EQS 10-Q

Equus Total Return, Inc. (EQS)

10-Q 2025-11-20 For: 2025-09-30

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Added on April 08, 2026

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

700 Louisiana St., 41^st Floor Houston, Texas	77002
(Address of principal executive offices)	(Zip Code)

	Page
PART I. FINANCIAL INFORMATION
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—Selected Per Share Data and Ratios	7
Schedules of Investments	8
Notes to Condensed Financial Statements	12
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	43
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	44
Item 1A. Risk Factors	44
Item 6. Exhibits	44
SIGNATURE	45

	September 30, 2025			December 31, 2024

(in thousands, except shares and per share amounts)
Assets
Investments in portfolio securities at fair value:
Control investments (cost at $10,500 and $18,611, respectively)	$	22,850		$	27,500
Non-affiliate investments (cost at $1,594 and $0, respectively)		5,178			—
Total investments in portfolio securities at fair value		28,028			27,500
Cash and cash equivalents		329			262
Accounts receivable from affiliates		580			678
Accrued interest		2,426			1,470
Other assets		38			26
Total assets		31,401			29,936
Liabilities and net assets
Accounts payable		258			332
Accrued compensation		4			1
Accounts payable to related parties		985			93
Notes payable		1,932			—
Warrant liability, at fair value		1,718			—
Total liabilities		4,897			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

Common stock, par value	$	14		$	14
Capital in excess of par value		76,023			74,785
Accumulated deficit		(49,533	)		(45,289	)
Total net assets	$	26,504		$	29,510
Shares of common stock issued and outstanding, $.001 par value, 100,000,000 and 50,000,000 shares authorized, respectively		13,967			13,586
Net asset value per share	$	1.90		$	2.17

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2025			2024			2025			2024
Investment income:
Control investments	$	322		$	322		$	956		$	924
Non-affiliate investments		34			—		$	94			—
Total investment income		356			322			1,050			924
Interest income		—			12			1			24
Total investment income		356			334			1,051			948

Expenses:
Compensation expense		920			429			1,923			1,334
Professional fees		258			238			840			1,172
Transaction costs		—			—			307			—
Professional liability expenses		—			141			80			439
Director fees and expenses		81			76			259			255
General and administrative expenses		42			40			149			136
Mailing, printing and other expenses		33			25			98			106
Taxes		6			5			19			30
Interest expense		412			63			492			129
Total expenses		1,752			1,017			4,167			3,601

Net investment loss		(1,396	)		(683	)		(3,116	)		(2,653	)

Net realized loss (gain):
Control investments		—			—			(4,111	)		—
Non-affiliate investments		(2,750	)		—			(2,750	)		—
Other		—			—			(155	)		—
U.S. Treasury Bills		—			56			—			131
Net realized (loss) gain		(2,750	)		56			(7,016	)		131

Net unrealized appreciation (depreciation) of portfolio securities:
Control investments		—			(9,000	)		3,461			(5,600	)
Non-affiliate investments		(2,797	)		—			3,585			—
Net change in net unrealized appreciation (depreciation) of portfolio securities		(2,797	)		(9,000	)		7,046			(5,600	)

Net change in net unrealized depreciation of warrant liability		(1,158	)		—			(1,158	)		—

Net decrease in net assets resulting from operations	$	(8,101	)	$	(9,627	)	$	(4,244	)	$	(8,122	)

Net decrease in net assets resulting from operations per share:
Basic	$	(0.59	)	$	(0.70	)	$	(0.31	)	$	(0.59	)
Diluted	$	(0.59	)	$	(0.70	)	$	(0.31	)	$	(0.59	)
Weighted average shares outstanding:
Basic		13,681			13,586			13,618			13,586
Diluted		13,681			13,586			13,618			13,586

	Common Stock
(in thousands)	Number of Shares		Par Value		Capital in Excess of Par Value			Accumulated Deficit			Total Net Assets

Balances as of January 1, 2025		13,586	$	14	$	74,785		$	(45,289	)	$	29,510

Issuance of warrants						744						744

Net increase in net assets resulting from operations		—		—		—			3,943			3,943

Balances as of March 31, 2025		13,586		14		75,529			(41,346	)		34,197

Net decrease in net assets resulting from operations		—		—		—			(86	)		(86	)

Balances as of June 30, 2025		13,586		14		75,529			(41,432	)		34,111

Share-based incentive compensation		381				932						932

Reclassification of warrants						(438	)					(438	)

Net decrease in net assets resulting from operations		—		—		—			(8,101	)		(8,101	)

Balances as of September 30, 2025		13,967	$	14	$	76,023		$	(49,533	)	$	26,504

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⁾:
Morgan E&P, Inc. Houston, TX		Energy		April 2023	Member interest (100%) ⁽⁵⁾				—	$	12,350
					12% senior secured promissory note due 5/26 ⁽⁵⁾⁽⁶⁾	$	10,500		10,500		10,500
									10,500		22,850
Total Control Investments: Majority-owned (represents 81.5% of total investments at fair value)									10,500		22,850
Non-Affiliate Investments: Less than 5% owned ⁽⁴⁾:
General Enterprise Ventures, Inc. Pomona, CA		Environmental		February 2025	Warrants (exercisable into 312,500 common stock) ⁽⁵⁾		—		—		1,267
					664,041 shares common stock		—		1,594		3,911
									1,594		5,178
Total Non-Affiliate Investments (represents 18.5% of total investments at fair value)									1,594		5,178
Total Investments								$	12,094	$	28,028

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

Limited liability company investments	$	—	$	12,350		46.6	%
Secured and subordinated debt		10,500		10,500		39.6	%
Warrants		—		1,267		4.8	%
Common stock		1,594		3,911		14.8	%
Total	$	12,094	$	28,028		105.8	%

			Fair Value Measurements as of September 30, 2025
(in thousands)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investments:
Control investments	$	22,850	$	—	$	—	$	22,850
Non-affiliate investments		5,178		—		3,911		1,267
Total investments	$	28,028	$	—	$	3,911	$	24,117

			Fair Value Measurements as of December 31, 2024
(in thousands)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Investments:
Control investments	$	27,500	$	—	$	—	$	27,500
Total investments	$	27,500	$	—	$	—	$	27,500

	Fair value measurements using significant unobservable inputs (Level 3)
(in thousands)	Control Investments			Affiliate Investments		Non-affiliate Investments			Total
Fair value as of January 1, 2025	$	27,500		$	—	$	—		$27,500
Sale of portfolio securities		(4,000	)		—		—		(4,000)
Purchases of portfolio securities		—			—		2,750		2,750
Change in unrealized appreciation		1,000			—		1,208		2,208
Fair value as of March 31, 2025		24,500			—		3,958		28,458
Change in unrealized appreciation		(1,650	)		—		(639	)	(2,289)
Fair value as of June 30, 2025		22,850			—		3,319		26,169
Change in unrealized appreciation		—			—		(2,052	)	(2,052)
Fair value as of September 30, 2025	$	22,850		$	—	$	1,267		$24,117

(in thousands, except share and per-share data)	Three Months Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Net income (loss) attributable to common shareholders	$	(8,101	)	$	(9,627	)	$	(4,244	)	$	(8,122	)
Weighted average shares outstanding - basic		13,681			13,586			13,618			13,586
Effect of dilutive securities		—			—		$	—			—
Weighted average shares outstanding - diluted		13,681			13,586			13,618			13,586
Basic earnings per share	$	(0.59	)	$	(0.70	)	$	(0.31	)	$	(0.59	)
Diluted earnings per share	$	(0.59	)	$	(0.70	)	$	(0.31	)	$	(0.59	)

	Carrying amount	Collateral	Issue date	Maturity date	Conversion price	Conversion shares
About Investment, Ltd	$1,932,000^(a)	^(b)	2/7/2025	2/7/2026	$1.50	1,999,999

	September 30, 2025
Note liability component:
Principal	$2,000,000
PIK’d interest	131,111
Debt discount	(199,111)
Net carrying amount	$1,932,000

Stock price	$2.25
Exercise price	$1.50
Expected volatility	51.0%
Expected term (years)	4.35
Risk free rate	3.71%
Dividend yield	0.0%

	September 30, 2025
Warrant liability component:
Warrant at inception	$ 560,000
Unrealized depreciation on warrant liability	1,158,142
Net carrying amount of the warrant liability	$ 1,718,142

	September 30, 2025			December 31, 2024
Assets:
Cash	$	7		$	15
Revenue receivables		575			343
Joint interest billing receivables		1,924			1,738
Other receivables		29			2
Prepaids and other current assets		33			35
Current assets		2,568			2,133

Property, plant and equipment
Oil and gas properties, net - full cost method		6,922			6,959
Other property, plant and equipment, net		26			34
Total property, plant and equipment - net		6,948			6,993

Other noncurrent assets
Operating lease right-of-use assets, net		196			227
Total noncurrent assets		196			227

Total assets	$	9,712		$	9,353

Liabilities and Shareholder's Equity:

Current liabilities
Accounts payable	$	6,124		$	6,656
Revenue payable		214			319
Short-term loan payable		2,933			—
Current portion of operating lease liabilities		52			47
Due to parent		580			550
Note payable - Due to parent		10,500			10,500
Accrued liabilities		3,228			3,162
Total current liabilities		23,631			10,734

Long-term liabilities
Asset retirement obligations		4			4
Long-term operating lease liabilities		168			207
Long-term accrued liabilities - Due to parent		2,427			1,471
Total long-term liabilities		2,599			12,182
Total liabilities		26,230			22,916

Retained earnings - beginning of year		(13,563	)		(1,804	)
Current year deficit		(2,955	)		(11,759	)
Shareholder's equity		(16,518	)		(13,563	)

Total liabilities and shareholder's equity	$	9,712		$	9,353

	•	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.

1.	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;
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;
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:
	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):
	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.