Company: EQS
Filing Date: 2025-04-10
Form Type: 10-K
Source: 0001712543-25-000016
Chunk: 4

Company: EQUUS TOTAL RETURN, INC.
Filing Date: 2025-04-10
Form: 10-K
Item: Item 1
Chunk 4
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 portfolio company operates should either
be sizeable or have significant growth potential.

History
of Profitability and Favorable Growth Potential. We target companies that have demonstrated a history of profitability or a reasonable
expectation of a return to profitability in the near future.

Ability to Provide
Regular Cash Interest and Distributions. We look for companies with strong cash flow models sufficient to provide regular and consistent
interest and/or preferred dividend payments.

Management
Assistance and Substantial Equity. Given the requirements of a BDC under the 1940 Act, we seek to invest in companies that will permit
substantial managerial assistance, including representation on the board of directors of the company or its equivalent. With regard to
equity investments, we desire to obtain a substantial investment position in portfolio companies. This position may be as a minority shareholder
with certain contractual rights and powers, or as a majority shareholder, and should otherwise allow us to have substantive input on the
direction and strategies of the portfolio company.

Plausible
Exit and Potential for Appreciation. Prior to investing in a portfolio company, we will seek to analyze potential exit strategies
and pursue those investments with such strategies as may be achievable.

InvestmentOperations

Our investment operations consist principally of the following
basicactivities:

Investment
Selection. Historically, many of our investment opportunities have come from Management, members of our Board, other private equity
investors, direct approaches from prospective portfolio companies and referrals from investment banks, business brokers, commercial, regional
and local banks, attorneys, accountants and other members of the financial community. Subject to the approval of our Board, we may compensate
certain referrals with finder’s fees to the extent permissible under applicable law and consistent with industry practice.

Due Diligence. Once a potential investment is identified, we undertake a due diligence review using information provided by the prospective portfolio
company and publicly available information. Management may also seek input from consultants, investment bankers and other knowledgeable
sources. The due diligence review will typically include, but is not limited to:

  Review of historical and prospective financial information, including audits and budgets;  

  On-site visits;  

  Interviews with management, employees, customers and vendors;  

  Review of existing loan documents and credit arrangements, if any;  

  Background checks on members of management; and  

  Research relating to the company, its management, industry, markets, products  

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Structuring Investments. We typically
negotiate investments in private transactions directly with