Going public on bigger markets gives private companies a perfect opportunity to generate capital to help further growth, reduce debt, fund research and development (R&D) and take care of other business operations.
Apart from the financial upside, the company can also benefit from increased public awareness because an uplist tends to generate publicity that attracts new customers, subsequently increasing market share.
On Aug. 10, Mill City Ventures III Ltd. (NASDAQ: MCVT), a nonbank lender and specialty finance company, joined Manhattan Bridge Capital Inc. (NASDAQ: LOAN), Oxford Square Capital Corp. (NASDAQ: OXSQ), and U.S. Global Investors Inc. (NASDAQ: GROW), which have moved to the Nasdaq (NASDAQ: NDAQ) stock market.
Founded in January 2006, Mill City is a nonbank specialty finance firm specializing in investments in debt and equity securities of public and private companies to fund operations facing short-term liquidity issues.
Before Commencing Trading On Nasdaq
Before it began trading on the Nasdaq Capital Market (Nasdaq), the company revealed the pricing of its underwritten public offering — 1.25 million shares of common stock at a public offering price of $4 per share for aggregate gross proceeds of $5 million before underwriting discounts and commissions, and other company offering expenses.
In addition, the company granted the underwriters a 45-day option to purchase up to 187,500 additional shares of common stock at the offering price, less the underwriting discount.
In its filing with the U.S. Securities and Exchange Commission (SEC), Mill City identified several criteria it believes are important guidelines to meet its financial objectives. They include:
Existing Liquidity Source
The company noted that because most of its transactions involve short-term maturities, it typically seeks to identify a liquidity source for the borrower to repay them.
Examples of sources of potential liquidity may include accounts receivable, another valuable asset, or a pending payment such as a tax refund, a litigation judgment, or a settlement payment that is reasonably expected to pay out prior to the maturity of the credit provided.
Mill City said it will generally seek to collateralize the obligations owed to the company.
“Our ability to identify valuable collateral is a significant factor in our credit analysis and determination of the attractiveness of a potential transaction,” the company said.
“This analysis will often involve legal counsel, both to assist in the identification of potential collateral assets and to better understand the ease with which a security interest in the collateral may be granted, perfected and, if necessary, foreclosed upon and the relevant jurisdiction(s) involved.”
Experienced And Capable Management
Mill City indicated that it would seek businesses with an experienced, knowledgeable and capable management teams in transactions involving business borrowers.
In transactions involving business borrowers, the company said it would seek to invest in transactions with businesses that have developed, or appear poised to develop, a strong competitive position within their respective industry sector or niche.
Finally, in transactions involving business borrowers, Mill City said it would seek to invest in profitable or nearly profitable businesses on an operating cash-flow basis. It will do this principally so that the business’s operating cash flow may serve as another source of liquidity from which it may ultimately be repaid.
Read more about the SEC filing here.
Shortly after going public, Mill City announced financial results for the three- and six-month periods that ended June 30.
Q2 2022 Highlights
Investment income from lending operations increased 83% to $1.24 million in the three-month period ended June 30, up from $675,549 in the prior year.
For the six-month period, investment income from lending operations was $2.24 million compared to $1.2 million in the prior year period — an 83% increase.
Pretax earnings from lending operations increased in the second quarter to $734,250 from $425,393 in the prior year, a 73% increase.
In the six-month period, pretax earnings from lending operations reached $1.2 million compared to $438,377 in the prior year period, a 171% increase.
Shareholder equity increased to $14.43 million from $13.41 million on Dec. 31, 2021.
As of June 30, the company had $629,572 in cash, compared with $1,936,148 on Dec. 31, 2021.
Founded in 2007, Mill City is a short-term non-bank lending and specialty finance company. Additional information can be found at www.sec.gov.
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