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Item 1. Business

2025-12-17 compared with 2014-04-01 · 201 added, 429 removed, 44 unchanged (93% of the section changed)

Equus Total Return, Inc.

( “we,”

“us,”

“our,”

“Equus”

the “Company”

or the “Fund ”), a Delaware corporation,

was formed by Equus Investments II, L.P.

(the “Partnership”) on August 16, 1991.

On July 1, 1992, the Partnership was

reorganized and all of the assets and liabilities of the Partnership were transferred to the Fund in exchange for shares of common

stock of the Fund.

On August 11, 2006, our shareholders approved the change of the Fund’s investment strategy to a total

return investment objective.

This strategy seeks to provide the highest total return, consisting of capital appreciation and current

In connection with this strategic investment change, the shareholders also approved the change of name from Equus II Incorporated

to Equus Total Return, Inc.

We attempt to maximize the return to

stockholders in the form of current investment income and long-term capital gains by investing in the debt and equity securities

of companies with a total enterprise value of between $5.0 million and $75.0 million, although we may engage in transactions with

smaller or larger investee companies from time to time.

We seek to invest primarily in companies pursuing growth either through

acquisition or organically, leveraged buyouts, management buyouts and recapitalizations of existing businesses or special situations.

Our income-producing investments consist principally of debt securities including bonds, subordinated debt, debt convertible into

common or preferred stock, or debt combined with warrants and common and preferred stock.

Debt and preferred equity financing may

also be used to create long-term capital appreciation through the exercise and sale of warrants received in connection with the

We seek to achieve capital appreciation by making investments in equity and equity-oriented securities issued by privately-owned

companies in transactions negotiated directly with such companies.

Given market conditions over the past several years and the

performance of our portfolio, our management and board of directors believe it prudent to continue to review alternatives to refine

and further clarify the current strategies.

Equus is a closed-end management investment

company that has elected to be treated as a business development company (hereafter, “BDC”) under the Investment Company

Act of 1940 (“1940 Act”).

In order to remain a business development company, we must meet certain specified requirements

under the 1940 Act, including investing at least 70% of our assets in eligible portfolio companies and limiting the amount of leverage

Equus is also a regulated investment company (“RIC”) under Subchapter M of the U.S.

Internal Revenue Code

As such, we are not required to pay corporate-level income tax on the Fund’s investment income.

We intend to maintain

our RIC status, which requires that we qualify annually as a RIC by meeting certain specified requirements.

For a discussion of

these requirements necessary to maintain our status as a BDC and as a RIC, please see “Business Development Company Requirements”

and “Regulated Investment Company Tax Status,”

respectively.

Our principal office is located at

Eight Greenway Plaza, Suite 930, Houston, Texas, 77046, and the telephone number is 1- 888-358-7575 .

(“we,” “us,” “our,” “Equus” the “Company” or the “Fund”), a Delaware corporation, was formed by Equus Investments II, L.P.

(the “Partnership”) on August 16, 1991.

On July 1, 1992, the Partnership was reorganized and all of the assets and liabilities of the Partnership were transferred to the Fund in exchange for shares of common stock of the Fund.

On August 11, 2006, our shareholders approved the change of the Fund’s investment strategy to a total return investment objective.

This strategy seeks to provide the highest total return, consisting of capital appreciation and current income.

In connection with this strategic investment change, the shareholders also approved the change of name from Equus II Incorporated to Equus Total Return, Inc.

We attempt to maximize the return to stockholders in the form of current investment income and long-term capital gains by investing in the debt and equity securities of companies with a total enterprise value between $5.0 million and $75.0 million, although we may engage in transactions with smaller or larger investee companies from time to time.

We seek to invest primarily in companies pursuing growth either through acquisition or organically, leveraged buyouts, management buyouts and recapitalizations of existing businesses or special situations.

Our income-producing investments consist principally of debt securities, including bonds, subordinated debt, debt convertible into common or preferred stock, or debt combined with warrants and common and preferred stock.

Debt and preferred equity financing may also be used to create long-term capital appreciation through the exercise and sale of warrants received in connection with a financing.

We seek to achieve capital appreciation by making investments in equity and equity-oriented securities issued by privately-owned companies or smaller public companies in transactions negotiated directly with such companies.

Equus is a closed-end management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (“1940 Act”).

In order to remain a BDC, we must meet certain specified requirements under the 1940 Act, including investing at least 70% of our assets in eligible portfolio companies and limiting the amount of leverage we incur.

Prior to the fourth quarter of 2024, Equus was also a regulated investment company (“RIC”) under Subchapter M of the U.S.

Internal Revenue Code of 1986.

A BDC that is also a RIC is not required to pay corporate-level income tax on its investment income.

During the fourth quarter of 2024, we elected to not qualify as a RIC.

Consequently, in the event that we incur operating income or net investment income, we will be taxed at regular corporate rates.

Notwithstanding our present election, we may seek to requalify as a RIC in the future.

For a discussion of requirements necessary to maintain our status as a BDC and as a RIC, please see “ Business Development Company Requirements ” and “ Regulated Investment Company Tax Status ,” respectively.

Our principal office is located at 700 Louisiana St., 41st Floor, Houston, Texas, 77002, and the telephone number is 1-800-856-0901.

Our corporate website is located at www.equuscap.com .

We make available free of charge on our website our annual report

on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably

practicable after such material is electronically filed or furnished to the Securities and Exchange Commission (“SEC”).

Our shares are traded on The New York Stock Exchange under the ticker symbol “EQS”.

We make available free of charge on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or furnished to the Securities and Exchange Commission (“SEC”).

Our shares are traded on The New York Stock Exchange (“NYSE”) under the ticker symbol “EQS”.

Significant Developments

Our Board of Directors (sometimes referred

to as the “Board”) and management of the Fund (“Management”) continue to believe that current market conditions

and recent portfolio performance dictate the need to pursue a more active role in the management of these investments and to seek

liquidity events at the appropriate time to protect and enhance shareholder value.

These activities include continuous monitoring

and intensive reviews of portfolio company performance and expectations, providing follow-on capital when necessary, exploration

of liquidity events for certain portfolio companies to position the Fund to maximize investment returns, and actively pursuing

suitable new investments for the Fund.

Consistent with that strategy, the following is a summary of significant developments during

December 27, 2012, we invested an additional $6.8 million in Equus Energy, LLC (“Equus Energy”), a wholly-owned

subsidiary of the Fund, for the purpose of additional working capital and to fund the purchase of $6.6 million in working

interests in 129 producing and non-producing oil and gas wells, including associated development rights of approximately

21,120 acres situated on 13 separate properties in Texas and Oklahoma.

The working interests range from a de minimus

amount to 50% of the leasehold production of these wells.

The wells are operated by a number of experienced operators such as

Apache, Chesapeake, and Chevron, which has operating responsibility for leasehold interests in the Conger Field, representing

approximately half of the producing well interests.

The assets were purchased from Warren American Oil Company, LLC, a

Tulsa-based oil & gas firm.

Due to improved operating performance in the fourth quarter of 2013, an increase

in proved developed producing reserves, and the estimated value of the acreage rights associated with certain working

interests held in the Eagle Ford trend, the fair value of this holding increased from approximately $6.9 million at December

31, 2012 to $8.0 million at December 31, 2013.

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On November 7, 2013, we made a short-term working capital loan of $0.5 million to Security Monitor Holdings, LLC (“SMH”).

The loan matures in May 2014 and bears interest at the rate of 14% per annum.

Located just outside of Boston, MA, SMH specializes in managing and improving operations of distressed companies.

SMH has been engaged by Spectrum Management, LLC (“Spectrum”), a portfolio company of the Fund, to turn around its operations and position the company for a possible sale.

to a more stable operating performance and improved customer retention for Spectrum during 2013, the fair value of our

holdings in Spectrum increased from $0.4 million at December 31, 2012 to approximately $2.9 million at

December 31, 2013.

Recent Financing and Investment Transactions .

In the first quarter of 2025, we undertook the following transactions:

Issuance of Convertible Note and Warrants .

On February 10, 2025, we issued a 1-year senior convertible promissory note bearing interest at the rate of 10.0% per annum in exchange for $2.0 million in cash (“Equus Note”).

The Equus Note is convertible into shares of the Fund’s common stock at a conversion price of $1.50 per share.

Contemporaneously with the issuance of the Note, the Fund also issued two common stock purchase warrants to acquire an aggregate of 2,000,000 shares of the Fund’s common stock at an exercise price of $1.50 per share.

New Portfolio Investment .

On February 10, 2025, we purchased from General Enterprise Ventures, Inc., a developer of fire suppression products (“GEVI”), a 1-year senior convertible promissory note bearing interest at the rate of 10% per annum, in exchange for $1.5 million in cash (“GEVI Note”).

The GEVI Note is convertible into shares of GEVI’s common stock at a conversion price of $0.40 per share.

Contemporaneously with the purchase of the GEVI Note, the Fund also received a common stock purchase warrant to acquire an aggregate of 1,875,000 shares of GEVI common stock at an exercise price of $0.50 per share.

Sale of Equus Ene rgy.

On March 3, 2025, we sold Equus Energy to North American Energy Opportunities Corp., a developer of upstream oil and gas assets (“NAEOC”).

The consideration provided by NAEOC consisted of $1.25 million in cash and 27,500 shares of preferred stock, redeemable within 6 months of the date of issuance at $100.00 per share, or an aggregate of $2.75 million, conditional upon Equus facilitating NAEOC’s acquisition of operating rights with respect to Equus Energy’s holdings in the Conger Field, as well as the acquisition of the working interests associated with the Conger Field not already held by Equus Energy.

Impact of Geopolitical Events on the Oil and Gas Sector .

The substantial volatility in world markets has been prominent in the oil and gas sector, with WTI and gas prices reaching multi-year highs in 2022, largely due to increased post-Covid demand and the buildup and subsequent invasion of Ukraine by Russian forces.

Prices began to moderately rise and fall in successive quarters between the third quarter of 2023 and the fourth quarter of 2024, and stood at $72.44 as of December 31, 2024.

Natural gas prices experienced high volatility in 2022 before collapsing in 2023 and have thereafter remained relatively stable, finishing the year ended December 31, 2024 at $3.40 per MMBTU.

Recent oil price stability has been a significant factor in increased consolidation activity in the Williston Basin region in North Dakota where Morgan E&P, LLC holds its development rights.

Authorization to Withdraw BDC Election .

Holders of a majority of our outstanding common stock have previously approved our cessation as a BDC under the 1940 Act and have authorized our Board to cause the Fund’s withdrawal of its election to be classified as a BDC, effective as of a date designated by the Board and our Chief Executive Officer.

Although this authorization has since expired, we expect to receive an additional authorization from our stockholders in the future.

This authorization is a consequence of our expressed intent to transform Equus into an operating company or a permanent capital vehicle.

Notwithstanding any such authorization to withdraw our BDC election, we will not submit any such withdrawal unless and until Equus has entered into a definitive agreement to effect a transformative transaction.

Further, even if we are again authorized to withdraw our election as a BDC, we will require a subsequent affirmative vote from holders of a majority of our outstanding voting shares to enter into any such definitive agreement or change the nature of our business.

While we are presently evaluating various opportunities that could enable us to accomplish this transformation, we cannot assure you that we will be able to do so within any particular time period or at all.

Moreover, we cannot assure you that the terms of any such transformative transaction would be acceptable to us.

Our Board and management of the Fund (“Management”) continue to believe that current market conditions and recent portfolio performance dictate the need to pursue a more active role in the management of our remaining investments and to seek liquidity events at the appropriate time to protect and enhance shareholder value.

These activities include continuous monitoring and intensive reviews of portfolio company performance and expectations, providing follow-on capital when necessary, and the exploration of liquidity events for certain portfolio companies to position the Fund to maximize investment returns and, to the extent we intend to remain a BDC, actively pursuing suitable new investments for the Fund.

Investment Objective

Our investment objective is to maximize

the total return to our stockholders in the form of current investment income and long-term capital gains by investing in the debt

and equity securities of small and middle market capitalization companies that are generally not publicly traded at the time of

our investment.

As a result of our endeavors in the energy sector, we also seek to purchase working interests and revenue leasehold

interests in oil and gas properties, although we remain open to exploring investment opportunities in a variety of other sectors,

such as real estate.

As we grow and develop the Fund, we intend to include investments in progressively larger enterprises.

To the extent we remain a BDC and do not complete the transformation of Equus into an operating company as described above, our investment objective is to maximize the total return to our stockholders in the form of current investment income and long-term capital gains by investing in the debt and equity securities of small and middle market capitalization companies that are generally not publicly traded at the time of our investment.

As a result of our endeavors in the energy sector, we may also seek to purchase or develop working interests, mineral interests, and revenue leasehold interests in oil and gas properties, although we remain open to exploring investment opportunities in a variety of other sectors.

Should we continue to grow and develop Equus as a closed-end fund or permanent capital vehicle instead of an operating company, we intend to include investments in progressively larger enterprises.

Investment Strategy

Beginning in 2006, we implemented a revised investment strategy

to attempt to strike a balance between the potential for gain and the risk of loss.

With respect to capital appreciation, Equus

is a “growth-at-reasonable-price”

investor that seeks to identify and acquire securities that meet our criteria for

selling at reasonable prices.

We give priority to cash producing investments wherein we invest principally in debt or preferred

equity financing with the objective of generating regular interest and dividend income back to the Fund.

Debt and preferred equity

financing may also be used to create long-term capital appreciation through the exercise and sale of warrants received in connection

with the financing.

Given market conditions over the past several years and the performance of our portfolio, our Management and

Board of Directors believe it prudent to continue to review alternatives to refine and further clarify the current strategies.

Our investment strategy attempts to strike a balance between the potential for gain and the risk of loss.

With respect to capital appreciation, Equus is a “growth- at-reasonable-price” investor that seeks to identify and acquire securities that meet our criteria for selling at reasonable prices.

We give priority to cash producing investments wherein we invest principally in debt or preferred equity financing with the objective of generating regular interest and dividend income back to the Fund.

Debt and preferred equity financing may also be used to create long-term capital appreciation through the exercise and sale of warrants received in connection with a financing.

Given market conditions over the past several years and the performance of our portfolio, our Management and Board believe it prudent to continue to review alternatives to refine and further clarify the current strategies.

Investment Criteria

Consistent with our investment objective

and strategy, Management evaluates prospective investments based upon the criteria set forth below.

We may modify some or all of

these criteria from time to time.

Consistent with our investment objective and strategy, our Management evaluates prospective investments based upon the criteria set forth below.

We may modify some or all of these criteria from time to time.

Management Competency and Ownership .

seek to invest in companies with experienced management teams who have demonstrated a track record of successful performance.

we desire to invest in companies with significant management ownership.

We believe that significant management ownership in small

capitalization and middle market companies provides appropriate incentives and an alignment of interests for management to maximize

shareholder value.

In addition, we will seek to design compensation and incentive arrangements that align the interests of the

portfolio company’s management with those of the Fund to enhance potential returns.

We seek to invest in companies with experienced management teams who have demonstrated a track record of successful performance.

Further, we desire to invest in companies with significant management ownership.

We believe that significant management ownership in small capitalization and middle market companies provides appropriate incentives and an alignment of interests for management to maximize shareholder value.

In addition, we will seek to design compensation and incentive arrangements that align the interests of the portfolio company’s management with those of the Fund to enhance potential returns.

Substantial Target Market .

We desire to focus

on companies whose products or services have favorable growth potential and strong competitive positions in their respective markets.

These positions may be as leadership positions within a given industry or market niche positions in which the product or service

has a demonstrated competitive advantage.

The market in which a potential portfolio company operates should either be sizeable

or have significant growth potential.

History of Profitability and Favorable Growth

We target companies that have demonstrated a history of profitability or a reasonable expectation of a return to

profitability in the near future.

Ability to Provide Regular Cash Interest and

Distributions .

We look for companies with strong cash flow models sufficient to provide regular and consistent interest and/or

preferred dividend payments.

We desire to focus on companies whose products or services have favorable growth potential and strong competitive positions in their respective markets.

These positions may be as leadership positions within a given industry or market niche positions in which the product or service has a demonstrated competitive advantage.

The market in which a potential portfolio company operates should either be sizeable or have significant growth potential.

History of Profitability and Favorable Growth Potential .

We target companies that have demonstrated a history of profitability or a reasonable expectation of a return to profitability in the near future.

Ability to Provide Regular Cash Interest and Distributions .

We look for companies with strong cash flow models sufficient to provide regular and consistent interest and/or preferred dividend payments.

Management Assistance and Substantial Equity .

Given the requirements of a BDC under the 1940 Act, we seek to invest in companies that will permit substantial managerial assistance

including representation on the board of directors of the company or its equivalent.

With regard to equity investments, we desire

to obtain a substantial

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investment position in portfolio companies.

position may be as a minority shareholder with certain contractual rights and powers, or as a majority shareholder, and should

otherwise allow us to have substantive input on the direction and strategies of the portfolio company.

Given the requirements of a BDC under the 1940 Act, we seek to invest in companies that will permit substantial managerial assistance, including representation on the board of directors of the company or its equivalent.

With regard to equity investments, we desire to obtain a substantial investment position in portfolio companies.

This position may be as a minority shareholder with certain contractual rights and powers, or as a majority shareholder, and should otherwise allow us to have substantive input on the direction and strategies of the portfolio company.

Plausible Exit and Potential for Appreciation .

Prior to investing in a portfolio company, we will seek to analyze potential exit strategies and pursue those investments with

such strategies as may be achievable.

Prior to investing in a portfolio company, we will seek to analyze potential exit strategies and pursue those investments with such strategies as may be achievable.

Investment Operations

Our investment operations consist principally

of the following basic activities:

Our investment operations consist principally of the following basic activities:

Investment Selection.

that many of our investment opportunities will come from Management, members of our Board, other private equity investors, direct

approaches from prospective portfolio companies and referrals from investment banks, business brokers, commercial, regional and

local banks, attorneys, accountants and other members of the financial community.

Subject to the approval of our Board, we may

compensate certain referrals with finder’s fees to the extent permissible under applicable law and consistent with industry

Historically, many of our investment opportunities have come from Management, members of our Board, other private equity investors, direct approaches from prospective portfolio companies and referrals from investment banks, business brokers, commercial, regional and local banks, attorneys, accountants and other members of the financial community.

Subject to the approval of our Board, we may compensate certain referrals with finder’s fees to the extent permissible under applicable law and consistent with industry practice.

Due Diligence.

Once a potential

investment is identified, we undertake a due diligence review using information provided by the prospective portfolio companies

and publicly available information.

Management may also seek input from consultants, investment bankers and other knowledgeable

Once a potential investment is identified, we undertake a due diligence review using information provided by the prospective portfolio company and publicly available information.

Management may also seek input from consultants, investment bankers and other knowledgeable sources.

The due diligence review will typically include, but is not limited to:

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On-site visits;

Interviews with management, employees, customers and vendors of the potential portfolio company;

Review of existing loan documents, if any;

Interviews with management, employees, customers and vendors;

Review of existing loan documents and credit arrangements, if any;

Background checks on members of management;

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Structuring Investments.

negotiate investments in private transactions directly with the owner or issuer of the securities acquired.

Management structures

the terms of a proposed investment, including the purchase price, the type of security to be purchased and our future involvement

in the portfolio company’s business.

We seek to structure the terms of the investment to provide for the capital needs of

the portfolio company while maximizing our opportunities for current income and capital appreciation.

In addition, we may invest

with other co-investors including private equity firms, business development companies, small business investment companies, venture

capital groups, institutional investors and individual investors.

Providing Management Assistance and

Monitoring of Investments.

Successful private equity investments typically require active monitoring of, and significant participation

in, major business decisions of portfolio companies.

In several cases, officers and directors of the Fund serve as members of the

governing boards of portfolio companies.

We typically negotiate investments in private transactions directly with the owner or issuer of the securities acquired.

Management structures the terms of a proposed investment, including the purchase price, the type of security to be purchased and our future involvement in the portfolio company’s business.

We seek to structure the terms of the investment to provide for the capital needs of the portfolio company while maximizing our opportunities for current income and capital appreciation.

In addition, we may invest with other co-investors including private equity firms, business development companies, small business investment companies, venture capital groups, institutional investors and individual investors.

Providing Management Assistance and Monitoring of Investments .

Successful private equity investments typically require active monitoring of, and significant participation in, major business decisions of portfolio companies.

In several cases, officers and directors of the Fund serve as members of the governing boards of portfolio companies.

Such management assistance is required of a BDC under the 1940 Act.

We seek to provide

guidance and management assistance with respect to such matters as capital structure, acquisitions, budgets, profit goals, corporate

strategy, portfolio management and potential sale of the company or other exit strategies.

In connection with their service as

directors of portfolio companies, officers and directors of the Fund may receive and retain directors’

fees or reimbursement

for expenses incurred, and may participate in incentive stock option plans for non-employee directors, if any.

When necessary and

as requested by any portfolio company, Management, on behalf of the Fund, may also assign staff professionals with financial or

management expertise to assist portfolio company management.

We seek to provide guidance and management assistance with respect to such matters as capital structure, acquisitions, budgets, profit goals, corporate strategy, portfolio management and potential sale of the company or other exit strategies.

In connection with their service as directors of portfolio companies, officers and directors of the Fund may receive and retain directors’ fees or reimbursement for expenses incurred, and may participate in incentive stock option plans for non-employee directors, if any.

When necessary and as requested by any portfolio company, Management, on behalf of the Fund, may also assign staff professionals with financial or management expertise to assist portfolio company management.

Follow-On Investments

Following our initial investment, a

portfolio company may request that we make follow-on investments by providing additional equity or loans needed to fully implement

their business plans to develop a new line of business or to recover from unexpected business problems or other purposes.

follow-on investments may be made to exercise warrants or other preferential rights granted to the Fund or otherwise to increase

our position in a portfolio company.

We may make follow-on investments in portfolio companies from cash on hand or borrow all or

a portion of the funds required.

If we are unable to make follow-on investments due to lack of available capital, the portfolio

company in need of the investment may be negatively impacted and our equity interest in the portfolio company may be diluted if

outside equity capital is required.

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Following our initial investment, a portfolio company may request that we make follow-on investments by providing additional equity or loans needed to fully implement its business plans to develop a new line of business or to recover from unexpected business problems or other purposes.

In addition, follow-on investments may be made to exercise warrants or other preferential rights granted to the Fund or otherwise to increase our position in a portfolio company.

We may make follow-on investments in portfolio companies from cash on hand or borrow all or a portion of the funds required.

If we are unable to make follow-on investments due to lack of available capital, the portfolio company in need of the investment may be negatively impacted, we may be required to subordinate our debt interest in the portfolio company to a new lender, and/or our equity interest in the portfolio company may be diluted if outside equity capital is required.

Disposition of Investments

The method and timing of the disposition

of our investments in portfolio companies are critical to our ability to realize capital gains and minimize capital losses.

may dispose of our portfolio securities through a variety of transactions, including recapitalizations, refinancings, management

buy-outs, repayments from cash flow, acquisitions of portfolio companies by a third party and outright sales of the Fund’s

securities in a portfolio company.

In addition, we may distribute our portfolio securities in-kind to our stockholders.

In structuring

our investments, we endeavor to reach an understanding with the management of the prospective portfolio company as to the appropriate

method and timing of the disposition of the investment.

In some cases, we seek registration rights for our portfolio securities

at the time of investment which typically provide that the portfolio company will bear the cost of registration.

To the extent

not paid by the portfolio company, the Fund typically bears the costs of disposing of its portfolio investments.

The method and timing of the disposition of our investments in portfolio companies are critical to our ability to realize capital gains and minimize capital losses.

We may dispose of our portfolio securities through a variety of transactions, including recapitalizations, refinancings, management buyouts, repayments from cash flow, acquisitions of portfolio companies by a third party and outright sales of the Fund’s securities in a portfolio company.

In addition, under certain circumstances we may distribute our portfolio securities in-kind to our stockholders.

In structuring our investments, we endeavor to reach an understanding with the management of the prospective portfolio company as to the appropriate method and timing of the disposition of the investment.

In some cases, we seek registration rights for our portfolio securities at the time of investment which typically provide that the portfolio company will bear the cost of registration.

To the extent not paid by the portfolio company, the Fund typically bears the costs of disposing of our portfolio investments.

Current Portfolio Companies

For a description of our current portfolio

company investments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Portfolio

Securities.”

On at least a quarterly basis, Management

values our portfolio investments.

For a description of our portfolio company investments as of December 31, 2024, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations–Portfolio Securities .”

On a quarterly basis, Management values our portfolio investments.

These valuations are subject to the approval and adoption of the Board.

Valuations of our portfolio

securities at “fair value”

are performed in accordance with accounting principles generally accepted in the United

States of America (“GAAP”).

The fair value of investments for which

no market exists (which includes most of the Fund’s investments) is determined through procedures established in good faith

by the Board.

As a general principle, the current “fair value”

of an investment is the amount the Fund might reasonably

expect to receive upon its sale in an orderly manner.

There are a range of values that are reasonable for such investments at any

particular time.

We base our adjustments

upon such factors as the portfolio company’s earnings, cash flow and net worth, the market prices for similar securities

of comparable companies, an assessment of the company’s current and future financial prospects and various other factors

and assumptions.

In the case of unsuccessful or substantially declining operations,we may base a portfolio company’s

fair value upon the company’s estimated liquidation value.

Fair valuations are necessarily subjective, and our

estimate of fair value may differ materially from amounts actually received upon the disposition of its portfolio securities.

any failure by a portfolio company to achieve its business plan or obtain and maintain its financing arrangements could result

in increased volatility and result in a significant and rapid change in its value.

Our general intent is to hold

our loans to maturity when appraising our privately held debt investments.

As such, we believe that the fair value will not exceed

the cost of the investment.

However, in addition to the previously described analysis involving allocation of value to the debt

instrument, we perform a yield analysis to determine if a debt security has been impaired.

The Audit Committee of the

Board of Directors may engage independent, third-party valuation firms to conduct independent appraisals and review management’s

preliminary valuations of each privately-held investment in order to make their own independent assessment.

Any third-party valuation

data would be considered as one of many factors in a fair value determination.

The Audit Committee then would recommend the fair

values for all privately-held securities based on all relevant factors to the Board of Directors for final approval.

To the extent that market quotations

are readily available for our investments and such investments are freely transferable, we value them at the closing market price

on the date of valuation.

For securities which are of the same class as a class of public securities but are restricted from free

trading (such as Rule 144 stock), we establish our valuation by discounting the closing market price to reflect the estimated impact

of illiquidity caused by such restriction.

Valuations of our portfolio securities at “fair value” are performed in accordance with accounting principles generally accepted in the United States (“GAAP”).

The fair value of investments for which no market exists (which includes most of our investments) is determined through procedures established in good faith by the Board.

As a general principle, the current “fair value” of an investment is the amount the Fund might reasonably expect to receive upon its sale in an orderly manner.

There are a range of values that are reasonable for such investments at any particular time.

We base our adjustments to fair value upon such factors as the portfolio company’s earnings, cash flow and net worth, the market prices for similar securities of comparable companies, an assessment of the company’s current and future financial prospects and various other factors and assumptions.

In the case of unsuccessful or substantially declining operations, we may base a portfolio company’s fair value upon the company’s estimated liquidation value.

Fair valuations are inherently subjective, and our estimate of fair value may differ materially from amounts actually received upon the disposition of our portfolio securities.

Also, any failure by a portfolio company to achieve its business plan or obtain and maintain its financing arrangements could result in increased volatility and result in a significant and rapid change in its value.

Our general intent is to hold our loans to maturity when appraising our privately held debt investments.

As such, we believe the fair value will not exceed the cost of the investment;

however, we perform a yield analysis to determine if a debt security has been impaired.

Our Management may engage independent, third-party valuation firms to conduct independent appraisals and review Management’s preliminary valuations of each privately-held investment in order to make their own independent assessment.

Any third- party valuation data would be considered as one of many factors in a fair value determination.

Management would then present its fair value recommendations to the Audit Committee of the Board of Directors for review.

Following review and any adjustments required thereby, the Audit Committee would, in turn, recommend the fair values for all of the Fund’s portfolio investments to the Board of Directors for final approval.

To the extent that market quotations are readily available for our investments and such investments are freely transferable, we value them at the closing market price on the date of valuation.

For securities which are of the same class as a class of public securities but are restricted from free trading (such as Rule 144 stock), we establish our valuation by discounting the closing market price to reflect the estimated impact of illiquidity caused by such restrictions.

We generally hold investments in debt securities to maturity.

Accordingly, we determine

the fair value of debt securities on the basis of the terms of the debt securities and the financial condition of the issuer.

value certificates of deposit at their face value, plus interest accrued to the date of valuation.

Our Board reviews the valuation

policies on a quarterly basis to determine their appropriateness and reserves the right to hire and from time to time utilizes

independent valuation firms to review Management’s valuation methodology or to conduct an independent valuation.

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On a daily basis, we adjust net asset

value for changes in the value of publicly held securities, if any, and for material changes in the value of investments in securities

issued by private companies.

We report these amounts to Lipper Analytical Services, Inc.

Our weekly and daily

net asset values appear in various publications, including Barron’s and The Wall Street Journal.

We compete with a large number of public

and private equity and mezzanine funds and other financing sources, including traditional financial services companies such as

finance companies and commercial banks.

Many of our competitors are substantially larger and have considerably greater financial,

technical and marketing resources than we do.

Our competitors may have a lower cost of funds and many have access to funding sources

that are not available to us.

In addition, certain of our competitors may have higher risk tolerances or different risk assessments,

which could allow them to consider a wider variety of investments and establish more relationships and build their market shares.

In addition, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC.

We cannot assure you that the

competitive pressures we face will not have a material adverse effect on our business, financial condition and results of

In addition, because of this competition, we may not be able to take advantage of attractive investment

opportunities and may not be able to identify and make investments that satisfy our investment objectives or meet our

investment goals.

Our principal executive offices are

located at Eight Greenway Plaza, Suite 930, Houston, Texas 77046.

We believe that our office facilities are suitable and adequate

for our operations as currently conducted and contemplated.

Accordingly, we determine the fair value of debt securities on the basis of the terms of the debt securities and the financial condition of the issuer.

We value certificates of deposit at their face value, plus interest accrued to the date of valuation.

Our Board reviews the valuation policies on a quarterly basis to determine their appropriateness and reserves the right to hire and, from time to time, utilizes independent valuation firms to review Management’s valuation methodology or to conduct an independent valuation.

We compete with a large number of public and private equity and mezzanine funds and other financing sources, including traditional financial services companies such as finance companies and commercial banks.

Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources.

Our competitors may have a lower cost of funds and many have access to funding sources not available to us.

In addition, certain of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships and build their respective market shares.

In addition, many of our competitors are not subject to the regulatory restrictions imposed by the 1940 Act imposes on BDCs.

We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations.

In addition, because of this competition, we may not be able to take advantage of attractive investment opportunities and may not be able to identify and make investments that satisfy our investment objectives or meet our investment goals.

Our principal executive offices are located at 700 Louisiana St., 48th Floor, Houston, Texas 77002.

Should we remain a BDC and not transform into an operating company or a permanent capital vehicle, we believe our office facilities are suitable and adequate for our operations as currently conducted and contemplated.

Business Development Company Requirements

Qualifying Assets .

we may not acquire any asset other than qualifying assets, as defined by the 1940 Act, unless, at the time the acquisition is made

the value of our qualifying assets represent at least 70% of the value of our total assets.

The principal categories of qualifying

assets relevant to our business are the following:

As a BDC, we may not acquire any asset other than qualifying assets, as defined by the 1940 Act, unless, at the time the acquisition is made, the value of our qualifying assets represents at least 70% of the value of our total assets.

The principal categories of qualifying assets relevant to our business are the following:

Securities purchased in transactions not involving any public offering from an issuer that is an eligible portfolio company.

An eligible portfolio company is any issuer that (a) is organized and has its principal place of business in the United States, (b) is not an investment company other than a small business investment company wholly-owned by the BDC, and (c) either (i) (A) does not have any class of securities with respect to which a broker or dealer may extend margin credit, (B) is controlled by the BDC either singly or as part of a group and an affiliated person of the BDC is a member of the issuer’s board of directors, or (C) has total assets of not more than $4 million and capital and surplus of at least $2 million, or (ii) does not have any class of securities listed on a national securities exchange, unless the total market capitalization of such issuer does not exceed $250 million.

Qualifying assets may also include follow-on investments in a company that was a particular type of eligible portfolio company at the time of the BDC’s initial investment, but subsequently did not meet the definition;

Securities received in exchange for or distributed with respect to securities described above, or pursuant to the exercise of options, warrants or rights relating to such securities;

Cash, cash items, government securities, or high quality debt securities maturing in one year or less from the time of investment.

We may not change the nature of our

business so as to cease to be, or withdraw our election as, a BDC unless authorized by vote of the holders of the majority of our

outstanding voting securities, as defined in the 1940 Act.

To include certain securities above

as qualifying assets for the purpose of the 70% test, a BDC must make available to the issuer of those securities significant managerial

assistance, such as providing significant guidance and counsel concerning the management, operations, or business objectives and

policies of a portfolio company.

To include certain securities above as qualifying assets for the purpose of the 70% test, a BDC must make available to the issuer of those securities significant managerial assistance, such as providing significant guidance and counsel concerning the management, operations, or business objectives and policies of a portfolio company.

We offer to provide significant managerial assistance to each of our portfolio companies.

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We may not change the nature of our business so as to cease to be, or withdraw our election as, a BDC unless authorized by vote of the holders of the majority of our outstanding voting securities, as defined in the 1940 Act.

As noted above, we have previously received this authorization from our shareholders to withdraw our BDC election and, although this authorization has expired, we expect to receive an additional authorization by our stockholders in the future.

This authorization was a consequence of our plan to effect a transformation of Equus by:

(i) acquiring or merging with an operating company based in the energy, natural resources, technology, or financial services sectors, and (ii) terminating the Fund’s election to be classified as a BDC under the 1940 Act.

Notwithstanding any future authorization to withdraw our BDC election, we will also require a separate affirmative vote of the holders of a majority of our outstanding voting securities to consummate a transformation of Equus and change the nature of our business (see “ Significant Developments−Authorization to Withdraw BDC Election” above).

Temporary Investments.

investment in portfolio companies, we invest our available funds in interest-bearing bank accounts, money market mutual funds,

Treasury securities and/or certificates of deposit with maturities of less than one year(collectively, “Temporary Investments”).

Pending investment in portfolio companies, we invest our available funds in interest- bearing bank accounts, money market mutual funds, U.S.

Treasury securities and/or certificates of deposit with maturities of less than one year (collectively, “Temporary Investments”).

Temporary Investments may also include commercial paper (rated or unrated) and other short-term securities.

Temporary Investments

constituting cash, cash items, securities issued or guaranteed by the U.S.

Temporary Investments constituting cash, cash items, securities issued or guaranteed by the U.S.

Treasury or U.S.

Government agencies and high quality

debt securities (commercial paper rated in the two highest rating categories by Moody’s Investor Services, Inc.

& Poor’s Corporation, or if not rated, issued by a company having an outstanding debt issue so rated, with maturities

of less than one year at the time of investment) will qualify for determining whether we have 70% of our total assets invested

in qualifying assets or in qualified Temporary Investments for purposes of the BDC provisions of the 1940 Act.

We are permitted by

the 1940 Act, under specified conditions, to issue multiple classes of senior debt and a single class of preferred stock senior

to the common stock if our asset coverage, as defined in the 1940 Act, is at least 200% after the issuance of the debt or the senior

stockholders’

In addition, provisions must be made to prohibit any distribution to common stockholders or the

repurchase of any shares unless the asset coverage ratio is at least 200% at the time of the distribution or repurchase.

Fund Share Sales Below Net Asset

We generally may sell our common stock at a price that is below the prevailing net asset value per share only upon the

approval of the policy by stockholders holding a majority of our issued shares, including a majority of shares held by nonaffiliated

stockholders.

We may, in accordance with certain conditions established by the SEC, sell shares below net asset value in connection

with the distribution of rights to all of our stockholders.

We may also issue shares at less than net asset value in payment of

dividends to existing stockholders.

Government agencies and high quality debt securities (commercial paper rated in the two highest rating categories by Moody’s Investor Services, Inc.

or Standard & Poor’s Corporation, or if not rated, issued by a company having an outstanding debt issue so rated, with maturities of less than one year at the time of investment) will qualify for determining whether we have 70% of our total assets invested in qualifying assets or in qualified Temporary Investments for purposes of the BDC provisions of the 1940 Act.

We are permitted by the 1940 Act, under specified conditions, to issue multiple classes of senior debt and a single class of preferred stock senior to the common stock if our asset coverage, as defined in the 1940 Act, is at least 150% after the issuance of the debt or the senior stockholders’ interests.

In addition, provisions must be made to prohibit any distribution to common stockholders or the repurchase of any shares unless the asset coverage ratio is at least 150% at the time of the distribution or repurchase.

Fund Share Sales Below Net Asset Value .

To the extent we remain a BDC, we generally may sell our common stock at a price that is below the prevailing net asset value per share only upon the approval of the policy by stockholders holding a majority of our issued shares, including a majority of shares held by nonaffiliated stockholders.

We may, in accordance with certain conditions established by the SEC, sell shares below net asset value in connection with the distribution of rights to all of our stockholders.

We may also issue shares at less than net asset value in payment of dividends to existing stockholders.

No Redemption Rights .

are a closed-end BDC, our stockholders have no right to present their shares to the Fund for redemption.

Recognizing the possibility

that our shares might trade at a discount, our Board has determined that it would be in the best interest of our stockholders for

the Fund to be authorized to attempt to reduce or eliminate a market value discount from net asset value.

Accordingly, from time

to time we may, but are not required to, repurchase our shares (including by means of tender offers) to attempt to reduce or eliminate

any discount or to increase the net asset value of our shares.

Since we are a closed-end BDC, our stockholders have no right to present their shares to the Fund for redemption.

Recognizing the possibility that our shares might trade at a discount, our Board has determined that it would be in the best interest of our stockholders for the Fund to be authorized to attempt to reduce or eliminate a market value discount from net asset value.

Accordingly, from time to time we may, but are not required to, repurchase our shares (including by means of tender offers) to attempt to reduce or eliminate any discount or to increase the net asset value of our shares.

Affiliated Transactions .

of the transactions involving the Fund and its affiliates (as well as affiliates of such affiliates) require the prior approval

of a majority of the independent directors and a majority of the independent directors having no financial interest in the transactions.

Many of the transactions involving the Fund and its affiliates (as well as affiliates of such affiliates) require the prior approval of a majority of the independent directors and a majority of the independent directors having no financial interest in the transactions.

However, certain transactions involving closely affiliated persons of the Fund require the prior approval of the SEC.

Regulated Investment Company Tax Status

We operate to qualify as a regulated

investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").

If we qualify as a RIC and annually distribute to our stockholders in a timely manner at least 90% of our investment company taxable

income, we will not be subject to federal income tax on the portion of our taxable income and capital gains we distribute to our

stockholders.

Taxable income generally differs from net income as defined by accounting principles generally accepted in the United

States of America due to temporary and permanent timing differences in the recognition of income and expenses, returns of capital

and net unrealized appreciation or depreciation.

Generally, in order to maintain our

status as a RIC, we must (i) continue to qualify as a BDC;

(ii) distribute to our stockholders in a timely manner at least 90%

of our investment company taxable income, as defined by the Code;

(iii) derive in each taxable year at least 90% of our gross investment

company income from dividends, interest, payments with respect to securities loans, gains from the sale of stock or other securities

or other income derived with respect to our business of investing in such stock or securities as defined by the Code;

meet investment diversification requirements.

The diversification requirements generally require us at the end of each quarter

of the taxable year to have (a) at least 50% of the value of our assets consist of cash, cash items, government securities, securities

of other regulated investment companies and other securities if such other securities of any one issuer do not represent more than

5% of our assets and 10% of the outstanding voting securities of the issuer and (b) no more than 25% of the value of our assets

invested in the securities of one issuer (other than U.S.

government securities and securities of other regulated investment companies),

or of two or more issuers that are controlled by us and are engaged in the same or similar or related trades or businesses.

In addition, with respect to each calendar

year, if we distribute or have treated as having distributed (including amounts retained but designated as deemed distributed)

in a timely manner 98% of our net capital gain income for each one-year period ending on October 31, and distribute 98.2% of our

investment company net ordinary income for such calendar year (as well as any ordinary income not distributed in prior years),

we will not be subject to the 4% nondeductible Federal excise tax imposed with respect to certain undistributed income of regulated

investment companies.

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If we fail to satisfy the 90% distribution

requirement or otherwise fail to qualify as a regulated investment company in any taxable year, we will be subject to tax in such

year on all of our taxable income, regardless of whether we make any distribution to our stockholders.

In addition, in that case,

all of our distributions to our stockholders will be characterized as ordinary income (to the extent of our current and accumulated

earnings and profits).

We have distributed and currently intend to distribute sufficient dividends to eliminate our investment

company taxable income;

As a BDC, we have historically operated to qualify as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), although RIC qualification is not a prerequisite to qualifying as a BDC.

During the fourth quarter of 2024, we elected to not qualify as a RIC, although we may seek to requalify at a later date.

Because we do not presently qualify as a RIC, in the event that we generate operating income or net investment income, we will be subject to regular corporate rates of taxation.

If we requalify as a RIC and annually distribute to our stockholders in a timely manner at least 90% of our investment company taxable income, we will not be subject to federal income tax on the portion of our taxable income and capital gains we distribute to our stockholders.

Taxable income generally differs from net income as defined by accounting principles generally accepted in the United States due to temporary and permanent timing differences in the recognition of income and expenses, returns of capital and net unrealized appreciation or depreciation.

While we are not required to qualify as a RIC to maintain our BDC status, we must continue to qualify as an investment company to obtain RIC status under the Code, among other requirements.

To obtain (or maintain, as the case may be) RIC status, we must (i) continue to qualify as an investment company;

(ii) distribute to our stockholders in a timely manner at least 90% of our investment company taxable income, as defined by the Code;

(iii) derive in each taxable year at least 90% of our gross investment company income from dividends, interest, payments with respect to securities loans, gains from the sale of stock or other securities or other income derived with respect to our business of investing in such stock or securities as defined by the Code;

and (iv) meet investment diversification requirements.

The diversification requirements generally require us, at the end of each quarter of the taxable year, to have (a) at least 50% of the value of our assets consist of cash, cash items, government securities, securities of other RICs and other securities if such other securities of any one issuer do not represent more than 5% of our assets and 10% of the outstanding voting securities of the issuer and (b) no more than 25% of the value of our assets invested in the securities of one issuer (other than U.S.

government securities and securities of other RICs), or of two or more issuers that are controlled by us and are engaged in the same or similar or related trades or businesses.

In addition, should we choose not to distribute at least 98.2% of our net income consisting of capital gains for each one-year period ending on October 31, we will be subject to a 4.0% nondeductible Federal exercise tax.

If we fail to satisfy the 90% distribution requirement or otherwise fail to requalify as a RIC in any taxable year, we will be subject to tax in such year on all of our taxable income, regardless of whether we make any distribution to our stockholders.

In addition, in that case, all of our distributions to our stockholders will be characterized as ordinary income (to the extent of our current and accumulated earnings and profits).

We have distributed and currently intend to distribute sufficient dividends to eliminate our investment company taxable income;

however, none have been necessary in recent years.

We act as the custodian of our securities

to the extent permitted under the 1940 Act and are subject to the restrictions imposed on self-custodians by the 1940 Act and the

rules and regulations thereunder.

We have also entered into an agreement with Amegy Bank with respect to the safekeeping of our

The principal business office of Amegy Bank is 4400 Post Oak Parkway, Houston, Texas 77019.

We act as the custodian of our securities to the extent permitted under the 1940 Act and are subject to the restrictions imposed on self- custodians by the 1940 Act and the rules and regulations thereunder.

We have also entered into an agreement with Amegy Bank with respect to the safekeeping of our securities.

The principal business office of Amegy Bank is 1717 West Loop South, Houston, Texas 77027.

Transfer and Disbursing Agent

We employ American Stock Transfer &

Trust Company as our transfer agent to record transfers of our shares, maintain proxy records and to process distributions.

principal business office of our transfer agent is 6201 15th Avenue, 2nd Floor, Brooklyn, NY 11219.

We employ Equiniti Group as our transfer agent to record transfers of our shares, maintain proxy records and to process distributions.

The principal business office of our transfer agent is 6201 15th Avenue, 2nd Floor, Brooklyn, NY 11219.

Certifications

In July 2013, we submitted to the New

York Stock Exchange pursuant to Section 303A.12(a) of its Listed Company Manual, an unqualified certification of our Chief Executive

In addition, certifications by our Chief Executive Officer and Chief Financial Officer have been filed as exhibits to

this annual report on Form 10-K as required by the Securities Exchange Act of 1934, as amended, and the Sarbanes-Oxley Act of 2002.

In July 2024, pursuant to Section 303A.12(a) of the NYSE Listed Company Manual, we submitted to the NYSE an unqualified certification of our Chief Executive Officer.

In addition, certifications by our Chief Executive Officer and Chief Financial Officer have been filed as exhibits to this annual report on Form 10- K as required by the Securities Exchange Act of 1934, as amended, and the Sarbanes-Oxley Act of 2002.

Forward-Looking Statements

All statements contained herein that

are not historical facts including, but not limited to, statements regarding anticipated activity are “forward-looking statements”

within the meaning of the federal securities laws, involve a number of risks and uncertainties, and are based on the beliefs and

assumptions of Management, based on information currently available to Management.

All statements contained herein that are not historical facts including, but not limited to, statements regarding anticipated activity are “forward-looking statements” within the meaning of the federal securities laws, involve a number of risks and uncertainties, and are based on the beliefs and assumptions of Management, based on information currently available to Management.

Actual results may differ materially.

cases, readers can identify forward-looking statements by words such as “may,”

“will,”

“should,”

“expect,”

“objective,”

“plan,”

“intend,”

“anticipate,”

“believe,”

“Management believes,”

“estimate,”

“predict,”

“project,”

“potential,”

“forecast,”

“continue,”

“strategy,”

or “position”

or the negative of such terms

or other variations of them or by comparable terminology.

In particular, statements, express or implied, concerning future actions,

conditions, or events, future operating results, or the ability to generate sales, income, or cash flow are forward-looking statements.

Among the factors that could cause

actual results to differ materially are the following:

(i) changes in the economic conditions in which we operate negatively impacting

our financial resources;

(ii) certain of our competitors have substantially greater financial resources than the Fund reducing

the number of suitable investment opportunities offered or reducing the yield necessary to consummate the investment;

is uncertainty regarding the value of our privately held securities that require a good faith estimate of fair value for which

a change in estimate could affect the Fund’s net asset value;

(iv) our investments in securities of privately held companies

may be illiquid which could affect our ability to realize a gain;

(v) our portfolio companies could default on their loans or provide

no returns on its investments which could affect the Fund’s operating results;

(vi) we are dependent on external financing

to grow our business;

In some cases, readers can identify forward- looking statements by words such as “may,” “will,” “should,” “expect,” “objective,” “plan,” “intend,” “anticipate,” “believe,” “Management believes,” “estimate,” “predict,” “project,” “potential,” “forecast,” “continue,” “strategy,” or “position” or the negative of such terms or other variations of them or by comparable terminology.

In particular, statements, express or implied, concerning future actions, conditions, or events, future operating results, or the ability to generate sales, income, or cash flow are forward-looking statements.

Among the factors that could cause actual results to differ materially are the following:

(i) changes in the economic conditions in which we operate, including changes related to the evolving impact of the coronavirus, which might negatively impacting our financial resources;

(ii) the substantially greater resources of certain of our competitors than the Fund, potentially reducing the number of suitable investment opportunities offered or reducing the yield necessary to consummate the investment;

(iii) the uncertainty regarding the value of our privately held securities that require a good faith estimate of fair value for which a change in estimate could affect the Fund’s net asset value;

(iv) the illiquidity of our investments in securities of privately held companies which could affect our ability to realize a gain;

(v) the default of one or more of our portfolio companies on their loans or the failure of such companies to provide any returns on our investments which could affect the Fund’s operating results;

(vi) our dependence on external financing to grow our business;

(vii) our ability to retain key management personnel;

(viii) an economic downturn or recession could impair

our portfolio companies and therefore harm our operating results;

(iv) our borrowing arrangements impose certain restrictions;

(x) changes in interest rates may affect our cost of capital and net operating income;

(xi) we cannot incur additional indebtedness

unless the Fund maintains an asset coverage of at least 200%, which may affect returns to our stockholders;

(xii) we may fail to

continue to qualify for our pass-through treatment as a RIC which could have an effect on stockholder returns;

(xiii) our common

stock price may be volatile;

and (xiv) general business and economic conditions and other risk factors described in its reports

filed from time to time with the Securities and Exchange Commission.

We caution readers not to place undue reliance on any such

forward-looking statements, which statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as

such, speak only as of the date made.

(viii) an economic downturn or recession that could impair our portfolio companies and therefore harm our operating results;

(iv) our borrowing arrangements, which could impose certain restrictions;

(x) changes in interest rates that may affect our cost of capital and net operating income;

(xi) our inability to incur additional indebtedness unless the Fund maintains an asset coverage of at least 150%, which may affect returns to our stockholders;

(xii) the possible failure of the Fund to continue to qualify for our pass-through treatment as a RIC which could have an effect on stockholder returns;

(xiii) the volatility of the price of our common stock;

(xiv) general business and economic conditions and other risk factors described in its reports filed from time to time with the SEC;

and (xv) risks related to our plan to transform Equus into an operating company or a permanent capital vehicle.

We caution readers not to place undue reliance on any such forward-looking statements, which statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K/A

Item 1. Business