equus_10qa.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

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

For the quarterly period ended September 30, 2023

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

For the transition period __________ to __________

Commission File Number 814-00098

EQUUS TOTAL RETURN, INC.

(Exact name of registrant as specified in its charter)

Delaware		76-0345915
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

700 Louisiana St., 48th Floor Houston, Texas		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:

Title of each class

Name of each exchange

on which registered

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 13,518,146 shares of the registrant’s common stock, $.001 par value, outstanding, as of September 30, 2023.

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EXPLANATORY NOTE

Equus Total Return, Inc. (“Equus” or the “Company”) is filing this Amendment No. 1 on Form 10-Q/A (“Amended 10-Q”) which supersedes and replaces in its entirety the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2023 (“Original Filing”).

The sole purpose of this Amended 10-Q is to provide the required Inline XBRL tagging, which was inadvertently omitted from the Original Filing. No other changes to the Original Filing have been made.

This Amended 10-Q does not reflect events occurring after the Original Filing except as noted above. This Amended 10-Q continues to speak as of the date of the Original Filing and the Company has not otherwise updated disclosures contained therein or herein to reflect events that occurred at a later date.

EQUUS TOTAL RETURN, INC.

(A Delaware Corporation) INDEX

			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Unaudited Condensed Financial Statements	4
		Condensed Balance Sheets	4
		Condensed Statements of Operations	5
		Condensed Statements of Changes in Net Assets	6
		Condensed Statements of Cash Flows	7
		Supplemental Information—Selected Per Share Data and Ratios	8
		Schedules of Investments	9
		Notes to Condensed Financial Statements	13
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
	Item 3.	Quantitative and Qualitative Disclosure about Market Risk	42
	Item 4.	Controls and Procedures	42
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	43
	Item 1A.	Risk Factors	43
	Item 6.	Exhibits	44
SIGNATURE			45

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Part I. Financial Information

Item 1. Unaudited Condensed Financial Statements

EQUUS TOTAL RETURN, INC.

CONDENSED BALANCE SHEETS

(Unaudited)

	September 30, 2023			December 31, 2022

(in thousands, except shares and per share amounts)
Assets
Investments in portfolio securities at fair value:
Control investments (cost at $10,511 and $8,111, respectively)	$	33,050		$	15,650
Total investments in portfolio securities at fair value		33,050			15,650
Temporary cash investments		17,987			5,998
Cash and cash equivalents		13,672			19,224
Restricted cash		180			60
Accounts receivable from affiliates		140			350
Accrued interest		40			—
Other assets		466			382
Total assets		65,535			41,664
Liabilities and net assets
Accounts payable		113			107
Accrued compensation		2			321
Accounts payable to related parties		305			1
Borrowing under margin account		17,987			5,998
Total liabilities		18,407			6,427

Commitments and contingencies (See Note 2)

Net assets
Common stock, $0.001 par value per share; 100,000,000 shares authorized and 13,518,146 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Preferred stock, $0.001 par value per share; 10,000,000 shares authorized as of September 30, 2023 and December 31, 2022 respectively
Common stock, par value	$	13		$	13
Capital in excess of par value		74,685			74,685
Accumulated deficit		(27,570	)		(39,461	)
Total net assets	$	47,128		$	35,237
Net asset value per share	$	3.49		$	2.61

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

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EQUUS TOTAL RETURN, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months ended September 30,
(in thousands, except per share amounts)	2023			2022			2023			2022
Investment income:
Control investments	$	32		$	—		$	40		$	—
Total interest and dividend income		32			—			40			—
Interest from temporary cash investments		10			—			20			—
Total investment income		42			—			60			—

Expenses:
Compensation expense		692			455			1,502			1,144
Professional fees		202			152			728			608
Professional liability expenses		148			181			513			479
Director fees and expenses		75			79			258			247
General and administrative expenses		31			31			101			92
Mailing, printing and other expenses		13			21			65			50
Taxes		3			4			10			11
Interest expense		12			2			14			4
Total expenses		1,176			925			3,191			2,635

Net investment loss		(1,134	)		(925	)		(3,131	)		(2,635	)

Net realized gain:
Temporary cash investments		11			—			22			—
Net realized gain		11			—			22			—

Net unrealized appreciation of portfolio securities:
Control investments		8,200			—			15,000			2,500
Net change in net unrealized appreciation of portfolio securities		8,200			—			15,000			2,500

Net increase (decrease) in net assets resulting from operations	$	7,077	$	925	)	$	11,891	$	(135	)

Net increase (decrease) in net assets resulting from operations per share:
Basic and diluted	$	0.52	$	(0.07	)	$	0.88	$	(0.01	)
Weighted average shares outstanding:
Basic and diluted		13,518		13,518			13,518		13,518

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

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EQUUS TOTAL RETURN, INC.

CONDENSED STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)

	Common Stock
(in thousands)	Number of Shares		Par Value		Capital in Excess of Par Value		Accumulated Deficit
Balances as of January 1, 2022		13,518	$	13	$	74,685	$	(38,333	)

Net increase in net assets resulting from operations		—		—		—		1,070

Balances as of March 31, 2022		13,518	$	13	$	74,685	$	(37,263	)

Net decrease in net assets resulting from operations		—		—		—		(280	)

Balances as of June 30, 2022		13,518	$	13	$	—	$	(37,543	)

Net decrease in net assets resulting from operations		—		—		—		(925	)

Balances as of September 30, 2022		13,518	$	13	$	74,685	$	(38,468	)

Balances as of January 1, 2023		13,518	$	13	$	74,685	$	(39,461	)

Net decrease in net assets resulting from operations		—		—		—		(1,131	)

Balances as of March 31, 2023		13,518	$	13	$	74,685	$	(40,592	)

Net increase in net assets resulting from operations		—		—		—		5,945

Balances as of June 30, 2023		13,518	$	13	$	74,685	$	(34,647	)

Net increase in net assets resulting from operations		—		—		—		7,077

Balances as of September 30, 2023		13,518	$	13	$	74,685	$	(27,570	)

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

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EQUUS TOTAL RETURN, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended September 30,
(in thousands)	2023			2022
Reconciliation of increase in net assets resulting from operations to net cash used in operating activities:
Net increase in net assets resulting from operations	$	11,891		$	(135	)
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Net realized gain:
Temporary cash investments		(22	)		—
Net change in unrealized appreciation of portfolio securities:
Control investments		(15,000	)		(2,500	)
Purchase of portfolio securities		(2,400	)		—
Purchase of temporary cash investments, net		(11,967	)		(1,499	)
Changes in operating assets and liabilities:
Accounts receivable from affiliates		210			—
Accrued interest and dividend receivable		(40	)		—
Other assets		(84	)		(250	)
Accounts payable and accrued liabilities		(313	)		(459	)
Accounts payable to related parties		304			(12	)
Net cash used in operating activities		(17,421	)		(4,855	)
Cash flows from financing activities:
Borrowings under margin account		40,968			10,999
Repayments under margin account		(28,979	)		(9,500	)
Net cash provided by financing activities		11,989			1,499
Net decrease in cash and cash equivalents		(5,432	)		(3,356	)
Cash and cash equivalents and restricted cash at beginning of period		19,284			23,490

Cash and cash equivalents and restricted cash at end of period	$	13,852		$	20,134
Supplemental disclosure of cash flow information:
Interest paid	$	14		$	4
Income taxes paid	$	10		$	49

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

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EQUUS TOTAL RETURN, INC.

SUPPLEMENTAL INFORMATION—SELECTED PER SHARE DATA AND RATIOS

(Unaudited)

	Nine months ended Sep 30,
	2023			2022

Investment income	$	—		$	—
Expenses		(0.23	)		(0.19	)

Net investment loss		(0.23	)		(0.19	)

Net change in unrealized appreciation of portfolio securities		1.11			0.18
Net increase in net assets		0.88			(0.01	)
Net assets at beginning of period		2.61			2.69
Net assets at end of period, basic and diluted	$	3.49		$	2.68
Weighted average number of shares outstanding during period, in thousands		13,518			13,518
Market price per share:
Beginning of period	$	1.43		$	2.38
End of period	$	1.48		$	1.64
Selected information and ratios:
Ratio of expenses to average net assets	(7.75		)%		7.26	%
Ratio of net investment loss to average net assets	(7.60		)%	(7.26		)%
Ratio of net increase in net assets resulting from operations to average net assets		28.87	%	(0.37		)%
Return on net asset value		33.72	%	(0.37		)%
Total return on market price ⁽¹⁾		3.50	%	(31.09		)%

⁽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.

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EQUUS TOTAL RETURN, INC.

SCHEDULE OF INVESTMENTS

SEPTEMBER 30, 2023

(Unaudited)

(in thousands, except share data)

Name and Location of Portfolio Company ⁽¹⁾

Industry

Date of Initial

Investment

Principal

Cost of

Investment

Fair

Value⁽²⁾

Control Investments: Majority-owned ⁽³⁾:

Equus Energy, LLC ⁽⁴⁾

Houston, TX

Energy

December 2011

Member interest (100%)

8,111

15,650

Morgan E&P, LLC ⁽⁴⁾

Houston, TX

Energy

April 2023

Member interest (100%)

—

15,000

12% senior secured promissory note due

5/26 ⁽⁵⁾

2,400

17,400

Total Control Investments: Majority-owned (represents 64.8% of total investments at fair value)

10,511

33,050

Temporary Cash Investments

U.S. Treasury Bill

Government

September 2023

UST 0% 10/23

17,987

Total Temporary Cash Investments (represents 35.2% of total investments at fair value)

17,987

Total Investments

28,498

51,037

⁽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 September 30, 2023 none of the Fund’s total assests 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.

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EQUUS TOTAL RETURN, INC.

SCHEDULE OF INVESTMENTS – (Continued)

SEPTEMBER 30, 2023

(Unaudited)

Our portfolio securities are restricted from public sale without prior registration under the Securities Act of 1933 (hereafter, the “Securities Act”). 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, 2023, we had invested 50.4% of our assets in securities of portfolio companies that constituted qualifying investments under the 1940 Act. As of September 30, 2023, none of our investments are considered non-qualifying assets as all of our investments are in enterprises that are considered eligible portfolio companies 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 September 30, 2023.

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 user. The value of one segment called “Energy” includes our two remaining portfolio companies and was 70.1% of our net asset value, 50.4% of our total assets and 100% of our investments in portfolio company securities (at fair value) as of September 30, 2023. 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, 2023 (in thousands):

Type of Securities	Cost		Fair Value		Fair Value as Percentage of Net Assets

Limited liability company investments	$	8,111	$	30,650		65.0	%
Secured and subordinated debt		2,400		2,400		5.1	%

Total	$	10,511	$	33,050		70.1	%

The following is a summary by industry of the Fund’s investments in portfolio securities as of September 30, 2023 (in thousands):

Industry

Fair Value

Fair Value as Percentage of

Net Assets

Energy

33,050

70.1

Total

33,050

70.1

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

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EQUUS TOTAL RETURN, INC.

SCHEDULE OF INVESTMENTS

DECEMBER 31, 2022

(Unaudited)

(in thousands, except share data)

Name and Location of Portfolio Company

Industry

Date of Initial

Investment

Principal

Cost of

Investment

Fair

Value⁽¹⁾

Control Investments: Majority-owned

Amendment: SEC Form 10-Q/A filed by Equus Total Return Inc.