EQUUS TOTAL RETURN, INC. Files Quarterly Report (10-Q) for Period Ended March 31, 2024

TL;DR

<b>EQUUS TOTAL RETURN, INC. has filed its quarterly report for Q1 2024, detailing financial statements and operational status.</b>

AI Summary

EQUUS TOTAL RETURN, INC. (EQS) filed a Quarterly Report (10-Q) with the SEC on May 15, 2024. EQUUS TOTAL RETURN, INC. filed a 10-Q report for the quarterly period ended March 31, 2024. The company is incorporated in Delaware and has its principal executive offices in Houston, Texas. As of March 31, 2024, there were 13,586,173 shares of common stock outstanding. The report includes unaudited condensed financial statements: Balance Sheets, Statements of Operations, Changes in Net Assets, and Cash Flows. The filing indicates the company is not a large accelerated filer, an accelerated filer, or a shell company.

Why It Matters

For investors and stakeholders tracking EQUUS TOTAL RETURN, INC., this filing contains several important signals. This 10-Q filing provides investors with the latest unaudited financial performance and position of EQUUS TOTAL RETURN, INC. as of March 31, 2024. The disclosure of outstanding shares and the company's filer status offers insights into its market capitalization and regulatory standing.

Risk Assessment

Risk Level: low — EQUUS TOTAL RETURN, INC. shows low risk based on this filing. The risk is low as this is a standard quarterly filing (10-Q) providing routine financial updates, with no immediate red flags or significant negative disclosures apparent in the header information.

Analyst Insight

Review the detailed financial statements within the 10-Q to understand the company's performance and asset allocation for the quarter ended March 31, 2024.

Key Numbers

• 13,586,173 — Outstanding Shares (As of March 31, 2024)
• 2024-03-31 — Reporting Period End Date (Quarterly report)
• 2024-05-15 — Filing Date (10-Q submission)

Key Players & Entities

• EQUUS TOTAL RETURN, INC. (company) — Filer name
• March 31, 2024 (date) — Quarterly period ended
• 700 Louisiana St., 48th Floor Houston, Texas 77002 (address) — Principal executive offices
• 13,586,173 (dollar_amount) — Shares of common stock outstanding as of March 31, 2024
• New York Stock Exchange (company) — Exchange where common stock is registered
• Delaware (jurisdiction) — State of incorporation

FAQ

Risk Factors

• Filer Status [low — regulatory]: The company is classified as a non-accelerated filer and not a shell company, indicating it is an established operating entity.

Industry Context

EQUUS TOTAL RETURN, INC. operates as a business development company (BDC) or similar investment entity, typically investing in debt and equity of middle-market companies.

Regulatory Implications

The filing is a Form 10-Q, a standard quarterly report required by the Securities Exchange Act of 1934 for public companies to provide updates on their financial condition.

What Investors Should Do

1. Analyze the Condensed Balance Sheets for the company's asset and liability structure as of March 31, 2024.
2. Review the Condensed Statements of Operations to assess revenue, expenses, and profitability for the quarter.
3. Examine the Condensed Statements of Cash Flows to understand the sources and uses of cash during the reporting period.

Key Dates

• 2024-03-31: Quarterly Period End — Marks the end of the period covered by the unaudited financial statements in the 10-Q.
• 2024-05-15: Filing Date — Date the 10-Q report was officially submitted to the SEC.

Year-Over-Year Comparison

This is the initial filing reviewed for the period ending March 31, 2024; therefore, no comparison to a prior filing is available from this data.

Key Financial Figures

• $18,611 — r value: Control investments (cost at $18,611 and $16,364, respectively) $ 41,750 $
• $16,364 — ontrol investments (cost at $18,611 and $16,364, respectively) $ 41,750 $ 40,853 To
• $250 million — with a market capitalization exceeding $250 million. As of March 31, 2024, we had invested
• $5.0 million — s with a total enterprise value between $5.0 million and $75.0 million, although we may enga
• $75.0 m — terprise value between $5.0 million and $75.0 million, although we may engage in transa
• $83.17 — ince the beginning of 2024 and stood at $83.17 as of March 31, 2024. Natural gas price
• $1.76 — finishing the first quarter of 2024 at $1.76 per MMBTU. Recent oil price stability h
• $3.0 million — 24, we had cash and cash equivalents of $3.0 million. We had $41.8 million of our net assets
• $41.8 million — ash equivalents of $3.0 million. We had $41.8 million of our net assets of $45.9 million inve
• $45.9 million — had $41.8 million of our net assets of $45.9 million invested in portfolio securities. As o
• $6.5 million — 23, we had cash and cash equivalents of $6.5 million. We had $40.9 million of our net assets
• $40.9 million — ash equivalents of $6.5 million. We had $40.9 million of our net assets of $48.3 million inve
• $48.3 million — had $40.9 million of our net assets of $48.3 million invested in portfolio securities. We e
• $53.5 million — nts &mdash;As of March 31, 2024, we had $53.5 million of restricted cash and temporary cash i
• $53.0 million — ts applicable to a RIC. Of this amount, $53.0 million was invested in U.S. Treasury bills and

Filing Documents

• f10q_equus03312024.htm (10-Q) — 529KB
• ex311_302ceocertification.htm (EX-31.1) — 9KB
• ex312_302cfocertification.htm (EX-31.2) — 9KB
• ex321_906ceocertification.htm (EX-32.1) — 4KB
• ex322_906cfocertification.htm (EX-32.2) — 5KB
• 0001712543-24-000030.txt (&nbsp;) — 557KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Unaudited Condensed Financial Statements

Item 1. Unaudited Condensed Financial Statements 3 Condensed Balance Sheets 3 Condensed Statements of Operations 4 Condensed Statements of Changes in Net Assets 5 Condensed Statements of Cash Flows 6 Supplemental Information&mdash;Selected Per Share Data and Ratios 7 Schedules of Investments 8 Notes to Condensed Financial Statements 12

Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations 35

Quantitative and Qualitative Disclosure about Market Risk

Item 3. Quantitative and Qualitative Disclosure about Market Risk 40

Controls and Procedures

Item 4. Controls and Procedures 40

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 42

Risk Factors

Item 1A. Risk Factors 42

Exhibits

Item 6. Exhibits 43 SIGNATURE 44 2 Table of Contents EQUUS TOTAL RETURN, INC. CONDENSED BALANCE SHEETS (Unaudited)

Financial Information

Part I. Financial Information

Unaudited Condensed Financial Statements

Item 1. Unaudited Condensed Financial Statements March 31, 2024 December 31, 2023 (in thousands, except shares and per share amounts) Assets Investments in portfolio securities at fair value: Control investments (cost at $18,611 and $16,364, respectively) $ 41,750 $ 40,853 Total investments in portfolio securities at fair value 41,750 40,853 U.S. Treasury bills 52,970 44,955 Cash and cash equivalents 3,050 6,533 Restricted cash 530 450 Accounts receivable from affiliates 139 139 Accrued interest 508 225 Other assets 192 392 Total assets 99,139 93,547 Liabilities and net assets Accounts payable 166 172 Accrued compensation 2 29 Accounts payable to related parties 109 104 Borrowing under margin account 52,970 44,955 Total liabilities 53,247 45,260 Commitments and contingencies (See Note 2) Net assets Common stock, $.001 par value per share; 100,000,000 shares authorized as of March 31, 2024 and December 31, 2023, respectively, and 13,586,173 shares outstanding as of March 31, 2024 and December 31, 2023, respectively Preferred stock, $.001 par value per share; 10,000,000 shares authorized as of March 31, 2024 and December 31, 2023 respectively Common stock, par value $ 14 $ 14 Capital in excess of par value 74,785 74,785 Accumulated deficit (28,907 ) (26,512 ) Total net assets $ 45,892 $ 48,287 Net asset value per share $ 3.38 $ 3.55 The accompanying notes are an integral part of these financial statements. 3 Table of Contents EQUUS TOTAL RETURN, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, (in thousands, except per share amounts) 2024 2023 Investment income: Interest income: Control investments $ 283 $ &mdash; Total interest income 283 &mdash; Interest from U.S. Treasury bills &mdash; 6 Total investment income 283 6 Expenses: Professional fees 567 400 Compensation expense 428 417 Professiona

financial statements

financial statements. 5 Table of Contents EQUUS TOTAL RETURN, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Three months ended March 31, (in thousands) 2024 2023 Reconciliation of decrease in net assets resulting from operations to net cash used in operating activities: Net decrease in net assets resulting from operations $ (2,395 ) $ (1,131 ) Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities: U.S. Treasury bills (45 ) (2 ) Purchase of portfolio securities (2,247 ) &mdash; Purchases of U.S. Treasury bills, net (7,970 ) (3,992 ) Net change in net unrealized appreciation of portfolio securities Control investments 1,350 &mdash; Changes in operating assets and liabilities: Accounts receivable from affiliates &mdash; (500 ) Accrued interest receivable (283 ) &mdash; Other assets 200 183 Accounts payable and accrued liabilities (33 ) (67 ) Accounts payable to related parties 5 29 Net cash used in operating activities (11,418 ) (5,480 ) Cash flows from financing activities: Borrowings under margin account 52,970 9,992 Repayments under margin account (44,955 ) (5,998 ) Net cash provided by financing activities 8,015 3,994 Net decrease in cash and cash equivalents (3,404 ) (1,486 ) Cash and cash equivalents and restricted cash at beginning of period 6,983 19,284 Cash and cash equivalents and restricted cash at end of period $ 3,580 $ 17,798 Supplemental disclosure of cash flow information: Interest paid $ &mdash; $ 1 Income taxes paid $ 14 $ &mdash; The accompanying notes are an integral part of these

financial statements

financial statements. 6 Table of Contents EQUUS TOTAL RETURN, INC. SUPPLEMENTAL INFORMATION&mdash;SELECTED PER SHARE DATA AND RATIOS (Unaudited) Three months ended March 31, 2024 2023 Investment income $ 0.02 $ &mdash; Expenses (0.09 ) (0.09 ) Net investment loss (0.07 ) (0.09 ) Net change in net unrealized appreciate of portfolio securities (0.10 ) &mdash; Net decrease in net assets (0.17 ) (0.09 ) Net assets at beginning of period 3.55 2.61 Net assets at end of period, basic and diluted $ 3.38 $ 2.52 Weighted average number of shares outstanding during period, in thousands 13,586 13,518 Market price per share: Beginning of period $ 1.45 $ 1.43 End of period $ 1.46 $ 1.56 Selected information and ratios: Ratio of expenses to average net assets (2.92 %) (3.28 %) Ratio of net investment loss to average net assets (2.31 %) (3.27 %) Ratio of net increase in net assets resulting from operations to average net assets (5.09 %) (3.26 %) Return on net asset value (4.96 %) (3.45 %) Total return on market price (1) 0.69 % 9.09 % (1) 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. 7 Table of Contents EQUUS TOTAL RETURN, INC. SCHEDULE OF INVESTMENTS March 31, 2024 (Unaudited) (in thousands, except share data) Name and Location of Date of Initial Cost of Fair Portfolio Company (1) Industry Investment Investment Principal Investment Value (2) Control Investments: Majority-owned (3) : Equus Energy, LLC (4) Houston, TX Energy December 2011 Member interest (100%) $ 8,111 $ 10,000 Morgan E&P, LLC (4) Houston, TX Energy April 2023 Member interest (100%) &mdash; 21,250 12% senior secured promissory note due 5/26 (5) $ 10,500 10,500 10,500 10,500 31,750 Total Control Investments: Majority-owned (represents

financial statements

financial statements. 8 Table of Contents EQUUS TOTAL RETURN, INC. SCHEDULE OF INVESTMENTS &ndash; (Continued) March 31, 2024 (Unaudited) Our portfolio securities are restricted from public sale without prior registration under the Securities Act of 1933 (hereafter, the &ldquo;Securities Act&rdquo;). 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 (&ldquo;BDC&rdquo;), we may invest up to 30% of our assets in non-qualifying portfolio investments, as permitted by the Investment Company Act of 1940 (the &ldquo;1940 Act&rdquo;). Specifically, we may invest up to 30% of our assets in entities that are not considered &ldquo;eligible portfolio companies&rdquo; (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 March 31, 2024, we had invested 42.1% of our assets in securities of portfolio companies that constituted qualifying investments under the 1940 Act. As of March 31, 2024, none of our investments are considered non-qualifying assets, inasmuch 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 March 31, 2024. We are classified as a &ldquo;non-diversified&rdquo; 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 user. The value of one segment called &ldquo;Energy&rdquo; includes our two remaining portfolio companies and was 91.0% of our net asset value, 42.1% of our total asset

financial statements

financial statements. 9 Table of Contents EQUUS TOTAL RETURN, INC. SCHEDULE OF INVESTMENTS DECEMBER 31, 2023 (Unaudited) (in thousands, except share data) Name and Location of Date of Initial Cost of Fair Portfolio Company (1) Industry Investment Investment Principal Investment Value (2) Control Investments: Majority-owned (3) : Equus Energy, LLC (4) Houston, TX Energy December 2011 Member interest (100%) $ 8,111 $ 10,000 Morgan E&P, LLC (4) Houston, TX Energy April 2023 Member interest (100%) &mdash; 22,600 12% senior secured promissory note due 5/26 (5) $ 8,253 8,253 8,253 8,253 30,853 Total Control Investments: Majority-owned (represents 47.6% of total investments at fair value) 16,364 40,853 U.S. Treasury Bills U.S. Treasury Bill Government December 2023 UST 0% 1/24 44,955 44,955 44,955 Total U.S. Treasury bills (represents 52.4% of total investments at fair value) 44,955 44,955 Total Investments $ 61,319 $ 85,808 (1) 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 December 31, 2023 none of the Fund&rsquo;s total assets were considered non-qualifying assets. (2) See Note 3 to the financial statements, Valuation of Investments. (3) 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. (4) Level 3 Portfolio Investment. (5) Income producing. The accompanying notes are an integral part of these

financial statements

financial statements. 10 Table of Contents EQUUS TOTAL RETURN, INC. SCHEDULE OF INVESTMENTS &ndash; (Continued) DECEMBER 31, 2023 (in thousands, except share data) Our portfolio securities are restricted from public sale without prior registration under the Securities Act of 1933 (hereafter, the &ldquo;Securities Act&rdquo;). 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 (&ldquo;BDC&rdquo;), we may invest up to 30% of our assets in non-qualifying portfolio investments, as permitted by the Investment Company Act of 1940 (the &ldquo;1940 Act&rdquo;). Specifically, we may invest up to 30% of our assets in entities that are not considered &ldquo;eligible portfolio companies&rdquo; (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, 2023, we had invested 43.7% of our assets in securities of portfolio companies that constituted qualifying investments under the 1940 Act. As of December 31, 2023, none of our investments are considered non-qualifying assets, inasmuch 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, 2023. We are classified as a &ldquo;non-diversified&rdquo; 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 &ldquo;Energy&rdquo; includes our two remaining portfolio companies and was 70.1% of our ne

financial statements

financial statements. 11 Table of Contents EQUUS TOTAL RETURN, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS March 31, 2024 (Unaudited) (1) Description of Business and Basis of Presentation Description of Business&mdash; Equus Total Return, Inc. (&ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;our,&rdquo; &ldquo;Equus&rdquo; the &ldquo;Company&rdquo; and the &ldquo;Fund&rdquo;), a Delaware corporation, was formed by Equus Investments II, L.P. (the &ldquo;Partnership&rdquo;) 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 (&ldquo;NYSE&rdquo;) under the symbol &lsquo;EQS&rsquo;. On August 11, 2006, our shareholders approved the change of the Fund&rsquo;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 March 31, 2024, we had 100,000,000 shares of common stock and 10,000,000 shares of preferred stock authorized for issuance, of which 13,568,173 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-pr

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