Company: EQS
Filing Date: 2025-04-10
Form Type: 10-K
Source: 0001712543-25-000016
Chunk: 37

Company: EQUUS TOTAL RETURN, INC.
Filing Date: 2025-04-10
Form: 10-K
Item: Item 8
Chunk 37
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 approach to determine fair value (or a range of fair values) involves applying an appropriate discount rate(s) to the estimated
future cash flows using various relevant factors depending on investment type, including comparing the latest arm’s length or market
transactions involving the subject security to the selected benchmark credit spread, assumed growth rate (in cash flows), and capitalization
rates/multiples (for determining terminal values of underlying portfolio companies). The valuation based on the inputs determined to be
the most reasonable and probable is used as the fair value of the investment. The determination of fair value using these methodologies
may take into consideration a range of factors including, but not limited to, the price at which the investment was acquired, the nature
of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating
performance, financing transactions subsequent to the acquisition of the investment and anticipated financing transactions after the valuationdate.

To assess the
reasonableness of the discounted cash flow approach, the fair value of equity securities, including warrants, in portfolio companies may
also consider the market approach - that is, through analyzing and applying to the underlying portfolio companies, market valuation
multiples of publicly-traded firms engaged in businesses similar to those of the portfolio companies. The market approach to determining
the fair value of a portfolio company’s equity security (or securities) will typically involve: (1) applying to the portfolio company’s
trailing twelve months (or current year projected) EBITDA, a low to high range of enterprise value to EBITDA multiples that are derived
from an analysis of publicly-traded comparable companies, in order to arrive at a range of enterprise values for the portfolio company;
(2) subtracting from the range of calculated enterprise values the outstanding balances of any debt or equity securities that would be
senior in right of payment to the equity securities we hold; and (3) multiplying the range of equity values derived therefrom by our ownership
share of such equity tranche in order to arrive at a range of fair values for our equity security (or securities). Application of these
valuation methodologies involves a significant degree of judgment by Management.

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Due to the
inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair
value of the investments may differ significantly from the values that would have been used had a ready market existed for such investments
and may differ materially from the values that