What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-12-18 compared with 2025-12-17 · 32 added, 40 removed, 205 unchanged (26% of the section changed)

13 unchanged sentences

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.

Equus is 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.

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.

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 700 Louisiana St., 48 th Floor, Houston, Texas, 77002, and the telephone number is 1-800-856-0901.

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

2 unchanged sentences

Significant Developments

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.

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.

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.

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.

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.

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.

72 unchanged sentences

Current Portfolio Companies

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 .”

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 a quarterly basis, Management values our portfolio investments.

10 unchanged sentences

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.

however, we may 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 represents 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.

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:

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:

(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).

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).

Temporary Investments.

21 unchanged sentences

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.

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 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;

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 maintain our RIC status, among other requirements.

To maintain our 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;

3 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 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, 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.

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.

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.

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).

1 unchanged sentence

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.

30 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