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  <P STYLE="font: 13.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>UNITED STATES </B></P>
  
  <P STYLE="font: 13.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SECURITIES AND EXCHANGE COMMISSION
  </B></P>
  
  <P STYLE="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Washington, D.C. 20549 </B></P>
  
  <P STYLE="font: 18pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>FORM 10-Q </B></P>
  
  <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0">(Mark One)</P>
  
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      <TD STYLE="width: 0px; font: 11pt/115% Calibri, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="width: 33px; font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: MS Gothic, Helvetica, Sans-Serif; font-size: 10pt">&#9746;</FONT></TD>
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">For the quarterly period ended
  March 31, 2017</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">or</P>
  
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  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 0px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 33px; padding-top: 9pt; line-height: 115%"><FONT STYLE="font-family: MS Mincho; font-size: 10pt">&#9744;</FONT></TD>
      <TD STYLE="padding-top: 9pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">For the transition period to</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">Commission File Number 814-00098</P>
  
  <P STYLE="font: 24pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>EQUUS TOTAL RETURN, INC. </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Exact name of registrant as specified
  in its charter) </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
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      <TD STYLE="width: 50%; font: 11pt/115% Calibri, Helvetica, Sans-Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Delaware</B></FONT></TD>
      <TD STYLE="width: 50%; font: 11pt/115% Calibri, Helvetica, Sans-Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>76-0345915</B></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD>
          <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(State or other jurisdiction of</B></P>
          <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><B>incorporation or organization)</B></P></TD>
      <TD>
          <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(I.R.S. Employer</B></P>
          <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><B>Identification No.)</B></P></TD></TR>
  <TR>
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD>
          <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>700 Louisiana St., 48<SUP>th</SUP>
          Floor</B></P>
          <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>Houston, Texas</B></P></TD>
      <TD>
          <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>
          <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>77002</B></P></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt"><B>(Address of principal executive offices)</B></FONT></TD>
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt"><B>(Zip Code)</B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Former Name, Former Address and
  Former Fiscal Year, if Changed Since Last Report)</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><B>Registrant&rsquo;s telephone
  number, including area code: (713) 529-0900 </B></P>
  
  <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 9pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Indicate
  by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and
  (2) has been subject to such filing requirements for the past 90 days. Yes </FONT><FONT STYLE="font-family: Wingdings">x</FONT>
  <FONT STYLE="font-family: Times New Roman, Times, Serif">No </FONT><FONT STYLE="font-family: Wingdings">&#168;</FONT></P>
  
  <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 9pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Indicate
  by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
  Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (&sect;232.405 of this chapter) during the
  preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes </FONT><FONT STYLE="font-family: MS Mincho">&#9744;</FONT>
  <FONT STYLE="font-family: Times New Roman, Times, Serif">No </FONT><FONT STYLE="font-family: MS Mincho">&#9744;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 24.5pt">Indicate by check mark whether
  the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of &ldquo;accelerated
  filer and large accelerated filer&rdquo; in Rule 12b-2 of the Exchange Act.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
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      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large accelerated filer </FONT><FONT STYLE="font-family: MS Mincho; font-size: 10pt">&#9744;</FONT></TD>
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer </FONT><FONT STYLE="font-family: MS Mincho; font-size: 10pt">&#9744;</FONT></TD>
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-accelerated filer </FONT><FONT STYLE="font-family: MS Mincho; font-size: 10pt">&#9746;</FONT></TD>
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Smaller Reporting Company </FONT><FONT STYLE="font-family: MS Mincho; font-size: 10pt">&#9744;</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Calibri, Helvetica, Sans-Serif; margin: 9pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif">Indicate
  by check mark whether the registrant is a shell company. Yes </FONT><FONT STYLE="font-family: MS Mincho">&#9744;</FONT> <FONT STYLE="font-family: Times New Roman, Times, Serif">No
  </FONT><FONT STYLE="font-family: MS Mincho">&#9746;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 24.5pt">There were 13,518,416 shares of
  the registrant&rsquo;s common stock, $.001 par value, outstanding, as of May 15, 2017.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 1 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 100%"><A HREF="#TableOfContents" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A>&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">EQUUS TOTAL RETURN, INC.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">(A Delaware Corporation)</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="TableOfContents"></A>INDEX</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt"><B>PAGE</B></FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_001">PART I. FINANCIAL INFORMATION</A></FONT></TD>
      <TD STYLE="vertical-align: bottom; line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; text-indent: 0.5in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_002">Item 1. Financial Statements</A></FONT></TD>
      <TD STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; text-indent: 1in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_003">Balance Sheets</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3</FONT></TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; text-indent: 1in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_004">Statements of Operations</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; text-indent: 1in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_005">Statements of Changes in Net Assets</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5</FONT></TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; text-indent: 1in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_006">Statements of Cash Flows</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">6</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; text-indent: 1in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_007">Supplemental Information&mdash;Selected Per Share Data and Ratios</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">7</FONT></TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; text-indent: 1in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_008">Schedules of Investments</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">8</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; text-indent: 1in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_009">Notes to Financial Statements</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">12</FONT></TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; text-indent: 0.5in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_010">Item 2. Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">27</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; text-indent: 0.5in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_011">Item 3. Quantitative and Qualitative Disclosure about Market Risk</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</FONT></TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; text-indent: 0.5in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_012">Item 4. Controls and Procedures</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">33</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_013">PART II. OTHER INFORMATION</A></FONT></TD>
      <TD STYLE="vertical-align: bottom; line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; text-indent: 0.5in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_014">Item 1. Legal Proceedings</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">33</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; text-indent: 0.5in; line-height: 115%"><A HREF="#a_015">Item 1A. Risk Factors</A></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%">34</TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; text-indent: 0.5in; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_016">Item 6. Exhibits</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">35</FONT></TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: top; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="#a_017">SIGNATURE</A></FONT></TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">36</FONT></TD></TR>
  <TR STYLE="background-color: White">
      <TD STYLE="vertical-align: top; line-height: 115%">&nbsp;</TD>
      <TD NOWRAP STYLE="vertical-align: bottom; line-height: 115%">&nbsp;</TD></TR>
  </TABLE>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in">&nbsp;</P>
  
  
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  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC. </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_003"></A><U STYLE="text-decoration: none">BALANCE SHEETS </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U STYLE="text-decoration: none">(Unaudited)</U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><U><A NAME="a_001"></A>Part I. Financial Information</U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><A NAME="a_002"></A><U>Item 1. Financial Statements </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center"><P STYLE="margin-top: 0; margin-bottom: 0">March 31,&nbsp;</P>2017</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold"><P STYLE="margin-top: 0; margin-bottom: 0">December 31,</P>
                                                <P STYLE="margin-top: 0; margin-bottom: 0">2016</P></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: left; vertical-align: bottom">(in thousands, except per share amounts)</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left; vertical-align: bottom">Assets</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Investments in portfolio securities at fair value:</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="width: 70%; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control investments (cost at $10,050 and $10,050 respectively)</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">6,463</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">6,462</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Affiliate investments (cost at $350 and $350 respectively)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,686</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments - related party (cost at $6,074 and $6,011 respectively)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,279</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,021</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments (cost at $2,978 and $2,978 respectively)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,978</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,978</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investments in portfolio securities at fair value</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,406</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,661</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Temporary cash investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,999</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,994</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Cash and cash equivalents</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,463</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11,961</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Restricted cash</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">350</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">300</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Accounts receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">611</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">611</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Accrued interest receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">666</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">542</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Other assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">36</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">77</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">77,531</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73,146</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Liabilities and net assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,039</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">269</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable to related parties</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">71</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">143</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowing under margin account</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">34,999</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29,994</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36,109</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,406</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Commitments and contingencies (see note 2)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41,422</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">42,740</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Net assets consist of:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">13</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital in excess of par value</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,696</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,213</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Undistributed net investment losses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(24,241</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(21,758</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized appreciation of portfolio securities, net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,749</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,262</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unrealized depreciation of portfolio securities - related party</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,795</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,990</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total net assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41,422</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">42,740</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt; text-align: left; vertical-align: bottom">Shares of common stock issued and outstanding, $.001 par value, 50,000 shares authorized</TD><TD STYLE="font-size: 11.5pt; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right">13,518</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 11.5pt; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right">12,674</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 11.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt; text-align: left; vertical-align: bottom">Shares of preferred stock issued and outstanding, $.001 par value, 5,000 shares authorized</TD><TD STYLE="font-size: 11.5pt; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 11.5pt; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-size: 10pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 11.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt; text-align: left; vertical-align: bottom">Net asset value per share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.06</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.37</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">The accompanying notes are an
  integral part of these financial statements.</P>
  
  
  <!-- Field: Page; Sequence: 3 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC.</U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U STYLE="text-decoration: none"><A NAME="a_004"></A>STATEMENTS OF OPERATIONS </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">(Unaudited)&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three Months Ended March 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: left; vertical-align: bottom">(in thousands, except per share amounts)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2017</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Investment income:</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest and dividend income:</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 70%; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments - related party</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">63</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">124</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">136</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest and dividend income</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">187</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">136</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest from temporary cash investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment income</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">190</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">138</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Expenses:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transaction costs</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1,283</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation expense</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">681</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">272</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional fees</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">443</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">368</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Director fees and expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">148</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">120</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expense</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">88</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">84</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Mailing, printing and other expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,670</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">871</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Net investment loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,480</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(733</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net realized loss:</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Control investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-affiliate investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Temporary cash investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized loss</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net unrealized appreciation of portfolio securities:</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of period</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,749</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,915</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">12,262</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">4,915</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Net change in net unrealized appreciation of portfolio securities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">487</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">1,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Net unrealized depreciation of portfolio securities - related party:</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of period</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,795</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,562</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1,990</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(2,539</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Net change in net unrealized depreciation of portfolio securities - related party</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">195</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(23</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net (decrease) increase in net assets resulting from operations</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(1,801</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">242</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net (decrease) increase in net assets resulting from operations per share:</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(0.14</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.02</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Weighted average shares outstanding:</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,814</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">12,674</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">The accompanying notes are an integral
  part of these financial statements.</P>
  
  
  <!-- Field: Page; Sequence: 4 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 100%"><A HREF="#TableOfContents" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A>&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC. </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_005"></A><U STYLE="text-decoration: none">STATEMENTS OF CHANGES IN NET ASSETS
  </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">(Unaudited)</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three months ended March 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: left; vertical-align: bottom">(in thousands)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2017</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 63%; text-align: left">Net (decrease) increase in net assets resulting from operations</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(1,801</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">242</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Capital share transactions:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based incentive compensation</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">483</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Net increase in net assets resulting from capital share transactions</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">483</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Decrease in net assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,318</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Net assets at beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">42,740</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">37,308</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net assets at end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">41,422</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">37,550</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">The accompanying notes are an integral
  part of these financial statements.</P>
  
  
  <!-- Field: Page; Sequence: 5 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 100%"><A HREF="#TableOfContents" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A>&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC.</U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_006"></A><U STYLE="text-decoration: none">STATEMENTS OF CASH FLOWS </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">(Unaudited)</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three months ended March 31,</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-size: 10pt; font-weight: bold; text-align: left; padding-bottom: 1pt">(in thousands)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center; vertical-align: bottom">2017</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center; vertical-align: bottom">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; font-weight: bold; text-align: center; vertical-align: bottom">2016</TD><TD STYLE="padding-bottom: 1pt; font-weight: bold; text-align: center; vertical-align: bottom">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Reconciliation of (decrease) increase in net assets resulting from operations to net cash</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;used in operating activities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 70%; text-align: left">Net (decrease) increase in net assets resulting from operations</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(1,801</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">242</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Adjustments to reconcile net (decrease) increase in net assets resulting from operations to net cash used in operating activities:</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font-family: Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized loss</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized appreciation of portfolio securities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(487</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,000</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized depreciation of portfolio securities - related party</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(195</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">23</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based incentive compensation</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">483</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Changes in operating assets and liabilities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of portfolio securities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,000</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of temporary cash investments, net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,008</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in restricted cash</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(50</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in accounts receivable from investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in accrued interest receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(187</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(111</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in accounts receivable and other</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">41</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">43</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase in accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">770</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">313</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in accounts payable to related parties</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(72</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(118</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Net cash used in operating activities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(6,503</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,605</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Cash flows from financing activities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowings under margin account</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">34,999</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14,999</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayments under margin account</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(29,994</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(15,000</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Net cash provided by (used in) financing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">5,005</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(1</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net decrease in cash and cash equivalents</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,498</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,606</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Cash and cash equivalents at beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">11,961</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">17,036</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Cash and cash equivalents at end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">10,463</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,430</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Non-cash operating and financing activities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest or dividends exchanged for portfolio securities</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest or dividends exchanged for portfolio securities - related party</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">63</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">130</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Supplemental disclosure of cash flow information:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes paid</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">7</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">The accompanying notes are an integral
  part of these financial statements.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 6 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC. </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_007"></A><U STYLE="text-decoration: none">SUPPLEMENTAL INFORMATION&mdash;SELECTED
  PER SHARE DATA AND RATIOS </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">(Unaudited)</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 9pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 0.5in; color: red"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three months ended March 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2017</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2016</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 70%; text-align: left; vertical-align: bottom">Investment income</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.01</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.01</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 1pt; text-align: left; vertical-align: bottom">Expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.20</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.07</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">Net investment loss</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.19</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.06</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">Net change in unrealized appreciation</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.04</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.08</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: bottom">Net change in unrealized depreciation - related party</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.01</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">Net (decrease) increase in net assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.14</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.02</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">Capital transactions:</TD><TD STYLE="color: red">&nbsp;</TD>
      <TD STYLE="color: red; text-align: left">&nbsp;</TD><TD STYLE="color: red; text-align: right">&nbsp;</TD><TD STYLE="color: red; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;Share-based incentive compensation</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.04</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 1pt; text-align: left; vertical-align: bottom">&nbsp;&nbsp;Dilutive effect of shares issued</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.21</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: bottom">Decrease in net assets resulting from capital transactions</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(0.17</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">Net (decrease) increase in net assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.31</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.02</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: bottom">Net assets at beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">3.37</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2.94</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; vertical-align: bottom">Net assets at end of period, basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.06</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2.96</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">Weighted average number of shares outstanding during period,</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in thousands</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,814</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">12,674</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">Market price per share:</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning of period</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.01</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.79</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of period</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.49</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.60</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">Selected information and ratios:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of expenses to average net assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6.34</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.33</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of net investment loss to average net assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5.89</TD><TD STYLE="text-align: left">%)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1.96</TD><TD STYLE="text-align: left">%)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Ratio of net increase (decrease) in net assets resulting from operations to average net assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4.28</TD><TD STYLE="text-align: left">%)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.65</TD><TD STYLE="text-align: left">%</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 0.5in; color: red"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0; text-align: left"><FONT STYLE="font-size: 7pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0pt 0 0; text-align: left"><FONT STYLE="font-size: 7pt"><SUP>(1)</SUP></FONT>
  <FONT STYLE="font-size: 8pt">Total return = [(ending market price per share - beginning price per share) / beginning market price
  per share</FONT><FONT STYLE="font-size: 9pt">].</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in">&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center">The accompanying notes are an integral
  part of these financial statements.</P>
  
  
  <!-- Field: Page; Sequence: 7 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC. </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none"><A NAME="a_008"></A>SCHEDULE OF INVESTMENTS </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">MARCH 31, 2017</U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Unaudited) </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><I>(in thousands, except share data)</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"></P>
  
  <TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 7.5pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; width: 37%">Name&nbsp;and&nbsp;Location&nbsp;of</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: center; width: 12%">&nbsp;</TD>
      <TD STYLE="font-weight: bold; width: 10%; text-align: center">Date&nbsp;of&nbsp;Initial</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right; width: 17%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right; width: 7%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; width: 7%">&nbsp;Cost of&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: center">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; width: 7%">&nbsp;Fair&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Portfolio&nbsp;Company</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Industry</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Investment</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Investment</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Principal</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Investment</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">Value<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-style: normal"><B STYLE="text-decoration: none"><U STYLE="text-decoration: none"><SUP STYLE="text-decoration: none">(1)</SUP></U></B></FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Control Investments:&nbsp;&nbsp;Majority-owned <FONT STYLE="font: normal 7.5pt Times New Roman, Times, Serif"><B><SUP>(3)</SUP></B></FONT><B><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-style: normal">:</FONT></B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="font: bold 9pt Arial, Helvetica, Sans-Serif; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="font-size: 9pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-size: 9pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font: bold 9pt Arial, Helvetica, Sans-Serif; border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font: bold 9pt Arial, Helvetica, Sans-Serif; border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left"><P STYLE="margin-top: 0; margin-bottom: 0">Equus Energy, LLC</P>
                                   <P STYLE="margin-top: 0; margin-bottom: 0">Houston, TX</P></TD>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;Energy&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;December 2011&nbsp;</TD>
      <TD STYLE="text-align: left; vertical-align: top">Member interest (100%)&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top"></TD>
      <TD STYLE="font-size: 4pt; text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;7,050&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;6,250</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="text-align: left"><P STYLE="margin-top: 0; margin-bottom: 0">Equus Media Development Company, LLC</P>
                                   <P STYLE="margin-top: 0; margin-bottom: 0">Houston, TX</P></TD>
      <TD STYLE="text-align: center">&nbsp;Media&nbsp;</TD>
      <TD STYLE="text-align: center">&nbsp;January 2007&nbsp;</TD>
      <TD STYLE="text-align: left; vertical-align: top">Member interest (100%)&nbsp;</TD>
      <TD STYLE="text-align: center">&nbsp;</TD>
      <TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD>
      <TD STYLE="text-align: center">&nbsp;</TD>
      <TD STYLE="text-align: right">3,000&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center"></TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;213</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; vertical-align: bottom; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left">Total Control Investments: Majority-owned (represents 9.9% of total investments at fair value)</TD>
      <TD STYLE="text-align: center; border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;10,050&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;6,463</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Affiliate Investments <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-style: normal"><B><SUP>(4)</SUP>:</B></FONT></TD>
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="border-top-color: Black; border-top-width: 0.5pt"><P STYLE="margin-top: 0; margin-bottom: 0">PalletOne, Inc.</P>
                                                                   <P STYLE="margin-top: 0; margin-bottom: 0">Bartow, FL</P></TD>
      <TD STYLE="border-top-color: Black; border-top-width: 0.5pt; text-align: center">&nbsp;Shipping products and services&nbsp;</TD>
      <TD STYLE="border-top-color: Black; border-top-width: 0.5pt; text-align: center; vertical-align: top">&nbsp;October 2001&nbsp;</TD>
      <TD STYLE="border-top-color: Black; border-top-width: 0.5pt; text-align: left; vertical-align: top">350,000&nbsp;shares&nbsp;of&nbsp;common stock (18.7%)&nbsp;</TD>
      <TD STYLE="text-align: center">&nbsp;</TD>
      <TD STYLE="font-size: 4pt; text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;350&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;16,686</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left">Total Affiliate Investments (represents 25.5% of total investments at fair value)</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-size: 4pt; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;350&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;16,686</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Non-Affiliate Investments - Related Party (less than 5% owned):</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
  <TR>
      <TD STYLE="vertical-align: top"><P STYLE="margin-top: 0; margin-bottom: 0">MVC Capital, Inc.</P>
                                      <P STYLE="margin-top: 0; margin-bottom: 0">Purchase, NY</P></TD>
      <TD STYLE="vertical-align: top; text-align: center">Financial services</TD>
      <TD STYLE="vertical-align: top; text-align: center">May 2014</TD>
      <TD STYLE="vertical-align: top">475,956 shares of common stock (1.7%)</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;6,074&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; text-align: right">4,279</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid">Total Non-Affiliate Investments - Related Party (represents 6.5% of total investments at fair value)</TD>
      <TD STYLE="text-align: center; border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;6,074&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;4,279</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Non-Affiliate Investments (less than 5% owned):</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD><P STYLE="margin-top: 0; margin-bottom: 0">5<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-weight: normal; font-style: normal"><SUP>TH</SUP> Element Tracking, LLC</FONT></P>
                                                                   <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: normal 7.5pt Times New Roman, Times, Serif">Boston, MA</FONT></P></TD>
      <TD STYLE="text-align: center">Business products and services</TD>
      <TD STYLE="text-align: center; vertical-align: top">January 2015</TD>
      <TD>14% promissory note due 3/17 <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-weight: normal; font-style: normal"><SUP>(2)</SUP></FONT></TD>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;965&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top"></TD>
      <TD STYLE="text-align: right; vertical-align: top">965&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top"></TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;965</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD><P STYLE="margin-top: 0; margin-bottom: 0">Biogenic Reagents, LLC</P>
                                                <P STYLE="margin-top: 0; margin-bottom: 0">Minneapolis, MN</P></TD>
      <TD STYLE="text-align: center">Industrial products</TD>
      <TD STYLE="text-align: center">January 2016</TD>
      <TD>16% promissory note due 6/16 <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-weight: normal; font-style: normal"><SUP>(5)</SUP></FONT></TD>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;2,013&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;2,013&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;2,013</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid">Total Non-Affiliate Investments (represents 4.6% of total investments at fair value)</TD>
      <TD STYLE="text-align: center; border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;2,978&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;2,978</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total Investment in Portfolio Securities</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">19,452&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;30,406</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Temporary Cash Investments</TD>
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
  <TR>
      <TD STYLE="vertical-align: bottom; text-align: left; border-bottom: Black 1pt solid">U.S. Treasury Bill</TD>
      <TD STYLE="vertical-align: bottom; text-align: center; border-bottom: Black 1pt solid">Government</TD>
      <TD STYLE="vertical-align: bottom; text-align: center; border-bottom: Black 1pt solid">December 2016</TD>
      <TD STYLE="vertical-align: bottom; border-bottom: Black 1pt solid">UST 0% 3/17</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: right">&nbsp;35,000&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top"></TD>
      <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: right">35,000&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top"></TD>
      <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: right">&nbsp;34,999</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total Temporary Cash Investments (represents 53.5% of total investments at fair value)</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;35,000&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;34,999</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total Investments</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;54,452&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: right; border-bottom: Black 1pt solid; vertical-align: top">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;65,405</TD></TR>
  </TABLE>
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(1) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">See Note 3 to the financial statements, Valuation of Investments.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(2) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Income-producing.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(3) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Majority owned investments are generally defined under the 1940 Act as companies in which we own more than 50% of the voting securities of the company.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(4) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Affiliate investments are generally defined under the 1940 Act as companies in which we own at least 5% but not more than 25% voting securities of the company.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(5) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Income impaired.</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral
  part of these financial statements.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 8 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC. </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">SCHEDULE OF INVESTMENTS &ndash;
  (Continued) </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">MARCH 31, 2017 </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Unaudited) </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Except for our holding of shares of
  MVC Capital, Inc. (&ldquo;MVC&rdquo;), substantially all of our portfolio securities are restricted from public sale without prior
  registration under the Securities Act of 1933 (hereafter, the &ldquo;Securities Act&rdquo;) or other relevant regulatory authority.
  We negotiate certain aspects of the method and timing of the disposition of our investment in each portfolio company, including
  registration rights and related costs.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As a business development company (&ldquo;BDC&rdquo;)
  regulated pursuant to the Investment Company Act of 1940 (&ldquo;1940 Act&rdquo;), we may invest up to 30% of our assets in non-qualifying
  portfolio investments, as permitted by the 1940 Act. Specifically, we may invest up to 30% of our assets in entities that are not
  considered &ldquo;eligible portfolio companies&rdquo; (as defined in the 1940 Act), including companies located outside of the
  United States, entities that are operating pursuant to certain exceptions under the 1940 Act, and publicly-traded entities with
  a market capitalization exceeding $250 million. As of March 31, 2017, we had invested 85.9% of our assets in securities of portfolio
  companies that constituted qualifying investments under the 1940 Act. As of March 31, 2017, except for our shares of MVC, all of
  our investments are in enterprises that are considered eligible portfolio companies under the 1940 Act. We provide significant
  managerial assistance to portfolio companies that comprise 31.0% of the total value of the investments in portfolio securities
  as of March 31, 2017.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Our investments in portfolio securities
  consist of the following types of securities as of March 31, 2017 (in thousands):</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 9pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt; color: red"><B></B></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Type of Securities</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Cost</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair Value</TD><TD STYLE="font-weight: bold; font-style: normal; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; font-style: normal; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Fair Value as</P>
                                                                                                                        <P STYLE="margin-top: 0; margin-bottom: 0">Percentage
  of</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif; text-decoration: none"><B><U STYLE="text-decoration: none">Net Assets</U></B></FONT></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 58%; text-align: left">Common stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">6,424</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">20,965</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">50.6</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Limited liability company investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,050</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,463</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.6</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Secured and subordinated debt</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,978</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,978</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7.2</TD><TD STYLE="text-align: left; border-bottom: Black 1pt solid">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">19,452</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">30,406</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">73.4</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">%</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt; color: red"><B></B></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 24.5pt"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 40.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The following is a summary by industry
  of the Fund&rsquo;s investments in portfolio securities as of March 31, 2017 (in thousands):</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Industry</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair Value</TD><TD STYLE="font-weight: bold; font-style: normal; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; font-style: normal; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Fair Value as</P>
                                                                                                                        <P STYLE="margin-top: 0; margin-bottom: 0">Percentage of</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;<FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><B><U STYLE="text-decoration: none">Net Assets</U></B></FONT></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 70%; text-align: left">Shipping products and services</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">16,686</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">40.3</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">Energy</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.1</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Financial services</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,279</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10.3</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Industrial products</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,013</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.9</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Business products and services</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">965</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.3</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 1pt; text-align: left">Media</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">213</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.5</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt; text-align: left">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">30,406</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">73.4</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">%</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral
  part of these financial statements.</P>
  
  
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  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC.</U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">SCHEDULE OF INVESTMENTS </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">DECEMBER 31, 2016</U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">(Unaudited)</U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><I>(in thousands, except share data)</I></B></P>
  
  <P STYLE="font: 7pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in"></P>
  
  <TABLE BORDER="0" CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; border-collapse: collapse; font: 7.5pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; width: 37%">Name&nbsp;and&nbsp;Location&nbsp;of</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: center; width: 12%; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-weight: bold; width: 10%; text-align: center; vertical-align: bottom">Date&nbsp;of&nbsp;Initial</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right; width: 17%">&nbsp;</TD>
      <TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right; width: 7%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; width: 7%; vertical-align: bottom">&nbsp;Cost of&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; width: 7%; vertical-align: bottom">&nbsp;Fair&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Portfolio&nbsp;Company</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Industry</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Investment</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Investment</TD>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Principal</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Investment</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-decoration: none; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">Value<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-style: normal"><B STYLE="text-decoration: none"><U STYLE="text-decoration: none"><SUP STYLE="text-decoration: none">(1)</SUP></U></B></FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Control Investments:&nbsp;&nbsp;Majority-owned <FONT STYLE="font: normal 7.5pt Times New Roman, Times, Serif"><B><SUP>(3)</SUP></B></FONT><B><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-style: normal">:</FONT></B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font: bold 9pt Arial, Helvetica, Sans-Serif; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-size: 9pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-size: 9pt; font-weight: bold; border-bottom: Black 1pt solid; text-align: center">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font: bold 9pt Arial, Helvetica, Sans-Serif; border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font: bold 9pt Arial, Helvetica, Sans-Serif; border-bottom: Black 1pt solid; text-align: right">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left"><P STYLE="margin-top: 0; margin-bottom: 0">Equus Energy, LLC</P>
                                   <P STYLE="margin-top: 0; margin-bottom: 0">Houston, TX</P></TD>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;Energy&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;December 2011&nbsp;</TD>
      <TD STYLE="text-align: left; vertical-align: top">Member interest (100%)&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">7,050&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6,250</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="text-align: left"><P STYLE="margin-top: 0; margin-bottom: 0">Equus Media Development Company, LLC</P>
                                   <P STYLE="margin-top: 0; margin-bottom: 0">Houston, TX</P></TD>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;Media&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;January 2007&nbsp;</TD>
      <TD>Member interest (100%)&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="font-size: 4pt; text-align: right">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,000&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;212</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; vertical-align: bottom; border-bottom: Black 1pt solid; text-align: left; border-top: Black 1pt solid">Total Control Investments: Majority-owned (represents 10.8% of total investments at fair value)</TD>
      <TD STYLE="border-bottom: Black 1pt solid; border-top: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; vertical-align: top; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid"><B>&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid; border-top: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; vertical-align: bottom; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid"><B>&nbsp;10,050&nbsp;&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid; border-top: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; vertical-align: bottom; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid">6,462</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Affiliate Investments <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-style: normal"><B><SUP>(4)</SUP>:</B></FONT></TD>
      <TD STYLE="font-weight: bold; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="border-top-color: Black; border-top-width: 0.5pt; text-align: left; vertical-align: top"><P STYLE="margin-top: 0; margin-bottom: 0">PalletOne, Inc.</P>
                                                                   <P STYLE="margin-top: 0; margin-bottom: 0">Bartow, FL</P></TD>
      <TD STYLE="border-top-color: Black; border-top-width: 0.5pt; text-align: center; vertical-align: bottom">&nbsp;Shipping products and services&nbsp;</TD>
      <TD STYLE="border-top-color: Black; border-top-width: 0.5pt; text-align: center; vertical-align: top">&nbsp;October 2001&nbsp;</TD>
      <TD STYLE="border-top-color: Black; border-top-width: 0.5pt; text-align: left; vertical-align: top">350,000&nbsp;shares&nbsp;of&nbsp;common stock (18.7%)&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="font-size: 4pt; text-align: right; border-top-color: Black; border-top-width: 0.5pt">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;350&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16,200</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left">Total Affiliate Investments (represents 27.2% of total investments at fair value)</TD>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-size: 4pt; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right"><B>&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right"><B>&nbsp;&nbsp;&nbsp;&nbsp;350&nbsp;&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;16,200</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Non-Affiliate Investments - Related Party (less than 5% owned):</TD>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
  <TR>
      <TD STYLE="vertical-align: top"><P STYLE="margin-top: 0; margin-bottom: 0">MVC Capital, Inc.</P>
                                      <P STYLE="margin-top: 0; margin-bottom: 0">Purchase, NY</P></TD>
      <TD STYLE="text-align: center; vertical-align: bottom">Financial services</TD>
      <TD STYLE="text-align: center; vertical-align: top">May 2014</TD>
      <TD STYLE="vertical-align: top">468,608 shares of common stock (1.7%)</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="font-weight: bold; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;&nbsp;6,011&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;&nbsp;&nbsp;4,021</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid">Total Non-Affiliate Investments - Related Party (represents 6.7% of total investments at fair value)</TD>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left"><B>&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top"><B>&nbsp;6,011&nbsp;&nbsp;</B></TD>
      <TD STYLE="text-align: left; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,021</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Non-Affiliate Investments (less than 5% owned):</TD>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: top"><P STYLE="margin-top: 0; margin-bottom: 0">5<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-weight: normal; font-style: normal"><SUP>TH</SUP> Element Tracking, LLC</FONT></P>
                                                                   <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: normal 7.5pt Times New Roman, Times, Serif">Boston, MA</FONT></P></TD>
      <TD STYLE="text-align: center; vertical-align: bottom">Business products and services</TD>
      <TD STYLE="text-align: center; vertical-align: top">January 2015</TD>
      <TD STYLE="text-align: left; vertical-align: top">14% promissory note due 3/17 <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-weight: normal; font-style: normal"><SUP>(2)</SUP></FONT></TD>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;965&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top"></TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;965&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top"></TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;965</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="border-top: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Biogenic Reagents, LLC</P>
                                                <P STYLE="margin-top: 0; margin-bottom: 0">Minneapolis, MN</P></TD>
      <TD STYLE="border-top: Black 1pt solid; text-align: center; vertical-align: bottom">Industrial products</TD>
      <TD STYLE="border-top: Black 1pt solid; text-align: center; vertical-align: top">January 2016</TD>
      <TD STYLE="border-top: Black 1pt solid">16% promissory note due 6/16 <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-weight: normal; font-style: normal"><SUP>(5)</SUP></FONT></TD>
      <TD STYLE="border-top: Black 1pt solid">$</TD>
      <TD STYLE="border-top: Black 1pt solid; text-align: right">&nbsp;&nbsp;2,013&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-top: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="border-top: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;2,013</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-top: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="border-top: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,013</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid">Total Non-Affiliate Investments (represents 5.0% of total investments at fair value)</TD>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left"><B>&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: bottom; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right"><B>&nbsp;&nbsp;&nbsp;2,978&nbsp;&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: bottom; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right"><B>&nbsp;&nbsp;&nbsp;2,9</B>78</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total Investment in Portfolio Securities</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left"><B>&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right"><B>&nbsp;&nbsp;19,389&nbsp;&nbsp;</B></TD>
      <TD STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B>29,661</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Temporary Cash Investments</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</TD></TR>
  <TR>
      <TD STYLE="vertical-align: bottom; text-align: left">U.S. Treasury Bill</TD>
      <TD STYLE="text-align: center; vertical-align: bottom">Government</TD>
      <TD STYLE="text-align: center; vertical-align: bottom">December 2016</TD>
      <TD STYLE="vertical-align: bottom">UST 0% 1/17</TD>
      <TD>$</TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;30,000&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top"></TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30,000&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top"></TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;&nbsp;29,994</TD></TR>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid">Total Temporary Cash Investments (represents 50.3% of total investments at fair value)</TD>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left; border-top: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: bottom; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid">30,000&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: bottom; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid">29,994</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total Investments</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right">&nbsp;49,389&nbsp;&nbsp;</TD>
      <TD STYLE="text-align: center; vertical-align: top; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;59,655</TD></TR>
  </TABLE>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(1) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">See Note 3 to the financial statements, Valuation of Investments.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(2) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Income-producing.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(3) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Majority owned investments are generally defined under the 1940 Act as companies in which we own more than 50% of the voting securities of the company.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(4) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Affiliate investments are generally defined under the 1940 Act as companies in which we own at least 5% but not more than 25% voting securities of the company.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; line-height: 115%"><SUP>(5) </SUP></FONT></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Income impaired.</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 13.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral
  part of these financial statements.</P>
  
  
  <!-- Field: Page; Sequence: 10 -->
      <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 33%">&nbsp;</TD><TD STYLE="width: 34%; text-align: center"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 100%"><A HREF="#TableOfContents" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A>&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>EQUUS TOTAL RETURN, INC.</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>SCHEDULE OF INVESTMENTS &ndash; (Continued)</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>DECEMBER 31, 2016</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Unaudited)</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Except for our holding of shares of
  MVC, substantially all of our portfolio securities are restricted from public sale without prior registration under the Securities
  Act or other relevant regulatory authority. We negotiate certain aspects of the method and timing of the disposition of our investment
  in each portfolio company, including registration rights and related costs.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As a BDC, we may invest up to 30% of
  our assets in non-qualifying portfolio investments, as permitted by the 1940 Act. Specifically, we may invest up to 30% of our
  assets in entities that are not considered &ldquo;eligible portfolio companies&rdquo; (as defined in the 1940 Act), including companies
  located outside of the United States, entities that are operating pursuant to certain exceptions under the 1940 Act, and publicly-traded
  entities with a market capitalization exceeding $250 million. As of December 31, 2016, we had invested 86.4% of our assets in securities
  of portfolio companies that constituted qualifying investments under the 1940 Act. As of December 31, 2016, except for our shares
  of MVC, all of our investments are in enterprises that are considered eligible portfolio companies under the 1940 Act. We provide
  significant managerial assistance to portfolio companies that comprise 31.8% of the total value of the investments in portfolio
  securities as of December 31, 2016.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Our investments in portfolio securities
  consist of the following types of securities as of December 31, 2016 (in thousands):</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Type of Securities</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Cost</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair Value</TD><TD STYLE="font-weight: bold; font-style: normal; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; font-style: normal; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Fair Value as</P>
                                                                                                                        <P STYLE="margin-top: 0; margin-bottom: 0">Percentage of</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><B><U STYLE="text-decoration: none">Net Assets</U></B></FONT></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 58%; text-align: left">Common stock</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">6,361</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">20,221</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">47.3</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Limited liability company investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">10,050</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,462</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.1</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Secured and subordinated debt</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,978</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left; border-bottom: Black 1pt solid">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">2,978</TD><TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="text-align: right; border-bottom: Black 1pt solid">7.0</TD><TD STYLE="text-align: left; border-bottom: Black 1pt solid">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; vertical-align: bottom">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">19,389</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">29,661</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">69.4</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">%</TD></TR>
  </TABLE>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The following is a summary by industry
  of the Fund&rsquo;s investments in portfolio securities as of December 31, 2016 (in thousands):</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 70%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Industry</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair Value</TD><TD STYLE="font-weight: bold; font-style: normal; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; font-style: normal; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Fair Value as</P>
                                                                                                                        <P STYLE="margin-top: 0; margin-bottom: 0">Percentage of <FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><B><U STYLE="text-decoration: none"></U></B></FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><B><U STYLE="text-decoration: none">Net Assets</U></B></FONT></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 70%; text-align: left">Shipping products and services</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">16,200</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">37.9</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">Energy</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.6</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Financial services</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,021</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.4</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Industrial products</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,013</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.7</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Business products and services</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">965</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.3</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 1pt; text-align: left; vertical-align: bottom">Media</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">212</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">0.5</TD><TD STYLE="padding-bottom: 1pt; text-align: left; border-bottom: Black 1pt solid">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt; text-align: left; vertical-align: bottom">Total</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">29,661</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">69.4</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">%</TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">The accompanying notes are an integral
  part of these financial statements.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in"><B>&nbsp;</B></P>
  
  
  <!-- Field: Page; Sequence: 11 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 100%"><A HREF="#TableOfContents" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A>&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">EQUUS TOTAL RETURN, INC.</U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none"><A NAME="a_009"></A>NOTES TO FINANCIAL STATEMENTS </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B><U STYLE="text-decoration: none">MARCH 31, 2017 </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><B>(Unaudited)</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(1)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Description of Business and Basis of Presentation </U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Description of Business</B>&mdash;Equus
  Total Return, Inc. (<I>&ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;our,&rdquo; &ldquo;Equus&rdquo; and the &ldquo;Fund</I>&rdquo;),
  a Delaware corporation, was formed by Equus Investments II, L.P. (the &ldquo;Partnership&rdquo;) on August 16, 1991. On July 1,
  1992, the Partnership was reorganized and all of the assets and liabilities of the Partnership were transferred to the Fund in
  exchange for shares of common stock of the Fund. Our shares trade on the New York Stock Exchange under the symbol EQS. On August
  11, 2006, our shareholders approved the change of the Fund&rsquo;s investment strategy to a total return investment objective.
  This strategy seeks to provide the highest total return, consisting of capital appreciation and current income. In connection with
  this strategic investment change, the shareholders also approved the change of name from Equus II Incorporated to Equus Total Return,
  Inc.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">On April 24, 2017, we entered into a
  Stock Purchase Agreement and Plan of Merger (&ldquo;Merger Agreement&rdquo;) with ETR Merger Sub, Inc., a newly-formed wholly-owned
  subsidiary of Equus, certain shareholders of U.S. Gas &amp; Electric, Inc. (&ldquo;USG&amp;E&rdquo;), and MVC as a selling shareholder
  of USG&amp;E and as representative of the selling USG&amp;E shareholders. USG&amp;E is a retail energy company with over 160 employees
  that sells electricity and natural gas in deregulated utility markets to residential and commercial customers. As of January 31,
  2017, USG&amp;E had over 375,000 residential customer equivalents in 62 utility markets across the District of Columbia and 11
  states. The transactions embodied in the Merger Agreement constitute a &ldquo;Consolidation&rdquo; as defined in our Plan of Reorganization
  (&ldquo;Plan of Reorganization&rdquo;) within the meaning of Section 2(a)(33) of the Investment Company Act of 1940 (&ldquo;1940
  Act&rdquo;) which we announced on May 15, 2014. Our intention of effecting a Consolidation through the Merger Agreement is to transform
  Equus from an investment company into an operating company focused on the energy sector, with USG&amp;E becoming a wholly-owned
  subsidiary of Equus. The full text of the Merger Agreement is attached as an exhibit to our Current Report on Form 8-K filed on
  April 24, 2017 (see Note 7 &ndash; <I>Plan of Reorganization</I>).</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">So long as we remain an investment company
  and not an operating company, we will attempt to maximize the return to stockholders in the form of current investment income and
  long-term capital gains by investing in the debt and equity securities of companies with a total enterprise value of between $5.0
  million and $75.0 million, although we may engage in transactions with smaller or larger investee companies from time to time.
  We seek to invest primarily in companies pursuing growth either through acquisition or organically, leveraged buyouts, management
  buyouts and recapitalizations of existing businesses or special situations. Our income-producing investments consist principally
  of debt securities including subordinate debt, debt convertible into common or preferred stock, or debt combined with warrants
  and common and preferred stock. Debt and preferred equity financing may also be used to create long-term capital appreciation through
  the exercise and sale of warrants received in connection with the financing. We seek to achieve capital appreciation by making
  investments in equity and equity-oriented securities issued by privately-owned companies (or smaller public companies) in transactions
  negotiated directly with such companies. Given market conditions over the past several years and the performance of our portfolio,
  our Management and Board of Directors believe it prudent to continue to review alternatives to refine and further clarify the current
  strategies.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We elected to be treated as a BDC under
  the 1940 Act. We currently qualify as a regulated investment company (&ldquo;RIC&rdquo;) for federal income tax purposes and, therefore,
  are not required to pay corporate income taxes on any income or gains that we distribute to our stockholders. We have certain wholly
  owned taxable subsidiaries (&ldquo;Taxable Subsidiaries&rdquo;) each of which holds one or more portfolio investments listed on
  our Schedules of Investments. The purpose of these Taxable Subsidiaries is to permit us to hold certain income-producing investments
  or portfolio companies organized as limited liability companies, or LLCs, (or other forms of pass-through entities) and still satisfy
  the RIC tax requirement that at least 90% of our gross revenue for income tax purposes must consist of investment income. Absent
  the Taxable Subsidiaries, a portion of the gross income of these income-producing investments or of any LLC (or other pass-through
  entity) portfolio investment, as the case may be, would flow through directly to us for the 90% test. To the extent that such income
  did not consist of investment income, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant
  federal income taxes. The income of the LLCs (or other pass-through entities) owned by Taxable Subsidiaries is taxed to the Taxable
  Subsidiaries and does not flow through to us, thereby helping us preserve our RIC status and resultant tax advantages. We do not
  consolidate the Taxable Subsidiaries for income tax purposes and they may generate income tax expense because of the Taxable Subsidiaries&rsquo;
  ownership of the portfolio companies. We reflect any such income tax expense on our Statements of Operations.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><B>Basis of Presentation</B>&mdash;In
  accordance with Article 6 of Regulation S-X under the Securities Act and the Securities Exchange Act of 1934, as amended (&ldquo;Exchange
  Act&rdquo;), we do not consolidate portfolio company investments, including those in which we have a controlling interest. Our
  interim unaudited financial statements were prepared in accordance with accounting principles generally accepted in the United
  States of America (&ldquo;GAAP&rdquo;), for interim financial information and in accordance with the requirements of reporting
  on Form 10-Q and Article 10 of Regulation S-X, under the Exchange Act. Accordingly, they are unaudited and exclude some disclosures
  required for annual financial statements. Management believes it has made all adjustments, consisting solely of normal recurring
  accruals, necessary for the fair presentation of these interim financial statements.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The results of operations for the three
  months ended March 31, 2017 are not necessarily indicative of results that ultimately may be achieved for the remainder of the
  year, particularly in view of our recent agreement to acquire USG&amp;E as described in Note 7 &ndash; <I>Plan of Reorganization</I>
  below. The interim unaudited financial statements and notes thereto should be read in conjunction with the financial statements
  and notes thereto included in the Fund&rsquo;s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed
  with the Securities and Exchange Commission (&ldquo;SEC&rdquo;).</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(2)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Liquidity and Financing Arrangements </U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Liquidity</B>&mdash;There are several
  factors that may materially affect our liquidity during the reasonably foreseeable future. We view this period as the twelve month
  period from the date of the financial statements in this Form 10-Q, <I>i.e</I>., the period through March 31, 2018. We are evaluating
  the impact of current market conditions on our portfolio company valuations and their ability to provide current income. We have
  followed valuation techniques in a consistent manner; however, we are cognizant of current market conditions that might affect
  future valuations of portfolio securities. We believe that our operating cash flow and cash on hand will be sufficient to meet
  operating requirements and, to the extent we remain a BDC, to finance routine follow-on investments, if any, through the next twelve
  months.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Cash and Cash Equivalents</B>&mdash;As
  of March 31, 2017, we had cash and cash equivalents of $10.5 million. We had $30.4 million of our net assets of $41.4 million invested
  in portfolio securities. We also had $35.4 million of restricted cash and temporary cash investments, including primarily the proceeds
  of a quarter-end margin loan that we incurred to maintain the diversification requirements applicable to a RIC to maintain our
  pass-through tax treatment. Of this amount, $35.0 million was invested in U.S. Treasury bills and $0.4 million represented a required
  1% brokerage margin deposit. These securities were held by a securities brokerage firm and pledged along with other assets to secure
  repayment of the margin loan. The U.S. Treasury bills were sold on April 2, 2017 and we subsequently repaid this margin loan, plus
  interest, on April 5, 2017.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As of December 31, 2016, we had cash
  and cash equivalents of $12.0 million. We had $30.0 million of our net assets of $42.7 million invested in portfolio securities.
  We also had $30.3 million of temporary cash investments and restricted cash, including primarily the proceeds of a quarter-end
  margin loan that we incurred to maintain the diversification requirements applicable to a RIC. Of this amount, $30.0 million was
  invested in U.S. Treasury bills and $0.3 million represented a required 1% brokerage margin deposit. These securities were held
  by a securities brokerage firm and pledged along with other assets to secure repayment of the margin loan. The U.S. Treasury bills
  were sold on January 3, 2017 and we subsequently repaid this margin loan. The margin interest was paid on February 3, 2017.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Dividends</B>&mdash;So long as we
  remain a BDC, we will pay out net investment income and/or realized capital gains, if any, on an annual basis as required under
  the 1940 Act.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Investment Commitments</B>&mdash;Under
  certain circumstances, we may be called on to make follow-on investments in certain portfolio companies. If we do not have sufficient
  funds to make follow-on investments, the portfolio company in need of the investment may be negatively impacted. Also, our equity
  interest in the estimated fair value of the portfolio company could be reduced.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As of March 31, 2017, we had no outstanding
  commitments to our portfolio company investments.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>RIC Borrowings, Restricted Cash and
  Temporary Cash Investments</B>&mdash;We may periodically borrow sufficient funds to maintain the Fund&rsquo;s RIC status by utilizing
  a margin account with a securities brokerage firm. There is no assurance that such arrangement will be available in the future.
  If we are unable to borrow funds to make qualifying investments, we may no longer qualify as a RIC. We would then be subject to
  corporate income tax on the Fund&rsquo;s net investment income and realized capital gains, and distributions to stockholders would
  be subject to income tax as ordinary dividends. If we do not consummate our Consolidation with USG&amp;E and become an operating
  company as described in Note 7 &ndash; <I>Plan of Reorganization</I> below, our failure to continue to qualify as a RIC could be
  materially adverse to us and our stockholders.</P>
  
  
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As of March 31, 2017, we borrowed $35.0
  million to maintain our RIC status by utilizing a margin account with a securities brokerage firm. We collateralized such borrowings
  with restricted cash and temporary cash investments in U.S. Treasury bills of $35.4 million.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As of December 31, 2016, we borrowed
  $30.0 million to maintain our RIC status by utilizing a margin account with a securities brokerage firm. We collateralized such
  borrowings with restricted cash and temporary cash investments in U.S. Treasury bills of $30.3 million.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Certain Risks and Uncertainties</B>&mdash;Market
  and economic volatility which has become endemic in the past few years has resulted in a relatively limited amount of available
  debt financing for small and medium-sized companies such as Equus and its portfolio companies. Such debt financing generally has
  shorter maturities, higher interest rates and fees, and more restrictive terms than debt facilities available in the past. In addition,
  during these years and continuing into the first three months of 2017, the price of our common stock remained well below our net
  asset value, thereby making it undesirable to issue additional shares of our common stock below net asset value. Because of these
  challenges, our near-term strategies shifted from originating debt and equity investments to preserving liquidity necessary to
  meet our operational needs. Key initiatives that we have previously undertaken to provide necessary liquidity include monetizations,
  the suspension of dividends and the internalization of management. Most recently, on April 24, 2017, we signed a definitive agreement
  to acquire USG&amp;E and emerge as an operating company as described in Note 7 &ndash; <I>Plan of Reorganization</I> below. Although
  we cannot assure you that such initiatives will be sufficient, we believe we have sufficient liquidity to meet our operating requirements
  for the remainder of 2017 and the first three months of 2018.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(3)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Significant Accounting Policies </U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The following is a summary of significant
  accounting policies followed by the Fund in the preparation of its financial statements:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Use of Estimates</B>&mdash;The preparation
  of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts
  and disclosures in the financial statements. Although we believe the estimates and assumptions used in preparing these financial
  statements and related notes are reasonable in light of known facts and circumstances, actual results could differ from those estimates.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Valuation of Investments&mdash;</B>For
  most of our investments, market quotations are not available. With respect to investments for which market quotations are not readily
  available or when such market quotations are deemed not to represent fair value, our Board has approved a multi-step valuation
  process each quarter, as described below:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 33px">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</FONT></TD>
      <TD><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each portfolio company or investment is reviewed by our investment professionals;</FONT></P>
                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 33px">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</FONT></TD>
      <TD><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">With respect to investments with a fair value exceeding $2.5 million that have been held for more than one year, we engage independent valuation firms to assist our investment professionals. These independent valuation firms conduct independent valuations and make their own independent assessments;</FONT></P>
                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 33px">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</FONT></TD>
      <TD><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our Management produces a report that summarized each of our portfolio investments and recommends a fair value of each such investment as of the date of the report;</FONT></P>
                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 33px">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</FONT></TD>
      <TD><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Audit Committee of our Board reviews and discusses the preliminary valuation of our portfolio investments as recommended by Management in their report and any reports or recommendations of the independent valuation firms, and then approves and recommends the fair values of our investments so determined to our Board for final approval; and</FONT></P>
                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 33px">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.</FONT></TD>
      <TD STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Board discusses valuations and determines the fair value of each portfolio investment in good faith based on the input of our Management, the respective independent valuation firm, as applicable, and the Audit Committee.</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the first twelve months after
  an investment is made, we rely on the original investment amount to determine the fair value unless significant developments have
  occurred during this twelve month period which would indicate a material effect on the portfolio company (such as results of operations
  or changes in general market conditions).</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 14 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Investments are valued utilizing a yield
  analysis, enterprise value (&ldquo;EV&rdquo;) analysis, net asset value analysis, liquidation analysis, discounted cash flow analysis,
  or a combination of methods, as appropriate. The yield analysis uses loan spreads and other relevant information implied by market
  data involving identical or comparable assets or liabilities. Under the EV analysis, the EV of a portfolio company is first determined
  and allocated over the portfolio company&rsquo;s securities in order of their preference relative to one another (i.e., &ldquo;waterfall&rdquo;
  allocation). To determine the EV, we typically use a market multiples approach that considers relevant and applicable market trading
  data of guideline public companies, transaction metrics from precedent M&amp;A transactions and/or a discounted cash flow analysis.
  The net asset value analysis is used to derive a value of an underlying investment (such as real estate property) by dividing a
  relevant earnings stream by an appropriate capitalization rate. For this purpose, we consider capitalization rates for similar
  properties as may be obtained from guideline public companies and/or relevant transactions. The liquidation analysis is intended
  to approximate the net recovery value of an investment based on, among other things, assumptions regarding liquidation proceeds
  based on a hypothetical liquidation of a portfolio company&rsquo;s assets. The discounted cash flow analysis uses valuation techniques
  to convert future cash flows or earnings to a range of fair values from which a single estimate may be derived utilizing an appropriate
  discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In applying these methodologies, additional
  factors that we consider in fair value pricing our investments may include, as we deem relevant: security covenants, call protection
  provisions, and information rights; the nature and realizable value of any collateral; the portfolio company&rsquo;s ability to
  make payments; the principal markets in which the portfolio company does business; publicly available financial ratios of peer
  companies; the principal market; and enterprise values, among other factors. Also, any failure by a portfolio company to achieve
  its business plan or obtain and maintain its financing arrangements could result in increased volatility and result in a significant
  and rapid change in its value.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Our general intent is to hold our loans
  to maturity when appraising our privately held debt investments. As such, we believe that the fair value will not exceed the cost
  of the investment. However, in addition to the previously described analysis involving allocation of value to the debt instrument,
  we perform a yield analysis assuming a hypothetical current sale of the security to determine if a debt security has been impaired.&nbsp;The
  yield analysis considers changes in interest rates and changes in leverage levels of the portfolio company as compared to the market
  interest rates and leverage levels. Assuming the credit quality of the portfolio company remains stable, the Fund will use the
  value determined by the yield analysis as the fair value for that security if less than the cost of the investment.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We record unrealized depreciation on
  investments when we determine that the fair value of a security is less than its cost basis, and will record unrealized appreciation
  when we determine that the fair value is greater than its cost basis.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Fair Value Measurement&mdash;</B>Fair
  value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
  participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to
  quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level
  3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels
  of the fair value hierarchy are described below:</P>
  
  <P STYLE="font: 10.5pt/normal Trebuchet MS, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Level 1&mdash;Unadjusted quoted prices
  in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Level 2&mdash;Inputs other than quoted
  prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and fair value is determined
  through the use of models or other valuation methodologies.</P>
  
  <P STYLE="font: 10.5pt/normal Trebuchet MS, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Level 3&mdash;Inputs are unobservable
  for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The
  inputs into the determination of fair value are based upon the best information under the circumstances and may require significant
  management judgment or estimation.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In certain cases, the inputs used to
  measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment&rsquo;s level within
  the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment
  of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors
  specific to the investment.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in">&nbsp;</P>
  
  
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Investments for which prices are not
  observable are generally private investments in the debt and equity securities of operating companies. The primary valuation method
  used to estimate the fair value of these Level 3 investments is the discounted cash flow method (although a liquidation analysis,
  option theoretical, or other methodology may be used when more appropriate). The discounted cash flow approach to determine fair
  value (or a range of fair values) involves applying an appropriate discount rate(s) to the estimated future cash flows using various
  relevant factors depending on investment type, including comparing the latest arm&rsquo;s length or market transactions involving
  the subject security to the selected benchmark credit spread, assumed growth rate (in cash flows), and capitalization rates/multiples
  (for determining terminal values of underlying portfolio companies). The valuation based on the inputs determined to be the most
  reasonable and probable is used as the fair value of the investment. The determination of fair value using these methodologies
  may take into consideration a range of factors including, but not limited to, the price at which the investment was acquired, the
  nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected
  operating performance, financing transactions subsequent to the acquisition of the investment and anticipated financing transactions
  after the valuation date.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in">&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">To assess the reasonableness of the
  discounted cash flow approach, the fair value of equity securities, including warrants, in portfolio companies may also consider
  the market approach&mdash;that is, through analyzing and applying to the underlying portfolio companies, market valuation multiples
  of publicly-traded firms engaged in businesses similar to those of the portfolio companies. The market approach to determining
  the fair value of a portfolio company&rsquo;s equity security (or securities) will typically involve: (1) applying to the portfolio
  company&rsquo;s trailing twelve months (or current year projected) EBITDA a low to high range of enterprise value to EBITDA multiples
  that are derived from an analysis of publicly-traded comparable companies, in order to arrive at a range of enterprise values for
  the portfolio company; (2) subtracting from the range of calculated enterprise values the outstanding balances of any debt or equity
  securities that would be senior in right of payment to the equity securities we hold; and (3) multiplying the range of equity values
  derived therefrom by our ownership share of such equity tranche in order to arrive at a range of fair values for our equity security
  (or securities). Application of these valuation methodologies involves a significant degree of judgment by Management.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Due to the inherent uncertainty of determining
  the fair value of Level 3 investments that do not have a readily available market value, the fair value of the investments may
  differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially
  from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other
  restrictions or otherwise are less liquid than publicly traded instruments. If we were required to liquidate a portfolio investment
  in a forced or liquidation sale, we might realize significantly less than the value at which such investment had previously been
  recorded. With respect to Level 3 investments, where sufficient market quotations are not readily available or for which no or
  an insufficient number of indicative prices from pricing services or brokers or dealers have been received, we undertake, on a
  quarterly basis, our valuation process as described above.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We assess the levels of the investments
  at each measurement date, and transfers between levels are recognized on the subsequent measurement date closest in time to the
  actual date of the event or change in circumstances that caused the transfer. There were no transfers among Level 1, 2 and 3 for
  the quarter ended March 31, 2017 and the year ended December 31, 2016.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As of March 31, 2017, investments measured
  at fair value on a recurring basis are categorized in the tables below based on the lowest level of significant input to the valuations:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="11" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair Value Measurements as of March 31, 2017</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="2" STYLE="font-weight: bold; font-style: italic; text-align: left; vertical-align: bottom">(in thousands)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Quoted Prices in Active Markets for Identical Assets</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">(Level 1)</P></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Significant Other Observable Inputs</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">(Level 2)</P></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Significant Unobservable Inputs</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">(Level 3)</P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">Assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;Investments:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Control investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,463</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,463</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Affiliate investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,686</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,686</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Non-affiliate investments - related party</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,279</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,279</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Non-affiliate investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,978</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,978</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Total investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">30,406</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,279</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">26,127</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Temporary cash investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">34,999</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">34,999</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total investments and temporary cash investments</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">65,405</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">39,278</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">26,127</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 16 -->
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      <DIV STYLE="page-break-before: always; margin-top: 6pt; margin-bottom: 12pt"><TABLE CELLPADDING="0" CELLSPACING="0" STYLE="border-collapse: collapse; width: 100%; font-size: 10pt"><TR STYLE="vertical-align: top; text-align: left"><TD STYLE="width: 100%"><A HREF="#TableOfContents" TITLE="Table of Contents" STYLE="font-style: italic">Table of Contents</A>&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As of December 31, 2016, investments
  measured at fair value on a recurring basis are categorized in the tables below based on the lowest level of significant input
  to the valuations:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="11" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair Value Measurements as of December 31, 2016</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="2" STYLE="font-weight: bold; font-style: italic; text-align: left; vertical-align: bottom">(in thousands)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Quoted Prices in Active Markets for Identical Assets</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">(Level 1)</P></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Significant Other Observable Inputs</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">(Level 2)</P></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">Significant Unobservable Inputs</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">(Level 3)</P></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD COLSPAN="2" STYLE="text-align: left; vertical-align: bottom">Assets</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; text-align: center">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;&nbsp;Investments:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Control investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,462</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">6,462</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Affiliate investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,200</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">16,200</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Non-affiliate investments - related party</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,021</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,021</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Non-affiliate investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,978</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,978</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Total investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">29,661</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,021</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,640</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Temporary cash investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29,994</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">29,994</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total investments and temporary cash investments</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">59,655</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">34,015</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25,640</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The following table provides a reconciliation
  of fair value changes during the three months ended March 31, 2017 for all investments for which we determine fair value using
  unobservable (Level 3) factors:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="13" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair value measurements using significant unobservable inputs (Level 3)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; font-style: italic; text-align: left; vertical-align: bottom">(in thousands)</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Control Investments</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Affiliate Investments</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Non-affiliate Investments</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 40%; text-align: left; vertical-align: bottom">Fair value as of December&nbsp;31, 2016</TD>
      <TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">6,462</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">16,200</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">2,978</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="text-align: right">$25,640</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">Change in unrealized appreciation (depreciation)</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">1</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">486</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: right">487</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: bottom">Purchases of portfolio securities</TD>
      <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center">-</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt; text-align: left; vertical-align: bottom">Fair value as of March 31, 2017</TD>
      <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">6,463</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">16,686</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,978</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">$26,127</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The following table provides a reconciliation
  of fair value changes during the three months ended March 31, 2016 for all investments for which we determine fair value using
  unobservable (Level 3) factors:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 4.5pt"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="14" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair value measurements using significant unobservable inputs (Level 3)</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; font-style: italic; text-align: left; vertical-align: bottom">(in thousands)</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Control Investments</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Affiliate Investments</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Non-affiliate Investments</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Total</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 40%; text-align: left; vertical-align: bottom">Fair value as of December&nbsp;31, 2015</TD>
      <TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,715</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">9,600</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">915</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="text-align: right">$16,230</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">Change in unrealized appreciation (depreciation)</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,000</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,000</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: right">1,000</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: bottom">Purchases of portfolio securities</TD>
      <TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,025</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: right">2,025</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt; text-align: left; vertical-align: bottom">Fair value as of March 31, 2016</TD>
      <TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,715</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">9,600</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,940</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: right">$19,255</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 4.5pt"></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Our investment portfolio is not composed
  of homogeneous debt and equity securities that can be valued with a small number of inputs. Instead, the majority of our investment
  portfolio is composed of complex debt and equity securities with distinct contract terms and conditions. As such, our valuation
  of each investment in our portfolio is unique and complex, often factoring in numerous different inputs, including historical and
  forecasted financial and operational performance of the portfolio company, project cash flows, market multiples comparable market
  transactions, the priority of our securities compared with those of other investors, credit risk, interest rates, independent valuations
  and reviews and other inputs.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 17 -->
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The following table summarizes the significant
  non-observable inputs in the fair value measurements of our Level 3 investments by category of investment and valuation technique
  as of March 31, 2017:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt"></P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD>&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD>&nbsp;</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Range</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; font-style: italic; border-bottom: Black 1pt solid">(in thousands)</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Fair Value</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Valuation Techniques</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Unobservable Inputs</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Minimum</TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Maximum</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 33%; text-align: left">Secured and subordinated debt</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 8%; text-align: right">2,978</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 18%; text-align: center">Yield analysis</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 20%; text-align: center">Discount for lack of marketability</TD><TD STYLE="width: 1%; font-size: 8pt">&nbsp;</TD>
      <TD STYLE="width: 1%; font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 8pt; text-align: right">0</TD><TD STYLE="width: 1%; font-size: 8pt; text-align: left">%</TD><TD STYLE="width: 1%; font-size: 8pt">&nbsp;</TD>
      <TD STYLE="width: 1%; font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="width: 5%; font-size: 8pt; text-align: right">0</TD><TD STYLE="width: 1%; font-size: 8pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Common stock</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left"></TD><TD STYLE="text-align: right">16,686</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: center">Income/Market approach</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: center">EBITDA Multiple/Discount for lack of marketability/Control premium</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">10</TD><TD STYLE="font-size: 8pt; text-align: left">%</TD><TD STYLE="font-size: 8pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">32.5</TD><TD STYLE="font-size: 8pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Limited liability company investments</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">6,463</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: center; padding-bottom: 1pt"><P STYLE="margin-top: 0; margin-bottom: 0">Asset Approach</P>
                                                          <P STYLE="margin-top: 0; margin-bottom: 0">Discounted cash flow; Guideline transaction method</P></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: center; padding-bottom: 1pt"><P STYLE="margin-top: 0; margin-bottom: 0">Recovery rate</P>
                                                          <P STYLE="margin-top: 0; margin-bottom: 0">Reserve adjustment factors</P></TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">75</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-align: left">%</TD><TD STYLE="font-size: 8pt; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">100</TD><TD STYLE="padding-bottom: 1pt; font-size: 8pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">26,127</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt"></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Because of the inherent uncertainty
  of the valuation of portfolio securities which do not have readily ascertainable market values, amounting to $26.1 million and
  $25.6 million as of March 31, 2017 and December 31, 2016, respectively, our fair value determinations may materially differ from
  the values that would have been used had a ready market existed for these securities. As of March 31, 2017, one of our portfolio
  investments, 475,956 common shares of MVC, was publicly listed on the New York Stock Exchange (&ldquo;NYSE&rdquo;). As
  of December 31, 2016, one of our portfolio investments, 468,608 common shares of MVC, was publicly listed on the NYSE.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We adjust our net asset value for the
  changes in the value of our publicly held securities, if applicable, and material changes in the value of private securities, generally
  determined on a quarterly basis or as announced in a press release, and report those amounts to Lipper Analytical Services, Inc.
  Our net asset value appears in various publications, including <I>Barron&rsquo;s </I>and <I>The Wall Street Journal</I>.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Foreign Exchange&mdash;</B>We record
  temporary changes in foreign exchange rates of portfolio securities denominated in foreign currencies as changes in fair value.
  These changes are therefore reflected as unrealized gains or losses until realized.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Investment Transactions</B>&mdash;Investment
  transactions are recorded on the accrual method. Realized gains and losses on investments sold are computed on a specific identification
  basis.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We classify our investments in accordance
  with the requirements of the 1940 Act. Under the 1940 Act, &ldquo;Control Investments&rdquo; are defined as investments in companies
  in which the Fund owns more than 25% of the voting securities or maintains greater than 50% of the board representation. Under
  the 1940 Act, &ldquo;Affiliate Investments&rdquo; are defined as those non-control investments in companies in which we own between
  5% and 25% of the voting securities. Under the 1940 Act, &ldquo;Non-affiliate Investments&rdquo; are defined as investments that
  are neither Control Investments nor Affiliate Investments.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">As of March 31, 2017, we had no outstanding
  commitments to our portfolio company investments; however, under certain circumstances, we may be called on to make follow-on investments
  in certain portfolio companies. If we do not have sufficient funds to make follow-on investments, the portfolio company in need
  of the investment may be negatively impacted. Also, our equity interest in the estimated fair value of the portfolio company could
  be reduced. Follow-on investments may include capital infusions which are expenditures made directly to the portfolio company to
  ensure that operations are completed, thereby allowing the portfolio company to generate cash flows to service their debt.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Interest Income Recognition</B>&mdash;We
  record interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis to the extent that
  we expect to collect such amounts. We accrete or amortize discounts and premiums on securities purchased over the life of the respective
  security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion
  of discount and/or amortization of premium on debt securities. We stop accruing interest on investments when we determine that
  interest is no longer collectible. We may also impair the accrued interest when we determine that all or a portion of the current
  accrual is uncollectible. If we receive any cash after determining that interest is no longer collectible, we treat such cash as
  payment on the principal balance until the entire principal balance has been repaid, before we recognize any additional interest
  income. We will write off uncollectible interest upon the occurrence of a definitive event such as a sale, bankruptcy, or reorganization
  of the relevant portfolio interest.</P>
  
  
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Payment in Kind Interest (PIK)</B>&mdash;We
  have loans in our portfolio that may pay PIK interest. We add PIK interest, if any, computed at the contractual rate specified
  in each loan agreement, to the principal balance of the loan and recorded as interest income. To maintain our status as a RIC,
  we must pay out to stockholders this non-cash source of income in the form of dividends even if we have not yet collected any cash
  in respect of such investments. To the extent we remain BDC and a RIC, we will continue to pay out net investment income and/or
  realized capital gains, if any, on an annual basis as required under the 1940 Act.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Cash Flows</B>&mdash;For purposes
  of the Statements of Cash Flows, we consider all highly liquid temporary cash investments purchased with an original maturity of
  three months or less to be cash equivalents. We include our investing activities within cash flows from operations. We exclude
  &ldquo;Restricted Cash and Temporary Cash Investments&rdquo; used for purposes of complying with RIC requirements from cash equivalents.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Taxes</B>&mdash;So long as we remain
  a BDC, we intend to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company
  and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which
  is distributed to stockholders. Therefore, no provision for federal income taxes is recorded in the financial statements. We borrow
  money from time to time to maintain our tax status under the Internal Revenue Code as a RIC. See Note 1 for discussion of Taxable
  Subsidiaries and see Note 2 for further discussion of the Fund&rsquo;s RIC borrowings.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">All corporations organized in the State
  of Delaware are required to file an Annual Report and to pay a franchise tax. As a result, we paid Delaware Franchise tax in the
  amount of $0.02 million for the year ended December 31, 2016.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Texas margin tax applies to legal entities
  conducting business in Texas. The margin tax is based on our Texas sourced taxable margin. The tax is calculated by applying a
  tax rate to a base that considers both revenue and expenses and therefore has the characteristics of an income tax. As a result,
  we did not owe state income tax for the year ended December 31, 2016.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(4)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Related Party Transactions and Agreements </U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Share Exchange with MVC</B>&mdash;On
  May 14, 2014, we announced that the Fund intended to effect a reorganization pursuant to Section 2(a)(33) of the 1940 Act (&ldquo;Plan
  of Reorganization&rdquo;). As a first step to consummating the Plan or Reorganization, we sold to MVC 2,112,000 newly-issued shares
  of the Fund&rsquo;s common stock in exchange for 395,839 shares of MVC (such transaction is hereinafter referred to as the &ldquo;Share
  Exchange&rdquo;). MVC is a BDC traded on the NYSE that provides long-term debt and equity investment capital to fund growth, acquisitions
  and recapitalizations of companies in a variety of industries. The Share Exchange was calculated based on the Fund&rsquo;s and
  MVC&rsquo;s respective net asset value per share. At the time of the Share Exchange, the number of MVC shares received by Equus
  represented approximately 1.73% of MVC&rsquo;s total outstanding shares of common stock. As of March 31, 2017, we valued our 475,956
  MVC shares at $4.3 million. As of December 31, 2016, we valued our 468,608 MVC shares at $4.0 million. The value of our MVC
  shares was based on MVC&rsquo;s closing trading price on the NYSE as of such dates. Due to the ownership relationship between
  the Company and MVC, the investment and amounts due to and from MVC have been identified and disclosed as &ldquo;related party(ies)&rdquo;
  in our Financial Statements.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Agreement to Acquire USG&amp;E</B>&mdash;On
  April 24, 2017, we entered into a Stock Purchase Agreement and Plan of Merger (&ldquo;Merger Agreement&rdquo;) with ETR Merger
  Sub, Inc., a newly-formed wholly-owned subsidiary of Equus, certain shareholders of USG&amp;E, and MVC as a selling shareholder
  of USG&amp;E and as representative of the selling USG&amp;E shareholders. The transactions embodied in the Merger Agreement constitute
  a &ldquo;Consolidation&rdquo; as defined in our Plan of Reorganization. Our intention of effecting a Consolidation through the
  Merger Agreement is to transform Equus from an investment company into an operating company focused on the energy sector with USG&amp;E
  becoming a wholly-owned subsidiary of Equus as a result. MVC, which currently holds 32.9% of our common stock, also holds approximately
  76.4% of the capital stock of USG&amp;E. As a result of the Consolidation, MVC will hold approximately 63.7% of our voting stock
  and will be entitled to appoint or remove our directors, subject to a requirement, in connection with the Merger Agreement, that
  the four directors nominated for reelection at our 2017 annual meeting of stockholders remain in their positions for a period of
  ten months following the closing of the first stage of the two-stage transaction that will accomplish the Consolidation with USG&amp;E
  (see Note 7 &ndash; <I>Plan of Reorganization</I> below).</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Except as noted below, as compensation
  for services to the Fund, each Independent Director receives an annual fee of $20,000 paid quarterly in arrears, a fee of $2,000
  for each meeting of the Board of Directors attended in person, a fee of $1,000 for participation in each telephonic meeting of
  the Board and a fee of $1,000 for each committee meeting attended, and reimbursement of all out-of-pocket expenses relating to
  attendance at such meetings. A quarterly fee of $15,000 is paid to the Chairman of the Audit Committee and a quarterly fee of $3,750
  is paid to the Chairman of the Independent Directors. We may also pay other one-time or recurring fees to members of our Board
  of Directors in special circumstances. None of our interested directors receive annual fees for their service on the Board of Directors.</P>
  
  
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In November 2011, Equus Energy, LLC
  (&ldquo;Equus Energy&rdquo;), a wholly-owned subsidiary of the Fund, entered into a consulting agreement with Global Energy Associates,
  LLC (&ldquo;Global Energy&rdquo;) to provide consulting services for energy related investments. Henry W. Hankinson, Director of
  the Fund, is a managing partner and co-founder of Global Energy. Payments to Global Energy totaled $18,750 for each of the three
  months ended March 31, 2017 and 2016.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In respect of services provided to the
  Fund by members of the Board not in connection with their roles and duties as directors, the Fund pays a fixed amount at a rate
  of $250 per hour for services rendered. During the three months ended March 31, 2017 and 2016, we paid Kenneth I. Denos, P.C.,
  a professional corporation owned by Kenneth I. Denos, a director of the Fund, $165,750 and $104,813 respectively, for services
  provided to the Fund.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(5)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Dividends </U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We will pay out net investment income
  and/or realized capital gains, if any, on an annual basis as required under the 1940 Act.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(6)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Portfolio Securities </U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2017, we received dividends in the form of additional shares of $0.1 million relating to our shareholding in MVC.&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2017, we recorded a net change in unrealized appreciation of $0.7 million, to a net unrealized appreciation of $11.0 million.
  Such change in unrealized appreciation resulted primarily from the following changes:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 33px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 48px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</FONT></TD>
      <TD STYLE="margin-top: 0; margin-bottom: 0; width: 90%"><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase in the fair value of our shareholding in MVC of $0.2 million due to the receipt of a dividend payment in the form of additional shares of MVC;</FONT></P>
                                                              <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 4%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 6%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT></TD>
      <TD STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase in fair value of our shareholding in PalletOne, Inc. of $0.5 million due to an overall improvement in comparable industry sectors, as well as continued revenue and earnings growth;</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">On January 29, 2016, we invested $2.0
  million in Biogenic Reagents, LLC (&ldquo;Biogenic&rdquo;) in the form of a senior secured promissory note maturing May 31, 2016
  and bearing cash and PIK interest at the combined rate of 16% per annum. Biogenic is a developer and producer of high value carbon
  products from renewable biomass, headquartered in Minneapolis. The company has developed and commercialized a low-cost platform
  technology to make carbon products such as activated carbon for use in purification of air, water, food and pharmaceuticals and
  agricultural carbon to improve crop production.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">On March 2, 2016, we extended the maturity
  of the 5<SUP>th</SUP> Element Tracking, LLC promissory note to July, 2016 and received fees in the form of a PIK and cash totaling
  $0.05 million.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2016, we received dividends in the form of additional shares of $0.1 million relating to our shareholding in MVC.&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2016, we recorded a net change in unrealized appreciation of $1.0 million, to a net unrealized appreciation of $3.3 million.
  Such change in unrealized appreciation resulted primarily from the following changes:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 33px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 48px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</FONT></TD>
      <TD><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase in the fair value of our shareholding in MVC of $0.1 million due to the receipt of a dividend payment in the form of additional shares of MVC;</FONT></P>
          <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 4%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 6%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT></TD>
      <TD STYLE="width: 90%"><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase in fair value of our shareholding in PalletOne, Inc. of $2.0 million due to an overall improvement in comparable industry sectors, as well as continued revenue and earnings growth;</FONT></P>
                             <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 33px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 48px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</FONT></TD>
      <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Decrease in the fair value of our holdings in Equus Energy, LLC of $1.0 million, principally due to a combination of lower production without a corresponding increase in proved reserves and continued lower short- and long-term prices for crude oil and natural gas.</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(7)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Plan of Reorganization</U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Share Exchange with MVC</B>&mdash;On
  May 14, 2014, we announced that the Fund intended to effect a Plan of Reorganization. As a first step to consummating the Plan
  of Reorganization, we executed a Share Exchange with MVC, wherein we sold to MVC 2,112,000 newly-issued shares of our common stock
  in exchange for 395,839 newly-issued shares of MVC. We also announced that, pursuant to the Plan of Reorganization, our intention
  was for Equus to pursue a Consolidation with MVC or one of its portfolio companies.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"></P>
  
  <!-- Field: Page; Sequence: 20 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Authorization to Withdraw BDC Election</B>&mdash;As
  a consequence of our Plan of Reorganization, on January 6, 2017, holders of a majority of the outstanding common stock of the Fund
  approved our cessation as a BDC under the 1940 Act and authorized our Board of Directors (sometimes referred to hereinafter as
  the &ldquo;Board&rdquo;) to cause the Fund&rsquo;s withdrawal of its election to be classified as a BDC, each effective as of a
  date designated by the Board and our Chief Executive Officer, but in no event later than July 31, 2017. Notwithstanding this authorization
  to withdraw our BDC election, we will not submit any such withdrawal unless and until we are reasonably confident that such Consolidation
  will be completed.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Agreement to Acquire USG&amp;E</B>&mdash;On
  April 24, 2017, as the final step in the Plan of Reorganization and our intention to effect a Consolidation thereunder, we entered
  into the Merger Agreement with ETR Merger Sub, Inc., a newly-formed wholly-owned subsidiary of Equus (&ldquo;Merger Sub&rdquo;),
  certain shareholders of USG&amp;E, and MVC as a selling shareholder of USG&amp;E and as representative of the selling USG&amp;E
  shareholders. A portfolio investment of MVC since 2007, USG&amp;E is a retail energy company with over 160 employees that sells
  electricity and natural gas in deregulated utility markets to residential and commercial customers. As of January 31, 2017, USG&amp;E
  had over 375,000 residential customer equivalents in 62 utility markets across the District of Columbia and 11 states. The Consolidation,
  if effected, will result in USG&amp;E becoming a wholly-owned subsidiary of Equus, and the operations of USG&amp;E becoming the
  predominant operations of the consolidated companies.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The Merger Agreement provides for a
  two-stage transaction to accomplish the Consolidation:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 42.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The first stage of the Consolidation (referred to
  in the Merger Agreement as the &ldquo;Acquisition&rdquo;) involves the acquisition by Equus, from certain USG&amp;E shareholders,
  inclusive of MVC, of 90.3% of the common and preferred stock of USG&amp;E. Upon completion of the Acquisition, Equus will change
  its corporate name from Equus Total Return, Inc. to &ldquo;USG&amp;E, Inc.&rdquo;</FONT></TD></TR></TABLE>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 60.5pt">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 42.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The second stage of the Consolidation (referred to
  in the Merger Agreement as the &ldquo;Merger&rdquo;) consists of a short-form merger of Merger Sub and USG&amp;E, whereupon Merger
  Sub will merge with and into USG&amp;E and the remaining shareholders of USG&amp;E will have the right to receive a pro-rata amount
  of the common and preferred shares of Equus described below. USG&amp;E will survive the merger as a wholly-owned subsidiary of
  the Company and the separate corporate existence of Merger Sub will cease.</FONT></TD></TR></TABLE>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The aggregate consideration to be tendered
  by the Company to the stockholders of USG&amp;E as part of the Consolidation consists of 32,606,539 shares of newly-issued common
  stock of the Company and $40 million of newly-issued 7.5% Series A Convertible Preferred Stock of the Company. The closing of the
  Acquisition is subject to a number of conditions, including compliance with applicable waiting periods under federal antitrust
  and energy regulations, as well as theExchange Act. The closing of the Acquisition is also subject to SEC clearance of an Information
  Statement filed by Equus with respect to the Consolidation and various actions undertaken by the Board and Equus shareholders in
  connection therewith. Additional information concerning the proposed Consolidation and a more thorough description thereof can
  be obtained from our filings with the SEC via the SEC&rsquo;s website at <I>www.sec.gov</I> or on the Company&rsquo;s website at
  <I>www.equuscap.com</I>.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(8)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">2016 Equity Incentive Plan</U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  June 13, 2016, our shareholders approved the adoption of our 2016 Equity Incentive Plan (&ldquo;Incentive Plan&rdquo;). On January
  10, 2017, the SEC issued an order approving the Incentive Plan and certain awards intended to be made thereunder. The Incentive
  Plan is intended to promote the interests of the Fund by encouraging officers, employees, and directors of the Fund and its affiliates
  to acquire or increase their equity interest in the Fund and to provide a means whereby they may develop a proprietary interest
  in the development and financial success of the Fund, to encourage them to remain with and devote their best efforts to the business
  of the Fund, thereby advancing the interests of the Fund and its stockholders. The Incentive Plan is also intended to enhance
  the ability of the Fund and its affiliates to attract and retain the services of individuals who are essential for the growth
  and profitability of the Fund. The Incentive Plan permits the award of restricted stock as well as common stock purchase options.
  The maximum number of shares of common stock that are subject to awards granted under the Incentive Plan is 2,434,728 shares.
  The term of the Incentive Plan will expire on June 13, 2026. On March 17, 2017, we granted awards of restricted stock under the
  Plan to certain of our directors and executive officers in the aggregate amount of 844,500 shares. The awards are each subject
  to a vesting requirement over a 3-year period unless the recipient thereof is terminated or removed from their position as a director
  or executive officer without &ldquo;cause&rdquo;, or as a result of constructive termination, as such terms are defined in the
  respective award agreements entered into by each of the recipients and the Fund. We account for share-based compensation using
  the fair value method, as prescribed by ASC 718, Compensation&mdash;Stock Compensation. Accordingly, for restricted stock awards,
  we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the
  fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting
  term. For the three months ended March 31, 2017, we recorded compensation expense of $0.5 million in connection with these awards.</FONT></P>
  
  <!-- Field: Page; Sequence: 21 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt; text-indent: 0.5in"></P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(9)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Equus Energy, LLC</U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt">Equus Energy was formed in November
  2011 as a wholly-owned subsidiary of the Fund to make investments in companies in the energy sector, with particular emphasis on
  income-producing oil &amp; gas properties. In December 2011, we contributed $250,000 to the capital of Equus Energy. On December
  27, 2012, we invested an additional $6.8 million in Equus Energy for the purpose of additional working capital and to fund the
  purchase of $6.6 million in working interests, which presently comprise 110 producing and non-producing oil and gas wells. The
  working interests include associated development rights of approximately 20,900 acres situated on 12 separate properties in Texas
  and Oklahoma. The working interests range from a <I>de minimus</I> amount to 50% of the leasehold that includes these wells.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt">The wells are operated by a number of
  experienced operators, including Chevron USA, Inc., which has operating responsibility for all of Equus Energy&rsquo;s 40 producing
  well interests located in the Conger Field, a productive oil and gas field on the edge of the Permian Basin that has experienced
  successful gas and hydrocarbon extraction in multiple formations. Equus Energy, which holds a 50% working interest in each of these
  Conger Field wells, is working with Chevron in a recompletion program of existing Conger Field wells to the Wolfcamp formation,
  a zone containing oil as well as gas and natural gas liquids. Part of Equus Energy&rsquo;s acreage rights described above also
  includes a 50% working interest in possible new drilling to the base of the Canyon formation (approximately 8,500 feet) on 2,400
  acres in the Conger Field. Also included in the interests acquired by Equus Energy are working interests of 7.5% and 2.5% in the
  Burnell and North Pettus Units, respectively, which collectively comprise approximately 13,000 acres located in the area known
  as the &ldquo;Eagle Ford Shale&rdquo; play.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><I>Revenue and Income</I>. During the
  three months ended March 31, 2017, Equus Energy&rsquo;s revenue, operating revenue less direct operating expenses, and net loss
  were $0.2 million, $0.1 million, and ($0.1) million, respectively, as compared to revenue, operating revenue less direct operating
  expenses, and net loss were $0.1 million, ($0.2) million, and ($0.4) million, respectively, for the three months ended March 31,
  2016.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><I>Capital Expenditures</I>. There
  were no capital expenditures for the three months ended March 31, 2017. During the three months ended March 31, 2016, Equus Energy
  invested $0.003 million in capital expenditures for small repairs and improvements. The operators of the various working interest
  communicated their intent to wait until later in 2017, commensurate with an anticipated gradual rise in the price of crude oil,
  to commence new drilling and recompletion projects.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt">We do not consolidate Equus Energy or
  its wholly-owned subsidiaries and accordingly only the value of our investment in Equus Energy is included on our balance sheets.
  Our investment in Equus Energy is valued in accordance with our normal valuation procedures and is based in part on using a discounted
  cash flow analysis based on a reserve report prepared for Equus Energy by Lee Keeling &amp; Associates, Inc., an independent petroleum
  engineering firm, the transactions and values of comparable companies in this sector, and the estimated value of leasehold mineral
  interests associated with the acreage held by Equus Energy. A valuation of Equus Energy was performed by a third-party valuation
  firm, who recommended a value range of Equus Energy consistent with the fair value determined by our Management (See <I>Schedule
  of Investments</I><FONT STYLE="background-color: white">)</FONT>.</P>
  
  
  <!-- Field: Page; Sequence: 22 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt">Below is summarized consolidated financial
  information for Equus Energy as of March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and 2016,
  respectively:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U>EQUUS ENERGY, LLC </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U>Unaudited Condensed Consolidated Balance
  Sheets</U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 0 99pt"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">March 31,</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">December 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left"><B>(in thousands)</B></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt"><B>&nbsp;</B></TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom"><B>2017</B></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom"><B>&nbsp;</B></TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom"><B>2016</B></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left"><B>Assets</B></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Current assets:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 69%; text-align: left; padding-left: 10pt">Cash and cash equivalents</TD><TD STYLE="width: 2%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">235</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">291</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Accounts receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">104</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">91</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Other current assets</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">42</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">32</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Total current assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">381</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">414</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Oil and gas properties</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,055</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,055</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Less: accumulated depletion, depreciation and amortization</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,241</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(7,145</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Net oil and gas properties</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">814</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">910</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,195</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,324</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Liabilities and member's equity</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right">&nbsp;</TD><TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Current liabilities:</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">Accounts payable and other</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">35</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">75</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Due to affiliate</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">611</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">611</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Total current liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">646</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">686</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Asset retirement obligations</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">185</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">184</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Total liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">831</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">870</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt">Total member's equity</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">364</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">454</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Total liabilities and member's equity</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,195</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,324</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 0 99pt"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Revenue and direct operating expenses
  for the various oil and gas assets included in the accompanying statements represent the net collective working and revenue interests
  acquired by Equus Energy. The revenue and direct operating expenses presented herein relate only to the interests in the producing
  oil and natural gas properties and do not represent all of the oil and natural gas operations of all of these properties. Direct
  operating expenses include lease operating expenses and production and other related taxes. General and administrative expenses,
  depletion, depreciation and amortization (&ldquo;DD&amp;A&rdquo;) of oil and gas properties and federal and state taxes have been
  excluded from direct operating expenses in the accompanying statements of operations because the allocation of certain expenses
  would be arbitrary and would not be indicative of what such costs would have been had Equus Energy been operated as a stand-alone
  entity. The statements of operations presented are not indicative of the financial condition or results of operations of Equus Energy
  on a go forward basis due to changes in the business and the omission of various operating expenses.</P>
  
  
  <!-- Field: Page; Sequence: 23 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U>EQUUS ENERGY, LLC </U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U>Unaudited Condensed Consolidated Statements
  of Operations</U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 45pt"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Three months ended March 31</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="vertical-align: bottom; text-align: left"><B>(in thousands)</B></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2017</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: bottom">2016</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 66%; text-align: left">Operating revenue</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">247</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">58</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Operating expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">Direct operating expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">147</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">262</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt">General and administrative</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">93</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">169</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt">Depletion, depreciation, amortization and accretion</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">97</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">63</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt">Total operating expenses</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">337</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">494</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Operating loss before income tax expense</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(90</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(436</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt">Net loss</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(90</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(436</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 45pt"></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 45pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U>EQUUS ENERGY, LLC</U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><U>Unaudited Condensed Consolidated Statements
  of Cash Flows</U></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="font-weight: bold; text-align: center">Three months ended March 31,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: left; vertical-align: bottom"><B>(in thousands)</B></TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2017</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">2016</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">Cash flows from operating activities:</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 66%; text-align: left; vertical-align: bottom">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">(90</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 14%; text-align: right">(436</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt; vertical-align: bottom">Adjustments to reconcile net loss to</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt; vertical-align: bottom">net cash used in operating activities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 30pt; vertical-align: bottom">Depletion, depreciation and amortization</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">97</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">63</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt; vertical-align: bottom">Changes in operating assets and liabilities:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 20pt; vertical-align: bottom">Accounts receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(13</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">80</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt; vertical-align: bottom">Prepaid expenses and other current assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(10</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt; vertical-align: bottom">Accounts payable and other</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(40</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(43</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 30pt; vertical-align: bottom">Net cash used in operating activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(56</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(336</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: bottom">Cash flows from investing activities:</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD STYLE="font-weight: bold; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt; vertical-align: bottom">Investment in oil &amp; gas properties</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 20pt; vertical-align: bottom">Net cash used in investing activities</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">(3</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; vertical-align: bottom">Net decrease in cash</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(56</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(339</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 1pt; vertical-align: bottom">Cash and cash equivalents at beginning of period</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">291</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right">517</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt; vertical-align: bottom">Cash and cash equivalents at end of period</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">235</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">178</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  
  </TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B></B></P>
  
  <!-- Field: Page; Sequence: 24 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B STYLE="text-decoration: none">Critical Accounting Policies for
  Equus Energy</B>&mdash;Equus Energy and its wholly-owned subsidiary EQS Energy Holdings, Inc. (collectively, &ldquo;the Company&rdquo;)
  follow the <I>Full Cost Method of Accounting</I> for oil and gas properties. Under the full cost method, all costs associated with
  property acquisition, exploration, and development activities are capitalized. Capitalized costs include lease acquisitions, geological
  and geophysical work, delay rentals, costs of drilling, completing and equipping successful and unsuccessful oil and gas wells
  and related costs. Gains or losses are normally not recognized on the sale or other disposition of oil and gas properties. Gains
  or losses are normally reflected as an adjustment to the full cost pool.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 24.5pt">The capitalized costs of oil
  and gas properties, plus estimated future development costs relating to proved reserves and estimated cost of dismantlement and
  abandonment, net of salvage value, are amortized on a unit-of-production method over the estimated productive life of the proved
  oil and gas reserves. Unevaluated oil and gas properties are excluded from this calculation.&nbsp; Depletion, depreciation, amortization
  and accretion expense for the Company&rsquo;s oil and gas properties totaled $0.1 million and $0.06 million for the three months
  ended March 31, 2017 and March 31, 2016, respectively.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Capitalized oil and gas property costs
  are limited to an amount (the ceiling limitation) equal to the sum of the following:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 48px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 48px; padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</FONT></TD>
      <TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As of March 31, 2017, the present value of estimated future net revenue from the projected production of proved oil and gas reserves, calculated at the simple arithmetic average, first-day-of-the-month prices during the twelve-month period before the balance sheet date (with consideration of price changes only to the extent provided by contractual arrangements) and a discount factor of 10%;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</FONT></TD>
      <TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The cost of investments in unproved and unevaluated properties excluded from the costs being amortized; and</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)</FONT></TD>
      <TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The lower of cost or estimated fair value of unproved properties included in the costs being amortized.</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">When it is determined that oil and gas
  property costs exceed the ceiling limitation, an impairment charge is recorded to reduce its carrying value to the ceiling limitation.&nbsp;
  The Company did not recognize an impairment loss on its oil and gas properties during the three months ended March 31, 2017 and
  March 31, 2016, respectively.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The costs of certain unevaluated leasehold
  acreage and certain wells being drilled are not amortized. The Company excludes all costs until proved reserves are found or until
  it is determined that the costs are impaired. Costs not amortized are periodically assessed for possible impairment or reduction
  in value. If a reduction in value has occurred, costs being amortized are increased accordingly.&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B><U STYLE="text-decoration: none">Revenue Recognition</U></B>&mdash;Revenue
  recognized for oil and natural gas sales under the sales method of accounting. Under this method, revenue is recognized on production
  as it is taken and delivered to its purchasers. The volumes sold may be more or less than the volumes entitled to, based on the
  owner&rsquo;s net leasehold interest. These differences result from production imbalances, which are not significant, and are reflected
  as adjustments to proven reserves and future cash flows in the unaudited consolidated financial information included herein.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B><U STYLE="text-decoration: none">Accounting Policy on DD&amp;A</U></B>&mdash;The
  Company employs the &ldquo;Units of Production&rdquo; method in calculating depletion of its proved oil and gas properties, wherein
  capitalized costs, as adjusted for future development costs and asset retirement obligations, are amortized over the total estimated
  proved reserves.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B><U STYLE="text-decoration: none">Income Taxes</U></B>&mdash;A limited
  liability company is not subject to the payment of federal income taxes as components of its income and expenses flow through directly
  to the members. However, the Company is subject to certain state income taxes. Texas margin tax applies to legal entities conducting
  business in Texas. The margin tax is based on our Texas sourced taxable margin. The tax is calculated by applying a tax rate to
  a base that considers both revenue and expenses and therefore has the characteristics of an income tax. Taxable Subsidiaries may
  generate income tax expense because of the Taxable Subsidiaries&rsquo; ownership of the portfolio companies. We reflect any such
  income tax expense on our Statements of Operations.&nbsp; As of March 31, 2017 and March 31, 2016, the Company recorded $0 in federal
  income taxes.&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Asset Retirement Obligations</B>&mdash;The
  fair value of asset retirement obligations are recorded in the period in which they are incurred if a reasonable estimate of fair
  value can be made, and the corresponding cost is capitalized as part of the carrying amount of the related long-lived asset.&nbsp;
  The fair value of the asset retirement obligation is measured using expected future cash outflows discounted at the Company&rsquo;s
  credit-adjusted risk-free interest rate.&nbsp; Fair value, to the extent possible, should include a market risk premium for unforeseeable
  circumstances.&nbsp; No market risk premium was included in the Company&rsquo;s asset retirement obligation fair value estimate
  since a reasonable estimate could not be made. &nbsp;The liability is accreted to its then present value each period, and the
  capitalized cost is depleted or amortized over the estimated recoverable reserves using the units-of-production method.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(10)</B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Recent Accounting Pronouncements </U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In January 2016, the FASB issued ASU
  2016-01, <I>Recognition and Measurement of Financial Assets and Financial Liabilities</I>.&nbsp; Among other things, this ASU requires
  that pubic business entities use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.&nbsp;
  ASU  2016-01 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after
  December 15, 2017.&nbsp; Our adoption of ASU  2016-01 is not anticipated to have a material effect on our financial statements.</P>
  
  
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In February 2016, the FASB issued ASU
  2016-02, <I>Leases</I>, which requires lessees to recognize on the balance sheet a right of use asset, representing its right to
  use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12&nbsp;months. The guidance
  also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising
  from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional
  practical expedients that entities may elect to apply. The new guidance is effective for annual periods beginning after December&nbsp;15,
  2018, and interim periods therein. Early application is permitted. The adoption of ASU 2016-02 will not have an impact on our financial
  statements as we currently have no operating leases and our principal offices are under a month-to-month lease arrangement.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In March 2016, the FASB issued&nbsp;ASU
  2016-09,&nbsp;<I>Compensation-Stock Compensation (Topic 718) &mdash;Improvements to Employee Share-Based Payment Accounting</I>,
  which is intended to improve the accounting for share-based payments and affects all organizations that issue share-based payment
  awards to their employees. ASU 2016-09 primarily simplifies the accounting for and classification of, income taxes related to
  share-based payment awards, including the impact of income taxes withheld on the classification of awards as equity or liabilities
  and the classification of income taxes on the statement of cash flows.&nbsp;ASU 2016-09 also permits an entity to elect a forfeiture
  rate assumption based on the estimated number of awards expected to vest or to account for forfeitures when they occur. ASU 2016-09
  is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption
  is permitted, including adoption in an interim period. We have adopted&nbsp;ASU 2016-09&nbsp;as of January 1, 2017. The provisions
  of ASU 2019-06 should be adopted on a modified retrospective, retrospective or prospective basis, depending on the provision.
  We recently adopted an incentive plan for management and issued awards during the quarter ended March 31, 2017. <FONT STYLE="color: Black">Our
  adoption of ASU 2016-09 did not have a material effect on our financial statements.</FONT></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In June 2016, the FASB issued ASU 2016-13,
  <I>Financial Instruments-Credit Losses (Topic 326) &mdash;Measurement of Credit Losses on Financial Instruments</I>, which amends
  the financial instruments impairment guidance so that an entity is required to measure expected credit losses for financial assets
  based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking
  information to estimate credit losses. ASU 2016-13 also amends the guidance in FASB ASC Subtopic 325-40, Investments-Other, Beneficial
  Interests in Securitized Financial Assets, related to the subsequent measurement of accretable yield recognized as interest income
  over the life of a beneficial interest in securitized financial assets under the effective yield method. ASU 2016-13 is effective
  for public business entities that meet the U.S. GAAP definition of an SEC filer, for fiscal years beginning after December 15,
  2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December
  15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2016-13 on our financial
  statements.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In August 2016, the FASB issued ASU
  2016-15, <I>Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the
  Emerging Issues Task Force)</I>, which addresses the diversity in practice in how certain cash receipts and cash payments are presented
  and classified in the statement of cash flows under ASC 230, Statement of Cash Flows, and other topics. ASU 2016-15 provides guidance
  on eight specific cash flow issues including the statement of cash flows treatment of beneficial interests in securitized financial
  transactions as well as the treatment of debt prepayment and extinguishment costs. ASU 2016-15 also provides guidance on the predominance
  principle to clarify when cash receipts and cash payments should be separated into more than one class of cash flows. ASU 2016-15
  is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within
  those fiscal years. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact
  of ASU 2016-15 on our statements of cash flows.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 24px; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 24px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(11) </B></FONT></TD>
      <TD STYLE="text-decoration: underline; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U STYLE="text-decoration: none">Subsequent Events </U></B></FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Management performed an evaluation of
  the Fund&rsquo;s activity through the date the financial statements were issued, noting the following subsequent events:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">On April 3, 2017, we sold U.S. Treasury
  Bills for $35.0 million and repaid our margin loan.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">On April 24, 2017, we entered into the
  Merger Agreement (see Note 7 &ndash; <I>Plan of Reorganization</I>).</P>
  
  
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  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><A NAME="a_010"></A><U STYLE="text-decoration: none">Item 2. Management&rsquo;s Discussion and Analysis
  of Financial Condition and Results of Operations</U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Equus Total Return, Inc. (<I>&ldquo;we,&rdquo;
  &ldquo;us,&rdquo; &ldquo;our,&rdquo; &ldquo;Equus,&rdquo;  and the &ldquo;Fund</I>&rdquo;), a Delaware
  corporation, was formed on August 16, 1991. Our shares trade on the New York Stock Exchange under the symbol &lsquo;EQS&rsquo;.
  Our investment strategy seeks to provide the highest total return, consisting of capital appreciation and current income.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">The information contained in this section
  should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Quarterly
  Report and in conjunction with the financial statements and notes thereto in the Fund&rsquo;s Form 10-K for the year ended December
  31, 2016, as filed with the SEC. In addition, some of the statements in this report constitute forward-looking statements. The
  matters discussed in this Quarterly Report, as well as in future oral and written statements by management of Equus, that are forward-looking
  statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual
  results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements
  relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such
  as &ldquo;may,&rdquo; &ldquo;will,&rdquo; &ldquo;should,&rdquo; &ldquo;expects,&rdquo; &ldquo;plans,&rdquo; &ldquo;anticipates,&rdquo;
  &ldquo;could,&rdquo; &ldquo;intends,&rdquo; &ldquo;target,&rdquo; &ldquo;projects,&rdquo; &ldquo;believes,&rdquo; &ldquo;estimates,&rdquo;
  &ldquo;predicts,&rdquo; &ldquo;potential&rdquo; or &ldquo;continue&rdquo; or the negative of these terms or other similar words.
  Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, and
  the availability of additional capital. In light of these and other uncertainties, the inclusion of a forward-looking statement
  in this Quarterly Report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking
  statements contained in this Quarterly Report include statements as to:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our future operating results;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our business prospects and the prospects of our existing
  and prospective portfolio companies; </FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the return or impact of current and future investments;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our contractual arrangements and other relationships
  with third parties;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the dependence of our future success on the general
  economy and its impact on the industries in which we invest;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the financial condition and ability of our existing
  and prospective portfolio companies to achieve their objectives;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our expected financings and investments;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our regulatory structure and tax treatment;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the adequacy of our cash resources and working capital;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the timing of cash flows, if any, from the operations
  of our portfolio companies;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the impact of fluctuations in interest rates on our
  business;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the valuation of our investments in portfolio companies,
  particularly those having no liquid trading market;</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to recover unrealized losses; and</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="padding-top: 4.5pt; width: 0.25in"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">market conditions and our ability to access additional
  capital, if deemed necessary.</FONT></TD></TR></TABLE>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 10pt 0 0; text-indent: 22.5pt">There are a number of important
  risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements.
  For a discussion of factors that could cause our actual results to differ from forward-looking statements contained in this Quarterly
  Report, please see the discussion in Part II, &ldquo;Item 1A. Risk Factors&rdquo;, and in Part I, &ldquo;Item 1A. Risk Factors&rdquo;
  in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. You should not place undue reliance on these forward-looking
  statements. The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements
  are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after
  the date this Quarterly Report is filed with the SEC.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We attempt to maximize the return to
  stockholders in the form of current investment income and long-term capital gains by investing in the debt and equity securities
  of companies with a total enterprise value of between $5.0 million and $75.0 million, although we may engage in transactions with
  smaller or larger investee companies from time to time. We seek to invest primarily in companies pursuing growth either through
  acquisition or organically, leveraged buyouts, management buyouts and recapitalizations of existing businesses or special situations.
  Our income-producing investments consist principally of debt securities including subordinate debt, debt convertible into common
  or preferred stock, or debt combined with warrants and common and preferred stock. Debt and preferred equity financing may also
  be used to create long-term capital appreciation through the exercise and sale of warrants received in connection with the financing.
  We seek to achieve capital appreciation by making investments in equity and equity-oriented securities issued by privately-owned
  companies (and smaller public companies) in transactions negotiated directly with such companies. Given market conditions over
  the past several years and the performance of our portfolio, our management and Board of Directors believe it is prudent to continue
  to review alternatives to refine and further clarify the current strategies.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt">We elected to be treated
  as a BDC under the 1940 Act. We currently qualify as a RIC for federal income tax purposes and, therefore, are not required to
  pay corporate income taxes on any income or gains that we distribute to our stockholders. We have certain wholly owned Taxable
  Subsidiaries each of which holds one or more portfolio investments listed on our Schedules of Investments. The purpose of these
  Taxable Subsidiaries is to permit us to hold certain income-producing investments or portfolio companies organized as limited liability
  companies, or LLCs, (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of our
  gross revenue for income tax purposes must consist of investment income. Absent the Taxable Subsidiaries, a portion of the gross
  income of these income-producing investments or of any LLC (or other pass-through entity) portfolio investment, as the case may
  be, would flow through directly to us for the 90% test. To the extent that such income did not consist of investment income, it
  could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant federal income taxes. The income
  of the LLCs (or other pass-through entities) owned by Taxable Subsidiaries is taxed to the Taxable Subsidiaries and does not flow
  through to us, thereby helping us preserve our RIC status and resultant tax advantages. We do not consolidate the Taxable Subsidiaries
  for income tax purposes and they may generate income tax expense because of the Taxable Subsidiaries&rsquo; ownership of the portfolio
  investments. We reflect any such income tax expense on our Statements of Operations.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0"><B>Plan of Reorganization </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Share Exchange with MVC</B>&mdash;On
  May 14, 2014, we announced that the Fund intended to effect a Plan of Reorganization. As a first step to consummating the Plan
  of Reorganization, we executed a Share Exchange with MVC, wherein we sold to MVC 2,112,000 newly-issued shares of our common stock
  in exchange for 395,839 newly-issued shares of MVC. We also announced that, pursuant to the Plan of Reorganization, our intention
  was for Equus to pursue a Consolidation with MVC or one of its portfolio companies.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Authorization to Withdraw BDC Election</B>&mdash;As a consequence of our Plan of Reorganization, on January 6, 2017, holders of a majority of the outstanding common stock
  of the Fund approved our cessation as a BDC under the 1940 Act and authorized our Board of Directors (sometimes referred to hereinafter
  as the &ldquo;Board&rdquo;) to cause the Fund&rsquo;s withdrawal of its election to be classified as a BDC, each effective as of
  a date designated by the Board and our Chief Executive Officer, but in no event later than July 31, 2017. Notwithstanding this
  authorization to withdraw our BDC election, we will not submit any such withdrawal unless and until we are reasonably confident
  that such Consolidation will be completed.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Agreement to Acquire USG&amp;E</B>&mdash;On
  April 24, 2017, as the final step in the Plan of Reorganization and our intention to effect a Consolidation thereunder, we entered
  into the Merger Agreement with ETR Merger Sub, Inc., a newly-formed wholly-owned subsidiary of Equus (&ldquo;Merger Sub&rdquo;),
  certain shareholders of USG&amp;E, and MVC as a selling shareholder of USG&amp;E and as representative of the selling USG&amp;E
  shareholders. A portfolio investment of MVC since 2007, USG&amp;E is a retail energy company with over 160 employees that sells
  electricity and natural gas in deregulated utility markets to residential and commercial customers. As of January 31, 2017, USG&amp;E
  had over 375,000 residential customer equivalents in 62 utility markets across the District of Columbia and 11 states. The Consolidation,
  if effected, will result in USG&amp;E becoming a wholly-owned subsidiary of Equus, and the operations of USG&amp;E becoming the
  predominant operations of the consolidated companies.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The Merger Agreement provides for a
  two-stage transaction to accomplish the Consolidation:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 42.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The first stage of the Consolidation (referred to
  in the Merger Agreement as the &ldquo;Acquisition&rdquo;) involves the acquisition by Equus, from certain USG&amp;E shareholders,
  inclusive of MVC, of 90.3% of the common and preferred stock of USG&amp;E. Upon completion of the Acquisition, Equus will change
  its corporate name from Equus Total Return, Inc. to &ldquo;USG&amp;E, Inc.&rdquo;</FONT></TD></TR></TABLE>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 60.5pt">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 42.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD STYLE="line-height: normal"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The second stage of the Consolidation (referred to
  in the Merger Agreement as the &ldquo;Merger&rdquo;) consists of a short-form merger of Merger Sub and USG&amp;E, whereupon Merger
  Sub will merge with and into USG&amp;E and the remaining shareholders of USG&amp;E will have the right to receive a pro-rata amount
  of the common and preferred shares of Equus described below. USG&amp;E will survive the merger as a wholly-owned subsidiary of
  the Company and the separate corporate existence of Merger Sub will cease.</FONT></TD></TR></TABLE>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt">The aggregate consideration
  to be tendered by the Company to the stockholders of USG&amp;E as part of the Consolidation consists of 32,606,539 shares of newly-issued
  common stock of the Company and $40 million of newly-issued 7.5% Series A Convertible Preferred Stock of the Company. The closing
  of the Acquisition is subject to a number of conditions, including compliance with applicable waiting periods under federal antitrust
  and energy regulations, as well as the Exchange Act. The closing of the Acquisition is also subject to SEC clearance of an Information
  Statement filed by Equus with respect to the Consolidation and various actions undertaken by the Board and Equus shareholders in
  connection therewith. Additional information concerning the proposed Consolidation and a more thorough description thereof can
  be obtained from our filings with the SEC via the SEC&rsquo;s website at <I>www.sec.gov</I> or on the Company&rsquo;s website at
  <I>www.equuscap.com</I>.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><B></B></P>
  
  <!-- Field: Page; Sequence: 28 -->
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  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0"><B>2016 Equity Incentive Plan</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 0.5in">On June 13, 2016, our shareholders
  approved the adoption of our 2016 Equity Incentive Plan (&ldquo;Incentive Plan&rdquo;). On January 10, 2017, the SEC issued an
  order approving the Incentive Plan and certain awards intended to be made thereunder. The Incentive Plan is intended to promote
  the interests of the Fund by encouraging officers, employees, and directors of the Fund and its affiliates to acquire or increase
  their equity interest in the Fund and to provide a means whereby they may develop a proprietary interest in the development and
  financial success of the Fund, to encourage them to remain with and devote their best efforts to the business of the Fund, thereby
  advancing the interests of the Fund and its stockholders. The Incentive Plan is also intended to enhance the ability of the Fund
  and its affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the
  Fund. The Incentive Plan permits the award of restricted stock as well as common stock purchase options. The maximum number of
  shares of common stock that are subject to awards granted under the Incentive Plan is 2,434,728 shares. The term of the Incentive
  Plan will expire on June 13, 2026. On March 17, 2017, we granted awards of restricted stock under the Plan to certain of our directors
  and executive officers in the aggregate amount of 844,500 shares. The awards are each subject to a vesting requirement over a 3-year
  period unless the recipient thereof is terminated or removed from their position as a director or executive officer without &ldquo;cause&rdquo;,
  or as a result of constructive termination, as such terms are defined in the respective award agreements entered into by each of
  the recipients and the Fund. For the three months ended March 31, 2017, we recorded compensation expense of $0.5 million in connection
  with these awards.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0"><B>Critical Accounting Policies </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">See the Fund&rsquo;s Critical Accounting
  Policies from the disclosure set forth in the Annual Report on Form 10-K for the year ended December 31, 2016.<B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B><I>Recent Accounting Pronouncements</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In January 2016, the FASB issued ASU
  2016-01, <I>Recognition and Measurement of Financial Assets and Financial Liabilities</I>.&nbsp; Among other things, this ASU requires
  that pubic business entities use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.&nbsp;
  ASU 2016-01 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after
  December 15, 2017.&nbsp; Our adoption of ASU 2016-01 is not anticipated to have a material effect on our financial statements.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In February 2016, the FASB issued ASU
  2016-02, <I>Leases</I>, which requires lessees to recognize on the balance sheet a right of use asset, representing its right to
  use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12&nbsp;months. The guidance
  also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising
  from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional
  practical expedients that entities may elect to apply. The new guidance is effective for annual periods beginning after December&nbsp;15,
  2018, and interim periods therein. Early application is permitted. The adoption of ASU 2016-02 will not have an impact on our financial
  statements as we currently have no operating leases and our principal offices are under a month-to-month lease arrangement.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In March 2016, the FASB issued&nbsp;ASU
  2016-09,&nbsp;<I>Compensation-Stock Compensation (Topic 718) &mdash;Improvements to Employee Share-Based Payment Accounting</I>,
  which is intended to improve the accounting for share-based payments and affects all organizations that issue share-based payment
  awards to their employees. ASU 2016-09 primarily simplifies the accounting for and classification of, income taxes related to
  share-based payment awards, including the impact of income taxes withheld on the classification of awards as equity or liabilities
  and the classification of income taxes on the statement of cash flows.&nbsp;ASU 2016-09 also permits an entity to elect a forfeiture
  rate assumption based on the estimated number of awards expected to vest or to account for forfeitures when they occur. ASU 2016-09
  is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption
  is permitted, including adoption in an interim period. We have adopted&nbsp;ASU 2016-09&nbsp;as of January 1, 2017. The provisions
  of ASU 2019-06 should be adopted on a modified retrospective, retrospective or prospective basis, depending on the provision.
  We recently adopted an incentive plan for management and issued awards during the quarter ended March 31, 2017. Our adoption
  of ASU 2016-09 did not have a material effect on our financial statements.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In June 2016, the FASB issued ASU 2016-13,
  <I>Financial Instruments-Credit Losses (Topic 326) &mdash;Measurement of Credit Losses on Financial Instruments</I>, which amends
  the financial instruments impairment guidance so that an entity is required to measure expected credit losses for financial assets
  based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking
  information to estimate credit losses. ASU 2016-13 also amends the guidance in FASB ASC Subtopic 325-40, Investments-Other, Beneficial
  Interests in Securitized Financial Assets, related to the subsequent measurement of accretable yield recognized as interest income
  over the life of a beneficial interest in securitized financial assets under the effective yield method. ASU 2016-13 is effective
  for public business entities that meet the U.S. GAAP definition of an SEC filer, for fiscal years beginning after December 15,
  2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December
  15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2016-13 on our financial
  statements.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 27pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In August 2016, the FASB issued ASU
  2016-15, <I>Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the
  Emerging Issues Task Force)</I>, which addresses the diversity in practice in how certain cash receipts and cash payments are presented
  and classified in the statement of cash flows under ASC 230, Statement of Cash Flows, and other topics. ASU 2016-15 provides guidance
  on eight specific cash flow issues including the statement of cash flows treatment of beneficial interests in securitized financial
  transactions as well as the treatment of debt prepayment and extinguishment costs. ASU 2016-15 also provides guidance on the predominance
  principle to clarify when cash receipts and cash payments should be separated into more than one class of cash flows. ASU 2016-15
  is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within
  those fiscal years. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact
  of ASU 2016-15 on our statements of cash flows.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><B><I>Current Market Conditions</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Despite relatively low unemployment
  rates, the U.S. economy expanded at an annualized rate of 0.7% during the first quarter of 2017, following an annualized increase
  of 1.2% during the fourth quarter of 2016. The decreased growth during the first quarter, the slowest since the first quarter of
  2014, was principally attributed to a mild winter resulting in weak consumer spending during the quarter but is expected to be
  temporary, given a labor market near full employment and strong U.S. consumer confidence. Business investment increased 9.1% during
  the quarter, principally due to rising oil and gas drilling activity due to modest price recoveries in WTI and Brent crude benchmarks.
  In a survey of 60 economists, the <I>Wall Street Journal</I> has predicted GDP growth of 2.8% for the second quarter of 2017 as
  compared to a projected increase of 2.3% for the same period by the Conference Board Leading Economic Index. The International
  Monetary Fund projects an annual increase of 2.3% of US GDP for all of 2017. (Sources: <I>CNBC, BDO USA, LLP, Wall Street Journal,
  Conference Board Leading Economic Index, International Monetary Fund</I>)</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B><I>&nbsp;</I></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Market conditions for business transactions
  during 2016, including mergers and acquisitions and private equity investments, improved to their highest level ($4.3 trillion)
  since prior to the 2008 financial crisis, as corporations have been deleveraging and are holding significant amounts of cash and
  many have focused on acquisitions as part of future growth plans. Nevertheless, mergers and acquisition activity was markedly slower
  in the first quarter of 2017 ($53 billion) as compared to the fourth quarter of 2016 ($89 billion), as the number of deals decreased
  while the size of such deals increased. Private equity funds increased their assets under management during 2016 to a projected
  $862 billion, a 14% increase from 2015 and a level not seen since 2008, as private equity firms as a group enjoyed more success
  during the year in attracting investment capital. First quarter 2017 results are not yet available. (Sources: <I>Forbes, Financial
  News,</I> and <I>Beneshlaw Private Equity Summary Report-February 2017</I>).</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2017, our net asset value decreased from $3.37 per share to $3.06 per share, a decrease of 9.2%. As of March 31, 2017, our
  common stock is trading at a 18.6% discount to our net asset value as compared to 40.4% as of December 31, 2016.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Over the past several years, we have
  executed certain initiatives to enhance liquidity, achieve a lower operational cost structure, provide more assistance to portfolio
  companies and realize certain of our portfolio investments. Specifically, we changed the composition of our Board of Directors
  and Management, terminated certain of our follow-on investments, internalized the management of the Fund, suspended our managed
  distribution policy, modified our investment strategy to pursue shorter term liquidation opportunities, pursued non-cash investment
  opportunities, and sold certain of our legacy and underperforming investment holdings. We believe these actions continue to be
  necessary to protect capital and liquidity in order to preserve and enhance shareholder value. Because our Management is internalized,
  certain of our expenses should not increase commensurate with an increase in the size of the Fund and, therefore, to the extent
  we remain a BDC, we expect to achieve efficiencies in our cost structure if we are able to grow the Fund.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Liquidity and Capital Resources </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We generate cash primarily from maturities,
  sales of securities and borrowings, as well as capital gains realized upon the sale of portfolio investments. We use cash primarily
  to make additional investments, either in new companies or as follow-on investments in the existing portfolio companies and to
  pay the dividends to our stockholders.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Because of the nature and size of the
  portfolio investments, we may periodically borrow funds to make qualifying investments to maintain our tax status as a RIC. We
  often borrow such funds by utilizing a margin account with a securities brokerage firm. There is no assurance that such arrangement
  will be available in the future. If the Fund is unable to borrow funds to make qualifying investments, it may no longer qualify
  as a RIC. The Fund would then be subject to corporate income tax on its net investment income and realized capital gains, and distributions
  to stockholders would be subject to income tax as ordinary dividends.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The Fund has the ability to borrow funds
  and issue forms of senior securities representing indebtedness or stock, such as preferred stock, subject to certain restrictions.
  Net taxable investment income and net taxable realized gains from the sales of portfolio investments are intended to be distributed
  at least annually, to the extent such amounts are not reserved for payment of expenses and contingencies or to make follow-on or
  new investments.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The Fund reserves the right to retain
  net long-term capital gains in excess of net short-term capital losses for reinvestment or to pay contingencies and expenses. Such
  retained amounts, if any, will be taxable to the Fund as long-term capital gains and stockholders will be able to claim their proportionate
  share of the federal income taxes paid on such gains as a credit against their own federal income tax liabilities. Stockholders
  will also be entitled to increase the adjusted tax basis of their Fund shares by the difference between their undistributed capital
  gains and their tax credit.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We are evaluating the impact of current
  market conditions on our portfolio company valuations and their ability to provide current income. We have followed valuation techniques
  in a consistent manner; however, we are cognizant of current market conditions that might affect future valuations of portfolio
  securities. In view of our present status as a BDC and our anticipated transformation into an operating company focused on the
  retail energy services industry as a result of the Consolidation with USG&amp;E, we believe that our operating cash flow and cash
  on hand will be sufficient to meet operating requirements and to finance routine capital expenditures through the next twelve months.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Results of Operations </B>&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Investment Income and Expense </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Net investment loss increased to $2.5
  million from $0.7 million for the three months ended March 31, 2017 and 2016, respectively. The increase in net investment loss
  generated at March 31, 2017 compared to March 31, 2016 is due primarily to transaction costs related to the Plan of Reorganization
  of $1.3 million and charges related to awards made pursuant to the Fund&rsquo;s 2016 Equity Incentive Plan of $0.5 million.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Investment income was $0.2 million for
  the three months ended March 31, 2017 and $0.1 million for the three months ended March 31, 2016. The increase in investment income
  was primarily due to the increase in income from the MVC share dividend received during the three months ended March 31, 2017.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Excluding transaction costs of $1.3
  million and equity incentive plan costs of $0.5 million, total expenses for the three months ended March 31, 2017 as compared to
  March 31, 2016 were unchanged at $0.9 million.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Realized
  Gains and Losses on Sales of Portfolio Securities</B></FONT>&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2017, we realized a loss of $3.0 thousand from the sale of temporary cash investments.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2016, we realized a loss of $2.0 thousand from the sale of temporary cash investments.</P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 31 -->
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Changes in Unrealized Appreciation/Depreciation
  of Portfolio Securities</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2017, we recorded a net change in unrealized appreciation of $0.7 million, to a net unrealized appreciation of $11.0 million.
  Such change in unrealized appreciation resulted primarily from the following changes:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 4%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 3%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</FONT></TD>
      <TD STYLE="line-height: normal; width: 93%"><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase in the fair value of our shareholding in MVC of $0.2 million due to the receipt of a dividend payment in the form of additional shares of MVC;</FONT></P>
                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT></TD>
      <TD STYLE="line-height: normal"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase in fair value of our shareholding in PalletOne, Inc. of $0.5 million due to an overall improvement in comparable industry sectors, as well as continued revenue and earnings growth;</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2016, we recorded a net change in unrealized appreciation of $1.0 million, to a net unrealized appreciation of $3.3 million.
  Such change in unrealized appreciation resulted primarily from the following changes:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P>
  
  
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 4%; line-height: 115%">&nbsp;</TD>
      <TD STYLE="width: 3%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</FONT></TD>
      <TD STYLE="width: 93%; line-height: normal"><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase in the fair value of our shareholding in MVC of $0.1 million due to the receipt of a dividend payment in the form of additional shares of MVC;</FONT></P>
                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD>&nbsp;</TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT></TD>
      <TD STYLE="line-height: normal"><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase in fair value of our shareholding in PalletOne, Inc. of $2.0 million due to an overall improvement in comparable industry sectors, as well as continued revenue and earnings growth;</FONT></P>
                                      <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</FONT></TD>
      <TD STYLE="line-height: normal"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Decrease in the fair value of our holdings in Equus Energy, LLC of $1.0 million, principally due to a combination of lower production without a corresponding increase in proved reserves and continued lower short- and long-term prices for crude oil and natural gas.</FONT></TD></TR>
  </TABLE>
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"></P><P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Dividends </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We will pay out net investment income
  and/or realized capital gains, if any, on an annual basis as required under the Investment Company Act of 1940.</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Portfolio Securities </B>&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2017, we received dividends in the form of additional shares of $0.1 million relating to our shareholding in MVC.&nbsp;</P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">On March 2, 2016, we extended the maturity
  of the 5<SUP>th</SUP> Element Tracking, LLC promissory note to July 2016 and received fees in the form of a PIK and cash totaling
  $0.05 million.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">During the three months ended March
  31, 2016, we received dividends in the form of additional shares of $0.1 million relating to our shareholding in MVC.&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Subsequent Events </B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Management performed an evaluation of
  the Fund&rsquo;s activity through the date the financial statements were issued, noting the following subsequent events:</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">On April 3, 2017, we sold U.S. Treasury
  Bills for $35.0 million and repaid our margin loan.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">On April 24, 2017, we entered into the
  Merger Agreement (see <I>Plan of Reorganization</I> above).</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><U STYLE="text-decoration: none"><A NAME="a_011"></A>Item 3. Quantitative and Qualitative Disclosure about
  Market Risk </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We are subject to financial market risks,
  including changes in interest rates with respect to investments in debt securities and outstanding debt payable, as well as changes
  in marketable equity security prices. In the future, we may invest in companies outside the United States, including in Europe
  and Asia, which would give rise to exposure to foreign currency value fluctuations. We do not use derivative financial instruments
  to mitigate any of these risks. The return on investments is generally not affected by foreign currency fluctuations.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
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  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Our investments in portfolio securities
  consist of some fixed-rate debt securities. Since the debt securities are generally priced at a fixed rate, changes in interest
  rates do not directly affect interest income. In addition, changes in market interest rates are not typically a significant factor
  in the determination of fair value of these debt securities, since the securities are generally held to maturity. We determine
  their fair values based on the terms of the relevant debt security and the financial condition of the issuer.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">A major portion of our investment portfolio
  consists of debt and equity investments in private companies. Modest changes in public market equity prices generally do not significantly
  impact the estimated fair value of these investments. However, significant changes in market equity prices can have a longer-term
  effect on valuations of private companies, which could affect the carrying value and the amount and timing of gains or losses realized
  on these investments. A small portion of the investment portfolio could also consist of common stock in publicly traded companies.
  These investments are directly exposed to equity price risk, in that a hypothetical ten percent change in these equity prices would
  result in a similar percentage change in the fair value of these securities.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">We are classified as a &ldquo;non-diversified&rdquo;
  investment company under the 1940 Act, which means we are not limited in the proportion of our assets that may be invested in the
  securities of a single user. The value of one segment called &ldquo;Shipping products and services&rdquo; includes one portfolio
  company, PalletOne, Inc., and was 40.3% of the net asset value and 50.9% of our investments in portfolio company securities (at
  fair value) as of March 31, 2017. Changes in business or industry trends or in the financial condition, results of operations,
  or the market&rsquo;s assessment of any single portfolio company will affect the net asset value and the market price of our common
  stock to a greater extent than would be the case if we were a &ldquo;diversified&rdquo; company holding numerous investments.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt"><B><A NAME="a_012"></A><U STYLE="text-decoration: none">Item 4. Controls
  and Procedures </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The Fund maintains disclosure controls
  and other procedures that are designed to ensure that information required to be disclosed by the Fund in the reports that it files
  or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC&rsquo;s
  rules and forms, and that such information is accumulated and communicated to the Fund&rsquo;s management, including its Chief
  Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">The Fund&rsquo;s management, with the
  participation of the Fund&rsquo;s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the
  design and operations of the Fund&rsquo;s &ldquo;disclosure controls and procedures&rdquo; (as defined in Rule 13a-15(e) under
  the Securities Exchange Act of 1934) as of March 31, 2017. Based on their evaluation, the Fund&rsquo;s Chief Executive Officer
  and Chief Financial Officer concluded that the Fund&rsquo;s disclosure controls and procedures were effective at a reasonable assurance
  level. There has been no change in the Fund&rsquo;s internal control over financial reporting during the quarter ended March 31,
  2017, that has materially affected, or is reasonably likely to materially affect, the Fund&rsquo;s internal control over financial
  reporting.&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><U STYLE="text-decoration: none"><A NAME="a_013"></A>Part II. Other Information </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt"><FONT STYLE="background-color: white"><B><U STYLE="text-decoration: none"><A NAME="a_014"></A>Item
  1. Legal Proceedings&nbsp;</U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>Shareholder Complaint</B>&mdash;On
  November 16, 2016, Samuel Zalmanoff filed a lawsuit against the Fund and members of the Board of Directors in the Court of Chancery
  in the State of Delaware. The lawsuit was filed in connection with the Fund&rsquo;s 2016 Equity Incentive Plan (&ldquo;Incentive
  Plan&rdquo;) which was adopted by the Board of Directors on April 15, 2016, approved by the Equus shareholders on June 13, 2016,
  and approved, with certain standard exceptions, by the Securities and Exchange Commission on January 10, 2017. Mr. Zalmanoff&rsquo;s
  complaint, which purports to be on behalf of all non-affiliate Equus shareholders entitled to vote for the Incentive Plan, alleges
  a breach by the Board of Directors of its fiduciary duties of disclosure in connection with the Incentive Plan, and seeks an order
  from the court: (i) enjoining implementation of the Incentive Plan, (ii) requiring the Fund to revise its disclosures relating
  to the Incentive Plan, and (iii) for an award of costs, attorneys&rsquo; fees, and expenses. We believe this lawsuit is without
  merit and intend to vigorously dispute the claims made therein. Accordingly, on January 9, 2017, we filed a Motion to Dismiss the
  complaint, which was followed on January 27, 2017 with a supporting brief and other corroborative items. Mr. Zalmanoff filed a
  response to this motion on March 13, 2017, and we filed a Reply Brief to this response on April 14, 2017. Oral argument with respect
  to our Motion to Dismiss is scheduled for July 24, 2017.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">From time to time, the Fund is also
  a party to certain proceedings incidental to the normal course of our business including the enforcement of our rights under contracts
  with our portfolio companies. While the outcome of these legal proceedings cannot at this time be predicted with certainty, we
  do not expect that these proceedings will have a material effect upon the Fund&rsquo;s financial condition or results of operations.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 33 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><B>&nbsp;</B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><U STYLE="text-decoration: none"><A NAME="a_015"></A>Item 1A. Risk Factors </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">In connection with our agreement to
  effect a Consolidation with USG&amp;E, we have identified a number of risks associated with the transactions undertaken in connection
  therewith, as well as with the underlying business of USG&amp;E. These risks are set forth in the Fund&rsquo;s Information Statement
  on Schedule 14C, which was filed in its preliminary form on May 4, 2017 and is hereby incorporated by reference. These risks should
  be considered in addition to various risk factors identified by us in our Annual Report on Form 10-K for the year ended December
  31, 2016.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Readers should carefully consider these
  risks and all other information contained in the annual report on Form 10-K, including the Fund&rsquo;s financial statements and
  the related notes thereto. The risks and uncertainties described below are not the only ones facing the Fund.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Additional risks and uncertainties not
  presently known to the Fund, or not presently deemed material by the Fund, may also impair its operations and performance.&nbsp;&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  
  <!-- Field: Page; Sequence: 34 -->
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      <!-- Field: /Page -->
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B><U STYLE="text-decoration: none"><A NAME="a_016"></A>Item 6. Exhibits </U></B></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</FONT></TD>
      <TD COLSPAN="3" STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Articles of Incorporation and by-laws</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Restated Certificate of Incorporation of the Fund, as amended. [Incorporated by reference to Exhibit 3(a) to Registrant&rsquo;s Annual Report on Form 10-K for the year ended December 31, 2007]</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certificate of Merger dated June 30, 1993, between the Fund and Equus Investments Incorporated [Incorporated by reference to Exhibit 3(c) to Registrant&rsquo;s Annual Report on Form 10-K for the year ended December 31, 2007]</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated Bylaws of the Fund. [Incorporated by reference to Exhibit 3(b) to Registrant&rsquo;s Current Report on Form 8-K filed on June 30, 2014.]</FONT></P>
                                                 <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10.</FONT></TD>
      <TD COLSPAN="3" STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Material Contracts.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Safekeeping Agreement between the Fund and Amegy Bank dated August 16, 2008. [Incorporated by reference to Exhibit 10(c) to Registrant&rsquo;s Annual Report on Form 10-K for the year ended December 31, 2008.]</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Indemnification Agreement between the Fund and its directors and certain officers. [Incorporated by reference to Exhibit 10(d) to Registrant&rsquo;s Annual Report on Form 10-K for the year ended December 31, 2011.]</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Release Agreement between the Fund and certain of its officers and former officers. [Incorporated by reference to Exhibit 10(h) to Registrant&rsquo;s Annual Report on Form 10-K for the year ended December 31, 2004.]</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(d)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Code of Ethics of the Fund (Rule 17j-1) [Incorporated by reference to Exhibit 10(f) to Registrant&rsquo;s Annual Report on Form 10-K for the year ended December 31, 2009.]</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(e)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Share Exchange Agreement between the Fund and MVC Capital, Inc., dated May 14, 2014. [Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K, filed on May 15, 2014.]</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(f)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2016 Equity Incentive Plan, adopted June 13, 2016 [Incorporated by reference to Exhibit 1 to Registrant&rsquo;s Definitive Proxy Statement filed on May 5, 2016.]</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(g)</FONT></TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt"><P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stock
  Purchase Agreement and Plan of Merger, dated April 24, 2017, among Equus Total Return, Inc., ETR Merger Sub, Inc., and certain
  shareholders of U.S. Gas &amp; Electric, Inc. [Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K, filed on
  April 25, 2017.]</FONT></P>
                                                 <P><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">31.</FONT></TD>
      <TD COLSPAN="3" STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Rule 13a-14(a)/15d-14(a) Certifications</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</FONT></TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="ex31_1302certhardy.htm">Certification by Chief Executive Officer</A></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</FONT></TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="ex31_2302certhudson.htm">Certification by Chief Financial Officer</A></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="line-height: 115%">&nbsp;</TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">32.</FONT></TD>
      <TD COLSPAN="3" STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Section 1350 Certifications</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</FONT></TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="ex321_906certhardy.htm">Certification by Chief Executive Officer</A></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="2" STYLE="line-height: 115%">&nbsp;</TD>
      <TD COLSPAN="2" STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</FONT></TD>
      <TD STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A HREF="ex322_906certhudson.htm">Certification by Chief Financial Officer</A></FONT></TD></TR>
  <TR>
      <TD STYLE="width: 4px">&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD>&nbsp;</TD>
      <TD STYLE="width: 2px">&nbsp;</TD>
      <TD>&nbsp;</TD></TR>
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  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_017"></A>SIGNATURE</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">Pursuant to the requirements of Section
  13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed by the undersigned, thereunto
  duly authorized.</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt">&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0">Date: May 15, 2017</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">&nbsp;</P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; width: 30%; border-collapse: collapse">
  <TR>
      <TD STYLE="width: 100%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">EQUUS TOTAL RETURN, INC.</FONT></TD></TR>
  <TR>
      <TD STYLE="line-height: 115%">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="border-bottom: black 1pt solid; text-align: left; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/ John A. Hardy</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>John A. Hardy</B></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD STYLE="text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Chief Executive Officer</B></FONT></TD></TR>
  </TABLE>
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  </P>
  
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metadata_documents: [{"type": "10-Q", "sequence": "1", "filename": "f10q_equus033117revision3.htm", "description": "FORM 10-Q", "secsgml_size_bytes": 469632}]
metadata_filer: {"company-data": {"conformed-name": "EQUUS TOTAL RETURN, INC.", "cik": "0000878932", "irs-number": "760345915", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "814-00098", "film-number": "17843864"}, "business-address": {"street1": "EIGHT GREENWAY PLAZA", "street2": "SUITE 930", "city": "HOUSTON", "state": "TX", "zip": "77046", "phone": "7135290900"}, "mail-address": {"street1": "EIGHT GREENWAY PLAZA", "street2": "SUITE 930", "city": "HOUSTON", "state": "TX", "zip": "77046"}, "former-company": {"former-conformed-name": "EQUUS II INC", "date-changed": "19970422"}}
text: 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
  March 31, 2017
  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
  EQUUS TOTAL RETURN, INC.
  (Exact name of registrant as specified
  in its charter)
  Delaware
  76-0345915
  (State or other jurisdiction of
  incorporation or organization)
  (I.R.S. Employer
  Identification No.)
  700 Louisiana St., 48
  th
  Floor
  Houston, Texas
  77002
  (Address of principal executive offices)
  (Zip Code)
  (Former Name, Former Address and
  Former Fiscal Year, if Changed Since Last Report)
  Registrant's telephone
  number, including area code: (713) 529-0900
  Indicate
  by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
  Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and
  (2) has been subject to such filing requirements for the past 90 days. Yes
  x
  No
  ¨
  Indicate
  by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
  Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
  preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
  ☐
  No
  ☐
  Indicate by check mark whether
  the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated
  filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.
  Large accelerated filer
  ☐
  Accelerated filer
  ☐
  Non-accelerated filer
  ☒
  Smaller Reporting Company
  ☐
  Indicate
  by check mark whether the registrant is a shell company. Yes
  ☐
  No
  ☒
  There were 13,518,416 shares of
  the registrant's common stock, $.001 par value, outstanding, as of May 15, 2017.
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  (A Delaware Corporation)
  INDEX
  PAGE
  PART I. FINANCIAL INFORMATION
  Item 1. Financial Statements
  3
  Balance Sheets
  3
  Statements of Operations
  4
  Statements of Changes in Net Assets
  5
  Statements of Cash Flows
  6
  Supplemental Information—Selected Per Share Data and Ratios
  7
  Schedules of Investments
  8
  Notes to Financial Statements
  12
  Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
  27
  Item 3. Quantitative and Qualitative Disclosure about Market Risk
  32
  Item 4. Controls and Procedures
  33
  PART II. OTHER INFORMATION
  Item 1. Legal Proceedings
  33
  Item 1A. Risk Factors
  34
  Item 6. Exhibits
  35
  SIGNATURE
  36
  2
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  BALANCE SHEETS
  (Unaudited)
  Part I. Financial Information
  Item 1. Financial Statements
  March 31,
  2017
  December 31,
  2016
  (in thousands, except per share amounts)
  Assets
  Investments in portfolio securities at fair value:
  Control investments (cost at $10,050 and $10,050 respectively)
  $
  6,463
  $
  6,462
  Affiliate investments (cost at $350 and $350 respectively)
  16,686
  16,200
  Non-affiliate investments - related party (cost at $6,074 and $6,011 respectively)
  4,279
  4,021
  Non-affiliate investments (cost at $2,978 and $2,978 respectively)
  2,978
  2,978
  Total investments in portfolio securities at fair value
  30,406
  29,661
  Temporary cash investments
  34,999
  29,994
  Cash and cash equivalents
  10,463
  11,961
  Restricted cash
  350
  300
  Accounts receivable
  611
  611
  Accrued interest receivable
  666
  542
  Other assets
  36
  77
  Total assets
  77,531
  73,146
  Liabilities and net assets
  Accounts payable
  1,039
  269
  Accounts payable to related parties
  71
  143
  Borrowing under margin account
  34,999
  29,994
  Total liabilities
  36,109
  30,406
  Commitments and contingencies (see note 2)
  Net assets
  $
  41,422
  $
  42,740
  Net assets consist of:
  Common stock, par value
  $
  13
  $
  13
  Capital in excess of par value
  54,696
  54,213
  Undistributed net investment losses
  (24,241
  )
  (21,758
  )
  Unrealized appreciation of portfolio securities, net
  12,749
  12,262
  Unrealized depreciation of portfolio securities - related party
  (1,795
  )
  (1,990
  )
  Total net assets
  $
  41,422
  $
  42,740
  Shares of common stock issued and outstanding, $.001 par value, 50,000 shares authorized
  13,518
  12,674
  Shares of preferred stock issued and outstanding, $.001 par value, 5,000 shares authorized
  —
  —
  Net asset value per share
  $
  3.06
  $
  3.37
  The accompanying notes are an
  integral part of these financial statements.
  3
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  STATEMENTS OF OPERATIONS
  (Unaudited)
  Three Months Ended March 31,
  (in thousands, except per share amounts)
  2017
  2016
  Investment income:
  Interest and dividend income:
  Non-affiliate investments - related party
  $
  63
  $
  —
  Non-affiliate investments
  124
  136
  Total interest and dividend income
  187
  136
  Interest from temporary cash investments
  3
  2
  Total investment income
  190
  138
  Expenses:
  Transaction costs
  1,283
  —
  Compensation expense
  681
  272
  Professional fees
  443
  368
  Director fees and expenses
  148
  120
  General and administrative expense
  88
  84
  Mailing, printing and other expenses
  25
  26
  Interest expense
  2
  1
  Total expenses
  2,670
  871
  Net investment loss
  (2,480
  )
  (733
  )
  Net realized loss:
  Control investments
  —
  —
  Non-affiliate investments
  —
  —
  Temporary cash investments
  (3
  )
  (2
  )
  Net realized loss
  (3
  )
  (2
  )
  Net unrealized appreciation of portfolio securities:
  End of period
  12,749
  5,915
  Beginning of period
  12,262
  4,915
  Net change in net unrealized appreciation of portfolio securities
  487
  1,000
  Net unrealized depreciation of portfolio securities - related party:
  End of period
  (1,795
  )
  (2,562
  )
  Beginning of period
  (1,990
  )
  (2,539
  )
  Net change in net unrealized depreciation of portfolio securities - related party
  195
  (23
  )
  Net (decrease) increase in net assets resulting from operations
  $
  (1,801
  )
  $
  242
  Net (decrease) increase in net assets resulting from operations per share:
  Basic and diluted
  $
  (0.14
  )
  $
  0.02
  Weighted average shares outstanding:
  Basic and diluted
  12,814
  12,674
  The accompanying notes are an integral
  part of these financial statements.
  4
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  STATEMENTS OF CHANGES IN NET ASSETS
  (Unaudited)
  Three months ended March 31,
  (in thousands)
  2017
  2016
  Net (decrease) increase in net assets resulting from operations
  $
  (1,801
  )
  $
  242
  Capital share transactions:
  Share-based incentive compensation
  483
  —
  Net increase in net assets resulting from capital share transactions
  483
  —
  Decrease in net assets
  (1,318
  )
  —
  Net assets at beginning of period
  42,740
  37,308
  Net assets at end of period
  $
  41,422
  $
  37,550
  The accompanying notes are an integral
  part of these financial statements.
  5
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  STATEMENTS OF CASH FLOWS
  (Unaudited)
  Three months ended March 31,
  (in thousands)
  2017
  2016
  Reconciliation of (decrease) increase in net assets resulting from operations to net cash
  used in operating activities:
  Net (decrease) increase in net assets resulting from operations
  $
  (1,801
  )
  $
  242
  Adjustments to reconcile net (decrease) increase in net assets resulting from operations to net cash used in operating activities:
  Net realized loss
  3
  2
  Net change in unrealized appreciation of portfolio securities
  (487
  )
  (1,000
  )
  Net change in unrealized depreciation of portfolio securities - related party
  (195
  )
  23
  Share-based incentive compensation
  483
  Changes in operating assets and liabilities:
  Purchase of portfolio securities
  —
  (2,000
  )
  Purchases of temporary cash investments, net
  (5,008
  )
  —
  Change in restricted cash
  (50
  )
  (2
  )
  Decrease in accounts receivable from investments
  —
  3
  Increase in accrued interest receivable
  (187
  )
  (111
  )
  Decrease in accounts receivable and other
  41
  43
  Increase in accounts payable and accrued liabilities
  770
  313
  Decrease in accounts payable to related parties
  (72
  )
  (118
  )
  Net cash used in operating activities
  (6,503
  )
  (2,605
  )
  Cash flows from financing activities:
  Borrowings under margin account
  34,999
  14,999
  Repayments under margin account
  (29,994
  )
  (15,000
  )
  Net cash provided by (used in) financing activities
  5,005
  (1
  )
  Net decrease in cash and cash equivalents
  (1,498
  )
  (2,606
  )
  Cash and cash equivalents at beginning of period
  11,961
  17,036
  Cash and cash equivalents at end of period
  $
  10,463
  $
  14,430
  Non-cash operating and financing activities:
  Accrued interest or dividends exchanged for portfolio securities
  $
  —
  $
  25
  Accrued interest or dividends exchanged for portfolio securities - related party
  $
  63
  $
  130
  Supplemental disclosure of cash flow information:
  Interest paid
  $
  2
  $
  1
  Income taxes paid
  $
  7
  $
  4
  The accompanying notes are an integral
  part of these financial statements.
  6
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  SUPPLEMENTAL INFORMATION—SELECTED
  PER SHARE DATA AND RATIOS
  (Unaudited)
  Three months ended March 31,
  2017
  2016
  Investment income
  $
  0.01
  $
  0.01
  Expenses
  0.20
  0.07
  Net investment loss
  (0.19
  )
  (0.06
  )
  Net change in unrealized appreciation
  0.04
  0.08
  Net change in unrealized depreciation - related party
  0.01
  —
  Net (decrease) increase in net assets
  (0.14
  )
  0.02
  Capital transactions:
  Share-based incentive compensation
  0.04
  —
  Dilutive effect of shares issued
  (0.21
  )
  —
  Decrease in net assets resulting from capital transactions
  (0.17
  )
  —
  Net (decrease) increase in net assets
  (0.31
  )
  0.02
  Net assets at beginning of period
  3.37
  2.94
  Net assets at end of period, basic and diluted
  $
  3.06
  $
  2.96
  Weighted average number of shares outstanding during period,
  in thousands
  12,814
  12,674
  Market price per share:
  Beginning of period
  $
  2.01
  $
  1.79
  End of period
  $
  2.49
  $
  1.60
  Selected information and ratios:
  Ratio of expenses to average net assets
  6.34
  %
  2.33
  %
  Ratio of net investment loss to average net assets
  (5.89
  %)
  (1.96
  %)
  Ratio of net increase (decrease) in net assets resulting from operations to average net assets
  (4.28
  %)
  0.65
  %
  (1)
  Total return = [(ending market price per share - beginning price per share) / beginning market price
  per share
  ].
  The accompanying notes are an integral
  part of these financial statements.
  7
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  SCHEDULE OF INVESTMENTS
  MARCH 31, 2017
  (Unaudited)
  (in thousands, except share data)
  Name and Location of
  Date of Initial
  Cost of
  Fair
  Portfolio Company
  Industry
  Investment
  Investment
  Principal
  Investment
  Value
  (1)
  Control Investments:  Majority-owned
  (3)
  :
  Equus Energy, LLC
  Houston, TX
  Energy
  December 2011
  Member interest (100%)
  $
  7,050
  $
  6,250
  Equus Media Development Company, LLC
  Houston, TX
  Media
  January 2007
  Member interest (100%)
  3,000
  213
  Total Control Investments: Majority-owned (represents 9.9% of total investments at fair value)
  $
  10,050
  $
  6,463
  Affiliate Investments
  (4)
  :
  PalletOne, Inc.
  Bartow, FL
  Shipping products and services
  October 2001
  350,000 shares of common stock (18.7%)
  $
  350
  $
  16,686
  Total Affiliate Investments (represents 25.5% of total investments at fair value)
  $
  350
  $
  16,686
  Non-Affiliate Investments - Related Party (less than 5% owned):
  MVC Capital, Inc.
  Purchase, NY
  Financial services
  May 2014
  475,956 shares of common stock (1.7%)
  $
  6,074
  $
  4,279
  Total Non-Affiliate Investments - Related Party (represents 6.5% of total investments at fair value)
  $
  6,074
  $
  4,279
  Non-Affiliate Investments (less than 5% owned):
  5
  TH
  Element Tracking, LLC
  Boston, MA
  Business products and services
  January 2015
  14% promissory note due 3/17
  (2)
  $
  965
  965
  965
  Biogenic Reagents, LLC
  Minneapolis, MN
  Industrial products
  January 2016
  16% promissory note due 6/16
  (5)
  $
  2,013
  2,013
  2,013
  Total Non-Affiliate Investments (represents 4.6% of total investments at fair value)
  $
  2,978
  $
  2,978
  Total Investment in Portfolio Securities
  $
  19,452
  $
  30,406
  Temporary Cash Investments
  U.S. Treasury Bill
  Government
  December 2016
  UST 0% 3/17
  $
  35,000
  35,000
  34,999
  Total Temporary Cash Investments (represents 53.5% of total investments at fair value)
  $
  35,000
  $
  34,999
  Total Investments
  $
  54,452
  $
  65,405
  (1)
  See Note 3 to the financial statements, Valuation of Investments.
  (2)
  Income-producing.
  (3)
  Majority owned investments are generally defined under the 1940 Act as companies in which we own more than 50% of the voting securities of the company.
  (4)
  Affiliate investments are generally defined under the 1940 Act as companies in which we own at least 5% but not more than 25% voting securities of the company.
  (5)
  Income impaired.
  The accompanying notes are an integral
  part of these financial statements.
  8
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  SCHEDULE OF INVESTMENTS –
  (Continued)
  MARCH 31, 2017
  (Unaudited)
  Except for our holding of shares of
  MVC Capital, Inc. ("MVC"), substantially all of our portfolio securities are restricted from public sale without prior
  registration under the Securities Act of 1933 (hereafter, the "Securities Act") or other relevant regulatory authority.
  We negotiate certain aspects of the method and timing of the disposition of our investment in each portfolio company, including
  registration rights and related costs.
  As a business development company ("BDC")
  regulated pursuant to the Investment Company Act of 1940 ("1940 Act"), we may invest up to 30% of our assets in non-qualifying
  portfolio investments, as permitted by the 1940 Act. Specifically, we may invest up to 30% of our assets in entities that are not
  considered "eligible portfolio companies" (as defined in the 1940 Act), including companies located outside of the
  United States, entities that are operating pursuant to certain exceptions under the 1940 Act, and publicly-traded entities with
  a market capitalization exceeding $250 million. As of March 31, 2017, we had invested 85.9% of our assets in securities of portfolio
  companies that constituted qualifying investments under the 1940 Act. As of March 31, 2017, except for our shares of MVC, all of
  our investments are in enterprises that are considered eligible portfolio companies under the 1940 Act. We provide significant
  managerial assistance to portfolio companies that comprise 31.0% of the total value of the investments in portfolio securities
  as of March 31, 2017.
  Our investments in portfolio securities
  consist of the following types of securities as of March 31, 2017 (in thousands):
  Type of Securities
  Cost
  Fair Value
  Fair Value as
  Percentage
  of
  Net Assets
  Common stock
  $
  6,424
  $
  20,965
  50.6
  %
  Limited liability company investments
  10,050
  6,463
  15.6
  %
  Secured and subordinated debt
  2,978
  2,978
  7.2
  %
  Total
  $
  19,452
  $
  30,406
  73.4
  %
  The following is a summary by industry
  of the Fund's investments in portfolio securities as of March 31, 2017 (in thousands):
  Industry
  Fair Value
  Fair Value as
  Percentage of
  Net Assets
  Shipping products and services
  $
  16,686
  40.3
  %
  Energy
  6,250
  15.1
  %
  Financial services
  4,279
  10.3
  %
  Industrial products
  2,013
  4.9
  %
  Business products and services
  965
  2.3
  %
  Media
  213
  0.5
  %
  Total
  $
  30,406
  73.4
  %
  The accompanying notes are an integral
  part of these financial statements.
  9
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  SCHEDULE OF INVESTMENTS
  DECEMBER 31, 2016
  (Unaudited)
  (in thousands, except share data)
  Name and Location of
  Date of Initial
  Cost of
  Fair
  Portfolio Company
  Industry
  Investment
  Investment
  Principal
  Investment
  Value
  (1)
  Control Investments:  Majority-owned
  (3)
  :
  Equus Energy, LLC
  Houston, TX
  Energy
  December 2011
  Member interest (100%)
  $
  7,050
  $
  6,250
  Equus Media Development Company, LLC
  Houston, TX
  Media
  January 2007
  Member interest (100%)
  3,000
  212
  Total Control Investments: Majority-owned (represents 10.8% of total investments at fair value)
  $
  10,050
  $
  6,462
  Affiliate Investments
  (4)
  :
  PalletOne, Inc.
  Bartow, FL
  Shipping products and services
  October 2001
  350,000 shares of common stock (18.7%)
  $
  350
  $
  16,200
  Total Affiliate Investments (represents 27.2% of total investments at fair value)
  $
  350
  $
  16,200
  Non-Affiliate Investments - Related Party (less than 5% owned):
  MVC Capital, Inc.
  Purchase, NY
  Financial services
  May 2014
  468,608 shares of common stock (1.7%)
  $
  6,011
  $
  4,021
  Total Non-Affiliate Investments - Related Party (represents 6.7% of total investments at fair value)
  $
  6,011
  $
  4,021
  Non-Affiliate Investments (less than 5% owned):
  5
  TH
  Element Tracking, LLC
  Boston, MA
  Business products and services
  January 2015
  14% promissory note due 3/17
  (2)
  $
  965
  965
  965
  Biogenic Reagents, LLC
  Minneapolis, MN
  Industrial products
  January 2016
  16% promissory note due 6/16
  (5)
  $
  2,013
  2,013
  2,013
  Total Non-Affiliate Investments (represents 5.0% of total investments at fair value)
  $
  2,978
  $
  2,9
  78
  Total Investment in Portfolio Securities
  $
  19,389
  $
  29,661
  Temporary Cash Investments
  U.S. Treasury Bill
  Government
  December 2016
  UST 0% 1/17
  $
  30,000
  30,000
  29,994
  Total Temporary Cash Investments (represents 50.3% of total investments at fair value)
  $
  30,000
  $
  29,994
  Total Investments
  $
  49,389
  $
  59,655
  (1)
  See Note 3 to the financial statements, Valuation of Investments.
  (2)
  Income-producing.
  (3)
  Majority owned investments are generally defined under the 1940 Act as companies in which we own more than 50% of the voting securities of the company.
  (4)
  Affiliate investments are generally defined under the 1940 Act as companies in which we own at least 5% but not more than 25% voting securities of the company.
  (5)
  Income impaired.
  The accompanying notes are an integral
  part of these financial statements.
  10
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  SCHEDULE OF INVESTMENTS – (Continued)
  DECEMBER 31, 2016
  (Unaudited)
  Except for our holding of shares of
  MVC, substantially all of our portfolio securities are restricted from public sale without prior registration under the Securities
  Act or other relevant regulatory authority. We negotiate certain aspects of the method and timing of the disposition of our investment
  in each portfolio company, including registration rights and related costs.
  As a BDC, we may invest up to 30% of
  our assets in non-qualifying portfolio investments, as permitted by the 1940 Act. Specifically, we may invest up to 30% of our
  assets in entities that are not considered "eligible portfolio companies" (as defined in the 1940 Act), including companies
  located outside of the United States, entities that are operating pursuant to certain exceptions under the 1940 Act, and publicly-traded
  entities with a market capitalization exceeding $250 million. As of December 31, 2016, we had invested 86.4% of our assets in securities
  of portfolio companies that constituted qualifying investments under the 1940 Act. As of December 31, 2016, except for our shares
  of MVC, all of our investments are in enterprises that are considered eligible portfolio companies under the 1940 Act. We provide
  significant managerial assistance to portfolio companies that comprise 31.8% of the total value of the investments in portfolio
  securities as of December 31, 2016.
  Our investments in portfolio securities
  consist of the following types of securities as of December 31, 2016 (in thousands):
  Type of Securities
  Cost
  Fair Value
  Fair Value as
  Percentage of
  Net Assets
  Common stock
  $
  6,361
  $
  20,221
  47.3
  %
  Limited liability company investments
  10,050
  6,462
  15.1
  %
  Secured and subordinated debt
  2,978
  2,978
  7.0
  %
  Total
  $
  19,389
  $
  29,661
  69.4
  %
  The following is a summary by industry
  of the Fund's investments in portfolio securities as of December 31, 2016 (in thousands):
  Industry
  Fair Value
  Fair Value as
  Percentage of
  Net Assets
  Shipping products and services
  $
  16,200
  37.9
  %
  Energy
  6,250
  14.6
  %
  Financial services
  4,021
  9.4
  %
  Industrial products
  2,013
  4.7
  %
  Business products and services
  965
  2.3
  %
  Media
  212
  0.5
  %
  Total
  $
  29,661
  69.4
  %
  The accompanying notes are an integral
  part of these financial statements.
  11
  Table of Contents
  EQUUS TOTAL RETURN, INC.
  NOTES TO FINANCIAL STATEMENTS
  MARCH 31, 2017
  (Unaudited)
  (1)
  Description of Business and Basis of Presentation
  Description of Business
  —Equus
  Total Return, Inc. (
  "we," "us," "our," "Equus" and the "Fund
  "),
  a Delaware corporation, was formed by Equus Investments II, L.P. (the "Partnership") on August 16, 1991. On July 1,
  1992, the Partnership was reorganized and all of the assets and liabilities of the Partnership were transferred to the Fund in
  exchange for shares of common stock of the Fund. Our shares trade on the New York Stock Exchange under the symbol EQS. On August
  11, 2006, our shareholders approved the change of the Fund's investment strategy to a total return investment objective.
  This strategy seeks to provide the highest total return, consisting of capital appreciation and current income. In connection with
  this strategic investment change, the shareholders also approved the change of name from Equus II Incorporated to Equus Total Return,
  Inc.
  On April 24, 2017, we entered into a
  Stock Purchase Agreement and Plan of Merger ("Merger Agreement") with ETR Merger Sub, Inc., a newly-formed wholly-owned
  subsidiary of Equus, certain shareholders of U.S. Gas & Electric, Inc. ("USG&E"), and MVC as a selling shareholder
  of USG&E and as representative of the selling USG&E shareholders. USG&E is a retail energy company with over 160 employees
  that sells electricity and natural gas in deregulated utility markets to residential and commercial customers. As of January 31,
  2017, USG&E had over 375,000 residential customer equivalents in 62 utility markets across the District of Columbia and 11
  states. The transactions embodied in the Merger Agreement constitute a "Consolidation" as defined in our Plan of Reorganization
  ("Plan of Reorganization") within the meaning of Section 2(a)(33) of the Investment Company Act of 1940 ("1940
  Act") which we announced on May 15, 2014. Our intention of effecting a Consolidation through the Merger Agreement is to transform
  Equus from an investment company into an operating company focused on the energy sector, with USG&E becoming a wholly-owned
  subsidiary of Equus. The full text of the Merger Agreement is attached as an exhibit to our Current Report on Form 8-K filed on
  April 24, 2017 (see Note 7 –
  Plan of Reorganization
  ).
  So long as we remain an investment company
  and not an operating company, we will attempt to maximize the return to stockholders in the form of current investment income and
  long-term capital gains by investing in the debt and equity securities of companies with a total enterprise value of between $5.0
  million and $75.0 million, although we may engage in transactions with smaller or larger investee companies from time to time.
  We seek to invest primarily in companies pursuing growth either through acquisition or organically, leveraged buyouts, management
  buyouts and recapitalizations of existing businesses or special situations. Our income-producing investments consist principally
  of debt securities including subordinate debt, debt convertible into common or preferred stock, or debt combined with warrants
  and common and preferred stock. Debt and preferred equity financing may also be used to create long-term capital appreciation through
  the exercise and sale of warrants received in connection with the financing. We seek to achieve capital appreciation by making
  investments in equity and equity-oriented securities issued by privately-owned companies (or smaller public companies) in transactions
  negotiated directly with such companies. Given market conditions over the past several years and the performance of our portfolio,
  our Management and Board of Directors believe it prudent to continue to review alternatives to refine and further clarify the current
  strategies.
  We elected to be treated as a BDC under
  the 1940 Act. We currently qualify as a regulated investment company ("RIC") for federal income tax purposes and, therefore,
  are not required to pay corporate income taxes on any income or gains that we distribute to our stockholders. We have certain wholly
  owned taxable subsidiaries ("Taxable Subsidiaries") each of which holds one or more portfolio investments listed on
  our Schedules of Investments. The purpose of these Taxable Subsidiaries is to permit us to hold certain income-producing investments
  or portfolio companies organized as limited liability companies, or LLCs, (or other forms of pass-through entities) and still satisfy
  the RIC tax requirement that at least 90% of our gross revenue for income tax purposes must consist of investment income. Absent
  the Taxable Subsidiaries, a portion of the gross income of these income-producing investments or of any LLC (or other pass-through
  entity) portfolio investment, as the case may be, would flow through directly to us for the 90% test. To the extent that such income
  did not consist of investment income, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant
  federal income taxes. The income of the LLCs (or other pass-through entities) owned by Taxable Subsidiaries is taxed to the Taxable
  Subsidiaries and does not flow through to us, thereby helping us preserve our RIC status and resultant tax advantages. We do not
  consolidate the Taxable Subsidiaries for income tax purposes and they may generate income tax expense because of the Taxable Subsidiaries'
  ownership of the portfolio companies. We reflect any such income tax expense on our Statements of Operations.
  12
  Table of Contents
  Basis of Presentation
  —In
  accordance with Article 6 of Regulation S-X under the Securities Act and the Securities Exchange Act of 1934, as amended ("Exchange
  Act"), we do not consolidate portfolio company investments, including those in which we have a controlling interest. Our
  interim unaudited financial statements were prepared in accordance with accounting principles generally accepted in the United
  States of America ("GAAP"), for interim financial information and in accordance with the requirements of reporting
  on Form 10-Q and Article 10 of Regulation S-X, under the Exchange Act. Accordingly, they are unaudited and exclude some disclosures
  required for annual financial statements. Management believes it has made all adjustments, consisting solely of normal recurring
  accruals, necessary for the fair presentation of these interim financial statements.
  The results of operations for the three
  months ended March 31, 2017 are not necessarily indicative of results that ultimately may be achieved for the remainder of the
  year, particularly in view of our recent agreement to acquire USG&E as described in Note 7 –
  Plan of Reorganization
  below. The interim unaudited financial statements and notes thereto should be read in conjunction with the financial statements
  and notes thereto included in the Fund's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as filed
  with the Securities and Exchange Commission ("SEC").
  (2)
  Liquidity and Financing Arrangements
  Liquidity
  —There are several
  factors that may materially affect our liquidity during the reasonably foreseeable future. We view this period as the twelve month
  period from the date of the financial statements in this Form 10-Q,
  i.e
  ., the period through March 31, 2018. We are evaluating
  the impact of current market conditions on our portfolio company valuations and their ability to provide current income. We have
  followed valuation techniques in a consistent manner; however, we are cognizant of current market conditions that might affect
  future valuations of portfolio securities. We believe that our operating cash flow and cash on hand will be sufficient to meet
  operating requirements and, to the extent we remain a BDC, to finance routine follow-on investments, if any, through the next twelve
  months.
  Cash and Cash Equivalents
  —As
  of March 31, 2017, we had cash and cash equivalents of $10.5 million. We had $30.4 million of our net assets of $41.4 million invested
  in portfolio securities. We also had $35.4 million of restricted cash and temporary cash investments, including primarily the proceeds
  of a quarter-end margin loan that we incurred to maintain the diversification requirements applicable to a RIC to maintain our
  pass-through tax treatment. Of this amount, $35.0 million was invested in U.S. Treasury bills and $0.4 million represented a required
  1% brokerage margin deposit. These securities were held by a securities brokerage firm and pledged along with other assets to secure
  repayment of the margin loan. The U.S. Treasury bills were sold on April 2, 2017 and we subsequently repaid this margin loan, plus
  interest, on April 5, 2017.
  As of December 31, 2016, we had cash
  and cash equivalents of $12.0 million. We had $30.0 million of our net assets of $42.7 million invested in portfolio securities.
  We also had $30.3 million of temporary cash investments and restricted cash, including primarily the proceeds of a quarter-end
  margin loan that we incurred to maintain the diversification requirements applicable to a RIC. Of this amount, $30.0 million was
  invested in U.S. Treasury bills and $0.3 million represented a required 1% brokerage margin deposit. These securities were held
  by a securities brokerage firm and pledged along with other assets to secure repayment of the margin loan. The U.S. Treasury bills
  were sold on January 3, 2017 and we subsequently repaid this margin loan. The margin interest was paid on February 3, 2017.
  Dividends
  —So long as we
  remain a BDC, we will pay out net investment income and/or realized capital gains, if any, on an annual basis as required under
  the 1940 Act.
  Investment Commitments
  —Under
  certain circumstances, we may be called on to make follow-on investments in certain portfolio companies. If we do not have sufficient
  funds to make follow-on investments, the portfolio company in need of the investment may be negatively impacted. Also, our equity
  interest in the estimated fair value of the portfolio company could be reduced.
  As of March 31, 2017, we had no outstanding
  commitments to our portfolio company investments.
  RIC Borrowings, Restricted Cash and
  Temporary Cash Investments
  —We may periodically borrow sufficient funds to maintain the Fund's RIC status by utilizing
  a margin account with a securities brokerage firm. There is no assurance that such arrangement will be available in the future.
  If we are unable to borrow funds to make qualifying investments, we may no longer qualify as a RIC. We would then be subject to
  corporate income tax on the Fund's net investment income and realized capital gains, and distributions to stockholders would
  be subject to income tax as ordinary dividends. If we do not consummate our Consolidation with USG&E and become an operating
  company as described in Note 7 –
  Plan of Reorganization
  below, our failure to continue to qualify as a RIC could be
  materially adverse to us and our stockholders.
  13
  Table of Contents
  As of March 31, 2017, we borrowed $35.0
  million to maintain our RIC status by utilizing a margin account with a securities brokerage firm. We collateralized such borrowings
  with restricted cash and temporary cash investments in U.S. Treasury bills of $35.4 million.
  As of December 31, 2016, we borrowed
  $30.0 million to maintain our RIC status by utilizing a margin account with a securities brokerage firm. We collateralized such
  borrowings with restricted cash and temporary cash investments in U.S. Treasury bills of $30.3 million.
  Certain Risks and Uncertainties
  —Market
  and economic volatility which has become endemic in the past few years has resulted in a relatively limited amount of available
  debt financing for small and medium-sized companies such as Equus and its portfolio companies. Such debt financing generally has
  shorter maturities, higher interest rates and fees, and more restrictive terms than debt facilities available in the past. In addition,
  during these years and continuing into the first three months of 2017, the price of our common stock remained well below our net
  asset value, thereby making it undesirable to issue additional shares of our common stock below net asset value. Because of these
  challenges, our near-term strategies shifted from originating debt and equity investments to preserving liquidity necessary to
  meet our operational needs. Key initiatives that we have previously undertaken to provide necessary liquidity include monetizations,
  the suspension of dividends and the internalization of management. Most recently, on April 24, 2017, we signed a definitive agreement
  to acquire USG&E and emerge as an operating company as described in Note 7 –
  Plan of Reorganization
  below. Although
  we cannot assure you that such initiatives will be sufficient, we believe we have sufficient liquidity to meet our operating requirements
  for the remainder of 2017 and the first three months of 2018.
  (3)
  Significant Accounting Policies
  The following is a summary of significant
  accounting policies followed by the Fund in the preparation of its financial statements:
  Use of Estimates
  —The preparation
  of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts
  and disclosures in the financial statements. Although we believe the estimates and assumptions used in preparing these financial
  statements and related notes are reasonable in light of known facts and circumstances, actual results could differ from those estimates.
  Valuation of Investments—
  For
  most of our investments, market quotations are not available. With respect to investments for which market quotations are not readily
  available or when such market quotations are deemed not to represent fair value, our Board has approved a multi-step valuation
  process each quarter, as described below:
  1.
  Each portfolio company or investment is reviewed by our investment professionals;
  2.
  With respect to investments with a fair value exceeding $2.5 million that have been held for more than one year, we engage independent valuation firms to assist our investment professionals. These independent valuation firms conduct independent valuations and make their own independent assessments;
  3.
  Our Management produces a report that summarized each of our portfolio investments and recommends a fair value of each such investment as of the date of the report;
  4.
  The Audit Committee of our Board reviews and discusses the preliminary valuation of our portfolio investments as recommended by Management in their report and any reports or recommendations of the independent valuation firms, and then approves and recommends the fair values of our investments so determined to our Board for final approval; and
  5.
  The Board discusses valuations and determines the fair value of each portfolio investment in good faith based on the input of our Management, the respective independent valuation firm, as applicable, and the Audit Committee.
  During the first twelve months after
  an investment is made, we rely on the original investment amount to determine the fair value unless significant developments have
  occurred during this twelve month period which would indicate a material effect on the portfolio company (such as results of operations
  or changes in general market conditions).
  14
  Table of Contents
  Investments are valued utilizing a yield
  analysis, enterprise value ("EV") analysis, net asset value analysis, liquidation analysis, discounted cash flow analysis,
  or a combination of methods, as appropriate. The yield analysis uses loan spreads and other relevant information implied by market
  data involving identical or comparable assets or liabilities. Under the EV analysis, the EV of a portfolio company is first determined
  and allocated over the portfolio company's securities in order of their preference relative to one another (i.e., "waterfall"
  allocation). To determine the EV, we typically use a market multiples approach that considers relevant and applicable market trading
  data of guideline public companies, transaction metrics from precedent M&A transactions and/or a discounted cash flow analysis.
  The net asset value analysis is used to derive a value of an underlying investment (such as real estate property) by dividing a
  relevant earnings stream by an appropriate capitalization rate. For this purpose, we consider capitalization rates for similar
  properties as may be obtained from guideline public companies and/or relevant transactions. The liquidation analysis is intended
  to approximate the net recovery value of an investment based on, among other things, assumptions regarding liquidation proceeds
  based on a hypothetical liquidation of a portfolio company's assets. The discounted cash flow analysis uses valuation techniques
  to convert future cash flows or earnings to a range of fair values from which a single estimate may be derived utilizing an appropriate
  discount rate. The measurement is based on the net present value indicated by current market expectations about those future amounts.
  In applying these methodologies, additional
  factors that we consider in fair value pricing our investments may include, as we deem relevant: security covenants, call protection
  provisions, and information rights; the nature and realizable value of any collateral; the portfolio company's ability to
  make payments; the principal markets in which the portfolio company does business; publicly available financial ratios of peer
  companies; the principal market; and enterprise values, among other factors. Also, any failure by a portfolio company to achieve
  its business plan or obtain and maintain its financing arrangements could result in increased volatility and result in a significant
  and rapid change in its value.
  Our general intent is to hold our loans
  to maturity when appraising our privately held debt investments. As such, we believe that the fair value will not exceed the cost
  of the investment. However, in addition to the previously described analysis involving allocation of value to the debt instrument,
  we perform a yield analysis assuming a hypothetical current sale of the security to determine if a debt security has been impaired. The
  yield analysis considers changes in interest rates and changes in leverage levels of the portfolio company as compared to the market
  interest rates and leverage levels. Assuming the credit quality of the portfolio company remains stable, the Fund will use the
  value determined by the yield analysis as the fair value for that security if less than the cost of the investment.
  We record unrealized depreciation on
  investments when we determine that the fair value of a security is less than its cost basis, and will record unrealized appreciation
  when we determine that the fair value is greater than its cost basis.
  Fair Value Measurement—
  Fair
  value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
  participants at the measurement date and sets out a fair value hierarchy. The fair value hierarchy gives the highest priority to
  quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level
  3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels
  of the fair value hierarchy are described below:
  Level 1—Unadjusted quoted prices
  in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
  Level 2—Inputs other than quoted
  prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and fair value is determined
  through the use of models or other valuation methodologies.
  Level 3—Inputs are unobservable
  for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The
  inputs into the determination of fair value are based upon the best information under the circumstances and may require significant
  management judgment or estimation.
  In certain cases, the inputs used to
  measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment's level within
  the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment
  of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors
  specific to the investment.
  15
  Table of Contents
  Investments for which prices are not
  observable are generally private investments in the debt and equity securities of operating companies. The primary valuation method
  used to estimate the fair value of these Level 3 investments is the discounted cash flow method (although a liquidation analysis,
  option theoretical, or other methodology may be used when more appropriate). The discounted cash flow approach to determine fair
  value (or a range of fair values) involves applying an appropriate discount rate(s) to the estimated future cash flows using various
  relevant factors depending on investment type, including comparing the latest arm's length or market transactions involving
  the subject security to the selected benchmark credit spread, assumed growth rate (in cash flows), and capitalization rates/multiples
  (for determining terminal values of underlying portfolio companies). The valuation based on the inputs determined to be the most
  reasonable and probable is used as the fair value of the investment. The determination of fair value using these methodologies
  may take into consideration a range of factors including, but not limited to, the price at which the investment was acquired, the
  nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected
  operating performance, financing transactions subsequent to the acquisition of the investment and anticipated financing transactions
  after the valuation date.
  To assess the reasonableness of the
  discounted cash flow approach, the fair value of equity securities, including warrants, in portfolio companies may also consider
  the market approach—that is, through analyzing and applying to the underlying portfolio companies, market valuation multiples
  of publicly-traded firms engaged in businesses similar to those of the portfolio companies. The market approach to determining
  the fair value of a portfolio company's equity security (or securities) will typically involve: (1) applying to the portfolio
  company's trailing twelve months (or current year projected) EBITDA a low to high range of enterprise value to EBITDA multiples
  that are derived from an analysis of publicly-traded comparable companies, in order to arrive at a range of enterprise values for
  the portfolio company; (2) subtracting from the range of calculated enterprise values the outstanding balances of any debt or equity
  securities that would be senior in right of payment to the equity securities we hold; and (3) multiplying the range of equity values
  derived therefrom by our ownership share of such equity tranche in order to arrive at a range of fair values for our equity security
  (or securities). Application of these valuation methodologies involves a significant degree of judgment by Management.
  Due to the inherent uncertainty of determining
  the fair value of Level 3 investments that do not have a readily available market value, the fair value of the investments may
  differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially
  from the values that may ultimately be received or settled. Further, such investments are generally subject to legal and other
  restrictions or otherwise are less liquid than publicly traded instruments. If we were required to liquidate a portfolio investment
  in a forced or liquidation sale, we might realize significantly less than the value at which such investment had previously been
  recorded. With respect to Level 3 investments, where sufficient market quotations are not readily available or for which no or
  an insufficient number of indicative prices from pricing services or brokers or dealers have been received, we undertake, on a
  quarterly basis, our valuation process as described above.
  We assess the levels of the investments
  at each measurement date, and transfers between levels are recognized on the subsequent measurement date closest in time to the
  actual date of the event or change in circumstances that caused the transfer. There were no transfers among Level 1, 2 and 3 for
  the quarter ended March 31, 2017 and the year ended December 31, 2016.
  As of March 31, 2017, investments measured
  at fair value on a recurring basis are categorized in the tables below based on the lowest level of significant input to the valuations:
  Fair Value Measurements as of March 31, 2017
  (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
  $
  6,463
  $
  —
  $
  —
  $
  6,463
  Affiliate investments
  16,686
  —
  —
  16,686
  Non-affiliate investments - related party
  4,279
  4,279
  —
  —
  Non-affiliate investments
  2,978
  —
  —
  2,978
  Total investments
  30,406
  4,279
  —
  26,127
  Temporary cash investments
  34,999
  34,999
  —
  —
  Total investments and temporary cash investments
  $
  65,405
  $
  39,278
  $
  —
  $
  26,127
  16
  Table of Contents
  As of December 31, 2016, investments
  measured at fair value on a recurring basis are categorized in the tables below based on the lowest level of significant input
  to the valuations:
  Fair Value Measurements as of December 31, 2016
  (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
  $
  6,462
  $
  —
  $
  —
  $
  6,462
  Affiliate investments
  16,200
  —
  —
  16,200
  Non-affiliate investments - related party
  4,021
  4,021
  —
  —
  Non-affiliate investments
  2,978
  —
  —
  2,978
  Total investments
  29,661
  4,021
  —
  25,640
  Temporary cash investments
  29,994
  29,994
  —
  —
  Total investments and temporary cash investments
  $
  59,655
  $
  34,015
  $
  —
  $
  25,640
  The following table provides a reconciliation
  of fair value changes during the three months ended March 31, 2017 for all investments for which we determine fair value using
  unobservable (Level 3) factors:
  Fair value measurements using significant unobservable inputs (Level 3)
  (in thousands)
  Control Investments
  Affiliate Investments
  Non-affiliate Investments
  Total
  Fair value as of December 31, 2016
  $
  6,462
  $
  16,200
  $
  2,978
  $25,640
  Change in unrealized appreciation (depreciation)
  1
  486
  —
  487
  Purchases of portfolio securities
  —
  —
  —
  -
  Fair value as of March 31, 2017
  $
  6,463
  $
  16,686
  $
  2,978
  $26,127
  The following table provides a reconciliation
  of fair value changes during the three months ended March 31, 2016 for all investments for which we determine fair value using
  unobservable (Level 3) factors:
  Fair value measurements using significant unobservable inputs (Level 3)
  (in thousands)
  Control Investments
  Affiliate Investments
  Non-affiliate Investments
  Total
  Fair value as of December 31, 2015
  $
  5,715
  $
  9,600
  $
  915
  $16,230
  Change in unrealized appreciation (depreciation)
  (1,000
  )
  —
  2,000
  1,000
  Purchases of portfolio securities
  —
  —
  2,025
  2,025
  Fair value as of March 31, 2016
  $
  4,715
  $
  9,600
  $
  4,940
  $19,255
  Our investment portfolio is not composed
  of homogeneous debt and equity securities that can be valued with a small number of inputs. Instead, the majority of our investment
  portfolio is composed of complex debt and equity securities with distinct contract terms and conditions. As such, our valuation
  of each investment in our portfolio is unique and complex, often factoring in numerous different inputs, including historical and
  forecasted financial and operational performance of the portfolio company, project cash flows, market multiples comparable market
  transactions, the priority of our securities compared with those of other investors, credit risk, interest rates, independent valuations
  and reviews and other inputs.
  17
  Table of Contents
  The following table summarizes the significant
  non-observable inputs in the fair value measurements of our Level 3 investments by category of investment and valuation technique
  as of March 31, 2017:
  Range
  (in thousands)
  Fair Value
  Valuation Techniques
  Unobservable Inputs
  Minimum
  Maximum
  Secured and subordinated debt
  $
  2,978
  Yield analysis
  Discount for lack of marketability
  0
  %
  0
  %
  Common stock
  16,686
  Income/Market approach
  EBITDA Multiple/Discount for lack of marketability/Control premium
  10
  %
  32.5
  %
  Limited liability company investments
  6,463
  Asset Approach
  Discounted cash flow; Guideline transaction method
  Recovery rate
  Reserve adjustment factors
  75
  %
  100
  %
  $
  26,127
  Because of the inherent uncertainty
  of the valuation of portfolio securities which do not have readily ascertainable market values, amounting to $26.1 million and
  $25.6 million as of March 31, 2017 and December 31, 2016, respectively, our fair value determinations may materially differ from
  the values that would have been used had a ready market existed for these securities. As of March 31, 2017, one of our portfolio
  investments, 475,956 common shares of MVC, was publicly listed on the New York Stock Exchange ("NYSE"). As
  of December 31, 2016, one of our portfolio investments, 468,608 common shares of MVC, was publicly listed on the NYSE.
  We adjust our net asset value for the
  changes in the value of our publicly held securities, if applicable, and material changes in the value of private securities, generally
  determined on a quarterly basis or as announced in a press release, and report those amounts to Lipper Analytical Services, Inc.
  Our net asset value appears in various publications, including
  Barron's
  and
  The Wall Street Journal
  .
  Foreign Exchange—
  We record
  temporary changes in foreign exchange rates of portfolio securities denominated in foreign currencies as changes in fair value.
  These changes are therefore reflected as unrealized gains or losses until realized.
  Investment Transactions
  —Investment
  transactions are recorded on the accrual method. Realized gains and losses on investments sold are computed on a specific identification
  basis.
  We classify our investments in accordance
  with the requirements of the 1940 Act. Under the 1940 Act, "Control Investments" are defined as investments in companies
  in which the Fund owns more than 25% of the voting securities or maintains greater than 50% of the board representation. Under
  the 1940 Act, "Affiliate Investments" are defined as those non-control investments in companies in which we own between
  5% and 25% of the voting securities. Under the 1940 Act, "Non-affiliate Investments" are defined as investments that
  are neither Control Investments nor Affiliate Investments.
  As of March 31, 2017, we had no outstanding
  commitments to our portfolio company investments; however, under certain circumstances, we may be called on to make follow-on investments
  in certain portfolio companies. If we do not have sufficient funds to make follow-on investments, the portfolio company in need
  of the investment may be negatively impacted. Also, our equity interest in the estimated fair value of the portfolio company could
  be reduced. Follow-on investments may include capital infusions which are expenditures made directly to the portfolio company to
  ensure that operations are completed, thereby allowing the portfolio company to generate cash flows to service their debt.
  Interest Income Recognition
  —We
  record interest income, adjusted for amortization of premium and accretion of discount, on an accrual basis to the extent that
  we expect to collect such amounts. We accrete or amortize discounts and premiums on securities purchased over the life of the respective
  security using the effective yield method. The amortized cost of investments represents the original cost adjusted for the accretion
  of discount and/or amortization of premium on debt securities. We stop accruing interest on investments when we determine that
  interest is no longer collectible. We may also impair the accrued interest when we determine that all or a portion of the current
  accrual is uncollectible. If we receive any cash after determining that interest is no longer collectible, we treat such cash as
  payment on the principal balance until the entire principal balance has been repaid, before we recognize any additional interest
  income. We will write off uncollectible interest upon the occurrence of a definitive event such as a sale, bankruptcy, or reorganization
  of the relevant portfolio interest.
  18
  Table of Contents
  Payment in Kind Interest (PIK)
  —We
  have loans in our portfolio that may pay PIK interest. We add PIK interest, if any, computed at the contractual rate specified
  in each loan agreement, to the principal balance of the loan and recorded as interest income. To maintain our status as a RIC,
  we must pay out to stockholders this non-cash source of income in the form of dividends even if we have not yet collected any cash
  in respect of such investments. To the extent we remain BDC and a RIC, we will continue to pay out net investment income and/or
  realized capital gains, if any, on an annual basis as required under the 1940 Act.
  Cash Flows
  —For purposes
  of the Statements of Cash Flows, we consider all highly liquid temporary cash investments purchased with an original maturity of
  three months or less to be cash equivalents. We include our investing activities within cash flows from operations. We exclude
  "Restricted Cash and Temporary Cash Investments" used for purposes of complying with RIC requirements from cash equivalents.
  Taxes
  —So long as we remain
  a BDC, we intend to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company
  and, as such, will not be subject to federal income taxes on otherwise taxable income (including net realized capital gains) which
  is distributed to stockholders. Therefore, no provision for federal income taxes is recorded in the financial statements. We borrow
  money from time to time to maintain our tax status under the Internal Revenue Code as a RIC. See Note 1 for discussion of Taxable
  Subsidiaries and see Note 2 for further discussion of the Fund's RIC borrowings.
  All corporations organized in the State
  of Delaware are required to file an Annual Report and to pay a franchise tax. As a result, we paid Delaware Franchise tax in the
  amount of $0.02 million for the year ended December 31, 2016.
  Texas margin tax applies to legal entities
  conducting business in Texas. The margin tax is based on our Texas sourced taxable margin. The tax is calculated by applying a
  tax rate to a base that considers both revenue and expenses and therefore has the characteristics of an income tax. As a result,
  we did not owe state income tax for the year ended December 31, 2016.
  (4)
  Related Party Transactions and Agreements
  Share Exchange with MVC
  —On
  May 14, 2014, we announced that the Fund intended to effect a reorganization pursuant to Section 2(a)(33) of the 1940 Act ("Plan
  of Reorganization"). As a first step to consummating the Plan or Reorganization, we sold to MVC 2,112,000 newly-issued shares
  of the Fund's common stock in exchange for 395,839 shares of MVC (such transaction is hereinafter referred to as the "Share
  Exchange"). MVC is a BDC traded on the NYSE that provides long-term debt and equity investment capital to fund growth, acquisitions
  and recapitalizations of companies in a variety of industries. The Share Exchange was calculated based on the Fund's and
  MVC's respective net asset value per share. At the time of the Share Exchange, the number of MVC shares received by Equus
  represented approximately 1.73% of MVC's total outstanding shares of common stock. As of March 31, 2017, we valued our 475,956
  MVC shares at $4.3 million. As of December 31, 2016, we valued our 468,608 MVC shares at $4.0 million. The value of our MVC
  shares was based on MVC's closing trading price on the NYSE as of such dates. Due to the ownership relationship between
  the Company and MVC, the investment and amounts due to and from MVC have been identified and disclosed as "related party(ies)"
  in our Financial Statements.
  Agreement to Acquire USG&E
  —On
  April 24, 2017, we entered into a Stock Purchase Agreement and Plan of Merger ("Merger Agreement") with ETR Merger
  Sub, Inc., a newly-formed wholly-owned subsidiary of Equus, certain shareholders of USG&E, and MVC as a selling shareholder
  of USG&E and as representative of the selling USG&E shareholders. The transactions embodied in the Merger Agreement constitute
  a "Consolidation" as defined in our Plan of Reorganization. Our intention of effecting a Consolidation through the
  Merger Agreement is to transform Equus from an investment company into an operating company focused on the energy sector with USG&E
  becoming a wholly-owned subsidiary of Equus as a result. MVC, which currently holds 32.9% of our common stock, also holds approximately
  76.4% of the capital stock of USG&E. As a result of the Consolidation, MVC will hold approximately 63.7% of our voting stock
  and will be entitled to appoint or remove our directors, subject to a requirement, in connection with the Merger Agreement, that
  the four directors nominated for reelection at our 2017 annual meeting of stockholders remain in their positions for a period of
  ten months following the closing of the first stage of the two-stage transaction that will accomplish the Consolidation with USG&E
  (see Note 7 –
  Plan of Reorganization
  below).
  Except as noted below, as compensation
  for services to the Fund, each Independent Director receives an annual fee of $20,000 paid quarterly in arrears, a fee of $2,000
  for each meeting of the Board of Directors attended in person, a fee of $1,000 for participation in each telephonic meeting of
  the Board and a fee of $1,000 for each committee meeting attended, and reimbursement of all out-of-pocket expenses relating to
  attendance at such meetings. A quarterly fee of $15,000 is paid to the Chairman of the Audit Committee and a quarterly fee of $3,750
  is paid to the Chairman of the Independent Directors. We may also pay other one-time or recurring fees to members of our Board
  of Directors in special circumstances. None of our interested directors receive annual fees for their service on the Board of Directors.
  19
  Table of Contents
  In November 2011, Equus Energy, LLC
  ("Equus Energy"), a wholly-owned subsidiary of the Fund, entered into a consulting agreement with Global Energy Associates,
  LLC ("Global Energy") to provide consulting services for energy related investments. Henry W. Hankinson, Director of
  the Fund, is a managing partner and co-founder of Global Energy. Payments to Global Energy totaled $18,750 for each of the three
  months ended March 31, 2017 and 2016.
  In respect of services provided to the
  Fund by members of the Board not in connection with their roles and duties as directors, the Fund pays a fixed amount at a rate
  of $250 per hour for services rendered. During the three months ended March 31, 2017 and 2016, we paid Kenneth I. Denos, P.C.,
  a professional corporation owned by Kenneth I. Denos, a director of the Fund, $165,750 and $104,813 respectively, for services
  provided to the Fund.
  (5)
  Dividends
  We will pay out net investment income
  and/or realized capital gains, if any, on an annual basis as required under the 1940 Act.
  (6)
  Portfolio Securities
  During the three months ended March
  31, 2017, we received dividends in the form of additional shares of $0.1 million relating to our shareholding in MVC.
  During the three months ended March
  31, 2017, we recorded a net change in unrealized appreciation of $0.7 million, to a net unrealized appreciation of $11.0 million.
  Such change in unrealized appreciation resulted primarily from the following changes:
  (i)
  Increase in the fair value of our shareholding in MVC of $0.2 million due to the receipt of a dividend payment in the form of additional shares of MVC;
  (ii)
  Increase in fair value of our shareholding in PalletOne, Inc. of $0.5 million due to an overall improvement in comparable industry sectors, as well as continued revenue and earnings growth;
  On January 29, 2016, we invested $2.0
  million in Biogenic Reagents, LLC ("Biogenic") in the form of a senior secured promissory note maturing May 31, 2016
  and bearing cash and PIK interest at the combined rate of 16% per annum. Biogenic is a developer and producer of high value carbon
  products from renewable biomass, headquartered in Minneapolis. The company has developed and commercialized a low-cost platform
  technology to make carbon products such as activated carbon for use in purification of air, water, food and pharmaceuticals and
  agricultural carbon to improve crop production.
  On March 2, 2016, we extended the maturity
  of the 5
  th
  Element Tracking, LLC promissory note to July, 2016 and received fees in the form of a PIK and cash totaling
  $0.05 million.
  During the three months ended March
  31, 2016, we received dividends in the form of additional shares of $0.1 million relating to our shareholding in MVC.
  During the three months ended March
  31, 2016, we recorded a net change in unrealized appreciation of $1.0 million, to a net unrealized appreciation of $3.3 million.
  Such change in unrealized appreciation resulted primarily from the following changes:
  (i)
  Increase in the fair value of our shareholding in MVC of $0.1 million due to the receipt of a dividend payment in the form of additional shares of MVC;
  (ii)
  Increase in fair value of our shareholding in PalletOne, Inc. of $2.0 million due to an overall improvement in comparable industry sectors, as well as continued revenue and earnings growth;
  (iii)
  Decrease in the fair value of our holdings in Equus Energy, LLC of $1.0 million, principally due to a combination of lower production without a corresponding increase in proved reserves and continued lower short- and long-term prices for crude oil and natural gas.
  (7)
  Plan of Reorganization
  Share Exchange with MVC
  —On
  May 14, 2014, we announced that the Fund intended to effect a Plan of Reorganization. As a first step to consummating the Plan
  of Reorganization, we executed a Share Exchange with MVC, wherein we sold to MVC 2,112,000 newly-issued shares of our common stock
  in exchange for 395,839 newly-issued shares of MVC. We also announced that, pursuant to the Plan of Reorganization, our intention
  was for Equus to pursue a Consolidation with MVC or one of its portfolio companies.
  20
  Table of Contents
  Authorization to Withdraw BDC Election
  —As
  a consequence of our Plan of Reorganization, on January 6, 2017, holders of a majority of the outstanding common stock of the Fund
  approved our cessation as a BDC under the 1940 Act and authorized our Board of Directors (sometimes referred to hereinafter as
  the "Board") to cause the Fund's withdrawal of its election to be classified as a BDC, each effective as of a
  date designated by the Board and our Chief Executive Officer, but in no event later than July 31, 2017. Notwithstanding this authorization
  to withdraw our BDC election, we will not submit any such withdrawal unless and until we are reasonably confident that such Consolidation
  will be completed.
  Agreement to Acquire USG&E
  —On
  April 24, 2017, as the final step in the Plan of Reorganization and our intention to effect a Consolidation thereunder, we entered
  into the Merger Agreement with ETR Merger Sub, Inc., a newly-formed wholly-owned subsidiary of Equus ("Merger Sub"),
  certain shareholders of USG&E, and MVC as a selling shareholder of USG&E and as representative of the selling USG&E
  shareholders. A portfolio investment of MVC since 2007, USG&E is a retail energy company with over 160 employees that sells
  electricity and natural gas in deregulated utility markets to residential and commercial customers. As of January 31, 2017, USG&E
  had over 375,000 residential customer equivalents in 62 utility markets across the District of Columbia and 11 states. The Consolidation,
  if effected, will result in USG&E becoming a wholly-owned subsidiary of Equus, and the operations of USG&E becoming the
  predominant operations of the consolidated companies.
  The Merger Agreement provides for a
  two-stage transaction to accomplish the Consolidation:
  ·
  The first stage of the Consolidation (referred to
  in the Merger Agreement as the "Acquisition") involves the acquisition by Equus, from certain USG&E shareholders,
  inclusive of MVC, of 90.3% of the common and preferred stock of USG&E. Upon completion of the Acquisition, Equus will change
  its corporate name from Equus Total Return, Inc. to "USG&E, Inc."
  ·
  The second stage of the Consolidation (referred to
  in the Merger Agreement as the "Merger") consists of a short-form merger of Merger Sub and USG&E, whereupon Merger
  Sub will merge with and into USG&E and the remaining shareholders of USG&E will have the right to receive a pro-rata amount
  of the common and preferred shares of Equus described below. USG&E will survive the merger as a wholly-owned subsidiary of
  the Company and the separate corporate existence of Merger Sub will cease.
  The aggregate consideration to be tendered
  by the Company to the stockholders of USG&E as part of the Consolidation consists of 32,606,539 shares of newly-issued common
  stock of the Company and $40 million of newly-issued 7.5% Series A Convertible Preferred Stock of the Company. The closing of the
  Acquisition is subject to a number of conditions, including compliance with applicable waiting periods under federal antitrust
  and energy regulations, as well as theExchange Act. The closing of the Acquisition is also subject to SEC clearance of an Information
  Statement filed by Equus with respect to the Consolidation and various actions undertaken by the Board and Equus shareholders in
  connection therewith. Additional information concerning the proposed Consolidation and a more thorough description thereof can
  be obtained from our filings with the SEC via the SEC's website at
  www.sec.gov
  or on the Company's website at
  www.equuscap.com
  .
  (8)
  2016 Equity Incentive Plan
  On
  June 13, 2016, our shareholders approved the adoption of our 2016 Equity Incentive Plan ("Incentive Plan"). On January
  10, 2017, the SEC issued an order approving the Incentive Plan and certain awards intended to be made thereunder. The Incentive
  Plan is intended to promote the interests of the Fund by encouraging officers, employees, and directors of the Fund and its affiliates
  to acquire or increase their equity interest in the Fund and to provide a means whereby they may develop a proprietary interest
  in the development and financial success of the Fund, to encourage them to remain with and devote their best efforts to the business
  of the Fund, thereby advancing the interests of the Fund and its stockholders. The Incentive Plan is also intended to enhance
  the ability of the Fund and its affiliates to attract and retain the services of individuals who are essential for the growth
  and profitability of the Fund. The Incentive Plan permits the award of restricted stock as well as common stock purchase options.
  The maximum number of shares of common stock that are subject to awards granted under the Incentive Plan is 2,434,728 shares.
  The term of the Incentive Plan will expire on June 13, 2026. On March 17, 2017, we granted awards of restricted stock under the
  Plan to certain of our directors and executive officers in the aggregate amount of 844,500 shares. The awards are each subject
  to a vesting requirement over a 3-year period unless the recipient thereof is terminated or removed from their position as a director
  or executive officer without "cause", or as a result of constructive termination, as such terms are defined in the
  respective award agreements entered into by each of the recipients and the Fund. We account for share-based compensation using
  the fair value method, as prescribed by ASC 718, Compensation—Stock Compensation. Accordingly, for restricted stock awards,
  we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the
  fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting
  term. For the three months ended March 31, 2017, we recorded compensation expense of $0.5 million in connection with these awards.
  21
  Table of Contents
  (9)
  Equus Energy, LLC
  Equus Energy was formed in November
  2011 as a wholly-owned subsidiary of the Fund to make investments in companies in the energy sector, with particular emphasis on
  income-producing oil & gas properties. In December 2011, we contributed $250,000 to the capital of Equus Energy. On December
  27, 2012, we invested an additional $6.8 million in Equus Energy for the purpose of additional working capital and to fund the
  purchase of $6.6 million in working interests, which presently comprise 110 producing and non-producing oil and gas wells. The
  working interests include associated development rights of approximately 20,900 acres situated on 12 separate properties in Texas
  and Oklahoma. The working interests range from a
  de minimus
  amount to 50% of the leasehold that includes these wells.
  The wells are operated by a number of
  experienced operators, including Chevron USA, Inc., which has operating responsibility for all of Equus Energy's 40 producing
  well interests located in the Conger Field, a productive oil and gas field on the edge of the Permian Basin that has experienced
  successful gas and hydrocarbon extraction in multiple formations. Equus Energy, which holds a 50% working interest in each of these
  Conger Field wells, is working with Chevron in a recompletion program of existing Conger Field wells to the Wolfcamp formation,
  a zone containing oil as well as gas and natural gas liquids. Part of Equus Energy's acreage rights described above also
  includes a 50% working interest in possible new drilling to the base of the Canyon formation (approximately 8,500 feet) on 2,400
  acres in the Conger Field. Also included in the interests acquired by Equus Energy are working interests of 7.5% and 2.5% in the
  Burnell and North Pettus Units, respectively, which collectively comprise approximately 13,000 acres located in the area known
  as the "Eagle Ford Shale" play.
  Revenue and Income
  . During the
  three months ended March 31, 2017, Equus Energy's revenue, operating revenue less direct operating expenses, and net loss
  were $0.2 million, $0.1 million, and ($0.1) million, respectively, as compared to revenue, operating revenue less direct operating
  expenses, and net loss were $0.1 million, ($0.2) million, and ($0.4) million, respectively, for the three months ended March 31,
  2016.
  Capital Expenditures
  . There
  were no capital expenditures for the three months ended March 31, 2017. During the three months ended March 31, 2016, Equus Energy
  invested $0.003 million in capital expenditures for small repairs and improvements. The operators of the various working interest
  communicated their intent to wait until later in 2017, commensurate with an anticipated gradual rise in the price of crude oil,
  to commence new drilling and recompletion projects.
  We do not consolidate Equus Energy or
  its wholly-owned subsidiaries and accordingly only the value of our investment in Equus Energy is included on our balance sheets.
  Our investment in Equus Energy is valued in accordance with our normal valuation procedures and is based in part on using a discounted
  cash flow analysis based on a reserve report prepared for Equus Energy by Lee Keeling & Associates, Inc., an independent petroleum
  engineering firm, the transactions and values of comparable companies in this sector, and the estimated value of leasehold mineral
  interests associated with the acreage held by Equus Energy. A valuation of Equus Energy was performed by a third-party valuation
  firm, who recommended a value range of Equus Energy consistent with the fair value determined by our Management (See
  Schedule
  of Investments
  )
  .
  22
  Table of Contents
  Below is summarized consolidated financial
  information for Equus Energy as of March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and 2016,
  respectively:
  EQUUS ENERGY, LLC
  Unaudited Condensed Consolidated Balance
  Sheets
  March 31,
  December 31,
  (in thousands)
  2017
  2016
  Assets
  Current assets:
  Cash and cash equivalents
  $
  235
  $
  291
  Accounts receivable
  104
  91
  Other current assets
  42
  32
  Total current assets
  381
  414
  Oil and gas properties
  8,055
  8,055
  Less: accumulated depletion, depreciation and amortization
  (7,241
  )
  (7,145
  )
  Net oil and gas properties
  814
  910
  Total assets
  $
  1,195
  $
  1,324
  Liabilities and member's equity
  Current liabilities:
  Accounts payable and other
  $
  35
  $
  75
  Due to affiliate
  611
  611
  Total current liabilities
  646
  686
  Asset retirement obligations
  185
  184
  Total liabilities
  831
  870
  Total member's equity
  364
  454
  Total liabilities and member's equity
  $
  1,195
  $
  1,324
  Revenue and direct operating expenses
  for the various oil and gas assets included in the accompanying statements represent the net collective working and revenue interests
  acquired by Equus Energy. The revenue and direct operating expenses presented herein relate only to the interests in the producing
  oil and natural gas properties and do not represent all of the oil and natural gas operations of all of these properties. Direct
  operating expenses include lease operating expenses and production and other related taxes. General and administrative expenses,
  depletion, depreciation and amortization ("DD&A") of oil and gas properties and federal and state taxes have been
  excluded from direct operating expenses in the accompanying statements of operations because the allocation of certain expenses
  would be arbitrary and would not be indicative of what such costs would have been had Equus Energy been operated as a stand-alone
  entity. The statements of operations presented are not indicative of the financial condition or results of operations of Equus Energy
  on a go forward basis due to changes in the business and the omission of various operating expenses.
  23
  Table of Contents
  EQUUS ENERGY, LLC
  Unaudited Condensed Consolidated Statements
  of Operations
  Three months ended March 31
  (in thousands)
  2017
  2016
  Operating revenue
  $
  247
  $
  58
  Operating expenses
  Direct operating expenses
  147
  262
  General and administrative
  93
  169
  Depletion, depreciation, amortization and accretion
  97
  63
  Total operating expenses
  337
  494
  Operating loss before income tax expense
  (90
  )
  (436
  )
  Net loss
  $
  (90
  )
  $
  (436
  )
  EQUUS ENERGY, LLC
  Unaudited Condensed Consolidated Statements
  of Cash Flows
  Three months ended March 31,
  (in thousands)
  2017
  2016
  Cash flows from operating activities:
  Net loss
  $
  (90
  )
  $
  (436
  )
  Adjustments to reconcile net loss to
  net cash used in operating activities:
  Depletion, depreciation and amortization
  97
  63
  Changes in operating assets and liabilities:
  Accounts receivable
  (13
  )
  80
  Prepaid expenses and other current assets
  (10
  )
  —
  Accounts payable and other
  (40
  )
  (43
  )
  Net cash used in operating activities
  (56
  )
  (336
  )
  Cash flows from investing activities:
  Investment in oil & gas properties
  —
  (3
  )
  Net cash used in investing activities
  —
  (3
  )
  Net decrease in cash
  (56
  )
  (339
  )
  Cash and cash equivalents at beginning of period
  291
  517
  Cash and cash equivalents at end of period
  $
  235
  $
  178
  24
  Table of Contents
  Critical Accounting Policies for
  Equus Energy
  —Equus Energy and its wholly-owned subsidiary EQS Energy Holdings, Inc. (collectively, "the Company")
  follow the
  Full Cost Method of Accounting
  for oil and gas properties. Under the full cost method, all costs associated with
  property acquisition, exploration, and development activities are capitalized. Capitalized costs include lease acquisitions, geological
  and geophysical work, delay rentals, costs of drilling, completing and equipping successful and unsuccessful oil and gas wells
  and related costs. Gains or losses are normally not recognized on the sale or other disposition of oil and gas properties. Gains
  or losses are normally reflected as an adjustment to the full cost pool.
  The capitalized costs of oil
  and gas properties, plus estimated future development costs relating to proved reserves and estimated cost of dismantlement and
  abandonment, net of salvage value, are amortized on a unit-of-production method over the estimated productive life of the proved
  oil and gas reserves. Unevaluated oil and gas properties are excluded from this calculation.  Depletion, depreciation, amortization
  and accretion expense for the Company's oil and gas properties totaled $0.1 million and $0.06 million for the three months
  ended March 31, 2017 and March 31, 2016, respectively.
  Capitalized oil and gas property costs
  are limited to an amount (the ceiling limitation) equal to the sum of the following:
  (a)
  As of March 31, 2017, the present value of estimated future net revenue from the projected production of proved oil and gas reserves, calculated at the simple arithmetic average, first-day-of-the-month prices during the twelve-month period before the balance sheet date (with consideration of price changes only to the extent provided by contractual arrangements) and a discount factor of 10%;
  (b)
  The cost of investments in unproved and unevaluated properties excluded from the costs being amortized; and
  (c)
  The lower of cost or estimated fair value of unproved properties included in the costs being amortized.
  When it is determined that oil and gas
  property costs exceed the ceiling limitation, an impairment charge is recorded to reduce its carrying value to the ceiling limitation. 
  The Company did not recognize an impairment loss on its oil and gas properties during the three months ended March 31, 2017 and
  March 31, 2016, respectively.
  The costs of certain unevaluated leasehold
  acreage and certain wells being drilled are not amortized. The Company excludes all costs until proved reserves are found or until
  it is determined that the costs are impaired. Costs not amortized are periodically assessed for possible impairment or reduction
  in value. If a reduction in value has occurred, costs being amortized are increased accordingly.
  Revenue Recognition
  —Revenue
  recognized for oil and natural gas sales under the sales method of accounting. Under this method, revenue is recognized on production
  as it is taken and delivered to its purchasers. The volumes sold may be more or less than the volumes entitled to, based on the
  owner's net leasehold interest. These differences result from production imbalances, which are not significant, and are reflected
  as adjustments to proven reserves and future cash flows in the unaudited consolidated financial information included herein.
  Accounting Policy on DD&A
  —The
  Company employs the "Units of Production" method in calculating depletion of its proved oil and gas properties, wherein
  capitalized costs, as adjusted for future development costs and asset retirement obligations, are amortized over the total estimated
  proved reserves.
  Income Taxes
  —A limited
  liability company is not subject to the payment of federal income taxes as components of its income and expenses flow through directly
  to the members. However, the Company is subject to certain state income taxes. Texas margin tax applies to legal entities conducting
  business in Texas. The margin tax is based on our Texas sourced taxable margin. The tax is calculated by applying a tax rate to
  a base that considers both revenue and expenses and therefore has the characteristics of an income tax. Taxable Subsidiaries may
  generate income tax expense because of the Taxable Subsidiaries' ownership of the portfolio companies. We reflect any such
  income tax expense on our Statements of Operations.  As of March 31, 2017 and March 31, 2016, the Company recorded $0 in federal
  income taxes.
  Asset Retirement Obligations
  —The
  fair value of asset retirement obligations are recorded in the period in which they are incurred if a reasonable estimate of fair
  value can be made, and the corresponding cost is capitalized as part of the carrying amount of the related long-lived asset. 
  The fair value of the asset retirement obligation is measured using expected future cash outflows discounted at the Company's
  credit-adjusted risk-free interest rate.  Fair value, to the extent possible, should include a market risk premium for unforeseeable
  circumstances.  No market risk premium was included in the Company's asset retirement obligation fair value estimate
  since a reasonable estimate could not be made.  The liability is accreted to its then present value each period, and the
  capitalized cost is depleted or amortized over the estimated recoverable reserves using the units-of-production method.
  (10)
  Recent Accounting Pronouncements
  In January 2016, the FASB issued ASU
  2016-01,
  Recognition and Measurement of Financial Assets and Financial Liabilities
  .  Among other things, this ASU requires
  that pubic business entities use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 
  ASU  2016-01 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after
  December 15, 2017.  Our adoption of ASU  2016-01 is not anticipated to have a material effect on our financial statements.
  25
  Table of Contents
  In February 2016, the FASB issued ASU
  2016-02,
  Leases
  , which requires lessees to recognize on the balance sheet a right of use asset, representing its right to
  use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance
  also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising
  from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional
  practical expedients that entities may elect to apply. The new guidance is effective for annual periods beginning after December 15,
  2018, and interim periods therein. Early application is permitted. The adoption of ASU 2016-02 will not have an impact on our financial
  statements as we currently have no operating leases and our principal offices are under a month-to-month lease arrangement.
  In March 2016, the FASB issued ASU
  2016-09,
  Compensation-Stock Compensation (Topic 718) —Improvements to Employee Share-Based Payment Accounting
  ,
  which is intended to improve the accounting for share-based payments and affects all organizations that issue share-based payment
  awards to their employees. ASU 2016-09 primarily simplifies the accounting for and classification of, income taxes related to
  share-based payment awards, including the impact of income taxes withheld on the classification of awards as equity or liabilities
  and the classification of income taxes on the statement of cash flows. ASU 2016-09 also permits an entity to elect a forfeiture
  rate assumption based on the estimated number of awards expected to vest or to account for forfeitures when they occur. ASU 2016-09
  is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption
  is permitted, including adoption in an interim period. We have adopted ASU 2016-09 as of January 1, 2017. The provisions
  of ASU 2019-06 should be adopted on a modified retrospective, retrospective or prospective basis, depending on the provision.
  We recently adopted an incentive plan for management and issued awards during the quarter ended March 31, 2017.
  Our
  adoption of ASU 2016-09 did not have a material effect on our financial statements.
  In June 2016, the FASB issued ASU 2016-13,
  Financial Instruments-Credit Losses (Topic 326) —Measurement of Credit Losses on Financial Instruments
  , which amends
  the financial instruments impairment guidance so that an entity is required to measure expected credit losses for financial assets
  based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking
  information to estimate credit losses. ASU 2016-13 also amends the guidance in FASB ASC Subtopic 325-40, Investments-Other, Beneficial
  Interests in Securitized Financial Assets, related to the subsequent measurement of accretable yield recognized as interest income
  over the life of a beneficial interest in securitized financial assets under the effective yield method. ASU 2016-13 is effective
  for public business entities that meet the U.S. GAAP definition of an SEC filer, for fiscal years beginning after December 15,
  2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December
  15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2016-13 on our financial
  statements.
  In August 2016, the FASB issued ASU
  2016-15,
  Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the
  Emerging Issues Task Force)
  , which addresses the diversity in practice in how certain cash receipts and cash payments are presented
  and classified in the statement of cash flows under ASC 230, Statement of Cash Flows, and other topics. ASU 2016-15 provides guidance
  on eight specific cash flow issues including the statement of cash flows treatment of beneficial interests in securitized financial
  transactions as well as the treatment of debt prepayment and extinguishment costs. ASU 2016-15 also provides guidance on the predominance
  principle to clarify when cash receipts and cash payments should be separated into more than one class of cash flows. ASU 2016-15
  is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within
  those fiscal years. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact
  of ASU 2016-15 on our statements of cash flows.
  (11)
  Subsequent Events
  Management performed an evaluation of
  the Fund's activity through the date the financial statements were issued, noting the following subsequent events:
  On April 3, 2017, we sold U.S. Treasury
  Bills for $35.0 million and repaid our margin loan.
  On April 24, 2017, we entered into the
  Merger Agreement (see Note 7 –
  Plan of Reorganization
  ).
  26
  Table of Contents
  Item 2. Management's Discussion and Analysis
  of Financial Condition and Results of Operations
  Equus Total Return, Inc. (
  "we,"
  "us," "our," "Equus,"  and the "Fund
  "), a Delaware
  corporation, was formed on August 16, 1991. Our shares trade on the New York Stock Exchange under the symbol 'EQS'.
  Our investment strategy seeks to provide the highest total return, consisting of capital appreciation and current income.
  The information contained in this section
  should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this Quarterly
  Report and in conjunction with the financial statements and notes thereto in the Fund's Form 10-K for the year ended December
  31, 2016, as filed with the SEC. In addition, some of the statements in this report constitute forward-looking statements. The
  matters discussed in this Quarterly Report, as well as in future oral and written statements by management of Equus, that are forward-looking
  statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual
  results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements
  relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such
  as "may," "will," "should," "expects," "plans," "anticipates,"
  "could," "intends," "target," "projects," "believes," "estimates,"
  "predicts," "potential" or "continue" or the negative of these terms or other similar words.
  Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, and
  the availability of additional capital. In light of these and other uncertainties, the inclusion of a forward-looking statement
  in this Quarterly Report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking
  statements contained in this Quarterly Report include statements as to:
  ·
  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; and
  ·
  market conditions and our ability to access additional
  capital, if deemed necessary.
  There are a number of important
  risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements.
  For a discussion of factors that could cause our actual results to differ from forward-looking statements contained in this Quarterly
  Report, please see the discussion in Part II, "Item 1A. Risk Factors", and in Part I, "Item 1A. Risk Factors"
  in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016. You should not place undue reliance on these forward-looking
  statements. The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements
  are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after
  the date this Quarterly Report is filed with the SEC.
  We attempt to maximize the return to
  stockholders in the form of current investment income and long-term capital gains by investing in the debt and equity securities
  of companies with a total enterprise value of between $5.0 million and $75.0 million, although we may engage in transactions with
  smaller or larger investee companies from time to time. We seek to invest primarily in companies pursuing growth either through
  acquisition or organically, leveraged buyouts, management buyouts and recapitalizations of existing businesses or special situations.
  Our income-producing investments consist principally of debt securities including subordinate debt, debt convertible into common
  or preferred stock, or debt combined with warrants and common and preferred stock. Debt and preferred equity financing may also
  be used to create long-term capital appreciation through the exercise and sale of warrants received in connection with the financing.
  We seek to achieve capital appreciation by making investments in equity and equity-oriented securities issued by privately-owned
  companies (and smaller public companies) in transactions negotiated directly with such companies. Given market conditions over
  the past several years and the performance of our portfolio, our management and Board of Directors believe it is prudent to continue
  to review alternatives to refine and further clarify the current strategies.
  27
  Table of Contents
  We elected to be treated
  as a BDC under the 1940 Act. We currently qualify as a RIC for federal income tax purposes and, therefore, are not required to
  pay corporate income taxes on any income or gains that we distribute to our stockholders. We have certain wholly owned Taxable
  Subsidiaries each of which holds one or more portfolio investments listed on our Schedules of Investments. The purpose of these
  Taxable Subsidiaries is to permit us to hold certain income-producing investments or portfolio companies organized as limited liability
  companies, or LLCs, (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of our
  gross revenue for income tax purposes must consist of investment income. Absent the Taxable Subsidiaries, a portion of the gross
  income of these income-producing investments or of any LLC (or other pass-through entity) portfolio investment, as the case may
  be, would flow through directly to us for the 90% test. To the extent that such income did not consist of investment income, it
  could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant federal income taxes. The income
  of the LLCs (or other pass-through entities) owned by Taxable Subsidiaries is taxed to the Taxable Subsidiaries and does not flow
  through to us, thereby helping us preserve our RIC status and resultant tax advantages. We do not consolidate the Taxable Subsidiaries
  for income tax purposes and they may generate income tax expense because of the Taxable Subsidiaries' ownership of the portfolio
  investments. We reflect any such income tax expense on our Statements of Operations.
  Plan of Reorganization
  Share Exchange with MVC
  —On
  May 14, 2014, we announced that the Fund intended to effect a Plan of Reorganization. As a first step to consummating the Plan
  of Reorganization, we executed a Share Exchange with MVC, wherein we sold to MVC 2,112,000 newly-issued shares of our common stock
  in exchange for 395,839 newly-issued shares of MVC. We also announced that, pursuant to the Plan of Reorganization, our intention
  was for Equus to pursue a Consolidation with MVC or one of its portfolio companies.
  Authorization to Withdraw BDC Election
  —As a consequence of our Plan of Reorganization, on January 6, 2017, holders of a majority of the outstanding common stock
  of the Fund approved our cessation as a BDC under the 1940 Act and authorized our Board of Directors (sometimes referred to hereinafter
  as the "Board") to cause the Fund's withdrawal of its election to be classified as a BDC, each effective as of
  a date designated by the Board and our Chief Executive Officer, but in no event later than July 31, 2017. Notwithstanding this
  authorization to withdraw our BDC election, we will not submit any such withdrawal unless and until we are reasonably confident
  that such Consolidation will be completed.
  Agreement to Acquire USG&E
  —On
  April 24, 2017, as the final step in the Plan of Reorganization and our intention to effect a Consolidation thereunder, we entered
  into the Merger Agreement with ETR Merger Sub, Inc., a newly-formed wholly-owned subsidiary of Equus ("Merger Sub"),
  certain shareholders of USG&E, and MVC as a selling shareholder of USG&E and as representative of the selling USG&E
  shareholders. A portfolio investment of MVC since 2007, USG&E is a retail energy company with over 160 employees that sells
  electricity and natural gas in deregulated utility markets to residential and commercial customers. As of January 31, 2017, USG&E
  had over 375,000 residential customer equivalents in 62 utility markets across the District of Columbia and 11 states. The Consolidation,
  if effected, will result in USG&E becoming a wholly-owned subsidiary of Equus, and the operations of USG&E becoming the
  predominant operations of the consolidated companies.
  The Merger Agreement provides for a
  two-stage transaction to accomplish the Consolidation:
  ·
  The first stage of the Consolidation (referred to
  in the Merger Agreement as the "Acquisition") involves the acquisition by Equus, from certain USG&E shareholders,
  inclusive of MVC, of 90.3% of the common and preferred stock of USG&E. Upon completion of the Acquisition, Equus will change
  its corporate name from Equus Total Return, Inc. to "USG&E, Inc."
  ·
  The second stage of the Consolidation (referred to
  in the Merger Agreement as the "Merger") consists of a short-form merger of Merger Sub and USG&E, whereupon Merger
  Sub will merge with and into USG&E and the remaining shareholders of USG&E will have the right to receive a pro-rata amount
  of the common and preferred shares of Equus described below. USG&E will survive the merger as a wholly-owned subsidiary of
  the Company and the separate corporate existence of Merger Sub will cease.
  The aggregate consideration
  to be tendered by the Company to the stockholders of USG&E as part of the Consolidation consists of 32,606,539 shares of newly-issued
  common stock of the Company and $40 million of newly-issued 7.5% Series A Convertible Preferred Stock of the Company. The closing
  of the Acquisition is subject to a number of conditions, including compliance with applicable waiting periods under federal antitrust
  and energy regulations, as well as the Exchange Act. The closing of the Acquisition is also subject to SEC clearance of an Information
  Statement filed by Equus with respect to the Consolidation and various actions undertaken by the Board and Equus shareholders in
  connection therewith. Additional information concerning the proposed Consolidation and a more thorough description thereof can
  be obtained from our filings with the SEC via the SEC's website at
  www.sec.gov
  or on the Company's website at
  www.equuscap.com
  .
  28
  Table of Contents
  2016 Equity Incentive Plan
  On June 13, 2016, our shareholders
  approved the adoption of our 2016 Equity Incentive Plan ("Incentive Plan"). On January 10, 2017, the SEC issued an
  order approving the Incentive Plan and certain awards intended to be made thereunder. The Incentive Plan is intended to promote
  the interests of the Fund by encouraging officers, employees, and directors of the Fund and its affiliates to acquire or increase
  their equity interest in the Fund and to provide a means whereby they may develop a proprietary interest in the development and
  financial success of the Fund, to encourage them to remain with and devote their best efforts to the business of the Fund, thereby
  advancing the interests of the Fund and its stockholders. The Incentive Plan is also intended to enhance the ability of the Fund
  and its affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the
  Fund. The Incentive Plan permits the award of restricted stock as well as common stock purchase options. The maximum number of
  shares of common stock that are subject to awards granted under the Incentive Plan is 2,434,728 shares. The term of the Incentive
  Plan will expire on June 13, 2026. On March 17, 2017, we granted awards of restricted stock under the Plan to certain of our directors
  and executive officers in the aggregate amount of 844,500 shares. The awards are each subject to a vesting requirement over a 3-year
  period unless the recipient thereof is terminated or removed from their position as a director or executive officer without "cause",
  or as a result of constructive termination, as such terms are defined in the respective award agreements entered into by each of
  the recipients and the Fund. For the three months ended March 31, 2017, we recorded compensation expense of $0.5 million in connection
  with these awards.
  Critical Accounting Policies
  See the Fund's Critical Accounting
  Policies from the disclosure set forth in the Annual Report on Form 10-K for the year ended December 31, 2016.
  Recent Accounting Pronouncements
  In January 2016, the FASB issued ASU
  2016-01,
  Recognition and Measurement of Financial Assets and Financial Liabilities
  .  Among other things, this ASU requires
  that pubic business entities use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. 
  ASU 2016-01 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after
  December 15, 2017.  Our adoption of ASU 2016-01 is not anticipated to have a material effect on our financial statements.
  In February 2016, the FASB issued ASU
  2016-02,
  Leases
  , which requires lessees to recognize on the balance sheet a right of use asset, representing its right to
  use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance
  also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising
  from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional
  practical expedients that entities may elect to apply. The new guidance is effective for annual periods beginning after December 15,
  2018, and interim periods therein. Early application is permitted. The adoption of ASU 2016-02 will not have an impact on our financial
  statements as we currently have no operating leases and our principal offices are under a month-to-month lease arrangement.
  In March 2016, the FASB issued ASU
  2016-09,
  Compensation-Stock Compensation (Topic 718) —Improvements to Employee Share-Based Payment Accounting
  ,
  which is intended to improve the accounting for share-based payments and affects all organizations that issue share-based payment
  awards to their employees. ASU 2016-09 primarily simplifies the accounting for and classification of, income taxes related to
  share-based payment awards, including the impact of income taxes withheld on the classification of awards as equity or liabilities
  and the classification of income taxes on the statement of cash flows. ASU 2016-09 also permits an entity to elect a forfeiture
  rate assumption based on the estimated number of awards expected to vest or to account for forfeitures when they occur. ASU 2016-09
  is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption
  is permitted, including adoption in an interim period. We have adopted ASU 2016-09 as of January 1, 2017. The provisions
  of ASU 2019-06 should be adopted on a modified retrospective, retrospective or prospective basis, depending on the provision.
  We recently adopted an incentive plan for management and issued awards during the quarter ended March 31, 2017. Our adoption
  of ASU 2016-09 did not have a material effect on our financial statements.
  29
  Table of Contents
  In June 2016, the FASB issued ASU 2016-13,
  Financial Instruments-Credit Losses (Topic 326) —Measurement of Credit Losses on Financial Instruments
  , which amends
  the financial instruments impairment guidance so that an entity is required to measure expected credit losses for financial assets
  based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking
  information to estimate credit losses. ASU 2016-13 also amends the guidance in FASB ASC Subtopic 325-40, Investments-Other, Beneficial
  Interests in Securitized Financial Assets, related to the subsequent measurement of accretable yield recognized as interest income
  over the life of a beneficial interest in securitized financial assets under the effective yield method. ASU 2016-13 is effective
  for public business entities that meet the U.S. GAAP definition of an SEC filer, for fiscal years beginning after December 15,
  2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December
  15, 2018, including interim periods within those fiscal years. We are currently evaluating the impact of ASU 2016-13 on our financial
  statements.
  In August 2016, the FASB issued ASU
  2016-15,
  Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the
  Emerging Issues Task Force)
  , which addresses the diversity in practice in how certain cash receipts and cash payments are presented
  and classified in the statement of cash flows under ASC 230, Statement of Cash Flows, and other topics. ASU 2016-15 provides guidance
  on eight specific cash flow issues including the statement of cash flows treatment of beneficial interests in securitized financial
  transactions as well as the treatment of debt prepayment and extinguishment costs. ASU 2016-15 also provides guidance on the predominance
  principle to clarify when cash receipts and cash payments should be separated into more than one class of cash flows. ASU 2016-15
  is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within
  those fiscal years. Early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact
  of ASU 2016-15 on our statements of cash flows.
  Current Market Conditions
  Despite relatively low unemployment
  rates, the U.S. economy expanded at an annualized rate of 0.7% during the first quarter of 2017, following an annualized increase
  of 1.2% during the fourth quarter of 2016. The decreased growth during the first quarter, the slowest since the first quarter of
  2014, was principally attributed to a mild winter resulting in weak consumer spending during the quarter but is expected to be
  temporary, given a labor market near full employment and strong U.S. consumer confidence. Business investment increased 9.1% during
  the quarter, principally due to rising oil and gas drilling activity due to modest price recoveries in WTI and Brent crude benchmarks.
  In a survey of 60 economists, the
  Wall Street Journal
  has predicted GDP growth of 2.8% for the second quarter of 2017 as
  compared to a projected increase of 2.3% for the same period by the Conference Board Leading Economic Index. The International
  Monetary Fund projects an annual increase of 2.3% of US GDP for all of 2017. (Sources:
  CNBC, BDO USA, LLP, Wall Street Journal,
  Conference Board Leading Economic Index, International Monetary Fund
  )
  Market conditions for business transactions
  during 2016, including mergers and acquisitions and private equity investments, improved to their highest level ($4.3 trillion)
  since prior to the 2008 financial crisis, as corporations have been deleveraging and are holding significant amounts of cash and
  many have focused on acquisitions as part of future growth plans. Nevertheless, mergers and acquisition activity was markedly slower
  in the first quarter of 2017 ($53 billion) as compared to the fourth quarter of 2016 ($89 billion), as the number of deals decreased
  while the size of such deals increased. Private equity funds increased their assets under management during 2016 to a projected
  $862 billion, a 14% increase from 2015 and a level not seen since 2008, as private equity firms as a group enjoyed more success
  during the year in attracting investment capital. First quarter 2017 results are not yet available. (Sources:
  Forbes, Financial
  News,
  and
  Beneshlaw Private Equity Summary Report-February 2017
  ).
  During the three months ended March
  31, 2017, our net asset value decreased from $3.37 per share to $3.06 per share, a decrease of 9.2%. As of March 31, 2017, our
  common stock is trading at a 18.6% discount to our net asset value as compared to 40.4% as of December 31, 2016.
  Over the past several years, we have
  executed certain initiatives to enhance liquidity, achieve a lower operational cost structure, provide more assistance to portfolio
  companies and realize certain of our portfolio investments. Specifically, we changed the composition of our Board of Directors
  and Management, terminated certain of our follow-on investments, internalized the management of the Fund, suspended our managed
  distribution policy, modified our investment strategy to pursue shorter term liquidation opportunities, pursued non-cash investment
  opportunities, and sold certain of our legacy and underperforming investment holdings. We believe these actions continue to be
  necessary to protect capital and liquidity in order to preserve and enhance shareholder value. Because our Management is internalized,
  certain of our expenses should not increase commensurate with an increase in the size of the Fund and, therefore, to the extent
  we remain a BDC, we expect to achieve efficiencies in our cost structure if we are able to grow the Fund.
  30
  Table of Contents
  Liquidity and Capital Resources
  We generate cash primarily from maturities,
  sales of securities and borrowings, as well as capital gains realized upon the sale of portfolio investments. We use cash primarily
  to make additional investments, either in new companies or as follow-on investments in the existing portfolio companies and to
  pay the dividends to our stockholders.
  Because of the nature and size of the
  portfolio investments, we may periodically borrow funds to make qualifying investments to maintain our tax status as a RIC. We
  often borrow such funds by utilizing a margin account with a securities brokerage firm. There is no assurance that such arrangement
  will be available in the future. If the Fund is unable to borrow funds to make qualifying investments, it may no longer qualify
  as a RIC. The Fund would then be subject to corporate income tax on its net investment income and realized capital gains, and distributions
  to stockholders would be subject to income tax as ordinary dividends.
  The Fund has the ability to borrow funds
  and issue forms of senior securities representing indebtedness or stock, such as preferred stock, subject to certain restrictions.
  Net taxable investment income and net taxable realized gains from the sales of portfolio investments are intended to be distributed
  at least annually, to the extent such amounts are not reserved for payment of expenses and contingencies or to make follow-on or
  new investments.
  The Fund reserves the right to retain
  net long-term capital gains in excess of net short-term capital losses for reinvestment or to pay contingencies and expenses. Such
  retained amounts, if any, will be taxable to the Fund as long-term capital gains and stockholders will be able to claim their proportionate
  share of the federal income taxes paid on such gains as a credit against their own federal income tax liabilities. Stockholders
  will also be entitled to increase the adjusted tax basis of their Fund shares by the difference between their undistributed capital
  gains and their tax credit.
  We are evaluating the impact of current
  market conditions on our portfolio company valuations and their ability to provide current income. We have followed valuation techniques
  in a consistent manner; however, we are cognizant of current market conditions that might affect future valuations of portfolio
  securities. In view of our present status as a BDC and our anticipated transformation into an operating company focused on the
  retail energy services industry as a result of the Consolidation with USG&E, we believe that our operating cash flow and cash
  on hand will be sufficient to meet operating requirements and to finance routine capital expenditures through the next twelve months.
  Results of Operations
  Investment Income and Expense
  Net investment loss increased to $2.5
  million from $0.7 million for the three months ended March 31, 2017 and 2016, respectively. The increase in net investment loss
  generated at March 31, 2017 compared to March 31, 2016 is due primarily to transaction costs related to the Plan of Reorganization
  of $1.3 million and charges related to awards made pursuant to the Fund's 2016 Equity Incentive Plan of $0.5 million.
  Investment income was $0.2 million for
  the three months ended March 31, 2017 and $0.1 million for the three months ended March 31, 2016. The increase in investment income
  was primarily due to the increase in income from the MVC share dividend received during the three months ended March 31, 2017.
  Excluding transaction costs of $1.3
  million and equity incentive plan costs of $0.5 million, total expenses for the three months ended March 31, 2017 as compared to
  March 31, 2016 were unchanged at $0.9 million.
  Realized
  Gains and Losses on Sales of Portfolio Securities
  During the three months ended March
  31, 2017, we realized a loss of $3.0 thousand from the sale of temporary cash investments.
  During the three months ended March
  31, 2016, we realized a loss of $2.0 thousand from the sale of temporary cash investments.
  31
  Table of Contents
  Changes in Unrealized Appreciation/Depreciation
  of Portfolio Securities
  During the three months ended March
  31, 2017, we recorded a net change in unrealized appreciation of $0.7 million, to a net unrealized appreciation of $11.0 million.
  Such change in unrealized appreciation resulted primarily from the following changes:
  (i)
  Increase in the fair value of our shareholding in MVC of $0.2 million due to the receipt of a dividend payment in the form of additional shares of MVC;
  (ii)
  Increase in fair value of our shareholding in PalletOne, Inc. of $0.5 million due to an overall improvement in comparable industry sectors, as well as continued revenue and earnings growth;
  During the three months ended March
  31, 2016, we recorded a net change in unrealized appreciation of $1.0 million, to a net unrealized appreciation of $3.3 million.
  Such change in unrealized appreciation resulted primarily from the following changes:
  (i)
  Increase in the fair value of our shareholding in MVC of $0.1 million due to the receipt of a dividend payment in the form of additional shares of MVC;
  (ii)
  Increase in fair value of our shareholding in PalletOne, Inc. of $2.0 million due to an overall improvement in comparable industry sectors, as well as continued revenue and earnings growth;
  (iii)
  Decrease in the fair value of our holdings in Equus Energy, LLC of $1.0 million, principally due to a combination of lower production without a corresponding increase in proved reserves and continued lower short- and long-term prices for crude oil and natural gas.
  Dividends
  We will pay out net investment income
  and/or realized capital gains, if any, on an annual basis as required under the Investment Company Act of 1940.
  Portfolio Securities
  During the three months ended March
  31, 2017, we received dividends in the form of additional shares of $0.1 million relating to our shareholding in MVC.
  On March 2, 2016, we extended the maturity
  of the 5
  th
  Element Tracking, LLC promissory note to July 2016 and received fees in the form of a PIK and cash totaling
  $0.05 million.
  During the three months ended March
  31, 2016, we received dividends in the form of additional shares of $0.1 million relating to our shareholding in MVC.
  Subsequent Events
  Management performed an evaluation of
  the Fund's activity through the date the financial statements were issued, noting the following subsequent events:
  On April 3, 2017, we sold U.S. Treasury
  Bills for $35.0 million and repaid our margin loan.
  On April 24, 2017, we entered into the
  Merger Agreement (see
  Plan of Reorganization
  above).
  Item 3. Quantitative and Qualitative Disclosure about
  Market Risk
  We are subject to financial market risks,
  including changes in interest rates with respect to investments in debt securities and outstanding debt payable, as well as changes
  in marketable equity security prices. In the future, we may invest in companies outside the United States, including in Europe
  and Asia, which would give rise to exposure to foreign currency value fluctuations. We do not use derivative financial instruments
  to mitigate any of these risks. The return on investments is generally not affected by foreign currency fluctuations.
  32
  Table of Contents
  Our investments in portfolio securities
  consist of some fixed-rate debt securities. Since the debt securities are generally priced at a fixed rate, changes in interest
  rates do not directly affect interest income. In addition, changes in market interest rates are not typically a significant factor
  in the determination of fair value of these debt securities, since the securities are generally held to maturity. We determine
  their fair values based on the terms of the relevant debt security and the financial condition of the issuer.
  A major portion of our investment portfolio
  consists of debt and equity investments in private companies. Modest changes in public market equity prices generally do not significantly
  impact the estimated fair value of these investments. However, significant changes in market equity prices can have a longer-term
  effect on valuations of private companies, which could affect the carrying value and the amount and timing of gains or losses realized
  on these investments. A small portion of the investment portfolio could also consist of common stock in publicly traded companies.
  These investments are directly exposed to equity price risk, in that a hypothetical ten percent change in these equity prices would
  result in a similar percentage change in the fair value of these securities.
  We are classified as a "non-diversified"
  investment company under the 1940 Act, which means we are not limited in the proportion of our assets that may be invested in the
  securities of a single user. The value of one segment called "Shipping products and services" includes one portfolio
  company, PalletOne, Inc., and was 40.3% of the net asset value and 50.9% of our investments in portfolio company securities (at
  fair value) as of March 31, 2017. Changes in business or industry trends or in the financial condition, results of operations,
  or the market's assessment of any single portfolio company will affect the net asset value and the market price of our common
  stock to a greater extent than would be the case if we were a "diversified" company holding numerous investments.
  Item 4. Controls
  and Procedures
  The Fund maintains disclosure controls
  and other procedures that are designed to ensure that information required to be disclosed by the Fund in the reports that it files
  or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's
  rules and forms, and that such information is accumulated and communicated to the Fund's management, including its Chief
  Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
  The Fund's management, with the
  participation of the Fund's Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the
  design and operations of the Fund's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under
  the Securities Exchange Act of 1934) as of March 31, 2017. Based on their evaluation, the Fund's Chief Executive Officer
  and Chief Financial Officer concluded that the Fund's disclosure controls and procedures were effective at a reasonable assurance
  level. There has been no change in the Fund's internal control over financial reporting during the quarter ended March 31,
  2017, that has materially affected, or is reasonably likely to materially affect, the Fund's internal control over financial
  reporting.
  Part II. Other Information
  Item
  1. Legal Proceedings
  Shareholder Complaint
  —On
  November 16, 2016, Samuel Zalmanoff filed a lawsuit against the Fund and members of the Board of Directors in the Court of Chancery
  in the State of Delaware. The lawsuit was filed in connection with the Fund's 2016 Equity Incentive Plan ("Incentive
  Plan") which was adopted by the Board of Directors on April 15, 2016, approved by the Equus shareholders on June 13, 2016,
  and approved, with certain standard exceptions, by the Securities and Exchange Commission on January 10, 2017. Mr. Zalmanoff's
  complaint, which purports to be on behalf of all non-affiliate Equus shareholders entitled to vote for the Incentive Plan, alleges
  a breach by the Board of Directors of its fiduciary duties of disclosure in connection with the Incentive Plan, and seeks an order
  from the court: (i) enjoining implementation of the Incentive Plan, (ii) requiring the Fund to revise its disclosures relating
  to the Incentive Plan, and (iii) for an award of costs, attorneys' fees, and expenses. We believe this lawsuit is without
  merit and intend to vigorously dispute the claims made therein. Accordingly, on January 9, 2017, we filed a Motion to Dismiss the
  complaint, which was followed on January 27, 2017 with a supporting brief and other corroborative items. Mr. Zalmanoff filed a
  response to this motion on March 13, 2017, and we filed a Reply Brief to this response on April 14, 2017. Oral argument with respect
  to our Motion to Dismiss is scheduled for July 24, 2017.
  From time to time, the Fund is also
  a party to certain proceedings incidental to the normal course of our business including the enforcement of our rights under contracts
  with our portfolio companies. While the outcome of these legal proceedings cannot at this time be predicted with certainty, we
  do not expect that these proceedings will have a material effect upon the Fund's financial condition or results of operations.
  33
  Table of Contents
  Item 1A. Risk Factors
  In connection with our agreement to
  effect a Consolidation with USG&E, we have identified a number of risks associated with the transactions undertaken in connection
  therewith, as well as with the underlying business of USG&E. These risks are set forth in the Fund's Information Statement
  on Schedule 14C, which was filed in its preliminary form on May 4, 2017 and is hereby incorporated by reference. These risks should
  be considered in addition to various risk factors identified by us in our Annual Report on Form 10-K for the year ended December
  31, 2016.
  Readers should carefully consider these
  risks and all other information contained in the annual report on Form 10-K, including the Fund's financial statements and
  the related notes thereto. The risks and uncertainties described below are not the only ones facing the Fund.
  Additional risks and uncertainties not
  presently known to the Fund, or not presently deemed material by the Fund, may also impair its operations and performance.
  34
  Table of Contents
  Item 6. Exhibits
  3.
  Articles of Incorporation and by-laws
  (a)
  Restated Certificate of Incorporation of the Fund, as amended. [Incorporated by reference to Exhibit 3(a) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2007]
  (b)
  Certificate of Merger dated June 30, 1993, between the Fund and Equus Investments Incorporated [Incorporated by reference to Exhibit 3(c) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2007]
  (c)
  Amended and Restated Bylaws of the Fund. [Incorporated by reference to Exhibit 3(b) to Registrant's Current Report on Form 8-K filed on June 30, 2014.]
  10.
  Material Contracts.
  (a)
  Safekeeping Agreement between the Fund and Amegy Bank dated August 16, 2008. [Incorporated by reference to Exhibit 10(c) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2008.]
  (b)
  Form of Indemnification Agreement between the Fund and its directors and certain officers. [Incorporated by reference to Exhibit 10(d) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2011.]
  (c)
  Form of Release Agreement between the Fund and certain of its officers and former officers. [Incorporated by reference to Exhibit 10(h) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2004.]
  (d)
  Code of Ethics of the Fund (Rule 17j-1) [Incorporated by reference to Exhibit 10(f) to Registrant's Annual Report on Form 10-K for the year ended December 31, 2009.]
  (e)
  Share Exchange Agreement between the Fund and MVC Capital, Inc., dated May 14, 2014. [Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K, filed on May 15, 2014.]
  (f)
  2016 Equity Incentive Plan, adopted June 13, 2016 [Incorporated by reference to Exhibit 1 to Registrant's Definitive Proxy Statement filed on May 5, 2016.]
  (g)
  Stock
  Purchase Agreement and Plan of Merger, dated April 24, 2017, among Equus Total Return, Inc., ETR Merger Sub, Inc., and certain
  shareholders of U.S. Gas & Electric, Inc. [Incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K, filed on
  April 25, 2017.]
  31.
  Rule 13a-14(a)/15d-14(a) Certifications
  1.
  Certification by Chief Executive Officer
  2.
  Certification by Chief Financial Officer
  32.
  Section 1350 Certifications
  1.
  Certification by Chief Executive Officer
  2.
  Certification by Chief Financial Officer
  35
  Table of Contents
  SIGNATURE
  Pursuant to the requirements of Section
  13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed by the undersigned, thereunto
  duly authorized.
  Date: May 15, 2017
  EQUUS TOTAL RETURN, INC.
  /s/ John A. Hardy
  John A. Hardy
  Chief Executive Officer
  36