What changed in this filing

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Item 1. Business

2025-12-18 compared with 2025-12-18 · 21 added, 22 removed, 215 unchanged (17% of the section changed)

16 unchanged sentences

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

So long as we remain a BDC, we intend to maintain our RIC status, which requires that we qualify annually as a RIC by meeting certain specified requirements.

So long as we remain a BDC, we intend, insofar as reasonably possible, 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.

5 unchanged sentences

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 crude prices falling to 18-year lows in mid-March 2020 as a result of the coronavirus pandemic, only to increase to multi-year highs in the first half of 2022, largely as a result of high industrial and consumer demand, a reluctance of U.S.

The substantial volatility in world markets has been prominent in the oil and gas sector, with WTI oil prices reaching a multi-year high of $130.00 per barrel in March 2022, and gas prices also reaching a multi-year high in mid-year, both due in part to increased demand, the reluctance of U.S.

producers and OPEC nations to generate additional supply, and the conflict in Ukraine.

Recessionary headwinds, among other macroeconomic factors, led to a decrease in oil prices from their 2022 peak, and have traded within a much narrower range than in previous years (approximately $72.00 to $82.00 per barrel) since the beginning of 2023.

Meanwhile, gas prices have experienced even greater volatility recently, with gas prices increasing to $9.85 per MMBTU in August 2022, decreasing markedly to $3.52 per MMBTU as of December 31, 2022, and decreasing further during the first quarter of 2023.

These pricing changes have had a significant effect on forward pricing curves and the corresponding outlook and prospects for remaining small oil and gas firms such as Equus Energy that hold development rights in low-cost production reservoirs such as those underlying the Permian Basin and the Eagle Ford Shale regions.

Beginning in the second and third quarters of 2022, oil prices retreated substantially before stabilizing in the second quarter of 2023, increasing again in the third quarter of 2023, and largely returning to second quarter 2023 prices by year-end.

During the third quarter of 2023, oil prices increased from $70.64 to $90.79, and thereafter decreased to $71.65 by the end of the fourth quarter of 2023.

Gas prices were volatile in the first half of 2023 before stabilizing in the second half of the year.

During the third quarter of 2023, gas prices increased from $2.48 to $2.68 before decreasing to $2.58 by the end of the fourth quarter of 2023.

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

Authorization to Withdraw BDC Election .

On November 1, 2022, holders of a majority of the outstanding common stock of the Fund approved our cessation as a BDC under the 1940 Act and 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 expired on February 28, 2023, we expect to receive an additional authorization from our stockholders in the future.

This authorization and others which preceded it are a consequence of our expressed intent to transform Equus into an operating company or a permanent capital vehicle.

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.

2 unchanged sentences

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

Increase in Authorized Shares .

On January 20, 2021, holders of a majority of the outstanding common stock of the Fund approved the restatement of our Certificate of Incorporation to increase the number of our authorized shares of common stock from 50,000,000 to 100,000,000, and the number of our authorized shares of preferred stock from 5,000,000 to 10,000,000.

The increase is intended to help facilitate the transformation of Equus into an operating company and provide sufficient authorized shares to evaluate larger business concerns as possible acquisition or merger candidates.

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.

85 unchanged sentences

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

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

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.

19 unchanged sentences

Qualifying Assets .

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

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

7 unchanged sentences

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.

On November 1, 2022, we received this authorization from our shareholders to withdraw our BDC election and, although this authorization expired on February 28, 2023, we expect to receive an additional authorization by our stockholders in the future.

This authorization and others which preceded it were provided as a consequence of our plan to effect a transformation of Equus by:

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 the present authorization to withdraw our BDC election, we will 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).

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.

30 unchanged sentences

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 capital gain net income for each one-year period ending on October 31, we will be subject to a 4.0% nondeductible Federal exercise tax.

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.

For the year ended December 31, 2021, we incurred a capital gain related to the settlement of the escrow receivable in connection with the sale of our interest in PalletOne, Inc.

that was not fully offset by our capital loss carryforward.

We chose not to distribute this small amount for the current year and pay the RIC and excise tax.

As such, as of December 31, 2021, we have accrued a $38,000 in corporate level income and excise tax in lieu of making a distribution of the net capital gain.

We chose not to distribute this small amount for the current year and pay the associated tax.

For the year ended December 31, 2021, we accrued a $38,000 in corporate level income and excise tax in lieu of effecting a distribution of the net capital gain.

This tax was paid in March 2022.

If we fail to satisfy the 90% distribution requirement or otherwise fail to qualify 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.

2 unchanged sentences

however, none have been necessary in recent years.

During the year ended December 31, 2021, according and pursuant to ASC 946-20-50, we recharacterized as a return of capital in excess of par certain accumulated undistributed net capital gains of $18.5 million for which we had loss carryforwards.

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.

5 unchanged sentences

Certifications

In July 2022, 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 June 2023, 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.

5 unchanged sentences

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;

(i) changes in the economi# 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;

14 unchanged sentences

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