Equus Total Return(EQS) - 2021 Q3 - Quarterly Report

Company Strategy and Transformation - Equus Total Return, Inc. aims to provide the highest total return through capital appreciation and current income [165]. - The company has authorized the withdrawal of its BDC election, effective by January 31, 2022, to transform into an operating company [169]. - The company continues to evaluate opportunities for transformation but cannot assure completion within a specific timeframe [169]. Financial Performance and Metrics - The authorized shares of common stock increased from 50 million to 100 million to facilitate potential acquisitions [171]. - The asset coverage ratio was reduced from 200% to 150%, allowing the company to borrow up to twice the value of its net assets [172]. - The company has not incurred additional borrowings beyond a margin loan for U.S. Treasury bills since the asset coverage reduction [172]. - Equus Energy's net asset value increased from $2.57 per share to $2.68 per share, a rise of 4.3% [185]. - Net investment loss for the three months ended September 30, 2021, was $0.8 million, compared to $0.7 million for the same period in 2020 [193]. - The company made a follow-on investment of $0.35 million in Equus Energy, LLC during the nine months ended September 30, 2021 [199]. - In October 2021, the company received $1.2 million for the cash escrow receivable related to the sale of PalletOne [200]. Market Conditions and Economic Impact - As of October 28, 2021, over 742,000 U.S. deaths were attributed to COVID-19, impacting market conditions and operations [178]. - The CDC reported that 78% of the U.S. population over age 12 had received at least one COVID-19 vaccine dose by October 28, 2021 [178]. - The pandemic has led to operational changes, including remote work, which have not materially affected day-to-day operations [179]. - However, travel restrictions have constrained the ability to source new investments and facilitate transactions [179]. - The U.S. GDP growth was 6.4% and 6.7% in Q1 and Q2 2021, respectively, but slowed to 2.0% in Q3 2021, below the forecast of 3.5% [181]. - Unemployment rate decreased to 4.8% by September 30, 2021, down from a peak of 14.7% in April 2020 [181]. - Median home value reached $400,000 for the first time in history by the end of Q3 2021, with average sale price at $453,000 [181]. Mergers and Acquisitions Activity - Merger and acquisition activity totaled $4.3 trillion in the first nine months of 2021, with a forecast of $6.0 trillion for the entire year [183]. - Private equity transactions in the first half of 2021 reached a record $580 billion, with predictions for 2021 to surpass $1.0 trillion [184]. Asset Valuation Changes - Equus Energy recorded a net change in unrealized appreciation of $4.65 million due to increases in mineral acreage prices and crude oil prices [195].