43 unchanged sentences
Given these factors, there is a risk that we will not realize gains upon the sale of those or other investment interests that we hold.
−Removed: Our holdings in Morgan E&P and Equus Energy are subject to commodity price declines endemic to oil and gas companies.
+Added: Our holdings in Morgan E&P are subject to commodity price declines endemic to oil and gas companies.
The oil and gas business is fundamentally a commodity-based enterprise.
−Removed: This means that the operations and earnings of Morgan E&P, LLC (“Morgan”) and Equus Energy, LLC (“Equus Energy”), our two remaining portfolio investments, may be significantly affected by changes in prices of oil, gas and natural gas liquids.
+Added: This means that the operations and earnings of Morgan E&P, Inc.
+Added: (“Morgan”) may be significantly affected by changes in prices of oil, gas and natural gas liquids.
The prices of these products are also dependent upon local, regional and global events or conditions that affect supply and demand for the relevant commodity.
1 unchanged sentence
Moreover, as a worldwide commodity, the price of oil and natural gas is also influenced by global demand, changes in currency exchange rates, interest rates, and inflation.
−Removed: Neither Morgan nor Equus Energy employs any hedging strategies in respect of its oil and gas holdings and is therefore subject to price fluctuations resulting from these and other factors.
−Removed: The operational results and financial condition of Morgan and Equus Energy, as well as the economic attractiveness of future capital expenditures for new drilling and recompletions, may be materially adversely affected as a result of lower oil and gas prices.
+Added: Morgan does not employ any hedging strategies in respect of its oil and gas holdings and is therefore subject to price fluctuations resulting from these and other factors.
+Added: The operational results and financial condition of Morgan, as well as the economic attractiveness of future capital expenditures for new drilling, may be materially adversely affected as a result of lower oil and gas prices.
We may not be able to make additional investments in our portfolio companies from time to time, which may dilute our interests in such companies.
55 unchanged sentences
Our business requires a substantial amount of cash to operate.
−Removed: We may borrow funds to pay contingencies or expenses or to make investments, to maintain our pass-through tax status as a RIC under Subchapter M of the Code.
+Added: We may borrow funds to pay contingencies or expenses or to make investments, or to reinstate our pass-through tax status as a RIC under Subchapter M of the Code.
We are permitted under the 1940 Act to borrow if, immediately after the borrowing, we have an asset coverage ratio of at least 150%.
7 unchanged sentences
The make-up of our portfolio has made it more difficult for us to borrow at the level and on the terms that we desire.
−Removed: Our borrowings have historically consisted of a revolving line of credit which has since expired, and a margin account used quarterly to enable us to achieve adequate diversification to maintain our pass- through tax status as a RIC.
−Removed: Although we believe the Fund’s liquidity is sufficient for our operating expenses for the next twelve months, we could be wrong.
−Removed: If we are wrong, we would have to obtain capital from other sources to pay Fund expenses, which could involve selling our portfolio holdings at an inopportune time and at a price that may be less than would be received if such holding were sold in a more competitive and orderly manner.
+Added: Our borrowings have historically consisted of a revolving line of credit which has since expired, and a margin account used quarterly to enable us to achieve adequate diversification to maintain our previous pass-through tax status as a RIC.
+Added: We are attempting to secure liquidity through various means, including the sale of our portfolio assets, as well as debt and equity financing.
+Added: Although we believe we will be able to obtain sufficient liquidity for our operating expenses for the next twelve months, we could be wrong.
+Added: If we are wrong, we would have to obtain capital from other sources to pay Fund expenses.
+Added: We may also be required to sell our portfolio holdings at an inopportune time and at a price that may be less than would be received if such holdings were sold in a more competitive and orderly manner.
The costs of borrowing money may exceed the income from the portfolio securities we purchase with the borrowed money.
1 unchanged sentence
A decline in net asset value could affect our ability to make distributions on our common stock.
−Removed: Our failure to distribute a sufficient portion of our net investment income and net realized capital gains could result in a loss of pass-through tax status or subject us to a 4% excise tax.
+Added: If we seek to requalify as a RIC and obtain pass-through tax status as a result, our failure to distribute a sufficient portion of our net investment income and net realized capital gains could result in a loss of such pass-through tax status or subject us to a 4% excise tax.
If the asset coverage for debt securities issued by the Fund declines to less than 150% (as a result of market fluctuations or otherwise), we may be required to sell a portion of our investments when it is disadvantageous to do so.
71 unchanged sentences
Such developments could correspondingly decrease our operating flexibility.
−Removed: We may not continue to qualify as a RIC under the Code.
−Removed: To remain entitled to the tax benefits accorded to RICs under the Code while we maintain our status as a BDC, we must meet certain income source, asset diversification and annual distribution requirements.
−Removed: To qualify as a RIC, we must derive each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other securities or foreign currencies, or other income derived with respect to our business of investing in such stock or securities or currencies and net income from interests in certain “qualified” publicly traded partnerships.
+Added: We are not currently qualified as a RIC under the Code and will be subject to corporate level income tax.
+Added: As described under Regulated Investment Company Tax Status above, during the fourth quarter of 2024, we elected to not qualify as a RIC.
+Added: As a result, we will be subject to regular corporate level income tax on our income and gains and will not be permitted to deduct distributions paid to our stockholders.
+Added: To requalify as a RIC and be entitled to the tax benefits accorded to RICs under the Code, we must meet certain income source, asset diversification and annual distribution requirements applicable to RICs.
+Added: Further, we must also derive, each taxable year, at least 90% of our gross income from dividends, interest, payments with respect to certain securities loans, gains from the sale of stock or other securities or foreign currencies, or other income derived with respect to our business of investing in such stock or securities or currencies and net income from interests in certain “qualified” publicly traded partnerships.
The annual distribution requirement for a RIC is satisfied if we distribute at least 90% of our ordinary net taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, to our stockholders on an annual basis.
As discussed above in “Our business depends on external financing,” we historically have borrowed funds necessary to make qualifying investments to satisfy the Subchapter M diversification requirements.
−Removed: If we fail to satisfy such diversification requirements and cease to qualify for conduit tax treatment, we will be subject to income tax on our income and gains and will not be permitted to deduct distributions paid to stockholders.
−Removed: In addition, our distributions will be taxable as dividends to the extent paid from earnings and profits.
−Removed: We may also cease to qualify as a RIC or be subject to income tax and/or a 4% excise tax, if we fail to distribute a sufficient portion of our net investment income and net realized capital gains.
−Removed: The loss of our RIC qualification would have a material adverse effect on the total return, if any, obtainable from an investment in our common stock.
−Removed: Because we intend to distribute substantially all of our income and net realized capital gains to our stockholders, if we continue to operate as a BDC and as a RIC, we will need additional capital to finance our growth.
−Removed: As noted above, inasmuch as we expect to receive a future authorization from our stockholders to withdraw our election to be classified as a BDC, such withdrawal also means that we will not operate as a RIC.
−Removed: Our management is currently evaluating potential transactions that would result in the transformation of Equus into an operating company and the withdrawal of our BDC election and RIC status within this time frame, but we may nevertheless not consummate any such transformative transaction and remain a BDC and continue to seek to qualify as a RIC.
−Removed: In order to qualify as a RIC, to avoid payment of excise taxes and to minimize or avoid payment of income taxes, for so long as we maintain our status as a BDC, we intend to distribute to our stockholders substantially all of our net ordinary income and realized net capital gains except for certain net long- term capital gains (which we may retain, pay applicable income taxes with respect thereto, and elect to treat as deemed distributions to our stockholders).
+Added: We undertook no such borrowings during 2025.
+Added: Because we intend to distribute substantially all of our income and net realized capital gains to our stockholders, if we continue to operate as a BDC, we will need additional capital to finance our growth.
+Added: As noted above, inasmuch as we expect to receive a future authorization from our stockholders to withdraw our election to be classified as a BDC, such withdrawal also means that we will not requalify as a RIC.
+Added: Our management is currently evaluating potential transactions that would result in the transformation of Equus into an operating company and the withdrawal of our BDC election and RIC status within this time frame, but we may nevertheless not consummate any such transformative transaction and remain a BDC and continue to seek to requalify as a RIC.
+Added: In order to requalify as a RIC, to avoid payment of excise taxes and to minimize or avoid payment of income taxes, for so long as we maintain our status as a BDC, we intend to distribute to our stockholders substantially all of our net ordinary income and realized net capital gains except for certain net long- term capital gains (which we may retain, pay applicable income taxes with respect thereto, and elect to treat as deemed distributions to our stockholders).
As a BDC, we are generally required to meet a coverage ratio of total assets to total senior securities, which includes all of our borrowings and any preferred stock we may issue in the future, of at least 150%.
47 unchanged sentences
If we are unable to effectively manage the strategic review process, our business, financial condition, liquidity and results of operations could be adversely affected.
−Removed: If we reorganize as an operating company, we will likely not continue to qualify as a RIC under the Code.
−Removed: If we were to reorganize as an operating company, we would lose our status as a RIC.
−Removed: If we fail to qualify as a RIC, we will be subject to corporate income tax, which would substantially reduce the amount of income we might otherwise distribute to our shareholders.
+Added: If we reorganize as an operating company, we will likely not seek to requalify as a RIC under the Code.
+Added: If we were to reorganize as an operating company, we would not seek to reinstate our status as a RIC.
+Added: As noted above under Regulated Investment Company Tax Status , if we do not requalify as a RIC, we will be subject to corporate income tax, which would substantially reduce the amount of income we might otherwise distribute to our shareholders.
If we reorganize as an operating company or a permanent capital vehicle, we will not continue to operate as a BDC.
35 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.