Company: EQS
Filing Date: 2025-04-10
Form Type: 10-K
Source: 0001712543-25-000016
Chunk: 35

Company: EQUUS TOTAL RETURN, INC.
Filing Date: 2025-04-10
Form: 10-K
Item: Item 8
Chunk 35
---
, we rely on the original investment amount to determine the fair value unless significant
developments have occurred during this twelve-month period which would indicate a material effect on the portfolio company (such as results
of operations or changes in general marketconditions).

Investments are
valued utilizing a yield analysis, enterprise value (“ EV”) analysis, net asset value analysis, liquidation analysis, discounted
cash flow analysis, or a combination of methods, as appropriate. The yield analysis uses loan spreads and other relevant information implied
by market data involving identical or comparable assets or liabilities. Under the EV analysis, the EV of a portfolio company is first
determined and allocated over the portfolio company’s securities in order of their preference relative to one another (i. e., “waterfall”
allocation). To determine the EV, we typically use a market multiples approach that considers relevant and applicable market trading data
of guideline public companies, transaction metrics from precedent M& A transactions and/or a discounted cash flow analysis. The net
asset value analysis is used to derive a value of an underlying investment (such as real estate property) by dividing a relevant earnings
stream by an appropriate capitalization rate. For this purpose, we consider capitalization rates for similar properties as may be obtained
from guideline public companies and/or relevant transactions. The liquidation analysis is intended to approximate the net recovery value
of an investment based on, among other things, assumptions regarding liquidation proceeds based on a hypothetical liquidation of a portfolio
company’s assets. The discounted cash flow analysis uses valuation techniques to convert future cash flows or earnings to a range
of fair values from which a single estimate may be derived utilizing an appropriate discount rate. The measurement is based on the net
present value indicated by current market expectations about those future amounts.

In applying
these methodologies, additional factors that we consider in fair value pricing our investments may include, as we deem relevant: security
covenants, call protection provisions, and information rights; the nature and realizable value of any collateral; the portfolio company’s
ability to make payments; the principal markets in which the portfolio company does business; publicly available financial ratios of peer
companies; the principal market; and enterprise values, among other factors. Also, any failure by a portfolio company to achieve its business
plan or obtain and maintain its financing arrangements could result in increased volatility and result in a significant and rapid change
in its value.

  52  

  TableOfContents  

In addition to
the previously described analysis involving allocation of value