Company: EQS
Filing Date: 2025-04-10
Form Type: 10-K
Source: 0001712543-25-000016
Chunk: 14

Company: EQUUS TOTAL RETURN, INC.
Filing Date: 2025-04-10
Form: 10-K
Item: Item 7
Chunk 14
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Management’s Discussion and Analysis of Financial Condition
and Results of Operations– Portfolio Securities

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   7  

  TableOfContents  

Valuation

On a quarterly
basis, Management values our portfolio investments. These valuations are subject to the approval and adoption of the Board. Valuations
of our portfolio securities at “fair value” are performed in accordance with accounting principles generally accepted in the
United States (“ GAAP”).

The fair value
of investments for which no market exists (which includes most of our investments) is determined through procedures established in good
faith by the Board. As a general principle, the current “fair value” of an investment is the amount the Fund might reasonably
expect to receive upon its sale in an orderly manner. There are a range of values that are reasonable for such investments at any particular
time.

We base our
adjustments to fair value upon such factors as the portfolio company’s earnings, cash flow and net worth, the market prices for
similar securities of comparable companies, an assessment of the company’s current and future financial prospects and various other
factors and assumptions. In the case of unsuccessful or substantially declining operations, we may base a portfolio company’s fair
value upon the company’s estimated liquidation value. Fair valuations are inherently subjective, and our estimate of fair value
may differ materially from amounts actually received upon the disposition of our portfolio securities. 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.

Our general
intent is to hold our loans to maturity when appraising our privately held debt investments. 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.

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. Any third- party valuation data would be considered
as one of many factors in a fair value determination. Management would then present its fair value recommendations to the Audit Committee
of the Board of Directors for review. Following review and any adjustments required thereby, the Audit Committee would, in turn, recommend
the fair values for all of the Fund’s portfolio investments to the Board of Directors for final approval.

To the
extent that market quotations are readily available for our investments and