Equus Total Return(US:EQS)2024-11-14 21:09Investment Strategy - Equus Total Return, Inc. aims to maximize stockholder returns through capital appreciation and current income by investing in companies with a total enterprise value between $5.0 million and $75.0 million [172]. - Equus Energy plans to secure equity or debt financing, request operators to shut-in wells, or sell oil and gas holdings to conserve cash resources [181]. Economic Indicators - As of September 30, 2024, crude oil prices were $68.27 per barrel, while natural gas prices finished the first nine months of 2024 at $2.92 per MMBTU [180]. - The U.S. GDP increased at an annualized rate of 2.8% in Q3 2024, with projections of 2.6% growth for the entire year [183]. - The Conference Board projects a GDP increase of 1.7% for 2025, indicating a slowdown in economic growth [183]. - The unemployment rate in the U.S. held steady at 4.1% as of October 2024, with no expected changes through 2025 [184]. Financial Performance - As of September 30, 2024, the company's net asset value decreased from $3.55 per share to $2.96 per share, a decline of 16.6% [189]. - The common stock is trading at a 54.1% discount to net asset value, compared to 59.2% as of December 31, 2023 [189]. - Total investment income for the nine months ended September 30, 2024, was $0.9 million, up from $0.06 million in the same period of 2023 [199]. - Net investment loss remained relatively unchanged at $2.7 million for the nine months ended September 30, 2024, compared to $3.1 million in 2023 [198]. - During the nine months ended September 30, 2024, the company made a $2.2 million follow-on debt investment in Morgan E&P, LLC, while recording a $3.6 million decrease in the fair value of its equity holding in Morgan [203]. - The company recorded a $2.0 million decrease in the fair value of its investment in Equus Energy, LLC, primarily due to declining oil prices [204]. Expenses and Compensation - Compensation expense decreased to $1.3 million for the nine months ended September 30, 2024, from $1.5 million in 2023, attributed to bonuses paid in 2023 [200]. - Professional fees increased to $1.2 million for the nine months ended September 30, 2024, compared to $0.7 million in 2023, due to overall fee increases in legal and accounting services [201]. Company Operations - The asset coverage ratio was reduced from 200% to 150%, allowing Equus to borrow up to twice the value of its net assets [176]. - The company has a wholly-owned Taxable Subsidiary to maintain its RIC status and avoid significant federal income taxes [173]. - The company is evaluating the impact of current market conditions on portfolio company valuations and their ability to provide current income [195]. - In October 2024, the company repaid its margin loan after the maturity of $55.0 million in U.S. Treasury Bills [207]. Equity Incentive Plan - The 2016 Equity Incentive Plan allows for the award of up to 2,434,728 shares of common stock to promote the interests of the Fund [177].