquired Shares, or to the extent that such tax withholding obligations are satisfied by withholding of shares otherwise issuable upon exercise of the Option, only the number of shares of Common Stock issued net of the number of shares tendered, attested to or withheld will be applied to reduce the maximum number of shares of Common Stock remaining available for issuance under the Plan.

4.3. Adjustments to Shares and Incentive Awards. In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares or any other change in the corporate structure or shares of the Company, the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) will make appropriate adjustment (which determination will be conclusive) as to the number and kind of securities or other property (including cash) available for issuance or payment under the Plan and, in order to prevent dilution or enlargement of the rights of Participants, the number and kind of securities or other property (including cash) subject to outstanding Incentive Awards and the exercise price of outstanding Options.

5. Participation

Participants in the Plan will be those Eligible Recipients who, in the judgment of the Committee, have contributed, are contributing or are expected to contribute to the achievement of economic objectives of the Company or its Subsidiaries. Eligible Recipients may be granted from time to time one or more Incentive Awards, singly or in combination or in tandem with other Incentive Awards, as may be determined by the Committee in its sole discretion. Incentive Awards will be deemed to be granted as of the date specified in the grant resolution of the Committee, which date will be the date of any related agreement with the Participant.

6. Options

6.1. Grant. An Eligible Recipient may be granted one or more Options under the Plan, and such Options will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may designate whether an Option is to be considered an Incentive Stock Option or a Non-Statutory Stock Option. To the extent that any Incentive Stock Option granted under the Plan ceases for any reason to qualify as an “incentive stock option” for purposes of Section 422 of the Code, such Incentive Stock Option will continue to be outstanding for purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock Option.

6.2. Exercise Price. The per share price to be paid by a Participant upon exercise of an Option will be determined by the Committee in its discretion at the time of the Option grant; provided, however, that such price will not be less than 100% of the Fair Market Value of one share of Common Stock on the date of grant with respect to any Incentive Stock Option (110% of the Fair Market Value with respect to an Incentive Stock Option if, at the time such Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).

6.3. Exercisability and Duration. An Option will become exercisable at such times and in such installments and upon such terms and conditions as may be determined by the Committee in its sole discretion at the time of grant (including without limitation (i) the achievement of one or more of the Performance Criteria and/or (ii) that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period); provided, however, that if the Committee does not specify the expiration date of the Option, the expiration date shall be 10 years from the date on which the Option was granted. In no case may an Option be exercisable after 10 years from its date of grant (or five years from its date of grant in the case of an Incentive Stock Option if, at the time the Incentive Stock Option is granted, the Participant owns, directly or indirectly, more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company).

6.4. Payment of Exercise Price. The total purchase price of the shares to be purchased upon exercise of an Option will be paid entirely in cash (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion and upon terms and conditions established by the Committee, may allow such payments to be made, in whole or in part, by tender of a Broker Exercise Notice, by tender, or attestation as to ownership, of Previously Acquired Shares that have been held for the period of time necessary to avoid a charge to the Company’s earnings for financial reporting purposes and that are otherwise acceptable to the Committee, or by a combination of such methods. For purposes of such payment, Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market Value on the exercise date.

6.5. Manner of Exercise. An Option may be exercised by a Participant in whole or in part from time to time, subject to the conditions contained in the Plan and in the agreement evidencing such Option, by delivery in person, by electronic transmission or through the mail of written notice of exercise to the Company pursuant to the instructions set forth in the Incentive Award or, if none, to the Company’s principal office, attention Chief Financial Officer, and by paying in full the total exercise price for the shares of Common Stock to be purchased in accordance with Section 6.4 of the Plan.

7. Restricted Stock Awards and Restricted Stock Units

7.1. Grant. An Eligible Recipient may be granted one or more Restricted Stock Awards or Restricted Stock Units under the Plan, and such Restricted Stock Awards and Restricted Stock Units will be subject to such terms and conditions, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Restricted Stock Awards and Restricted Stock Units as it deems appropriate, including, without limitation, (i) the achievement of one or more of the Performance Criteria and/or (ii) that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period.

7.2. Rights as a Shareholder; Transferability. Except as provided in Sections 7.1, 7.3, 7.4 and 12.3 of the Plan, a Participant will have all voting, dividend, liquidation and other rights with respect to shares of Common Stock issued to the Participant as a Restricted Stock Award or pursuant to a Restricted Stock Unit under this Section 7 upon the Participant becoming the holder of record of such shares as if such Participant were a holder of record of shares of contractually unrestricted Common Stock.

7.3. Dividends and Distributions. Unless the Committee determines otherwise in its sole discretion (either in the agreement evidencing the Restricted Stock Award at the time of grant or at any time after the grant of the Restricted Stock Award), any dividends or distributions paid with respect to shares of Common Stock subject to the unvested portion of a Restricted Stock Award will be subject to the same restrictions as the shares to which such dividends or distributions relate. The Committee will determine in its sole discretion whether any interest will be paid on such dividends or distributions. A Participant to whom Restricted Stock Units have been granted will have no rights to receive any dividends or distributions with respect to the shares of Common Stock underlying the Restricted Stock Units unless and until the Restricted Stock Units are settled and the Participant becomes the holder of record of any shares of Common Stock delivered in settlement of such Restricted Stock Units.

7.4. Enforcement of Restrictions. To enforce the restrictions referred to in this Section 7, the Committee may place a legend on the stock certificates referring to such restrictions and may require the Participant, until the restrictions have lapsed, to keep the stock certificates, together with duly endorsed stock powers, in the custody of the Company or its transfer agent, or to maintain evidence of stock ownership, together with duly endorsed stock powers, in a non-certificated book-entry stock account with the Company’s transfer agent.

8. Performance Awards

8.1. Grant. An Eligible Recipient may be granted one or more Performance Awards under the Plan, and such Performance Awards will be subject to such terms and conditions, if any, consistent with the other provisions of the Plan, as may be determined by the Committee in its sole discretion. The Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting of such Performance Awards as it deems appropriate, including, without limitation, (i) the achievement of one or more of the Performance Criteria and/or (ii) that the Participant remain in the continuous employ or service of the Company or a Subsidiary for a certain period.

8.2 Performance Periods. The Performance Period with respect to each Performance Award will be such period of time commencing with the date of grant as is determined by the Committee on the date of grant.

8.3 Specification of Performance Criteria. Any grant of Performance Awards will specify Performance Criteria that, if achieved, will result in payment or early payment of the Award, and each grant may specify in respect of such specified Performance Criteria a minimum acceptable level of achievement and shall set forth a formula for determining the amount of the Performance Award that will be earned if performance is at or above the minimum level, but falls short of full achievement of the specified Performance Criteria. The grant of Performance Awards will specify that, before the Performance Awards will be earned and paid, the Compensation Committee of the Board must certify that the Performance Criteria have been satisfied.

8.4. Settlement – Time of Payment.

(a) At the time any Performance Award is granted, the agreement evidencing the Performance Award will specify the time at which the vested portion of the Performance Award will be settled. In no event may the time of payment be changed after the Performance Award is granted.

(b) The agreement may specify that settlement will be made upon vesting or the settlement will occur with respect to all vested Performance Awards as of a specified time.

(c) To the extent the agreement does not provide for the settlement of vested Performance Awards on or before the date that is two and one-half months after the end of the year in which the Performance Award (or the relevant portion thereof) vests, the agreement will provide for payment to occur: (a) upon the Eligible Recipient’s separation from service, death or disability; (b) upon a change in control of the Company; or (c) upon a specified date or pursuant to a specified schedule. In all cases in which payment is to be made in accordance with this Section 8.2(c), the times specified for payment will be interpreted and administered in accordance with the requirements of Section 409A of the Code and any applicable regulations or guidance issued in connection with that Code section.

8.5. Settlement – Form of Payment. Unless otherwise specified in the agreement evidencing the Performance Award, or some other written agreement between the Company and the Eligible Recipient, vested Performance Awards will be settled in cash or shares of Common Stock.

8.6. Rights as a Shareholder. A Participant holding a Performance Award shall have no rights as a holder of Common Stock unless and until the Performance Award is settled and shares of Common Stock are delivered to the Participant in such settlement.

8.7. Dividends and Distributions. Unless the Committee determines otherwise in its sole discretion (either in the agreement evidencing the Performance Award at the time of grant or at any time after the grant of the Performance Award), the Participant shall not be entitled to receive dividends or distributions with respect to the Shares subject to a Performance Award unless and until the Performance Award is settled and shares of Common Stock are delivered to the Participant in such settlement.

8.8. Unfunded and Unsecured Obligation of the Company. A Performance Award represents an unfunded and unsecured obligation of the Company to make payment to a Participant in accordance with the terms of this Plan or an award agreement. The Participant’s rights with respect to a Performance Award shall be those of an unsecured creditor of the Company.

9. Effect of Termination of Employment or Other Service

9.1. Termination Due to Death or Disability. In the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of death or Disability:

(a) All outstanding Options then held by the Participant will, to the extent exercisable as of such termination, remain exercisable for a period of six months after such termination (but in no event after the expiration date of any such Option); and

(b) All Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

(c) All outstanding Performance Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited.

9.2. Termination Due to Retirement. Subject to Section 9.5, in the event a Participant’s employment or other service with the Company and all Subsidiaries is terminated by reason of Retirement:

(a) All outstanding Options then held by the Participant will, to the extent exercisable as of such termination, remain exercisable in full for a period of three months after such termination (but in no event after the expiration date of any such Option). Options not exercisable as of such Retirement will be forfeited and terminate; and

(b) All Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

(c) All outstanding Performance Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited.

9.3. Termination for Reasons Other than Death, Disability or Retirement. Subject to Section 9.5, in the event a Participant’s employment or other service is terminated with the Company and all Subsidiaries for any reason other than death, Disability or Retirement, or a Participant is in the employ of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the Company (unless the Participant continues in the employ of the Company or another Subsidiary):

1.            The name(a) All outstanding Options then held by the Participant will, to the extent exercisable as of such termination, remain exercisable in full for a period of three months after such termination (but in no event after the expiration date of any such Option). Options not exercisable as of such termination will be forfeited and terminate; and

(b) All Restricted Stock Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited; and

(c) All outstanding Performance Awards then held by the Participant that have not vested as of such termination will be terminated and forfeited.

9.4. Modification of Rights Upon Termination. Notwithstanding the other provisions of this Section 9, the Committee may, in its sole discretion (which may be exercised in connection with the grant or after the date of grant, including following such termination), determine that upon a Participant’s termination of employment or other service with the Company and all Subsidiaries, any Options (or any part thereof) then held by such Participant may become or continue to become exercisable and/or remain exercisable following such termination of employment or service, and Restricted Stock Awards and Performance Awards then held by such Participant may vest and/or continue to vest or become free of restrictions and conditions to issuance, as the case may be, following such termination of employment or service, in each case in the manner determined by the Committee.

9.5. Effects of Actions Constituting Cause. Notwithstanding anything in the Plan to the contrary, in the event that a Participant is determined by the Committee, acting in its sole discretion, to have committed any action which would constitute Cause as defined in Section 2.3, irrespective of whether such action or the Committee’s determination occurs before or after termination of such Participant’s employment or service with the Company or any Subsidiary, all rights of the Corporation is: Mill City Ventures III, Ltd.Participant under the Plan and any agreements evidencing an Incentive Award then held by the Participant shall terminate and be forfeited without notice of any kind. The Company may defer the exercise of any Option or the vesting of any Restricted Stock Award or Performance Award for a period of up to 90 days in order for the Committee to make any determination as to the existence of Cause.

9.6. Determination of Termination of Employment or Other Service. Unless the Committee otherwise determines in its sole discretion, a Participant’s employment or other service will, for purposes of the Plan, be deemed to have terminated on the date recorded on the personnel or other records of the Company or the Subsidiary for which the Participant provides employment or service, as determined by the Committee in its sole discretion based upon such records.

2.            Article 310. Payment of Withholding Taxes

10.1. General Rules. The Company is entitled to (a) withhold and deduct from future wages of the Corporation’s ArticlesParticipant (or from other amounts that may be due and owing to the Participant from the Company or a Subsidiary), or make other arrangements for the collection of, Incorporation, as amended, is hereby amended by addingall legally required amounts necessary to satisfy any and all federal, foreign, state and local withholding and employment-related tax requirements attributable to an Incentive Award, including, without limitation, the grant, exercise or vesting of, or payment of dividends with respect to, an Incentive Award or a new paragraph “E” as follows:disqualifying disposition of stock received upon exercise of an Incentive Stock Option, or (b) require the Participant promptly to remit the amount of such withholding to the Company before taking any action, including issuing any shares of Common Stock, with respect to an Incentive Award.

E.       Effective10.2. Special Rules. The Committee may, in its sole discretion and upon terms and conditions established by the filingCommittee, permit or require a Participant to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 10.1 of the ArticlesPlan by electing to tender, or by attestation as to ownership of, Amendment approvedPreviously Acquired Shares that have been held for the period of time necessary to avoid a charge to the Company’s earnings for financial reporting purposes and that are otherwise acceptable to the Committee, by delivery of a Broker Exercise Notice or a combination of such methods. For purposes of satisfying a Participant’s withholding or employment-related tax obligation, Previously Acquired Shares tendered or covered by an attestation will be valued at their Fair Market Value.

11. Change in Control

11.1. A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs has occurred:

(a) the sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of the Company, whether in one single transaction or in a series of related transactions, to any Successor;

(b) the approval by the shareholders of the CorporationCompany of any plan or proposal for the liquidation or dissolution of the Company;

(c) any Successor (as defined in Section 11.2), other than a Bona Fide Underwriter (as defined in Section 11.2 below), becomes after the effective date of the Plan the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of (i) 25% or more, but not 50% or more, of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors, unless the transaction resulting in such ownership has been approved in advance by the Continuity Directors (as defined in Section 11.2 below), or (ii) more than 50% of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the Continuity Directors);

(d) a special meeting heldmerger or consolidation to which the Company is a party if the shareholders of the Company immediately prior to effective date of such merger or consolidation have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act), immediately following the effective date of such merger or consolidation, of securities of the surviving corporation representing (i) 50% or more, but not more than 80%, of the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections of directors, unless such merger or consolidation has been approved in advance by the Continuity Directors, or (ii) less than 50% of the combined voting power of the surviving corporation’s then outstanding securities ordinarily having the right to vote at elections of directors (regardless of any approval by the Continuity Directors); or

(e) the Continuity Directors cease for any reason to constitute at least 50% or more of the Board.

11.2. Change in Control Definitions. For purposes of this Section 11:

(a) “Continuity Directors” of the Company will mean any individuals who are members of the Board on , 2019 (the “Effective Time”)the effective date of the Plan and any individual who subsequently becomes a member of the Board whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the Continuity Directors (either by specific vote or by approval of the Company’s proxy statement in which such individual is named as a nominee for director without objection to such nomination).

(b) “Bona Fide Underwriter” means an entity engaged in business as an underwriter of securities that acquires securities of the Company through such entity’s participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition.

(c) “Successor” means any individual, corporation, partnership, group, association or other “person,” as such term is used in Section 13(d) or Section 14(d) of the Exchange Act, other than the Company, any “affiliate” (as defined below) or any benefit plan(s) sponsored by the Company or any affiliate that succeeds to, or has the practical ability to control (either immediately or solely with the passage of time), the issued and outstanding common stockCompany’s business directly, by merger, consolidation or other form of business combination, or indirectly, by purchase of the Corporation shall be combined onCompany’s outstanding securities ordinarily having the right to vote at the election of directors or all or substantially all of its assets or otherwise. For this purpose, an “affiliate” is (i) any corporation at least a 1-for-[•] basismajority of whose outstanding securities ordinarily having the right to vote at elections of directors is owned directly or indirectly by the Company; (ii) any other form of business entity in which the Company, by virtue of a direct or indirect ownership interest, has the right to elect a majority of the members of such entity’s governing body or (iii) any entity that at the Effective Time, every [•]time of the approval of this Plan owns in excess of 10% of the Company’s common stock and its affiliates.

11.3. Acceleration of Vesting. Without limiting the authority of the Committee under Sections 3.2 and 4.3, if a Change in Control of the Company occurs, then, if approved by the Committee in its sole discretion either in an agreement evidencing an Incentive Award at the time of grant or at any time after the grant of an Incentive Award: (a) outstanding Options that may become immediately exercisable in full and will remain exercisable in accordance with their terms; and (b) outstanding Restricted Stock Awards and Restricted Stock Units may become immediately fully vested and non-forfeitable; and (c) any conditions to the issuance of cash or shares of common stockCommon Stock pursuant to Performance Awards may lapse.

11.4. Cash Payment. If a Change in Control of the Company occurs, then the Committee, if approved by the Committee in its sole discretion either in an agreement evidencing an Incentive Award at the time of grant or at any time after the grant of an Incentive Award, and without the consent of any Participant affected thereby, may determine that:

(a) Some or all Participants holding outstanding immediately priorOptions will receive, with respect to the Effective Time shall be combined into one sharesome or all of common stock. This share combination will be effected through the exchange and replacement of certificates representing issued and outstanding shares of common stockCommon Stock subject to such Options (“Option Shares”), either (i) as of the Effective Time, together with immediate book-entry adjustments to the stock register of the Corporation maintained in accordance with the Act. If the share combination would result in a shareholder being entitled to receive less than a full share of common stock, that shareholder will receive a cash payment from the Company, in lieueffective date of any fractional share interest,such Change in Control, cash in an amount equal to the productexcess of (i) the numberFair Market Value of common shares held bysuch Option Shares on the shareholder that would otherwise have been exchanged forlast business day prior to the fractional share interest, multiplied by (ii)effective date of such Change in Control over the volume-weighted averageexercise price per share of such Option Shares, (ii) immediately prior to such Change of Control, a number of shares of Common Stock having an aggregate Fair Market Value equal to the excess of the Fair Market Value of the Option Shares as of the last business day prior to the effective date of such Change in Control over the ten trading days immediately preceding the Effective Time; provided, that if there is no trading in our common stock on any of ten trading days immediately preceding the Effective Time, then the most recent closing sales price of our common stock will be substituted for the “volume-weighted averageexercise price per share.”. The par valueshare of such Option Shares; or (iii) any combination of cash or shares of Common Stock with the amount of each share of issued and outstanding common stock shall notcomponent to be affecteddetermined by the share combination.

3.             These Articles of Amendment were adopted pursuant toCommittee not inconsistent with the Act.

In Witness Whereofforegoing clauses (i) and (ii), the undersigned has set his hand as of [•], 2019.proportionally adjusted; and

(b) any Options which, as of the effective date of any such Change in Control, are “underwater” (as defined in Section 3.2(d)) shall terminate as of the effective date of any such Change in Control; and

(c) some or all Participants holding Performance Awards will receive, with respect to some or all of the shares of Common Stock subject to such Performance Awards that remain subject to issuance based upon the future achievement of Performance Criteria or other future event as of the effective date of any such Change in Control of the Company, cash in an amount equal the Fair Market Value of such shares immediately prior to the effective date of such Change in Control.

11.5. Limitation on Change in Control Payments. Notwithstanding anything in Section 11.3 or 11.4 to the contrary, if, with respect to a Participant, the acceleration of the exercisability of an Option as provided in Section 11.3 or the payment of cash or shares of Common Stock in exchange for all or part of an Option as provided in Section 11.4 (which acceleration or payment could be deemed a “payment” within the meaning of Section 280G(b)(2) of the Code), together with any other “payments” that such Participant has the right to receive from the Company or any corporation that is a member of an “affiliated group” (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which the Company is a member, would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code), then the “payments” to such Participant pursuant to Section 11.3 or 11.4 will be reduced to the largest amount as will result in no portion of such “payments” being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that if a Participant is subject to a separate agreement with the Company or a Subsidiary which specifically provides that payments attributable to one or more forms of employee stock incentives or to payments made in lieu of employee stock incentives will not reduce any other payments under such agreement, even if it would constitute an excess parachute payment, or provides that the Participant will have the discretion to determine which payments will be reduced in order to avoid an excess parachute payment, then the limitations of this Section 11.4 will, to that extent, not apply.

12. Rights of Eligible Recipients and Participants; Transferability

12.1. Employment or Service. Nothing in the Plan will interfere with or limit in any way the right of the Company or any Subsidiary to terminate the employment or service of any Eligible Recipient or Participant at any time, nor confer upon any Eligible Recipient or Participant any right to continue in the employ or service of the Company or any Subsidiary.

12.2. Rights as a Shareholder. As a holder of Incentive Awards (other than Restricted Stock Awards), a Participant will have no rights as a shareholder unless and until such Incentive Awards are exercised for, or paid in the form of, shares of Common Stock and the Participant becomes the holder of record of such shares. Except as otherwise provided in the Plan, no adjustment will be made for dividends or distributions with respect to such Incentive Awards as to which there is a record date preceding the date the Participant becomes the holder of record of such shares, except as the Committee may determine in its discretion.

Exhibit B12.3. Restrictions on Transfer.

302A.471 RIGHTS OF DISSENTING SHAREHOLDERS.(a) Except pursuant to a testamentary instrument or the laws of descent and distribution or as otherwise expressly permitted by subsections (b) and (c) below, no right or interest of any Participant in an Incentive Award prior to the exercise (in the case of Options) or vesting (in the case of Restricted Stock Awards) or settlement (in the case of Restricted Stock Units or Performance Awards) of such Incentive Award will be assignable or transferable, or subjected to any lien, during the lifetime of the Participant, either voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise.

Subdivision 1.Actions creating rights.

(b) A shareholder ofParticipant will be entitled to designate a corporation may dissent from,beneficiary to receive an Incentive Award upon such Participant’s death, and obtain payment for the fair value of the shareholder's shares in the event of such Participant’s death, payment of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted pursuant to Section 9 of the following corporate actions:

(a) unless otherwise provided inPlan) may be made by, such beneficiary. If a deceased Participant has failed to designate a beneficiary, or if a beneficiary designated by the articles, an amendmentParticipant fails to survive the Participant, payment of any amounts due under the Plan will be made to, and exercise of any Options (to the extent permitted pursuant to Section 9 of the articles that materiallyPlan) may be made by, the Participant’s legal representatives, heirs and adversely affectslegatees. If a deceased Participant has designated a beneficiary and such beneficiary survives the rightsParticipant but dies before complete payment of all amounts due under the Plan or preferencesexercise of all exercisable Options, then such payments will be made to, and the exercise of such Options may be made by, the legal representatives, heirs and legatees of the shares of the dissenting shareholder in that it:

(1) alters or abolishes a preferential right of the shares;

(2) creates, alters, or abolishes a right in respect of the redemption of the shares, including a provision respecting a sinking fund for the redemption or repurchase of the shares;

(3) alters or abolishes a preemptive right of the holder of the shares to acquire shares, securities other than shares, or rights to purchase shares or securities other than shares;

(4) excludes or limits the right of a shareholder to vote on a matter, or to cumulate votes, except as the right may be excluded or limited through the authorization or issuance of securities of an existing or new class or series with similar or different voting rights; except that an amendment to the articles of an issuing public corporation that provides that section 302A.671 does not apply to a control share acquisition does not give rise to the right to obtain payment under this section; or

(5) eliminates the right to obtain payment under this subdivision;

(b) a sale, lease, transfer, or other disposition of property and assets of the corporation that requires shareholder approval under section 302A.661, subdivision 2, but not including a disposition in dissolution described in section 302A.725, subdivision 2, or a disposition pursuant to an order of a court, or a disposition for cash on terms requiring that all or substantially all of the net proceeds of disposition be distributed to the shareholders in accordance with their respective interests within one year after the date of disposition;

(c) a plan of merger, whether under this chapter or under chapter 322C, to which the corporation is a constituent organization, except as provided in subdivision 3, and except for a plan of merger adopted under section 302A.626;

(d) a plan of exchange, whether under this chapter or under chapter 322C, to which the corporation is a party as the corporation whose shares will be acquired by the acquiring organization, except as provided in subdivision 3;

(e) a plan of conversion is adopted by the corporation and becomes effective;

(f) an amendment of the articles in connection with a combination of a class or series under section 302A.402 that reduces the number of shares of the class or series owned by the shareholder to a fraction of a share if the corporation exercises its right to repurchase the fractional share so created under section 302A.423; or

(g) any other corporate action taken pursuant to a shareholder vote with respect to which the articles, the bylaws, or a resolution approved by the board directs that dissenting shareholders may obtain payment for their shares.

Subd. 2.Beneficial owners.

(a) A shareholder shall not assert dissenters' rights as to less than all of the shares registered in the name of the shareholder, unless the shareholder dissents with respect to all the shares that are beneficially owned by another person but registered in the name of the shareholder and discloses the name and address of each beneficial owner on whose behalf the shareholder dissents. In that event, the rights of the dissenter shall be determined as if the shares as to which the shareholder has dissented and the other shares were registered in the names of different shareholders.

(b) A beneficial owner of shares who is not the shareholder may assert dissenters' rights with respect to shares held on behalf of the beneficial owner, and shall be treated as a dissenting shareholder under the terms of this section and section 302A.473, if the beneficial owner submits to the corporation at the time of or before the assertion of the rights a written consent of the shareholder.

Subd. 3.Rights not to apply.

(a) Unless the articles, the bylaws, or a resolution approved by the board otherwise provide, the right to obtain payment under this section does not apply to a shareholder of (1) the surviving corporation in a merger with respect to shares of the shareholder that are not entitled to be voted on the merger and are not canceled or exchanged in the merger or (2) the corporation whose shares will be acquired by the acquiring organization in a plan of exchange with respect to shares of the shareholder that are not entitled to be voted on the plan of exchange and are not exchanged in the plan of exchange.

(b) If a date is fixed according to section 302A.445, subdivision 1, for the determination of shareholders entitled to receive notice of and to vote on an action described in subdivision 1, only shareholders as of the date fixed, and beneficial owners as of the date fixed who hold through shareholders, as provided in subdivision 2, may exercise dissenters' rights.beneficiary.

(c) Upon a Participant’s request, the Committee may, in its sole discretion, permit a transfer of all or a portion of a Non-Statutory Stock Option, other than for value (i.e., a gift), to such Participant’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, any person sharing such Participant’s household (other than a tenant or employee), a trust in which any of the foregoing have more than 50% of the beneficial interests, a foundation in which any of the foregoing (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty percent of the voting interests. Any permitted transferee will remain subject to all the terms and conditions applicable to the Participant prior to the transfer. A permitted transfer may be conditioned upon such requirements as the Committee may, in its sole discretion, determine, including, but not limited to execution and/or delivery of appropriate acknowledgements, opinion of counsel, or other documents by the transferee.

12.4. Non-Exclusivity of the Plan. Nothing contained in the Plan is intended to modify or rescind any previously approved compensation plans or programs of the Company or create any limitations on the power or authority of the Board to adopt such additional or other compensation arrangements as the Board may deem necessary or desirable.

13. Securities Law and Other Restrictions

Notwithstanding subdivision 1,any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any shares of Common Stock under this Plan, and a Participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to Incentive Awards granted under the Plan, unless (a) there is in effect with respect to such shares a registration statement under the Securities Act and any applicable securities laws of a state or foreign jurisdiction or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other U.S. or foreign regulatory body which the Committee, in its sole discretion, deems necessary or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

14. Plan Amendment, Modification and Termination

The Board may suspend or terminate the Plan or any portion thereof at any time, and may amend the Plan from time to time in such respects as the Board may deem advisable in order that Incentive Awards under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however, that no such amendments to the Plan will be effective without approval of the Company’s shareholders if shareholder approval of the amendment is then required pursuant to Section 422 of the Code or the rules of any stock exchange or the NASDAQ Stock Market or similar regulatory body. No termination, suspension or amendment of the Plan may adversely affect any outstanding Incentive Award without the consent of the affected Participant; provided, however, that this sentence will not impair the right of the Committee to obtain paymenttake whatever action it deems appropriate under Sections 3.2(c), 4.3 and 11.

15. Effective Date and Duration of the Plan

The Plan is effective as of the Effective Date. The Plan will terminate at midnight on November 22, 2032 and may be terminated prior to such time by Board action. No Incentive Award will be granted after termination of the Plan. Incentive Awards outstanding upon termination of the Plan may continue to be exercised, or become free of restrictions, according to their terms.  If shareholder approval of this section, other thanPlan shall not have been obtained on or prior to the 12-month anniversary of the Effective Date, or if this Plan is submitted to a vote of shareholders and not approved, then this Plan and all Incentive Awards granted hereunder shall thereupon be null and void without any further action required on the part of the Committee or the Company.

16. General Provisions

16.1. Governing Law. Except to the extent expressly provided herein or in connection with a planother matters of merger adopted under section 302A.613, subdivision 4corporate governance and authority (all of which shall be governed by the laws of the Company’s jurisdiction of incorporation), or 302A.621, is limitedthe validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to the Plan will be governed by and construed exclusively in accordance with the following provisions:laws of the State of Minnesota notwithstanding the conflicts-of-laws principles of any jurisdictions.

(1)16.2. Successors and Assigns. The rightPlan will be binding upon and inure to obtain payment under this section is not available for the holdersbenefit of sharesthe successors and permitted assigns of any class or series of shares that is listed on the New York Stock Exchange, NYSE MKT LLC,Company and the Nasdaq Global Market,Participants.

* SPECIMEN PROXY CARD *

Please vote, sign, date and return promptly in the NASDAQ Global Select Market, the Nasdaq Capital Market, or any successor to any such market.enclosed envelope

Special Meeting Proxy Card – Mill City Ventures III, Ltd.

(2) The applicability of clause (1) is determined as of:THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL 1.

(i)1. To approve the record date fixed to determine the shareholders entitled to receive notice of, and to vote at, the meeting of shareholders to act upon the corporate action described in subdivision 1; orCompany’s 2022 Stock Incentive Plan

(ii) the day

1. To transact such other business that may properly come before the effective date ofspecial meeting

Note:  This proxy card must be signed exactly as the name appears hereon.  When shares are held jointly, each holder should sign.  When signing as an executor, administrator, attorney, trustee or guardian, please give full title as such.  If the signer is a corporation, please sign full corporate action describedname by a duly authorized officer, giving full title as such.  If signer is a partnership, please sign in subdivision 1 if there is no meeting of shareholders.partnership name by an authorized person.

(3) Clause (1) is not applicable, and the right to obtain payment under this section is available pursuant to subdivision 1, for the holdersSPECIMEN

Special Meeting of any class or series of shares who are required by the terms of the corporate action described in subdivision 1 to accept for such shares anything other than shares, or cash in lieu of fractional shares, of any class or any series of shares of a domestic or foreign corporation, or any other ownership interest of any other organization, that satisfies the standards set forth in clause (1) at the time the corporate action becomes effective.Shareholders

January 6, 2023

Subd. 4.Other rights.Important Notice Regarding the Availability of Proxy Materials

for the Special Meeting of Shareholders

To Be Held on January 6, 2023

The shareholders of a corporation who have a right under this section to obtain paymentProxy Statement for their shares, or who would have the right to obtain payment for their shares absent the exception set forth in paragraph (c) of subdivision 3, do not have a rightSpecial Meeting is available at law or in equity to have a corporate action described in subdivision 1 set aside or rescinded, except when the corporate action is fraudulent with regard to the complaining shareholder or the corporation.http://millcityventures3.com/investors

302A.473 PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS.

Subdivision 1.Definitions.

(a) For purposes of this section, the terms defined in this subdivision have the meanings given them.

(b) "Corporation" means the issuer of the shares held by a dissenter before the corporate action referred to in section 302A.471, subdivision 1 or the successor by merger of that issuer.

(c) "Fair value of the shares" means the value of the shares of a corporation immediately before the effective date of the corporate action referred to in section 302A.471, subdivision 1.

(d) "Interest" means interest commencing five days after the effective date of the corporate action referred to in section 302A.471, subdivision 1, up to and including the date of payment, calculated at the rate provided in section 549.09, subdivision 1, paragraph (c), clause (1).

Subd. 2.Notice of action.

(a) If a corporation calls a shareholder meeting at which any action described in section 302A.471, subdivision 1 is to be voted upon, the notice of the meeting shall inform each shareholder of the right to dissent and shall include a copy of section 302A.471 and this section and a brief description of the procedure to be followed under these sections.

(b) In connection with a qualified offer as described in section 302A.613, subdivision 4, the constituent corporation subject to the offer may, but is not required to, send to all shareholders a written notice informing each shareholder of the right to dissent and must include a copy of this section and section 302A.471 and a brief description of the procedure to be followed under these sections. To be effective, the notice must be sent as promptly as practicable at or following the commencement of the offer, but in any event at least ten days before the consummation of the offer.

Subd. 3.Notice of dissent.

If the proposedaction must be approved by the shareholders and the corporation holds a shareholder meeting, a shareholder who is entitled to dissent under section 302A.471 and who wishes to exercise dissenters' rights must file with the corporation before the vote on the proposed action a written notice of intent to demand the fair value of the shares owned by the shareholder and must not vote the shares in favor of the proposed action. If the proposed action is to be effected pursuant to section 302A.613, subdivision 4, and the corporation has elected to send a notice of action in accordance with subdivision 2, paragraph (b), a shareholder who is entitled to dissent under section 302A.471 and who wishes to exercise dissenters' rights must not tender the shares owned by the shareholder in response to the offer and must file with the corporation a written notice of intent to demand the fair value of the shares owned by the shareholder. Written notice must be filed with the corporation before the consummation of the offer.

Subd. 4.Notice of procedure; deposit of shares.

(a) After the proposed action has been approved by the board and, if necessary, the shareholders, the corporation shall send (i) in any case where subdivision 3 is applicable, to all shareholders who have complied with subdivision 3, (ii) in any case where a written action of shareholders gave effect to the action creating the right to obtain payment under section 302A.471, to all shareholders who did not sign or consent to a written action that gave effect to the action creating the right to obtain payment under section 302A.471, and (iii) in any other case, to all shareholders entitled to dissent, a notice that contains:

(1) the address to which a demand for payment and certificates of certificated shares must be sent in order to obtain payment and the date by which they must be received;

(2) any restrictions on transfer of uncertificated shares that will apply after the demand for payment is received;

(3) a form to be used to certify the date on which the shareholder, or the beneficial owner on whose behalf the shareholder dissents, acquired the shares or an interest in them and to demand payment; and

(4) a copy of section 302A.471 and this section and a brief description of the procedures to be followed under these sections.

(b) In order to receive the fair value of the shares, a dissenting shareholder must demand payment and deposit certificated shares or comply with any restrictions on transfer of uncertificated shares within 30 days after the notice required by paragraph (a) was given, but the dissenter retains all other rights of a shareholder until the proposed action takes effect.

Subd. 5.Payment; return of shares.

(a) After the corporate action takes effect, or after the corporation receives a valid demand for payment, whichever is later, the corporation shall remit to each dissenting shareholder who has complied with subdivisions 3 and 4 the amount the corporation estimates to be the fair value of the shares, plus interest, accompanied by:

(1) the corporation's closing balance sheet and statement of income for a fiscal year ending not more than 16 months before the effective date of the corporate action, together with the latest available interim financial statements;

(2) an estimate by the corporation of the fair value of the shares and a brief description of the method used to reach the estimate; and

(3) a copy of section 302A.471 and this section, and a brief description of the procedure to be followed in demanding supplemental payment.

(b) The corporation may withhold the remittance described in paragraph (a) from a person who was not a shareholder on the date the action dissented from was first announced to the public or who is dissenting on behalf of a person who was not a beneficial owner on that date. If the dissenter has complied with subdivisions 3 and 4, the corporation shall forward to the dissenter the materials described in paragraph (a), a statement of the reason for withholding the remittance, and an offer to pay to the dissenter the amount listed in the materials if the dissenter agrees to accept that amount in full satisfaction. The dissenter may decline the offer and demand payment under subdivision 6. Failure to do so entitles the dissenter only to the amount offered. If the dissenter makes demand, subdivisions 7 and 8 apply.

(c) If the corporation fails to remit payment within 60 days of the deposit of certificates or the imposition of transfer restrictions on uncertificated shares, it shall return all deposited certificates and cancel all transfer restrictions. However, the corporation may again give notice under subdivision 4 and require deposit or restrict transfer at a later time.

Subd. 6.Supplemental payment; demand.

If a dissenter believes that the amount remitted under subdivision 5 is less than the fair value of the shares plus interest, the dissenter may give written notice to the corporation of the dissenter's own estimate of the fair value of the shares, plus interest, within 30 days after the corporation mails the remittance under subdivision 5, and demand payment of the difference. Otherwise, a dissenter is entitled only to the amount remitted by the corporation.

Subd. 7.Petition; determination.

If the corporation receives a demand under subdivision 6, it shall, within 60 days after receiving the demand, either pay to the dissenter the amount demanded or agreed to by the dissenter after discussion with the corporation or file in court a petition requesting that the court determine the fair value of the shares, plus interest. The petition shall be filed in the county in which the registered office of the corporation is located, except that a surviving foreign corporation that receives a demand relating to the shares of a constituent domestic corporation shall file the petition in the county in this state in which the last registered office of the constituent corporation was located. The petition shall name as parties all dissenters who have demanded payment under subdivision 6 and who have not reached agreement with the corporation. The corporation shall, after filing the petition, serve all parties with a summons and copy of the petition under the Rules of Civil Procedure. Nonresidents of this state may be served by registered or certified mail or by publication as provided by law. Except as otherwise provided, the Rules of Civil Procedure apply to this proceeding. The jurisdiction of the court is plenary and exclusive. The court may appoint appraisers, with powers and authorities the court deems proper, to receive evidence on and recommend the amount of the fair value of the shares. The court shall determine whether the shareholder or shareholders in question have fully complied with the requirements of this section, and shall determine the fair value of the shares, taking into account any and all factors the court finds relevant, computed by any method or combination of methods that the court, in its discretion, sees fit to use, whether or not used by the corporation or by a dissenter. The fair value of the shares as determined by the court is binding on all shareholders, wherever located. A dissenter is entitled to judgment in cash for the amount by which the fair value of the shares as determined by the court, plus interest, exceeds the amount, if any, remitted under subdivision 5, but shall not be liable to the corporation for the amount, if any, by which the amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair value of the shares as determined by the court, plus interest.

Subd. 8.Costs; fees; expenses.

(a) The court shall determine the costs and expenses of a proceeding under subdivision 7, including the reasonable expenses and compensation of any appraisers appointed by the court, and shall assess those costs and expenses against the corporation, except that the court may assess part or all of those costs and expenses against a dissenter whose action in demanding payment under subdivision 6 is found to be arbitrary, vexatious, or not in good faith.

(b) If the court finds that the corporation has failed to comply substantially with this section, the court may assess all fees and expenses of any experts or attorneys as the court deems equitable. These fees and expenses may also be assessed against a person who has acted arbitrarily, vexatiously, or not in good faith in bringing the proceeding, and may be awarded to a party injured by those actions.

(c) The court may award, in its discretion, fees and expenses to an attorney for the dissenters out of the amount awarded to the dissenters, if any.

MILL CITY VENTURES III, LTD.

PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
                        , 2019
      :      a.m.

1907 Wayzata Boulevard, Suite 205, Wayzata, MN 55391

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned, a shareholder of Mill City Ventures III, Ltd..,revoking all prior proxies, hereby appoints Douglas M. Polinsky and Joseph A. Geraci, II, and each of them, as proxies, with full power of substitution, as proxy to represent and re-substitution, to vote on behalfall shares of the undersigned the numberCommon Stock of sharesMill City Ventures III, Ltd. (the “Company”), which the undersigned is thenwill be entitled to vote if personally present at the Special Meeting of the Shareholders of the Company to be held on January 6, 2023, at 8:00 a.m. local time at 1907 Wayzata Boulevard, Suite 205, Wayzata MN 55391. Each share of Common Stock is entitled to one vote. THE PROXIES ARE FURTHER AUTHORIZED TO VOTE, IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

This proxy, when properly executed, will be voted as directed. If no direction is made, the proxy shall be voted FOR the approval of the Company’s 2022 Stock Incentive Plan, and, in the case of other matters that legally come before the meeting, as said proxies may deem advisable.

Please check here if you plan to attend the special meeting of shareholders of the companyon January 6, 2023, at 8:00 a.m. (local time).  ☐

(Continued and to be held at the address and time indicated above, and at any and all adjournments thereof.

see reverse for voting instructions.

PROPOSALS: The Board of Directors recommends a vote FOR Proposals 1 and 2.

1.     Approval of the withdrawal of the company’s election to be regulated as a business development company under the Investment Company Act of 1940

2.     Approval of an amendment to the company’s certificate of incorporation to effect a share combination (reverse stock split)signed on a 1-for-basis, subject to the ultimate discretion of the Board of Directors to effect such share combination

The undersigned hereby revokes all previous proxies relating to the shares covered hereby and acknowledges receipt of the Notice and Proxy Statement relating to the special meeting of shareholders. When properly executed, this proxy will be voted on the proposal set forth herein as directed by the shareholder. The undersigned authorizes the proxies to vote in their discretion upon such other business as may properly come before the meeting.Reverse Sides]