What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2025-12-17 compared with 2014-04-01 · 20 added, 879 removed, 0 unchanged (100% of the section changed)

Market for Registrant’s Common

Equity, Related Stockholder Matters and Issuer Purchases of Equity Securitie s

Our common stock is listed

on the New York Stock Exchange under the symbol “EQS”.

We had approximately 2,800 stockholders as of December 31, 2013,

766 of whom were registered holders.

Registered holders do not include those stockholders whose stock has been issued in street

As of December 31, 2013, our net asset value was $3.14 per share of our common stock.

The following table reflects

the high and low closing sales prices per share of our common stock on the New York Stock Exchange, net asset value, or NAV and

quarterly dividends declared per share for the two years ended December 31, 2013, by quarter:

Dividends Declared

As a RIC, we are required

to distribute to our stockholders, in a timely manner, at least 90% of our taxable net investment income each year.

distribute, in a timely manner, 98.2% of our taxable net capital gains and 90% of our taxable net investment income each year (as

well as any portion of the respective 2% balances not distributed in the previous year), we will be subject to a 4% non-deductible

federal excise tax on certain undistributed income of regulated investment companies.

Under the 1940 Act, we are not permitted

to pay dividends to stockholders unless we meet certain asset coverage requirements.

If taxable net investment income is retained,

we will be subject to federal income and excise taxes.

We reserve the right to retain net long-term capital gains in excess of

net short-term capital losses for reinvestment or to pay contingencies and expenses.

Such retained amounts, if any, will be taxable

to the Fund as long-term capital gains and our stockholders will be able to claim their proportionate share of the federal income

taxes paid by the Fund on such gains as a credit against their own federal income tax liabilities.

Stockholders will also be entitled

to increase the adjusted tax basis of their fund shares by the difference between their undistributed capital gains and their tax

We invest in companies that are believed

to have a high potential for capital appreciation, and we intend to realize the majority of our profits upon the sale of our investments

in portfolio companies.

Consequently, most of the companies in which we invest do not have established policies of paying annual

However, a portion of the investments in portfolio securities held by the Fund consists of interest-bearing subordinated

debt securities or dividend-paying preferred stock.

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Selected Financial Data

The following is a summary of selected

financial data and per share data of the Fund for the five years ended December 31, 2013 (in thousands, except per share data):

Total investment income

Net investment (loss) income

Net realized gain (loss) of portfolio securities

Net change in unrealized appreciation (depreciation)

of portfolio securities

Net increase (decrease) in net assets resulting

from operations

Distribution from net investment income

Return of capital distribution

Distribution of realized gains

Total net assets

Net cash (used in) provided by operating activities

Shares outstanding at end of year

Weighted average shares outstanding, basic

Per Share Data:

Net investment (loss) income

Net realized loss of portfolio securities

Net change in unrealized appreciation (depreciation)

of portfolio securities

Net increase (decrease) in net amounts resulting from

operations per share, basic and diluted

Return of capital distribution

Net asset value (including unrealized appreciation (depreciation))

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

Equus is a BDC that provides financing

solutions for privately held middle market and small capitalization companies.

We began operations in 1983 and have been a publicly

traded closed-end fund since 1991.

Our investment objective is to seek the highest total return, consisting of capital appreciation

and current income.

As a BDC, we are required to comply

with certain regulatory requirements.

For instance, we generally have to invest at least 70% of the Fund’s total assets in

“qualifying assets,”

including securities of private U.S.

companies, certain public U.S.

companies with a total market

capitalization not in excess of $250 million, cash, cash equivalents, U.S.

government securities and short-term high-quality debt

Equus is a RIC under Subchapter M of the Code.

To qualify as a RIC, we must meet certain source of income and asset

diversification requirements.

If we comply with the provisions of Subchapter M, the Fund generally does not have to pay corporate-level

income taxes on any income that distributed to our stockholders.

Investment Income .

We generate investment income from interest payable on the debt securities that the Fund holds, dividends received on equity interests

in our portfolio companies and capital gains, if any, realized upon sales of equity and, to a lesser extent, debt securities in

the investment portfolio.

Our equity investments may include shares of common and

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preferred stock, membership interests in limited

liability companies and warrants to purchase additional equity interests.

These equity securities may or may not pay dividends,

and the exercise prices of warrants that we acquire in connection with debt investments, if any, vary by investment.

Our debt investments

in portfolio companies may be in the form of senior or subordinated loans and may be unsecured or

have a first or second lien on some or all of the assets of the borrower.

Our loans typically have a term of three to seven years

and bear interest at fixed or floating rates.

Interest on these debt securities is generally payable either quarterly or semiannually.

Some promissory notes held by the Fund provide that a portfolio company may elect to pay interest in cash or provide that discount

interest may accrete in the form of original issue discount or payment-in-kind (PIK) over the life of the notes by adding unpaid

interest amounts to the principal balance.

Amortization of principal on our debt investments is generally deferred for several

years from the date of initial investment.

The principal amount of these debt securities and any accrued but unpaid interest generally

will become due at maturity.

We also earn interest income at market rates on investments in short-term marketable securities.

time to time, we generate income from time to time in the form of commitment, origination and structuring fees in connection with

our investments.

We recognize all such fees when earned.

our primary operating expenses include director fees and expenses, professional fees, compensation expense, and general

and administrative fees.

During 2013, we incurred non-recurring expenses, including settlement expenses of $0.5 million, and

legal expenses of $0.2 million related to the various legal proceedings described in Item 3 above.

During 2012, we did not incur any non-recurring expenses.

During 2011, we incurred non-recurring expenses, including

settlement expenses, related to various legal proceedings of $0.3 million, as well as offering costs of $0.4 million.

Operating Activities.

cash to make new investments and follow-on investments in our existing portfolio companies.

We record these investments at cost

on the applicable trade date.

Realized gains or losses are computed using the specific identification method.

On an ongoing basis,

we carry our investments in our financial statements at fair value, as determined by our board of directors.

See “—Critical

Accounting Policies –

Valuation of Investments”

As of December 31, 2013, we had invested 40.7% of our net assets

in securities of portfolio companies that constituted qualifying investments under the 1940 Act.

At that time, we had invested

1.3% by value in shares of common stock, 24.7% in membership interests in limited liability companies, and 14.7% in various debt

Under certain circumstances, we make

follow-on investments in some of our portfolio companies.

As of December 31, 2013, we had no outstanding commitments to our portfolio

company investments.

Financing Activities.

to time, we use leverage to finance a portion of our investments.

We then repay such debt from the sale of portfolio securities.

Under the 1940 Act, we have the ability to borrow funds and issue debt securities or preferred stock that are referred to as senior

securities, subject to certain restrictions including an overall limitation on the amount of outstanding debt, or leverage, relative

to equity of 1:1.

Because of the nature and size of our portfolio investments, we periodically borrow funds to make qualifying

investments in order to maintain our qualification as a RIC.

During 2013 and 2012, we borrowed such funds by accessing a margin

account with a securities brokerage firm.

We invest the proceeds of these margin loans in high-quality securities such as U.S.

Treasury securities until they are repaid.

We refer to these high-quality investments as “restricted assets”

they are not generally available for investment in portfolio companies under the terms of borrowing.

If, in the future, we cannot

borrow funds to make such qualifying investments at the end of any future quarter, we may not qualify as a RIC and would become

subject to corporate-level income tax on our net investment income and realized capital gains, if any.

In addition, our distributions

to stockholders would be taxable as ordinary dividends to the extent paid from earnings and profits.

See “Federal Income

Tax Considerations.”

Distributions .

On March 24, 2009,

we announced that we suspended our managed distribution policy and payment of quarterly distributions for an indefinite period,

following the distribution of the first quarter dividend to be paid on March 30, 2009.

As originally implemented, the policy provided

for quarterly dividends at an annualized rate equal to 10% of the Fund’s market value per share as at the end of the preceding

calendar year.

We will continue to pay out net investment income and/or realized capital gains, if any, on an annual basis as required

under the 1940 Act.

Possible Share Repurchase.

a closed-end BDC, our shares of common stock are not redeemable at the option of stockholders, and our shares currently trade at

a discount to their net asset value.

Our Board has determined that it would be in the best interests of our stockholders to reduce

or eliminate this market value discount.

Accordingly, we have been authorized to, and may from time to time, repurchase shares

of our outstanding common stock (including by means of tender offers or privately negotiated transactions) in an effort to reduce

or eliminate this market discount or to increase the net asset value of our shares.

We are not required to undertake any such share

repurchases, nor do we anticipate taking such action in 2014.

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Critical Accounting Policies

Our financial statements are based on

the selection and application of significant accounting policies, which require management to make significant estimates and assumptions.

We believe that the following are some of the more critical judgment areas in the application of our accounting policies that currently

affect our financial condition and results of operations.

Valuation of Investments —

Portfolio investments are carried at fair value with the net change in unrealized appreciation or depreciation included in the

determination of net assets.

Valuations of portfolio securities are performed in accordance with GAAP and the financial reporting

policies of the Securities and Exchange Commission (“SEC”).

The applicable methods prescribed by such principles and

policies are described below:

Publicly-traded portfolio securities —Investments

in companies whose securities are publicly traded are generally valued at their quoted market price at the close of business on

the valuation date.

Privately-held portfolio securities —The

fair value of investments for which no market exists is determined on the basis of procedures established in good faith by our

Board of Directors.

As a general principle, the current “fair value”

of an investment would be the amount we might

reasonably expect to receive for it upon its current sale, in an orderly manner.

Appraisal valuations are necessarily subjective

and the estimated values arrived at by the Fund may differ materially from amounts actually received upon the disposition of portfolio

Thinly Traded and Over-the-Counter

Securities —Generally, we value securities that are traded in the over-the-counter market or on a stock exchange at the

average of the prevailing bid and ask prices on the date of the relevant period end.

However, we may apply a discount to the market

value of restricted or thinly traded public securities to reflect the impact that these restrictions have on the value of these

We review factors, including the trading volume, total securities outstanding and our percentage ownership of securities

to determine whether the trading levels are active (Level 1) or inactive (Level 2) or unobservable (Level 3).

As of December 31,

2013, these securities, consisting of our holdings in the OPG Notes, represented 11% of our investments in portfolio securities.

We utilized independent pricing services with certain of our fair value estimates.

To corroborate “bid/ask”

from independent pricing services, we perform a market-yield approach to validate prices obtained or obtain other evidence.

During the first twelve months after

an investment is made, we rely on the original investment amount to determine the fair value unless significant developments have

occurred during this 12 month period which would indicate a material effect on the portfolio company (such as results of operations

or changes in general market conditions).

After the 12 month period, or if material events have occurred within the twelve month

period, we consider a two step process when appraising investments of privately held companies.

The first step involves determining

the enterprise value of the portfolio company.

During this step, we consider three different valuation approaches:

a market approach,

an income approach, and an asset approach.

The particular facts and circumstances of each portfolio company determine which approach,

or combination of approaches, will be utilized.

The second step when appraising equity investments of privately held companies

involves allocating value to the various debt and equity securities of the company.

We allocate value to these securities based

on their relative priorities.

For equity securities such as warrants, we may also incorporate alternative methodologies including

the Black-Scholes Option Pricing Model.

Market approach –

approach typically employed by Management calculates the enterprise value of a company as a multiple of earnings before interest,

taxes, depreciation and amortization (“EBITDA”) generated by the company for the trailing twelve month period.

to the company’s EBITDA, including those for non-recurring items, may be considered.

Multiples are estimated based on current

market conditions and past experience in the private company marketplace and are subjective in nature.

We will apply liquidity

and other discounts we deem appropriate to equity valuations where applicable.

We may also use, when available, third-party transactions

in a portfolio company’s securities as the basis of valuation (the “private market method”).

The private market

method will be used only with respect to completed transactions or firm offers made by sophisticated, independent investors.

Income approach –

approach typically utilized by Management calculates the enterprise value of a company utilizing a discounted cash flow model incorporating

projected future cash flows of the company.

Projected future cash flows consider the historical performance of the company as well

as current and projected market participant performance.

Discount rates are estimated based on current market conditions and past

experience in the private company marketplace and are subjective in nature.

We will apply liquidity and other discounts we deem

appropriate to equity valuations where applicable.

Asset approach –

the asset approach to determine the fair value of significantly deteriorated investments demonstrating circumstances indicative

of a liquidation analysis.

This situation may arise when a portfolio company:

1) cannot generate adequate cash flow to meet the

principal and interest payments on its indebtedness;

2) is not successful in refinancing its

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debt upon maturity;

3) we believe

the credit quality of a loan has deteriorated due to changes in the business and underlying asset or market conditions may result

in the company’s inability to meet future obligations;

or 4) the portfolio company’s reorganization or bankruptcy.

Consideration is also given as to whether a liquidation event would be orderly or forced.

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.

Certificates of deposit purchased by

the Fund generally will be valued at their face value, plus interest accrued to the date of valuation.

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 that the Fund (a) has held for more than one year and (b) holds on its books at a

fair value of at least $2.0 million 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.

Because of the inherent uncertainty

of the valuation of portfolio securities which do not have readily ascertainable market values, amounting to $13.3 million and

$9.0 million as of December 31, 2013 and 2012, respectively, our fair value determinations may materially differ from the values

that would have been used had a ready market existed for the securities.

As of December 31, 2013, one of our portfolio investments,

consisting of 73,666 ordinary shares of OPG, was publicly listed on the NYSE Euronext Paris Exchange, along with €1,200,790

in newly-issued 6-year OPG Notes.

However, there had been no recent trading activity in the OPG Notes.

On a daily basis, we adjust our net

asset value for the changes in the value of our publicly held securities, if applicable, and material changes in the value of private

securities, generally determined on a quarterly basis or as announced in a press release, and reports those amounts to Lipper Analytical

Services, Inc.

Weekly and daily net asset values appear in various publications, including Barron’s and The Wall

Street Journal .

Federal Income Taxes

We intend to comply with the requirements

of the Code necessary for us to qualify as a RIC.

So long as we comply with these requirements, we generally will not be subject

to corporate-level federal income taxes on otherwise taxable income (including net realized capital gains) distributed to stockholders.

Therefore, we did not record a provision for federal income taxes in our financial statements.

As of December 31, 2013, we had

a capital loss carry forward of $39.1 million which may be used to offset future capital gains.

We may borrow money from time to

time to maintain our status as a RIC under the Code.

See “—Overview –

Financing Activities”

Interest Income Recognition

We record interest income, adjusted

for amortization of premium and accretion of discount, on an accrual basis to the extent that we expect to collect such amounts.

We stop accruing interest on investments when we determine that interest is no longer collectible.

We may also impair the accrued

interest when we determine that all or a portion of the current accrual is uncollectible.

If we receive any cash after determining

that interest is no longer collectible, we treat such cash as payment on the principal balance until the entire principal balance

has been repaid, before we recognize any additional interest income.

We accrete or amortize discounts and premiums on securities

purchased over the life of the respective security using the effective yield method.

The amortized cost of investments represents

the original cost adjusted for the accretion of discount and/or amortization of premium on debt securities.

Payment in Kind Interest

We have loans in our portfolio that

may pay PIK interest.

We add PIK interest, if any, computed at the contractual rate specified in each loan agreement, to the principal

balance of the loan and recorded as interest income.

To maintain the Fund’s status as a RIC, we must pay out to our stockholders

this non-cash source of income in the form of dividends even if we have not yet collected any cash in respect of such investments.

Table of Contents 24

Recent Accounting Pronouncements

In June 2013, the

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-08,

Financial Services—Investment Companies.

ASU 2013-08 provides clarifying guidance to determine if an entity qualifies

as an investment company.

ASU 2013-08 also requires an investment company to measure non-controlling interests in other

investment companies at fair value.

The following disclosures will also be required upon adoption of ASU 2013-08:

an entity is an investment company and is applying the accounting and reporting guidance for investment companies;

information about changes, if any, in an entity’s status as an investment company;

and (iii) information about

financial support provided or contractually required to be provided by an investment company to any of its investees.

requirements of ASU 2013-08 are effective for the Fund beginning in the first quarter of 2014.

We are currently evaluating

the impact, if any, that these updates will have on our financial condition or results of operations.

Current Market Conditions

Overall economic conditions in the United

States have improved, albeit marginally.

However, the economic recovery has been hampered by slower growth and persistent high

unemployment levels.

Congressional Budget Office is forecasting higher growth in 2014 (3.1%), with a projected unemployment

rate exceeding 6.0% until 2017.

Further, the banking industry continues

to experience additional bank failures as regulators continue to impose strict capital requirements.

Additionally, future economic

expansion and business investment is threatened by perceptions of higher taxes and healthcare costs, as well as the high levels

of government deficit spending.

Market conditions for business transactions

including mergers and acquisitions and private equity investments improved significantly in 2013 compared with previous years,

as corporations have been deleveraging and are holding significant amounts of cash and many have begun to focus on acquisitions

as part of future growth plans.

Private equity firms as a group enjoyed more success in 2013 in monetizing their investments through

sales and public listings.

During 2013, our net asset value increased

from $3.11 per share to $3.14 per share, an increase of 1.0%.

As of December 31, 2013, our common stock is trading at a 36.6% discount

to our net asset value.

Over the past several years, we have

executed certain initiatives to enhance liquidity, achieve a lower operational cost structure, provide more assistance to portfolio

companies and realize certain of our portfolio investments.

Specifically, we changed the composition of our Board of Directors

and Management, terminated certain of our follow-on investments, internalized the management of the Fund, suspended our managed

distribution policy, modified our investment strategy to pursue shorter term liquidation opportunities, pursued non-cash investment

opportunities, and sold certain of our legacy and underperforming investment holdings.

We believe these actions continue to be

necessary to protect capital and liquidity during this turbulent economic period in order to preserve and enhance shareholder value.

Because our Management is internalized, certain of our expenses should not increase commensurate with an increase in the size of

the Fund and, therefore, we expect to achieve efficiencies in our cost structure if we are able to grow the Fund.

Liquidity and Capital Resources

We generate cash primarily from maturities,

sales of securities and borrowings, as well as capital gains realized upon the sale of portfolio investments.

We use cash primarily

to make additional investments, either in new companies or as follow-on investments in the existing portfolio companies and to

pay the dividends to our stockholders.

We are currently evaluating the impact

of current market conditions on our portfolio company valuations and their ability to provide current income.

We have followed

valuation techniques in a consistent manner;

however, we are cognizant of current market conditions that might effect future valuations

of portfolio securities.

We believe that our operating cash flow and cash on hand will be sufficient to meet operating requirements

and to finance routine capital expenditures through the next twelve months.

Year Ended December 31, 2013

As of December 31, 2013, we had total

assets of $48.3 million, of which $13.5 million were invested in portfolio investments and $19.1 million were invested in cash

and cash equivalents.

Among our portfolio investments, $4.9 million (at fair value) or 14.7% of net asset value were in the form

of notes receivable from portfolio companies as of December 31, 2013.

We continue to impair accrued interest for certain promissory

notes issued by Spectrum, having a fair value of $2.9 million.

As of December 31, 2013, we also had

$15.2 million of restricted cash and cash equivalents, including primarily the proceeds of a quarter-end margin loan that we incurred

to maintain the diversification requirements applicable to a RIC.

Of this amount, $15.0 million was invested in U.S.

Treasury bills

and $0.2 million represented a required 1% brokerage margin deposit.

Table of Contents 25

These securities were held by a securities brokerage firm

and pledged along with other assets to secure repayment of the margin loan.

Treasury bills were sold on January 2, 2014

and we subsequently repaid this margin loan.

The margin interest was paid on January 22, 2014.

Operating Activities.

used $19.6 million in cash for operating activities in 2013, including $15.1 million for the purchase of U.S.

Treasury bills.

In 2013, we made investments in portfolio companies of $0.8 million and paid fees to our advisers, directors, banks and

others of $2.6 million, while realizing a loss of $9.8 million from the disposition of portfolio securities.

During 2013, we

incurred non-recurring expenses including settlement expenses of $0.5 million and legal expenses of $0.2 million related to the

various legal proceedings described in Item 3.

Financing Activities.

$15.0 million in cash from financing activities for 2013.

We did not declare any dividends in 2013.

Year Ended December 31, 2012

As of December 31, 2012, we had total

assets of $33.3 million, of which $9.2 million were invested in portfolio investments and $23.7 million were invested in cash and

cash equivalents.

Among our portfolio investments, $1.8 million (at fair value) or 5.6% of net asset value were in the form of

notes receivable from portfolio companies as of December 31, 2012.

We continue to impair certain promissory notes issued by Spectrum,

having a fair value of $0.4 million.

As of December 31, 2012, we had no RIC

borrowings or restricted cash.

Operating Activities.

$12.9 million in cash for operating activities in 2012.

In 2012, we made investments in portfolio companies of $6.9 million and

paid fees to our advisers, directors, banks and others of $3.0 million, while realizing a loss of $2.8 million from the disposition

of portfolio securities.

Financing Activities.

$6.0 million in cash from financing activities for 2012.

We did not declare any dividends in 2012.

Year Ended December 31, 2011

As of December 31, 2011, we had total

assets of $44.3 million, of which $19.2 million were invested in portfolio investments and $16.8 million were invested in cash

and cash equivalents.

Among our portfolio investments, $14.1 million (at fair value) or 37.1% of net asset value were in the form

of notes receivable from portfolio companies as of December 31, 2011.

We impaired certain promissory notes issued by Spectrum,

having a fair value of $0.3 million.

As of December 31, 2011, we also had

$6.1 million of restricted cash and temporary cash investments, including primarily the proceeds of a quarter-end margin loan that

we incurred to maintain the diversification requirements applicable to a RIC.

Of this amount, $6.0 million was invested in U.S.

Treasury bills and $0.1 million represented a required 1% brokerage margin deposit.

These securities were held by a securities

brokerage firm and pledged along with other assets to secure repayment of the margin loan.

Treasury bills were sold on

January 3, 2012 and we subsequently repaid this margin.

Operating Activities.

$18.6 million in cash for operating activities in 2011.

In 2011, we made investments in portfolio companies of $0.6 million and

incurred compensation expense and paid fees to our consultants, legal counsel, directors, banks and others of $3.1 million, while

realizing a loss of $10.9 million from the disposition of portfolio securities.

During 2011, we incurred non-recurring expenses

including settlement expenses, related to the various legal proceedings described in Item 3 above of $0.3 million and offering

costs of $0.4 million.

Financing Activities.

$9.2 million in cash from financing activities for 2011.

We issued 1,700,000 additional shares of our common stock at an effective

price of $4.29 per share.

On April 27, 2011, we announced that we had entered into two separate transactions involving the purchase

of an aggregate of 11,408 4% bonds due May 2012 (“Bonds”) issued by Orco Germany S.A., a commercial and multi-family

residential real estate holding company and developer based in Berlin.

The consideration provided to the selling bondholders consisted

of an aggregate of 1,700,000 newly issued shares of common stock of the Fund.

These shares are unregistered under the Securities

We received 8,890 of the Bonds on April 27, 2011 and, on June 23, 2011, we received $1.6 million in cash in lieu of

the 2,518 Bonds which were not delivered as required.

We incurred a quarter-end margin loan in the amount of $6.0 million to maintain

the diversification requirement applicable to a RIC.

Table of Contents 26

Results of Operations

Investment Income and Expense

Year Ended December 31, 2013 as

compared to Year Ended December 31, 2012

Total income from portfolio

securities decreased $0.5 million in 2013 due to the impairment of the interest receivable from Spectrum and the decline in

interest-bearing investments.

Professional fees decreased to

$1.0 from $1.3 million during 2012.

These decreases were due to the decreases in consulting fees and legal fees associated

with various legal proceedings.

Compensation expense was $0.9 million

for 2013 and $1.1 million for 2012, respectively.

The $0.2 million decrease was largely due to a decrease in compensation paid

to existing personnel.

Settlement expense was $0.5 million

for 2013 related to the various legal proceedings described in Item 3.

As a result of the factors described

above, net investment loss after expenses was $3.1 million for 2013 as compared to a net investment loss of $2.7 million for 2012.

Year Ended December 31, 2012 as

compared to Year Ended December 31, 2011

Total income from portfolio securities

remained relatively unchanged from 2011.

However, there was a significant decline in interest bearing promissory notes during 2012,

with the sale of our interests in ConGlobal Industries Holding, Inc.

(“ConGlobal”) and Sovereign Business Forms, Inc.

(“Sovereign”).

Professional fees increased to $1.3

million for 2012 from $1.2 million for 2011.

These increases were due to the increases in legal fees associated with various legal

Compensation expense was $1.1 million

for 2012 and $1.3 million in 2011, respectively.

The $0.2 million decrease was largely due to the salary and accrued bonus for

our Chief Investment Officer, whose position was vacated in November 2011.

As a result of the factors described

above, net investment loss after expenses was $2.7 million for 2012 as compared to a net investment loss of $3.5 million for 2011.

Summary of Portfolio Investment Activity

Year Ended December 31, 2013

During the year ended December 31,

2013, we had investment activity of $0.8 million in two portfolio companies.

We capitalized consulting expenses of $0.3 million

relating to Spectrum.

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

SMH is a company which specializes in managing and improving operations of distressed companies.

The following table includes significant

investment activity during the year ended December 31, 2013 (in thousands):

Investment Activity

New Investments

Existing Investments

Portfolio Company

Security Monitor Holdings, Inc.

Spectrum Management, LLC

Year Ended December 31, 2012

During the year ended December 31,

2012, we received $6.4 million from the disposal of the Fund’s 55% fully-diluted equity interest in Sovereign, together

with the Fund’s promissory note and all interest as accrued interest.

We also received $5.3 million from the disposal of

the Fund’s 34.2% fully equity interest in ConGlobal, together with the Fund’s promissory note and all interest as

accrued interest.

Table of Contents 27

On May 7, 2012, holders of 72.5% of

all OG bonds approved a joint restructuring of certain bond debt of OG and its parent company, OPG.

Pursuant to such restructuring,

approximately 84.5% of the Orco Germany bonds held by each bondholder were converted into Obligations Convertibles en Actions

(“OCA”) on May 9, 2012.

The OCA were converted into an aggregate of 26,209,613 OPG shares which were delivered

in two tranches.

The first tranche, consisting of 18,361,540 OPG shares, was delivered in May 2012, of which the Fund received

1,102,455 OPG shares.

The second tranche, consisting of 7,848,073 OPG shares, was received in October 2012.

Also in October, the

remaining 15.5% of the Orco Germany bonds held by each bondholder was converted into new 6-year OPG Notes with a face value of

€20.0 million bearing cash and PIK interest each at 5% per annum, which interest percentages may be reduced over time upon

timely repayments of principal tranches during a four-year period commencing in 2015.

Of the total amount of OPG Notes issued,

Equus received OPG Notes in the face amount of €1,200,790.

On October 15, 2012, we announced the sale of 1,500,000 of our

1,573,666 OPG shares, where we received net cash proceeds of €3.8 million [$4.9 million].

As of December 31, 2012, we held

73,666 OPG shares, and €1,200,790 OPG Notes.

During the year ended December 31, 2012,

we had investment activity of $7.2 million in three portfolio companies.

We made a follow-on investment of $6.8 million in Equus

The restructuring of the Orco Germany bonds noted above resulted in the capitalization of $0.3 million accrued interest

received in the form of additional portfolio securities (PIK).

We capitalized legal and consulting expenses of $0.1 million relating

The following table includes significant

investment activity during the year ended December 31, 2012 (in thousands):

Investment Activity

New Investments

Existing Investments

Portfolio Company

Equus Energy, LLC

Orco Property Group S.A.

Spectrum Management, LLC

Year Ended December 31, 2011

During the year ended December 31, 2011,

we received $0.4 million from Sovereign in the form of principal payments and a distribution from Equus Media Development Company,

LLC in the amount of $1.0 million.

We sold our promissory notes in 1848 Capital Partners, LLC, Big Apple Entertainment Partners,

LLC, and London Bridge Entertainment Partners, Ltd (“London Bridge”) and certain assets of Riptide Entertainment Partners,

LLC (“Riptide”) in which we held a 64.67% membership interest.

All of these assets were sold to Capital Markets Acquisition

Partners, LLC for a combined price of $10.0 million, with $9.8 million allocated to the promissory notes held by the Fund and $0.2

million to Riptide.

We allocated the proceeds to the promissory notes resulting in a realized loss of approximately $0.9 million

at London Bridge.

In addition, the monies provided to Riptide were sufficient to satisfy its outstanding liabilities, resulting

in a value of $0.

We also received $0.8 million in connection with the sale and redemption of our membership interest in RP&C

International Investments LLC (“RP&C”).

During the year ended December 31, 2011,

we had investment activity of $3.7 million in three portfolio companies.

We made a follow-on investment of $0.3 million in Spectrum.

On April 27, 2011, we announced that we had entered into two separate transactions involving the purchase of an aggregate of 11,408

4% bonds due May 2012 (“Bonds”) issued by Orco Germany S.A.

a commercial and multi-family residential real estate holding

company and developer based in Berlin.

The consideration provided to the selling bondholders consisted of an aggregate of 1,700,000

newly issued shares of common stock of the Fund.

These shares are unregistered under the Securities Act of 1933.

We received 8,890

of the Bonds on April 27, 2011.

On May 9, 2011, one of these agreements was amended and restated to provide for an additional 45

days to deliver 2,518 of the Bonds in exchange for providing to the Fund approximately $1.6 million in cash as security for such

As the remaining bonds were not delivered by the specified date, the cash collateral became free and clear property of

the Fund on June 23, 2011.

On September 30, 2011, we formed Equus Energy, LLC, as a wholly-owned subsidiary of the Fund, to make

investments in companies in the energy sector, with particular emphasis on income-producing oil & gas properties.

2011, we contributed $250,000 to the capital of Equus Energy.

Table of Contents 28

The following table includes significant

investment activity during the year ended December 31, 2011 (in thousands):

Investment Activity

New Investments

Existing Investments

Portfolio Company

Orco Germany S.A

Spectrum Management, LLC

Equus Energy, LLC

Realized Gains and Losses on Sales of Portfolio Securities

Year Ended December 31, 2013

During 2013, we realized capital

losses of $9.8 million, including the following significant transactions:

Portfolio Company

Transaction Type

Realized Gain (Loss)

The Bradshaw Group

Business products and services

Non-affiliate

Infinia Corporation

Alternative Energy

Non-affiliate

Year Ended December 31, 2012

During 2012, we realized net capital

losses of $2.8 million, including the following significant transactions:

Portfolio Company

Transaction Type

Realized Gain (Loss)

ConGlobal Industries Holding, Inc.

Shipping products and services

Sovereign Business Forms, Inc.

Business products and services

Orco Property Group

Non-affiliate

Various others

Year Ended December 31, 2011

During 2011, we realized net capital

losses of $10.9 million, including the following significant transactions:

Portfolio Company

Transaction Type

Realized Gain (Loss)

Riptide Entertainment, LLC

Entertainment and leisure

London Bridge Entertainment Partners Ltd

Entertainment and leisure

Non-affiliate

RP&C International Investments LLC

Various others

Changes in Unrealized Appreciation/Depreciation

of Portfolio Securities

Year Ended December 31, 2013

During 2013, we recorded a net

change in unrealized depreciation of $13.3 million, to a net unrealized depreciation of $3.9 million at December 31, 2013.

Such change in depreciation resulted primarily from the following changes:

of unrealized depreciation to realized loss of our holdings in The Bradshaw Group (“Bradshaw”) of $1.8 million in

connection with Bradshaw’s sale of all of its assets;

of unrealized depreciation to realized loss of our holdings in Infinia Corporation (“Infinia”) of $8.0 million as

a result of the liquidation of Infinia due to bankruptcy proceedings initiated by the company;

Table of Contents 29

in the fair value of Equus Energy of $1.1 million due improved operational results and an increase in proved developed producing

Increase in the fair value

of our holdings in Spectrum of $2.5 million due to continued stability in operations resulting in the utilization of a

market approach in determining fair

value, in lieu of an asset approach applying a liquidation analysis used in prior quarters;

Increase in the fair value of our holdings in PalletOne, Inc.

(“PalletOne”) of $0.1 million due to improved operations.

Year Ended December 31, 2012

During 2012, we recorded a net

change in unrealized depreciation of $0.2 million, to a net unrealized depreciation of $17.2 million at December 31, 2012.

Such change in depreciation resulted primarily from the following changes:

of unrealized depreciation to realized loss of our holdings in ConGlobal of $1.6 million upon the divestiture of the investment;

of unrealized depreciation to realized loss of our holdings in Sovereign of $0.6 million upon the divestiture of the investment;

restructuring of the 8,890 Orco Germany bonds resulted in the Fund holding 1,573,666 ordinary shares of OPG and €1,200,790

newly-issued 6-year OPG notes.

The capitalization of $0.3 million accrued interest and the subsequent sale of 1.5 million shares

of OPG shares in October 2012 resulted in a decrease in fair value of our holdings in OPG of $1.8 million;

Decrease in the fair value of Equus Energy of $0.2 million due to working capital expenditures.

Year Ended December 31, 2011

During 2011, we recorded a net

change in unrealized depreciation of $9.9 million, to a net unrealized depreciation of $17.4 million at December 31, 2011.

Such change in depreciation resulted primarily from the following changes:

Decline in fair market value of our holdings in ConGlobal of $2.6 million due to the decline in operating performance;

of unrealized depreciation to realized depreciation for our holdings in London Bridge of $0.8 million due to the sale of the promissory

in the fair market value of our holdings in Orco Germany bonds of $2.7 million due to the difference in the market price of Equus

shares used as consideration for the bonds on the date of acquisition offset by the change in the Euro-USD exchange rate;

Increase in the fair market value of our holdings in PalletOne of $0.1 million due to steady improvement in operating performance and indications of value from independent third parties;

Transfer of unrealized depreciation to realized depreciation for our holdings in Riptide of $10.1 million due to the sale of the promissory notes and the winding up of the entity;

Transfer of unrealized appreciation to realized appreciation for our holdings in RP&C of $0.1 million due to the maturity of the investment;

Increase in fair market value of our holdings in Sovereign of $0.6 million as Sovereign had seen an upward trend in operating results and has continued to reduce its debt which has resulted in a corresponding increase its equity value;

Decrease in fair market value of our holdings in Spectrum of $1.4 million due to the decline in operating performance and the maturity of its funded debts which remained in default;

in the fair market value of our holdings in Trulite of $0.1 million due to the lack of progress and inability to achieve

sufficient funding with regards to its product development program.

Table of Contents 30

Portfolio Securities

As of December 31, 2013, we had active

investments in the following entities or portfolio companies:

Equus Energy, LLC

We formed Equus Energy, as a wholly-owned

subsidiary of the Fund, to make investments in companies in the energy sector, with particular emphasis on income-producing oil

& gas properties.

In December 2011, we contributed $250,000 to the capital of Equus Energy.

On December 27, 2012 we invested

an additional $6.8 million in Equus Energy 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 &

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.

Equus Media Development Company,

Equus Media Development Company, LLC

(“EMDC”) is a company engaged in the acquisition and development of creative properties with the purpose of developing

the properties for release in various entertainment mediums.

We formed EMDC in 2007 as a wholly-owned subsidiary of the Fund in

connection with a management and development agreement with Kopelson Entertainment (“KE”).

The concept of the business of EMDC

is to partner with creators, developers and producers of creative work, such as scripts, short stories or books, by providing capital

necessary to enhance the creative development and package the assets to companies, such as major and independent studios, to produce

In December 2011, our agreement with KE expired and EMDC distributed $1 million to the Fund.

As of December 31, 2013,

we valued EMDC at $0.2 million.

Orco Property Group S.A.

(“OPG”)

is a commercial and multi-family residential real estate holding company based in Paris.

On April 27, 2011, we announced that we

had entered into two separate transactions involving the purchase of an aggregate of 11,408 Orco Germany 4% bonds due May 2012

(“Bonds”).

The consideration provided to the selling bondholders consisted of an aggregate of 1,700,000 newly issued

shares of common stock of the Fund.

We received 8,890 of the Bonds on April 27, 2011.

On May 9, 2011, one of these agreements was

amended and restated to provide for an additional 45 days to deliver the remaining 2,518 of the Bonds in exchange for providing

to the Fund approximately $1.6 million in cash as security for such delivery.

As the remaining Bonds were not delivered by the

specified date, the cash collateral became free and clear property of the Fund on June 23, 2011.

During 2012, the Bonds were converted

into 1,573,666 ordinary shares of OPG and €1,200,790 in newly-issued 6-year OPG Notes.

We subsequently sold 1,500,000 of our

OPG shares in October 2012.

As of December 31, 2013, we valued this investment at $1.6 million.

PalletOne, Inc.

PalletOne is considered one of the largest

wooden pallet manufacturer in the United States, operating 17 facilities in 11 states, with approximately 1,100 employees.

company manufactures and recycles a variety of pallets types as well as boxes.

The company also sells its by-products of mulch

and scrap metal.

PalletOne also owns and operates a major Florida-based wood treating plant.

PalletOne has a diverse customer base

and competes with numerous other manufacturers on a regional basis.

Its largest pallet customers are agricultural and construction

related companies including growers, grocery stores, and housing construction companies.

We believe PalletOne’s numerous

locations allows for a slight advantage in pursuing large corporate accounts, as sales of pallets are typically regionalized to

specific locations.

In 2006, the company acquired a wood treating operation.

The wood treating facility, Sunbelt, sells treated

wood to a variety of customers, the most significant being Lowe’s home improvement stores.

Sunbelt has had a 20 year exclusive

relationship with a large retail company selling treated and pre-fabricated fences.

The principals of PalletOne have significant

pallet manufacturing experience.

The pallet manufacturing industry is mature and is experiencing continuing slow growth as the

number of participants shrinks due to consolidation and underutilized plants, which have been eliminated.

We initially invested

in PalletOne in October 2001.

Our investment in PalletOne consists of 350,000 shares of common stock, which represents a fully

diluted equity interest of approximately 18%.

Due to improved operating performance, we valued our interest in PalletOne as of

December 31, 2013 at $0.3 million.

Table of Contents 31

Monitor Holdings, LLC

Security Monitor Holdings, LLC (“SMH”)

is a company which specializes in managing and improving operations of distressed companies.

During 2013, we made a short-term

working capital loan of $0.5 million to SMH.

The loan has a six month term and bears interest at 14% per annum.

As of December

31, 2013, we valued this investment at $0.5 million.

Management, LLC

Spectrum uses proprietary electronic

tracking equipment and software, and a full suite of custom services to help client organizations, mainly financial institutions,

protect or recover high-value merchandise and cash.

Spectrum markets its services under the brand name Electronic Tracking Systems

The company specializes in assisting communities and law enforcement in recovery of stolen property.

The most common use for Spectrum’s

product, or TracPac, is in branch offices of banks.

When used in a bank, the product can be placed between two bills and passed

to a robber as a teller empties a drawer.

In addition, law enforcement has begun to utilize the product for stake outs in recovering

stolen property as the product can be placed on or in property that may have a high likelihood of being stolen.

Once the robbery

event has taken place and the TracPac is moved, the device is activated and begins to transmit a radio signal.

Law enforcement

can then track the TracPac on pre-installed receivers mounted in various vehicles.

The company believes its product is the only

product on the market that allows tracking of the “last mile”

(within 15-30 feet of the transmitter).

Once law enforcement

knows it is close to a suspect, it can generally, then utilize a handheld device to locate the individual in a building or small

The company leases its transmitters

to banks on a per unit basis and has relationships with a number of different banks from international commercial banks to community

Spectrum has been impacted by the issues facing lending institutions as banks seek to reduce expenses and have slowed

branch expansion.

Spectrum competes in the currency protection niche of the security industry, which includes home security, private

security, identity theft, airport security and many other segments.

Currently there are over 75,000 bank branches in the US with

an average of five tellers per branch.

In the currency protection segment there are a number of competitors providing services,

the company’s direct competitor in the tracking business is 3SI Security Systems.

Competing products include bullet proof

glass for teller windows, panic buttons, security personnel, exploding dye packs, ATM protection and safe protection.

As of December 31, 2013,

our investment in Spectrum consisted of 285,000 units of Class A Members’

interest, representing a fully-diluted

equity interest of 82.5%, and 16% subordinated promissory notes in the face amount of $2.9 million, which are currently in

Based on a more stable operating performance for 2013 and improved customer retention, we valued our investment in

Spectrum at approximately $2.9 million.

Trulite, Inc.

Trulite is a developer of safe, clean,

affordable, portable hybrid power generation products that are also user friendly.

Trulite utilizes fuel cells powered by water

and hydrogen in portable and semi-portable products that can be used off-grid for applications of up to one kilowatt, with ideal

usage in the 150-500 watt range.

During 2008 and 2009, we invested

an aggregate of $2.0 million in the form of an unsecured promissory note maturing in January 2010, initially bearing interest

at 15% and thereafter increased to 18%.

In connection with the investment, we also received warrants to acquire 8.9 million

shares of Trulite’s common stock at exercise prices ranging from $0.01 to $0.38 per share.

The warrants expire in 2015.

In June 2010, the note, together with all interest as accrued, was repaid by Trulite.

We retained the Trulite warrants and we

valued them at $0 as of December 31, 2013.

Off Balance Sheet Arrangements

We have operating leases

for office space and office equipment.

The lease for office space expires in 2014 with a one-time option to terminate the

lease as of the last day of the 36th month.

The lease also contains a provision for certain annual rental escalations.

expense inclusive of common area maintenance costs was $85,000, $84,000 and $81,000 for each of the years ended December 31,

2013, 2012 and 2011, respectively.

Future minimum lease payments under the operating lease as of December 31, 2013 for

the year ended December 31, 2014 is $42,000.

Contractual Obligations

As of December 31, 2013, we had no outstanding

commitments to our portfolio company investments.

Table of Contents 32

Our Board terminated our external advisory

and administration agreements effective June 30, 2009.

Since that time, the Fund has been internally managed, meaning that we directly

employ our management team and incur the costs and expenses associated with Fund operations.

There is no outside investment advisory

organization providing services to the Fund under a fee-based advisory agreement, or a third-party administrative organization

charging the Fund for services rendered.

On March 24, 2009, we announced a suspension

of our managed distribution policy and payment of quarterly distributions for an indefinite period.

We will continue to pay out

net investment income and/or realized capital gains, if any, on an annual basis as required under the Investment Company Act of

Subsequent Event

Our Management performed an evaluation

of the Fund’s activity through the date the financial statements were issued, noting the following subsequent event:

January 2, 2014, the Fund sold U.S.

Treasury Bills for $15.0 million and repaid its year-end margin loan .

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the NYSE under the symbol “EQS”.

We had approximately 1,640 stockholders as of December 31, 2024, 586 of whom were registered holders.

Registered holders do not include those stockholders whose stock has been issued in street name.

As of December 31, 2024, our net asset value per share was $2.17.

The following table reflects the high and low closing sales prices per share of our common stock on the NYSE, and net asset value (“NAV”) per share for each of the three years ended December 31, 2024, by quarter:

Stock Performance Graph

The following graph compares the cumulative total return on our common stock with the cumulative total return of the NYSE Composite Index and the S&P 500 Index for the five years ended December 31, 2024.

This comparison assumes $100.00 was invested in our common stock at the closing price of our common stock on December 31, 2019 and in the comparison groups and assumes the reinvestment of all cash dividends on the ex-dividend date prior to any tax effect.

The stock price performance shown on the graph below is not necessarily indicative of future price performance.

If we requalify as a RIC, we will be required to distribute to our stockholders, in a timely manner, at least 90% of our taxable net investment income each year.

If we do not distribute, in a timely manner, 98.2% of our taxable net capital gains and 90% of our taxable net investment income each year (as well as any portion of the respective 2% balances not distributed in the previous year), we will be subject to a 4% non-deductible federal excise tax on certain undistributed income of regulated investment companies.

Under the 1940 Act, we are not permitted to pay dividends to stockholders unless we meet certain asset coverage requirements.

If taxable net investment income is retained, we will be subject to federal income and excise taxes.

We reserve the right to retain net long-term capital gains in excess of net short-term capital losses for reinvestment or to pay contingencies and expenses.

Such retained amounts, if any, will be taxable to the Fund as long-term capital gains and our stockholders will be able to claim their proportionate share of the federal income taxes paid by the Fund on such gains as a credit against their own federal income tax liabilities.

Stockholders will also be entitled to increase the adjusted tax basis of their fund shares by the difference between their undistributed capital gains and their tax credit.

We invest in companies that are believed to have a high potential for capital appreciation, and we intend to realize the majority of our profits upon the sale of our investments in portfolio companies.

Consequently, most of the companies in which we invest do not have established policies of paying annual dividends.

However, a portion of the investments in portfolio securities held by the Fund consists of interest-bearing subordinated debt securities or dividend-paying preferred stock.

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 5. Market for Registrant’s Common Equity