content: <HTML>
  <HEAD>
       <TITLE></TITLE>
  </HEAD>
  <BODY STYLE="font: 10pt Times New Roman, Times, Serif">
  
  <P STYLE="margin: 0"></P>
  
  <P STYLE="font: 13.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>UNITED
  STATES </B></FONT></P>
  
  <P STYLE="font: 13.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>SECURITIES
  AND EXCHANGE COMMISSION </B></FONT></P>
  
  <P STYLE="font: 12pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Washington,
  D.C. 20549 </B></FONT></P>
  
  <P STYLE="font: 18pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>FORM
  10-Q </B></FONT></P>
  
  <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Mark
  One)</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%">
  <tr style="vertical-align: top">
      <td style="width: 0px; font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 33px; font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
  the quarterly period ended June 30, 2016</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">or</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%">
  <tr style="vertical-align: top">
      <td style="width: 0px; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 33px; padding-top: 9pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
  the transition period to</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Commission
  File Number 814-00098</FONT></P>
  
  <P STYLE="font: 24pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>EQUUS
  TOTAL RETURN, INC. </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Exact
  name of registrant as specified in its charter) </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
      <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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(State
          or other jurisdiction of</B></FONT></P>
          <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>incorporation
          or organization)</B></FONT></P></td>
      <td><P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(I.R.S.
          Employer</B></FONT></P>
          <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0 0 0.75pt; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Identification
          No.)</B></FONT></P></td></tr>
  <tr>
      <td style="font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
      <td><P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>700
          Louisiana St., 48<SUP>th</SUP> Floor</B></FONT></P>
          <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Houston,
          Texas</B></FONT></P></td>
      <td><P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
          <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>77002</B></FONT></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: 10pt"><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: 10pt"><B>(Zip
      Code)</B></FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 7.5pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Former
  Name, Former Address and Former Fiscal Year, if Changed Since Last Report)</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Registrant&rsquo;s
  telephone number, including area code: (713) 529-0900 </B></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; font-size: 10pt">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 &#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; font-size: 10pt">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 &#9744; No
  &#9744;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
      <td style="font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large
      accelerated filer &#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 &#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 &#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 &#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; font-size: 10pt">Indicate
  by check mark whether the registrant is a shell company. Yes &#9744; No &#9746;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
  were 12,673,646 shares of the registrant&rsquo;s common stock, $.001 par value, outstanding, as of August 12, 2016.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 1 -->
      <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; Options: Hidden -->&nbsp;<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">EQUUS
  TOTAL RETURN, INC.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(A
  Delaware Corporation)</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="TableOfContents"></A><A NAME="a_018"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">INDEX</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="font: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <TD STYLE="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>PAGE</B></FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">6</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">7</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">8</FONT></td></tr>
  <tr>
      <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_019">Notes to Financial Statements</A> </FONT></td>
      <TD NOWRAP STYLE="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">12</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">27</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</FONT></td></tr>
  <tr>
      <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_015">Item 1A. Risk Factors</A> </FONT></td>
      <TD NOWRAP STYLE="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">32</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">33</FONT></td></tr>
  <tr>
      <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="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">34</FONT></td></tr>
  <tr>
      <td style="vertical-align: top; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <TD NOWRAP STYLE="text-align: center; line-height: 115%; vertical-align: bottom"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 2 -->
      <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 -->2<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>EQUUS
  TOTAL RETURN, INC. </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_003"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>BALANCE
  SHEETS </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>(Unaudited)</U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><A NAME="a_001"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Part
  I. Financial Information</U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><A NAME="a_002"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Item
  1. Financial Statements </U></B></FONT></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: 0.5in"></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">&nbsp;</TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">June 30,</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">2016</P></TD><TD STYLE="font-size: 10pt; font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-size: 10pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><P STYLE="margin-top: 0; margin-bottom: 0">December 31,</P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0">2015</P></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">(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; background-color: rgb(204,238,255)">
      <TD>Assets</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: White">
      <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: rgb(204,238,255)">
      <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">4,213</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">5,715</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <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">14,300</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,600</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 - related party (cost at $5,888 and $5,698 respectively)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,648</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,159</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;Non-affiliate investments (cost at $2,978 and $915 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">915</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;Total investments in portfolio securities at fair value</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">25,139</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">19,389</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Temporary cash investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">27,986</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,000</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">Cash and cash equivalents</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">13,250</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,036</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Restricted cash</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">280</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">150</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">Accounts receivable from investments</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">614</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Accrued interest receivable</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><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">128</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 dividend receivable</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">130</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">Accounts receivable 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">157</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">83</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">67,723</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">52,530</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 and accrued liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">47</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">36</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">73</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">186</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">27,986</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">15,000</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">28,106</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,222</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">39,617</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">37,308</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Net assets consist of:</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</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>&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">54,223</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">54,226</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">(20,492</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(19,307</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;Undistributed net capital gains</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;Unrealized appreciation (depreciation) of portfolio securities, net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,113</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,915</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;Unrealized depreciation of portfolio securities - related party, net</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">(2,240</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: 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">39,617</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">37,308</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt">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">12,674</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: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 2.5pt">Shares of preferred stock issued and outstanding, $.001 par value, 5,000 shares authorized</TD><TD STYLE="font-size: 11.5pt; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-size: 11.5pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 11.5pt; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; font-size: 11.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; font-size: 11.5pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 11.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt">Net asset value per share</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.13</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">2.94</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: 0.5in"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  accompanying notes are an integral part of these financial statements.</FONT></P>
  
  
  <!-- Field: Page; Sequence: 3 -->
      <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 -->3<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>EQUUS
  TOTAL RETURN, INC.</U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U><A NAME="a_004"></A>STATEMENTS
  OF OPERATIONS </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Unaudited)&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></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">&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 June 30,</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">Six Months Ended June 30,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">(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">2016</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">2015</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><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">2015</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><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><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: 48%; 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">$</TD><TD STYLE="width: 10%; text-align: right">60</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">55</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: 10%; text-align: right">60</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: 10%; text-align: right">55</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">164</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><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">300</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">76</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">224</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">87</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">360</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">131</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><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</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; padding-bottom: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total investment income</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">227</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">89</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">365</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">133</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <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><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>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><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;Compensation expense</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><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">239</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">534</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">863</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;Professional fees</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">149</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">109</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">517</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">436</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;Director fees and expenses</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">145</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">116</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">265</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">211</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;General and administrative expense</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">78</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">135</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">162</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">176</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;Mailing, printing and other expenses</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><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">66</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">69</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">89</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Taxes</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">18</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</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">&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">&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">679</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">683</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">1,550</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">1,801</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <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><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">(452</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">(594</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">(1,185</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">(1,668</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <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><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 gain (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><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><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">(2,850</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;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><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">372</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">(1</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><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">(5</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">(1</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><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">(2,483</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&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><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 (depreciation) 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><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>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of period</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,113</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,942</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,113</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,942</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;&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">5,915</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">1,023</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><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">(1,840</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 change in unrealized appreciation (depreciation) 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">2,198</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">2,919</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">3,198</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">5,782</TD><TD STYLE="padding-bottom: 1pt; 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><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><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>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of period</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,240</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,572</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(2,240</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,572</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="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">(2,562</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">(1,870</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><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">(1,725</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 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">322</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">298</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">299</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">153</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&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><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 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">2,067</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,623</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,309</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">1,784</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&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><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 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><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">0.17</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.21</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">0.19</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">0.14</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><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">12,674</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><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><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: 9pt 0 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  accompanying notes are an integral part of these financial statements.</FONT></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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>EQUUS
  TOTAL RETURN, INC. </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_005"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>STATEMENTS
  OF CHANGES IN NET ASSETS </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Unaudited)</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><B></B></FONT></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">Six months ended June 30,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">(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">2016</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">2015</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left">&nbsp;Net increase in net assets resulting from operations</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">2,309</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,784</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;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">37,308</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">36,201</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">&nbsp;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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">39,617</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">37,985</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"><FONT STYLE="font: 10pt Times New Roman, Times, Serif; color: Red"><B></B></FONT><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  accompanying notes are an integral part of these financial statements.</FONT></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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>EQUUS
  TOTAL RETURN, INC.</U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U><A NAME="a_006"></A>STATEMENTS
  OF CASH FLOWS </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Unaudited)</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; 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">&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">Six months ended June 30,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-size: 10pt; font-weight: bold">(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">2016</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">2015</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Reconciliation of 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) provided by 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 increase (decrease) in net assets resulting from operations</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">2,309</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">1,784</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 increase (decrease) in net assets resulting from operations to net cash provided by (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">2,483</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 depreciation of portfolio securities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,198</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(5,782</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">(299</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(153</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;Net realized loss</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">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">(2,000</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></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net proceeds from dispositions 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">372</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;Principal payments received from 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">4,255</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;(Purchases) sales of temporary cash investments, net</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(13,119</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15,144</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;Decrease in accounts receivable from investments</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">&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;Increase in accrued interest receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(235</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(268</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;Increase in accrued dividend receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(60</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: 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">(74</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(55</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;Increase (decrease) in accounts payable and accrued liabilities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">11</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(577</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">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Decrease) increase 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">(113</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">76</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">Net cash (used in) provided by operating activities</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(16,772</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">17,279</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">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">42,985</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">&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">(29,999</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">(14,999</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 (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">12,986</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">(14,999</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) increase in cash and cash equivalents</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(3,786</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,280</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">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">17,036</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">15,697</TD><TD STYLE="padding-bottom: 1pt; 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; 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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">13,250</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,977</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">63</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">915</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 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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">190</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">110</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <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: 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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">11</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">22</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; color: Red"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; color: Red">&nbsp;</P>
  
  <P STYLE="font: 9pt/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: 9pt/normal Sans-Serif; margin: 0; text-align: center; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"></P>
  
  <!-- Field: Page; Sequence: 6 -->
      <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 -->6<!-- 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"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>EQUUS
  TOTAL RETURN, INC. </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_007"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>SUPPLEMENTAL
  INFORMATION&mdash;SELECTED PER SHARE DATA AND RATIOS </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Unaudited)</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 0.5in"></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">&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">Six months ended June 30,</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold">&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: top">2016</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center; border-bottom: Black 1pt solid; vertical-align: top">2015</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3" STYLE="text-align: right">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 70%; text-align: left">Investment income</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">0.03</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</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="padding-bottom: 1pt">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">0.12</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">0.14</TD><TD STYLE="padding-bottom: 1pt; 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 investment loss</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.09</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.13</TD><TD STYLE="text-align: left">)</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 realized loss</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">(0.20</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Net change in unrealized appreciation</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.25</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.46</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 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">0.03</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">0.01</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">Net increase in net assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.19</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">0.14</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">2.94</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">2.86</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, basic and diluted</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.13</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">3.00</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>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: rgb(204,238,255)">
      <TD STYLE="text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in thousands</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><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: White">
      <TD>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: rgb(204,238,255)">
      <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning of period</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.79</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">2.10</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of period</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.78</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">1.90</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">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: White">
      <TD STYLE="text-align: left">&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">4.03</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.86</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;&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">(3.08</TD><TD STYLE="text-align: left">%)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(4.50</TD><TD STYLE="text-align: left">%)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 24px">Ratio of net increase 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">6.00</TD><TD STYLE="text-align: left">%</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4.81</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: normal; font-style: normal; text-align: left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total return on market price <font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-weight: normal; font-style: normal"><sup>(1)</sup></font></TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(0.56</TD><TD STYLE="text-align: left">%)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(9.52</TD><TD STYLE="text-align: left">%)</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 0.5in">&nbsp;</P>
  
  <P STYLE="font: 9pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><SUP>(1)
  </SUP>Total return = [(ending market price per share - beginning price per share) / beginning market price per share].</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  accompanying notes are an integral part of these financial statements.</FONT></P>
  
  
  <!-- Field: Page; Sequence: 7 -->
      <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 -->7<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>EQUUS
  TOTAL RETURN, INC. </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_008"></A><U>SCHEDULE
  OF INVESTMENTS </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>JUNE
  30, 2016 </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unaudited)
  </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>(in
  thousands, except share data)</I></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B></B></FONT></P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 8pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="vertical-align: bottom">
      <TD STYLE="font-weight: bold; width: 28%">Name&nbsp;and&nbsp;Location&nbsp;of</td>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: center; width: 11%; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; width: 12%; text-align: center; vertical-align: bottom">Date&nbsp;of&nbsp;Initial</td>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: center; width: 18%; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right; width: 8%">&nbsp;</td>
      <TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; width: 10%">&nbsp;Cost of&nbsp;</td>
      <TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; width: 10%">&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="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="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><SUP>(1)</SUP></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; vertical-align: bottom">&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="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="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: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;7,050&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,000</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 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: right; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;3,000&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top"></TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&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 7.9% 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; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;10,050&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,213</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: center; vertical-align: bottom; 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="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></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: top">&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: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;350&nbsp;&nbsp;</td>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;14,300</td></tr>
  <tr style="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left">Total Affiliate Investments (represents 26.9% of total investments at fair value)</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-size: 4pt; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;350&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14,300</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Non-Affiliate Investments - Related Party (less than 5% owned):</td>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td></tr>
  <tr>
      <TD STYLE="text-align: left; vertical-align: top"><P STYLE="margin-top: 0; margin-bottom: 0">MVC Capital, Inc.</P>
                                      <P STYLE="margin-top: 0; margin-bottom: 0">Purchase, NY</P></td>
      <TD STYLE="text-align: center; vertical-align: top">Financial services</td>
      <TD STYLE="text-align: center; vertical-align: top">May 2014</td>
      <TD STYLE="text-align: left; vertical-align: bottom">453,718 shares of common stock (1.7%)</td>
      <TD>&nbsp;</TD>
      <TD STYLE="font-weight: bold; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,888&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,648</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid">Total Non-Affiliate Investments - Related Party (represents 6.9% of total investments at fair value)</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left">&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</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;5,888&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,648</td></tr>
  <tr style="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Non-Affiliate Investments (less than 5% owned):</td>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; vertical-align: top"><P STYLE="margin-top: 0; margin-bottom: 0">5<font style="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-weight: normal; font-style: normal"><sup>TH</sup> Element Tracking, LLC</FONT></P>
                                                                   <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: normal 7.5pt Times New Roman, Times, Serif">Boston, MA</font></P></td>
      <TD STYLE="text-align: center; vertical-align: top">Business products and services</td>
      <TD STYLE="text-align: center; vertical-align: top">January 2015</td>
      <TD STYLE="text-align: left; vertical-align: top">14% promissory note due 10/16 <font style="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-weight: normal; font-style: normal"><sup>(2)</sup></font></td>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;965&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;965&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; vertical-align: top">&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; vertical-align: top">Energy</td>
      <TD STYLE="text-align: center; vertical-align: top">January 2016</td>
      <TD STYLE="text-align: left; vertical-align: top">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>(2)</sup></font></td>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,013&nbsp;&nbsp;</td>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,013&nbsp;&nbsp;</td>
      <TD>&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,013</td></tr>
  <tr style="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid">Total Non-Affiliate Investments (represents 5.6% of total investments at fair value)</td>
      <TD STYLE="border-top: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; text-align: left">&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;2,978&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2,978</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; border-top: Black 1pt solid">Total Investment in Portfolio Securities</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; border-top: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; border-top: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; border-top: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</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: right; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid; vertical-align: top">&nbsp;&nbsp;&nbsp;19,266&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;25,139</td></tr>
  <tr style="vertical-align: bottom">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Temporary Cash Investments</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: center; vertical-align: bottom; 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="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></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="vertical-align: bottom; text-align: left; border-bottom: Black 1pt solid">U.S. Treasury Bill</td>
      <TD STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">Government</td>
      <TD STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">June 2016</td>
      <TD STYLE="text-align: left; vertical-align: bottom; border-bottom: Black 1pt solid">UST 0% 10/16</td>
      <TD STYLE="text-align: right; vertical-align: top; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;28,000&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27,986&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="vertical-align: top; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;27,986</td></tr>
  <tr style="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total Temporary Cash Investments (represents 52.7% of total investments at fair value)</td>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left">&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right">27,986&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right">27,986</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total Investments</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left">&nbsp;</td>
      <TD STYLE="text-align: right; vertical-align: top; border-bottom: Black 1pt solid">$</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;47,252&nbsp;&nbsp;</td>
      <TD STYLE="text-align: right; 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;&nbsp;&nbsp;53,125</td></tr>
  </table>
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; color: Red"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">&nbsp;</FONT></P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 11pt Times New Roman, Times, 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"><SUP>(1) </SUP></FONT></td>
      <TD><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"><SUP>(2) </SUP></FONT></td>
      <TD><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"><SUP>(3) </SUP></FONT></td>
      <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Majority owned investments
      are generally defined under the Investment Company Act of 1940 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"><SUP>(4) </SUP></FONT></td>
      <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt">Affiliate investments
      are generally defined under the Investment Company Act of 1940 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: 10pt"><SUP>&nbsp;</SUP></FONT></td>
      <td><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  accompanying notes are an integral part of these financial statements.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 8 -->
      <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 -->8<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>EQUUS
  TOTAL RETURN, INC. </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>SCHEDULE
  OF INVESTMENTS &ndash; (Continued) </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>JUNE
  30, 2016 </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unaudited)
  </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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;). 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
  may invest up to 30% of our assets in non-qualifying portfolio investments, as permitted by the Investment Company Act of 1940
  (hereafter, the &ldquo;1940 Act&rdquo;). 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 June 30, 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 24.8% of the total value of the investments in portfolio securities as of June 30, 2016.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
  investments in portfolio securities consist of the following types of securities as of June 30, 2016 (in thousands):</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; text-indent: 24.5pt; 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-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 <FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; font-style: normal"><B></B></FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><B>Net Assets</B></FONT></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 46%; text-align: left">Limited liability company investments</TD><TD STYLE="width: 5%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">10,050</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">4,213</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">10.7</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Secured and subordinated debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,978</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2,978</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">7.5</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">Common stock</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">6,238</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">17,948</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">45.3</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">19,266</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">25,139</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">63.5</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">%</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; text-indent: 24.5pt; color: Red"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 40.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  following is a summary by industry of the Fund&rsquo;s investments in portfolio securities as of June 30, 2016 (in thousands):</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; color: Red"></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-family: Times New Roman, Times, Serif; font-size: 10pt; font-style: normal"></FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: normal 10pt Times New Roman, Times, Serif"><B>Net Assets</B></FONT></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left">Shipping products and services</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">14,300</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">36.1</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>Energy</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">6,013</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">15.2</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Financial services</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,648</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9.2</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <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">2.5</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 1pt">Media</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">213</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">0.5</TD><TD STYLE="text-align: left; border-bottom: Black 1pt solid">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="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">25,139</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">63.5</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">%</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-align: center; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  accompanying notes are an integral part of these financial statements.</FONT></P>
  
  
  <!-- Field: Page; Sequence: 9 -->
      <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 -->9<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>EQUUS
  TOTAL RETURN, INC.</U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>SCHEDULE
  OF INVESTMENTS </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>DECEMBER
  31, 2015</U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>(Unaudited)</U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>(in
  thousands, except share data)</I></B></FONT></P>
  
  <P STYLE="font: 7pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 13.5pt"></P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 8pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="vertical-align: bottom">
      <TD STYLE="font-weight: bold; width: 28%">Name&nbsp;and&nbsp;Location&nbsp;of</td>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: center; width: 11%; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; width: 12%; text-align: center; vertical-align: bottom">Date&nbsp;of&nbsp;Initial</td>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right; width: 18%">&nbsp;</td>
      <TD STYLE="width: 1%; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font: 10pt Arial, Helvetica, Sans-Serif; text-align: right; width: 8%">&nbsp;</td>
      <TD STYLE="width: 1%; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center; width: 10%">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: 10%">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="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">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; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">Value<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 7.5pt; font-style: normal"><B><SUP>(1)</SUP></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-family: Times New Roman, Times, Serif; font-size: 8pt; font-style: normal"><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; text-align: center; vertical-align: top">&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; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font: bold 9pt Arial, Helvetica, Sans-Serif; border-bottom: Black 1pt solid; text-align: right">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&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">Energy&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">December 2011&nbsp;</td>
      <TD STYLE="text-align: left; vertical-align: top">Member interest (100%)&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-size: 4pt; text-align: right">&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7,050
      &nbsp; </td>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,500</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">Media&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">January 2007&nbsp;</td>
      <TD>Member interest (100%)&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">&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;</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;215</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 16.6% of total investments at fair value)</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&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: center; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;10,050 &nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,715</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; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&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="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="text-align: center; vertical-align: top">Shipping products and services&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">October 2001&nbsp;</td>
      <TD STYLE="text-align: left; vertical-align: top">350,000&nbsp;shares&nbsp;of&nbsp;common stock (18.8%)&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-size: 4pt; text-align: right"></td>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;350 &nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top-color: Black; border-top-width: 0.5pt; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,600</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 27.9% of total investments at fair value)</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-size: 4pt; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;350 &nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; border-top: Black 1pt solid">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,600</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; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&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">September 2014</td>
      <TD STYLE="vertical-align: top">428,662 shares of common stock (1.7%)</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,698 &nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">$</TD>
      <TD STYLE="vertical-align: top; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,159</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 9.2% of total investments at fair value)</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&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: center; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;5,698 &nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top; border-top: Black 1pt solid; border-bottom: Black 1pt solid"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,159</td></tr>
  <tr style="vertical-align: bottom">
      <td colspan="4" style="font-weight: bold; border-bottom: Black 0.5pt solid">Non-Affiliate Investments (less than 5% owned):</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold">&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold">&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold">&nbsp;</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="border-top: Black 1pt solid; 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="border-top: Black 1pt solid; text-align: center; vertical-align: top">Business products and services</td>
      <TD STYLE="border-top: Black 1pt solid; text-align: center; vertical-align: top">January 2015</td>
      <TD STYLE="border-top: Black 1pt solid; text-align: left; vertical-align: top">14% promissory note due 1/16 <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="border-top: Black 1pt solid; text-align: center; vertical-align: top">$</TD>
      <TD STYLE="border-top: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;915&nbsp;&nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; text-align: center; vertical-align: top"></TD>
      <TD STYLE="border-top: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;915 &nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="border-top: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;915</td></tr>
  <tr style="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid">Total Non-Affiliate Investments (represents 2.7% of total investments at fair value)</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left">&nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;915 &nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;915</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">Total Investment in Portfolio Securities</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;17,013 &nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right; vertical-align: top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19,389</td></tr>
  <tr style="vertical-align: bottom">
      <TD STYLE="font-weight: bold">Temporary Cash Investments</td>
      <TD STYLE="font-weight: bold; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold; text-align: center; vertical-align: bottom">&nbsp;</td>
      <TD STYLE="font-weight: bold">&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left">&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right">&nbsp;</td>
      <TD STYLE="text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: right">&nbsp;</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; border-top: Black 1pt solid">U.S. Treasury Bill</td>
      <TD STYLE="text-align: center; vertical-align: bottom; border-top: Black 1pt solid">Government</td>
      <TD STYLE="text-align: center; vertical-align: bottom; border-top: Black 1pt solid">December 2015</td>
      <TD STYLE="border-top: Black 1pt solid">UST 0% 1/16</td>
      <TD STYLE="border-top: Black 1pt solid; text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid">15,000&nbsp;&nbsp; </td>
      <TD STYLE="border-top: Black 1pt solid; text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid">15,000 &nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; text-align: center; vertical-align: top">$</TD>
      <TD STYLE="text-align: right; border-top: Black 1pt solid">15,000</td></tr>
  <tr style="vertical-align: bottom">
      <TD COLSPAN="4" STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid">Total Temporary Cash Investments (represents 43.6% of total investments at fair value)</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: left">&nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">15,000 &nbsp;</td>
      <TD STYLE="border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-top: Black 1pt solid; border-bottom: Black 1pt solid; text-align: right">15,000</td></tr>
  <TR STYLE="background-color: rgb(204,238,255)">
      <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; text-align: center; vertical-align: top">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left">&nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;32,013 &nbsp;</td>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: center; vertical-align: top"><B>$</B></TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: right">&nbsp;&nbsp;&nbsp;34,389</td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: center; text-indent: 13.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">&nbsp;</FONT></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: 8pt"><SUP>(1) </SUP></FONT></td>
      <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">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: 8pt"><SUP>(2) </SUP></FONT></td>
      <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">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: 8pt"><SUP>(3) </SUP></FONT></td>
      <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Majority owned investments are generally defined
      under the Investment Company Act of 1940 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: 8pt"><SUP>(4) </SUP></FONT></td>
      <TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 8pt">Affiliate investments are generally defined under
      the Investment Company Act of 1940 as companies in which we own at least 5% but not more than 25% voting securities of the
      company.</FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 13.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  accompanying notes are an integral part of these financial statements.</FONT></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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>EQUUS
  TOTAL RETURN, INC.</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>SCHEDULE
  OF INVESTMENTS &ndash; (Continued)</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>DECEMBER
  31, 2015</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unaudited)</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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;). 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
  may invest up to 30% of our assets in non-qualifying portfolio investments, as permitted by the Investment Company Act of 1940
  (hereafter, the &ldquo;1940 Act&rdquo;). 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, 2015, 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 29.5% of the total value of the investments in portfolio securities as of December 31, 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
  investments in portfolio securities consist of the following types of securities as of December 31, 2015 (in thousands):</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-indent: 24.5pt; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B></B></FONT></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: 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: 46%; text-align: left">Limited liability company investments</TD><TD STYLE="width: 5%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">10,050</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">5,715</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 5%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 11%; text-align: right">15.3</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Secured and subordinated debt</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">915</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">915</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.5</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">Common stock</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">6,048</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">12,759</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">34.2</TD><TD STYLE="text-align: left; border-bottom: Black 1pt solid">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">17,013</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">19,389</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52.0</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">%</TD></TR>
  </TABLE>
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-indent: 24.5pt; color: Red"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  following is a summary by industry of the Fund&rsquo;s investments in portfolio securities as of December 31, 2015 (in thousands):</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0 0 10pt; text-align: center; color: Red"></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">N<B><U STYLE="text-decoration: none">et Assets</u></b></font></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 56%; text-align: left">Shipping products and services</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">9,600</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 12%; text-align: right">25.7</TD><TD STYLE="width: 1%; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD>Energy</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">5,500</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">14.7</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Financial services</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,159</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8.5</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <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">915</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">2.5</TD><TD STYLE="text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="padding-bottom: 1pt">Media</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">215</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">0.6</TD><TD STYLE="text-align: left; border-bottom: Black 1pt solid">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="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">19,389</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">&nbsp;</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">52.0</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: left">%</TD></TR>
  </TABLE>
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0 0 10pt; text-align: center; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  accompanying notes are an integral part of these financial statements.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  
  <!-- Field: Page; Sequence: 11 -->
      <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 -->11<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>EQUUS
  TOTAL RETURN, INC.</U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><A NAME="a_019"></A><U>NOTES
  TO FINANCIAL STATEMENTS </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>JUNE
  30, 2016 </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>(Unaudited)</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Description
  of Business -</B> Equus Total Return, Inc. (<I>&ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;our,&rdquo; &ldquo;Equus&rdquo; the
  &ldquo;Company&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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 (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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
  elected to be treated as a business development company (&ldquo;BDC&rdquo;) 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Basis
  of Presentation - </B>In accordance with Article 6 of Regulation S-X under the Securities Act of 1933 and the Securities Exchange
  Act of 1934, 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, or 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 Securities Exchange Act of 1934, as amended. 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  results of operations for the six months ended June 30, 2016 are not necessarily indicative of results that ultimately may be
  achieved for the remainder of the year. 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, 2015, as filed with the Securities and Exchange Commission (&ldquo;SEC&rdquo;).</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 12 -->
      <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 -->12<!-- 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: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
  
  
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Liquidity
  - </B>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
  June 30, 2016. We are evaluating the impact of current market conditions on our portfolio company valuations and the ability of
  these companies 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 finance routine follow-on investments, if any, through
  the next twelve months.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Cash
  and Cash Equivalents - </B>As of June 30, 2016, we had cash and cash equivalents of $13.3 million. We had $25.1<FONT STYLE="color: red">
  </FONT>million of our net assets of $39.6 million invested in portfolio securities. We also had $28.3 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, $28.0 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 July 1, 2016 and we subsequently repaid this margin loan, plus interest, on July 5, 2016.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
  of December 31, 2015, we had cash and cash equivalents of $17.0 million. We had $19.4 million of our net assets of $37.3 million
  invested in portfolio securities. We also had $15.1 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, $15.0 million was invested in U.S. Treasury bills and $0.1 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 4, 2016 and we subsequently repaid this margin loan. The margin interest was
  paid on February 3, 2016.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Dividends
  -</B> We will pay out net investment income and/or realized capital gains, if any, on an annual basis as required under the 1940
  Act.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Investment
  Commitments - </B>As of June 30, 2016, we had no outstanding commitments to our portfolio company investments.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>RIC
  Borrowings, Restricted Cash and Temporary Cash Investments - </B>We may periodically borrow sufficient funds to maintain the Fund&rsquo;s
  RIC status by utilizing a margin account with a securities brokerage firm. We cannot assure you 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. Failure to continue to qualify as a RIC could be materially
  adverse to us and our stockholders.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
  of June 30, 2016, we borrowed $28.0 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 $28.3 million.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
  of December 31, 2015, we borrowed $15.0 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 $15.1 million.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Certain
  Risks and Uncertainties -</B> 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 six months of 2016, 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. 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 2016 and the first six months of 2017.</FONT></P>
  
  <!-- Field: Page; Sequence: 13 -->
      <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 -->13<!-- 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"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><BR CLEAR="ALL"></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Use
  of Estimates - </B>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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Valuation
  of Investments - </B>We follow ASC Topic 820 for measuring fair value. Prior to our election to become a BDC, we also followed
  the guidance in ASC Topic 820 in disclosing the fair value reported for all financial instruments that were either impaired or
  available for sale securities, using the definitions provided in Accounting Standards Codification Topic 320, &ldquo;Investments
  &ndash; Debt and Equity Securities&rdquo; (&ldquo;ASC Topic 320&rdquo;). 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 under ASC
  Topic 820 as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy
  under ASC Topic 820 are described below:</FONT></P>
  
  <P STYLE="font: 10.5pt/normal Trebuchet MS, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10.5pt/normal Trebuchet MS, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
  consider a two-step process when appraising investments of privately held companies. The first step involves determining the enterprise
  value of the portfolio company. During this step, we consider three different valuation approaches: a market approach, an income
  approach, and a cost approach. The particular facts and circumstances of each portfolio company determine which approach, or combination
  of approaches, will be utilized. The second step when appraising equity investments of privately held companies involves allocating
  value to the various debt and equity securities of the portfolio company. We allocate value to these securities based on their
  relative priorities. For equity securities such as warrants, we may also incorporate alternative methodologies including the Black-Scholes
  Option Pricing Model. Yield analysis is also employed to determine if a debt security has been impaired.</FONT></P>
  
  <P STYLE="font: 10.5pt/normal Trebuchet MS, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. Application of these valuation methodologies involves
  a significant degree of judgment by management. Fair values of new investments are generally assumed to be equal to their cost
  to the Fund for up to twelve months after their initial purchase.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 14 -->
      <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 -->14<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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, a valuation process as described below:</FONT></P>
  
  <P STYLE="font: 10.5pt/normal Trebuchet MS, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 73px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&bull;</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
      each debt investment, a basic credit review process is completed. The risk profile on every credit facility is reviewed and
      either reaffirmed or revised by our Investment Committee.</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 73px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&bull;</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
      portfolio company or investment is valued by an investment professional</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 73px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&bull;</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Third
      party valuation firm(s) are engaged to provide valuation services as requested, by reviewing Management&rsquo;s preliminary
      valuations and/or analysis of the portfolio investment in question. For investments with a fair value exceeding $2.5 million
      held for more than 1 year, our Management&rsquo;s preliminary fair value conclusions on each of the Fund&rsquo;s assets for
      which sufficient market quotations are not readily available is reviewed and assessed by a third-party valuation firm at least
      once in every 12-month period, and more often as determined by the Audit Committee or required by our valuation policy. Such
      valuation assessment may be in the form of positive assurance, range of values or another valuation method based on the discretion
      of our Board.</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 73px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&bull;</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
      Audit Committee reviews the preliminary valuations of our Management and independent valuation firms and, if appropriate,
      recommends the approval of the valuations by the Board.</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 73px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&bull;</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
      Board discusses valuations and determines the fair value of each investment in the portfolio in good faith based on the input
      of Management, the Audit Committee and, where appropriate, the respective independent valuation firms.</FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  following sections describe the valuation techniques we use to measure different financial instruments at fair value and include
  the levels within the fair value hierarchy in which the financial instruments are categorized.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Market
  approach</B>  - The market approach typically employed by Management calculates the enterprise value of a company as a
  multiple of earnings before interest, taxes, depreciation and amortization (&ldquo;EBITDA&rdquo;) generated by the company
  for the trailing twelve month period. Adjustments to the company&rsquo;s EBITDA, including those for non-recurring items, may
  be considered. Multiples are estimated based on current market conditions and past experience in the private company
  marketplace and are subjective in nature. We will apply liquidity and other discounts as deemed appropriate to equity
  valuations where applicable. We may also use, when available, third-party transactions in a portfolio company&rsquo;s
  securities as the basis of valuation (the &ldquo;private market method&rdquo;). The private market method will be used only
  with respect to completed transactions or firm offers made by sophisticated, independent investors.<B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Income
  approach</B>  - The income approach typically utilized by our Management calculates the enterprise value of a company
  utilizing a discounted cash flow model incorporating projected future cash flows of the company. Projected future cash flows
  consider the historical performance of the company as well as current and projected market participant performance. Discount
  rates are estimated based on current market conditions and past experience in the private company marketplace and are
  subjective in nature. We will apply liquidity and other discounts as deemed appropriate to equity valuations where
  applicable.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  
  <!-- Field: Page; Sequence: 15 -->
      <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 -->15<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Asset
  approach</B>  - We consider the asset approach to determine the fair value of significantly deteriorated investments
  demonstrating circumstances indicative of a liquidation analysis. This situation may arise when a portfolio company: 1)
  cannot generate adequate cash flow to meet the principal and interest payments on its indebtedness; 2) is not successful in
  refinancing its debt upon maturity; 3) we believe the credit quality of a loan has deteriorated due to changes in the
  business and underlying asset or market conditions may result in the company&rsquo;s inability to meet future obligations; or
  4) the portfolio company&rsquo;s reorganization or bankruptcy. Consideration is also given as to whether a liquidation event
  would be orderly or forced.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
  base adjustments upon such factors as the portfolio company&rsquo;s earnings, cash flow and net worth, the market prices for similar
  securities of comparable companies, an assessment of the company&rsquo;s current and future financial prospects and various other
  factors and assumptions. In the case of unsuccessful or substantially declining operations, we may base a portfolio company&rsquo;s
  fair value upon the company&rsquo;s estimated liquidation value. Fair valuations are necessarily subjective, and our estimate
  of fair value may differ materially from amounts actually received upon the disposition of its portfolio securities. 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 will often perform a yield analysis to determine if a debt security has been impaired.
  Certificates of deposit purchased by the Fund generally will be valued at their face value, plus interest accrued to the date
  of valuation.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 47px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: justify; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each
      portfolio company or investment is reviewed by our investment professionals and, where necessary, with independent valuation
      firms engaged by the Fund;</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 47px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: justify; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
      independent valuation firms conduct independent valuations and make their own independent assessments;</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 47px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: justify; line-height: 115%"><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 the Fund and that of the independent valuation
      firms; and</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <table cellspacing="0" cellpadding="0" style="width: 100%; font: 11pt Calibri, Helvetica, Sans-Serif">
  <tr style="vertical-align: top">
      <td style="width: 47px; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</FONT></td>
      <td style="width: 7px"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: justify; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
      Board discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input
      of our Management, the respective independent valuation firm and the Audit Committee.</FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
  of the inherent uncertainty of the valuation of portfolio securities which do not have readily ascertainable market values, amounting
  to $21.5 million and $16.2 million as of June 30, 2016 and December 31, 2015, 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 June 30, 2016,
  one of our portfolio investments, 453,718 common shares of MVC, was publicly listed on the NYSE. As of December 31, 2015, one
  of our portfolio investments, 428,662 common shares of MVC, was publicly listed on the NYSE.</FONT></P>
  
  
  <!-- Field: Page; Sequence: 16 -->
      <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 -->16<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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>.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
  loan and debt securities held for longer than one year, the Fund will often perform a yield analysis assuming a hypothetical current
  sale of the security. 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
  will 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 June 30, 2016 and the year ended December 31, 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
  of June 30, 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:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; color: Red"></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" STYLE="border-collapse: collapse; width: 100%; font: normal 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-size: 8pt; font-weight: bold; text-align: center"></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD COLSPAN="15" STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt"><B>Fair
      Value Measurements as of June 30, 2016</B></FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; font-style: italic; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">(in thousands)</FONT></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"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></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"><FONT STYLE="font-size: 10pt">Quoted
                                           Prices</FONT></P>
                                                                                                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">in
                                           Active</FONT></P>
                                                                                                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Markets
                                           for</FONT></P>
                                                                                                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Identical</FONT></P>
                                                                                                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Assets</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">(Level
                                           1)</FONT></P></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></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"><FONT STYLE="font-size: 10pt">Significant
                                           Other</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Observable</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Inputs</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">(Level
                                           2)</FONT></P></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></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"><FONT STYLE="font-size: 10pt">Significant</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Unobservable</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Inputs</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Level
                                           3)</FONT></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD><FONT STYLE="font-size: 10pt">Assets</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;Investments:</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 42%; text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Control investments</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">4,213</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 3%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 3%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 3%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">4,213</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Affiliate investments</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">14,300</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">14,300</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Non-affiliate investments - related party</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">3,648</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">3,648</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt; padding-left: 10pt"><FONT STYLE="font-size: 10pt">Non-affiliate investments</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">2,978</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">2,978</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Total investments</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">25,139</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">3,648</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">21,491</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Temporary
      cash investments</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">27,986</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">27,986</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Total investments and temporary cash investments</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">53,125</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">31,634</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">21,491</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 17 -->
      <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 -->17<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
  of December 31, 2015, 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:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-indent: 24.5pt; 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-size: 8pt; font-weight: bold; text-align: center"></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 8pt">&nbsp;</FONT></TD>
      <TD COLSPAN="15" STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt"><B>Fair Value Measurements
      as of December 31, 2015</B></FONT></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"><FONT STYLE="font-size: 10pt">Total</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></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"><FONT STYLE="font-size: 10pt">Quoted
                                           Prices</FONT></P>
                                                                                                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">in
                                           Active</FONT></P>
                                                                                                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Markets
                                           for</FONT></P>
                                                                                                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Identical</FONT></P>
                                                                                                                    <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Assets</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">(Level
                                           1)</FONT></P></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></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"><FONT STYLE="font-size: 10pt">Significant
                                           Other</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Observable</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Inputs</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">(Level
                                           2)</FONT></P></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></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"><FONT STYLE="font-size: 10pt">Significant</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Unobservable</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">Inputs</FONT></P>
                                                                                  <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font-size: 10pt">(Level
                                           3)</FONT></P></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD>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><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>&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>&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><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: 42%; text-align: left; padding-left: 10pt">Control investments</TD><TD STYLE="width: 1%">&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">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">5,715</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">Affiliate investments</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">9,600</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">9,600</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">3,159</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,159</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">915</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">915</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">19,389</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">3,159</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">16,230</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">15,000</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">15,000</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">34,389</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">18,159</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">16,230</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-indent: 24.5pt; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  following table provides a reconciliation of fair value changes during the six months ended June 30, 2016 for all investments
  for which we determine fair value using unobservable (Level 3) factors:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-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="font-size: 8pt; font-weight: bold; text-align: center"></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="15" STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt"><B>Fair value measurements
      using significant unobservable inputs (Level 3)</B></FONT></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-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"><FONT STYLE="font-size: 10pt">Control
      Investments</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Affiliate
      Investments</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Non-affiliate
      Investments</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Total</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 40%">Fair value as of December&nbsp;31, 2015</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 2%; text-align: left">$</TD><TD STYLE="width: 11%; text-align: right">5,715</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</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">$</TD><TD STYLE="width: 10%; text-align: right">915</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">16,230</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Change in unrealized appreciation (depreciation)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(1,502</TD><TD STYLE="text-align: left">)</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">4,700</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">3,198</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">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">2,063</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">2,063</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt">Fair value as of June 30, 2016</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">4,213</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">14,300</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,978</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">21,491</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 4.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; color: Red"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  following table provides a reconciliation of fair value changes during the six months ended June 30, 2015 for all investments
  for which we determine fair value using unobservable (Level 3) factors:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B></B></FONT></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-size: 8pt; font-weight: bold; text-align: center"></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="15" STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid">&nbsp;<FONT STYLE="font-size: 10pt"><B>Fair value measurements
      using significant unobservable inputs (Level 3)</B></FONT></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; font-style: italic; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">(in thousands)</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Control
      Investments</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Affiliate
      Investments</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Non-affiliate
      Investments</FONT></TD><TD STYLE="font-size: 8pt; font-weight: bold; padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD COLSPAN="3" STYLE="font-size: 8pt; font-weight: bold; text-align: center; border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt">Total</FONT></TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 40%"><FONT STYLE="font-size: 10pt">Fair value as of December&nbsp;31, 2014</FONT></TD><TD STYLE="width: 1%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="width: 2%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="text-align: right; width: 11%"><FONT STYLE="font-size: 10pt">13,173</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 3%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">960</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 3%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">1,532</FONT></TD><TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="width: 3%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="width: 1%; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="width: 10%; text-align: right"><FONT STYLE="font-size: 10pt">15,665</FONT></TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Realized gains (losses)</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(2,850</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">372</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(2,478</FONT></TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Change in unrealized appreciation (depreciation)</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">1,550</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">4,667</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">(580</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">5,637</FONT></TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">Purchases of portfolio securities</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">54</FONT></TD><TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="text-align: right"><FONT STYLE="font-size: 10pt">54</FONT></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"><FONT STYLE="font-size: 10pt">Proceeds from sales/dispositions</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(3,158</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">&mdash;&nbsp;&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(463</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left"><FONT STYLE="font-size: 10pt">)</FONT></TD><TD STYLE="padding-bottom: 1pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 1pt solid; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="border-bottom: Black 1pt solid; text-align: right"><FONT STYLE="font-size: 10pt">(3,621</FONT></TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">Fair value as of June 30, 2015</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">8,715</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">5,627</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">915</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD><TD STYLE="padding-bottom: 2.5pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left"><FONT STYLE="font-size: 10pt">$</FONT></TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right"><FONT STYLE="font-size: 10pt">15,257</FONT></TD><TD STYLE="padding-bottom: 2.5pt; text-align: left"><B>&nbsp;</B></TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; color: Red"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B></B></FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Foreign
  Exchange - </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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Investment
  Transactions - </B>Investment transactions are recorded on the accrual method. Realized gains and losses on investments sold are
  computed on a specific identification basis.</FONT></P>
  
  
  <!-- Field: Page; Sequence: 18 -->
      <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 -->18<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
  of June 30, 2016 and December 31, 2015, 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, or on behalf of, the portfolio company to ensure that operations are completed, thereby
  allowing the portfolio company to generate cash flows to service their debt.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Interest
  Income Recognition - </B>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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Payment
  in Kind Interest (PIK)</B> - 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. We will continue to 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Cash
  Flows</B> - 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Taxes
  </B>- 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 $.007 million for the three and six months ended June 30, 2016, respectively,
  and $0.02 million for the year ended December 31, 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 have no provision for margin tax expense for the three and six months ended June 30, 2016, respectively,
  and we did not owe state income tax for the year ended December 31, 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Significant
  Unobservable Inputs </B>- 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 19 -->
      <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 -->19<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 June 30, 2016:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B></B></FONT></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="font-weight: bold; font-style: italic">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: center">&nbsp;</TD><TD STYLE="font-size: 8pt; 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">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: 10pt; 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: 10pt; 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-to-maturity</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="text-align: right; line-height: 115%; width: 5%">0</TD><TD STYLE="width: 1%; font-size: 10pt; 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: 10pt; text-align: right">0</TD><TD STYLE="width: 1%; font-size: 10pt; 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">&nbsp;</TD><TD STYLE="text-align: right">14,300</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: 10pt; text-align: right">10</TD><TD STYLE="font-size: 10pt; 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: 10pt; text-align: right">32.5</TD><TD STYLE="font-size: 10pt; 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">4,213</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: 10pt; text-align: right">75</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; 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: 10pt; text-align: right">100</TD><TD STYLE="padding-bottom: 1pt; font-size: 10pt; text-align: left">%</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left; 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">21,491</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: center; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="text-align: center; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-size: 8pt; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="padding-bottom: 2.5pt; font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="padding-bottom: 2.5pt; font-size: 8pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 8pt; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-size: 8pt; text-align: left">&nbsp;</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; color: Red"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 December 31, 2015:&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td colspan="3" style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td colspan="7" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Range</B></FONT></td></tr>
  <tr style="vertical-align: bottom">
      <td style="border-bottom: black 1pt solid; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>(in
      thousands)</I></B></FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td colspan="3" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Fair
      Value</B></FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Valuation
      Techniques</B></FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Unobservable
      Inputs</B></FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td colspan="3" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Minimum</B></FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td colspan="3" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Maximum</B></FONT></td></tr>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <td style="width: 33%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Secured
      and subordinated debt</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></td>
      <td style="width: 8%; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">915</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 18%; text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yield-to-maturity</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 20%; text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Discount
      for lack of marketability</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 5%; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="width: 5%; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">0</FONT></td>
      <td style="width: 1%; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></td></tr>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Common stock</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">9,600</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Income/Market
      approach</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: center; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">EBITDA
      Multiple/Discount for lack of marketability/Control premium</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">10</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">32.5</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></td></tr>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Limited liability
      company investments</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="border-bottom: black 1pt solid; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">5,715</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: center; line-height: 115%"><P STYLE="margin-top: 0; margin-bottom: 0">Asset
      approach</P>
                                                        <P STYLE="margin-top: 0; margin-bottom: 0">&nbsp;<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Discounted cash flow; Guideline transaction method</FONT></P></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: center; line-height: 115%"><P STYLE="margin-top: 0; margin-bottom: 0">Recovery
      rate<FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>
                                                        <P STYLE="margin-top: 0; margin-bottom: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Reserve adjustment factors</FONT></P></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">75</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">100</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">%</FONT></td></tr>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="border-bottom: black 2.25pt double; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</FONT></td>
      <td style="border-bottom: black 2.25pt double; text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">16,230</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="text-align: right; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td>
      <td style="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
  2011, Equus Energy, LLC, 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,
  is a managing partner and co-founder of Global Energy. Payments to Global Energy totaled $37,500 for each of the six month periods
  ended June 30, 2016 and 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 six months ended June 2016 and 2015, we
  paid Kenneth I. Denos, P.C., a professional corporation owned by Kenneth I. Denos, a director of the Fund, $197,063 and $163,813,
  respectively, for services provided to the Fund.</FONT></P>
  
  
  <!-- Field: Page; Sequence: 20 -->
      <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 -->20<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>Dividends
      </U></B></FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
  will pay out net investment income and/or realized capital gains, if any, on an annual basis as required under the 1940 Act.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>Portfolio
      Securities </U></B></FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 originally maturing April 28, 2016 and subsequently extended to June 30, 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  March 2, 2016, we extended the maturity of the 5<SUP>TH</SUP> Element Tracking, LLC (&ldquo;5<SUP>TH</SUP> Element&rdquo;) promissory
  note to July 1, 2016 and received fees in the form of a PIK and cash totaling $0.05 million. Effective June 30, 2016, we agreed
  to further extend the maturity of the note to October 31, 2016 in exchange for fees in the form of a PIK and cash totaling $0.05
  million.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  April 1, 2016, we received $40,000 in cash representing payment of accrued cash interest on our $2.0 million loan to Biogenic,
  made on January 29, 2016.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2016, we received dividends in the form of additional shares of $0.2 million relating to our shareholding
  in MVC.&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2016, we recorded an increase of $3.5 million in net unrealized appreciation, from $2.4 million
  to $5.9 million, in our portfolio securities. Such increase resulted primarily from the following changes:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase
  in the fair value of our shareholding in MVC of $0.3 million due to an increase in the MVC share price during the first half of
  2016 and the receipt of dividend payments in the form of additional shares of MVC;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase
  in fair value of our shareholding in PalletOne, Inc. of $4.7 million due to continued strong revenue and earnings growth, and
  an overall improvement in comparable industry sectors;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><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 $1.5 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; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  January 6, 2015, we sold our interests in Spectrum Management, LLC (&ldquo;Spectrum&rdquo;) to 5<FONT STYLE="font-variant: small-caps"><SUP>th
  </SUP></FONT>Element. The purchase price of $3.9 million paid by 5<FONT STYLE="font-variant: small-caps"><SUP> th</SUP></FONT>
  Element consisted of $3.0 million in cash and a 1-year subordinated note in the original principal amount of $0.9 million, bearing
  interest at the rate of 14% per annum. We realized a net capital loss of $2.8 million in connection with the sale of our interest
  in Spectrum.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Also
  on January 6, 2015, in connection with the sale of our interest in Spectrum, our $0.5 million loan to Security Monitor Holdings,
  LLC, together with all accrued interest amounting to approximately $0.1 million, was repaid.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  January 30, 2015, we received a partial redemption payment in respect of our holding of Notes of Orco Property Group S.A. (&ldquo;OPG
  Notes&rdquo;) in the amount of &euro;36,587 [$41,478].</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  February 20, 2015, we sold our OPG Notes at a discount of 23% to their par value, receiving $1.0 million in cash and a realized
  gain of $0.4 million.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2015, we received dividends in the form of additional shares of $0.1 million relating to our shareholding
  in MVC.</FONT></P>
  
  
  <!-- Field: Page; Sequence: 21 -->
      <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 -->21<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2015, we recorded an increase of $5.9 million in net unrealized appreciation, from net unrealized
  depreciation of $3.6 million to net unrealized appreciation of $2.4 million, in our portfolio securities. Such increase resulted
  primarily from the following changes:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">(i)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Decrease
  in the fair value of our holdings in Equus Energy, LLC of $1.3 million, principally due to a combination of decreased production
  and declining oil and prices;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: White">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">(ii)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Increase
  in the fair value of our shareholding in MVC of $0.2 million due to an increase in the MVC share price during the period, along
  with dividends received in the form of additional MVC shares;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">(iii)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Increase
  in fair value of our shareholding in PalletOne, Inc. of $4.6 million due to strong revenue and earnings group, as well as an overall
  improvement in the industry sector for packaging companies;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">(iv)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Transfer
  of unrealized depreciation to realized gain on our holding of OPG Notes of $0.4 million in connection with the sale of our interest
  in the OPG Notes; and</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">(v)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Transfer
  of unrealized depreciation to realized loss on our holdings in Spectrum of $2.9 million in connection with the sale of our interest
  in Spectrum.</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>Plan
      of Reorganization - Share Exchange with MVC Capital </U></B></FONT></td></tr>
  </table>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  May 14, 2014, we announced that the Fund intended to effect a reorganization pursuant to Section 2(a)(33) of the 1940 Act. As
  a first step to consummating the reorganization, we sold to MVC Capital, Inc. (&ldquo;MVC&rdquo;) 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 business development company traded on the New York Stock Exchange 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
  to the terms of a Share Exchange Agreement, dated May 12, 2014, entered into by Equus and MVC which memorialized the Share Exchange,
  we intend to finalize the reorganization by pursuing a merger or consolidation with MVC, a subsidiary of MVC, or one or more of
  MVC&rsquo;s portfolio companies (the &ldquo;Consolidation&rdquo;). Absent Equus merging or consolidating with/into MVC or a subsidiary
  thereof, our current intention is for Equus to (i) consummate the Consolidation with a portfolio company of MVC, (ii) terminate
  its election to be classified as a BDC under the 1940 Act, and (iii) be restructured as a publicly-traded operating company focused
  on the energy and/or financial services sector. Our management is currently evaluating these alternatives.</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 112 producing and non-producing
  oil and gas wells. The working interests include associated development rights of approximately 21,220 acres situated on 13 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 22 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, has worked previously with Chevron on 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 22 -->
      <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 -->22<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>&nbsp;</I></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Revenue
  and Income</I>. During the three months ended June 30, 2016, Equus Energy&rsquo;s revenue, operating revenue less direct operating
  expenses, and net loss were $0.1 million, $0.01 million, and ($0.1) million, respectively, as compared to revenue, operating revenue
  less direct operating expenses, and net income of $0.3 million, $0.05 million, and ($0.2) million, respectively, for the three
  months ended June 30, 2015. During the six months ended June 30, 2016, Equus Energy&rsquo;s revenue, operating revenue less direct
  operating expenses, and net loss were $0.2 million, ($0.2) million, and ($0.6) million, respectively, as compared to revenue,
  operating revenue less direct operating expenses, and net loss of $0.6 million, $0.07 million, and ($0.5), respectively, for the
  six months ended June 30, 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><I>Capital
  Expenditures</I>. During the six months ended June 30, 2016, Equus Energy invested $0.005 million in capital expenditures for
  small repairs and improvements. The operators of the various working interest have communicated their intent to wait until later
  in 2016 or 2017, commensurate with an anticipated gradual rise in the price of crude oil, to commence new drilling and recompletion
  projects.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 statement of assets and liabilities. 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>.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Below
  is summarized consolidated financial information for Equus Energy as of June 30, 2016 and December 31, 2015 and for the three
  and six months ended June 30, 2016 and 2015, respectively, (in thousands):</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>EQUUS
  ENERGY, LLC </U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>Condensed
  Consolidated Balance Sheets</U></FONT></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: 100%; font: normal 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: center"></TD><TD STYLE="font-weight: bold">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; text-align: center">June 30,</TD><TD><B>&nbsp;</B></TD>
      <TD COLSPAN="3" STYLE="text-align: center; vertical-align: bottom"><B>December 31,</B></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&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">2016</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">2015</TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: left">Assets</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD><TD>&nbsp;</TD>
      <TD COLSPAN="3">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <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: White">
      <TD STYLE="width: 63%; text-align: left; padding-left: 10pt">Cash and cash equivalents</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">83</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">517</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; padding-left: 10pt">Accounts receivable</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">33</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">122</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">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">32</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: rgb(204,238,255)">
      <TD STYLE="text-align: left">Total current assets</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">671</TD><TD STYLE="text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <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">8,275</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">8,269</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">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">(6,650</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">(6,516</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; 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">1,625</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">1,753</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; padding-left: 20pt">Total assets</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,773</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,424</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-weight: bold; text-align: left">Liabilities and member's capital</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">Current 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: 10pt">Accounts payable and other</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">123</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">206</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">734</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">817</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">181</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">178</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 liabilities</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">915</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">995</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; padding-left: 20pt">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">858</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">1,429</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; padding-left: 20pt">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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">1,773</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">2,424</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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 0 99pt; text-indent: 81pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>
  
  
  
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 0 99pt; text-indent: 81pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0 0 0 0.75in; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>
  
  <!-- Field: Page; Sequence: 23 -->
      <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 -->23<!-- 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: 9pt/normal Sans-Serif; margin: 0 0 0 0.75in; color: Red"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 revenues and direct
  operating expenses 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.<B> </B>The statements of revenue and direct operating
  expenses 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>EQUUS
  ENERGY, LLC</U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>Condensed
  Consolidated Statements of Operations</U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-indent: 9pt; color: Red"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></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="font-weight: bold; text-align: center"></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 June
      30,</TD><TD STYLE="padding-bottom: 1pt"><B>&nbsp;</B></TD>
      <TD COLSPAN="7" STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid"><B>Six Months ended June 30,</B></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&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">2016</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">2015</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><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">2015</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="width: 42%; text-align: left">Operating revenue</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">105</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">309</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">163</TD><TD STYLE="width: 1%; text-align: left">&nbsp;</TD><TD STYLE="width: 3%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 10%; text-align: right">592</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><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">94</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">263</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">356</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">522</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">Depletion, depreciation, amortization and accretion</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">73</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">162</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><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">348</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">General and administrative</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">73</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">75</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">242</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">204</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">240</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">500</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">734</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">1,074</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">Operating income (loss) before income tax 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">(135</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">(191</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">(571</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">(482</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">Net loss (income)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(135</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(191</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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(571</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">(482</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  </TABLE>
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-indent: 9pt; color: Red"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  
  
  
  <P STYLE="font: 9pt/normal Sans-Serif; margin: 0; text-indent: 9pt; color: Red"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>EQUUS
  ENERGY, LLC</U></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><U>Condensed
  Consolidated Statements of Cash Flows</U></FONT></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: 80%; font: 10pt Times New Roman, Times, Serif">
  <TR STYLE="vertical-align: bottom">
      <TD STYLE="font-weight: bold; text-align: center"></TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD COLSPAN="7" STYLE="text-align: center; vertical-align: bottom; border-bottom: Black 1pt solid"><B>Six Months ended June 30,</B></TD></TR>
  <TR STYLE="vertical-align: bottom">
      <TD>&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">2016</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">2015</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Cash flows from 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="width: 63%; text-align: left">Net loss</TD><TD STYLE="width: 1%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(571</TD><TD STYLE="width: 1%; text-align: left">)</TD><TD STYLE="width: 8%">&nbsp;</TD>
      <TD STYLE="width: 1%; text-align: left">$</TD><TD STYLE="width: 12%; text-align: right">(482</TD><TD STYLE="width: 1%; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 10pt">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: White">
      <TD STYLE="text-align: left; padding-left: 20pt">net cash (used in) provided by 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: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 30pt">Depletion, depreciation, amortization and accretion</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><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">348</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">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: rgb(204,238,255)">
      <TD STYLE="text-align: left; padding-left: 20pt">Prepaids and deposits</TD><TD STYLE="font-size: 10pt">&nbsp;</TD>
      <TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: right">&mdash;&nbsp;&nbsp;</TD><TD STYLE="font-size: 10pt; text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">22</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">Accounts receivable and other current assets</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">89</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">154</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: 20pt">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">(83</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">5</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: 30pt">Net cash (used in) provided by 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">(429</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">47</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">Cash flows from investing 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: 1pt; padding-left: 10pt">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">(5</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">(46</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">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">(5</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">(46</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 (decrease) increase in cash</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">(434</TD><TD STYLE="text-align: left">)</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></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <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">517</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">613</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">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">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">83</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="border-bottom: Black 2.5pt double; text-align: left">$</TD><TD STYLE="border-bottom: Black 2.5pt double; text-align: right">614</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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  
  <!-- Field: Page; Sequence: 24 -->
      <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 -->24<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Critical
  Accounting Policies for Equus Energy </B>&ndash; 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 $0.07 million and $0.2
  million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $0.1 million for the six months ended June
  30, 2016 compared to $0.4 million for the six months ended June 30, 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Capitalized
  oil and gas property costs are limited to an amount (the ceiling limitation) equal to the sum of the following:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(a)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">As of June
  30, 2016, 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></TABLE>
  
  <P STYLE="margin: 0">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(b)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><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></TABLE>
  
  <P STYLE="margin: 0">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(c)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 six months ended June 30, 2016. However, during 2015, the Company recognized an impairment loss of $4.0 million.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Revenue
  Recognition</U> - </B>Revenue recognized for oil and natural gas sales under the sales method of accounting. Under this method,
  revenue 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Accounting
  Policy on DD&amp;A</U></B> - 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Income
  Taxes</U></B> - A limited liability company is not subject to the payment of federal income taxes as items of income and expenses
  flow through directly to its members. However, the Company may be liable for certain state income taxes. Texas margin tax applies
  to legal entities conducting business in Texas, and is assessed on the company&rsquo;s Texas sourced taxable margin. The tax is
  calculated by applying the appropriate tax rate to a base that considers both revenue and expenses and therefore has the characteristics
  of an income tax. Taxable Subsidiaries may also generate income tax expense because of the Taxable Subsidiaries&rsquo; ownership
  of the portfolio companies; as such we reflect any such income tax expense on our Statements of Operations.&nbsp; As of June 30,
  2016 and June 30, 2015, the Company recorded $0 in federal income taxes.&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Asset
  Retirement Obligations </U></B>- 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.</FONT></P>
  
  
  <!-- Field: Page; Sequence: 25 -->
      <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 -->25<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>Recent
      Accounting Pronouncements </U></B></FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
  January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.&nbsp;
  Among other things, this ASU requires that public business entities use the exit price notion when measuring the fair value of
  financial instruments for disclosure purposes.&nbsp; ASU No. 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 No. 2016-01 is not anticipated
  to have a material effect on our financial statements.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>Subsequent
      Events </U></B></FONT></td></tr>
  </table>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
  performed an evaluation of the Fund&rsquo;s activity through the date the financial statements were issued, noting the following
  subsequent events:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  July 1, 2016, we sold U.S. Treasury Bills for $27.9 million and repaid our margin loan.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B></B></FONT></P>
  
  <!-- Field: Page; Sequence: 26 -->
      <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 -->26<!-- 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; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A NAME="a_010"></A><B><U>Item
  2.</U> <U>Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations</U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Equus
  Total Return, Inc. (<I>&ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;our,&rdquo; &ldquo;Equus,&rdquo; the &ldquo;Company,&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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
  information contained in this section should be read in conjunction with our consolidated 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, 2015, 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:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our future operating results;</FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 11pt/normal Times New Roman, Times, Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><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></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the return or impact of current and future investments;</FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our contractual arrangements and other relationships
  with third parties;</FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><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></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><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></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our expected financings and investments;</FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our regulatory structure and tax treatment;</FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><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></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">the adequacy of our cash resources and working capital;</FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><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></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><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></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><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></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to recover unrealized losses; and</FONT></TD></TR></TABLE>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin-top: 10pt; margin-bottom: 0"><TR STYLE="vertical-align: top">
  <TD STYLE="width: 0.5in"></TD><TD STYLE="width: 0.25in"><FONT STYLE="font: 11pt Times New Roman, Times, Serif">&bull;</FONT></TD><TD><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: 0; text-indent: 24.5pt"></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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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, 2015.
  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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></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>
  
  <!-- Field: Page; Sequence: 27 -->
      <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 -->27<!-- 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; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Plan
  of Reorganization </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  May 14, 2014, we announced that the Fund intended to effect a reorganization pursuant to Section 2(a)(33) of the 1940 Act. As
  a first step to consummating the 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 business development company traded on the New York Stock Exchange 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, and the
  number of Equus shares sold to MVC represented approximately 16.7% of our issued and outstanding shares of common stock. We incurred
  dilution of $0.11 per share as a result of the Share Exchange. Since the announcement, we have received 57,879 shares of MVC (market
  value of $0.4 million calculated as of the date of receipt) in the form of dividend payments.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
  to the terms of a Share Exchange Agreement, dated May 14, 2014, entered into by Equus and MVC which memorialized the Share Exchange,
  we intend to finalize the reorganization by pursuing a merger or consolidation with MVC, or a subsidiary of MVC, or one or more
  of MVC&rsquo;s portfolio companies (the &ldquo;Consolidation&rdquo;). Absent Equus merging or consolidating with/into MVC, our
  current intention is for Equus to (i) consummate the Consolidation, (ii) terminate its election to be classified as a business
  development company under the 1940 Act, and (iii) be restructured as a publicly-traded operating company focused on the energy
  and/or financial services sector.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><B>Equity Incentive Plan</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 22.5pt 0 0; text-indent: 24.5pt">On June 13, 2016, the
  Equus shareholders approved the adoption of the Fund&rsquo;s 2016 Equity Incentive Plan (the &ldquo;Plan&rdquo;).&nbsp; The
  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 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.&nbsp; Although certain elements of the Plan require approval from the
  SEC and may therefore be subsequently modified, the Plan permits the award of restricted stock as well as common stock
  purchase options.&nbsp; The maximum number of shares of common stock that are subject to awards granted under the Plan is
  2,434,728 shares.&nbsp; The term of the Plan will expire on June 13, 2026.&nbsp; No awards have been granted under the Plan
  and, consequently, no compensation expense has been recorded for the three and six months ended June 30, 2016.</P>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 22.5pt 0 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Critical
  Accounting Policies </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
  the Fund&rsquo;s Critical Accounting Policies from the disclosure set forth in the Annual Report on Form10-K for the year ended
  December 31, 2015.<B><I>&nbsp;</I></B></FONT></P>
  
  
  
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Recent
  Accounting Pronouncements</I></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
  January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.&nbsp;
  Among other things, this ASU requires that public business entities use the exit price notion when measuring the fair value of
  financial instruments for disclosure purposes.&nbsp; ASU No. 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 No. 2016-01 is not anticipated
  to have a material effect on our financial statements.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>&nbsp;</I></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <!-- Field: Page; Sequence: 28 -->
      <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 -->28<!-- 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"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT>&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><I>Current
  Market Conditions</I></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27.35pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Despite
  relatively low unemployment rates, the U.S. economy expanded at an annualized rate of 1.2% during the second quarter of 2016,
  following an annualized increase of 0.8% during the first quarter of 2016. The low growth during the first half of 2016 was principally
  attributed to lower inventories and business investment, and also came in spite of a relatively strong housing market as well
  as consumer spending, in addition to healthy corporate profits. In a survey of 60 economists, the <I>Wall Street Journal</I> has
  predicted GDP growth of 2.3% for the third quarter of 2016. Recently, JPMorgan Chase lowered its assessment of the likelihood
  of a recession in the U.S. from 37% to 30%. (Sources: <I>U.S. Dept. of Commerce - Bureau of Economic Analysis, Wall Street Journal,
  CNBC, CNN Money, Bloomberg, Forbes</I>).</FONT></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"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Market
  conditions for business transactions during 2015, including mergers and acquisitions and private equity investments, improved
  to their highest level ($3.8 trillion) since prior to the 2008 financial crisis. Such activity has declined in the first half
  of 2016, as a number of high profile transactions were abandoned due to economic and regulatory factors. Nevertheless, corporations
  have continued a trend of deleveraging and are holding significant amounts of cash and many have focused on acquisitions as part
  of future growth plans. Private equity funds increased their assets under management during 2015 to a projected $2.4 trillion,
  the last period for which data is available, as private equity firms as a group enjoyed more success during the year in attracting
  investment capital. First half 2016 results are not yet available but are expected to continue this trend. (Sources: <I>Bloomberg,
  Fortune</I>).</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2016, our net asset value increased from $2.94 per share to $3.13 per share, an increase of 6.5%.
  As of June 30, 2016, our common stock is trading at a 43.1% discount to our net asset value as compared to 39.2% as of December
  31, 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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, we expect to achieve efficiencies in our cost structure if we are able to grow the Fund.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Liquidity
  and Capital Resources </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"></FONT></P>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 finance routine capital expenditures through the next twelve months.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B>&nbsp;</FONT></P>
  
  <!-- Field: Page; Sequence: 29 -->
      <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 -->29<!-- 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"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT>&nbsp;</P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Results
  of Operations </B>&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>Investment
  Income and Expense </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">Net
  investment loss was $0.4 million and $0.6 million for the three months ended June 30, 2016 and 2015, respectively and $1.2 million
  and $1.7 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The decrease in net investment loss generated
  at June 30, 2016 compared to June 30, 2015 is due primarily to an increase in total investment income and a decrease in operating
  expense.</FONT></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"></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Investment
  income was $0.2 million and $0.09 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $0.4 million
  and $0.1 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The increase in investment income was
  primarily due to the increase in income producing investments, including interest income from our loan to Biogenic Reagents, LLC
  and the MVC share dividend received during the three and six months ended June 30, 2016.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
  expenses were unchanged at $0.7 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $1.5 million
  and $1.8 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The decrease is principally officer and
  employee bonuses paid during the first quarter of 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></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>&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2016, we realized a loss of $3.0 thousand from the sale of temporary cash investments.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2015, we realized net capital losses of $2.5 million, including the following significant transactions
  (in thousands):</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"></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="font-weight: bold; border-bottom: Black 1pt solid">Portfolio Company</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left; vertical-align: bottom">Industry</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: left; vertical-align: bottom">&nbsp;</TD>
      <TD COLSPAN="3" STYLE="font-weight: bold; border-bottom: Black 1pt solid; text-align: left; vertical-align: bottom">Type</TD><TD STYLE="font-weight: bold; padding-bottom: 1pt; text-align: left; vertical-align: bottom">&nbsp;</TD>
      <TD STYLE="font-weight: bold; text-align: left; border-bottom: Black 1pt solid; vertical-align: bottom">Transaction Type</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">Realized Gain (Loss)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: rgb(204,238,255)">
      <TD STYLE="text-align: left">Spectrum Management, LLC</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">Business products&nbsp;&nbsp;and services</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">Control</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD>Disposition</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">$</TD><TD STYLE="text-align: right">(2,850</TD><TD STYLE="text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="text-align: left">Orco Property Group S. A.</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">Real Estate</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: left; vertical-align: bottom">Non-affiliate</TD><TD STYLE="text-align: left">&nbsp;</TD><TD>&nbsp;</TD>
      <TD>Disposition</TD><TD>&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">372</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">Various others</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: right; padding-bottom: 1pt">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="text-align: left">&nbsp;</TD><TD STYLE="text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 1pt; text-align: left">&nbsp;</TD><TD STYLE="padding-bottom: 1pt">&nbsp;</TD>
      <TD STYLE="padding-bottom: 1pt">Disposition</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</TD><TD STYLE="padding-bottom: 1pt; text-align: left">)</TD></TR>
  <TR STYLE="vertical-align: bottom; background-color: White">
      <TD STYLE="font-family: Helv; text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-family: Helv; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="font-family: Helv; text-align: right; padding-bottom: 2.5pt">&nbsp;</TD><TD STYLE="font-family: Helv; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="font-family: Helv; text-align: left">&nbsp;</TD><TD STYLE="font-family: Helv; text-align: right">&nbsp;</TD><TD STYLE="padding-bottom: 2.5pt; font-family: Helv; text-align: left">&nbsp;</TD><TD STYLE="font-family: Helv; padding-bottom: 2.5pt">&nbsp;</TD>
      <TD STYLE="font-family: Helv; 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">(2,483</TD><TD STYLE="padding-bottom: 2.5pt; text-align: left">)</TD></TR>
  </TABLE>
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"></P>
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Changes
  in Unrealized Appreciation/Depreciation of Portfolio Securities</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2016, we recorded an increase of $3.5 million in net unrealized appreciation, from $2.4 million
  to $5.9 million, in our portfolio securities. Such increase resulted primarily from the following changes:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(i)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase
  in the fair value of our shareholding in MVC of $0.3 million due to an increase in the MVC share price during the first half of
  2016 and the receipt of dividend payments in the form of additional shares of MVC;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(ii)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Increase
  in fair value of our shareholding in PalletOne, Inc. of $4.7 million due to continued strong revenue and earnings growth, and
  an overall improvement in comparable industry sectors;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">(iii)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><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 $1.5 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2015, we recorded an increase of $5.9 million in net unrealized appreciation, from net unrealized
  depreciation of $3.6 million to net unrealized appreciation of $2.4 million, in our portfolio securities. Such increase resulted
  primarily from the following changes:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">(i)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Decrease
  in the fair value of our holdings in Equus Energy, LLC of $1.3 million, principally due to a combination of decreased production
  and declining oil and prices;</FONT></TD>
  </TR></TABLE>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: White">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">(ii)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Increase
  in the fair value of our shareholding in MVC of $0.2 million due to an increase in the MVC share price during the period, along
  with dividends received in the form of additional MVC shares;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 11pt Calibri, Helvetica, Sans-Serif; margin-top: 0; margin-bottom: 6pt"><TR STYLE="vertical-align: top; text-align: justify">
  <TD STYLE="width: 35pt; text-align: right"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">(iii)</FONT></TD><TD STYLE="width: 5pt"></TD><TD STYLE="text-align: justify"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Increase
  in fair value of our shareholding in PalletOne, Inc. of $4.6 million due to strong revenue and earnings group, as well as an overall
  improvement in the industry sector for packaging companies;</FONT></TD>
  </TR></TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <!-- Field: Page; Sequence: 30 -->
      <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 -->30<!-- 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">&nbsp;</P>
  
  <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; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt">
  <TR STYLE="vertical-align: top">
      <TD STYLE="text-align: right; width: 35pt">(iv)</TD>
      <TD STYLE="width: 5pt; font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%"></FONT></TD>
      <TD STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Transfer of unrealized depreciation to realized gain on our holding of OPG Notes of $0.4 million in connection with the sale of our interest in the OPG Notes; and</FONT></TD></TR>
  </TABLE>
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>
  
  <TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt">
  <TR STYLE="vertical-align: top">
      <TD STYLE="width: 35pt; line-height: 115%; text-align: right; vertical-align: top">(v)</TD>
      <TD STYLE="width: 5pt; line-height: 115%"></TD>
      <TD STYLE="line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; line-height: 91%">Transfer of unrealized depreciation to realized loss on our holdings in Spectrum of $2.9 million in connection with the sale of our interest in Spectrum.</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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Dividends
  </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Portfolio
  Securities </B>&nbsp;</FONT></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">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 originally maturing April 28, 2016 and subsequently extended to June 30, 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  March 2, 2016, we extended the maturity of the 5<SUP>TH</SUP> Element Tracking, LLC (&ldquo;5<SUP>TH</SUP> Element&rdquo;) promissory
  note to July 1, 2016 and received fees in the form of a PIK and cash totaling $0.05 million. Effective June 30, 2016, we agreed
  to further extend the maturity of the note to October 31, 2016 in exchange for fees in the form of a PIK and cash totaling $0.05
  million.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  April 1, 2016, we received $40,000 in cash representing payment of accrued cash interest on our $2.0 million loan to Biogenic,
  made on January 29, 2016.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2016, we received dividends in the form of additional shares of $0.2 million relating to our shareholding
  in MVC.&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  January 6, 2015, we sold our interests in Spectrum to 5<FONT STYLE="font-variant: small-caps"><SUP>th</SUP></FONT> Element. The
  purchase price of $3.9 million paid by 5<FONT STYLE="font-variant: small-caps"><SUP> th</SUP></FONT> Element consisted of $3.0
  million in cash and a 1-year subordinated note in the original principal amount of $0.9 million, bearing interest at the rate
  of 14% per annum. We realized a net capital loss of $2.8 million in connection with the sale of our interest in Spectrum.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Also
  on January 6, 2015, in connection with the sale of our interest in Spectrum, our $0.5 million loan to Security Monitor Holdings,
  LLC, together with all accrued interest amounting to approximately $0.1 million, was repaid.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  January 30, 2015, we received a partial redemption payment in respect of our holding of Notes of Orco Property Group S.A. (&ldquo;OPG
  Notes&rdquo;) in the amount of &euro;36,587 [$41,478].</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  February 20, 2015, we sold our OPG Notes at a discount of 23% to their par value, receiving $1.0 million in cash and a realized
  gain of $0.4 million.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">During
  the six months ended June 30, 2015, we received dividends in the form of additional shares of $0.1 million relating to our shareholding
  in MVC.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Subsequent
  Events </B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management
  performed an evaluation of the Fund&rsquo;s activity through the date the financial statements were issued, noting the following
  subsequent events:</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
  July 1, 2016, we sold U.S. Treasury Bills for $27.9 million and repaid our margin loan.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <!-- Field: Page; Sequence: 31 -->
      <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 -->31<!-- 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"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  
  
  
  <P STYLE="font: 10pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"><A NAME="a_011"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Item
  3. Quantitative and Qualitative Disclosure about Market Risk </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 36.1% of the net asset value and 56.9% of
  our investments in portfolio company securities (at fair value) as of June 30, 2016. 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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.4in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt"><A NAME="a_012"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B><U>Item
  4. Controls and Procedures </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 June 30, 2016. 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 June 30, 2016, that has materially affected, or is reasonably likely to materially affect, the Fund&rsquo;s
  internal control over financial reporting.&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A NAME="a_013"></A><B><U>Part
  II. Other Information </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 0 55.05pt; text-indent: -55.1pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt; background-color: white"><B><A NAME="a_014"></A><U>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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A NAME="a_015"></A><B><U>Item
  1A. Risk Factors </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
  have been no material changes in the Fund&rsquo;s risk factors from the disclosure set forth in the Annual Report on Form 10-K
  for the year ended December 31, 2015.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></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"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT>&nbsp;&nbsp;<FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 32 -->
      <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 -->32<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><A NAME="a_016"></A><B><U>Item
  6. Exhibits </U></B></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif"></FONT></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%">&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="3" 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 STYLE="padding-top: 4.5pt; line-height: 115%"><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="3" 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 STYLE="line-height: 115%"><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="3" 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 STYLE="line-height: 115%"><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></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">10.</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">Material Contracts.</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="3" 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 STYLE="padding-top: 4.5pt; line-height: 115%"><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="3" 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; line-height: 115%"><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="3" 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; line-height: 115%"><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="3" 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 STYLE="padding-top: 4.5pt; line-height: 115%"><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="3" 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 STYLE="padding-top: 4.5pt; line-height: 115%"><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="3" 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 STYLE="padding-top: 4.5pt; line-height: 115%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">2016 Equity Incentive Plan of the Fund.&nbsp;&nbsp;[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 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">31.</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">Rule 13a-14(a)/15d-14(a) Certifications</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="3" 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">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_1hardy.htm">Certification by Chief Executive Officer</A></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="3" 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">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_2hudson.htm">Certification by Chief Financial Officer</A></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">32.</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">Section 1350 Certifications</FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="3" 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">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="ex32_1hardy.htm">Certification by Chief Executive Officer</A></FONT></TD></TR>
  <TR STYLE="vertical-align: top">
      <TD COLSPAN="3" 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">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="ex32_2hudson.htm">Certification by Chief Financial Officer</A></FONT></TD></TR>
  </TABLE>
  
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font: 10pt Times New Roman, Times, Serif">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 33 -->
      <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 -->33<!-- 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"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><A NAME="a_017"></A><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">SIGNATURE</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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.</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 24.5pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 9pt 0 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date:
  August 12, 2016</FONT></P>
  
  <TABLE CELLSPACING="0" CELLPADDING="0" ALIGN="RIGHT" STYLE="font: 10pt 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%"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></td></tr>
  <tr style="vertical-align: top">
      <td style="border-bottom: black 1pt solid; text-align: center; line-height: 115%"><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><BR STYLE="clear: both">
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><BR CLEAR="ALL"></FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 6pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  <P STYLE="font: 10pt/normal Times New Roman, Times, Serif; margin: 0 0 10pt; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>&nbsp;</B></FONT></P>
  
  <P STYLE="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0 0 0 0.4in; text-indent: 0.5in"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  <!-- Field: Page; Sequence: 34; Options: Last -->
      <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 -->34<!-- Field: /Sequence --></TD><TD STYLE="width: 33%; text-align: right">&nbsp;</TD></TR></TABLE></DIV>
      <!-- Field: /Page -->
  
  <P STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">&nbsp;</FONT></P>
  
  
  
  <P STYLE="margin: 0"></P>
  
  </BODY>
  </HTML>
metadata_documents: [{"type": "10-Q", "sequence": "1", "filename": "f10q_equus63016.htm", "description": "FORM 10-Q", "secsgml_size_bytes": 555459}]
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": "161827626"}, "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 June 30, 2016
  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 12,673,646 shares of the registrant's common stock, $.001 par value, outstanding, as of August 12, 2016.
  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
  32
  PART II. OTHER INFORMATION
  Item 1. Legal Proceedings
  32
  Item 1A. Risk Factors
  32
  Item 6. Exhibits
  33
  SIGNATURE
  34
  2
  Table of Contents
  EQUUS
  TOTAL RETURN, INC.
  BALANCE
  SHEETS
  (Unaudited)
  Part
  I. Financial Information
  Item
  1. Financial Statements
  June 30,
  2016
  December 31,
  2015
  (in thousands, except per share amounts)
  Assets
  Investments in portfolio securities at fair value:
  Control investments (cost at $10,050 and $10,050 respectively)
  $
  4,213
  $
  5,715
  Affiliate investments (cost at $350 and $350 respectively)
  14,300
  9,600
  Non-affiliate investments - related party (cost at $5,888 and $5,698 respectively)
  3,648
  3,159
  Non-affiliate investments (cost at $2,978 and $915 respectively)
  2,978
  915
  Total investments in portfolio securities at fair value
  25,139
  19,389
  Temporary cash investments
  27,986
  15,000
  Cash and cash equivalents
  13,250
  17,036
  Restricted cash
  280
  150
  Accounts receivable from investments
  611
  614
  Accrued interest receivable
  300
  128
  Accrued dividend receivable
  —
  130
  Accounts receivable and other
  157
  83
  Total assets
  67,723
  52,530
  Liabilities and net assets
  Accounts payable and accrued liabilities
  47
  36
  Accounts payable to related parties
  73
  186
  Borrowing under margin account
  27,986
  15,000
  Total liabilities
  28,106
  15,222
  Commitments and contingencies (See Note 2)
  Net assets
  $
  39,617
  $
  37,308
  Net assets consist of:
  Common stock, par value
  $
  13
  $
  13
  Capital in excess of par value
  54,223
  54,226
  Undistributed net investment losses
  (20,492
  )
  (19,307
  )
  Undistributed net capital gains
  —
  —
  Unrealized appreciation (depreciation) of portfolio securities, net
  8,113
  4,915
  Unrealized depreciation of portfolio securities - related party, net
  (2,240
  )
  (2,539
  )
  Total net assets
  $
  39,617
  $
  37,308
  Shares of common stock issued and outstanding, $.001 par value, 50,000 shares authorized
  12,674
  12,674
  Shares of preferred stock issued and outstanding, $.001 par value, 5,000 shares authorized
  —
  —
  Net asset value per share
  $
  3.13
  $
  2.94
  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 June 30,
  Six Months Ended June 30,
  (in thousands, except per share amounts)
  2016
  2015
  2016
  2015
  Investment income:
  Interest and dividend income:
  Non-affiliate investments - related party
  $
  60
  $
  55
  $
  60
  55
  Non-affiliate investments
  164
  32
  300
  76
  Total interest and dividend income
  224
  87
  360
  131
  Interest from temporary cash investments
  3
  2
  5
  2
  Total investment income
  227
  89
  365
  133
  Expenses:
  Compensation expense
  262
  239
  534
  863
  Professional fees
  149
  109
  517
  436
  Director fees and expenses
  145
  116
  265
  211
  General and administrative expense
  78
  135
  162
  176
  Mailing, printing and other expenses
  43
  66
  69
  89
  Taxes
  —
  18
  —
  25
  Interest expense
  2
  —
  3
  1
  Total expenses
  679
  683
  1,550
  1,801
  Net investment loss
  (452
  )
  (594
  )
  (1,185
  )
  (1,668
  )
  Net realized gain (loss):
  Control investments
  —
  —
  —
  (2,850
  )
  Non-affiliate investments
  —
  —
  —
  372
  Temporary cash investments
  (1
  )
  —
  (3
  )
  (5
  )
  Net realized loss
  (1
  )
  —
  (3
  )
  (2,483
  )
  Net unrealized appreciation (depreciation) of portfolio securities:
  End of period
  8,113
  3,942
  8,113
  3,942
  Beginning of period
  5,915
  1,023
  4,915
  (1,840
  )
  Net change in unrealized appreciation (depreciation) of portfolio securities
  2,198
  2,919
  3,198
  5,782
  Net unrealized depreciation of portfolio securities - related party:
  End of period
  (2,240
  )
  (1,572
  )
  (2,240
  )
  (1,572
  )
  Beginning of period
  (2,562
  )
  (1,870
  )
  (2,539
  )
  (1,725
  )
  Net change in unrealized depreciation of portfolio securities - related party
  322
  298
  299
  153
  Net increase in net assets resulting from operations
  $
  2,067
  $
  2,623
  $
  2,309
  $
  1,784
  Net increase in net assets resulting from operations per share:
  Basic and diluted
  $
  0.17
  $
  0.21
  $
  0.19
  $
  0.14
  Weighted average shares outstanding:
  Basic and diluted
  12,674
  12,674
  12,674
  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)
  Six months ended June 30,
  (in thousands)
  2016
  2015
  Net increase in net assets resulting from operations
  $
  2,309
  $
  1,784
  Net assets at beginning of period
  37,308
  36,201
  Net assets at end of period
  $
  39,617
  $
  37,985
  The
  accompanying notes are an integral part of these financial statements.
  5
  Table of Contents
  EQUUS
  TOTAL RETURN, INC.
  STATEMENTS
  OF CASH FLOWS
  (Unaudited)
  Six months ended June 30,
  (in thousands)
  2016
  2015
  Reconciliation of increase in net assets resulting from operations to net cash
  (used in) provided by operating activities:
  Net increase (decrease) in net assets resulting from operations
  $
  2,309
  $
  1,784
  Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
  Net realized loss
  3
  2,483
  Net change in unrealized depreciation of portfolio securities
  (3,198
  )
  (5,782
  )
  Net change in unrealized depreciation of portfolio securities - related party
  (299
  )
  (153
  )
  Net realized loss
  Changes in operating assets and liabilities:
  Purchase of portfolio securities
  (2,000
  )
  —
  Net proceeds from dispositions of portfolio securities
  —
  372
  Principal payments received from portfolio securities
  —
  4,255
  (Purchases) sales of temporary cash investments, net
  (13,119
  )
  15,144
  Decrease in accounts receivable from investments
  3
  —
  Increase in accrued interest receivable
  (235
  )
  (268
  )
  Increase in accrued dividend receivable
  (60
  )
  —
  Decrease in accounts receivable and other
  (74
  )
  (55
  )
  Increase (decrease) in accounts payable and accrued liabilities
  11
  (577
  )
  (Decrease) increase in accounts payable to related parties
  (113
  )
  76
  Net cash (used in) provided by operating activities
  (16,772
  )
  17,279
  Cash flows from financing activities:
  Borrowings under margin account
  42,985
  —
  Repayments under margin account
  (29,999
  )
  (14,999
  )
  Net cash provided (used in) financing activities
  12,986
  (14,999
  )
  Net (decrease) increase in cash and cash equivalents
  (3,786
  )
  2,280
  Cash and cash equivalents at beginning of period
  17,036
  15,697
  Cash and cash equivalents at end of period
  $
  13,250
  $
  17,977
  Non-cash operating and financing activities:
  Accrued interest or dividends exchanged for portfolio securities
  $
  63
  $
  915
  Accrued dividends exchanged for portfolio securities - related party
  $
  190
  $
  110
  Supplemental disclosure of cash flow information:
  Interest paid
  $
  3
  $
  1
  Income taxes paid
  $
  11
  $
  22
  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)
  Six months ended June 30,
  2016
  2015
  Investment income
  $
  0.03
  $
  0.01
  Expenses
  0.12
  0.14
  Net investment loss
  (0.09
  )
  (0.13
  )
  Net realized loss
  —
  (0.20
  )
  Net change in unrealized appreciation
  0.25
  0.46
  Net change in unrealized depreciation - related party
  0.03
  0.01
  Net increase in net assets
  0.19
  0.14
  Net assets at beginning of period
  2.94
  2.86
  Net assets at end of period, basic and diluted
  $
  3.13
  $
  3.00
  Weighted average number of shares outstanding during period,
  in thousands
  12,674
  12,674
  Market price per share:
  Beginning of period
  $
  1.79
  $
  2.10
  End of period
  $
  1.78
  $
  1.90
  Selected information and ratios:
  Ratio of expenses to average net assets
  4.03
  %
  4.86
  %
  Ratio of net investment loss to average net assets
  (3.08
  %)
  (4.50
  %)
  Ratio of net increase in net assets resulting from operations to average net assets
  6.00
  %
  4.81
  %
  Total return on market price
  (1)
  (0.56
  %)
  (9.52
  %)
  (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
  JUNE
  30, 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
  $
  4,000
  Equus Media Development Company, LLC
  Houston, TX
  Media
  January 2007
  Member interest (100%)
  3,000
  213
  Total Control Investments: Majority-owned (represents 7.9% of total investments at fair value)
  $
  10,050
  $
  4,213
  Affiliate Investments
  (4)
  :
  PalletOne, Inc.
  Bartow, FL
  Shipping products and services
  October 2001
  350,000 shares of common stock (18.7%)
  $
  350
  14,300
  Total Affiliate Investments (represents 26.9% of total investments at fair value)
  $
  350
  $
  14,300
  Non-Affiliate Investments - Related Party (less than 5% owned):
  MVC Capital, Inc.
  Purchase, NY
  Financial services
  May 2014
  453,718 shares of common stock (1.7%)
  $
  5,888
  $
  3,648
  Total Non-Affiliate Investments - Related Party (represents 6.9% of total investments at fair value)
  $
  5,888
  $
  3,648
  Non-Affiliate Investments (less than 5% owned):
  5
  TH
  Element Tracking, LLC
  Boston, MA
  Business products and services
  January 2015
  14% promissory note due 10/16
  (2)
  $
  965
  $
  965
  $
  965
  Biogenic Reagents, LLC
  Minneapolis, MN
  Energy
  January 2016
  16% promissory note due 6/16
  (2)
  2,013
  2,013
  2,013
  Total Non-Affiliate Investments (represents 5.6% of total investments at fair value)
  $
  2,978
  $
  2,978
  Total Investment in Portfolio Securities
  $
  19,266
  $
  25,139
  Temporary Cash Investments
  U.S. Treasury Bill
  Government
  June 2016
  UST 0% 10/16
  $
  28,000
  $
  27,986
  $
  27,986
  Total Temporary Cash Investments (represents 52.7% of total investments at fair value)
  $
  27,986
  $
  27,986
  Total Investments
  $
  47,252
  $
  53,125
  (1)
  See Note 3 to the
      financial statements, Valuation of Investments.
  (2)
  Income-producing.
  (3)
  Majority owned investments
      are generally defined under the Investment Company Act of 1940 as companies in which we own more than 50% of the voting securities
      of the company.
  (4)
  Affiliate investments
      are generally defined under the Investment Company Act of 1940 as companies in which we own at least 5% but not more than
      25% voting securities of the company.
  The
  accompanying notes are an integral part of these financial statements.
  8
  Table of Contents
  EQUUS
  TOTAL RETURN, INC.
  SCHEDULE
  OF INVESTMENTS – (Continued)
  JUNE
  30, 2016
  (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"). 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.
  We
  may invest up to 30% of our assets in non-qualifying portfolio investments, as permitted by the Investment Company Act of 1940
  (hereafter, 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 June 30, 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 24.8% of the total value of the investments in portfolio securities as of June 30, 2016.
  Our
  investments in portfolio securities consist of the following types of securities as of June 30, 2016 (in thousands):
  Type of Securities
  Cost
  Fair Value
  Fair Value as
  Percentage of
  Net Assets
  Limited liability company investments
  $
  10,050
  $
  4,213
  10.7
  %
  Secured and subordinated debt
  2,978
  2,978
  7.5
  %
  Common stock
  6,238
  17,948
  45.3
  %
  Total
  $
  19,266
  $
  25,139
  63.5
  %
  The
  following is a summary by industry of the Fund's investments in portfolio securities as of June 30, 2016 (in thousands):
  Industry
  Fair Value
  Fair Value as
  Percentage of
  Net Assets
  Shipping products and services
  $
  14,300
  36.1
  %
  Energy
  6,013
  15.2
  %
  Financial services
  3,648
  9.2
  %
  Business products and services
  965
  2.5
  %
  Media
  213
  0.5
  %
  Total
  $
  25,139
  63.5
  %
  The
  accompanying notes are an integral part of these financial statements.
  9
  Table of Contents
  EQUUS
  TOTAL RETURN, INC.
  SCHEDULE
  OF INVESTMENTS
  DECEMBER
  31, 2015
  (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
  $
  5,500
  Equus Media Development Company, LLC
  Houston, TX
  Media
  January 2007
  Member interest (100%)
  3,000
  215
  Total Control Investments: Majority-owned (represents 16.6% of total investments at fair value)
  $
  10,050
  $
  5,715
  Affiliate Investments
  (4)
  :
  PalletOne, Inc.
  Bartow, FL
  Shipping products and services
  October 2001
  350,000 shares of common stock (18.8%)
  $
  350
  $
  9,600
  Total Affiliate Investments (represents 27.9% of total investments at fair value)
  $
  350
  $
  9,600
  Non-Affiliate Investments - Related Party (less than 5% owned):
  MVC Capital, Inc.
  Purchase, NY
  Financial services
  September 2014
  428,662 shares of common stock (1.7%)
  $
  5,698
  $
  3,159
  Total Non-Affiliate Investments - Related Party (represents 9.2% of total investments at fair value)
  $
  5,698
  $
  3,159
  Non-Affiliate Investments (less than 5% owned):
  5
  TH
  Element Tracking, LLC
  Boston, MA
  Business products and services
  January 2015
  14% promissory note due 1/16
  (2)
  $
  915
  915
  915
  Total Non-Affiliate Investments (represents 2.7% of total investments at fair value)
  $
  915
  $
  915
  Total Investment in Portfolio Securities
  $
  17,013
  $
  19,389
  Temporary Cash Investments
  U.S. Treasury Bill
  Government
  December 2015
  UST 0% 1/16
  $
  15,000
  $
  15,000
  $
  15,000
  Total Temporary Cash Investments (represents 43.6% of total investments at fair value)
  $
  15,000
  $
  15,000
  Total Investments
  $
  32,013
  $
  34,389
  (1)
  See Note 3 to the financial statements, Valuation
      of Investments.
  (2)
  Income-producing.
  (3)
  Majority owned investments are generally defined
      under the Investment Company Act of 1940 as companies in which we own more than 50% of the voting securities of the company.
  (4)
  Affiliate investments are generally defined under
      the Investment Company Act of 1940 as companies in which we own at least 5% but not more than 25% voting securities of the
      company.
  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, 2015
  (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"). 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.
  We
  may invest up to 30% of our assets in non-qualifying portfolio investments, as permitted by the Investment Company Act of 1940
  (hereafter, 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, 2015, 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 29.5% of the total value of the investments in portfolio securities as of December 31, 2015.
  Our
  investments in portfolio securities consist of the following types of securities as of December 31, 2015 (in thousands):
  Type of Securities
  Cost
  Fair Value
  Fair Value as
  Percentage of
  Net Assets
  Limited liability company investments
  $
  10,050
  $
  5,715
  15.3
  %
  Secured and subordinated debt
  915
  915
  2.5
  %
  Common stock
  6,048
  12,759
  34.2
  %
  Total
  $
  17,013
  $
  19,389
  52.0
  %
  The
  following is a summary by industry of the Fund's investments in portfolio securities as of December 31, 2015 (in thousands):
  Industry
  Fair Value
  Fair Value as
  Percentage of
  N
  et Assets
  Shipping products and services
  $
  9,600
  25.7
  %
  Energy
  5,500
  14.7
  %
  Financial services
  3,159
  8.5
  %
  Business products and services
  915
  2.5
  %
  Media
  215
  0.6
  %
  Total
  $
  19,389
  52.0
  %
  The
  accompanying notes are an integral part of these financial statements.
  11
  Table of Contents
  EQUUS
  TOTAL RETURN, INC.
  NOTES
  TO FINANCIAL STATEMENTS
  JUNE
  30, 2016
  (Unaudited)
  (1)
  Description
      of Business and Basis of Presentation
  Description
  of Business -
  Equus Total Return, Inc. (
  "we," "us," "our," "Equus" the
  "Company" 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.
  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 (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 business development company ("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.
  Basis
  of Presentation -
  In accordance with Article 6 of Regulation S-X under the Securities Act of 1933 and the Securities Exchange
  Act of 1934, 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, or 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 Securities Exchange Act of 1934, as amended. 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 six months ended June 30, 2016 are not necessarily indicative of results that ultimately may be
  achieved for the remainder of the year. 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, 2015, as filed with the Securities and Exchange Commission ("SEC").
  12
  Table of Contents
  (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
  June 30, 2016. We are evaluating the impact of current market conditions on our portfolio company valuations and the ability of
  these companies 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 finance routine follow-on investments, if any, through
  the next twelve months.
  Cash
  and Cash Equivalents -
  As of June 30, 2016, we had cash and cash equivalents of $13.3 million. We had $25.1
  million of our net assets of $39.6 million invested in portfolio securities. We also had $28.3 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, $28.0 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 July 1, 2016 and we subsequently repaid this margin loan, plus interest, on July 5, 2016.
  As
  of December 31, 2015, we had cash and cash equivalents of $17.0 million. We had $19.4 million of our net assets of $37.3 million
  invested in portfolio securities. We also had $15.1 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, $15.0 million was invested in U.S. Treasury bills and $0.1 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 4, 2016 and we subsequently repaid this margin loan. The margin interest was
  paid on February 3, 2016.
  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.
  Investment
  Commitments -
  As of June 30, 2016, we had no outstanding commitments to our portfolio company investments.
  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.
  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. We cannot assure you 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. Failure to continue to qualify as a RIC could be materially
  adverse to us and our stockholders.
  As
  of June 30, 2016, we borrowed $28.0 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 $28.3 million.
  As
  of December 31, 2015, we borrowed $15.0 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 $15.1 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 six months of 2016, 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. 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 2016 and the first six months of 2017.
  13
  Table of Contents
  (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 -
  We follow ASC Topic 820 for measuring fair value. Prior to our election to become a BDC, we also followed
  the guidance in ASC Topic 820 in disclosing the fair value reported for all financial instruments that were either impaired or
  available for sale securities, using the definitions provided in Accounting Standards Codification Topic 320, "Investments
  – Debt and Equity Securities" ("ASC Topic 320"). 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 under ASC
  Topic 820 as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy
  under ASC Topic 820 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.
  We
  consider a two-step process when appraising investments of privately held companies. The first step involves determining the enterprise
  value of the portfolio company. During this step, we consider three different valuation approaches: a market approach, an income
  approach, and a cost approach. The particular facts and circumstances of each portfolio company determine which approach, or combination
  of approaches, will be utilized. The second step when appraising equity investments of privately held companies involves allocating
  value to the various debt and equity securities of the portfolio company. We allocate value to these securities based on their
  relative priorities. For equity securities such as warrants, we may also incorporate alternative methodologies including the Black-Scholes
  Option Pricing Model. Yield analysis is also employed to determine if a debt security has been impaired.
  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.
  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. Application of these valuation methodologies involves
  a significant degree of judgment by management. Fair values of new investments are generally assumed to be equal to their cost
  to the Fund for up to twelve months after their initial purchase.
  14
  Table of Contents
  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, a valuation process as described below:
  •
  For
      each debt investment, a basic credit review process is completed. The risk profile on every credit facility is reviewed and
      either reaffirmed or revised by our Investment Committee.
  •
  Each
      portfolio company or investment is valued by an investment professional
  •
  Third
      party valuation firm(s) are engaged to provide valuation services as requested, by reviewing Management's preliminary
      valuations and/or analysis of the portfolio investment in question. For investments with a fair value exceeding $2.5 million
      held for more than 1 year, our Management's preliminary fair value conclusions on each of the Fund's assets for
      which sufficient market quotations are not readily available is reviewed and assessed by a third-party valuation firm at least
      once in every 12-month period, and more often as determined by the Audit Committee or required by our valuation policy. Such
      valuation assessment may be in the form of positive assurance, range of values or another valuation method based on the discretion
      of our Board.
  •
  The
      Audit Committee reviews the preliminary valuations of our Management and independent valuation firms and, if appropriate,
      recommends the approval of the valuations by the Board.
  •
  Our
      Board discusses valuations and determines the fair value of each investment in the portfolio in good faith based on the input
      of Management, the Audit Committee and, where appropriate, the respective independent valuation firms.
  The
  following sections describe the valuation techniques we use to measure different financial instruments at fair value and include
  the levels within the fair value hierarchy in which the financial instruments are categorized.
  Market
  approach
  - The market approach typically employed by Management calculates the enterprise value of a company as a
  multiple of earnings before interest, taxes, depreciation and amortization ("EBITDA") generated by the company
  for the trailing twelve month period. Adjustments to the company's EBITDA, including those for non-recurring items, may
  be considered. Multiples are estimated based on current market conditions and past experience in the private company
  marketplace and are subjective in nature. We will apply liquidity and other discounts as deemed appropriate to equity
  valuations where applicable. We may also use, when available, third-party transactions in a portfolio company's
  securities as the basis of valuation (the "private market method"). The private market method will be used only
  with respect to completed transactions or firm offers made by sophisticated, independent investors.
  Income
  approach
  - The income approach typically utilized by our Management calculates the enterprise value of a company
  utilizing a discounted cash flow model incorporating projected future cash flows of the company. Projected future cash flows
  consider the historical performance of the company as well as current and projected market participant performance. Discount
  rates are estimated based on current market conditions and past experience in the private company marketplace and are
  subjective in nature. We will apply liquidity and other discounts as deemed appropriate to equity valuations where
  applicable.
  15
  Table of Contents
  Asset
  approach
  - We consider the asset approach to determine the fair value of significantly deteriorated investments
  demonstrating circumstances indicative of a liquidation analysis. This situation may arise when a portfolio company: 1)
  cannot generate adequate cash flow to meet the principal and interest payments on its indebtedness; 2) is not successful in
  refinancing its debt upon maturity; 3) we believe the credit quality of a loan has deteriorated due to changes in the
  business and underlying asset or market conditions may result in the company's inability to meet future obligations; or
  4) the portfolio company's reorganization or bankruptcy. Consideration is also given as to whether a liquidation event
  would be orderly or forced.
  We
  base adjustments upon such factors as the portfolio company's earnings, cash flow and net worth, the market prices for similar
  securities of comparable companies, an assessment of the company's current and future financial prospects and various other
  factors and assumptions. In the case of unsuccessful or substantially declining operations, we may base a portfolio company's
  fair value upon the company's estimated liquidation value. Fair valuations are necessarily subjective, and our estimate
  of fair value may differ materially from amounts actually received upon the disposition of its portfolio securities. 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 will often perform a yield analysis to determine if a debt security has been impaired.
  Certificates of deposit purchased by the Fund generally will be valued at their face value, plus interest accrued to the date
  of valuation.
  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 and, where necessary, with independent valuation
      firms engaged by the Fund;
  2.
  The
      independent valuation firms conduct independent valuations and make their own independent assessments;
  3.
  The
      Audit Committee of our Board reviews and discusses the preliminary valuation of the Fund and that of the independent valuation
      firms; and
  4.
  The
      Board discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input
      of our Management, the respective independent valuation firm and the Audit Committee.
  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.
  Because
  of the inherent uncertainty of the valuation of portfolio securities which do not have readily ascertainable market values, amounting
  to $21.5 million and $16.2 million as of June 30, 2016 and December 31, 2015, 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 June 30, 2016,
  one of our portfolio investments, 453,718 common shares of MVC, was publicly listed on the NYSE. As of December 31, 2015, one
  of our portfolio investments, 428,662 common shares of MVC, was publicly listed on the NYSE.
  16
  Table of Contents
  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
  .
  For
  loan and debt securities held for longer than one year, the Fund will often perform a yield analysis assuming a hypothetical current
  sale of the security. 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.
  We
  will 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.
  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 June 30, 2016 and the year ended December 31, 2015.
  As
  of June 30, 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 June 30, 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
  $
  4,213
  $
  —
  $
  —
  $
  4,213
  Affiliate investments
  14,300
  —
  —
  14,300
  Non-affiliate investments - related party
  3,648
  3,648
  —
  —
  Non-affiliate investments
  2,978
  —
  —
  2,978
  Total investments
  25,139
  3,648
  —
  21,491
  Temporary
      cash investments
  27,986
  27,986
  —
  —
  Total investments and temporary cash investments
  $
  53,125
  $
  31,634
  $
  —
  $
  21,491
  17
  Table of Contents
  As
  of December 31, 2015, 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, 2015
  (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
  $
  5,715
  $
  —
  $
  —
  $
  5,715
  Affiliate investments
  9,600
  —
  —
  9,600
  Non-affiliate investments - related party
  3,159
  3,159
  —
  —
  Non-affiliate investments
  915
  —
  —
  915
  Total investments
  19,389
  3,159
  —
  16,230
  Temporary cash investments
  15,000
  15,000
  —
  —
  Total investments and temporary cash investments
  $
  34,389
  $
  18,159
  $
  —
  $
  16,230
  The
  following table provides a reconciliation of fair value changes during the six months ended June 30, 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)
  (1,502
  )
  4,700
  —
  3,198
  Purchases of portfolio securities
  —
  —
  2,063
  2,063
  Fair value as of June 30, 2016
  $
  4,213
  $
  14,300
  $
  2,978
  $
  21,491
  The
  following table provides a reconciliation of fair value changes during the six months ended June 30, 2015 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, 2014
  $
  13,173
  $
  960
  $
  1,532
  $
  15,665
  Realized gains (losses)
  (2,850
  )
  —
  372
  (2,478
  )
  Change in unrealized appreciation (depreciation)
  1,550
  4,667
  (580
  )
  5,637
  Purchases of portfolio securities
  —
  —
  54
  54
  Proceeds from sales/dispositions
  (3,158
  )
  —
  (463
  )
  (3,621
  )
  Fair value as of June 30, 2015
  $
  8,715
  $
  5,627
  $
  915
  $
  15,257
  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.
  18
  Table of Contents
  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 June 30, 2016 and December 31, 2015, 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, or on behalf of, 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.
  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. We will continue to 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.
  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
  - 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 $.007 million for the three and six months ended June 30, 2016, respectively,
  and $0.02 million for the year ended December 31, 2015.
  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 have no provision for margin tax expense for the three and six months ended June 30, 2016, respectively,
  and we did not owe state income tax for the year ended December 31, 2015.
  Significant
  Unobservable Inputs
  - 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.
  19
  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 June 30, 2016:
  Range
  (in thousands)
  Fair Value
  Valuation Techniques
  Unobservable Inputs
  Minimum
  Maximum
  Secured and subordinated debt
  $
  2,978
  Yield-to-maturity
  Discount for lack of marketability
  0
  %
  0
  %
  Common stock
  14,300
  Income/Market approach
  EBITDA Multiple/Discount for lack of marketability/Control premium
  10
  %
  32.5
  %
  Limited liability company investments
  4,213
  Asset approach
  Discounted cash flow; Guideline transaction method
  Recovery rate
  Reserve adjustment factors
  75
  %
  100
  %
  $
  21,491
  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 December 31, 2015:
  Range
  (in
      thousands)
  Fair
      Value
  Valuation
      Techniques
  Unobservable
      Inputs
  Minimum
  Maximum
  Secured
      and subordinated debt
  $
  915
  Yield-to-maturity
  Discount
      for lack of marketability
  0
  %
  0
  %
  Common stock
  9,600
  Income/Market
      approach
  EBITDA
      Multiple/Discount for lack of marketability/Control premium
  10
  %
  32.5
  %
  Limited liability
      company investments
  5,715
  Asset
      approach
  Discounted cash flow; Guideline transaction method
  Recovery
      rate
  Reserve adjustment factors
  75
  %
  100
  %
  $
  16,230
  (4)
  Related
      Party Transactions and Agreements
  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.
  In
  2011, Equus Energy, LLC, 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,
  is a managing partner and co-founder of Global Energy. Payments to Global Energy totaled $37,500 for each of the six month periods
  ended June 30, 2016 and 2015.
  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 six months ended June 2016 and 2015, we
  paid Kenneth I. Denos, P.C., a professional corporation owned by Kenneth I. Denos, a director of the Fund, $197,063 and $163,813,
  respectively, for services provided to the Fund.
  20
  Table of Contents
  (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
  On
  January 29, 2016, we invested $2.0 million in Biogenic Reagents, LLC ("Biogenic") in the form of a senior secured
  promissory note originally maturing April 28, 2016 and subsequently extended to June 30, 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 ("5
  TH
  Element") promissory
  note to July 1, 2016 and received fees in the form of a PIK and cash totaling $0.05 million. Effective June 30, 2016, we agreed
  to further extend the maturity of the note to October 31, 2016 in exchange for fees in the form of a PIK and cash totaling $0.05
  million.
  On
  April 1, 2016, we received $40,000 in cash representing payment of accrued cash interest on our $2.0 million loan to Biogenic,
  made on January 29, 2016.
  During
  the six months ended June 30, 2016, we received dividends in the form of additional shares of $0.2 million relating to our shareholding
  in MVC.
  During
  the six months ended June 30, 2016, we recorded an increase of $3.5 million in net unrealized appreciation, from $2.4 million
  to $5.9 million, in our portfolio securities. Such increase resulted primarily from the following changes:
  (i)
  Increase
  in the fair value of our shareholding in MVC of $0.3 million due to an increase in the MVC share price during the first half of
  2016 and the receipt of dividend payments in the form of additional shares of MVC;
  (ii)
  Increase
  in fair value of our shareholding in PalletOne, Inc. of $4.7 million due to continued strong revenue and earnings growth, and
  an overall improvement in comparable industry sectors;
  (iii)
  Decrease
  in the fair value of our holdings in Equus Energy, LLC of $1.5 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.
  On
  January 6, 2015, we sold our interests in Spectrum Management, LLC ("Spectrum") to 5
  th
  Element. The purchase price of $3.9 million paid by 5
  th
  Element consisted of $3.0 million in cash and a 1-year subordinated note in the original principal amount of $0.9 million, bearing
  interest at the rate of 14% per annum. We realized a net capital loss of $2.8 million in connection with the sale of our interest
  in Spectrum.
  Also
  on January 6, 2015, in connection with the sale of our interest in Spectrum, our $0.5 million loan to Security Monitor Holdings,
  LLC, together with all accrued interest amounting to approximately $0.1 million, was repaid.
  On
  January 30, 2015, we received a partial redemption payment in respect of our holding of Notes of Orco Property Group S.A. ("OPG
  Notes") in the amount of €36,587 [$41,478].
  On
  February 20, 2015, we sold our OPG Notes at a discount of 23% to their par value, receiving $1.0 million in cash and a realized
  gain of $0.4 million.
  During
  the six months ended June 30, 2015, we received dividends in the form of additional shares of $0.1 million relating to our shareholding
  in MVC.
  21
  Table of Contents
  During
  the six months ended June 30, 2015, we recorded an increase of $5.9 million in net unrealized appreciation, from net unrealized
  depreciation of $3.6 million to net unrealized appreciation of $2.4 million, in our portfolio securities. Such increase resulted
  primarily from the following changes:
  (i)
  Decrease
  in the fair value of our holdings in Equus Energy, LLC of $1.3 million, principally due to a combination of decreased production
  and declining oil and prices;
  (ii)
  Increase
  in the fair value of our shareholding in MVC of $0.2 million due to an increase in the MVC share price during the period, along
  with dividends received in the form of additional MVC shares;
  (iii)
  Increase
  in fair value of our shareholding in PalletOne, Inc. of $4.6 million due to strong revenue and earnings group, as well as an overall
  improvement in the industry sector for packaging companies;
  (iv)
  Transfer
  of unrealized depreciation to realized gain on our holding of OPG Notes of $0.4 million in connection with the sale of our interest
  in the OPG Notes; and
  (v)
  Transfer
  of unrealized depreciation to realized loss on our holdings in Spectrum of $2.9 million in connection with the sale of our interest
  in Spectrum.
  (7)
  Plan
      of Reorganization - Share Exchange with MVC Capital
  On
  May 14, 2014, we announced that the Fund intended to effect a reorganization pursuant to Section 2(a)(33) of the 1940 Act. As
  a first step to consummating the reorganization, we sold to MVC Capital, Inc. ("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 business development company traded on the New York Stock Exchange 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.
  Pursuant
  to the terms of a Share Exchange Agreement, dated May 12, 2014, entered into by Equus and MVC which memorialized the Share Exchange,
  we intend to finalize the reorganization by pursuing a merger or consolidation with MVC, a subsidiary of MVC, or one or more of
  MVC's portfolio companies (the "Consolidation"). Absent Equus merging or consolidating with/into MVC or a subsidiary
  thereof, our current intention is for Equus to (i) consummate the Consolidation with a portfolio company of MVC, (ii) terminate
  its election to be classified as a BDC under the 1940 Act, and (iii) be restructured as a publicly-traded operating company focused
  on the energy and/or financial services sector. Our management is currently evaluating these alternatives.
  (8)
  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 112 producing and non-producing
  oil and gas wells. The working interests include associated development rights of approximately 21,220 acres situated on 13 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 22 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, has worked previously with Chevron on 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.
  22
  Table of Contents
  Revenue
  and Income
  . During the three months ended June 30, 2016, Equus Energy's revenue, operating revenue less direct operating
  expenses, and net loss were $0.1 million, $0.01 million, and ($0.1) million, respectively, as compared to revenue, operating revenue
  less direct operating expenses, and net income of $0.3 million, $0.05 million, and ($0.2) million, respectively, for the three
  months ended June 30, 2015. During the six months ended June 30, 2016, Equus Energy's revenue, operating revenue less direct
  operating expenses, and net loss were $0.2 million, ($0.2) million, and ($0.6) million, respectively, as compared to revenue,
  operating revenue less direct operating expenses, and net loss of $0.6 million, $0.07 million, and ($0.5), respectively, for the
  six months ended June 30, 2015.
  Capital
  Expenditures
  . During the six months ended June 30, 2016, Equus Energy invested $0.005 million in capital expenditures for
  small repairs and improvements. The operators of the various working interest have communicated their intent to wait until later
  in 2016 or 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 statement of assets and liabilities. 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
  )
  .
  Below
  is summarized consolidated financial information for Equus Energy as of June 30, 2016 and December 31, 2015 and for the three
  and six months ended June 30, 2016 and 2015, respectively, (in thousands):
  EQUUS
  ENERGY, LLC
  Condensed
  Consolidated Balance Sheets
  June 30,
  December 31,
  2016
  2015
  Assets
  Current assets:
  Cash and cash equivalents
  $
  83
  $
  517
  Accounts receivable
  33
  122
  Other current assets
  32
  32
  Total current assets
  148
  671
  Oil and gas properties
  8,275
  8,269
  Less: accumulated depletion, depreciation and amortization
  (6,650
  )
  (6,516
  )
  Net oil and gas properties
  1,625
  1,753
  Total assets
  $
  1,773
  $
  2,424
  Liabilities and member's capital
  Current liabilities:
  Accounts payable and other
  $
  123
  $
  206
  Due to affiliate
  611
  611
  Total current liabilities
  734
  817
  Asset retirement obligations
  181
  178
  Total liabilities
  915
  995
  Total member's equity
  858
  1,429
  Total liabilities and member's equity
  $
  1,773
  $
  2,424
  23
  Table of Contents
  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 revenues and direct
  operating expenses 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 revenue and direct operating
  expenses 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.
  EQUUS
  ENERGY, LLC
  Condensed
  Consolidated Statements of Operations
  Three Months ended June
      30,
  Six Months ended June 30,
  2016
  2015
  2016
  2015
  Operating revenue
  $
  105
  $
  309
  $
  163
  $
  592
  Operating expenses
  Direct operating expenses
  94
  263
  356
  522
  Depletion, depreciation, amortization and accretion
  73
  162
  136
  348
  General and administrative
  73
  75
  242
  204
  Total operating expenses
  240
  500
  734
  1,074
  Operating income (loss) before income tax expense
  (135
  )
  (191
  )
  (571
  )
  (482
  )
  Net loss (income)
  $
  (135
  )
  $
  (191
  )
  $
  (571
  )
  $
  (482
  )
  EQUUS
  ENERGY, LLC
  Condensed
  Consolidated Statements of Cash Flows
  Six Months ended June 30,
  2016
  2015
  Cash flows from operating activities:
  Net loss
  $
  (571
  )
  $
  (482
  )
  Adjustments to reconcile net loss to
  net cash (used in) provided by operating activities:
  Depletion, depreciation, amortization and accretion
  136
  348
  Changes in operating assets and liabilities:
  Prepaids and deposits
  —
  22
  Accounts receivable and other current assets
  89
  154
  Accounts payable and other
  (83
  )
  5
  Net cash (used in) provided by operating activities
  (429
  )
  47
  Cash flows from investing activities:
  Investment in oil & gas properties
  (5
  )
  (46
  )
  Net cash used in investing activities
  (5
  )
  (46
  )
  Net (decrease) increase in cash
  (434
  )
  1
  Cash and cash equivalents at beginning of period
  517
  613
  Cash and cash equivalents at end of period
  $
  83
  $
  614
  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 $0.07 million and $0.2
  million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $0.1 million for the six months ended June
  30, 2016 compared to $0.4 million for the six months ended June 30, 2015.
  Capitalized
  oil and gas property costs are limited to an amount (the ceiling limitation) equal to the sum of the following:
  (a)
  As of June
  30, 2016, 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 six months ended June 30, 2016. However, during 2015, the Company recognized an impairment loss of $4.0 million.
  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 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 items of income and expenses
  flow through directly to its members. However, the Company may be liable for certain state income taxes. Texas margin tax applies
  to legal entities conducting business in Texas, and is assessed on the company's Texas sourced taxable margin. The tax is
  calculated by applying the appropriate tax rate to a base that considers both revenue and expenses and therefore has the characteristics
  of an income tax. Taxable Subsidiaries may also generate income tax expense because of the Taxable Subsidiaries' ownership
  of the portfolio companies; as such we reflect any such income tax expense on our Statements of Operations.  As of June 30,
  2016 and June 30, 2015, 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.
  25
  Table of Contents
  (9)
  Recent
      Accounting Pronouncements
  In
  January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. 
  Among other things, this ASU requires that public business entities use the exit price notion when measuring the fair value of
  financial instruments for disclosure purposes.  ASU No. 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 No. 2016-01 is not anticipated
  to have a material effect on our financial statements.
  (10)
  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
  July 1, 2016, we sold U.S. Treasury Bills for $27.9 million and repaid our margin loan.
  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," the "Company,"
  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 consolidated 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, 2015, 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, 2015.
  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
  On
  May 14, 2014, we announced that the Fund intended to effect a reorganization pursuant to Section 2(a)(33) of the 1940 Act. As
  a first step to consummating the 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 business development company traded on the New York Stock Exchange 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, and the
  number of Equus shares sold to MVC represented approximately 16.7% of our issued and outstanding shares of common stock. We incurred
  dilution of $0.11 per share as a result of the Share Exchange. Since the announcement, we have received 57,879 shares of MVC (market
  value of $0.4 million calculated as of the date of receipt) in the form of dividend payments.
  Pursuant
  to the terms of a Share Exchange Agreement, dated May 14, 2014, entered into by Equus and MVC which memorialized the Share Exchange,
  we intend to finalize the reorganization by pursuing a merger or consolidation with MVC, or a subsidiary of MVC, or one or more
  of MVC's portfolio companies (the "Consolidation"). Absent Equus merging or consolidating with/into MVC, our
  current intention is for Equus to (i) consummate the Consolidation, (ii) terminate its election to be classified as a business
  development company under the 1940 Act, and (iii) be restructured as a publicly-traded operating company focused on the energy
  and/or financial services sector.
  Equity Incentive Plan
  On June 13, 2016, the
  Equus shareholders approved the adoption of the Fund's 2016 Equity Incentive Plan (the "Plan").  The
  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 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.  Although certain elements of the Plan require approval from the
  SEC and may therefore be subsequently modified, the 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 Plan is
  2,434,728 shares.  The term of the Plan will expire on June 13, 2026.  No awards have been granted under the Plan
  and, consequently, no compensation expense has been recorded for the three and six months ended June 30, 2016.
  Critical
  Accounting Policies
  See
  the Fund's Critical Accounting Policies from the disclosure set forth in the Annual Report on Form10-K for the year ended
  December 31, 2015.
  Recent
  Accounting Pronouncements
  In
  January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. 
  Among other things, this ASU requires that public business entities use the exit price notion when measuring the fair value of
  financial instruments for disclosure purposes.  ASU No. 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 No. 2016-01 is not anticipated
  to have a material effect on our financial statements.
  28
  Table of Contents
  Current
  Market Conditions
  Despite
  relatively low unemployment rates, the U.S. economy expanded at an annualized rate of 1.2% during the second quarter of 2016,
  following an annualized increase of 0.8% during the first quarter of 2016. The low growth during the first half of 2016 was principally
  attributed to lower inventories and business investment, and also came in spite of a relatively strong housing market as well
  as consumer spending, in addition to healthy corporate profits. In a survey of 60 economists, the
  Wall Street Journal
  has
  predicted GDP growth of 2.3% for the third quarter of 2016. Recently, JPMorgan Chase lowered its assessment of the likelihood
  of a recession in the U.S. from 37% to 30%. (Sources:
  U.S. Dept. of Commerce - Bureau of Economic Analysis, Wall Street Journal,
  CNBC, CNN Money, Bloomberg, Forbes
  ).
  Market
  conditions for business transactions during 2015, including mergers and acquisitions and private equity investments, improved
  to their highest level ($3.8 trillion) since prior to the 2008 financial crisis. Such activity has declined in the first half
  of 2016, as a number of high profile transactions were abandoned due to economic and regulatory factors. Nevertheless, corporations
  have continued a trend of deleveraging and are holding significant amounts of cash and many have focused on acquisitions as part
  of future growth plans. Private equity funds increased their assets under management during 2015 to a projected $2.4 trillion,
  the last period for which data is available, as private equity firms as a group enjoyed more success during the year in attracting
  investment capital. First half 2016 results are not yet available but are expected to continue this trend. (Sources:
  Bloomberg,
  Fortune
  ).
  During
  the six months ended June 30, 2016, our net asset value increased from $2.94 per share to $3.13 per share, an increase of 6.5%.
  As of June 30, 2016, our common stock is trading at a 43.1% discount to our net asset value as compared to 39.2% as of December
  31, 2015.
  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, we expect to achieve efficiencies in our cost structure if we are able to grow the Fund.
  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. 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.
  29
  Table of Contents
  Results
  of Operations
  Investment
  Income and Expense
  Net
  investment loss was $0.4 million and $0.6 million for the three months ended June 30, 2016 and 2015, respectively and $1.2 million
  and $1.7 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The decrease in net investment loss generated
  at June 30, 2016 compared to June 30, 2015 is due primarily to an increase in total investment income and a decrease in operating
  expense.
  Investment
  income was $0.2 million and $0.09 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $0.4 million
  and $0.1 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The increase in investment income was
  primarily due to the increase in income producing investments, including interest income from our loan to Biogenic Reagents, LLC
  and the MVC share dividend received during the three and six months ended June 30, 2016.
  Total
  expenses were unchanged at $0.7 million for the three months ended June 30, 2016 and June 30, 2015, respectively, and $1.5 million
  and $1.8 million for the six months ended June 30, 2016 and June 30, 2015, respectively. The decrease is principally officer and
  employee bonuses paid during the first quarter of 2015.
  Realized
  Gains and Losses on Sales of Portfolio Securities
  During
  the six months ended June 30, 2016, we realized a loss of $3.0 thousand from the sale of temporary cash investments.
  During
  the six months ended June 30, 2015, we realized net capital losses of $2.5 million, including the following significant transactions
  (in thousands):
  Portfolio Company
  Industry
  Type
  Transaction Type
  Realized Gain (Loss)
  Spectrum Management, LLC
  Business products  and services
  Control
  Disposition
  $
  (2,850
  )
  Orco Property Group S. A.
  Real Estate
  Non-affiliate
  Disposition
  372
  Various others
  Disposition
  (5
  )
  $
  (2,483
  )
  Changes
  in Unrealized Appreciation/Depreciation of Portfolio Securities
  During
  the six months ended June 30, 2016, we recorded an increase of $3.5 million in net unrealized appreciation, from $2.4 million
  to $5.9 million, in our portfolio securities. Such increase resulted primarily from the following changes:
  (i)
  Increase
  in the fair value of our shareholding in MVC of $0.3 million due to an increase in the MVC share price during the first half of
  2016 and the receipt of dividend payments in the form of additional shares of MVC;
  (ii)
  Increase
  in fair value of our shareholding in PalletOne, Inc. of $4.7 million due to continued strong revenue and earnings growth, and
  an overall improvement in comparable industry sectors;
  (iii)
  Decrease
  in the fair value of our holdings in Equus Energy, LLC of $1.5 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.
  During
  the six months ended June 30, 2015, we recorded an increase of $5.9 million in net unrealized appreciation, from net unrealized
  depreciation of $3.6 million to net unrealized appreciation of $2.4 million, in our portfolio securities. Such increase resulted
  primarily from the following changes:
  (i)
  Decrease
  in the fair value of our holdings in Equus Energy, LLC of $1.3 million, principally due to a combination of decreased production
  and declining oil and prices;
  (ii)
  Increase
  in the fair value of our shareholding in MVC of $0.2 million due to an increase in the MVC share price during the period, along
  with dividends received in the form of additional MVC shares;
  (iii)
  Increase
  in fair value of our shareholding in PalletOne, Inc. of $4.6 million due to strong revenue and earnings group, as well as an overall
  improvement in the industry sector for packaging companies;
  30
  Table of Contents
  (iv)
  Transfer of unrealized depreciation to realized gain on our holding of OPG Notes of $0.4 million in connection with the sale of our interest in the OPG Notes; and
  (v)
  Transfer of unrealized depreciation to realized loss on our holdings in Spectrum of $2.9 million in connection with the sale of our interest in Spectrum.
  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
  On
  January 29, 2016, we invested $2.0 million in Biogenic Reagents, LLC ("Biogenic") in the form of a senior secured
  promissory note originally maturing April 28, 2016 and subsequently extended to June 30, 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 ("5
  TH
  Element") promissory
  note to July 1, 2016 and received fees in the form of a PIK and cash totaling $0.05 million. Effective June 30, 2016, we agreed
  to further extend the maturity of the note to October 31, 2016 in exchange for fees in the form of a PIK and cash totaling $0.05
  million.
  On
  April 1, 2016, we received $40,000 in cash representing payment of accrued cash interest on our $2.0 million loan to Biogenic,
  made on January 29, 2016.
  During
  the six months ended June 30, 2016, we received dividends in the form of additional shares of $0.2 million relating to our shareholding
  in MVC.
  On
  January 6, 2015, we sold our interests in Spectrum to 5
  th
  Element. The
  purchase price of $3.9 million paid by 5
  th
  Element consisted of $3.0
  million in cash and a 1-year subordinated note in the original principal amount of $0.9 million, bearing interest at the rate
  of 14% per annum. We realized a net capital loss of $2.8 million in connection with the sale of our interest in Spectrum.
  Also
  on January 6, 2015, in connection with the sale of our interest in Spectrum, our $0.5 million loan to Security Monitor Holdings,
  LLC, together with all accrued interest amounting to approximately $0.1 million, was repaid.
  On
  January 30, 2015, we received a partial redemption payment in respect of our holding of Notes of Orco Property Group S.A. ("OPG
  Notes") in the amount of €36,587 [$41,478].
  On
  February 20, 2015, we sold our OPG Notes at a discount of 23% to their par value, receiving $1.0 million in cash and a realized
  gain of $0.4 million.
  During
  the six months ended June 30, 2015, 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
  July 1, 2016, we sold U.S. Treasury Bills for $27.9 million and repaid our margin loan.
  31
  Table of Contents
  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.
  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 36.1% of the net asset value and 56.9% of
  our investments in portfolio company securities (at fair value) as of June 30, 2016. 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 June 30, 2016. 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 June 30, 2016, 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
  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.
  Item
  1A. Risk Factors
  There
  have been no material changes in the Fund's risk factors from the disclosure set forth in the Annual Report on Form 10-K
  for the year ended December 31, 2015.
  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.
  32
  Table of Contents
  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.
  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 of the Fund.  [Incorporated by reference to Exhibit 1 to Registrant's Definitive Proxy Statement filed on May 5, 2016]
  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
  33
  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:
  August 12, 2016
  EQUUS
      TOTAL RETURN, INC.
  /s/
      John A. Hardy
  John
      A. Hardy
  Chief
      Executive Officer
  34