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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2010

or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period
 to

Commission File Number 814-00098





EQUUS TOTAL
RETURN, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 76-0345915                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               | 
|Eight Greenway Plaza, Suite 930 Houston, Texas                 |  | 77046                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: (713) 529-0900





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



|                          |  |                     |  |                         |  |                            
|------------------------- |  | ------------------- |  | ----------------------- |  | ---------------------------
|Large accelerated filer  ̈ |  | Accelerated filer  ̈ |  | Non-accelerated filer x |  | Smaller Reporting Company  ̈

Indicate by check mark whether the registrant is a shell
company.    Yes   ̈    No  x

There were 8,861,646 shares of the registrants common stock, $.001 par value, outstanding, as of May 14, 2010.









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EQUUS TOTAL RETURN, INC.

(A Delaware Corporation)

INDEX



|                                                                                              |  |     
|--------------------------------------------------------------------------------------------- |  | ----
|                                                                                              |  | PAGE
|PART I. FINANCIAL INFORMATION                                                                 |  |     
|Item 1. Financial Statements                                                                  |  |     
|Balance Sheets                                                                                |  | 3   
|Statements of Operations                                                                      |  | 4   
|Statements of Changes in Net Assets                                                           |  | 5   
|Statements of Cash Flows                                                                      |  | 6   
|Supplemental InformationSelected Per Share Data and Ratios                                   |  | 7   
|Schedule of Portfolio Securities                                                              |  | 8   
|Notes to Financial Statements                                                                 |  | 14  
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 22  
|Item 3. Quantitative and Qualitative Disclosure about Market Risk                             |  | 27  
|Item 4. Controls and Procedures                                                               |  | 27  
|PART II. OTHER INFORMATION                                                                    |  |     
|Item 1. Legal Proceedings                                                                     |  | 27  
|Item 6. Exhibits                                                                              |  | 28  
|SIGNATURE                                                                                     |  | 29  



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EQUUS TOTAL RETURN, INC.

BALANCE SHEETS



|                                                                                                                     |  |                |         |   |                   |   |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                     |  | March 
31,2010 |         |   | December 
31,2009 |  
|(in thousands, except per share amounts)                                                                             |  | (Unaudited)    |         |   |                   |  
|Assets                                                                                                               |  |                |         |   |                   |   |         |  
|Investments in portfolio securities at fair value:                                                                   |  |                |         |   |                   |   |         |  
|Control investments (cost at $35,194 and $35,315 respectively)                                                       |  | $              | 28,726  |   |                   | $ | 28,729  |  
|Affiliate investments (cost at $8,973 and $8,973 respectively)                                                       |  |                | 1,310   |   |                   |   | 2,128   |  
|Non-affiliate investments (cost at $13,714 and $13,350 respectively)                                                 |  |                | 11,919  |   |                   |   | 11,554  |  
|                                                                                                                     |  |                |         |   |                   |   |         |  
|Total investments in portfolio securities at fair value                                                              |  |                | 41,955  |   |                   |   | 42,411  |  
|Restricted cash & temporary investments                                                                              |  |                | 21,209  |   |                   |   | 30,299  |  
|Cash                                                                                                                 |  |                | 377     |   |                   |   | 535     |  
|Temporary cash investments                                                                                           |  |                | 5,317   |   |                   |   | 5,510   |  
|Accounts receivable and other                                                                                        |  |                | 52      |   |                   |   | 47      |  
|Accrued interest and dividends receivable due from portfolio companies                                               |  |                | 2,501   |   |                   |   | 2,205   |  
|                                                                                                                     |  |                |         |   |                   |   |         |  
|Total assets                                                                                                         |  | $              | 71,411  |   |                   | $ | 81,007  |  
|                                                                                                                     |  |                |         |   |                   |   |         |  
|Liabilities and net assets                                                                                           |  |                |         |   |                   |   |         |  
|Liabilities:                                                                                                         |  |                |         |   |                   |   |         |  
|Accounts payable and accrued liabilities                                                                             |  | $              | 261     |   |                   | $ | 107     |  
|Borrowing under margin account                                                                                       |  |                | 20,999  |   |                   |   | 29,999  |  
|                                                                                                                     |  |                |         |   |                   |   |         |  
|Total liabilities                                                                                                    |  |                | 21,260  |   |                   |   | 30,106  |  
|                                                                                                                     |  |                |         |   |                   |   |         |  
|Net assets:                                                                                                          |  |                |         |   |                   |   |         |  
|Preferred stock, $.001 par value, 5,000 shares authorized, no shares outstanding                                     |  |                |        |   |                   |   |        |  
|Common stock, $.001 par value, 50,000 shares authorized, 8,862 and 8,862 shares issued and outstanding,
respectively |  |                | 9       |   |                   |   | 9       |  
|Additional paid-in capital                                                                                           |  |                | 70,553  |   |                   |   | 70,604  |  
|Undistributed net investment losses                                                                                  |  |                | (4,485  | ) |                   |   | (4,485  | )
|Unrealized depreciation of portfolio securities, net                                                                 |  |                | (15,926 | ) |                   |   | (15,227 | )
|                                                                                                                     |  |                |         |   |                   |   |         |  
|Total net assets                                                                                                     |  | $              | 50,151  |   |                   | $ | 50,901  |  
|                                                                                                                     |  |                |         |   |                   |   |         |  
|Net assets per share                                                                                                 |  | $              | 5.66    |   |                   | $ | 5.74    |  
|                                                                                                                     |  |                |         |   |                   |   |         |  

The accompanying notes are an integral part of these financial statements.



3



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EQUUS TOTAL RETURN, INC.

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(Unaudited)



|                                                                             |  |      |         |   |      |   |        |  
|---------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ | -
|(in thousands, except per share amounts)                                     |  | 2010 |         |   | 2009 |  
|Investment income:                                                           |  |      |         |   |      |   |        |  
|Interest and dividend income from portfolio securities:                      |  |      |         |   |      |   |        |  
|Control investments                                                          |  | $    | 304     |   |      | $ | 311    |  
|Affiliate investments                                                        |  |      | 13      |   |      |   | 25     |  
|Non-affiliate investments                                                    |  |      | 530     |   |      |   | 548    |  
|                                                                             |  |      |         |   |      |   |        |  
|Total interest and dividend income                                           |  |      | 847     |   |      |   | 884    |  
|Interest from temporary cash investments                                     |  |      | 4       |   |      |   | 21     |  
|                                                                             |  |      |         |   |      |   |        |  
|Total investment income                                                      |  |      | 851     |   |      |   | 905    |  
|Expenses:                                                                    |  |      |         |   |      |   |        |  
|Management fee                                                               |  |      |        |   |      |   | 362    |  
|Administrative fees                                                          |  |      |        |   |      |   | 113    |  
|Compensation expense                                                         |  |      | 348     |   |      |   |       |  
|Professional fees                                                            |  |      | 344     |   |      |   | 346    |  
|Director fees and expenses                                                   |  |      | 100     |   |      |   | 105    |  
|Mailing, printing and other expenses                                         |  |      | 29      |   |      |   | 88     |  
|General and administrative expense                                           |  |      | 44      |   |      |   |       |  
|Interest expense                                                             |  |      | 9       |   |      |   | 11     |  
|Taxes                                                                        |  |      | 24      |   |      |   | 7      |  
|                                                                             |  |      |         |   |      |   |        |  
|Total expenses                                                               |  |      | 898     |   |      |   | 1,032  |  
|                                                                             |  |      |         |   |      |   |        |  
|Net investment income (loss)                                                 |  |      | (47     | ) |      |   | (127   | )
|Net realized gain (loss) on portfolio securities:                            |  |      |         |   |      |   |        |  
|Control investments                                                          |  |      |        |   |      |   |       |  
|Affiliate investments                                                        |  |      |        |   |      |   |       |  
|Non-affiliate investments                                                    |  |      |        |   |      |   |       |  
|Temporary cash investments                                                   |  |      | (4      | ) |      |   | (24    | )
|                                                                             |  |      |         |   |      |   |        |  
|Total net realized gain (loss) on portfolio securities                       |  |      | (4      | ) |      |   | (24    | )
|Net unrealized appreciation (depreciation) of portfolio securities:          |  |      |         |   |      |   |        |  
|                                                                             |  |      |         |   |      |   |        |  
|End of period                                                                |  |      | (15,926 | ) |      |   | (1,941 | )
|Beginning of period                                                          |  |      | (15,227 | ) |      |   | (3,055 | )
|                                                                             |  |      |         |   |      |   |        |  
|Net change in unrealized appreciation (depreciation) of portfolio securities |  |      | (699    | ) |      |   | 1,114  |  
|                                                                             |  |      |         |   |      |   |        |  
|Net increase (decrease) in net assets resulting from operations              |  | $    | (750    | ) |      | $ | 963    |  
|                                                                             |  |      |         |   |      |   |        |  
|Net increase (decrease) in net assets resulting from operations per share:   |  |      |         |   |      |   |        |  
|Basic and diluted                                                            |  | $    | (0.08   | ) |      | $ | 0.11   |  
|                                                                             |  |      |         |   |      |   |        |  
|Weighted average shares outstanding, in thousands                            |  |      |         |   |      |   |        |  
|Basic and diluted                                                            |  |      | 8,862   |   |      |   | 8,572  |  
|                                                                             |  |      |         |   |      |   |        |  

The accompanying notes are an integral part of these financial statements.



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EQUUS TOTAL RETURN, INC.

STATEMENTS OF CHANGES IN NET ASSETS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(Unaudited)



|                                                                                |  |      |        |   |      |   |        |  
|------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|(in thousands)                                                                  |  | 2010 |        |   | 2009 |  
|Net increase (decrease) in net assets resulting from operations:                |  | $    | (750   | ) |      | $ | 963    |  
|Capital share transactions:                                                     |  |      |        |   |      |   |        |  
|Dividend declared                                                               |  |      |       |   |      |   | (921   | )
|Shares issued in dividend                                                       |  |      |       |   |      |   | 919    |  
|                                                                                |  |      |        |   |      |   |        |  
|Net increase (decrease) in net assets resulting from capital share transactions |  |      |       |   |      |   | (2     | )
|                                                                                |  |      |        |   |      |   |        |  
|Increase (decrease) in net assets                                               |  |      | (750   | ) |      |   | 961    |  
|Net assets at beginning of period                                               |  |      | 50,901 |   |      |   | 78,435 |  
|                                                                                |  |      |        |   |      |   |        |  
|Net assets at end of period                                                     |  | $    | 50,151 |   |      | $ | 79,396 |  
|                                                                                |  |      |        |   |      |   |        |  

The accompanying notes are an integral part of these financial statements.



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EQUUS TOTAL RETURN, INC.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(Unaudited)



|                                                                                                                                                 |  |      |         |   |      |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | -
|(in thousands)                                                                                                                                   |  | 2010 |         |   | 2009 |  
|Net increase (decrease) in net assets resulting from operations                                                                                  |  | $    | (750    | ) |      | $ | 963     |  
|Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in)
operating activities: |  |      |         |   |      |   |         |  
|Net realized (gain) loss                                                                                                                         |  |      | 4       |   |      |   | 24      |  
|Net change in unrealized (appreciation) depreciation of portfolio securities                                                                     |  |      | 699     |   |      |   | (1,114  | )
|Changes in operating assets and liabilities:                                                                                                     |  |      |         |   |      |   |         |  
|Purchase of portfolio securities                                                                                                                 |  |      | (200    | ) |      |   | (670    | )
|Principal payments received from portfolio securities                                                                                            |  |      | 122     |   |      |   |        |  
|Sales (purchases) of restricted temporary cash investments                                                                                       |  |      | 9,086   |   |      |   | 2,975   |  
|(Increase) decrease in accounts receivable and other                                                                                             |  |      | (5      | ) |      |   | (2      | )
|Increase in accrued interest receivable due from portfolio securities                                                                            |  |      | (461    | ) |      |   | (508    | )
|Decrease in accounts payable and accrued liabilities                                                                                             |  |      | 154     |   |      |   | 47      |  
|Decrease in due to adviser                                                                                                                       |  |      |        |   |      |   | (93     | )
|                                                                                                                                                 |  |      |         |   |      |   |         |  
|Net cash provided by (used in) operating activities                                                                                              |  |      | 8,649   |   |      |   | 1,622   |  
|Cash flows from financing activities:                                                                                                            |  |      |         |   |      |   |         |  
|Borrowings under margin account                                                                                                                  |  |      | 20,999  |   |      |   | 42,000  |  
|Repayments under margin account                                                                                                                  |  |      | (29,999 | ) |      |   | (44,969 | )
|Dividends paid                                                                                                                                   |  |      |        |   |      |   | (2      | )
|                                                                                                                                                 |  |      |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                                                                                              |  |      | (9,000  | ) |      |   | (2,971  | )
|                                                                                                                                                 |  |      |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                                                                                        |  |      | (351    | ) |      |   | (1,349  | )
|Cash and cash equivalents at beginning of period                                                                                                 |  |      | 6,045   |   |      |   | 8,656   |  
|                                                                                                                                                 |  |      |         |   |      |   |         |  
|Cash and cash equivalents at end of period                                                                                                       |  | $    | 5,694   |   |      | $ | 7,307   |  
|                                                                                                                                                 |  |      |         |   |      |   |         |  
|Non-cash operating and financing activities:                                                                                                     |  |      |         |   |      |   |         |  
|Shares issued in lieu of cash dividend                                                                                                           |  | $    |        |   |      | $ | 919     |  
|                                                                                                                                                 |  |      |         |   |      |   |         |  
|Accrued interest or dividends exchanged for portfolio securities                                                                                 |  | $    | 165     |   |      | $ | 332     |  
|                                                                                                                                                 |  |      |         |   |      |   |         |  
|Supplemental disclosure of cash flow information:                                                                                                |  |      |         |   |      |   |         |  
|Interest paid                                                                                                                                    |  | $    | 7       |   |      | $ | 23      |  
|                                                                                                                                                 |  |      |         |   |      |   |         |  
|Income taxes paid                                                                                                                                |  | $    | 24      |   |      | $ |        |  
|                                                                                                                                                 |  |      |         |   |      |   |         |  

The accompanying notes are an integral part of these financial statements.



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EQUUS TOTAL RETURN, INC.

SUPPLEMENTAL INFORMATIONSELECTED PER SHARE DATA AND RATIOS

FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(Unaudited)



|                                                                                               |  |      |        |    |      |   |        |   
|---------------------------------------------------------------------------------------------- |  | ---- | ------ | -- | ---- | - | ------ | --
|                                                                                               |  | 2010 |        |    | 2009 |  
|Investment income                                                                              |  | $    | 0.10   |    |      | $ | 0.10   |   
|Expenses                                                                                       |  |      | 0.10   |    |      |   | 0.12   |   
|                                                                                               |  |      |        |    |      |   |        |   
|Net investment income (loss)                                                                   |  |      | 0.00   |    |      |   | (0.02  | ) 
|Net realized gain (loss) on portfolio securities                                               |  |      |       |    |      |   |       |   
|Net change in unrealized appreciation (depreciation) of portfolio securities                   |  |      | (0.08  | )  |      |   | 0.13   |   
|                                                                                               |  |      |        |    |      |   |        |   
|Net increase (decrease) in net assets resulting from operations                                |  |      | (0.08  | )  |      |   | 0.11   |   
|Capital transactions:                                                                          |  |      |        |    |      |   |        |   
|Dividend declared                                                                              |  |      |       |    |      |   | (0.11  | ) 
|Dilutive effect of shares issued in common stock dividend                                      |  |      |       |    |      |   | (0.20  | ) 
|                                                                                               |  |      |        |    |      |   |        |   
|Decrease in net assets resulting from capital transactions                                     |  |      |       |    |      |   | (0.31  | ) 
|                                                                                               |  |      |        |    |      |   |        |   
|Net increase (decrease) in net assets                                                          |  |      | (0.08  | )  |      |   | (0.20  | ) 
|Net assets at beginning of period                                                              |  |      | 5.74   |    |      |   | 9.16   |   
|                                                                                               |  |      |        |    |      |   |        |   
|Net assets at end of period, basic and diluted                                                 |  | $    | 5.66   |    |      | $ | 8.96   |   
|                                                                                               |  |      |        |    |      |   |        |   
|Weighted average number of shares outstanding during period, in thousands                      |  |      | 8,862  |    |      |   | 8,572  |   
|Market value per share at end of period                                                        |  | $    | 2.81   |    |      | $ | 2.85   |   
|Selected ratios:                                                                               |  |      |        |    |      |   |        |   
|Ratio of expenses to average net assets                                                        |  |      | 1.78   | %  |      |   | 1.31   | % 
|Ratio of net investment gain (loss) to average net assets                                      |  |      | (0.09  | )% |      |   | (0.16  | )%
|Ratio of net increase (decrease) in net assets resulting from operations to average net assets |  |      | (1.48  | )% |      |   | 1.22   | % 
|Total return on market price*                                                                  |  |      | (12.19 | )% |      |   | (31.22 | )%



|* | Adjusted for dividends and can be calculated as the March 31, 2009 market value plus year-to-date dividends declared less the December 31, 2008 market value,
divided by the December 31, 2008 market value. There were no dividends paid in the quarter ending March 31, 2010.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.



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EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES

March 31, 2010

(Unaudited)



|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |              |  |   |           
|--------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | ------------------------- | - | ---------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | ----------------- | - | ------------ |  | - | ----------
|Name and Location of
Portfolio Company                                                              |  | Industry                       |        | Date of InitialInvestment |   | Investment                                                                                                                   |  | Principal              |        | Cost ofInvestment |   | FairValue(1)
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  | (amounts in thousands)
|Control investments: Majority-owned (5):                                                           
|Equus Media Development Company, LLC
Houston, TX                                                    |  | Media                          |        | January 2007              |   | Member interest (100%)                                                                                                       |  |                        |        |                   | $ | 5,000        |  | $ | 5,000     
|Riptide Entertainment, LLC
Miami, FL                                                                |  | Entertainment and leisure      |        | December 2005             |   | Member interest (64.67%) 8%
promissory notes (4)                                                                             |  | $                      | 10,010 |                   |   | 6510,010     |  |   |   3,028  
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 10,075       |  |   | 3,028     
|Sovereign Business Forms, Inc.
Houston, TX                                                          |  | Business products and services |        | August 1996               |   | 1,214,630 shares of common stock
12% promissory notes(2)                                                                     |  |                        | 3,129  |                   |   | 5,0803,129   |  |   | 4,6483,129
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 8,209        |  |   | 7,777     
|Spectrum Management, LLC
Carrollton, TX                                                             |  | Business products and services |        | December 1999             |   | 285,000 units of Class A member interest
16% subordinated promissory note(2)(3)                                              |  |                        | 1,690  |                   |   | 2,8501,690   |  |   | 3,0571,690
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 4,540        |  |   | 4,747     
|Total Control investments: Majority-owned (represents 49.0% of total
investments at fair value)     |  | $                              | 27,824 |                           | $ | 20,552                                                                                                                      
|Control Investments: Non-majority owned(6):                                                        
|ConGlobal Industries Holding, Inc.
San Ramon, CA                                                    |  | Shipping products and services |        | February 1997             |   | 24,397,303 shares of common stock
7% promissory note (1)(2)                                                                  |  |                        | 6,000  |                   | $ | 1,3706,000   |  | $ | 2,1746,000
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 7,370        |  |   | 8,174     
|Total Control Investments: Non-majority Owned (represents 19.5% of total
investments at fair value) |  | $                              | 7,370  |                           | $ | 8,174                                                                                                                       
|Total Control Investments: (represents 68.5% of total investments at fair
value)                    |  | $                              | 35,194 |                           | $ | 28,726                                                                                                                      
|Affiliate Investments(7):                                                                          
|Infinia Corporation Kennewick,
WA                                                                   |  | Alternative energy             |        | June 2007                 |   | 1,151,800 shares preferred stock                                                                                             |  |                        |        |                   | $ | 8,000        |  | $ | 659       
|                                                                                                    |  |                                |        |                           |   | Option to purchase 16,000 shares of common stock at $6.50 per share through December 19, 2012                                |  |                        |        |                   |   |             |  |   | 6         
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 8,000        |  |   | 665       
|Nickent Golf, Inc. City of
Industry, CA                                                             |  | Entertainment and leisure      |        | June 2007                 |   | 8% receivership certificate(4)
3,000,000 shares Class A convertible preferred stock                                          |  | $                      | 50     |                   |   | 50          |  |   | 50       
|                                                                                                    |  |                                |        |                           |   | Warrants to buy 15,000 shares of common stock at $0.60 per share through March 17, 2013                                      |  |                        |        |                   |   |             |  |   |          
|                                                                                                    |  |                                |        |                           |   | Warrants to buy 1,434,149 shares of common stock at $0.60 per share through August 16, 2010, warrant terms subject to change |  |                        |        |                   |   |             |  |   |          
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 50           |  |   | 50        
|PalletOne, Inc.
Bartow, FL                                                                          |  | Shipping products and services |        | October 2001              |   | 350,000 shares of common stock                                                                                               |  |                        |        |                   |   | 350          |  |   |          
|RP&C International Investments LLC
New York, NY                                                     |  | Healthcare                     |        | September 2006            |   | Member interest (17.2%)                                                                                                      |  |                        |        |                   |   | 573          |  |   | 595       
|Total Affiliate Investments (represents 3.1% of total investments at fair
value)                    |  | $                              | 8,973  |                           | $ | 1,310                                                                                                                       

The accompanying notes are an integral part of these financial statements.



8



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES  (Continued)

March 31, 2010

(Unaudited)



|                                                                                      |  |                                |        |                            |   |                                                                                                                                        |  |                        |       |                   |   |              |  |   |       
|------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | -------------------------- | - | -------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ----- | ----------------- | - | ------------ |  | - | ------
|Name and Location of
Portfolio Company                                                |  | Industry                       |        | Date of Initial
Investment |   | Investment                                                                                                                             |  | Principal              |       | Cost
ofInvestment |   | FairValue(1)
|                                                                                      |  |                                |        |                            |   |                                                                                                                                        |  | (amounts in thousands)
|Non-Affiliate Investments (less than 5% owned):                                      
|1848 Capital Partners LLC
Miami, FL                                                   |  | Entertainment and leisure      |        | January 2008               |   | 18% promissory note(2)(3)                                                                                                              |  | $                      | 3,658 |                   | $ | 3,658        |  | $ | 3,658 
|Big Apple Entertainment Partners LLC
New York, NY                                     |  | Entertainment and leisure      |        | October 2007               |   | 18% promissory note(2)(3)                                                                                                              |  |                        | 3,193 |                   |   | 3,193        |  |   | 3,193 
|London Bridge Entertainment Partners Ltd
London UK                                    |  | Entertainment and leisure      |        | August 2008                |   | 18% promissory note(2)(3)                                                                                                              |  |                        | 2,761 |                   |   | 2,761        |  |   | 2,761 
|The Bradshaw Group Richardson,
TX                                                     |  | Business products and services |        | May 2000                   |   | 576,828 Class B Shares 12.25% preferred stock
38,750 Class C shares preferred stock                                                    |  |                        |       |                   |   | 1,795       |  |   |     
|                                                                                      |  |                                |        |                            |   | 788,649 Class D shares 15% preferred stock                                                                                             |  |                        |       |                   |   |             |  |   |      
|                                                                                      |  |                                |        |                            |   | 2,218,109 Class E shares 8% preferred stock                                                                                            |  |                        |       |                   |   |             |  |   |      
|                                                                                      |  |                                |        |                            |   | Warrant to buy 2,229,450 shares of common
stock through May 2016                                                                       |  |                        |       |                   |   |             |  |   |      
|                                                                                      |  |                                |        |                            |   |                                                                                                                                        |  |                        |       |                   |   |             
|                                                                                      |  |                                |        |                            |   |                                                                                                                                        |  |                        |       |                   |   | 1,795        |  |   |      
|Trulite, Inc. El Dorado Hills,
CA                                                     |  | Alternative energy             |        | August 2008                |   | 18% promissory note(2) (3)
Warrants to buy 8,934,211 shares of common stock
ranging from $0.01 - $0.38 per share through November 2015 |  |                        | 2,307 |                   |   | 2,307       |  |   | 2,307
|                                                                                      |  |                                |        |                            |   |                                                                                                                                        |  |                        |       |                   |   |             
|                                                                                      |  |                                |        |                            |   |                                                                                                                                        |  |                        |       |                   |   | 2,307        |  |   | 2,307 
|Total Non-Affiliate Investments (represents 28.4% of total investments at
fair value) |  | $                              | 13,714 |                            | $ | 11,919                                                                                                                                
|Total Investments                                                                     |  | $                              | 57,881 |                            | $ | 41,955                                                                                                                                



|(1) | See Note 3 to the financial statements, Valuation of Investments.
|--- | -----------------------------------------------------------------

|(2) | Income-producing.
|--- | -----------------

|(3) | Income on these securities is paid-in-kind by the issuance of additional securities, accrual to maturity or through accretion of original issue discount.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Non-income producing.
|--- | ---------------------

|(5) | Majority owned investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns more than 50% of the voting securities of
the company.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Non-majority owned control investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns more than 25% but not more
than 50% of the voting securities of the company.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns at least 5% but not more than 25% voting
securities of the company.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.



9



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES  (Continued)

March 31, 2010

(Unaudited)

Substantially all of the Funds portfolio securities are restricted from public sale without prior registration under the Securities
Act of 1933. The Fund negotiates certain aspects of the method and timing of the disposition of the Funds investment in each portfolio company, including registration rights and related costs.

As defined in the Investment Company Act of 1940, all of the Funds investments are in eligible portfolio companies. The Fund
provides significant managerial assistance to all of the portfolio companies in which it has invested. The Fund provides significant managerial assistance to portfolio companies that comprise 77.1% of the total value of the investments in portfolio
companies as of March 31, 2010.

The Funds investments in portfolio securities consist of the following types of
securities as of March 31, 2010 (in thousands):



|                                      |  |      |        |           |   |                                      |  |      |  
|------------------------------------- |  | ---- | ------ | --------- | - | ------------------------------------ |  | ---- | -
|Type of Securities                    |  | Cost |        | FairValue |   | Fair Value asPercentage ofNet Assets | 
|Secured and subordinated debt         |  | $    | 32,798 |           | $ | 25,816                               |  | 51.5 | %
|Limited liability company investments |  |      | 8,488  |           |   | 8,652                                |  | 17.3 | %
|Common stock                          |  |      | 6,800  |           |   | 6,822                                |  | 13.6 | %
|Preferred stock                       |  |      | 9,795  |           |   | 659                                  |  | 1.3  | %
|Options and warrants                  |  |      |       |           |   | 6                                    |  | 0.0  | %
|                                      |  |      |        |           |   |                                      |  |      |  
|Total                                 |  | $    | 57,881 |           | $ | 41,955                               |  | 83.7 | %
|                                      |  |      |        |           |   |                                      |  |      |  

Three notes receivable included in secured and subordinated debt with an estimated fair value of $9.6
million provide that all or a portion of interest is paid in kind or the original issue discount is accreted over the life of the notes, by adding such amount to the principal of the notes. For the remainder of the secured and subordinated debt,
cash payments of interest are currently being received and/or accrued on notes aggregating $13.1 million in fair value, while notes totaling $3.1 million are non-income producing.

The following is a summary by industry of the Funds investments in portfolio securities as of March 31, 2010 (in thousands):



|                               |  |           |        |                                      |      |  
|------------------------------ |  | --------- | ------ | ------------------------------------ | ---- | -
|Industry                       |  | FairValue |        | Fair Value asPercentage ofNet Assets |     
|Entertainment and leisure      |  | $         | 12,690 |                                      | 25.4 | %
|Business products and services |  |           | 12,524 |                                      | 25.0 | %
|Shipping products and services |  |           | 8,174  |                                      | 16.3 | %
|Media                          |  |           | 5,000  |                                      | 10.0 | %
|Alternative energy             |  |           | 2,972  |                                      | 5.9  | %
|Healthcare                     |  |           | 595    |                                      | 1.1  | %
|                               |  |           |        |                                      |      |  
|Total                          |  | $         | 41,955 |                                      | 83.7 | %
|                               |  |           |        |                                      |      |  

The accompanying notes are an integral part of these financial statements.



10



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES

DECEMBER 31, 2009



|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |              |  |   |           
|--------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | ------------------------- | - | ---------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- | ------ | ----------------- | - | ------------ |  | - | ----------
|Name and Location ofPortfolio Company                                                               |  | Industry                       |        | Date of InitialInvestment |   | Investment                                                                                                                   |  | Principal              |        | Cost ofInvestment |   | FairValue(1)
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  | (amounts in thousands)
|Control Investments: Majority-owned(5):                                                            
|Equus Media Development Company, LLC
Houston, TX                                                    |  | Media                          |        | January 2007              |   | Member interest (100%)                                                                                                       |  |                        |        |                   | $ | 5,000        |  | $ | 5,000     
|Riptide Entertainment, LLC
Miami, FL                                                                |  | Entertainment and leisure      |        | December 2005             |   | Member interest (64.67%)
8% promissory notes(4)                                                                              |  | $                      | 10,010 |                   |   | 6510,010     |  |   |   3,151  
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 10,075       |  |   | 3,151     
|Sovereign Business Forms, Inc.
Houston, TX                                                          |  | Business products and services |        | August 1996               |   | 1,214,630 shares of common stock
12% promissory notes(2)                                                                     |  |                        | 3,250  |                   |   | 5,0803,250   |  |   | 4,2563,250
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 8,330        |  |   | 7,506     
|Spectrum Management, LLC
Carrollton, TX                                                             |  | Business products and services |        | December 1999             |   | 285,000 units of Class A member interest
16% subordinated promissory note(2)(3)                                              |  |                        | 1,690  |                   |   | 2,8501,690   |  |   | 3,2081,690
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 4,540        |  |   | 4,898     
|Total Control Investments: Majority-owned (represents 48.5% of total
investments at fair value)     |  | $                              | 27,945 |                           | $ | 20,555                                                                                                                      
|Control Investments: Non-majority owned(6):                                                        
|ConGlobal Industries Holding, Inc.
San Ramon, CA                                                    |  | Shipping products and services |        | February 1997             |   | 24,397,303 shares of common stock
7% promissory note(1)(2)                                                                   |  | $                      | 6,000  |                   | $ | 1,3706,000   |  | $ | 2,1746,000
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 7,370        |  |   | 8,174     
|Total Control Investments: Non-majority Owned (represents 19.3% of total
investments at fair value) |  | $                              | 7,370  |                           | $ | 8,174                                                                                                                       
|Total Control Investments: (represents 67.8% of total investments at fair
value)                    |  | $                              | 35,315 |                           | $ | 28,729                                                                                                                      
|Affiliate Investments(7):                                                                          
|Infinia Corporation                                                                                 |  | Alternative energy             |        | June 2007                 |   | 1,151,800 shares preferred stock                                                                                             |  |                        |        |                   | $ | 8,000        |  | $ | 1,479     
|Kennewick, WA                                                                                       |  |                                |        |                           |   | Option to purchase 16,000 shares common stock at $6.50 per share through December 19, 2012                                   |  |                        |        |                   |   |             |  |   | 11        
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 8,000        |  |   | 1,490     
|Nickent Golf, Inc.
City of Industry, CA                                                             |  | Entertainment and leisure      |        | June 2007                 |   | 8% receivership certificate(4)                                                                                               |  |                        | 50     |                   |   | 50           |  |   | 25        
|                                                                                                    |  |                                |        |                           |   | 3,000,000 shares Class A convertible
preferred stock                                                                         |  |                        |        |                   |   |             |  |   |          
|                                                                                                    |  |                                |        |                           |   | Warrants to buy 15,000 shares of common stock at $0.60 per share through March 17, 2013                                      |  |                        |        |                   |   |             |  |   |          
|                                                                                                    |  |                                |        |                           |   | Warrants to buy 1,434,149 shares of common stock at $0.60 per share through August 16, 2012, warrant terms subject to change |  |                        |        |                   |   |             |  |   |          
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   |             
|                                                                                                    |  |                                |        |                           |   |                                                                                                                              |  |                        |        |                   |   | 50           |  |   | 25        
|PalletOne, Inc.
Bartow, FL                                                                          |  | Shipping products and services |        | October 2001              |   | 350,000 shares of common stock                                                                                               |  |                        |        |                   |   | 350          |  |   |          
|RP&C International Investments LLC
New York, NY                                                     |  | Healthcare                     |        | September 2006            |   | Member interest (17.2%)                                                                                                      |  |                        |        |                   |   | 573          |  |   | 613       
|Total Affiliate Investments (represents 5.0% of total investments at fair
value)                    |  | $                              | 8,973  |                           | $ | 2,128                                                                                                                       

The accompanying notes are an integral part of these financial statements.



11



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES

DECEMBER 31, 2009  (Continued)





|                                                                                      |  |                                |        |                           |   |                                                                                                              |  |                        |       |                   |   |              |  |   |       
|------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | ------------------------- | - | ------------------------------------------------------------------------------------------------------------ |  | ---------------------- | ----- | ----------------- | - | ------------ |  | - | ------
|Name and Location ofPortfolio Company                                                 |  | Industry                       |        | Date of InitialInvestment |   | Investment                                                                                                   |  | Principal              |       | Cost ofInvestment |   | FairValue(1)
|                                                                                      |  |                                |        |                           |   |                                                                                                              |  | (amounts in thousands)
|Non-Affiliate Investments (less than 5% owned):                                      
|1848 Capital Partners LLC
Miami, FL                                                   |  | Entertainment and leisure      |        | January 2008              |   | 18% promissory note(2)(3)                                                                                    |  | $                      | 3,587 |                   | $ | 3,587        |  | $ | 3,587 
|Big Apple Entertainment Partners LLC
New York, NY                                     |  | Entertainment and leisure      |        | October 2007              |   | 18% promissory note(2)(3)                                                                                    |  |                        | 3,153 |                   |   | 3,153        |  |   | 3,153 
|London Bridge Entertainment Partners Ltd
London UK                                    |  | Entertainment and leisure      |        | August 2008               |   | 18% promissory note(2)(3)                                                                                    |  |                        | 2,707 |                   |   | 2,707        |  |   | 2,707 
|The Bradshaw Group
Richardson, TX                                                     |  | Business products and services |        | May 2000                  |   | 576,828 Class B Shares 12.25%
preferred stock                                                                |  |                        |       |                   |   | 1,796        |  |   |      
|                                                                                      |  |                                |        |                           |   | 38,750 Class C shares preferred stock                                                                        |  |                        |       |                   |   |             |  |   |      
|                                                                                      |  |                                |        |                           |   | 788,649 Class D shares 15% preferred stock                                                                   |  |                        |       |                   |   |             |  |   |      
|                                                                                      |  |                                |        |                           |   | 2,218,109 Class E shares 8% preferred stock                                                                  |  |                        |       |                   |   |             |  |   |      
|                                                                                      |  |                                |        |                           |   | Warrant to buy 2,229,450 shares of common stock through May 2016                                             |  |                        |       |                   |   |             |  |   |      
|                                                                                      |  |                                |        |                           |   |                                                                                                              |  |                        |       |                   |   |             
|                                                                                      |  |                                |        |                           |   |                                                                                                              |  |                        |       |                   |   | 1,796        |  |   |       
|Trulite, Inc.
El Dorado Hills, CA                                                     |  | Alternative energy             |        | August 2008               |   | 18% promissory note(2)(3)                                                                                    |  |                        | 2,107 |                   |   | 2,107       |  |   | 2,107
|                                                                                      |  |                                |        |                           |   | Warrants to buy 6,934,211 sharesof common stock ranging fromat $0.01 - $0.38 per share through November 2015 |  |                        |       |                   |   |             |  |   |      
|                                                                                      |  |                                |        |                           |   |                                                                                                              |  |                        |       |                   |   |             
|                                                                                      |  |                                |        |                           |   |                                                                                                              |  |                        |       |                   |   | 2,107        |  |   | 2,107 
|Total Non-Affiliate Investments (represents 27.2% of total investments at
fair value) |  | $                              | 13,350 |                           | $ | 11,554                                                                                                      
|Total Investments                                                                     |  | $                              | 57,638 |                           | $ | 42,411                                                                                                      



|(1) | See Note 3 to the financial statements, Valuation of Investments.
|--- | -----------------------------------------------------------------

|(2) | Income-producing.
|--- | -----------------

|(3) | Income on these securities is paid-in-kind by the issuance of additional securities, accrual to maturity or through accretion of original issue discount.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Non-income producing.
|--- | ---------------------

|(5) | Majority owned investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns more than 50% of the voting securities of
the company.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Non-majority owned control investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns more than 25% but not more
than 50% of the voting securities of the company.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Affiliate investments are generally defined under the Investment Company Act of 1940 as companies in which the Fund owns at least 5% but not more than 25% voting
securities of the company.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these financial statements.



12



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

SCHEDULE OF PORTFOLIO SECURITIES  (Continued)

DECEMBER 31, 2009

Substantially all of the Funds portfolio securities are restricted from public sale without prior registration under the Securities
Act of 1933. The Fund negotiates certain aspects of the method and timing of the disposition of the Funds investment in each portfolio company, including registration rights and related costs.

As defined in the Investment Company Act of 1940, all of the Funds investments are in eligible portfolio companies. The Fund
provides significant managerial assistance to all of the portfolio companies in which it has invested. The Fund provides significant managerial assistance to portfolio companies that comprise 77.7% of the total value of the investments in portfolio
securities as of December 31, 2009.

The Funds investments in portfolio securities consist of the following types
of securities at December 31, 2009 (in thousands):



|                                      |  |      |        |           |   |                                      |  |      |  
|------------------------------------- |  | ---- | ------ | --------- | - | ------------------------------------ |  | ---- | -
|Type of Securities                    |  | Cost |        | FairValue |   | Fair Value asPercentage ofNet Assets | 
|Secured and subordinated debt         |  | $    | 32,555 |           | $ | 25,671                               |  | 50.5 | %
|Limited liability company investments |  |      | 8,488  |           |   | 8,820                                |  | 17.3 | %
|Common stock                          |  |      | 6,800  |           |   | 6,430                                |  | 12.6 | %
|Preferred stock                       |  |      | 9,795  |           |   | 1,479                                |  | 2.9  | %
|Options and warrants                  |  |      |       |           |   | 11                                   |  | 0.0  | %
|                                      |  |      |        |           |   |                                      |  |      |  
|Total                                 |  | $    | 57,638 |           | $ | 42,411                               |  | 83.3 | %
|                                      |  |      |        |           |   |                                      |  |      |  

Three notes receivable included in secured and subordinated debt with an estimated fair value of $9.4
million provide that all or a portion of interest is paid-in-kind or the original issue discount is accreted over the life of the notes, by adding such amount to the principal of the notes. For the remainder of secured and subordinated debt, cash
payments of interest are currently being received and/or accrued on notes aggregating $13.1 million in fair value, while notes totaling $3.2 million are non-income producing.

The following is a summary by industry of the Funds investments as of December 31, 2009 (in thousands):



|                               |  |           |        |                                      |      |  
|------------------------------ |  | --------- | ------ | ------------------------------------ | ---- | -
|Industry                       |  | FairValue |        | Fair Value asPercentage ofNet Assets |     
|Entertainment and leisure      |  | $         | 12,624 |                                      | 24.8 | %
|Business products and services |  |           | 12,403 |                                      | 24.4 | %
|Shipping products and services |  |           | 8,174  |                                      | 16.1 | %
|Alternative energy             |  |           | 3,597  |                                      | 7.1  | %
|Media                          |  |           | 5,000  |                                      | 9.8  | %
|Healthcare                     |  |           | 613    |                                      | 1.1  | %
|                               |  |           |        |                                      |      |  
|Total                          |  | $         | 42,411 |                                      | 83.3 | %
|                               |  |           |        |                                      |      |  

The accompanying notes are an integral part of these financial statements.



13



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##### Table of Contents

EQUUS TOTAL RETURN, INC.

NOTES TO FINANCIAL STATEMENTS

March 31, 2010 AND 2009

(Unaudited)

(1) Description
of Business and Basis of Presentation

Description of BusinessEquus Total Return, Inc. (the Fund,
EQS), formerly Equus II Incorporated, a Delaware corporation, was formed by Equus Investments II, L.P. (the Partnership) on August 16, 1991. On July 1, 1992, the Partnership was reorganized and all of the assets and
liabilities of the Partnership were transferred to the Fund in exchange for shares of common stock of the Fund. The shares of the Fund trade on the New York Stock Exchange under the symbol EQS. On August 11, 2006, shareholders of the Fund
approved the change of the Funds investment strategy to a total return investment objective. This strategy seeks to provide the highest total return, consisting of capital appreciation and current income. In connection with this strategic
investment change, the shareholders also approved the change of name from Equus II Incorporated to Equus Total Return, Inc.

The Fund seeks to achieve capital appreciation by making investments in equity and equity-oriented securities issued by privately-owned
companies in transactions negotiated directly with such companies. The Fund seeks to invest primarily in companies which intend to grow either by acquiring other businesses, including leveraged buyouts, or organically. The Fund may also invest in
recapitalizations of existing businesses or special situations from time to time. The Fund also invests in debt financing with the objective of generating regular interest income back to the Fund. Debt financing may also be used to create long-term
capital appreciation through the exercise and sale of warrants received in connection with the financing. The Fund elected to be treated as a business development company under the Investment Company Act of 1940 (1940 Act). For tax
purposes, the Fund has elected to be treated as a regulated investment company (RIC). With shareholder approval on June 30, 2005, the Fund entered into a new investment advisory agreement with Moore Clayton Capital Advisors, Inc.
(the Adviser). Prior to this agreement, the Funds adviser was Equus Capital Management Corporation. On June 12, 2009, the Fund and its Board of Directors announced plans to internalize Fund management. The
Funds investment advisory agreement with the Adviser terminated on June 30, 2009. The Fund now directly employs its management team and incurs the costs and expenses associated with Fund operations. There is no outside
investment advisory organization providing services to the Fund under a fee-based advisory agreement, or an administrative organization charging the Fund for services rendered.

Effective August 11, 2006, the Fund began to employ a total return investment style. The total return style combines both
growth and income investments and is intended to strike a balance between the potential for gain and the risk of loss. In the growth category, the Fund is a growth-at- reasonable-price investor. The Fund invests primarily in
privately owned companies and is open to virtually any potential growth investment in the privately owned arena. However, the Funds primary aim is to identify and acquire only those equity securities that meet its criteria for selling at
reasonable prices. The income investments made by the Fund consist principally of purchasing debt financing with the objective of generating regular interest income back to the fund as well as long-term capital appreciation through the
exercise and sale of warrants received in connection with the financing.

Basis of PresentationIn
accordance with Article 6 of Regulation S-X under the Securities Act of 1933 and Securities Exchange Act of 1934, the Fund does not consolidate portfolio company investments, including those in which it has a controlling interest. The Funds
interim consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and in accordance with the requirements of reporting on
Form 10-Q and Article 10 of Regulation S-X, under the Securities Exchange Act of 1934, as amended. Accordingly, they are unaudited and exclude some disclosures required for annual financial statements. Management believes it has made all
adjustments, consisting solely of normal recurring accruals, necessary for the fair presentation of these interim financial statements.

The results of operations for the three months ended March 31, 2010 are not necessarily indicative of results that ultimately may be
achieved for the year. The interim unaudited consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Funds Form 10-K for the fiscal year ended
December 31, 2009, as filed with the Security and Exchange Commission (SEC). Certain prior period information has been reclassified to conform to current year presentation.

(2) Liquidity and Financing Arrangements

LiquidityThere are several factors that may materially affect the Funds liquidity during the reasonably foreseeable
future. The Fund views this period as the twelve month period from the date of the financial statements in this Form 10-Q, i.e., the period through March 31, 2011.



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Management is evaluating the impact of current market conditions on its portfolio company
valuations and their ability to provide current income. Management has followed valuation techniques in a consistent manner; however, it is cognizant of current market conditions that might effect future valuations of portfolio securities. The Fund
believes that its operating cash flow and cash on hand will be sufficient to meet operating requirements and to finance routine capital expenditures through the next twelve months.

Cash and Temporary InvestmentsAs of March 31, 2010, the Fund had cash and temporary cash investments of $5.7 million.
The Fund had $42.0 million of its net assets of $50.2 million invested in portfolio securities. Restricted assets totaled $21.2 million, of which $21.0 million were invested in U.S. Treasury Bills for the purpose of satisfying the diversification
requirement to maintain the Funds pass-through tax treatment and $0.2 million for the required 1% brokerage deposit. These securities are held by a securities brokerage firm and are pledged along with cash to secure the payment of the margin
account balance. The U.S. Treasury bills were sold and the margin loan was repaid to the brokerage firm on April 1, 2010.

As of December 31, 2009, the Fund had cash and temporary cash investments of $6.0 million. The Fund had $42.4 million of its net
assets of $50.9 million invested in portfolio securities. Restricted assets totaled $30.3, of which $30.0 million were invested in U.S. Treasury Bills for the purpose of satisfying the diversification requirement to maintain the Funds
pass-through tax treatment and $0.3 million for the required 1% brokerage deposit. These securities are held by a securities brokerage firm and are pledged along with cash to secure the payment of the margin account balance. The U.S. Treasury bills
were sold and the margin loan was repaid to the brokerage firm on January 4, 2010.

Dividends On
March 24, 2009, the Fund announced that it suspended its managed distribution policy and payment of quarterly distributions for an indefinite period. As originally implemented, the policy provided for quarterly dividends at an annualized rate
equal to 10% of the Funds market value per share as at the end of the preceding calendar year. The Fund will continue to pay out net investment income and/or realized capital gains, if any, on an annual basis as required under the Investment
Company Act of 1940.

Revolving Line of Credit Agreement Effective February 15, 2010,
the Fund modified and extended its revolving line of credit agreement (the Credit Facility) with Amegy Bank of Texas. The Credit Facility was reduced to $5.0 million from $7.5 million and the maturity was extended to July 2011. The line
of credit is intended to enable the Fund to make follow-on investments, when necessary. The Fund can borrow up to $5.0 million under the Credit Facility, subject to a borrowing base equal to 20% of the value of the Funds eligible portfolio
assets. The Credit Facility bears a floating interest rate of the higher of (a) the Federal Funds Rate
plus1/2
 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Lender as its prime rate. The Credit Facility is secured by substantially all of the Funds portfolio assets and securities.
It contains certain restrictive covenants, including, but not limited to, the maintenance of certain financial ratios and certain limitations on indebtedness, liens, sales of assets, mergers and transactions with affiliates all of which the Fund is
in compliance as of March 31, 2010. To date, the Fund has not borrowed any amounts under the Credit Facility.

Investment CommitmentsAs of March 31, 2010, the Fund had no outstanding commitments to its portfolio company
investments.

Under certain circumstances, the Fund may be called on to make follow-on investments in certain portfolio
companies. If the Fund does not have sufficient funds to make follow-on investments, the portfolio company in need of the investment may be negatively impacted. Also, the Funds equity interest in the estimated fair value of the portfolio
company could be reduced.

RIC Borrowings, Restricted Cash and Temporary InvestmentsAs of March 31, 2010 and
December 31, 2009, the Fund borrowed sufficient funds to maintain the Funds RIC status by utilizing a margin account with a securities brokerage firm. There is no assurance that such arrangement will be available in the future. If the
Fund is unable to borrow funds to make qualifying investments, it may no longer qualify as a RIC. The Fund would then be subject to corporate income tax on the Funds net investment income and realized capital gains, and distributions to
stockholders would be subject to income tax as ordinary dividends. Failure to continue to qualify as a RIC could be material to us and the Funds stockholders.

As of March 31, 2010, the Fund borrowed $21.0 million to make qualifying investments to maintain its RIC status by utilizing a
margin account with a securities brokerage firm. The Fund collateralized such borrowings with restricted cash and temporary investments in U.S. Treasury bills of $21.2 million. The U.S. Treasury bills were sold and the total amount borrowed was
repaid on April 1, 2010.

As of December 31, 2009, the Fund borrowed $30.0 million to make qualifying investments to
maintain its RIC status by utilizing a margin account with a securities brokerage firm. The Fund collateralized such borrowings with restricted cash and temporary investments in U.S. Treasury bills of $30.3 million. The U.S Treasury bills were sold
on January 4, 2010 and the total amount borrowed was repaid at that time.



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##### Table of Contents

Certain Risks and Uncertainties Economic conditions during 2009 and 2008 and
market dislocations resulted in the availability of debt and equity capital declining significantly. Generally, the limited amount of available debt financing has shorter maturities, higher interest rates and fees, and more restrictive terms than
debt facilities available in the past. In addition, during 2009 the price of our common stock continued to fall well below our net asset value, thereby making it undesirable to issue additional shares of our common stock. Because of these
challenges, our near-term strategies shifted from originating debt and equity investments to preserving liquidity necessary to meet our operational needs. Key initiatives that we undertook during 2009 to provide necessary liquidity include
monetizations, the suspension of dividends and the internalization of management. Although there can be no assurances that such initiatives will be sufficient, we believe we have sufficient liquidity to meet our 2010 operating requirements.

(3) Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements:

Use of EstimatesThe preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Although management believes the estimates and assumptions used in preparing
these interim financial statements and related notes are reasonable in light of known facts and circumstances, actual results could differ from those estimates.

Valuation of InvestmentsPortfolio investments are carried at fair value with the net change in unrealized appreciation or
depreciation included in the determination of net assets. Valuations of portfolio securities are performed in accordance with accounting principles generally accepted in the United States of America and the financial reporting policies of the SEC.
The applicable methods prescribed by such principles and policies are described below:

Publicly-traded
portfolio securitiesInvestments in companies whose securities are publicly traded are generally valued at their quoted market price at the close of business on the valuation date.

Privately-held portfolio securitiesThe fair value of investments for which no market exists is determined on
the basis of procedures established in good faith by the Board of Directors of the Fund. As a general principle, the current fair value of an investment would be the amount the Fund might reasonably expect to receive for it upon its
current sale, in an orderly manner. Appraisal valuations are necessarily subjective and the estimated values arrived at by the Funds board of directors may differ materially from amounts actually received upon the disposition of portfolio
securities.

Generally, cost is the primary factor used to determine fair value until significant developments affecting the
portfolio company (such as results of operations or changes in general market conditions) provide a basis for use of an appraisal valuation. Appraised values are determined quarterly by management, subject to the approval of the Board of Directors.

Most of the Funds common equity investments of privately held companies are appraised at a multiple of free cash flow
generated by the company in its most recent fiscal year, less outstanding funded indebtedness and other senior securities such as preferred stock. Projections of current year free cash flow may be utilized and adjustments for non-recurring items are
considered. Multiples utilized are estimated based on past experience in the private company marketplace, and are necessarily subjective in nature.

From time to time, portfolio companies are in default of certain covenants in their loan agreements. When management has a reasonable
belief that the portfolio company will be able to restructure the loan agreements to adjust for any defaults, the portfolio companys securities continue to be valued assuming that the company is a going concern. In the event a portfolio
company cannot generate adequate cash flow to meet the principal and interest payments on such indebtedness or is not successful in refinancing the debt upon its maturity, the Funds investment could be reduced or eliminated through foreclosure
on the portfolio companys assets or the portfolio companys reorganization or bankruptcy.

The Fund may also use,
when available, third-party transactions in a portfolio companys securities as the basis of valuation (the private market method). The private market method will be used only with respect to completed transactions or firm offers
made by sophisticated, independent investors.

For valuation purposes, the Fund uses the income approach to value its debt
instruments. Since the Funds general intent is to hold its loans to maturity, the fair value will not exceed the cost of the investment. A change in the assumptions that the Fund uses to estimate the fair value of its debt securities using the
yield analysis could have a material impact on the



16



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##### Table of Contents

determination of fair value. If there is deterioration in credit quality or a debt security is in workout status, the Fund may consider other factors in determining the fair value of the debt
security, including the fair value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. The Funds general intent is to hold its debt investments
to maturity. Accordingly, the fair value of the debt investments will not exceed the cost of the investment. Certificates of deposit purchased by the Fund generally will be valued at their face value, plus interest accrued to the date of valuation.

The Audit Committee of the Board may engage independent, third-party valuation firms to conduct independent appraisals and
review managements preliminary valuations in order to make their own independent assessment of each privately-held investment that the Fund (a) has held for more than one year and (b) holds on its books at a fair value of at least
$2.0 million. The Audit Committee will review and evaluate the preliminary valuations of management and those of any third-party valuations firms, if so retained, and will review and evaluate any third-party firm supplements to reflect any comments
from management and/or Audit Committee members. Any third-party valuation data would be considered as one of many factors in a fair value determination. The Audit Committee then would recommend to the full Board fair values for all privately-held
securities based on all relevant factors.

Because of the inherent uncertainty of the valuation of portfolio securities which
do not have readily ascertainable market values, amounting to $42.0 million and $42.4 million as of March 31, 2010 and December 31, 2009, respectively, the Funds fair value determinations may materially differ from the values that
would have been used had a ready market existed for the securities. There were no publicly traded securities as of March 31, 2010 and December 31, 2009.

On a daily basis, the Fund adjusts its net asset value for the changes in the value of its publicly held securities and material changes
in the value of its private securities and reports those amounts to Lipper Analytical Services, Inc. Weekly and daily net asset values appear in various publications, including Barrons and The Wall Street Journal.

Investment TransactionsInvestment transactions are recorded on the accrual method. Realized gains and losses on investments
sold are computed on a specific identification basis.

The Fund classifies its investments in accordance with the requirements
of the 1940 Act. Under the 1940 Act, Control Investments are defined as investments in companies in which EQS owns more than 25% of the voting securities or maintains greater than 50% of the board representation. Under the 1940 Act,
Affiliate Investments are defined as those non-control investments in companies in which EQS owns between 5% and 25% of the voting securities. Under the 1940 Act, Non-affiliate Investments are defined as investments that are
neither Control Investments nor Affiliate Investments.

Interest Income RecognitionThe Fund records interest
income, adjusted for amortization of premium and accretion of discount, on an accrual basis to the extent that it expects to collect such amounts. The Fund accretes or amortizes discounts and premiums on securities purchased over the life of the
respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discount and/or amortization of premium on debt securities. The Fund stops accruing interest on
investments when it determines that interest is no longer collectible. If the Fund receives any cash after determining that interest is no longer collectible, it treats such cash as payment on the principal balance until the entire principal balance
has been repaid, before it recognizes any additional interest income.

Payment in Kind InterestThe Fund has loans
in its portfolio that may pay payment in kind (PIK) interest. The Fund adds PIK interest, if any, computed at the contractual rate specified in each loan agreement, to the principal balance of the loan and recorded as interest income. To
maintain its status as a RIC, the Fund must pay out to stockholders this non-cash source of income in the form of dividends even if it has not yet collected any cash in respect of such investments.

Cash FlowsFor purposes of the Statements of Cash Flows, the Fund considers all highly liquid temporary cash investments
purchased with an original maturity of three months or less to be cash equivalents. The Fund includes its investing activities within cash flows from operations. The Fund excludes Restricted Cash & Temporary Investments used for
purposes of complying with RIC requirements from cash equivalents.

Income TaxesThe Fund intends to comply with
the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which is distributed to
stockholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund borrows money from time to time to maintain its tax status under the Internal Revenue Code as a RIC. See Note 2 for further discussion
of the Funds RIC borrowings.

Texas margin tax applies to legal entities conducting business in Texas, including
previously non-taxable entities such as limited partnerships and limited liability partnerships. The margin tax is based on our Texas sourced taxable margin. The tax is calculated by applying a tax rate to a base that considers both revenue and
expenses and therefore has the characteristics of an income tax.



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##### Table of Contents

Fair Value Measurement In September 2006, the Financial Accounting Standard
Board (FASB) issued guidance regarding Fair Value Measurementswhich defined fair value, establishes a framework for measuring fair value, outlined a fair value hierarchy based on inputs used to measure fair value and enhanced
disclosure requirements for fair value measurements. The guidance did not change existing guidance as to whether an instrument is carried at fair value. The Fund adopted changes issued by the FASB to fair value disclosures of financial instruments
which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Fund has categorized all investments recorded at fair value based upon the level of judgment associated with the inputs used to
measure their fair value. Hierarchical levels, directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:

Level 1  Inputs are unadjusted, quoted prices in active markets for identical assets at the measurement date. The types of assets
carried at Level 1 fair value generally are equities listed in active markets.

Level 2  Inputs (other than quoted prices
included in Level 1) are either directly or indirectly observable for the asset in connection with market data at the measurement date and for the extent of the instruments anticipated life. Fair valued assets that are generally included in
this category are warrants held in a public company.

Level 3  Inputs reflect managements best estimate of what
market participants would use in pricing the asset at the measurement date. It includes prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. Generally, assets carried at fair value and
included in this category are debt, warrants and/or other equity investments held in a private company. For loan and debt securities, the Fund has performed a yield analysis assuming a hypothetical current sale of the security. The yield analysis
considers changes in interest rates and changes in leverage levels of the portfolio company as compared to the market interest rates and leverage levels. Assuming the credit quality of the portfolio company remains stable, the Fund will use the
value determined by the yield analysis as the fair value for that security.

The Fund will record unrealized depreciation on
investments when it determines that the fair value of a security is less than its cost basis, and will record unrealized appreciation when it determines that the fair value is greater than its cost basis.

As of March 31, 2010, investments measured at fair value on a recurring basis are categorized in the tables below based on the
lowest level of significant input to the valuations:



|                                    |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       
|----------------------------------- |  | ----- | ------ | ----------------------------------------------------------- | - | ------------------------------------------- |  | --------------------------------------- | - |  | - | ------
|                                    |  |       |        | Fair Value Measurements As of March 31, 2010               
|(in thousands)                      |  | Total |        | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant
OtherObservable Inputs(Level 2) |  | SignificantUnobservableInputs(Level
 3)
|Assets                              |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       
|Investments:                        |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       
|Control investments                 |  | $     | 28,726 |                                                             | $ |                                            |  | $                                       |  |  | $ | 28,726
|Affiliate investments               |  |       | 1,310  |                                                             |   |                                            |  |                                         |  |  |   | 1,310 
|Non-Affiliate investments           |  |       | 11,919 |                                                             |   |                                            |  |                                         |  |  |   | 11,919
|                                    |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       
|Total assets reported at fair value |  | $     | 41,955 |                                                             | $ |                                            |  | $                                       |  |  | $ | 41,955
|                                    |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       
|                                    |  |      
|                                    |  |       |        | Fair Value Measurements As of December 31, 2009            
|(in thousands)                      |  | Total |        | Quoted Prices inActive Markets forIdentical Assets(Level 1) |   | Significant OtherObservable Inputs(Level 2) |  | SignificantUnobservableInputs(Level 3) 
|Assets                              |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       
|Investments:                        |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       
|Control investments                 |  | $     | 28,729 |                                                             | $ |                                            |  | $                                       |  |  | $ | 28,729
|Affiliate investments               |  |       | 2,128  |                                                             |   |                                            |  |                                         |  |  |   | 2,128 
|Non-Affiliate investments           |  |       | 11,554 |                                                             |   |                                            |  |                                         |  |  |   | 11,554
|                                    |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       
|Total assets reported at fair value |  | $     | 42,411 |                                                             | $ |                                            |  | $                                       |  |  | $ | 42,411
|                                    |  |       |        |                                                             |   |                                             |  |                                         |   |  |   |       



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##### Table of Contents

The following table provides a reconciliation of fair value changes during the three months
ending March 31, 2010 for all investments for which we determine fair value using unobservable (Level 3) factors:



|                                                                                                                                                                                                              |  |                                                                          |        |   |                      |   |        |                          |  |       |        |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------ | ------ | - | -------------------- | - | ------ | ------------------------ |  | ----- | ------ |  | - | ------ | -
|                                                                                                                                                                                                              |  | Fair value measurements using significant unobservable inputs 
(Level 3) |       
|(in thousands)                                                                                                                                                                                                |  | ControlInvestments                                                       |        |   | AffiliateInvestments |   |        | Non-affiliateInvestments |  | Total |       
|Fair value as of December 31, 2009                                                                                                                                                                            |  | $                                                                        | 28,729 |   |                      | $ | 2,128  |                          |  | $     | 11,554 |  | $ | 42,411 |  
|Total realized losses                                                                                                                                                                                         |  |                                                                          |       |   |                      |   |       |                          |  |       |       |  |   |       |  
|Change in unrealized appreciation (depreciation)                                                                                                                                                              |  |                                                                          | 119    |   |                      |   | (818   | )                        |  |       |       |  |   | (699   | )
|Purchases, issuances and settlements, net                                                                                                                                                                     |  |                                                                          | (122   | ) |                      |   |       |                          |  |       | 365    |  |   | 243    |  
|                                                                                                                                                                                                              |  |                                                                          |        |   |                      |   |        |                          |  |       |        |  |   |        |  
|Fair value as of March 31, 2010                                                                                                                                                                               |  | $                                                                        | 28,726 |   |                      | $ | 1,310  |                          |  | $     | 11,919 |  | $ | 41,955 |  
|                                                                                                                                                                                                              |  |                                                                          |        |   |                      |   |        |                          |  |       |        |  |   |        |  
|                                                                                                                                                                                                             
|The following table provides a reconciliation of fair value changes during the three months ending March 31, 2009 for all
investments for which we determine fair value using unobservable (Level 3) factors: | 
|                                                                                                                                                                                                              | 
|                                                                                                                                                                                                              |  | Fair value measurements using unobservable inputs (Level 
3)             |       
|(in thousands)                                                                                                                                                                                                |  | ControlInvestments                                                       |        |   | AffiliateInvestments |   |        | Non-affiliateInvestments |  | Total |       
|Fair value as of December 31, 2008                                                                                                                                                                            |  | $                                                                        | 36,885 |   |                      | $ | 20,974 |                          |  | $     | 10,135 |  | $ | 67,994 |  
|Change in unrealized appreciation                                                                                                                                                                             |  |                                                                          | (505   | ) |                      |   | 1,479  |                          |  |       |       |  |   | 974    |  
|Purchases, issuances and settlements, net                                                                                                                                                                     |  |                                                                          | 350    |   |                      |   | 320    |                          |  |       | 332    |  |   | 1,002  |  
|                                                                                                                                                                                                              |  |                                                                          |        |   |                      |   |        |                          |  |       |        |  |   |        |  
|Fair value as of March 31, 2009                                                                                                                                                                               |  | $                                                                        | 36,730 |   |                      | $ | 22,773 |                          |  | $     | 10,467 |  | $ | 69,970 |  
|                                                                                                                                                                                                              |  |                                                                          |        |   |                      |   |        |                          |  |       |        |  |   |        |  

ReclassificationCertain amounts for the three months ended March 31, 2009 have been
reclassified in the comparative financial statements to be comparable to the presentation in the three months ended March 31, 2010. These reclassifications had no effect on net assets, net income or cash flows from operating activities.

(4) Related Party Transactions and Agreements

The Fund had entered into an investment advisory agreement dated June 30, 2005 with Moore Clayton Capital Advisors, Inc., pursuant to
which Moore Clayton Capital Advisors, Inc. provided investment advisory services in exchange for an advisory fee. The Fund also had entered into an administration agreement dated June 30, 2005 with Equus Capital Administration Company, Inc.,
pursuant to which Equus Capital Administration Company, Inc. provided administrative services in exchange for an administrative fee. The Funds Board of Directors terminated the advisory agreement and the administrative agreement effective
June 30, 2009. The Fund is now internally managed. This means that the Fund directly employs its management team and incur the costs and expenses associated with Fund operations. There is no outside investment advisory organization
providing services to the Fund under a fee-based advisory agreement, or an administrative organization charging the Fund for services rendered since June 30, 2009.

As compensation for services to the Fund, each Independent Director receives an annual fee of $20,000 paid quarterly in arrears, a fee of
$2,000 for each meeting of the Board of Directors attended in person, a fee of $1,000 for participation in each telephonic meeting of the Board and a fee of $1,000 for each committee meeting attended, and reimbursement of all out-of-pocket expenses
relating to attendance at such meetings. A quarterly fee of $2,500 is paid to the Chairman of the Independent Directors and the Chairman of the Audit Committee. An annual fee of $15,000 is paid to the Chairman of the Board of Directors.



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(5) Dividends

On February 27, 2009, the Fund announced the declaration of a first quarter dividend of $0.1075 per share. The Fund issued 296,528
additional shares of its common stock at an effective price of $3.10 per share and paid $2,000 in cash for fractional shares. This dividend was 100% qualified and classified as 21% ordinary income and 79% return of capital.

On March 24, 2009, the Fund announced that it suspended its managed distribution policy and payment of quarterly distributions for
an indefinite period, following the distribution of the first quarter dividend, paid on March 30, 2009. The Fund will continue to pay out net investment income and/or realized capital gains, if any, on an annual basis as required under the
Investment Company Act of 1940.

(6) Portfolio Securities

During the three months ended March 31, 2010, the Fund had investment activity of $0.4 million in several follow-on investments,
including $0.2 million in the form of accrued interest and dividends received in the form of paid-in-kind (PIK).



20



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##### Table of Contents

The following table includes significant investment activity during the quarter ended
March 31, 2010 (in thousands):



|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |    
|---------------------------------------- |  | --------------- | - | -------------------- | - | --------- |  | --- | --- | ----- | - | --- |  | - | ---
|                                         |  | New Investments |   | Existing Investments |   |          
|Portfolio Company                        |  | Cash            |   | PIK                  |   | Follow-On |  | PIK |     | Total
|TruLite, Inc.                            |  | $               |  |                      | $ |          |  | $   | 200 |       | $ |    |  | $ | 200
|1848 Capital Partners LLC                |  |                 |  |                      |   |          |  |     |    |       |   | 71  |  |   | 71 
|London Bridge Entertainment Partners Ltd |  |                 |  |                      |   |          |  |     |    |       |   | 54  |  |   | 54 
|Big Apple Entertainment Partners LLC     |  |                 |  |                      |   |          |  |     |    |       |   | 40  |  |   | 40 
|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |    
|                                         |  | $               |  |                      | $ |          |  | $   | 200 |       | $ | 165 |  | $ | 365
|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |    

Net unrealized depreciation on investments increased
by $0.7 million during the three months ended March 31, 2010, to a net unrealized depreciation of $15.9 million. Such increase in depreciation resulted primarily from decrease in estimated fair market value of Infinia Corporation of ($0.8)
million, Riptide Entertainment LLC of ($0.1) million and Spectrum Management, LLC of ($0.2) million, resulting from declining sales and trailing operations for the period. These decreases in estimated fair market value were partially offset by the
increase in fair market value of Sovereign Business Forms, Inc. of $0.4 million, resulting from an increase in operations.

During the three months ended March 31, 2009, the Fund had investment activity of $1.0 million in several portfolio companies,
including $0.3 million in the form of accrued interest and dividends received in the form of paid-in-kind (PIK).

The
following table includes significant investment activity during the quarter ended March 31, 2009 (in thousands):



|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |      
|---------------------------------------- |  | --------------- | - | -------------------- | - | --------- |  | --- | --- | ----- | - | --- |  | - | -----
|                                         |  | New Investments |   | Existing Investments |   |          
|Portfolio Company                        |  | Cash            |   | PIK                  |   | Follow-on |  | PIK |     | Total
|Riptide Entertainment, LLC               |  | $               |  |                      | $ |          |  | $   | 350 |       | $ |    |  | $ | 350  
|Nickent Golf, Inc.                       |  |                 |  |                      |   |          |  |     | 320 |       |   |    |  |   | 320  
|1848 Capital Partners LLC                |  |                 |  |                      |   |          |  |     |    |       |   | 244 |  |   | 244  
|London Bridge Entertainment Partners Ltd |  |                 |  |                      |   |          |  |     |    |       |   | 50  |  |   | 50   
|Big Apple Entertainment Partners LLC     |  |                 |  |                      |   |          |  |     |    |       |   | 38  |  |   | 38   
|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |      
|                                         |  |                 |   |                      |   |           |  | $   | 670 |       | $ | 332 |  | $ | 1,002
|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |      

Net unrealized depreciation on investments decreased
by $1.1 million during the three months ended March 31, 2009, from a net unrealized depreciation of $3.0 million to a net unrealized depreciation of $1.9 million. Such decrease in depreciation resulted primarily from increase in estimated
fair market value of Infinia Corporation of $1.8 million and Spectrum Management, Inc. of $0.9 million, resulting from an increase in operations for the period. These increases were partially offset by the decrease in fair market value of Sovereign
Business Forms, Inc. of ($0.5) million and ConGlobal Industries Holdings, Inc. of $(0.9) million, resulting from declining sales and trailing operations.

(9) Recent Accounting Pronouncements

Effective January 1, 2010, the Fund adopted changes issued by the FASB to add new requirements for disclosures about significant transfers
into and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements. In addition, the update clarifies existing fair value disclosures about the level of disaggregation and about
inputs and valuation techniques used to measure fair value. The adoption of this standard had no impact on our financial position and results of operations.



21



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##### Table of Contents

In January 2010, the FASB issued changes to disclosure requirements for fair value
measurements. Specifically, the changes require a reporting entity to disclose, in the reconciliation of fair value measurements using significant unobservable inputs (Level 3), separate information about purchases, sales, issuances, and settlements
(that is, on a gross basis rather than as one net number). These changes become effective for the Fund beginning January 1, 2011. Other than the additional disclosure requirements, the Fund does not anticipate that the adoption of this standard
will have a material effect on our financial position and results of operations

(10) Subsequent Events

Management performed an evaluation of the Funds events and transactions through the date the financial statements were available to
be issued, noting the following subsequent events:

On April 1, 2010, the Fund sold U.S. Treasury bills for $21.0 million
and repaid the margin loan.

On April 30, 2010, the Fund received $0.02 million from Sovereign Business Forms, Inc. in
the form of a principal payment.

On May 12, 2010, the Fund held its annual meeting of shareholders. The purpose of
the meeting was to elect nine directors and to ratify the appointment of UHY LLP as the Funds independent auditor for fiscal year ending December 31, 2010. As of the filing of this Form 10-Q, the meeting results had not yet been
certified.



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Overview

Equus
Total Return, Inc. is a business development company which invests in equity and equity-oriented securities issued by privately-owned companies in transactions negotiated directly with such companies. The Fund did not make any new investments other
than follow-on investments during the three months ended March 31, 2010 and March 31, 2009.

The valuation of the
Funds investments is the most significant area of judgment impacting the financial statements. The Funds portfolio investments are valued at estimates of fair value, with the net change in unrealized appreciation or depreciation included
in the determination of net assets. Almost all of the long-term investments are in privately-held or restricted securities, the valuation of which is necessarily subjective. Actual values may differ materially from the Funds estimated fair
value.

Most of the Funds portfolio companies utilize leverage, and the leverage magnifies the return on its
investments. For example, if a portfolio company has a total enterprise value of $10.0 million and $7.5 million in funded indebtedness, its equity is valued at $2.5 million. If the enterprise value increases or decreases by 20%, to $12.0 million or
$8.0 million, respectively, the value of the equity increases or decreases by 80%, to $4.5 million or $0.5 million, respectively. This disproportionate increase or decrease adds a level of volatility to the Funds equity-oriented portfolio
securities.

On June 12, 2009, the Fund and its Board of Directors announced plans to internalize Fund
management. The Funds investment advisory agreement with the Adviser terminated June 30, 2009. The Fund now directly employs its management team and incurs the costs and expenses associated with Fund operations. There is no
outside investment advisory organization providing services to the Fund under a fee-based advisory agreement, or an administrative organization charging the Fund for services rendered.

The Fund derives its cash flow from interest and dividends received and sales of securities from its investment portfolio. The Fund pays
certain general and administrative fees and interest expense on its existing debt. The Fund also spends its cash on new investments, or follow-on investments which may be required by certain portfolio companies. Because the investments are illiquid,
the Fund utilizes leverage to provide the required funds, and the leverage is then repaid from the sale of portfolio securities.

Since the Fund is a closed-end business development company, stockholders have no right to present their shares to the Fund for
redemption. Because the shares continue to trade at a discount, the Board of Directors has determined that it would be in the best interest of the Funds stockholders for the Fund to be authorized to attempt to reduce or eliminate the market
value discount from net asset value. Accordingly, from time to time the Fund may, but is not required to, repurchase its shares (including by means of tender offers) to attempt to reduce or eliminate the discount or to increase the net asset value
of those shares.



22



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##### Table of Contents

Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements:

Use of EstimatesThe preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Although management believes the estimates and assumptions used in preparing
these interim financial statements and related notes are reasonable in light of known facts and circumstances, actual results could differ from those estimates.

Valuation of InvestmentsPortfolio investments are carried at fair value with the net change in unrealized appreciation or
depreciation included in the determination of net assets. Valuations of portfolio securities are performed in accordance with accounting principles generally accepted in the United States of America and the financial reporting policies of the SEC.
The applicable methods prescribed by such principles and policies are described below:

Publicly-traded portfolio
securitiesInvestments in companies whose securities are publicly traded are generally valued at their quoted market price at the close of business on the valuation date.

Privately-held portfolio securitiesThe fair value of investments for which no market exists is determined on the basis of
procedures established in good faith by the Board of Directors of the Fund. As a general principle, the current fair value of an investment would be the amount the Fund might reasonably expect to receive for it upon its current sale, in
an orderly manner. Appraisal valuations are necessarily subjective and the estimated values arrived at by the Funds board of directors may differ materially from amounts actually received upon the disposition of portfolio securities.

Generally, cost is the primary factor used to determine fair value until significant developments affecting the portfolio
company (such as results of operations or changes in general market conditions) provide a basis for use of an appraisal valuation. Appraised values are determined quarterly by management, subject to the approval of the Board of Directors.

Most of the Funds common equity investments of privately held companies are appraised at a multiple of free cash flow
generated by the company in its most recent fiscal year, less outstanding funded indebtedness and other senior securities such as preferred stock. Projections of current year free cash flow may be utilized and adjustments for non-recurring items are
considered. Multiples utilized are estimated based on past experience in the private company marketplace, and are necessarily subjective in nature.

From time to time, portfolio companies are in default of certain covenants in their loan agreements. When management has a reasonable
belief that the portfolio company will be able to restructure the loan agreements to adjust for any defaults, the portfolio companys securities continue to be valued assuming that the company is a going concern. In the event a portfolio
company cannot generate adequate cash flow to meet the principal and interest payments on such indebtedness or is not successful in refinancing the debt upon its maturity, the Funds investment could be reduced or eliminated through foreclosure
on the portfolio companys assets or the portfolio companys reorganization or bankruptcy.

The Fund may also use,
when available, third-party transactions in a portfolio companys securities as the basis of valuation (the private market method). The private market method will be used only with respect to completed transactions or firm offers
made by sophisticated, independent investors.

For valuation purposes, the Fund uses the income approach to value its debt
instruments. Since the Funds general intent is to hold its loans to maturity, the fair value will not exceed the cost of the investment. A change in the assumptions that the Fund uses to estimate the fair value of its debt securities using the
yield analysis could have a material impact on the determination of fair value. If there is deterioration in credit quality or a debt security is in workout status, the Fund may consider other factors in determining the fair value of the debt
security, including the fair value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. The Funds general intent is to hold its debt investments
to maturity. Accordingly, the fair value of the debt investments will not exceed the cost of the investment. Certificates of deposit purchased by the Fund generally will be valued at their face value, plus interest accrued to the date of valuation.

The Audit Committee of the Board may engage independent, third-party valuation firms to conduct independent appraisals and
review managements preliminary valuations in order to make their own independent assessment of each privately-held investment that the Fund (a) has held for more than one year and (b) holds on its books at a fair value of at least
$2.0 million. The Audit Committee will review and evaluate the preliminary valuations of management and those of any third-party valuations firms, if so retained, and will review and evaluate any third-party firm supplements to reflect any comments
from management and/or Audit Committee members. Any third-party valuation data would be considered as one of many factors in a fair value determination. The Audit Committee then would recommend to the full Board fair values for all privately-held
securities based on all relevant factors.



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##### Table of Contents

Because of the inherent uncertainty of the valuation of portfolio securities which do not
have readily ascertainable market values, amounting to $42.0 million and $42.4 million as of March 31, 2010 and December 31, 2009, respectively, the Funds fair value determinations may materially differ from the values that would
have been used had a ready market existed for the securities. There were no publicly traded securities as of March 31, 2010 and December 31, 2009.

On a daily basis, the Fund adjusts its net asset value for the changes in the value of its publicly held securities and material changes
in the value of its private securities and reports those amounts to Lipper Analytical Services, Inc. Weekly and daily net asset values appear in various publications, including Barrons and The Wall Street Journal.

Federal Income Taxes

The Fund intends to comply with the requirements of the Code necessary for us to qualify as a RIC. So long as it complies with these
requirements, the Fund generally will not be subject to corporate-level federal income taxes on otherwise taxable income (including net realized capital gains) distributed to stockholders. Therefore, the Fund did not record a provision for federal
income taxes in its financial statements. The Fund may borrow money from time to time to maintain its status as a RIC under the Code.

Interest Income Recognition

The Fund records interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis to the extent that
it expects to collect such amounts. The Fund stops accruing interest on investments when it determines that interest is no longer collectible. If the Fund receives any cash after determining that interest is no longer collectible, it treats such
cash as payment on the principal balance until the entire principal balance has been repaid, before it recognizes any additional interest income. The Fund accretes or amortizes discounts and premiums on securities purchased over the life of the
respective security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion of discount and/or amortization of premium on debt securities.

Payment in Kind Interest

The Fund has loans in its portfolio that may pay payment in kind (PIK) interest. The Fund adds PIK interest, if any, computed
at the contractual rate specified in each loan agreement, to the principal balance of the loan and recorded as interest income. To maintain its status as a RIC, the Fund must pay out to stockholders this non-cash source of income in the form of
dividends even if it has not yet collected any cash in respect of such investments.

Current Market Conditions

Since late 2007, the state of the economy in the U.S. remained in a recession as consumer confidence deteriorated and unemployment indices
increased. Banks and other financial service companies continued to experience difficulties as the extending of credit suffered its largest single year decline during 2009 since the World War II era. Loan delinquency rates are at 26 year highs and
bank failures increased and the threat of continued failures remains as concerns regarding commercial real estate have weighed on the financial industry. Stock market returns were stronger as the S&P 500 improved approximately 23% during
the year ended December 31, 2009, despite reaching a 12 year low in the first quarter of 2009. Merger and acquisition activity was at its lowest level since 2004. In recent months, certain economic indicators have shown modest
improvements.

To the extent that recessionary conditions continue or worsen, the financial results of middle-market
companies, like those in which we invest, will continue to experience deterioration, which ultimately could lead to difficulty in meeting debt service requirements and an increase in defaults. Many of the companies have experienced difficult
operating environments and access to capital has been limited.

Consistent with other companies in the financial services
sector, the Funds performance has been adversely affected. Between March 31, 2010 and March 31, 2009, the net asset value of the Fund declined from $8.96 per share to $5.66 per share. The Funds common stock is trading at a 50%
discount.

During 2009, we executed a management internalization strategy initiated to enhance liquidity, achieve a lower
operational cost structure, provide more assistance to portfolio companies and enhance communication with shareholders. We believe these actions continue to be necessary to protect capital and liquidity during this turbulent economic period in
order to preserve and enhance shareholder value.



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##### Table of Contents

Liquidity and Capital Resources

Because of the nature and size of the portfolio investments, the Fund may periodically borrow funds to make qualifying investments to
maintain its tax status as a RIC. During the three months ended March 31, 2010 and 2009, the Fund borrowed such funds by utilizing a margin account with a securities brokerage firm. There is no assurance that such arrangement will be available
in the future. If the Fund is unable to borrow funds to make qualifying investments, it may no longer qualify as a RIC. The Fund would then be subject to corporate income tax on its net investment income and realized capital gains, and distributions
to stockholders would be subject to income tax as ordinary dividends.

The Fund has the ability to borrow funds and issue
forms of senior securities representing indebtedness or stock, such as preferred stock, subject to certain restrictions. Net taxable investment income and net taxable realized gains from the sales of portfolio investments are intended to be
distributed at least annually, to the extent such amounts are not reserved for payment of expenses and contingencies or to make follow-on or new investments. Pursuant to the restrictions in the existing line of credit, the Fund is not allowed to
incur additional indebtedness unless approved by the lender.

The Fund reserves the right to retain net long-term capital
gains in excess of net short-term capital losses for reinvestment or to pay contingencies and expenses. Such retained amounts, if any, will be taxable to the Fund as long-term capital gains and stockholders will be able to claim their proportionate
share of the federal income taxes paid on such gains as a credit against their own federal income tax liabilities. Stockholders will also be entitled to increase the adjusted tax basis of their Fund shares by the difference between their
undistributed capital gains and their tax credit.

Management is currently evaluating the impact of current market conditions
on its portfolio company valuations and their ability to provide current income. Management has followed valuation techniques in a consistent manner; however, it is cognizant of current market conditions that might effect future valuations of
portfolio securities. The Fund has access to a $5.0 million revolving line of credit facility with Amegy Bank. The Fund has not yet borrowed under this facility. The Fund believes that its operating cash flow and cash on hand will be sufficient to
meet operating requirements and to finance routine capital expenditures through the next twelve months.

Results of Operations

Investment Income and Expense

Net investment loss after all expenses was $0.05 and $0.1 million for the three months ended March 31, 2010 and March 31,
2009, respectively. The decrease in net investment loss generated at March 31, 2010 compared to March 31, 2009 is due primarily to the decrease in total investment income offset by a greater decrease in total expenses for the three months
ended March 31, 2010 as compared to the three months ended March 31, 2009.

Total income from portfolio securities
was $0.8 million and $0.9 million for the three months ended March 31, 2010 and 2009, respectively.

Interest from
temporary cash investments decreased from $0.02 million for the three months ended March 31, 2009 to $0.004 million for the three months ended March 31, 2010. The cash in temporary investments (excluding the margin account) decreased $2.0
million from $7.3 million as of March 31, 2009 to $5.3 million as of March 31, 2010, primarily due to the increase in follow-on investments along with operating expenditures.

The former Adviser received management fee compensation at an annual rate of 2% of the net assets of the Fund paid quarterly in arrears.
Such fees amounted to $0.4 million for the three months ended March 31, 2009. The Fund also reimbursed the former Administrator, for the costs and expenses incurred in performing its obligations and providing personnel and facilities under the
Administrative Agreement, provided that such reimbursements do not exceed $450,000 per year. The former Administrator received $0.1 million for the three months ended March 31, 2009.

Compensation expenses were $0.3 million for the three months ended March 31, 2010. General and administrative fees were $0.04
million for the three months ended March 31, 2010. As a result of the internalization management, the Fund assumed these obligations directly beginning July 1, 2009.

Realized Gains and Losses on Sales of Portfolio Securities

During the three months ended March 31, 2010, the Fund realized net capital loss of $0.004 million from the sale of U.S. Treasury
Bills.

During the three months ended March 31, 2009, the Fund realized net capital loss of $0.02 million from the sale of
U.S. Treasury Bills.



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##### Table of Contents

Changes in Unrealized Appreciation/Depreciation of Portfolio Securities

Net unrealized depreciation on investments increased by $0.7 million during the three months ended March 31, 2010, to a net
unrealized depreciation of $15.9 million. Such increase in depreciation resulted primarily from decrease in estimated fair market value of Infinia Corporation, Riptide Entertainment LLC and Spectrum Management, LLC, resulting from declining sales
and trailing operations for the period. These decreases in estimated fair market value were partially offset by the increase in fair market value of Sovereign Business Forms, Inc., resulting from an increase in operations.

Net unrealized depreciation on investments decreased by $1.1 million during the three months ended March 31, 2009, from a net
unrealized depreciation of $3.0 million to a net unrealized depreciation of $1.9 million. Such decrease in depreciation resulted primarily from increase in estimated fair market value of Infinia Corporation and Spectrum Management, Inc., resulting
from an increase in operations for the period. These increases were partially offset by the decrease in fair market value of Sovereign Business Forms, Inc. and ConGlobal Industries Holdings, Inc, resulting from declining sales and trailing
operations.

Dividends

On February 27, 2009, the Fund announced the declaration of a first quarter dividend of $0.1075 per share. The Fund issued 296,528
additional shares of its common stock at an effective price of $3.10 per share and paid $2,000 in cash for fractional shares. This dividend was 100% qualified and classified as 21% ordinary income and 79% return of capital.

On March 24, 2009, the Fund announced that it suspended its managed distribution policy and payment of quarterly distributions for
an indefinite period, following the distribution of the first quarter dividend, paid on March 30, 2009. The Fund will continue to pay out net investment income and/or realized capital gains, if any, on an annual basis as required under the
Investment Company Act of 1940.

Portfolio Investments

The following table includes significant investment activity during the quarter ended March 31, 2010 (in thousands):



|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |    
|---------------------------------------- |  | --------------- | - | -------------------- | - | --------- |  | --- | --- | ----- | - | --- |  | - | ---
|                                         |  | New Investments |   | Existing Investments |   |          
|Portfolio Company                        |  | Cash            |   | PIK                  |   | Follow-on |  | PIK |     | Total
|TruLite, Inc.                            |  | $               |  |                      | $ |          |  | $   | 200 |       | $ |    |  | $ | 200
|1848 Capital Partners LLC                |  |                 |  |                      |   |          |  |     |    |       |   | 71  |  |   | 71 
|London Bridge Entertainment Partners Ltd |  |                 |  |                      |   |          |  |     |    |       |   | 54  |  |   | 54 
|Big Apple Entertainment Partners LLC     |  |                 |  |                      |   |          |  |     |    |       |   | 40  |  |   | 40 
|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |    
|                                         |  | $               |  |                      | $ |          |  | $   | 200 |       | $ | 165 |  | $ | 365
|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |    

The following table includes significant investment
activity during the quarter ended March 31, 2009 (in thousands):



|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |      
|---------------------------------------- |  | --------------- | - | -------------------- | - | --------- |  | --- | --- | ----- | - | --- |  | - | -----
|                                         |  | New Investments |   | Existing Investments |   |          
|Portfolio Company                        |  | Cash            |   | PIK                  |   | Follow-on |  | PIK |     | Total
|Riptide Entertainment, LLC               |  | $               |  |                      | $ |          |  | $   | 350 |       | $ |    |  | $ | 350  
|Nickent Golf, Inc.                       |  |                 |  |                      |   |          |  |     | 320 |       |   |    |  |   | 320  
|1848 Capital Partners LLC                |  |                 |  |                      |   |          |  |     |    |       |   | 244 |  |   | 244  
|London Bridge Entertainment Partners Ltd |  |                 |  |                      |   |          |  |     |    |       |   | 50  |  |   | 50   
|Big Apple Entertainment Partners LLC     |  |                 |  |                      |   |          |  |     |    |       |   | 38  |  |   | 38   
|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |      
|                                         |  |                 |   |                      |   |           |  | $   | 670 |       | $ | 332 |  | $ | 1,002
|                                         |  |                 |   |                      |   |           |  |     |     |       |   |     |  |   |      



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##### Table of Contents

|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes in the Funds risk factors from the disclosure set forth in the Annual Report on Form 10-K for
the year ended December 31, 2009.

Readers should carefully consider these risks and all other information contained in
the annual report on Form 10-K, including the Funds consolidated financial statements and the related notes thereto. The risks and uncertainties described below are not the only ones facing the Fund. Additional risks and uncertainties not
presently known to the Fund, or not presently deemed material by the Fund, may also impair its operations and performance.



|Item 3. | Quantitative and Qualitative Disclosure about Market Risk
|------- | ---------------------------------------------------------

The Fund is subject to financial market risks, including changes in interest rates with respect to investments in debt securities and
outstanding debt payable, as well as changes in marketable equity security prices. The Fund does not use derivative financial instruments to mitigate any of these risks. The return on investments is generally not affected by foreign currency
fluctuations.

The Funds investments in portfolio securities consist of some fixed rate debt securities. Since the debt
securities are generally priced at a fixed rate, changes in interest rates do not directly impact interest income. In addition, changes in market interest rates are not typically a significant factor in the determination of fair value of these debt
securities, since the securities are generally held to maturity. Their fair values are determined on the basis of the terms of the debt security and the financial condition of the issuer.

A major portion of the Funds investment portfolio consists of debt and equity investments in private companies. Modest changes in
public market equity prices generally do not significantly impact the estimated fair value of these investments. However, significant changes in market equity prices can have a longer-term effect on valuations of private companies, which could
affect the carrying value and the amount and timing of gains or losses realized on these investments. A small portion of the investment portfolio also consists of common stocks in publicly traded companies. These investments are directly exposed to
equity price risk, in that a hypothetical ten percent change in these equity prices would result in a similar percentage change in the fair value of these securities.

The Fund is classified as a non-diversified investment company under the Investment Company Act, which means the Fund is not
limited in the proportion of its assets that may be invested in the securities of a single user. The value of one segment called Shipping Products and Services includes one portfolio companies and was 16.3% of the net asset value and 19.5% of the
Funds investments in portfolio company securities (at fair value) at March 31, 2010. Changes in business or industry trends or in the financial condition, results of operations, or the markets assessment of any single portfolio
company will affect the net asset value and the market price of the Funds common stock to a greater extent than would be the case if the Fund were a diversified company holding numerous investments.



|Item 4. | Controls and Procedures
|------- | -----------------------

The Fund maintains disclosure controls and other procedures that are designed to ensure that information required to be disclosed by the
Fund in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to the
Funds management, including its Chief Investment Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Funds management, with the participation of the Funds Chief Investment Officer and Chief Financial Officer, have
evaluated the effectiveness of the design and operations of the Funds disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of March 31, 2010. Based on their evaluation,
the Funds Chief Investment Officer (Principal Executive Officer) and Chief Financial Officer concluded that the Funds disclosure controls and procedures were effective at a reasonable assurance level. There has been no change in the
Funds internal control over financial reporting during the quarter ended March 31, 2010, that has materially affected, or is reasonably likely to materially affect, the Funds internal control over financial reporting.

Part II. Other Information



|Item 5. | Legal Proceedings
|------- | -----------------

On June 30, 2009, the Fund received a Wells notice from the staff of the Securities and Exchange Commission
(SEC). Based on discussions with the SEC staff, the Fund believes that the issues the staff intends to pursue relate to a one-time administrative fee that the Fund paid in 2005 and the compensation of a certain Fund officer during
approximately the same time period. The Wells notice notified the Fund that the staff intends to recommend that the SEC bring a civil action against the Fund for possible violations of the securities laws. The Fund has been cooperating with the SEC
in this inquiry. In accordance with SEC procedures, the Fund has presented its perspective on these issues to the staff. The SEC has not made a formal decision regarding an enforcement proceeding. The Fund also understands that three persons (two of
whom are formerly associated with the Fund and the Funds Former Adviser) received similar Wells notices relating to the 2005 activity. The Fund understands that these individuals also will have an opportunity to present their perspectives on
these issues before any formal decision is made on enforcement proceedings.



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##### Table of Contents

On April 26, 2010, the SEC also subpoenaed records of the Fund in connection with
certain trades in the Funds shares by SPQR Capital LLP, SAE Capital, Ltd., Versatile Systems, Inc., Mobiquity Investments, Ltd., and anyone associated with those entities. The Fund is fully cooperating with the SECs request.

From time to time, the Fund is also a party to certain legal proceedings incidental to the normal course of our business including the
enforcement of our rights under contracts with our portfolio companies. While the outcome of these legal proceedings cannot at this time be predicted with certainty, the Fund does not expect that these proceedings will have a material effect upon
the Funds financial condition or results of operations.



|Item 6. | Exhibits
|------- | --------



|3. | Articles of Incorporation and by-laws
|-- | -------------------------------------



| | (a) | Restated Certificate of Incorporation of the Fund, as amended. [Incorporated by reference to Exhibit 3(a) to Registrants Annual Report on Form 10-K for the year
ended December 31, 2007]
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Certificate of Merger dated June 30, 1993, between the Fund and Equus Investments Incorporated [Incorporated by reference to Exhibit 3(c) to Registrants
Annual Report on Form 10-K for the year ended December 31, 2007]
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | Amended and Restated Bylaws of the Fund. [Incorporated by reference to Exhibit 3(c) to Registrants Annual Report on Form 10-K for the year ended December 31,
2007]
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|10. | Material Contracts.
|--- | -------------------



| | (c) | Safekeeping Agreement between the Fund and Amegy Bank dated August 16, 2008. [Incorporated by reference to Exhibit 10(c) to Registrants Annual
Report on Form 10-K for the year ended December 31, 2008.]
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | Form of Indemnification Agreement between the Fund and its directors and certain officers. [Incorporated by reference to Exhibit 10(g) to Registrants Annual
Report on Form 10-K for the year ended December 31, 2004.]
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | Form of Release Agreement between the Fund and certain of its officers and former officers. [Incorporated by reference to Exhibit 10(h) to Registrants Annual
Report on Form 10-K for the year ended December 31, 2004.]
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (f) | Code of Ethics of the Fund (Rule 17j-1) [Incorporated by reference to Exhibit 10(f) to Registrants Annual Report on Form 10-K for the year ended December 31,
2009.]
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g).1 | Revolving Credit Note between the Fund and Amegy Bank National Association dated August 13, 2008. [Incorporated by reference to Exhibit 10 (g) to
Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.]
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g).2 | First Extension and Modification Agreement between the Fund and Amegy Bank National Associated dated February 15, 2010. [Filed herewith.]
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------



| | (h) | Pledge and Security Agreement between the Fund and Amegy Bank National Association dated August 13, 2008. [Incorporated by reference to Exhibit 10 (h) to
Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2008.]
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|31. | Rule 13a-14(a)/15d-14(a) Certifications
|--- | ---------------------------------------



| | 1. | Certification by Principal Executive Officer
| | -- | --------------------------------------------



| | 2. | Certification by Chief Financial Officer
| | -- | ----------------------------------------



|32. | Section 1350 Certifications
|--- | ---------------------------



| | 1. | Certification by Principal Executive Officer
| | -- | --------------------------------------------



| | 2. | Certification by Chief Financial Officer
| | -- | ----------------------------------------



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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to
be signed by the undersigned, thereunto duly authorized.



|                   |  |  |  |                         
|------------------ |  |  |  | ------------------------
|                   |  |  |  | EQUUS TOTAL RETURN, INC.
|                   |  | 
|Date: May 17, 2010 |  |  |  | /s/ Jay Brown           
|                   |  |  |  | Jay Brown               
|                   |  |  |  | Chief Investment Officer



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