Equus Total Return Reports Significant Decline in Financial Performance for Fiscal Year 2024

Equus Total Return, Inc. reported a significant decline in its financial performance for the fiscal year ending December 31, 2024, with total assets decreasing to $29.9 million from $93.5 million in 2023. The company generated $1.3 million in total investment income, a notable increase from $0.3 million in the previous year. However, Equus recorded a net investment loss of $3.3 million, an improvement from a loss of $4.0 million in 2023. The net asset value per share also fell sharply from $3.55 to $2.17, reflecting a 62.9% discount to its net asset value as of year-end.

The company experienced a substantial decrease in unrealized appreciation, dropping from $24.5 million in 2023 to $8.9 million in 2024. This decline was primarily attributed to a $9.6 million decrease in the fair value of its holdings in Morgan E&P, LLC, due to a lower forward price curve for oil and the reclassification of certain proved reserves from producing to non-producing. Additionally, the fair value of Equus Energy, LLC decreased by $6.0 million, influenced by similar market conditions affecting oil and natural gas prices.

In terms of strategic developments, Equus Total Return has been actively pursuing a transformation into an operating company or permanent capital vehicle, with plans to withdraw its election as a Business Development Company (BDC). Although the authorization to withdraw this election has expired, the company anticipates seeking further approval from shareholders. In line with this strategy, Equus sold its interest in Equus Energy in March 2025 for a combination of cash and preferred stock valued at $4.0 million.

Operationally, Equus has focused on enhancing liquidity and reducing operational costs. The company has internalized its management and modified its investment strategy to pursue shorter-term liquidation opportunities. As of December 31, 2024, Equus had invested 91.9% of its assets in qualifying investments under the 1940 Act, primarily in the energy sector, which constituted 93.2% of its net asset value. The company is also exploring new investment opportunities, including a recent purchase of a convertible note from General Enterprise Ventures, Inc. for $1.5 million.

Looking ahead, Equus Total Return's management remains cautious about market conditions and the performance of its portfolio. The company is actively seeking liquidity through the sale of portfolio interests and external financing. However, there is substantial doubt about its ability to continue as a going concern if these efforts do not materialize. The management is committed to enhancing internal controls and addressing material weaknesses identified in its financial reporting processes, which could impact future operations and financial results.