UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2019 Or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from 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 incorpora ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Condensed Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Condensed%20Financial%20Statements) Unaudited financial statements and notes detail business, policies, and investment valuations, highlighting net asset growth from portfolio appreciation [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) | Metric (in thousands) | Sep 30, 2019 | Dec 31, 2018 | Change | | :-------------------- | :----------- | :----------- | :----- | | Total Assets | $76,200 | $70,941 | +$5,259 | | Total Liabilities | $27,176 | $27,446 | -$270 | | Total Net Assets | $49,024 | $43,495 | +$5,529 | | Investments in portfolio securities at fair value | $42,904 | $35,015 | +$7,889 | | Cash and cash equivalents | $4,783 | $7,425 | -$2,642 | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) | Metric (in thousands) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Investment Income | $90 | $85 | $196 | $315 | | Total Expenses | $916 | $807 | $2,809 | $2,964 | | Net Investment Loss | $(826) | $(722) | $(2,613) | $(2,649) | | Net Realized (Loss) Gain | $10 | $3 | $(2,747) | $4 | | Net Change in Unrealized Appreciation of Portfolio Securities | $2,000 | $2,999 | $10,290 | $6,313 | | Net Change in Unrealized Depreciation of Portfolio Securities - Related Party | $(173) | $78 | $359 | $(461) | | Net Increase in Net Assets from Operations | $1,011 | $2,358 | $5,289 | $3,207 | | Basic and Diluted EPS | $0.07 | $0.17 | $0.39 | $0.24 | [Condensed Statements of Changes in Net Assets](index=5&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Net%20Assets) | Metric (in thousands) | Jan 1, 2019 | Sep 30, 2019 | Change | | :-------------------- | :---------- | :----------- | :----- | | Total Net Assets | $43,495 | $49,024 | +$5,529 | | Undistributed Net Investment Losses | $(29,327) | $(31,940) | -$2,613 | | Unrealized Appreciation of Portfolio Securities, net | $19,310 | $29,600 | +$10,290 | | Share-based incentive compensation (9 months) | N/A | $240 | N/A | | Net increase in net assets resulting from operations (9 months) | N/A | $5,289 | N/A | [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :-------------------- | :----------------------------- | :----------------------------- | | Net Cash Used in Operating Activities | $(2,652) | $(1,596) | | Net Cash Provided by (Used in) Financing Activities | $10 | $(1,003) | | Net Decrease in Cash and Cash Equivalents | $(2,642) | $(2,599) | | Cash and Cash Equivalents and Restricted Cash at End of Period | $5,053 | $8,376 | [Supplemental Information—Selected Per Share Data and Ratios Schedules of Investments](index=7&type=section&id=Supplemental%20Information%E2%80%94Selected%20Per%20Share%20Data%20and%20Ratios%20Schedules%20of%20Investments) [Selected Per Share Data and Ratios](index=7&type=section&id=Selected%20Per%20Share%20Data%20and%20Ratios) | Metric | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net Investment Loss per share | $(0.20) | $(0.20) | | Net Realized Loss per share | $(0.20) | — | | Net Change in Unrealized Appreciation per share | $0.76 | $0.47 | | Net Increase in Net Assets per share | $0.39 | $0.24 | | Net Assets at End of Period per share | $3.63 | $3.45 | | Ratio of Expenses to Average Net Assets | 6.07% | 6.62% | | Ratio of Net Investment Loss to Average Net Assets | (5.65%) | (5.92%) | - Market price per share decreased from **$1.96** at the beginning of the period to **$1.61** at the end of September 30, 2019, while net assets per share increased, leading to a wider discount[16](index=16&type=chunk) [Schedule of Investments](index=8&type=section&id=Schedule%20of%20Investments) | Investment Type | Sep 30, 2019 | Dec 31, 2018 | | :-------------- | :----------- | :----------- | | Control Investments | $10,500 | $9,210 | | Affiliate Investments | $26,500 | $20,500 | | Non-affiliate Investments - Related Party | $4,927 | $4,328 | | Non-affiliate Investments | $977 | $977 | | Total Investments in Portfolio Securities | $42,904 | $35,015 | | Temporary Cash Investments | $26,991 | $26,981 | | Total Investments | $69,895 | $61,996 | | Type of Securities | Cost | Fair Value | Fair Value as Percentage of Net Assets | | :----------------- | :--- | :--------- | :------------------------------------- | | Common stock | $7,169 | $31,427 | 64.1% | | Limited liability company investments | $7,050 | $10,500 | 21.4% | | Secured and subordinated debt | $977 | $977 | 2.0% | | Total | $15,196 | $42,904 | 87.5% | | Industry | Fair Value | Fair Value as Percentage of Net Assets | | :--------------------------- | :--------- | :------------------------------------- | | Shipping products and services | $26,500 | 54.1% | | Energy | $10,500 | 21.4% | | Financial services | $4,927 | 10.0% | | Business products and services | $977 | 2.0% | | Total | $42,904 | 87.5% | - The company is a **"non-diversified"** investment company, with **54.1%** of net asset value in **"Shipping products and services"** and **21.4%** in **"Energy"** as of September 30, 2019, making it highly susceptible to changes in these sectors[23](index=23&type=chunk)[28](index=28&type=chunk) - As of September 30, 2019, **88.5%** of assets at fair value were in qualifying investments under the 1940 Act, and the company provides significant managerial assistance to portfolio companies comprising **86.2%** of total investment value[23](index=23&type=chunk) [Notes to Condensed Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) [Note 1. Description of Business and Basis of Presentation](index=12&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) - Equus Total Return, Inc. is a **BDC** and **RIC**, trading on the **NYSE** under **'EQS'**, with an investment strategy focused on total return in companies with enterprise values between **$5.0 million** and **$75.0 million**[31](index=31&type=chunk) - The company uses wholly-owned taxable subsidiaries to hold certain income-producing investments and LLCs, helping satisfy the **RIC** tax requirement that at least **90%** of gross revenue must consist of investment income, preserving **RIC** status and tax advantages[31](index=31&type=chunk) [Note 2. Liquidity and Financing Arrangements](index=13&type=section&id=Note%202.%20Liquidity%20and%20Financing%20Arrangements) - As of September 30, 2019, cash and cash equivalents were **$4.8 million**, and restricted cash and temporary cash investments totaled **$27.3 million**, primarily from a quarter-end margin loan to maintain **RIC** diversification requirements[33](index=33&type=chunk) - The company borrowed **$27.0 million** via a margin account as of September 30, 2019, collateralized by **$27.3 million** in restricted cash and U.S. Treasury bills, to maintain its **RIC** status[35](index=35&type=chunk) - The company believes its operating cash flow and cash on hand are sufficient to meet operating requirements and finance routine follow-on investments for the next twelve months[33](index=33&type=chunk) [Note 3. Significant Accounting Policies](index=14&type=section&id=Note%203.%20Significant%20Accounting%20Policies) [Valuation of Investments](index=14&type=section&id=Valuation%20of%20Investments) - Investments without readily available market quotations are valued quarterly through a multi-step process involving internal professionals, independent valuation firms (for investments over **$2.5M** held >1 year), management, and approval by the Audit Committee and Board[38](index=38&type=chunk) - Valuation methodologies include yield analysis, enterprise value (EV) analysis, net asset value analysis, liquidation analysis, and discounted cash flow analysis, considering factors like security covenants, collateral, portfolio company performance, and market ratios[38](index=38&type=chunk)[40](index=40&type=chunk) [Fair Value Measurement](index=15&type=section&id=Fair%20Value%20Measurement) - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[40](index=40&type=chunk) | Investment Type | Total | Level 1 | Level 2 | Level 3 | | :-------------- | :---- | :------ | :------ | :------ | | Control investments | $10,500 | $— | $— | $10,500 | | Affiliate investments | $26,500 | $— | $— | $26,500 | | Non-affiliate investments - related party | $4,927 | $4,927 | $— | $— | | Non-affiliate investments | $977 | $— | $— | $977 | | Total investments | $42,904 | $4,927 | $— | $37,977 | | Temporary cash investments | $26,991 | $26,991 | $— | $— | | Total investments and temporary cash investments | $69,895 | $31,918 | $— | $37,977 | - As of September 30, 2019, **$37.977 million** of total investments were classified as **Level 3**, indicating reliance on significant unobservable inputs and management judgment for valuation[42](index=42&type=chunk) | Metric | Control Investments | Affiliate Investments | Non-affiliate Investments | Total | | :-------------------------- | :------------------ | :-------------------- | :------------------------ | :------ | | Fair value as of Jan 1, 2019 | $9,210 | $20,500 | $977 | $30,687 | | Realized losses | — | $(2,789) | — | $(2,789) | | Change in unrealized appreciation | $4,290 | $6,000 | — | $10,290 | | Proceeds from sales/dispositions | $(211) | — | — | $(211) | | Fair value as of Sep 30, 2019 | $10,500 | $26,500 | $977 | $37,977 | [Other Significant Accounting Policies](index=18&type=section&id=Other%20Significant%20Accounting%20Policies) - Investment transactions are recorded on an accrual basis, with realized gains/losses computed using specific identification; investments are classified as **Control** (**>25%** voting, or **>50%** board), **Affiliate** (**5-25%** voting), or **Non-affiliate** (**<5%** voting) per the **1940 Act**[46](index=46&type=chunk) - Interest income is recognized on an accrual basis, and **Payment in Kind (PIK)** interest is added to the principal balance of loans and recorded as interest income, requiring distribution to stockholders to maintain **RIC** status[46](index=46&type=chunk)[48](index=48&type=chunk) - Share-based compensation is accounted for using the fair value method, with grant date fair value amortized as expense over the vesting period[48](index=48&type=chunk) - The company intends to qualify as a **Regulated Investment Company (RIC)** for federal income tax purposes, avoiding corporate income taxes on distributed income or gains[48](index=48&type=chunk) [Accounting Standards Recently Adopted and Not Yet Adopted](index=19&type=section&id=Accounting%20Standards%20Recently%20Adopted%20and%20Not%20Yet%20Adopted) - Adoption of **ASU 2016-02 (Leases)** on January 1, 2019, had no material impact due to the absence of operating leases[48](index=48&type=chunk) - The company adopted new **SEC** rules for disclosing changes in net assets in **Form 10-Q**, effective January 1, 2019, without material impact[50](index=50&type=chunk) - **ASU 2016-13 (Credit Losses)** and **ASU 2018-13 (Fair Value Measurement)** are not expected to materially impact financial statements upon future adoption[50](index=50&type=chunk) [Note 4. Related Party Transactions and Agreements](index=20&type=section&id=Note%204.%20Related%20Party%20Transactions%20and%20Agreements) - Independent Directors receive annual fees (**$40,000**), meeting fees (**$2,000** in-person, **$1,000** telephonic), and expense reimbursements; Committee chairs receive an additional **$50,000** annual fee[51](index=51&type=chunk) - The Fund paid Kenneth I. Denos, P.C., a director's professional corporation, **$0.07 million** for services during each of the three months ended September 30, 2019 and 2018, and **$0.3 million** for each of the nine months ended September 30, 2019 and 2018[51](index=51&type=chunk) [Note 5. Portfolio Securities](index=21&type=section&id=Note%205.%20Portfolio%20Securities) - Net change in unrealized appreciation was **$10.7 million** for the nine months ended September 30, 2019, increasing total net unrealized appreciation to **$27.7 million**[54](index=54&type=chunk) - Key drivers of unrealized appreciation for the nine months ended September 30, 2019, included: PalletOne, Inc.: **+$6.0 million** due to improved operating performance; Equus Energy, LLC: **+$1.5 million** due to increased mineral acreage prices and crude oil prices; MVC Capital, Inc.: **+$0.4 million** due to share price increase and dividend payments[54](index=54&type=chunk) - The dissolution of Equus Media Development Company, LLC resulted in a **$2.8 million** transfer of unrealized depreciation to realized loss during the nine months ended September 30, 2019[54](index=54&type=chunk) [Note 6. Plan of Reorganization](index=22&type=section&id=Note%206.%20Plan%20of%20Reorganization) - The company plans a reorganization to merge with MVC Capital or an operating company, or to terminate its **BDC** election and restructure as a publicly-traded operating company in energy, natural resources, technology, and/or financial services[56](index=56&type=chunk) - Shareholder authorization to withdraw the **BDC** election expired on July 31, 2019, but is expected to be renewed, with actual withdrawal contingent on a definitive "Consolidation" agreement and a subsequent affirmative shareholder vote[56](index=56&type=chunk) [Note 7. 2016 Equity Incentive Plan](index=22&type=section&id=Note%207.%202016%20Equity%20Incentive%20Plan) - The 2016 Equity Incentive Plan allows for awards of restricted stock and common stock purchase options, with a maximum of **2,434,728 shares**, to align interests and retain key personnel[57](index=57&type=chunk) - As of September 30, 2019, **280,000 shares** of restricted stock remained unvested[57](index=57&type=chunk) | Period | 2019 (in thousands) | 2018 (in thousands) | | :----- | :--- | :--- | | Three Months Ended Sep 30 | $0.08 | $0.08 | | Nine Months Ended Sep 30 | $0.2 | $0.4 | [Note 8. Equus Energy, LLC](index=23&type=section&id=Note%208.%20Equus%20Energy%2C%20LLC) - Equus Energy, LLC, a wholly-owned subsidiary, invests in oil & gas properties, holding working interests in **141 wells** across Texas and Oklahoma, including a **50%** interest in Conger Field wells and interests in the Eagle Ford Shale play[59](index=59&type=chunk) | Metric | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating Revenue | $120 | $278 | $481 | $855 | | Total Operating Expenses | $322 | $364 | $956 | $1,097 | | Operating Loss before Income Tax Expense | $(202) | $(86) | $(475) | $(242) | | Net Loss | $(202) | $(86) | $(475) | $(242) | - Equus Energy's operators intend to delay new drilling and recompletion projects until 2020, anticipating a gradual rise in crude oil prices[59](index=59&type=chunk) - Equus Energy follows the **Full Cost Method of Accounting** for oil and gas properties, capitalizing all acquisition, exploration, and development costs, and amortizing them over the estimated productive life of proved reserves using the unit-of-production method[67](index=67&type=chunk) [Note 9. Subsequent Events](index=26&type=section&id=Note%209.%20Subsequent%20Events) - On October 5, 2019, the company sold **$27.0 million** in U.S. Treasury Bills and repaid the associated margin loan[68](index=68&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Discusses Equus Total Return, Inc.'s BDC and RIC business, investment strategy, reorganization plan, market conditions, liquidity, and operations, highlighting net asset value increase [Business Overview and Strategy](index=27&type=section&id=Business%20Overview%20and%20Strategy) - Equus is a **BDC** and **RIC**, listed on the **NYSE (EQS)**, focused on maximizing total return through capital appreciation and current income from debt and equity investments in companies with enterprise values between **$5.0 million** and **$75.0 million**[69](index=69&type=chunk)[71](index=71&type=chunk) - The company utilizes wholly-owned taxable subsidiaries to hold certain income-producing investments, ensuring compliance with the **90%** investment income requirement for **RIC** tax status[71](index=71&type=chunk) [Plan of Reorganization](index=28&type=section&id=Plan%20of%20Reorganization) - The Plan of Reorganization involves a potential merger with MVC Capital, Inc. or an operating company, or restructuring Equus as a publicly-traded operating company focused on energy, natural resources, technology, and/or financial services[72](index=72&type=chunk) - Shareholder authorization to withdraw the **BDC** election expired on July 31, 2019, and a subsequent affirmative vote will be required to enter into any definitive agreement for "Consolidation" or change the business nature[74](index=74&type=chunk) [2016 Equity Incentive Plan](index=29&type=section&id=2016%20Equity%20Incentive%20Plan) - The 2016 Equity Incentive Plan aims to promote equity ownership and retention among key personnel, with **844,500 restricted shares** granted on March 17, 2017, subject to a **3-year** vesting period[75](index=75&type=chunk) | Period | 2019 (in thousands) | 2018 (in thousands) | | :----- | :--- | :--- | | Three Months Ended Sep 30 | $0.08 | $0.08 | | Nine Months Ended Sep 30 | $0.2 | $0.4 | [Current Market Conditions](index=29&type=section&id=Current%20Market%20Conditions) - U.S. GDP growth was **1.9%** in **Q3 2019**, following **2.0%** and **3.1%** in **Q1** and **Q2**, respectively, with a tight labor market but signs of weakening business investment[76](index=76&type=chunk) - Global M&A activity slowed in Q1 2019 but accelerated in Q2, with approximately **$2 trillion** in global transactions and **$2.4 trillion** in undeployed capital, leading to higher median valuation multiples (**11x EBITDA**) and constrained investment yields[76](index=76&type=chunk) - The company's net asset value increased by **12.7%** from **$3.22** to **$3.63 per share** during the nine months ended September 30, 2019, but its common stock traded at a **55.6% discount** to NAV, up from **39.1%** at December 31, 2018[78](index=78&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash is generated from maturities, security sales, and borrowings, and used for additional investments and stockholder dividends[79](index=79&type=chunk) - The company periodically borrows funds, often through margin accounts, to make qualifying investments and maintain its **RIC** tax status, noting that failure to qualify would result in corporate income tax[79](index=79&type=chunk) - Management believes current operating cash flow and cash on hand are sufficient to meet operating requirements and finance routine capital expenditures for the next twelve months[79](index=79&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) [Investment Income and Expense](index=30&type=section&id=Investment%20Income%20and%20Expense) | Metric (in millions) | Three Months Ended Sep 30, 2019 | Three Months Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Investment Loss | $(0.8) | $(0.7) | $(2.6) | $(2.6) | | Investment Income | $0.1 | $0.1 | $0.2 | $0.3 | | Total Expense | $0.9 | $0.8 | $2.8 | $3.0 | - The decrease in total expenses for the nine months ended September 30, 2019, was mainly due to a decline in professional fees[80](index=80&type=chunk) [Realized Gains and Losses on Sales of Portfolio Securities](index=31&type=section&id=Realized%20Gains%20and%20Losses%20on%20Sales%20of%20Portfolio%20Securities) - A realized loss of **$2.8 million** was incurred from the dissolution and liquidation of Equus Media Development Company LLC (EMDC) during the nine months ended September 30, 2019[81](index=81&type=chunk) [Changes in Unrealized Appreciation/Depreciation of Portfolio Securities](index=31&type=section&id=Changes%20in%20Unrealized%20Appreciation%2FDepreciation%20of%20Portfolio%20Securities) - Net change in unrealized appreciation was **$10.7 million** for the nine months ended September 30, 2019, increasing total net unrealized appreciation to **$27.7 million**[83](index=83&type=chunk) - Key contributors to unrealized appreciation included PalletOne, Inc. (**+$6.0 million**), Equus Energy, LLC (**+$1.5 million**), and MVC Capital, Inc. (**+$0.4 million**)[83](index=83&type=chunk) - The dissolution of EMDC resulted in a **$2.8 million** transfer of unrealized depreciation to realized loss[83](index=83&type=chunk) [Dividends](index=31&type=section&id=Dividends) - As a **BDC**, the company is required to distribute net investment income and/or realized capital gains annually under the **1940 Act**[83](index=83&type=chunk) [Portfolio Securities](index=31&type=section&id=Portfolio%20Securities) - Received **$0.2 million** in dividends as additional MVC shares during the nine months ended September 30, 2019[83](index=83&type=chunk) - Dissolved Equus Media Development Company, LLC (EMDC) and transferred its assets, including **$211,000** in cash, to the Fund[83](index=83&type=chunk) [Subsequent Events](index=32&type=section&id=Subsequent%20Events) - On October 5, 2019, the company sold **$27.0 million** in U.S. Treasury Bills and repaid the associated margin loan[85](index=85&type=chunk) [Item 3. Quantitative and Qualitative Disclosure about Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) Details exposure to financial market risks from interest rate changes and equity prices, noting no derivative use and the impact of significant market shifts on private company valuations - The company is exposed to market risks from changes in interest rates (debt securities, outstanding debt) and marketable equity security prices[86](index=86&type=chunk) - It does not use derivative financial instruments to mitigate market risks[86](index=86&type=chunk) - While modest public market equity price changes do not significantly impact private company valuations, significant shifts can affect carrying values and realized gains/losses[86](index=86&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including CEO and CFO, evaluated disclosure controls and procedures as effective, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated by management, CEO, and CFO, and deemed effective at a reasonable assurance level as of September 30, 2019[87](index=87&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended September 30, 2019[87](index=87&type=chunk) [PART II. OTHER INFORMATION](index=33&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) A shareholder lawsuit regarding the 2016 Equity Incentive Plan was dismissed, and other incidental legal proceedings are not expected to materially affect financial condition or operations - A shareholder lawsuit challenging the 2016 Equity Incentive Plan was dismissed by the Chancery Court and affirmed by the Delaware Supreme Court on May 16, 2019[89](index=89&type=chunk) - The company does not expect other legal proceedings incidental to its normal business to materially affect its financial condition or results of operations[89](index=89&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) Refers to the Annual Report on Form 10-K for risk factors; new risks from planned operating company conversion and related transactions will be disclosed in future filings - Readers should refer to the **Annual Report on Form 10-K** for a comprehensive discussion of risk factors[90](index=90&type=chunk) - New risks may arise from the planned conversion to an operating company and related transactions, which will be identified and disclosed in subsequent filings[90](index=90&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) Lists various exhibits filed by the company, including corporate governance documents, material contracts, and certifications - The exhibits include corporate governance documents (Restated Certificate of Incorporation, Bylaws), material contracts (Safekeeping Agreement, Share Exchange Agreement with MVC Capital, Inc.), and the 2016 Equity Incentive Plan[92](index=92&type=chunk) [SIGNATURE](index=35&type=section&id=SIGNATURE) The report is signed by John A. Hardy, CEO, on November 13, 2019, certifying compliance with Section 13 or 15(d) of the Securities Exchange Act of 1934 - The report was signed by **John A. Hardy, Chief Executive Officer**, on **November 13, 2019**[96](index=96&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 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 | --- | --- | |---------------------------------------------------------------------------|------------------------------------- ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Item 1. Unaudited Condensed Financial Statements](index=3&type=section&id=Item%201%2E%20Unaudited%20Condensed%20Financial%20Statements) Equus Total Return, Inc. reported increased assets and net assets for Q1 2019, driven by unrealized appreciation [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) Condensed Balance Sheets (in thousands) | Financial Metric (in thousands) | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Investments at Fair Value | $39,050 | $35,015 | | Total Assets | $73,734 | $70,941 | | Total Liabilities | $27,182 | $27,446 | | Total Net Assets | $46,552 | $43,495 | | Net Asset Value Per Share | $3.44 | $3.22 | - The company's net assets increased by approximately **$3.1 million** during the first quarter of 2019, primarily due to an increase in the fair value of its investment portfolio[10](index=10&type=chunk) [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) Condensed Statements of Operations (in thousands) | Metric (in thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Total Investment Income | $16 | $113 | | Total Expenses | $1,006 | $1,104 | | Net Investment Loss | $(990) | $(991) | | Net Change in Unrealized Appreciation | $3,957 | $1,045 | | Net Increase in Net Assets from Operations | $2,977 | $56 | | Earnings Per Share (Basic and Diluted) | $0.22 | $0.00 | - The net increase in net assets was primarily driven by a significant net change in unrealized appreciation of portfolio securities, amounting to **$4.0 million** in Q1 2019, compared to **$1.1 million** in Q1 2018[13](index=13&type=chunk) [Condensed Statements of Changes in Net Assets](index=5&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Net%20Assets) Condensed Statements of Changes in Net Assets (in thousands) | Description (in thousands) | Amount | | :--- | :--- | | Net Assets at December 31, 2018 | $43,495 | | Share-based incentive compensation | $80 | | Net increase in net assets from operations | $2,977 | | Net Assets at March 31, 2019 | $46,552 | [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Condensed Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(1,103) | $(1,608) | | Net Cash (Used in) Provided by Financing Activities | $(4) | $994 | | Net Decrease in Cash and Cash Equivalents | $(1,107) | $(614) | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $6,588 | $10,361 | [Schedules of Investments](index=8&type=section&id=Schedules%20of%20Investments) - The company is classified as a "non-diversified" investment company, with significant concentration in its portfolio. As of March 31, 2019, the investment in PalletOne, Inc. ("Shipping products and services") represented **48.3%** of net asset value, and the investment in Equus Energy, LLC ("Energy") represented **22.6%** of net asset value[38](index=38&type=chunk) Investments by Type (in thousands) | Investment Type (in thousands) | Fair Value (Mar 31, 2019) | % of Net Assets | | :--- | :--- | :--- | | Common stock | $27,362 | 58.8% | | Limited liability company investments | $10,711 | 23.0% | | Secured and subordinated debt | $977 | 2.1% | | **Total** | **$39,050** | **83.9%** | Investments by Industry (in thousands) | Industry (in thousands) | Fair Value (Mar 31, 2019) | % of Net Assets | | :--- | :--- | :--- | | Shipping products and services | $22,500 | 48.3% | | Energy | $10,500 | 22.6% | | Financial services | $4,862 | 10.4% | | Business products and services | $977 | 2.1% | | Media | $211 | 0.5% | | **Total** | **$39,050** | **83.9%** | [Notes to Condensed Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Financial%20Statements) - The company operates as a Business Development Company (BDC) and qualifies as a Regulated Investment Company (RIC) for tax purposes, allowing it to avoid corporate income taxes on distributed income[54](index=54&type=chunk) - The company periodically borrows funds via a margin account to make qualifying investments needed to maintain its RIC status. As of March 31, 2019, it had borrowed **$27.0 million** for this purpose, collateralized by U.S. Treasury bills[64](index=64&type=chunk)[65](index=65&type=chunk) - A significant portion of the company's investments (**$34.2 million**) are classified as Level 3 assets, meaning their fair values are determined using unobservable inputs and significant management judgment, leading to inherent valuation uncertainty[88](index=88&type=chunk)[92](index=92&type=chunk) - The company is pursuing a Plan of Reorganization to transition from a BDC to a publicly-traded operating company. Shareholders have authorized the withdrawal of its BDC election, contingent on entering a definitive agreement for a merger or consolidation[117](index=117&type=chunk)[118](index=118&type=chunk)[120](index=120&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Plan of Reorganization, with net asset value increasing due to unrealized gains - The company's primary strategic focus is the 'Plan of Reorganization' to transition from a BDC into a publicly-traded operating company, potentially through a merger or consolidation[154](index=154&type=chunk)[155](index=155&type=chunk) - On January 21, 2019, shareholders approved the company's cessation as a BDC, authorizing the Board to withdraw its BDC election, though this action is contingent upon securing a definitive consolidation agreement[158](index=158&type=chunk) Net Investment Loss and Expenses (in millions) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net Investment Loss | $1.0 million | $1.0 million | | Investment Income | $0.01 million | $0.1 million | | Total Expense | $1.0 million | $1.1 million | - The net change in unrealized appreciation of **$4.0 million** in Q1 2019 was primarily due to fair value increases in MVC (**$0.6M**), PalletOne, Inc. (**$2.0M**), and Equus Energy, LLC (**$1.5M**)[175](index=175&type=chunk) [Item 3. Quantitative and Qualitative Disclosure about Market Risk](index=33&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company faces market risks from interest rate changes and equity price fluctuations in its private investments - The company's main market risks are changes in interest rates for debt securities and changes in equity security prices[182](index=182&type=chunk) - A major portion of the investment portfolio consists of debt and equity in private companies. While modest public market changes do not significantly impact their value, significant market shifts can affect valuations and the timing of realized gains or losses[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the Fund's disclosure controls and procedures were **effective** at a reasonable assurance level as of March 31, 2019[186](index=186&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter ended March 31, 2019, that materially affected, or are reasonably likely to materially affect, internal controls[186](index=186&type=chunk) [PART II. OTHER INFORMATION](index=34&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=34&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is defending a shareholder lawsuit regarding its 2016 Equity Incentive Plan, with an appeal pending - A shareholder lawsuit was filed by Samuel Zalmanoff regarding the Fund's 2016 Equity Incentive Plan, alleging a breach of fiduciary duties of disclosure[188](index=188&type=chunk) - The Fund was granted summary judgment on November 13, 2018, but the plaintiff appealed to the Delaware Supreme Court. The company intends to vigorously defend its position[188](index=188&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes to existing risk factors, but the Plan of Reorganization may introduce new risks - The company states there have been **no changes** to the risk factors since its 2018 Form 10-K filing[191](index=191&type=chunk) - The company acknowledges that its efforts to convert into an operating company under the Plan of Reorganization may subject it to a number of new risks, which will be identified in subsequent filings[190](index=190&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206%2E%20Exhibits) This section lists key exhibits filed with the Form 10-Q, including corporate documents and CEO/CFO certifications - The report lists various exhibits, including corporate governance documents, material contracts, and required CEO/CFO certifications under Rule 13a-14(a) and Section 1350[194](index=194&type=chunk)[195](index=195&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2018 Or ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 814-00098 | --- | --- | |------------------------------------------------------------------------------------------------------------------------------ ...