Equus Total Return(US:EQS)2025-11-20 16:19Investment Strategy - Equus Total Return, Inc. aims to provide the highest total return through capital appreciation and current income [158]. - The company has shifted its strategy to focus on investments in companies with a total enterprise value between $5.0 million and $75.0 million [163]. - The company is evaluating opportunities to transform into an operating company, with no expected withdrawal from BDC classification before December 31, 2025 [166]. Economic Indicators - As of September 30, 2025, crude oil prices stood at $63.17, while natural gas prices finished at $3.12 per MMBTU [170]. - U.S. GDP is projected to grow at an annualized rate of 3.9% for Q3 2025, up from 2.8% in Q3 2024 [171]. - The unemployment rate remained steady at 4.3% in October 2025, with job growth averaging just 37,000 per month in Q3 2025 [172]. - Consumer price index increased by 3.0% over the previous 12 months as of October 2025, marking stable inflation for nine consecutive quarters [173]. - The Federal Reserve cut interest rates by 25 basis points in both September and October 2025, bringing the federal funds rate range to 3.75% - 4.00% [174]. Market Activity - Global M&A activity surged by 234% in Q3 2025 compared to Q3 2024, with a 41% increase in September 2025 compared to September 2024 [175]. - Private equity transactions rose by 28% in Q3 2025 compared to Q2 2025, and by 38% compared to Q3 2024, despite subdued fundraising trends [177]. Financial Performance - The company's net asset value decreased from $2.17 per share to $1.90 per share, a decline of 12.4% [178]. - Total investment income was $0.4 million for Q3 2025, slightly up from $0.3 million in Q3 2024, and $1.0 million for the nine months ended September 30, 2025, compared to $0.9 million in the same period of 2024 [187]. - Compensation expenses increased to $0.9 million in Q3 2025 from $0.4 million in Q3 2024, primarily due to officer bonuses and equity incentive plan shares [188]. - The company recorded a decrease of $3.4 million in the fair value of the GEVI Note during Q3 2025 [191]. - A realized loss of $2.7 million was recorded on preferred stock in NAEOC due to unmet redemption conditions [193]. - The company recognized a depreciation of the warrant liability of $1.1 million during the nine months ended September 30, 2025 [197]. Regulatory and Compliance - The company has not incurred additional borrowings since the reduction of its asset coverage ratio from 200% to 150% approved by shareholders [167]. - Equus has elected not to qualify as a regulated investment company (RIC) as of Q4 2024, subjecting it to normal corporate tax rates [164]. - The company plans to distribute net investment income and/or realized capital gains annually as required under the Investment Company Act of 1940 [198]. Equity Incentive Plan - The 2016 Equity Incentive Plan allows for the award of up to 2,434,728 shares, with recent awards fully vested as of September 30, 2020 [168].