# EDGAR Filing Document

**Accession Number:** 0000878932
**File Stem:** 0000878932-25-000007
**Filing Date:** 2025-11
**Character Count:** 182449
**Document Hash:** 55e4c080cee3dd004664e3ef92d24ec8
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000878932-25-000007.hdr.sgml**: 20251120

**ACCESSION NUMBER**: 0000878932-25-000007

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 5

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251120

**DATE AS OF CHANGE**: 20251120

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** EQUUS TOTAL RETURN, INC.
- **CENTRAL INDEX KEY:** 0000878932

**ORGANIZATION NAME:**
- **EIN:** 760345915
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 814-00098
- **FILM NUMBER:** 251501723

**BUSINESS ADDRESS:**
- **STREET 1:** 700 LOUISIANA STREET
- **STREET 2:** 48TH FLOOR
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77002
- **BUSINESS PHONE:** 7135290900

**MAIL ADDRESS:**
- **STREET 1:** 700 LOUISIANA STREET
- **STREET 2:** 48TH FLOOR
- **CITY:** HOUSTON
- **STATE:** TX
- **ZIP:** 77002

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** EQUUS II INC
- **DATE OF NAME CHANGE:** 19970422

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

**FORM 10-Q** 

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** 

For the quarterly period ended September 30, 2025

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**<br> **incorporation or organization)** | **(I.R.S. Employer**<br> **Identification No.)** |
| **700 Louisiana St., 41<sup>st</sup> Floor**<br> **Houston, Texas** | <br> **77002** |
| **(Address of principal executive offices)** | **(Zip Code)** |

---

**(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)**

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

**Securities registered pursuant to Section 12(b) of the Act:**

---

| | |
|:---|:---|
| **<u>Title of each class</u>** | **Name of each exchange**<br> **<u>on which registered</u>** |
| **Common Stock** | **New York Stock Exchange** |

---

☐ 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 ☒ No

☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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 ☒ Smaller Reporting Company ☐ Emerging Growth Company ☐

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

There were 13,966,696 shares of the registrant's common stock, $.001 par value, outstanding, as of September 30, 2025.

[**Table of Contents**](#TableOfContents)

**EQUUS TOTAL RETURN, INC.**

**(A Delaware Corporation)**

**INDEX**

---

| | |
|:---|:---|
|  | **<u>Page</u>** |
| [PART I. FINANCIAL INFORMATION](#a01) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1. Unaudited Condensed Financial Statements](#a02) | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Condensed Balance Sheets](#a03) | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Condensed Statements of Operations](#a04) | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Condensed Statements of Changes in Net Assets](#a05) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Condensed Statements of Cash Flows](#a06) | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Supplemental Information—Selected Per Share Data and Ratios](#a07) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Schedules of Investments](#a08) | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Notes to Condensed Financial Statements](#a09) | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](#a10) | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 3. Quantitative and Qualitative Disclosure about Market Risk](#a11) | 42 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 4. Controls and Procedures](#a12) | 43 |
| [PART II. OTHER INFORMATION](#a13) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1. Legal Proceedings](#a14) | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 1A. Risk Factors](#a15) | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Item 6. Exhibits](#a16) | 44 |
| [SIGNATURE](#a17) | 45 |

---

[**Table of Contents**](#TableOfContents)

**EQUUS TOTAL RETURN, INC.**

**CONDENSED BALANCE SHEETS**

**(Unaudited)**

**<u>Part I. Financial Information</u>**

**<u>Item 1. Unaudited Condensed Financial Statements</u>**

---

| | | |
|:---|:---|:---|
|  | **September 30, 2025** | **December 31, 2024** |
| **(in thousands, except shares and per share amounts)** | | |
| Assets |  |  |
| Investments in portfolio securities at fair value: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control investments (cost at $10,500 and $18,611, respectively) | $22850 | $27500 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments (cost at $1,594 and $0, respectively) | 5178 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investments in portfolio securities at fair value | 28028 | 27500 |
| Cash and cash equivalents | 329 | 262 |
| Accounts receivable from affiliates | 580 | 678 |
| Accrued interest | 2426 | 1470 |
| Other assets | 38 | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | 31401 | 29936 |
| Liabilities and net assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 258 | 332 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued compensation | 4 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable to related parties | 985 | 93 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notes payable | 1932 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrant liability, at fair value | 1718 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 4897 | 426 |
| Commitments and contingencies (See Note 2) |  |  |
| Net assets |  |  |
| Common stock, $.001 par value per share; 100,000,000 shares authorized as of September 30, 2025 and December 31, 2024, and 13,966,696 and 13,586,173 shares outstanding as of September 30, 2025 and December 31, 2024, respectively |  |  |
| Preferred stock, $.001 par value per share; 10,000,000 shares authorized as of September 30, 2025 and December 31, 2024 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value | $14 | $14 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital in excess of par value | 76023 | 74785 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (49533) | (45289) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total net assets | $26504 | $29510 |
| Shares of common stock issued and outstanding, $.001 par value, 100,000,000 and 50,000,000 shares authorized, respectively | 13967 | 13586 |
| Net asset value per share | $1.90 | $2.17 |

---

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

[**Table of Contents**](#TableOfContents)

**EQUUS TOTAL RETURN, INC.**

**CONDENSED STATEMENTS OF OPERATIONS**

**(Unaudited)**

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| <br>**(in thousands, except per share amounts)** | **2025** | **2024** | **2025** | **2024** |
| Investment income: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control investments | $322 | $322 | $956 | $924 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments | 34 |  | $94 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment income | 356 | 322 | 1050 | 924 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income |  | 12 | 1 | 24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment income | 356 | 334 | 1051 | 948 |
| Expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation expense | 920 | 429 | 1923 | 1334 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional fees | 258 | 238 | 840 | 1172 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transaction costs |  |  | 307 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional liability expenses |  | 141 | 80 | 439 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Director fees and expenses | 81 | 76 | 259 | 255 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses | 42 | 40 | 149 | 136 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mailing, printing and other expenses | 33 | 25 | 98 | 106 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes | 6 | 5 | 19 | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 412 | 63 | 492 | 129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses | 1752 | 1017 | 4167 | 3601 |
| Net investment loss | (1396) | (683) | (3116) | (2653) |
| Net realized loss (gain): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control investments |  |  | (4111) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments | (2750) |  | (2750) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other |  |  | (155) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury Bills |  | 56 |  | 131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized (loss) gain | (2750) | 56 | (7016) | 131 |
| Net unrealized appreciation (depreciation) of portfolio securities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control investments |  | (9000) | 3461 | (5600) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments | (2797) |  | 3585 |  |
| Net change in net unrealized appreciation (depreciation) of portfolio securities | (2797) | (9000) | 7046 | (5600) |
| Net change in net unrealized depreciation of warrant liability | (1158) |  | (1158) |  |
| Net decrease in net assets resulting from operations | $(8101) | $(9627) | $(4244) | $(8122) |
| Net decrease in net assets resulting from operations per share: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $(0.59) | $(0.70) | $(0.31) | $(0.59) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $(0.59) | $(0.70) | $(0.31) | $(0.59) |
| Weighted average shares outstanding: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | 13681 | 13586 | 13618 | 13586 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | 13681 | 13586 | 13618 | 13586 |

---

The accompanying notes are an integral part of these financial statements

[**Table of Contents**](#TableOfContents)

**EQUUS TOTAL RETURN, INC.**

**CONDENSED STATEMENTS OF CHANGES IN NET ASSETS**

**(Unaudited)**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Common Stock** | | |
| <br>**(in thousands)** | **Number of Shares** | **Par Value** | **Capital in Excess of Par Value** |<br>**Accumulated Deficit** |<br>**Total Net Assets** |
| Balances as of January 1, 2025 | 13586 | $14 | $74785 | $(45289) | $29510 |
| Issuance of warrants |  |  | 744 |  | 744 |
| Net increase in net assets resulting from operations |  |  |  | 3943 | 3943 |
| Balances as of March 31, 2025 | 13586 | 14 | 75529 | (41346) | 34197 |
| Net decrease in net assets resulting from operations |  |  |  | (86) | (86) |
| Balances as of June 30, 2025 | 13586 | 14 | 75529 | (41432) | 34111 |
| Share-based incentive compensation | 381 |  | 932 |  | 932 |
| Reclassification of warrants |  |  | (438) |  | (438) |
| Net decrease in net assets resulting from operations |  |  |  | (8101) | (8101) |
| Balances as of September 30, 2025 | 13967 | $14 | $76023 | $(49533) | $26504 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Common Stock** | | |
| <br>**(in thousands)** | **Number of Shares** | **Par Value** | **Capital in Excess of Par Value** |<br>**Accumulated Deficit** |<br>**Total Net Assets** |
| Balances as of January 1, 2024 | 13586 | $14 | $74785 | $(26512) | $48287 |
| Net decrease in net assets resulting from operations |  |  |  | (2395) | (2395) |
| Balances as of March 31, 2024 | 13586 | 14 | 74785 | (28907) | 45892 |
| Net increase in net assets resulting from operations |  |  |  | 3900 | 3900 |
| Balances as of June 30, 2024 | 13586 | 14 | 74785 | (25007) | 49792 |
| Net decrease in net assets resulting from operations |  |  |  | (9627) | (9627) |
| Balances as of September 30, 2024 | 13586 | $14 | $74785 | $(34634) | $40165 |

---

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

[**Table of Contents**](#TableOfContents)

**EQUUS TOTAL RETURN, INC.**

**CONDENSED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Nine months ended September 30,** | **Nine months ended September 30,** |
| <br>**(in thousands)** | **2025** | **2024** |
| Cash flow from operating activities: |  |  |
| Net decrease in net assets resulting from operations | $(4244) | $(8122) |
| Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized loss: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control investments | 4111 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments | 2750 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | 155 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;U.S. Treasury Bills |  | (131) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized (appreciation) depreciation of portfolio securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control investments | (3461) | 5600 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments | (3585) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized depreciation on warrant liability | 1158 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based incentive compensation | 491 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of portfolio securities | (1594) | (2247) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Write-off of receivable from portfolio company | (155) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PIK interest payable | 131 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount | 361 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transaction costs | 307 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net proceeds from dispositions of portfolio securities | 1250 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of U.S. Treasury bills, net |  | (9907) |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable from affiliates | 539 | (4) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest receivable | (956) | (923) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | (12) | 369 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | (71) | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable to related parties | 892 | (7) |
| Net cash used in operating activities | (1933) | (15322) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowings under margin account |  | 161907 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments under margin account |  | (151869) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of notes payable and warrants liability | 2000 |  |
| Net cash provided by financing activities | 2000 | 10038 |
| Net decrease in cash and cash equivalents | 67 | (5284) |
| Cash and cash equivalents and restricted cash at beginning of period | 262 | 6983 |
| Cash and cash equivalents and restricted cash at end of period | $329 | $1699 |
| Supplemental disclosure of cash flow information: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid in kind on note payable | $131 | $129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes paid | $19 | $30 |

---

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

[**Table of Contents**](#TableOfContents)

**EQUUS TOTAL RETURN, INC.**

**SUPPLEMENTAL INFORMATION—SELECTED PER SHARE DATA AND RATIOS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Nine Months ended September 30,** | **Nine Months ended September 30,** |
|  | **2025** | **2024** |
| Investment income | $0.08 | $0.07 |
| Expenses | (0.30) | (0.26) |
| Net investment loss | (0.22) | (0.19) |
| Net realized (loss) gain | (0.51) |  |
| Net change in unrealized appreciation of portfolio securities | 0.51 | (0.40) |
| Net change in unrealized depreciation on warrant liability | (0.08) |  |
| Net decrease in net assets resulting from operations | (0.30) | (0.59) |
| Capital transactions: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Dilutive effect of warrants issued | 0.03 |  |
| Increase in net assets resulting from capital transactions | 0.03 |  |
| Net decrease in net assets | (0.27) | (0.59) |
| Net assets at beginning of period | 2.17 | 3.55 |
| Net assets at end of period, basic and diluted | $1.90 | $2.96 |
| Weighted average number of shares outstanding during period, |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in thousands | 13618 | 13586 |
| Market price per share: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning of period | $1.10 | $1.45 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of period | $2.25 | $1.36 |
| Selected information and ratios: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of expenses to average net assets | (14.88%) | (8.14%) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of net investment loss to average net assets | (11.13%) | (6.00%) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of net increase in net assets resulting from operations to average net assets | (15.15%) | (18.37%) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return on net asset value | (10.19%) | (16.82%) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total return on market price <sup>(1)</sup> | 104.55% | (6.21%) |

---

<sup>(1)</sup> Total return = [(ending market price per share - beginning price per share) / beginning market price per share].

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

[**Table of Contents**](#TableOfContents)

**EQUUS TOTAL RETURN, INC.**

**SCHEDULE OF INVESTMENTS**

**September 30, 2025**

**(Unaudited)**

***(in thousands, except share data)***

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Location of** | | | **Date of Initial** | **Date of Initial** |  | | | **Cost of** | **Fair** |
| **Portfolio Company <sup>(1)</sup>** | **Industry** | **Industry** | **Investment** | **Investment** | **Investment** | **Principal** | **Principal** | **Investment** | **Value<sup>(2)</sup>** |
| **Control Investments: Majority-owned <sup>(3)</sup>:** | **Control Investments: Majority-owned <sup>(3)</sup>:** | **Control Investments: Majority-owned <sup>(3)</sup>:** | | |  | | | | |
| Morgan E&P, Inc.<br> Houston, TX | Morgan E&P, Inc.<br> Houston, TX | Energy |  | April 2023 | Member interest (100%) <sup>(5)</sup> |  |  |  | $12350 |
|  |  |  |  |  | 12% senior secured promissory note due 5/26 <sup>(5)(6)</sup> | $| 10500 | 10500 | 10500 |
|  |  |  |  |  |  |  |  | 10500 | 22850 |
| **Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)** | **10500** | **22850** |
| **Non-Affiliate Investments: Less than 5% owned <sup>(4)</sup>:** | **Non-Affiliate Investments: Less than 5% owned <sup>(4)</sup>:** | **Non-Affiliate Investments: Less than 5% owned <sup>(4)</sup>:** | **Non-Affiliate Investments: Less than 5% owned <sup>(4)</sup>:** |  |  |  |  |  |  |
| General Enterprise Ventures, Inc.<br> Pomona, CA | General Enterprise Ventures, Inc.<br> Pomona, CA | Environmental |  | February 2025 | Warrants (exercisable into 312,500 common stock) <sup>(5)</sup> |  |  |  | 1267 |
|  |  |  |  |  | 664,041 shares common stock |  |  | 1594 | 3911 |
|  |  |  |  |  |  |  |  | 1594 | 5178 |
| **Total Non-Affiliate Investments (represents 18.5% of total investments at fair value)** | **Total Non-Affiliate Investments (represents 18.5% of total investments at fair value)** | **Total Non-Affiliate Investments (represents 18.5% of total investments at fair value)** | **Total Non-Affiliate Investments (represents 18.5% of total investments at fair value)** | **Total Non-Affiliate Investments (represents 18.5% of total investments at fair value)** | **Total Non-Affiliate Investments (represents 18.5% of total investments at fair value)** |  |  | **1594** | **5178** |
| **Total Investments** |  |  |  |  |  |  |  | $**12094** | $**28028** |

---

<sup>(1)</sup> Under Section 55(a) of the 1940 Act, qualifying assets must represent at least 70% of the total assets at the time of acquisitions of any non-qualifying. As of September 30, 2025 none of the Fund's total assets were considered non-qualifying assets.

<sup>(2)</sup> See Note 3 to the financial statements, Valuation of Investments.

<sup>(3)</sup> Majority owned investments are generally defined under the 1940 Act as companies in which we own more than 50% of the voting securities of such company.

<sup>(4)</sup> Non-affiliate investments are generally defined under the 1940 Act as companies in which we own less than 5% of the voting securities of such company.

<sup>(5)</sup> Level 3 Portfolio Investment.

<sup>(6)</sup> Income producing.

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

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**EQUUS TOTAL RETURN, INC.**

**SCHEDULE OF INVESTMENTS – (Continued)**

**September 30, 2025**

**(Unaudited)**

Our portfolio securities are restricted from public sale without prior registration under the Securities Act of 1933 (hereafter, the "Securities Act") or pursuant to an exemption from such registration that is available. We typically negotiate certain aspects of the method and timing of the disposition of our investment in each portfolio company, including registration rights and related costs.

As a business development company ("BDC"), we may invest up to 30% of our assets in non-qualifying portfolio investments, as permitted by the Investment Company Act of 1940 (the "1940 Act"). Specifically, we may invest up to 30% of our assets in entities that are not considered "eligible portfolio companies" (as defined in the 1940 Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the 1940 Act, and publicly-traded entities with a market capitalization exceeding $250 million. As of September 30, 2025, we had invested 89.3% of our total assets in securities of portfolio companies that constituted qualifying investments under the 1940 Act. As of September 30, 2025, none of our investments are considered non-qualifying assets as all of our investments are in enterprises that are considered eligible portfolio companies under the 1940 Act. We provide significant managerial assistance to our portfolio companies that comprise 81.5% of the total value of the investments in portfolio securities as of September 30, 2025.

We are classified as a "non-diversified" investment company under the 1940 Act, which means we are not limited in the proportion of our assets that may be invested in the securities of a single issuer. The value of one segment called "Energy" includes one portfolio company and was 86.2% of our net asset value, 72.8% of our total assets and 81.5% of our investments in portfolio company securities (at fair value) as of September 30, 2025. 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 our common stock to a greater extent than would be the case if we were a "diversified" company holding numerous investments.

Our investments in portfolio securities consist of the following types of securities as of September 30, 2025 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| **Type of Securities** | **Cost** | **Fair Value** | **Fair Value as Percentage of Net Assets** |
| Limited liability company investments | $— | $12350 | 46.6% |
| Secured and subordinated debt | 10500 | 10500 | 39.6% |
| Warrants |  | 1267 | 4.8% |
| Common stock | 1594 | 3911 | 14.8% |
| Total | $12094 | $28028 | 105.8% |

---

The following is a summary by industry of the Fund's investments in portfolio securities as of September 30, 2025 (in thousands):

---

| | | |
|:---|:---|:---|
| **Industry** | **Fair Value** | **Fair Value as Percentage of Net Assets** |
| Energy | $22850 | 86.2% |
| Environmental | 5178 | 19.6% |
| Total | $28028 | 105.8% |

---

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

[**Table of Contents**](#TableOfContents)

**EQUUS TOTAL RETURN, INC.**

**SCHEDULE OF INVESTMENTS**

**December 31, 2024**

**(Unaudited)** 

***(in thousands, except share data)***

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Location of** | | | **Date of Initial** |  | | | **Cost of** | **Fair** |
| **Portfolio Company <sup>(1)</sup>** | **Industry** | **Industry** | **Investment** | **Investment** | **Principal** | **Principal** | **Investment** | **Value<sup>(2)</sup>** |
| **Control Investments: Majority-owned <sup>(3)</sup>:** | **Control Investments: Majority-owned <sup>(3)</sup>:** | **Control Investments: Majority-owned <sup>(3)</sup>:** | **Control Investments: Majority-owned <sup>(3)</sup>:** |  | | | | |
| Equus Energy, LLC <sup>(4)</sup><br> Houston, TX | Equus Energy, LLC <sup>(4)</sup><br> Houston, TX | Energy | December 2011 | Member interest (100%) |  |  | $8111 | $4000 |
| Morgan E&P, LLC <sup>(4)</sup><br> Houston, TX | Morgan E&P, LLC <sup>(4)</sup><br> Houston, TX | Energy | April 2023 | Member interest (100%) |  |  |  | 13000 |
|  |  |  |  | 12% senior secured promissory note due 5/26 <sup>(5)</sup> | $| 10500 | 10500 | 10500 |
|  |  |  |  |  |  |  | 10500 | 23500 |
| **Total Control Investments: Majority-owned (represents 100% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 100% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 100% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 100% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 100% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 100% of total investments at fair value)** | **Total Control Investments: Majority-owned (represents 100% of total investments at fair value)** | **18611** | **27500** |
| **Total Investments** |  |  |  |  |  |  | $**18611** | $**27500** |

---

<sup>(1)</sup> Under Section 55(a) of the 1940 Act, qualifying assets must represent at least 70% of the total assets at the time of acquisition. As of December 31, 2024 none of the Fund's total assets were considered non-qualifying assets.

<sup>(2)</sup> See Note 3 to the financial statements, Valuation of Investments.

<sup>(3)</sup> Majority owned investments are generally defined under the 1940 Act as companies in which we own more than 50% of the voting securities of such company.

<sup>(4)</sup> Level 3 Portfolio Investment.

<sup>(5)</sup> Income producing.

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

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**EQUUS TOTAL RETURN, INC.**

**SCHEDULE OF INVESTMENTS – (Continued)**

**DECEMBER 31, 2024**

**(in thousands, except share data)**

Our portfolio securities are restricted from public sale without prior registration under the Securities Act of 1933 (hereafter, the "Securities Act") or pursuant to an exemption from such registration that is available. We typically negotiate certain aspects of the method and timing of the disposition of our investment in each portfolio company, including registration rights and related costs.

As a business development company ("BDC"), we may invest up to 30% of our assets in non-qualifying portfolio investments, as permitted by the Investment Company Act of 1940 (the "1940 Act"). Specifically, we may invest up to 30% of our assets in entities that are not considered "eligible portfolio companies" (as defined in the 1940 Act), including companies located outside of the United States, entities that are operating pursuant to certain exceptions under the 1940 Act, and publicly-traded entities with a market capitalization exceeding $250 million. As of December 31, 2024, we had invested 91.9% of our total assets in securities of portfolio companies that constituted qualifying investments under the 1940 Act. As of December 31, 2024, none of our investments are considered non-qualifying assets as all of our investments are in enterprises that are considered eligible portfolio companies under the 1940 Act. We provide significant managerial assistance to our portfolio companies that comprise 100% of the total value of the investments in portfolio securities as of December 31, 2024.

We are classified as a "non-diversified" investment company under the 1940 Act, which means we are not limited in the proportion of our assets that may be invested in the securities of a single issuer. The value of one segment called "Energy" includes our two portfolio companies and was 93.2% of our net asset value, 91.9% of our total assets and 100% of our investments in portfolio company securities (at fair value) as of December 31, 2024. 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 our common stock to a greater extent than would be the case if we were a "diversified" company holding numerous investments.

Our investments in portfolio securities consist of the following types of securities as of December 31, 2024 (in thousands):

---

| | | | |
|:---|:---|:---|:---|
| **Type of Securities** | **Cost** | **Fair Value** | **Fair Value as Percentage of Net Assets** |
| Limited liability company investments | $8111 | $17000 | 57.6% |
| Secured and subordinated debt | 10500 | 10500 | 35.6% |
| Total | $18611 | $27500 | 93.2% |

---

The following is a summary by industry of the Fund's investments in portfolio securities as of December 31, 2024 (in thousands):

---

| | | |
|:---|:---|:---|
| **Industry** | **Fair Value** | **Fair Value as Percentage of Net Assets** |
| Energy | $27500 | 93.2% |
| Total | $27500 | 93.2% |

---

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

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**EQUUS TOTAL RETURN, INC.**

**NOTES TO CONDENSED FINANCIAL STATEMENTS**

**September 30, 2025**

**(Unaudited)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **(1) Description of Business and Basis of Presentation**

**Description of Business—**Equus Total Return, Inc. ("we," "us," "our," "Equus" the "Company" and the "Fund"), 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. Our shares trade on the New York Stock Exchange ("NYSE") under the symbol 'EQS'. On August 11, 2006, our shareholders 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. As of September 30, 2025, we had 100,000,000 shares of common stock and 10,000,000 shares of preferred stock authorized for issuance, of which 13,966,696 shares of common stock and no shares of preferred stock were outstanding.

We attempt to maximize the return to stockholders in the form of current investment income and long-term capital gains by investing in the debt and equity securities of companies with a total enterprise value between $5.0 million and $75.0 million, although we may engage in transactions with smaller or larger investee companies from time to time. We seek to invest primarily in companies pursuing growth either through acquisition or organically, leveraged buyouts, management buyouts and recapitalizations of existing businesses or special situations. Our income-producing investments consist principally of debt securities including subordinated debt, debt convertible into common or preferred stock, or debt combined with warrants and common and preferred stock. Debt and preferred equity financing may also be used to create long-term capital appreciation through the exercise and sale of warrants received in connection with the financing. We seek 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. Given market conditions over the past several years and the performance of our portfolio, our Management and Board of Directors believe it prudent to continue to review alternatives to refine and further clarify the current strategies.

We elected to be treated as a BDC under the Investment Company Act of 1940 Act ("1940 Act"), although our shareholders authorized us to withdraw this election in previous years (which authorization has since expired) and may do so again in the future. Prior to the fourth quarter of 2024, we qualified as a regulated investment company ("RIC") for federal income tax purposes and, therefore, were not required to pay corporate income taxes on any income or gains that we would have distributed distribute to our stockholders. During the fourth quarter of 2024, we elected to not qualify as a RIC and, consequently, we will be subject to normal corporate rates of taxation of our income and gains and will not be permitted to deduct distributions paid to our stockholders.

From time to time, we may have certain wholly-owned taxable subsidiaries ("Taxable Subsidiaries") each of which may hold one or more portfolio investments listed on our Schedules of Investments. Although we are no longer a RIC, the purpose of these Taxable Subsidiaries is to permit us to hold certain income-producing investments or portfolio companies organized as limited liability companies, or LLCs, (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of our gross revenue for income tax purposes must consist of investment income. Absent the Taxable Subsidiaries, a portion of the gross income of these income-producing investments or of any LLC (or other pass-through entity) portfolio investment, as the case may be, would flow through directly to us for the 90% test. To the extent that such income did not consist of investment income, it could jeopardize our ability to requalify as a RIC and, therefore, cause us to incur federal income taxes as described above. The income of the LLCs (or other pass-through entities) owned by Taxable Subsidiaries is taxed to the Taxable Subsidiaries and does not flow through to us, thereby helping us obtain (or preserve, as the case may be) RIC status and the resultant tax advantages. We do not consolidate the Taxable Subsidiaries for income tax purposes, with the exception of Texas Margin Tax, which is an entity level tax. The Taxable Subsidiaries may generate income tax expense because of the Taxable Subsidiaries' ownership of the portfolio companies. We reflect any such income tax expense on our Statements of Operations.

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**Impact of Economic and Geopolitical Events on the Oil and Gas Sector—**Beginning in the second quarter of 2022, crude prices began a steady decline following increases that were largely due to increased post-Covid demand and the buildup and subsequent invasion of Ukraine by Russian forces. Prices began a rise and fall in successive quarters between the third quarters of 2023 and the fourth quarter of 2024 before experiencing a slow and steady decline from the end of 2024 and throughout 2025, and stood at $63.17 as of September 30, 2025. Natural gas prices experienced high volatility in 2022 before collapsing in 2023 and then steadily increasing each quarter thereafter until the first quarter of 2025 before declining in the second and third quarters of 2025, finishing the quarter ended September 30, 2025 at $3.12 per MMBTU. Relative oil and gas price stability has been a significant factor in increased consolidation activity in the Williston Basin region in North Dakota where Morgan E&P, Inc. holds its development rights.

**Basis of Presentation**—In accordance with Article 6 of Regulation S-X under the Securities Act and the Securities Exchange Act of 1934, as amended ("Exchange Act"), we do not consolidate portfolio company investments, including those in which we have a controlling interest. Our interim unaudited financial statements were prepared in accordance with accounting principles generally accepted in the United States of America ("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 Exchange Act. Accordingly, they are unaudited and exclude some disclosures required for annual financial statements. We believe that we have made all adjustments, consisting solely of normal recurring accruals, necessary for the fair statement of these interim financial statements.

The results of operations for the three months ended September 30, 2025 are not necessarily indicative of results that ultimately may be achieved for the remainder of the year. The interim unaudited financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in the Fund's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2) Liquidity and Financing Arrangements; Going Concern**

**Liquidity**—There are several factors that may materially affect our liquidity during the reasonably foreseeable future. We are evaluating the impact of current market conditions on our portfolio company valuations and their ability to provide current income. We have followed valuation techniques in a consistent manner; however, we are cognizant of current market conditions that might affect future valuations of portfolio securities.

**Cash and Cash Equivalents**—As of September 30, 2025, we had cash and cash equivalents of $0.3 million.

As of December 31, 2024, we had cash and cash equivalents of $0.3 million.

**Dividends**—So long as we remain a BDC, we will pay out net investment income and/or realized net capital gains, if any, on an annual basis as required under the 1940 Act.

**Investment Commitments**—Under certain circumstances, we may be called on to make follow-on investments in certain portfolio companies. If we do not have sufficient funds to make follow-on investments, the portfolio company in need of the investment may be negatively impacted. Also, our equity interest in the estimated fair value of the portfolio company could be reduced. We had no follow-on commitments as of September 30, 2025.

**Asset Coverage Ratio**—Under the 1940 Act, BDCs are required to have an asset coverage ratio of 200%, meaning that the maximum debt that may be incurred by a BDC is the BDC's net asset value. Pursuant to amendments made to the 1940 Act in March 2018, BDCs may now, with stockholder or board of directors approval, reduce this ratio to 150%, meaning that the maximum debt that may be incurred by a BDC is two times the BDC's net asset value. In November 2019, we obtained approval of our shareholders to reduce our asset coverage ratio to 150%. This authorization permits Equus to borrow up to twice the value of the Fund's net assets. Other than the convertible note financing undertaken in February 2025 described under *Issuance of Equus Securities* in Note 5 below, we have not yet undertaken any other additional borrowings.

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**Certain Risks and Uncertainties and Going Concern**—Market and economic volatility which has become endemic in the past few years, together with the economic dislocation caused by the onset of the coronavirus, has constrained the availability of debt financing for small and medium-sized companies such as Equus and its portfolio companies. Such debt financing generally has shorter maturities, higher interest rates and fees, and more restrictive terms than debt facilities available in the past. In addition, during these years and continuing into the third quarter of 2025, the price of our common stock remained well below our net asset value, thereby making it undesirable to issue additional shares of our common stock below net asset value.

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 have previously undertaken to provide necessary liquidity include monetizations, the suspension of dividends and the internalization of management. We are also evaluating potential opportunities that could enable us to effect a change to our business and become an operating company as described in Note 6 – *Conversion to an Operating Company*.

The accompanying unaudited condensed financial statements of the Fund have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and other commitments in the normal course of business.

Our cash and cash equivalents totaled $0.3 million as of September 30, 2025. We do not currently have the necessary cash on hand and/or projected future cash flows to fund our operating activities. It is possible the Fund will require loans, capital investment from one or more sources, or will be required to dispose of certain of its portfolio investments, to cover a potential cash shortfall. The Fund does not presently have any existing commitments to fund any such shortfall, should it occur, and cannot guarantee that it will be able to execute on such plans in the future. Because we do not currently have committed financing to fund our operations for at least twelve months from the issuance of these unaudited condensed consolidated financial statements, substantial doubt exists about our ability to continue as a going concern.

The unaudited condensed financial statements do not include adjustments relating to the recoverability and classification of assets and their carrying amount, or the amount and classification of liabilities that may result should the Fund be unable to continue as a going concern.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3) Significant Accounting Policies**

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

**Use of Estimates—**The preparation of financial statements in accordance with accounting principles generally accepted in the United States ("GAAP") requires us to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Although we believe the estimates and assumptions used in preparing these financial statements and related notes are reasonable in light of known facts and circumstances, actual results could differ from those estimates. We have identified valuation of investments and revenue recognition as our most critical accounting estimates.

**Consolidation—**In accordance with Article 6 of Regulation S-X under the Securities Act of 1933, we do not consolidate portfolio company investments. Under Accounting Standards Committee ("ASC") 946, we are precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.

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**Valuation of Investments**—For most of our investments, market quotations are not available. With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our Board has approved a multi-step valuation process each quarter, as described below:

&nbsp;&nbsp;&nbsp;&nbsp;1. Each portfolio company or investment is reviewed by our investment professionals;

&nbsp;&nbsp;&nbsp;&nbsp;2. With certain exceptions as determined by our Management, with respect to investments with a fair value exceeding $2.5 million that have been held for more than one year, we engage independent valuation firms to assist our investment professionals. These independent valuation firms conduct independent valuations and make their own independent assessments;

&nbsp;&nbsp;&nbsp;&nbsp;3. Our Management produces a report that summarizes each of our portfolio investments and recommends a fair value of each such investment as of the date of the report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The Audit Committee of our Board reviews and discusses the preliminary valuation of our portfolio investments as recommended by Management in their report and any reports or recommendations of the independent valuation firms, and then approves and recommends the fair values of our investments so determined to our Board for final approval; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The Board discusses valuations and determines the fair value of each portfolio investment in good faith based on the input of our Management, the respective independent valuation firm, as applicable, and the Audit Committee.

During the first twelve months after an investment is made, we rely on the original investment amount to determine the fair value unless significant developments have occurred during this twelve-month period which would indicate a material effect on the portfolio company (such as results of operations or changes in general market conditions).

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

In estimating the fair value of our equity interest in Morgan, we have given more emphasis to an income approach that examines expected cash flows from the development of leasehold interests held by Morgan. Our management received advice and assistance from a third-party valuation firm to support our determination of the fair value of this investment.

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

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Our general intent is to hold our loans to maturity when appraising our privately held debt investments. As such, we believe that the fair value will not exceed the cost of the investment. However, in addition to the previously described analysis involving allocation of value to the debt instrument, we perform a yield analysis assuming a hypothetical current sale of the security to determine if a debt security has been impaired. 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 if less than the cost of the investment.

We record unrealized depreciation on investments when we determine that the fair value of a security is less than its cost basis and will record unrealized appreciation when we determine that the fair value is greater than its cost basis.

**Fair Value Measurement**—Fair value is 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 and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy are described below:

**Level 1**—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

**Level 2**—Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and fair value is determined through the use of models or other valuation methodologies.

**Level 3**—Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information under the circumstances and may require significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

Investments for which prices are not observable are generally private investments in the debt and equity securities of operating companies. A primary valuation method used to estimate the fair value of these Level 3 investments is the discounted cash flow method (although a liquidation analysis, option theoretical, or other methodology may be used when more appropriate). The discounted cash flow approach to determine fair value (or a range of fair values) involves applying an appropriate discount rate(s) to the estimated future cash flows using various relevant factors depending on investment type, including comparing the latest arm's length or market transactions involving the subject security to the selected benchmark credit spread, assumed growth rate (in cash flows), and capitalization rates/multiples (for determining terminal values of underlying portfolio companies). The valuation based on the inputs determined to be the most reasonable and probable is used as the fair value of the investment. In the case of our investment in Morgan E&P, Inc. ("Morgan"), we also examine acreage values in comparable transactions and assess the impact upon the working interests held by Morgan. The determination of fair value using these methodologies may take into consideration a range of factors including, but not limited to, the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance, financing transactions subsequent to the acquisition of the investment and anticipated financing transactions after the valuation date. In the case of our holding of shares and warrants in General Enterprise Ventures, Inc. ("GEVI"), we examined the trading price of the GEVI shares on the relevant measurement date and, in the case of the warrants, employed a Black-Scholes analysis with a 2-year stock variance to determine value.

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

Due to the inherent uncertainty of determining the fair value of Level 3 investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other restrictions or otherwise are less liquid than publicly traded instruments. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we might realize significantly less than the value at which such investment had previously been recorded. With respect to Level 3 investments, where sufficient market quotations are not readily available or for which no or an insufficient number of indicative prices from pricing services or brokers or dealers have been received, we undertake, on a quarterly basis, our valuation process as described above.

We assess the levels of the investments at each measurement date, and transfers between levels are recognized on the subsequent measurement date closest in time to the actual date of the event or change in circumstances that caused the transfer. There were no transfers to or from Level 3 for the three months ended September 30, 2025 and for the year ended December 31, 2024.

As of September 30, 2025, 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:

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| | | | | |
|:---|:---|:---|:---|:---|
| | | **Fair Value Measurements as of September 30, 2025** | **Fair Value Measurements as of September 30, 2025** | **Fair Value Measurements as of September 30, 2025** |
| <br>***(in thousands)*** |<br>**Total** | **Quoted Prices in<br> Active Markets<br> for Identical<br> Assets<br> (Level 1)** | **Significant Other<br> Observable<br> Inputs<br> (Level 2)** | **Significant<br> Unobservable<br> Inputs<br> (Level 3)** |
| Assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Control investments | $22850 | $— | $— | $22850 |
| &nbsp;&nbsp;&nbsp;Non-affiliate investments | 5178 |  | 3911 | 1267 |
| Total investments | $28028 | $— | $3911 | $24117 |

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As of December 31, 2024, 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:

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| | | | | |
|:---|:---|:---|:---|:---|
| | | **Fair Value Measurements as of December 31, 2024** | **Fair Value Measurements as of December 31, 2024** | **Fair Value Measurements as of December 31, 2024** |
| <br>***(in thousands)*** |<br>**Total** | **Quoted Prices in<br> Active Markets<br> for Identical<br> Assets<br> (Level 1)** | **Significant Other<br> Observable<br> Inputs<br> (Level 2)** | **Significant<br> Unobservable<br> Inputs<br> (Level 3)** |
| Assets |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Investments: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Control investments | $27500 | $— | $— | $27500 |
| Total investments | $27500 | $— | $— | $27500 |

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The following table provides a reconciliation of fair value changes during the three and nine months ended September 30, 2025 for all investments for which we determine fair value using unobservable (Level 3) factors:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Fair value measurements using significant unobservable inputs (Level 3)** | **Fair value measurements using significant unobservable inputs (Level 3)** | **Fair value measurements using significant unobservable inputs (Level 3)** | **Fair value measurements using significant unobservable inputs (Level 3)** |
| <br>***(in thousands)*** | **Control Investments** | **Affiliate Investments** | **Non-affiliate Investments** | **Total** |
| Fair value as of January 1, 2025 | $27500 | $— | $— | $27500 |
| Sale of portfolio securities | (4000) |  |  | (4000) |
| Purchases of portfolio securities |  |  | 2750 | 2750 |
| Change in unrealized appreciation | 1000 |  | 1208 | 2208 |
| Fair value as of March 31, 2025 | 24500 |  | 3958 | 28458 |
| Change in unrealized appreciation | (1650) |  | (639) | (2289) |
| Fair value as of June 30, 2025 | 22850 |  | 3319 | 26169 |
| Change in unrealized appreciation |  |  | (2052) | (2052) |
| Fair value as of September 30, 2025 | $22850 | $— | $1267 | $24117 |

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The following table provides a reconciliation of fair value changes during the three and nine months ended September 30, 2024 for all investments for which we determine fair value using unobservable (Level 3) factors:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Fair value measurements using significant unobservable inputs (Level 3)** | **Fair value measurements using significant unobservable inputs (Level 3)** | **Fair value measurements using significant unobservable inputs (Level 3)** | **Fair value measurements using significant unobservable inputs (Level 3)** |
| <br>***(in thousands)*** | **Control Investments** | **Affiliate Investments** | **Non-affiliate Investments** | **Total** |
| Fair value as of January 1, 2024 | $40853 | $— | $— | $40853 |
| Purchases of portfolio securities | 2247 |  |  | 2247 |
| Change in unrealized appreciation | (1350) |  |  | (1350) |
| Fair value as of March 31, 2024 | 41750 |  |  | 41750 |
| Change in unrealized appreciation | 4750 |  |  | 4750 |
| Fair value as of June 30, 2024 | 46500 |  |  | 46500 |
| Change in unrealized appreciation | (9000) |  |  | (9000) |
| Fair value as of September 30, 2024 | $37500 | $— | $— | $37500 |

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Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in discount rates, EBITDA or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of our investments. Generally, an increase/(decrease) in market yields, discount rates, or an increase/(decrease) in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a corresponding increase/(decrease), respectively, in the fair value of certain of our investments. In the case of our holdings in Morgan, we also consider acreage value, proved reserve multiples, daily production multiples, and discount rates.

Finally, industry trends, market forecasts, and comparable transactions in sectors in which we hold a Level 3 investment are also taken into account when assessing the value of these investments.

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The following table summarizes the significant non-observable inputs in the fair value measurements of our Level 3 investments by category of investment and valuation technique as of September 30, 2025 (fair value expressed in thousands; acreage range expressed in dollars and not rounded):

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **Range** | **Range** | **Range** |
| ***<u>(in thousands)</u>*** | **<u>Fair Value</u>** | **<u>Valuation Techniques</u>** | **<u>Unobservable Inputs</u>** | **<u>Minimum</u>** | **<u>Maximum</u>** | **<u>Weighted Average</u>** |
| **Limited liability company investments** |  |  |  |  |  |  |
|  |  | Guideline Public Company Method | Proved Reserve Multiple | 6,212x | 7,133x | 6,673x |
|  |  | Guideline Public Company Method | Daily Production Multiple | 26,897x | 28,476x | 27,687x |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan E&P, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12350 | Guideline Transaction Method | Proved Reserve Multiple | 5,304x | 8,969x | 7,137x |
|  |  | Guideline Transaction Method | Daily Production Multiple | 22,297x | 36,221x | 29,259x |
|  |  | Discounted Cash Flow | Discount Rate | 10.8% | 11.6% | 11.2% |
| **Senior debt** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan E&P, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10500 | Yield analysis | Company specific yield | 10.40% | 12.0% | 11.2% |
| **Warrant** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General Enterprise Ventures, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1267 | Black-Scholes | Volatility | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.0% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;38.0% | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.5% |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24117 |  |  |  |  |  |

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[**Table of Contents**](#TableOfContents)

The following table summarizes the significant non-observable inputs in the fair value measurements of our Level 3 investments by category of investment and valuation technique as of December 31, 2024 (fair value expressed in thousands; acreage range expressed in dollars and not rounded):

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  | **Range** | **Range** | **Range** |
| ***<u>(in thousands)</u>*** | **<u>Fair Value</u>** | **<u>Valuation Techniques</u>** | **<u>Unobservable Inputs</u>** | **<u>Minimum</u>** | **<u>Maximum</u>** | **<u>Weighted Average</u>** |
| **Limited liability company investments** |  |  |  |  |  |  |
|  |  |  | Acreage Value (per acre) | $1000 | $4000 | $1784 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equus Energy, LLC | $4000 | Guideline Transaction Method | Proved Reserve Multiple | 6.2x | 10.8x | 8.65x |
|  |  |  | Daily Production Multiple | 24,921.7x | 45,307.1x | 40,787.19x |
|  |  | Discounted Cash Flow | Discount Rate | 10.9% | 10.9% | 10.9% |
|  |  | Transaction Price |  | $4000 | $4000 | $4000 |
|  |  | Guideline Public Company Method | Proved Reserve Multiple | 6,415x | 7,342x | 6,878.5x |
|  |  | Guideline Public Company Method | Daily Production Multiple | 29,948x | 40,946x | 35,447x |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan E&P, Inc. | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13000 | Guideline Transaction Method | Proved Reserve Multiple | 5,304x | 8,786x | 7,045x |
|  |  | Guideline Transaction Method | Daily Production Multiple | 22,297x | 32,595x | 27,446x |
|  |  | Discounted Cash Flow | Discount Rate | 11.7% | 12.6% | 12.15% |
| **Senior debt** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan E&P, Inc. | <u>10500</u> | Yield analysis | Company specific yield | 11.52% | 12.0% | 11.76% |
|  | $27500 |  |  |  |  |  |

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The various weighted averages in the tables above were determined based on acreage, reserves, production and, in the case of discount rates, an arithmetic average of minimum and maximum rates. Because of the inherent uncertainty of the valuation of portfolio securities which do not have readily ascertainable market values, our fair value determinations may materially differ from the values that would have been used had a ready market existed for the securities.

We adjust our net asset value for the changes in the value of our publicly held securities, if applicable, and material changes in the value of private securities, generally determined on a quarterly basis or as announced in a press release, and report those amounts to Lipper Analytical Services, Inc. Our net asset value appears in various publications, including *Barron's* and *The Wall Street Journal*.

**Investment Transactions**— Investment transactions are recorded at fair value on the trade date. Current-period changes in fair value of investments are reflected as a component of the net unrealized appreciation of portfolio securities on the Statements of Operations. The net change in unrealized appreciation primarily reflects the change in investment fair values as of the last business day of the reporting period, including the reversal of previously recorded unrealized gains or losses for investments sold during the period. Realized gains or losses are recognized as the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments written off during the period, net of recoveries. As of September 30, 2025, we have no assets going through foreclosure. Realized gains and losses on investments sold are computed on a specific identification basis.

We classify our investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, "Control Investments" are defined as investments in companies in which the Fund 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 we own 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 and Dividend Income Recognition**—We record interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis to the extent that we expect to collect such amounts. We accrete or amortize 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. We stop accruing interest on investments when we determine that interest is no longer collectible. We may also impair the accrued interest when we determine that all or a portion of the current accrual is uncollectible. If we receive any cash after determining that interest is no longer collectible, we treat such cash as payment on the principal balance until the entire principal balance has been repaid, before we recognize any additional interest income. We will write off uncollectible interest upon the occurrence of a definitive event such as a sale, bankruptcy, or reorganization of the relevant portfolio interest. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution.

**Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation**—Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net change in unrealized appreciation or depreciation reflects the net change in the fair value of the portfolio company investments and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

**Payment in Kind Interest (PIK)—**From time to time, we have loans in our portfolio that may pay PIK interest. We add 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. If we regain our status as a RIC, we will be required to pay out to stockholders this non-cash source of income in the form of dividends even if we have not yet collected any cash in respect of such investments. To the extent we remain BDC and a RIC, we will continue to pay out net investment income and/or realized capital gains, if any, on an annual basis as required under the 1940 Act.

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**Earnings Per Share**—Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. Diluted earnings per share adjusts the basic EPS for the potential dilution that could occur if the Equus Note (1,333,333 shares) and Warrants (1,999,999 shares) were exercised or converted into common stock. The impact of the Equus Note and Warrants were anti-dilutive for the three months and nine months ended September 30, 2015 due to the net loss for the periods.

The following table presents the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2025 and 2024 respectively:

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| | | | | |
|:---|:---|:---|:---|:---|
| *(in thousands, except share and per-share data)* | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Net income (loss) attributable to common shareholders | $(8101) | $(9627) | $(4244) | $(8122) |
| Weighted average shares outstanding - basic | 13681 | 13586 | 13618 | 13586 |
| Effect of dilutive securities |  |  | $— |  |
| Weighted average shares outstanding - diluted | 13681 | 13586 | 13618 | 13586 |
| Basic earnings per share | $(0.59) | $(0.70) | $(0.31) | $(0.59) |
| Diluted earnings per share | $(0.59) | $(0.70) | $(0.31) | $(0.59) |

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**Distributable Earnings**—The components that make up distributable earnings (accumulated undistributed deficit) on the Condensed Balance Sheet as of September 30, 2025 and December 31, 2024 are as follows:

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| | | |
|:---|:---|:---|
| *(in thousands)* | **September 30, 2025** | **December 31, 2024** |
| Accumulated undistributed net investment losses | $(57896) | $(54780) |
| Unrealized appreciation of portfolio securities, net | 15935 | 8889 |
| Unrealized depreciation on warrant liability | (1158) |  |
| Accumulated undistributed net capital gains | (6414) | 602 |
| Accumulated deficit | $(49533) | $(45289) |

---

**Taxes**—Historically, the Company has filed an income tax return as a Regulated Investment Company. However, following the Company's election not to qualify as a RIC in the fourth quarter of 2024, the Company is now classified as a C corporation for income tax purposes and is subject to guidance under ASC 740, accounting for income taxes.

The Company records income taxes for interim reporting periods based on an estimated annual effective tax rate. This estimated rate is reassessed each quarter and may fluctuate due to changes in forecasted annual operating income, adjustments to the valuation allowance on deferred tax assets, and changes in actual or projected permanent book-to-tax differences. The Company's effective tax rate for the nine months ended September 30, 2025 was 0.0%, and accordingly, no income tax expense or benefit was recorded for the quarter.

The Company records deferred tax assets to the extent the Company believes these assets will more-likely-than-not be realized. In making such determinations, the Company considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies and recent financial operations. For the nine months ended September 30, 2025, the Company believes its deferred tax assets will more-likely-than-not be realized and has recorded a valuation allowance against its net deferred tax assets.

On July 4, 2025, Public Law No. 119-21, commonly referred to as the One Big Beautiful Bill Act (the "Act"), was enacted. Key provisions of the Act affecting the Company include: (i) a permanent reduction in the corporate tax rate, (ii) the permanent extension of 100% bonus depreciation for qualified property, and (iii) modifications to the calculation of the §163(j) business interest expense limitation.

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In accordance with ASC 740, the Company recognized the effects of the new tax law in the period of enactment. The adoption of the Act did not result in any material impact to current or deferred income tax expense for the quarter ended September 30, 2025. The Company continues to evaluate the impact of the Act on its financial statements and will update its estimates as additional guidance becomes available.

Texas margin tax applies to entities conducting business in Texas and is based on Texas-sourced taxable margin. Because the margin tax is calculated on a base that incorporates both revenue and expense elements, it is treated as an income tax under ASC 740. For the quarter ended September 30, 2025, no provision for margin tax expense has been recorded.

ASC Topic 740-10, *Income Taxes,* provides that a tax benefit from an uncertain position may be recognized in the financial statements when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits. This guidance also addresses measurement, derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition. The Company has no material uncertain tax positions in its prior or current filings

**Segments**—Equus operates in a single segment with a principal investment objective to maximize total return from generating current income from debt investments and current income and capital appreciation from equity and equity-related investments. The Company's Investment Committee and Chief Executive Officer collectively perform the function that allocates resources and assesses performance, and thus together, serve as the Company's chief operating decision maker (the "CODM"). Among other metrics, the CODM uses net investment income as a primary GAAP profit or loss metric used in making operating decisions, which can be found on the Statement of Operations along with significant expenses. The measure of segment assets is reported on the Balance Sheets as total assets.

**Cash and Cash Equivalents and Restricted Cash—** Cash includes unrestricted demand deposits at highly rated financial institutions and highly liquid investments with original maturities of three months or less. The Company's cash balances may exceed Federal Deposit Insurance Corporation ("FDIC") insured limits from time to time. Although the Company bears risk to amounts in excess of those insured by the FDIC, it does not anticipate any losses as a result due to the financial position and creditworthiness of the depository institutions in which those deposits are held. We include our investing activities within cash flows from operations.

 **Recent Accounting Standards—**We consider the applicability and impact of all accounting standard updates ("ASU") issued by the Financial Accounting Standards Board ("FASB"). ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on our financial statements.

**Accounting Standards Not Yet Adopted**—In November 2024, FASB issued ASU 2024-03, "Income Statement – Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses". The amendments in this Update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2026. Early adoption is permitted. The Fund is currently evaluating the impact of this standard on the financial statements.

In January 2025, FASB issued ASU 2025-01, "Income Statement – Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), Clarifying the Effective Date". The amendment in this Update amends the effective date of Update 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026. Early adoption of Update 2024-03 is permitted. The Fund is currently evaluating the impact of this standard on the financial statements.

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In November 2024, FASB issued ASU 2024-04, "Debt with Conversion and Other Options (Subtopic 470-20), Induced Conversions of Convertible Debt Instruments". The amendments in this Update clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. An entity should assess whether this criterion is satisfied as of the date the inducement offer is accepted by the holder. If, when applying this criterion, the convertible debt instrument had been exchanged or modified (without being deemed substantially different) within the one-year period leading up to the offer acceptance date, an entity should compare the terms provided in the inducement offer with the terms that existed one year before the offer acceptance date. The amendments do not change the other criteria that are required to be satisfied to account for a settlement transaction as an induced conversion. The amendments in this Update also make additional clarifications to assist stakeholders in applying the guidance. Under the amendments, the incorporation, elimination, or modification of a VWAP formula does not automatically cause a settlement to be accounted for as an extinguishment; an entity should instead assess whether the form and amount of conversion consideration are preserved (that is, provided for in the inducement offer) using the fair value of an entity's shares as of the offer acceptance date. The amendments in this Update also clarify that the induced conversion guidance applies to a convertible debt instrument that is not currently convertible as long as it had a substantive conversion feature as of both its issuance date and the date the inducement offer is accepted. This update will be effective for financial statements issued for fiscal years beginning after December 15, 2025. Early adoption is permitted for all entities that have adopted the amendments in update 2020-06. The Fund is currently evaluating the impact of this standard on the financial statements.

In September 2025, FASB issued ASU 2025-07, "Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606)". The amendments in this Update address stakeholders' concerns that the application of the definition of a derivative is too broad and should not apply to certain contracts. Topic 815, Derivatives and Hedging, establishes accounting requirements for contracts that meet the characteristics-based definition of a derivative and are not otherwise excluded from the Topic's scope. Because of the broad application of the definition of a derivative, many types of contracts are being evaluated and potentially accounted for as derivatives. The amendments in this Update exclude from derivative accounting nonexchange-traded contracts with underlyings that are based on operations or activities specific to one of the parties to the contract. However, this scope exception does not apply to (1) variables based on a market rate, market price, or market index, (2) variables based on the price or performance of a financial asset or financial liability of one of the parties to the contract, (3) contracts (or features) involving the issuer's own equity that are evaluated under the guidance in Subtopic 815-40, Derivatives and Hedging—Contracts in Entity's Own Equity, and (4) call options and put options on debt instruments. This update will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Fund is currently evaluating the impact of this standard on the financial statements.

**Accounting Standards Recently Adopted**—On January 1, 2024, we adopted ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". The amendments in this ASU require improved reportable segment information on an annual and interim basis, primarily through enhanced disclosures about significant segment expenses. See Note 3 – Segments for the incremental disclosures.

On January 1, 2025, we adopted ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The amendments in this ASU require improved annual income tax disclosures surrounding rate reconciliation, income taxes paid, and other disclosures. This ASU effects financial statement disclosure only, which is not required until year end 2025, and as a result, does not effect our results of operations of financial condition.

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**(4)** **Related Party Transactions and Agreements** 

Except as noted below, as compensation for services to the Fund, each Independent Director receives an annual fee of $40,000 paid quarterly in arrears, a fee of $2,000 for each meeting of the Board of Directors or committee thereof attended in person, a fee of $1,000 for participation in each telephonic meeting of the Board or committee thereof, and reimbursement of all out-of-pocket expenses relating to attendance at such meetings. The chair of each of our standing committees (audit, compensation, and nominating and governance) also receives an annual fee of $50,000, payable quarterly in arrears. We may also pay other one-time or recurring fees to members of our Board of Directors in special circumstances. None of our interested directors receive annual fees for their service on the Board of Directors.

In respect of services provided to the Fund by members of the Board not in connection with their roles and duties as directors, the Fund pays a rate of $300 per hour for such services.

Accounts payable to related parties were $1.0 million and $0.1 million for the nine months ended September 30, 2025 and 2024, respectively.

**(5)** **Issuance of Equus Securities** 

***Convertible Senior Note***

On February 7, 2025, the Fund issued a one-year senior convertible promissory note bearing interest at the rate of 10.0% per annum in exchange for $2.0 million in cash ("Equus Note"). The Equus Note is convertible into shares of the Fund's common stock at a conversion price of $1.50 per share. Pursuant to the terms of the Equus Note, the holder has the right, at its option, at any time to convert the Equus Note into a number of fully-paid and nonassessable shares of Equus common stock determined by dividing (i) the sum of the outstanding principal balance and accrued but unpaid interest of the Equus Note being converted by (ii) the conversion price.

The Fund has the right, at any time and from time to time, to prepay the Equus Note in whole or in part without premium or penalty. All interest payments may be made in cash and/or in shares of Equus common stock at the sole option of the Fund. All payments due under the Equus Note are senior to all other indebtedness of the Fund and its subsidiaries.

The Fund accounts for the Equus Note under ASC 470-20, "*Debt—Debt with Conversion and other Options*" ("ASC 470"). The Equus Note is assessed under ASC 815 for any conversion features which may require bifurcation.

The Fund is not required to account for the debt instrument at fair value, and did not elect to measure debt at fair value in accordance with ASC 815, *Derivatives and Hedging*, and ASC 825, *Financial Instruments*.

We evaluated the conversion feature of the Equus Note offering for an embedded derivative in accordance with ASC 815, *Derivatives and Hedging*, and the substantial premium model in accordance with ASC 470, *Debt*. Based on our assessment, separate accounting for the conversion feature of the Equus Note is not required.

The Fund has $1,932,000 and $0 in convertible notes payable as of September 30, 2025, and December 31, 2024, respectively.

The balances as of September 30, 2025 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | &nbsp;&nbsp;Issue date | &nbsp;&nbsp;Maturity date | &nbsp;&nbsp;Conversion price | &nbsp;&nbsp;Conversion shares |
| &nbsp;&nbsp;About Investment, Ltd &nbsp;&nbsp;$1932000<sup>(a)</sup> &nbsp;&nbsp;<sup>(b)</sup> | &nbsp;&nbsp;2/7/2025 | &nbsp;&nbsp;2/7/2026 | &nbsp;&nbsp;$1.50 | &nbsp;&nbsp;1999999 |

---

<sup>(a)</sup> Including accrued interest of $131,000 as of September 30, 2025.

<sup>(b)</sup> Collateral for the Equus Note consists of the Fund's holdings in General Enterprise Ventures, Inc. as shown in the Schedule of Investments.

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The net carrying amount of the liability and equity components of the Note was as follows:

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;**September 30, 2025** |
| &nbsp;&nbsp;Note liability component: |  |
| &nbsp;&nbsp; Principal | &nbsp;&nbsp;$2000000 |
| &nbsp;&nbsp; PIK'd interest | &nbsp;&nbsp;131111 |
| &nbsp;&nbsp; Debt discount | &nbsp;&nbsp;(<u>199111</u>) |
| &nbsp;&nbsp;**Net carrying amount** | &nbsp;&nbsp;**$1932000** |

---

Interest expense recognized related to the convertible note for the nine months ended September 30, 2025 and 2024 was $131,000 and $0, respectively.

***Stock Purchase Warrants***

 ****

Contemporaneously with the issuance of the Equus Note, the Fund also issued two common stock purchase warrants (collectively, the "Warrants") to acquire an aggregate of 1,999,999 shares of the Fund's common stock at an exercise price of $1.50 per share of which 1,333,333 were issued to the holder of the Equus Note.

Initially, the Fund would account for warrants issued to purchase shares of its common stock as equity in accordance with FASB ASC 480, *Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock, Distinguishing Liabilities from Equity.* However, during the quarter ended September 30, 2025 we concluded since the terms of the Warrants issued to the Equus Note holder may be modified by the holder thereof in the event of the subsequent issuance of Equus securities with terms deemed by such holders to be more favorable than the Warrants, we should account for the Warrants as a liability. Accordingly, we recorded an immaterial out-of-period adjustment to reclassify the initial value of the warrants of $437,500 from APIC to warrant liability and a write up to its absolute initial value of $560,000 and to record the subsequent change in fair value, which was unrealized appreciation of approximately $235,000 from inception to March 31, 2025 and unrealized depreciation of approximately $495,000 for the three months ended June 30, 2025. During the three months ended September 30, 2025 the warrants had an unrealized depreciation of approximately $898,000, for a cumulative year to date unrealized depreciation of $1,158,142 at September 30, 2025.

Subsequent to reclassification of the Warrants as described above, the Fund accounts for the Warrants as a liability under fair value Level 3 hierarchy, using a Black-Scholes option pricing model. The assumptions used to measure the fair value as of September 30, 2025 under this model include the following:

---

| | |
|:---|:---|
| &nbsp;&nbsp;Stock price | &nbsp;&nbsp;$2.25 |
| &nbsp;&nbsp;Exercise price | &nbsp;&nbsp;$1.50 |
| &nbsp;&nbsp;Expected volatility | &nbsp;&nbsp;51.0% |
| &nbsp;&nbsp;Expected term (years) | &nbsp;&nbsp;4.35 |
| &nbsp;&nbsp;Risk free rate | &nbsp;&nbsp;3.71% |
| &nbsp;&nbsp;Dividend yield | &nbsp;&nbsp;0.0% |

---

The net carrying amount of the liability related to the Warrants was as follows:

---

| | |
|:---|:---|
|  | &nbsp;&nbsp;**September 30, 2025** |
| &nbsp;&nbsp;Warrant liability component: |  |
| &nbsp;&nbsp; Warrant at inception | &nbsp;&nbsp;$560000 |
| &nbsp;&nbsp; Unrealized depreciation on warrant liability | &nbsp;&nbsp; 1158142 |
| &nbsp;&nbsp;**Net carrying amount of the warrant liability** | &nbsp;&nbsp;**$1718142** |

---

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(6) Portfolio Securities**

In the first nine months of 2025, we completed the following investment transactions:

*New Portfolio Investment*. On February 10, 2025, we purchased from General Enterprise Ventures, Inc., a developer of fire suppression products ("GEVI"), a 1-year senior convertible promissory note bearing interest at the rate of 10% per annum, in exchange for $1.5 million in cash ("GEVI Note"). The GEVI Note is convertible into shares of GEVI's common stock at a conversion price of $0.40 per share. Contemporaneously with the purchase of the GEVI Note, the Fund also received a common stock purchase warrant to acquire an aggregate of 1,875,000 shares of GEVI common stock at an exercise price of $0.50 per share ("GEVI Warrant"). On August 28, 2025, GEVI effected a 1-for-6 reverse split of its outstanding shares, which therefore increased the exercise price of the GEVI Warrant to $3.00 per share and reduced the number of shares subject to the GEVI Warrant to 312,500 shares. On September 22, 2025, we converted the GEVI Note, inclusive of $1.5 million in principal and $93,699 in interest, as accrued, into an aggregate of 664,041 post reverse-split shares of GEVI common stock. The shares of GEVI are publicly traded over the counter on the pink-sheets and, as of September 30, 2025, the closing trading price of GEVI shares was $5.89 per share ($0.98 on a pre-split basis) as compared to $11.70 per share ($1.95 on a pre-split basis) at June 30, 2025. Accordingly, during the three months ended September 30, 2025, we recorded a decrease of $3.4 million in the fair value of the GEVI Note and a $2.0 million decrease in the fair value of the GEVI Warrant.

*Sale of Equus Energy*. On March 3, 2025, we sold Equus Energy to North American Energy Opportunities Corp., a developer of upstream oil and gas assets ("NAEOC"). The consideration provided by NAEOC consisted of $1.25 million in cash and 27,500 shares of preferred stock, redeemable within 6 months of the date of issuance at $100.00 per share based upon fulfillment of certain conditions. The redemption conditions were not fulfilled by the 6-month deadline and, accordingly, at September 30, 2025, we valued the NAEOC preferred stock at $0 and realized a loss of $2.7 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(7) Conversion to an Operating Company**

**Authorization to Withdraw BDC Election**—In previous years, holders of a majority of the outstanding common stock of the Fund approved our cessation as a BDC under the 1940 Act and authorized our Board to cause the Fund's withdrawal of its election to be classified as a BDC, effective as of a date designated by the Board and our Chief Executive Officer. Although this authorization has since expired, we may receive a further authorization from our shareholders in the future as a consequence of our expressed intent to transform Equus into an operating company. Notwithstanding any such authorization to withdraw our BDC election, we will not submit any such withdrawal unless and until Equus has entered into a definitive agreement to effect a transformative transaction. Further, even if we are again authorized to withdraw our election as a BDC, we will require a subsequent affirmative vote from holders of a majority of our outstanding voting shares to enter into any such definitive agreement or change the nature of our business. While we are presently evaluating various opportunities that could enable us to accomplish this transformation, we cannot assure you that we will be able to do so within any particular time period or at all, and, although we expect that our shareholders will grant a further authorization, we do not expect to cause the Fund to withdraw its election to be classified as BDC prior to December 31, 2025. Moreover, we cannot assure you that the terms of any such transformative transaction would be acceptable to us.

**Increase in Authorized Shares—**On January 20, 2021, holders of a majority of the outstanding common stock of the Fund approved the restatement of our Certificate of Incorporation to increase the number of our authorized shares of common stock from 50,000,000 to 100,000,000, and the number of our authorized shares of preferred stock from 5,000,000 to 10,000,000. The increase is intended to help facilitate the transformation of Equus into an operating company and provide sufficient authorized shares to evaluate larger business concerns as possible acquisition or merger candidates.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(8) 2016 Equity Incentive Plan**

**Share-Based Incentive Compensation—**On June 13, 2016, our shareholders approved the adoption of our 2016 Equity Incentive Plan ("Incentive Plan"). On January 10, 2017, the SEC issued an order approving the Incentive Plan and certain awards intended to be made thereunder. The Incentive Plan is intended to promote the interests of the Fund by encouraging officers, employees, and directors of the Fund and its affiliates to acquire or increase their equity interest in the Fund and to provide a means whereby they may develop a proprietary interest in the development and financial success of the Fund, to encourage them to remain with and devote their best efforts to the business of the Fund, thereby advancing the interests of the Fund and its stockholders. The Incentive Plan is also intended to enhance the ability of the Fund and its affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Fund. The Incentive Plan permits the award of restricted stock as well as common stock purchase options. The maximum number of shares of common stock that are subject to awards granted under the Incentive Plan is 2,434,728 shares. The term of the Incentive Plan will expire on June 13, 2026. On March 17, 2017, we granted awards of restricted stock under the Incentive Plan to certain of our directors and executive officers in the aggregate amount of 844,500 shares. These awards were each subject to a vesting requirement over a 3-year period unless the recipient thereof was terminated or removed from their position as a director or executive officer without "cause", or as a result of constructive termination, as such terms are defined in the respective award agreements entered into by each of the recipients and the Fund. These were fully vested as of September 30, 2020. During the quarter ended September 30, 2025, we awarded an additional 380,523 shares of restricted stock under the Incentive Plan to officers of the Fund and to consultants of Morgan. These awards were fully vested at the grant date. We account for share-based compensation using the fair value method, as prescribed by ASC 718. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term. In the case of the most recent awards under the Incentive Plan which were fully-vested, we recognized share-based compensation expense on the date of grant, based on the number of restricted shares awarded and our closing trading price per share on such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(9) Morgan E&P, Inc.**

Morgan E&P, Inc. ("Morgan") was organized by the Fund on April 3, 2023 as a Delaware limited liability company and a wholly-owned subsidiary of the Fund. On September 5, 2025, Morgan converted to a Delaware corporation. On May 22, 2023, Morgan completed the acquisition of 4,747.52 net acres, in the Bakken/Three Forks formation in the Williston Basin of North Dakota, and acquired approximately 1,100 additional acres on September 26, 2023. During the second quarter of 2024, Morgan acquired an additional 810 net acres proximate to its existing holdings. The acreage and associated mineral rights were acquired from Pro Energy I LLC ("Pro Energy") who received a carried working interest of 20% in the acquired acreage.

Under the terms of the Purchase and Sale Agreement covering the initial acreage acquired by Morgan, Morgan is required to drill and complete a minimum of six wells within 18 months of receiving the first drilling permits. The average cost of drilling a new horizontal well is approximately $8.2 million. During the fourth quarter of 2023, Morgan sold certain of its wellbore interest in its initial 2 wells to a third party for $5.6 million in cash in exchange for a net revenue interest of approximately 27% in these wells.

During the fourth quarter of 2024, Morgan entered into an agreement to acquire the carried working interest held by Pro Energy in exchange for a payment of $2.4 million in cash.

During 2024, in addition to the increase in acreage noted above, Morgan also experienced an increase in proved reserves and probable reserves, largely due to the commencement of production of its initial two wells that were drilled and completed in the fourth quarter of 2023.

In May 2023, we entered into an agreement with Morgan to provide it up to $10.0 million in senior debt financing, subject to a schedule of disbursements and draws that we determine. In February 2024, we increased the total amount of the facility to $10.5 million. As of September 30, 2025, the facility had been fully-drawn.

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**Going-Concern**—The accompanying unaudited condensed consolidated financial statements of Morgan have been prepared on a going concern basis, which contemplates the near-term sale of quantities of oil and gas, realization of assets and the satisfaction of liabilities and other commitments in the normal course of business. As such, the unaudited condensed consolidated financial statements do not include adjustments relating to the recoverability and classification of assets and their carrying amount, or the amount and classification of liabilities that may result should Morgan be unable to continue as a going concern. As of September 30, 2025, Morgan does not have sufficient cash resources to fund its present operations. Morgan is presently seeking external financing to enable it to continue operations over the twelve months from the date of this quarterly report, but we cannot assure you that Morgan will be successful in doing so, or that such endeavors will generate sufficient liquidity to enable Morgan to continue operations over the next twelve months. These factors raise substantial doubt about Morgan's ability to continue as a going concern.

We do not consolidate the financial results of Morgan with the financial results of the Fund and, accordingly, only the value of our investment in Morgan is included on our balance sheets. Our investment in Morgan is valued in accordance with our normal valuation procedures and is based in part on a reserve report prepared for Morgan by Cawley, Gillespie, & Associates, Inc., an independent petroleum engineering firm, the transactions and values of comparable companies in this sector, and the estimated value of leasehold mineral interests associated with the acreage held by Morgan. A valuation of Morgan was performed by a third-party valuation firm, who recommended a value range of Morgan consistent with the fair value determined by our Management (See Schedule of Investments).

Below is summarized unaudited condensed financial information for Morgan E&P, Inc. as of September 30, 2025 and December 31, 2024 and for the three and nine months ended September 30, 2025 and 2024, respectively, (in thousands):

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**<u>MORGAN E&P, INC.</u>**

**<u>Unaudited Condensed Balance Sheet</u>**

---

| | | |
|:---|:---|:---|
|  | **September 30, 2025** | **December 31, 2024** |
| Assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash | $7 | $15 |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue receivables | 575 | 343 |
| &nbsp;&nbsp;&nbsp;&nbsp; Joint interest billing receivables | 1924 | 1738 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other receivables | 29 | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp; Prepaids and other current assets | 33 | 35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Current assets | 2568 | 2133 |
| Property, plant and equipment |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Oil and gas properties, net - full cost method | 6922 | 6959 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other property, plant and equipment, net | 26 | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total property, plant and equipment - net | 6948 | 6993 |
| Other noncurrent assets |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Operating lease right-of-use assets, net | 196 | 227 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total noncurrent assets | 196 | 227 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets | $9712 | $9353 |
| Liabilities and Shareholder's Equity: |  |  |
| Current liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | $6124 | $6656 |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue payable | 214 | 319 |
| &nbsp;&nbsp;&nbsp;&nbsp; Short-term loan payable | 2933 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Current portion of operating lease liabilities | 52 | 47 |
| &nbsp;&nbsp;&nbsp;&nbsp; Due to parent | 580 | 550 |
| &nbsp;&nbsp;&nbsp;&nbsp; Note payable - Due to parent | 10500 | 10500 |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued liabilities | 3228 | 3162 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities | 23631 | 10734 |
| Long-term liabilities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Asset retirement obligations | 4 | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp; Long-term operating lease liabilities | 168 | 207 |
| &nbsp;&nbsp;&nbsp;&nbsp; Long-term accrued liabilities - Due to parent | 2427 | 1471 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total long-term liabilities | 2599 | 12182 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities | 26230 | 22916 |
| &nbsp;&nbsp; Retained earnings - beginning of year | (13563) | (1804) |
| &nbsp;&nbsp; Current year deficit | (2955) | (11759) |
| Shareholder's equity | (16518) | (13563) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and shareholder's equity | $9712 | $9353 |

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**<u>MORGAN E&P, INC.</u>**

**<u>Unaudited Condensed Statement of Operations</u>**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** | **2025** | **2024** |
| Oil and gas revenue | 67 | 173 | 271 | 2639 |
| Operating costs and expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Lease operating | 589 | 380 | 645 | 2377 |
| &nbsp;&nbsp;&nbsp;&nbsp; Production and ad valorem taxes | 6 | 19 | 24 | 254 |
| &nbsp;&nbsp;&nbsp;&nbsp; Marketing, transportation and gathering | 8 | 4 | 24 | 82 |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, and amortization | 17 | 32 | 81 | 530 |
| &nbsp;&nbsp;&nbsp;&nbsp; General and administrative | 933 | 617 | 1458 | 1754 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating costs and expenses | 1553 | 1052 | 2232 | 4997 |
| Loss from operations | (1486) | (879) | (1961) | (2358) |
| Other income (expense) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest income |  |  |  | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other income | 10 |  | 10 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Interest expense | (370) | (317) | (1004) | (925) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total other income (expense), net | (360) | (317) | (994) | (919) |
| Net loss | $(1846) | $(1196) | $(2955) | $(3277) |

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**<u>MORGAN E&P, INC.</u>**

**<u>Unaudited Condensed Statement of Cash Flows</u>**

---

| | | |
|:---|:---|:---|
|  | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** |
| Cash flows from operating activities: |  |  |
| Net loss | $(2955) | $(3277) |
| &nbsp;&nbsp; Adjustments to reconcile net loss to cash flows provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Depreciation, depletion, amortization | 80 | 530 |
| &nbsp;&nbsp;&nbsp;&nbsp; Amortization of right-of-use asset | 31 | 33 |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue receivables | (232) | 181 |
| &nbsp;&nbsp;&nbsp;&nbsp; Joint interest billing receivables | (186) | 969 |
| &nbsp;&nbsp;&nbsp;&nbsp; Prepaids and other current assets | (25) | (35) |
| &nbsp;&nbsp;&nbsp;&nbsp; Accounts payable | (502) | 2613 |
| &nbsp;&nbsp;&nbsp;&nbsp; Revenue payable | (105) | 524 |
| &nbsp;&nbsp;&nbsp;&nbsp; Prepayments from working interest owners |  | (122) |
| &nbsp;&nbsp;&nbsp;&nbsp; Due to parent | 1368 | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment of operating lease liability | (34) | (17) |
| &nbsp;&nbsp;&nbsp;&nbsp; Accrued liabilities | 39 | (576) |
| &nbsp;&nbsp;&nbsp;&nbsp; Long Term Accrued liabilities - due to parent | 956 | 924 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities | (1565) | 1751 |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Additions to oil and gas properties | (30) | (6439) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in investing activities | (30) | (6439) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from short-term loan payable due Mill City Ventures | 3000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred financing costs - ST loan payable due Mill City | (75) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Repayment of Note payable | (1338) |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from Note payable - Due to parent |  | 2247 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by financing activities | 1587 | 2247 |
| Net change in cash | (8) | (2441) |
| Cash at beginning of period | 15 | 2441 |
| Cash at end of period | 7 | $— |
| Supplemental Disclosure of Cash Flow Information |  |  |
| &nbsp;&nbsp; Cash paid for interest: | $41 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-cash investing and financing activities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in capital accounts payable and capital accruals | (5) | 4888 |

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**Critical Accounting Policies for Morgan**

**Acquisitions**—Morgan evaluates each acquisition of oil and gas properties to determine whether each should be accounted for as an acquisition of assets or business in accordance with Accounting Standards Update No. 2017-01: Business Combinations (Topic 805) Clarifying the Definition of a Business ("ASU 2017-01").

Asset acquisitions are recorded at the cost of acquiring the property. The results of operations of the oil and gas properties acquired in the Company's acquisitions have been included in the consolidated financial statements since the closing dates of the respective acquisitions. A business combination may result in the recognition of a bargain purchase gain or goodwill based on the measurement of the fair value of the assets and liabilities acquired at the acquisition date as compared to the fair value of consideration transferred, adjusted for purchase price adjustments. The initial accounting for business combinations may not be complete and adjustments to provisional amounts, or recognition of additional assets acquired, or liabilities assumed, may occur as more detailed analyses are completed and additional information is obtained about the facts and circumstances that existed as of the acquisition dates.

**Oil & Gas Properties**—The method of accounting for oil and natural gas properties determines what costs are capitalized and how these costs are ultimately matched with revenue and expenses. Morgan uses the full cost method of accounting for oil and natural gas properties. Under the full cost method, all direct costs and certain indirect costs associated with the acquisition, exploration, and development of oil and natural gas properties are capitalized.

Oil and gas properties include costs that are excluded from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unproved properties and include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and exploration costs. The Company excludes these costs until the project is evaluated and proved reserves are established or impairment is determined. Excluded costs are reviewed at least annually to determine if impairment has occurred. The amount of any evaluated or impaired oil and natural gas properties is transferred to capitalized costs being amortized. For the nine months ended September 30, 2025 and 2024, the Company transferred $0.03 million and $1.5 million, respectively, to the full cost pool.

Oil and natural gas properties are depleted using the units-of-production method. The depletion expense is significantly affected by the unamortized historical and future development costs and the estimated proved oil and natural gas reserves. Estimation of proved oil and natural gas reserves relies on professional judgment and the use of factors that cannot be precisely determined. Holding all other factors constant, if proved oil and natural gas reserves were revised upward or downward, earnings would increase or decrease, respectively. Subsequent proved reserve estimates that are materially different from those reported would change the depletion expense recognized during the future reporting period. Proceeds from the sales or disposition of oil and natural gas of proved and unproved properties are accounted for as a reduction of capitalized costs with no gain or loss recognized, unless such reduction would significantly alter the relationship between capitalized costs and proved reserves, in which case the gain or loss is recognized in the statement of income. In general, a significant alteration occurs when the deferral of gains or losses will result in an amortization rate materially different from the amortization rate calculated upon recognition of gains or losses. Abandonments of properties are accounted for as adjustments of capitalized costs with no loss recognized.

Under the full cost accounting rules, total capitalized costs are limited to a ceiling equal to the present value of future net revenue, discounted at 10% per annum, plus the lower of cost or fair value of unevaluated properties less income tax effects (the "ceiling limitation"). Future net revenue used to calculate the ceiling do not include cash outflows associated with settling asset retirement obligations. Morgan performs an annual ceiling test to evaluate whether the net book value of the full cost pool exceeds the ceiling limitation. If capitalized costs (net of accumulated depreciation, depletion, and amortization) are greater than the discounted future net revenue or ceiling limitation, a write-down or impairment of the full cost pool is required. A write-down of the carrying value of the full cost pool is a non-cash charge that reduces earnings and impacts members' equity in the period of occurrence and typically results in lower depreciation, depletion, and amortization expense in future periods. Once incurred, a write-down is not reversible at a later date. The risk that Morgan will be required to write-down the carrying value of oil and natural gas properties increases during a period when oil or gas prices are depressed. In addition, a write-down may occur if estimates of proved reserves are substantially reduced or estimates of future development costs increase significantly.

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**Income Taxes**— Morgan was a single-member limited liability company that had elected to be taxed as a C Corporation under Subchapter C of the Internal Revenue Code from inception. Although Morgan later converted to a corporation, its federal tax treatment remained unchanged because of the original election. For state tax purposes, Morgan will file a combined Texas margin tax filing with its direct parent, Equus Total Return, Inc., and its related affiliates.

Morgan records income taxes for interim reporting periods based on an estimated annual effective tax rate. This estimated rate is reassessed each quarter and may fluctuate due to changes in forecasted annual operating income, adjustments to the valuation allowance on deferred tax assets, and changes in actual or projected permanent book-to-tax differences. Morgan's effective tax rate for the nine months ended September 30, 2025 was 0.0%, and accordingly, no income tax expense or benefit was recorded for the quarter.

Morgan records deferred tax assets to the extent Morgan believes these assets will more-likely-than-not be realized. In making such determinations, Morgan considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event Morgan were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance would be made which would reduce the provision for income taxes. . For the nine months ended September 30, 2025, the Company believes its deferred tax assets will more-likely-than-not be realized and has recorded a valuation allowance against its net deferred tax assets.

On July 4, 2025, Public Law No. 119-21, the Act was signed into law by the U.S. government. Key provisions of the Act effecting Morgan include: (i) the permanent reduction of the corporate tax rate, (ii) the permanent extension of 100% bonus depreciation for qualified property, and (iii) modifications to the calculation for excess business interest expense limitation under § 163(j) to adjusted taxable income calculation on the business interest expense limitation.

In accordance with ASC 740, Morgan has recognized the effects of the new tax law in the period of enactment. The adoption of the Act did not result in any material impact to current or deferred income tax expense for the quarter ended September 30, 2025. Morgan continues to evaluate the impact of the Act on its financial statements and will update its estimates as additional guidance becomes available.

ASC Topic 740-10, *Income Taxes,* provides that a tax benefit from an uncertain position may be recognized in the financial statements when it is more-likely-than-not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on technical merits. This guidance also addresses measurement, derecognition, classification, interest and penalties, accounting for interim periods, disclosure and transition. Morgan has no material uncertain tax positions in its prior or current filings

**Asset Retirement Obligations**—The fair value of asset retirement obligations are recorded in the period in which they are incurred if a reasonable estimate of fair value can be made, and the corresponding cost is capitalized as part of the carrying amount of the related long-lived asset. The fair value of the asset retirement obligation is measured using expected future cash outflows discounted at Morgan's credit- adjusted risk-free interest rate. Fair value, to the extent possible, should include a market risk premium for unforeseeable circumstances. No market risk premium was included in Morgan's asset retirement obligation fair value estimate since a reasonable estimate could not be made. The liability is accreted to its then present value each period, and the capitalized cost is depleted or amortized over the estimated recoverable reserves using the units-of-production method. If the obligation is settled for other than the carrying amount of the liability, the Company will record the difference to the full cost pool.

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**Environmental Matters**

We do not believe the existence of current environmental laws or interpretations thereof will materially hinder or adversely affect Morgan's business operations; however, there can be no assurances of future effects on Morgan of new laws or interpretations thereof.

**Environmental Contingencies**

Morgan's activities are subject to local, state, and federal laws and regulations governing environmental quality and pollution control in the United States. The exploration, drilling and production from wells, natural gas facilities, including the operation and construction of pipelines, plants and other facilities for transporting, processing, treating, or storing natural gas and other products, are subject to stringent environmental regulation by state and federal authorities, including the Environmental Protection Agency ("EPA"). Such regulation can increase the cost of planning, designing, installing, and operating such facilities.

**Financing**

On August 14, 2025, Morgan secured a $3 million loan facility, the proceeds of which were used to fund near-term drilling and work-over operations in the Bakken Shale formation of North Dakota's Williston Basin on two existing but non-producing wells owned by Morgan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(10)** **Subsequent Events** 

Management performed an evaluation of the Fund's activity through the date the financial statements were issued, noting no subsequent event.

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

Equus Total Return, Inc. ("we," "us," "our," "Equus," and the "Fund"), a Delaware corporation, was formed on August 16, 1991. Our shares trade on the New York Stock Exchange under the symbol 'EQS'. Our investment strategy seeks to provide the highest total return, consisting of capital appreciation and current income.

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The information contained in this section should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Quarterly Report and in conjunction with the financial statements and notes thereto in the Fund's Form 10-K for the year ended December 31, 2024, as filed with the SEC. In addition, some of the statements in this report constitute forward-looking statements. The matters discussed in this Quarterly Report, as well as in future oral and written statements by management of Equus, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, and the availability of additional capital. In light of these and other uncertainties, the inclusion of a forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward- looking statements contained in this Quarterly Report include statements as to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our future operating results;

• our business prospects and the prospects of our existing and prospective portfolio companies;

• the return or impact of current and future investments;

• our contractual arrangements and other relationships with third parties;

• the dependence of our future success on the general economy and its impact on the industries in which we invest;

• the financial condition and ability of our existing and prospective portfolio companies to achieve their objectives;

• our expected financings and investments;

• our regulatory structure and tax treatment;

• our ability to qualify and operate as a BDC and a RIC, including the impact of changes in laws or regulations governing our operations, or the operations of our portfolio companies;

• the adequacy of our cash resources and working capital;

• the timing of cash flows, if any, from the operations of our portfolio companies;

• the impact of fluctuations in interest rates on our business;

• the valuation of our investments in portfolio companies, particularly those having no liquid trading market;

• our ability to recover unrealized losses;

• market conditions and our ability to access additional capital, if deemed necessary;

• changes in interest rates and overall investment activity;

• developments in the global economy and resulting demand and supply for oil and natural gas;

• natural or man-made disasters and other external events that may disrupt our operations; and

• continued volatility of oil and natural gas prices.

There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. For a discussion of factors that could cause our actual results to differ from forward-looking statements contained in this Quarterly Report, please see the discussion in Part II, "*Item 1A. Risk Factors*", and in Part I, "*Item 1A. Risk Factors*" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 ("10-K"). In particular, you should carefully consider the risks we have described in the 10-K and elsewhere in this Quarterly Report concerning our efforts to transform Equus into an operating company, as well as the coronavirus pandemic and the economic impact of the coronavirus on the Fund and our sole remaining portfolio company, as well as on oil and gas markets generally. You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date this Quarterly Report is filed with the SEC.

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We attempt to maximize the return to stockholders in the form of current investment income and long-term capital gains by investing in the debt and equity securities of companies with a total enterprise value of between $5.0 million and $75.0 million, although we may engage in transactions with smaller or larger investee companies from time to time. We seek to invest primarily in companies pursuing growth either through acquisition or organically, leveraged buyouts, management buyouts and recapitalizations of existing businesses or special situations. Our income-producing investments consist principally of debt securities including subordinate debt, debt convertible into common or preferred stock, or debt combined with warrants and common and preferred stock. Debt and preferred equity financing may also be used to create long- term capital appreciation through the exercise and sale of warrants received in connection with the financing. To the extent that we remain a BDC, we will seek to achieve capital appreciation by making investments in equity and equity-oriented securities issued by privately-owned companies (and smaller public companies) in transactions negotiated directly with such companies. Given market conditions over the past several years and the performance of our portfolio, our management and Board of Directors believe it is prudent to continue to review alternatives to refine and further clarify the current strategies.

We elected to be treated as a BDC under the 1940 Act. Prior to the fourth quarter of 2024, we qualified as a regulated investment company ("RIC") for federal income tax purposes and, therefore, were not required to pay corporate income taxes on any income or gains that we would have distributed distribute to our stockholders. During the fourth quarter of 2024, we elected to not qualify as a RIC and, consequently, we will be subject to normal corporate rates of taxation of our income and gains and will not be permitted to deduct distributions paid to our stockholders.

From time to time, we may have certain wholly-owned taxable subsidiaries ("Taxable Subsidiaries") each of which may hold one or more portfolio investments listed on our Schedules of Investments. The purpose of these Taxable Subsidiaries is to permit us to hold certain income-producing investments or portfolio companies organized as limited liability companies, or LLCs, (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of our gross revenue for income tax purposes must consist of investment income. Absent the Taxable Subsidiaries, a portion of the gross income of these income-producing investments or of any LLC (or other pass-through entity) portfolio investment, as the case may be, would flow through directly to us for the 90% test. To the extent that such income did not consist of investment income, it could jeopardize our ability to requalify as a RIC and, therefore, cause us to incur federal income taxes as described above. The income of the LLCs (or other pass-through entities) owned by Taxable Subsidiaries is taxed to the Taxable Subsidiaries and does not flow through to us, thereby helping us obtain (or preserve, as the case may be) RIC status and the resultant tax advantages. We do not consolidate the Taxable Subsidiaries for income tax purposes, with the exception of Texas Margin Tax, which is an entity level tax. The Taxable Subsidiaries may generate income tax expense because of the Taxable Subsidiaries' ownership of the portfolio companies. We reflect any such income tax expense on our Statements of Operations.

**Conversion to an Operating Company**

*Authorization to Withdraw BDC Election*. In previous years, holders of a majority of the outstanding common stock of the Fund approved our cessation as a BDC under the 1940 Act and authorized our Board to cause the Fund's withdrawal of its election to be classified as a BDC, effective as of a date designated by the Board and our Chief Executive Officer. Although this authorization has since expired, we may receive a further authorization from our shareholders in the future as a consequence of our expressed intent to transform Equus into an operating company. Notwithstanding any such authorization to withdraw our BDC election, we will not submit any such withdrawal unless and until Equus has entered into a definitive agreement to effect a transformative transaction. Further, even if we are again authorized to withdraw our election as a BDC, we will require a subsequent affirmative vote from holders of a majority of our outstanding voting shares to enter into any such definitive agreement or change the nature of our business. While we are presently evaluating various opportunities that could enable us to accomplish this transformation, we cannot assure you that we will be able to do so within any particular time period or at all, and, although we expect that our shareholders will grant a further authorization, we do not expect to cause the Fund to withdraw its election to be classified as BDC prior to December 31, 2025. Moreover, we cannot assure you that the terms of any such transformative transaction would be acceptable to us.

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**Reduction in Asset Coverage Ratio**

On November 14, 2019, our shareholders approved a reduction in our asset coverage ratio from 200% to 150%. Prior to the reduction, we were restricted in the amount that we could borrow to the value of our net assets. The reduction in our asset coverage from 200% to 150% means that we may now borrow up to twice the value of our net assets. Except for a margin loan that we have previously procured each quarter to acquire U.S. Treasury bills as part of the maintenance of our RIC status, we have not incurred any additional borrowings as a consequence of this authorization.

**2016 Equity Incentive Plan**

On June 13, 2016, our shareholders approved the adoption of our 2016 Equity Incentive Plan ("Incentive Plan"). On January 10, 2017, the SEC issued an order approving the Incentive Plan and certain awards intended to be made thereunder. The Incentive Plan is intended to promote the interests of the Fund by encouraging officers, employees, and directors of the Fund and its affiliates to acquire or increase their equity interest in the Fund and to provide a means whereby they may develop a proprietary interest in the development and financial success of the Fund, to encourage them to remain with and devote their best efforts to the business of the Fund, thereby advancing the interests of the Fund and its stockholders. The Incentive Plan is also intended to enhance the ability of the Fund and its affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Fund. The Incentive Plan permits the award of restricted stock as well as common stock purchase options. The maximum number of shares of common stock that are subject to awards granted under the Incentive Plan is 2,434,728 shares. The term of the Incentive Plan will expire on June 13, 2026. On March 17, 2017, we granted awards of restricted stock under the Plan to certain of our directors and executive officers in the aggregate amount of 844,500 shares. These awards were each subject to a vesting requirement over a 3-year period unless the recipient thereof was terminated or removed from their position as a director or executive officer without "cause", or as a result of constructive termination, as such terms are defined in the respective award agreements entered into by each of the recipients and the Fund. During the quarter ended September 30, 2025, we awarded an additional 380,523 shares of restricted stock under the Incentive Plan. As of September 30, 2020, all awards granted under the Incentive Plan, including the new awards recently granted, were fully-vested. We account for share-based compensation using the fair value method, as prescribed by ASC 718. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term. In the case of the most recent awards under the Incentive Plan which were fully-vested, we recognized share-based compensation expense on the date of grant, based on the number of restricted shares awarded and our closing trading price per share on such date.

**Critical Accounting Policies**

See the Fund's Critical Accounting Policies from the disclosure set forth in the Fund's Annual Report on Form 10-K for the year ended December 31, 2024.

 **Current Market Conditions**

*Impact of Economic and Geopolitical Events on the Oil and Gas Sector.* Beginning in the second quarter of 2022, crude prices began a steady decline following increases that were largely due to increased post-Covid demand and the buildup and subsequent invasion of Ukraine by Russian forces. Prices began a rise and fall in successive quarters between the third quarters of 2023 and the fourth quarter of 2024 before experiencing a slow and steady decline from the end of 2024 and throughout 2025, and stood at $63.17 as of September 30, 2025. Natural gas prices experienced high volatility in 2022 before collapsing in 2023 and then steadily increasing each quarter thereafter until the first quarter of 2025 before declining in the second and third quarters of 2025, finishing the quarter ended September 30, 2025 at $3.12 per MMBTU. Relative oil and gas price stability has been a significant factor in increased consolidation activity in the Williston Basin region in North Dakota where Morgan E&P, Inc. holds its development rights.

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*The U.S. Economy*. U.S. GDP is expected to increase at an annualized rate of 3.9% for the third quarter of 2025 as compared to an increase of 3.8% for the second quarter of 2025 and a 0.5% contraction in the first quarter of the year. Actual GDP results for the third quarter of 2025 have been delayed due to the shutdown of the federal government. Consensus estimates for the third quarter of 2025 have varied significantly, but the actual growth rate is expected to be almost a full percentage point higher than the third quarter of 2024 which saw annualized GDP growth of 2.8%. The principal drivers of the increases over the second and third quarters of 2025 were consumer spending and gains in private-sector activity, including manufacturing and auto output. The Congressional Budget Office continues to project full-year GDP growth of 1.9% for 2025, with a modest slowdown to 1.8% in 2026. (*Sources: Federal Reserve Bank of Atlanta; Bureau of Economic Analysis; The Congressional Budget Office*).

*Employment and Housing*. The U.S. added an estimated 57,000 jobs in October 2025 after a relatively weak third quarter in which job growth averaged just 37,000 per month—almost as slow as the 35,000 per month averaged in the second quarter of 2025 which was the slowest hiring pace since early 2020. The unemployment rate in October 2025 held relatively steady at 4.3%, unchanged from September and August 2025. The labor force participation rate also held steady at 62.3% as of August 31, 2025 which remained relatively unchanged from the end of the second quarter of 2025. The Congressional Budget Office now projects the unemployment rate for the fourth quarter of 2025 will increase to 4.5 before tapering to 4.2% for 2026 and 4.4% for 2027. Persistently high borrowing costs relative to the pandemic lows continue to suppress sales volumes of both new and existing homes, with existing home sales presently at only 2.8% of available inventory, its lowest level in decades. Despite these headwinds, mid-level home prices have continued to rise, outpacing inflation and driven by constrained supply. Conflicting economic signals—such as stable unemployment amid weak job creation and negative revisions—have kept mortgage rates elevated, with the 30-year fixed rate averaging 6.25% in October 2025. Acquisition and refinancing activity is unlikely to rebound meaningfully until early 2026 (*Sources: Federal Reserve Bank of Chicago; Bureau of Labor Statistics; Congressional Budget Office*).

*Consumer Prices*. After experiencing substantial increases in 2022 and into 2023, consumer price growth continued to moderate through 2024 and into the first nine months of 2025. As of October 2025, the consumer price index was up 3.0% over the previous 12-month period, up from 2.9% in September and August 2025, marking the ninth consecutive quarter of relatively stable inflation. Consensus estimates for the remainder of 2025 are that inflation will remain consistent with the previous 10 months of the year. Thus far, the effect of the current administration's tariff policy remains muted, but many analysts still anticipate upward pressure on prices, with inflation expected to accelerate in 2026. (*Sources: Bureau of Economic Analysis; Bureau of Labor Statistics; Morgan Stanley Research; Goldman Sachs*).

 

*Interest Rates*. Principally as a response to weaker employment figures and restrained inflation, the Federal Reserve cut interest rates in each of the FOMC's September and October 2025 meetings by 25 basis points each time, with the federal funds rate range now down to between 3.75% and 4.00%. However, the Federal Reserve Chair declined to signal its intention to further reduce rates in its upcoming December 2025 meeting. Given the uncertainty regarding the U.S. economy and the effect of current tariff policy, commentators are mixed in forecasting further rate cuts in late 2025 or early 2026. (*Sources: The Wall Street Journal; The Federal Reserve Board*).

*Mergers and Acquisitions*. Global merger and acquisition activity in the quarter ended September 30, 2025 has rebounded significantly, with total transaction value up 234% as compared to the third quarter of 2024 and substantial increases in large deal volume in the third quarter of 2025 as compared to the third quarter of 2024. Merger and acquisition activity and transaction values in September 2025 were up 41% and 110%, respectively, as compared to September 2024 activity increasing 41% in September 2025 as compared to September 2025. Technology, energy, life sciences, and telecommunications represented the sectors which experienced the most significant increases in deal activity during the third quarter of 2025. Heading into 2026, expectations for increased consolidation remain high, driven largely by transactions in the technology sector, especially in AI, cloud infrastructure, and financial services. (*Sources: Ernst & Young; Bloomberg*).

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*Private Equity*. Private equity activity during the first half of 2025 continued a softening trend which began in the fourth quarter 2024. However, beginning in August 2025 and continuing through the end of September 2025, private equity activity increased sharply as compared to the first half of the year, with PE funds contributing substantially to the rise in mergers and acquisition activity described above. Overall, PE transactions increased 28% in the third quarter of 2025 as compared to the second quarter of 2025, and 38% as compared to the third quarter of 2024. PE fundraising trends, however, remained subdued, extending the three-year decline that began in 2022, as limited partners exercised greater caution amid macroeconomic uncertainty. Despite persistent uncertainty surrounding global trade policies and interest rate trajectories, analysts now project an 8% increase in total private equity activity for all of 2025 compared to 2024 and a further increase of 5% in 2026. (*Sources: Foley & Lardner; Ernst & Young*).

During the nine months ended September 30, 2025, our net asset value decreased from $2.17 per share to $1.90 per share, a decrease of 12.4%. As of September 30, 2025, our common stock is trading at a 15.6% premium to our net asset value as compared to 49.3% discount to our net asset value as of December 31, 2024.

Over the past several years, we have executed certain initiatives to enhance liquidity, achieve a lower operational cost structure, provide more assistance to portfolio companies and realize certain of our portfolio investments. Specifically, we changed the composition of our Board of Directors and Management, terminated certain of our follow-on investments, internalized the management of the Fund, suspended our managed distribution policy, modified our investment strategy to pursue shorter term liquidation opportunities, pursued non-cash investment opportunities, and sold certain of our legacy and underperforming investment holdings. We believe these actions continue to be necessary to protect capital and liquidity in order to preserve and enhance shareholder value. Because our Management is internalized, certain of our expenses should not increase commensurate with an increase in the size of the Fund and, therefore, to the extent we remain a BDC, we expect to achieve efficiencies in our cost structure if we are able to grow the Fund.

**Liquidity and Capital Resources**

We generate cash primarily from maturities, sales of securities and borrowings, as well as capital gains realized upon the sale of portfolio investments. We use cash primarily to make additional investments, either in new companies or as follow-on investments in the existing portfolio companies and to pay the dividends to our stockholders.

Because of the nature and size of the portfolio investments, in the event we seek to requalify as a RIC, we may periodically borrow funds to make qualifying investments to maintain this tax status. In such case, we will borrow 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 we seek to requalify as a RIC and are unable to borrow funds to make qualifying investments, Equus would continue to be subject to corporate income tax on its net investment income and realized capital gains, and distributions to stockholders would continue to 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.

We reserve 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.

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We are evaluating the impact of current market conditions on our portfolio company valuations and their ability to provide current income. We believe we have followed valuation techniques in a reasonably consistent manner; however, we are cognizant of current market conditions that might affect future valuations of portfolio securities.

It is possible the Fund will require loans, capital investment from one or more sources, or will be required to dispose of certain of its investments, to cover a potential cash shortfall. The Fund does not presently have any existing commitments to fund any such shortfall, should it occur, and cannot guarantee that it will be able to execute on such plans in the future.

**Results of Operations**

**Investment Income and Expense**

Net investment loss was $1.4 million and $0.7 million for the three months ended September 30, 2025 and 2024, respectively, and $3.1 million and $2.7 million for the nine months ended September 30, 2025 and 2024, respectively, primarily due to an increase in compensation expense due additional shares issued under the equity incentive plan and an increase in interest expense related to the amortization of the debt discount, offset by a decrease in professional liability expenses.

Total investment income was comparable at $0.4 million and $0.3 million for the three months ended September 30, 2025 and 2024, respectively, and $1.0 million and $0.9 million for the nine months ended September 30, 2025 and 2024, respectively.

Compensation expense was $0.9 million and $0.4 million for the three months ended September 30, 2025 and 2024, respectively and $1.9 million and $1.3 million for the nine months ended September 30, 2025 and 2024 respectively, due to the officer bonuses related to dispositions and shares issued under the Equity Incentive Plan.

Professional fees were $0.3 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively and $0.8 million and $1.2 million for the nine months ended September 2025 and 2024, respectively.

Transaction costs, relating to the issuance of a convertible promissory note described in Note 5 of the financial statement footnotes above were $0.3 million for the nine months ended September 30, 2025 as compared to $0 for the nine months ended September 30, 2024.

**Changes in Unrealized Appreciation/Depreciation of Portfolio Securities**

During the nine months ended September 30, 2025, we recorded a decrease of $0.7 million in fair value of our equity holding in Morgan E&P, Inc. ("Morgan").

On February 10, 2025, we purchased from General Enterprise Ventures, Inc., a developer of fire suppression products ("GEVI"), a 1-year senior convertible promissory note bearing interest at the rate of 10% per annum, in exchange for $1.5 million in cash ("GEVI Note"). Contemporaneously with the purchase of the GEVI Note, the Fund also received a common stock purchase warrant ("GEVI Warrant") to acquire an aggregate of 1,875,000 shares of GEVI common stock at an exercise price of $0.50 per share. On August 28, 2025, GEVI effected a 1-for-6 reverse split of its outstanding shares, which therefore increased the exercise price of the GEVI Warrant to $3.00 per share and reduced the number of shares subject to the GEVI Warrant to 312,500 shares. On September 22, 2025, we converted the GEVI Note, inclusive of $1.5 million in principal and $93,699 in interest, as accrued, into an aggregate of 664,041 post reverse-split shares of GEVI common stock. The shares of GEVI are publicly traded and, as of September 30, 2025, the closing trading price of GEVI shares was $5.89 per share ($0.98 on a pre-split basis) as compared to $11.70 per share ($1.95 on a pre-split basis) at June 30, 2025. Accordingly, during the three months ended September 30, 2025, we recorded a decrease of $3.4 million in the fair value of the GEVI Note and a $2.0 million decrease in the fair value of the GEVI Warrant.

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On March 3, 2025, we sold Equus Energy to North American Energy Opportunities Corp., a developer of upstream oil and gas assets ("NAEOC"). The consideration provided by NAEOC consisted of $1.25 million in cash and 27,500 shares of preferred stock, redeemable within 6 months of the date of issuance at $100.00 per share based upon fulfillment of certain conditions. The redemption conditions were not fulfilled by the 6-month deadline and, accordingly, at September 30, 2025, we valued the NAEOC preferred stock at $0.

At March 31, 2025, we valued our preferred stock in NAEOC at $2.7 million. Because the conditions to redemption of the preferred stock were not fulfilled by the redemption deadline of August 31, 2025, we recorded a realized loss of $2.7 million during the nine months ended September 30, 2025.

During the nine months ended September 30, 2025, with respect to our holding in Equus Energy, LLC, we recorded a reversal of the unrealized depreciation of $4.1 million of the fair value of this investment as a result of the sale of this investment.

During the nine months ended September 30, 2024, we made a $2.2 million follow-on debt investment in Morgan. During this period, we also recorded a decrease of $3.6 million in the fair value of our equity holding in Morgan. The decrease was primarily due to declines in oil prices, as well as declines in production during the period.

During the nine months ended September 30, 2024, with respect to our holding in Equus Energy, LLC, we recorded a decrease of $2.0 million in the fair value of our investment. The decrease was primarily due to the decrease in oil prices during the period.

**Change in Unrealized Depreciation on Warrant Liability**

During the nine months ended September 30, 2025, with respect to the warrants issued, we recognized depreciation of the warrant liability of $1.1 million.

**Dividends**

We will 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.

**Subsequent Event**s

Management performed an evaluation of the Fund's activity through the date the financial statements were issued, noting no subsequent events.

**Item 3. Quantitative and Qualitative Disclosure about Market Risk**

We are 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. In the future, we may invest in companies outside the United States, including in Europe and Asia, which would give rise to exposure to foreign currency value fluctuations. We do not use derivative financial instruments to mitigate any of these risks. The return on investments is generally not affected by foreign currency fluctuations.

Our 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 affect 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. We determine their fair values based on the terms of the relevant debt security and the financial condition of the issuer.

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A major portion of our 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 could also consist of common stock 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.

**Item 4. Controls and Procedures**

**Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and other procedures that are designed to ensure that information required to be disclosed by the Fund in the reports that we file or submit 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 our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Our management, with the participation of our Fund's Chief Executive 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 September 30, 2025. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Fund's disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting described below.

**Material Weakness in Internal Control over Financing Reporting Existing as September 30, 2025**

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company's annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

Management performed an assessment of the effectiveness of the Fund's internal control over financial reporting as of September 30, 2025, based upon criteria in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management has concluded that the Fund did not maintain effective internal control over financial reporting as of September 30, 2025, due to the material weaknesses described below.

A material weakness was identified in our internal control over financial reporting relating to our controls over applying technical accounting guidance to complex nonrecurring events and transactions.

Although this material weakness did not result in a material misstatement of our consolidated financial statements for the periods presented, there is a possibility that, had the material weakness continued undetected, it could have led to a material misstatement of complex non-recurring events and related disclosures. Accordingly, management has concluded that this control deficiency constitutes a material weakness.

Management concluded that the previously disclosed material weakness relating to the Fund's controls relating to the design and operation of management review over the valuation of the Fund's portfolio investments, including management's review procedures over the completeness and accuracy of the underlying data and information supplied to third parties assisting management by recommending a range of reasonable fair values, continued to exist as of September 30, 2025.

Management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects the Fund's financial condition, results of its operations, changes in its net assets and its cash flows for the periods presented. We believe that the consolidated financial statements included in this Quarterly Report on Form 10-Q are accurate.

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We have begun the process of, and we are focused on, enhancing effective internal control measures to improve our internal control over financial reporting and remediate the material weaknesses. Our internal control remediation efforts include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Working
 with consultants to establish controls and protocols relating applying technical accounting guidance to nonrecurring events and transactions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Enhancing existing controls that address the completeness and accuracy of underlying data and information supplied to third parties assisting management in its determination of fair value and in the performance of management review controls over the valuation of the Fund's portfolio securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Enhancing policies and procedures to improve the precision of review and evidence of review procedures performed to demonstrate effective design and operation of such controls.

We believe our planned actions to enhance our processes and controls will address the material weakness, but these actions are subject to ongoing management evaluation, and we will need a period of execution to demonstrate remediation. We are committed to the continuous improvement of our internal control over financial reporting and will continue to diligently review our internal control over financial reporting.

There were no other changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

**Part II. Other Information**

**Item 1. Legal Proceedings** 

From time to time, the Fund is a party to certain 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, we do not expect that these proceedings will have a material effect upon the Fund's financial condition or results of operations.

**Item 1A. Risk Factors**

In connection with our efforts to convert Equus into an operating company in furtherance of our plan to convert the Fund into an operating company, we may be subject to a number of risks associated with this process, the transactions that would embody a consolidation of Equus with another company, as well as specific risks associated with the commercial enterprise with which Equus may seek to combine itself. We intend to identify, as will be reasonably possible, such risks and include the same in our subsequent filings and reports with the SEC.

Readers should carefully consider these risks and all other information contained in our annual report on Form 10-K ("10-K") for the year ended December 31, 2024, including the Fund's financial statements and the related notes thereto. The risks and uncertainties described in our 10-K and throughout this 10-Q are not the only ones facing the Fund.

Additional risks and uncertainties not presently known to us, or not presently deemed material by us, may also impair our operations and performance.

[**Table of Contents**](#TableOfContents)

 **Item 6. Exhibits**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. Articles of Incorporation or Bylaws**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Restated Certificate of Incorporation of the Fund. [Incorporated by reference to Exhibit 3(a) to Registrant's Current Report on Form 8-K filed on January 21, 2021]

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

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Amended and Restated Bylaws of the Fund [Incorporated by reference to Exhibit 3(c) to Registrant's Current Report on Form 8-K filed on June 30, 2014]

&nbsp;&nbsp;&nbsp;&nbsp;**10. Material Contracts**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) 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]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Form of Indemnification Agreement between the Fund and its directors and certain officers. [Incorporated by reference to Exhibit 10(d) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2011]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) 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]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) 2016 Equity Incentive Plan, adopted June 13, 2016. [Incorporated by reference to Exhibit 1 to Registrant's Definitive Proxy Statement filed on May 5, 2016]

&nbsp;&nbsp;&nbsp;&nbsp;**31. Rule 13a-14(a)/15d-14(a) Certifications**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. [Certification by Chief Executive Officer\*](ex311_302ceocertification.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. [Certification by Chief Financial Officer\*](ex312_302cfocertification.htm)

&nbsp;&nbsp;&nbsp;&nbsp;**32. Rule 1350 Certifications**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. [Certification by Chief Executive Officer\*](ex321_906ceocertification.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. [Certification by Chief Financial Officer\*](ex322_906cfocertification.htm)

&nbsp;&nbsp;&nbsp;&nbsp;**97. Policy Relating to Recovery of Erroneously Awarded Compensation.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Equus Total Return, Inc. Compensation Recoupment Policy [Incorporated by reference to Exhibit 97.1 to Registrant's Annual Report on Form 10-K for the year ended December 31, 2023]

\* Filed herewith

[**Table of Contents**](#TableOfContents)

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.

Dated: November 20, 2025

---

| |
|:---|
| EQUUS TOTAL RETURN, INC. |
| /s/ John A. Hardy |
| **John A. Hardy** |
| **Chief Executive Officer** |

---

## Exhibit 31.1

[EXHIBIT 31.1](f10q_equus09302025.htm)

Form of Quarterly Certification Required

by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, John A. Hardy, certify that:

---

| | | |
|:---|:---|:---|
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Equus Total Return, Inc.; | I have reviewed this Quarterly Report on Form 10-Q of Equus Total Return, Inc.; |
| 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: |
|  | a. | Designed such disclosure controls and procedures. or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
|  | b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles; |
|  | c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; |
|  | d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's first fiscal quarter in the case of a quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and; |
| 5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): |
|  | a. | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|  | b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. |

---

Dated: November 20, 2025

---

| |
|:---|
| EQUUS TOTAL RETURN, INC. |
| /s/ John A. Hardy |
| **John A. Hardy** |
| **Chief Executive Officer** |

---

## Exhibit 31.2

[EXHIBIT 31.2](f10q_equus09302025.htm)

Form of Quarterly Certification Required

by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, L'Sheryl D. Hudson, certify that:

---

| | | |
|:---|:---|:---|
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Equus Total Return, Inc.; | I have reviewed this Quarterly Report on Form 10-Q of Equus Total Return, Inc.; |
| 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
| 4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: |
|  | a. | Designed such disclosure controls and procedures. or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
|  | b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles; |
|  | c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; |
|  | d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's first fiscal quarter in the case of a quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting, and; |
| 5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): |
|  | a. | All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|  | b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls.<br>|

---

Dated: November 20, 2025

---

| |
|:---|
| EQUUS TOTAL RETURN, INC. |
| /s/ L'Sheryl D. Hudson |
| **L'Sheryl D. Hudson** |
| **Chief Financial Officer** |

---

## Exhibit 32.1

[EXHIBIT 32.1](f10q_equus09302025.htm)

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)

In connection with the accompanying Quarterly Report of Equus Total Return, Inc. (the "Fund") on Form 10-Q for the quarter ended September 30, 2025 (the "Report"), I, John A Hardy, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To my knowledge, the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund.

Dated: November 20, 2025

---

| |
|:---|
| EQUUS TOTAL RETURN, INC. |
| /s/ John A. Hardy |
| **John A. Hardy** |
| **Chief Executive Officer** |

---

## Exhibit 32.2

[EXHIBIT 32.2](f10q_equus09302025.htm)

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 1350)

In connection with the accompanying Quarterly Report of Equus Total Return, Inc. (the "Fund") on Form 10-Q for the quarter ended September 30, 2025 (the "Report"), I, L'Sheryl D. Hudson, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) To my knowledge, the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund.

Dated: November 20, 2025

---

| |
|:---|
| EQUUS TOTAL RETURN, INC. |
| /s/ L'Sheryl D. Hudson |
| **L'Sheryl D. Hudson** |
| **Chief Financial Officer** |

---