UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026

☐

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., 41^st 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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange

on which registered

Common Stock

New York Stock Exchange

☐ 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 ☒ No

☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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 ☐

Emerging Growth Company ☐

☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐ Indicate by check mark whether the registrant is a shell company. Yes ☐ No ☒

There were 13,966,696 shares of the registrant’s common stock, $.001 par value, outstanding, as of June 30, 2026.

	Page
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Condensed Financial Statements	3
Condensed Balance Sheets	3
Condensed Statements of Operations	4
Condensed Statements of Changes in Net Assets	5
Condensed Statements of Cash Flows	6
Supplemental Information—Selected Per Share Data and Ratios	7
Schedules of Investments	8
Notes to Condensed Financial Statements	12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosure about Market Risk	42
Item 4. Controls and Procedures	42
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	44
Item 1A. Risk Factors	44
Item 6. Exhibits	45
SIGNATURE	46

	June 30, 2026			December 31, 2025

(in thousands, except shares and per share amounts)
Assets
Investments in portfolio securities at fair value:
Control investments (cost at $10,500 and $10,500, respectively)	$	13,000		$	10,500
Non-affiliate investments (cost at $782 and $1,418, respectively)		3,198			6,776
Total investments in portfolio securities at fair value		16,198			17,276
Cash and cash equivalents		219			133
Accounts receivable from affiliates		2,126			1,145
Accrued interest		3,381			2,748
Other assets		18			36
Total assets		21,942			21,338
Liabilities and net assets
Accounts payable and other		566			414
Accrued compensation		2			3
Accounts payable to related parties		2,143			1,371
Convertible notes payable		2,283			2,123
Warrant liability, at fair value		318			857
Total liabilities		5,312			4,768

Commitments and contingencies (See Note 2)

Net assets
Preferred stock, $.001 par value per share; 10,000,000 shares authorized as of June 30, 2026 and December 31, 2025, respectively
Common stock, $.001 par value per share; 100,000,000 shares authorized as of June 30, 2026 and December 31, 2025, and 13,966,696 shares outstanding as of June 30, 2026 and December 31, 2025, respectively



Common stock, par value	$	14		$	14
Capital in excess of par value		76,510			76,009
Accumulated deficit		(59,894	)		(59,453	)
Total net assets	$	16,630		$	16,570
Shares of common stock issued and outstanding, $.001 par value, 100,000,000 and 50,000,000 shares authorized, respectively		13,967			13,967
Net asset value per share	$	1.19		$	1.19

	Three Months Ended June 30,						Six Months June 30,
(in thousands, except per share amounts)	2026			2025			2026			2025
Investment income:
Control investments	$	318		$	319		$	633		$	634
Non-affiliate investments		—			38			—			60
Total investment income		318			357			633			694
Interest income		—			—			—			1
Total investment income		318			357			633			695

Expenses:
Compensation expense		582			433			1,190			1,003
Professional fees		364			229			669			582
Transaction costs		—			—			—			307
Professional liability expenses		—			30			2			80
Director fees and expenses		107			101			182			178
General and administrative expenses		49			59			92			107
Mailing, printing and other expenses		65			54			107			65
Taxes		—			10			—			13
Interest expense		51			51			160			80
Total expenses		1,218			967			2,402			2,415

Net investment loss		(900	)		(610	)		(1,769	)		(1,720	)

Net realized gain (loss):
Control investments		—			—			—			(4,111	)
Non-affiliate investments		672			—			1,230			—
Other		—			—			—			(155	)
Net realized gain (loss)		672			—			1,230			(4,266	)

Net unrealized appreciation (depreciation) of portfolio securities:
Control investments		(2,500	)		(1,650	)		2,500			3,461
Non-affiliate investments		(2,689	)		2,174			(2,941	)		6,382
Net change in net unrealized appreciation (depreciation) of portfolio securities		(5,189	)		524			(441	)		9,843

Net change in net unrealized appreciation on warrant liability		864			—			539			—

Net (decrease) increase in net assets resulting from operations	$	(4,553	)	$	(86	)	$	(441	)	$	3,857

Net (decrease) increase in net assets resulting from operations per share:
Basic	$	(0.33	)	$	(0.01	)	$	(0.03	)	$	0.28
Diluted	$	(0.33	)	$	(0.01	)	$	(0.03	)	$	0.24
Weighted average shares outstanding:
Basic		13,967			13,586			13,967			13,586
Diluted		13,967			13,586			13,967			16,238

	Common Stock
(in thousands)	Number of Shares		Par Value		Capital in Excess of Par Value		Accumulated Deficit			Total Net Assets


Balances as of December 31, 2024		13,586	$	14	$	74,785	$	(45,289	)	$	29,510

Issuance of warrants		—		—		744		—			744

Net increase in net assets resulting from operations		—		—		—		3,943			3,943

Balances as of March 31, 2025		13,586	$	14	$	75,529	$	(41,346	)	$	34,197

Net decrease in net assets resulting from operations		—		—		—		(86	)		(86	)

Balances as of June 30, 2025		13,586	$	14	$	75,529	$	(41,432	)	$	34,111




Balances as of December 31, 2025		13,967		14		76,009		(59,453	)		16,570

Shares subscribed but not issued		—		—		248		—			248

Net increase in net assets resulting from operations		—		—		—		4,112			4,112

Balances as of March 31, 2026		13,967	$	14	$	76,257	$	(55,341	)	$	20,930

Shares subscribed but not issued		—		—		253		—			253

Net increase in net assets resulting from operations		—		—		—		(4,553	)		(4,553	)

Balances as of June 30, 2026		13,967	$	14	$	76,510	$	(59,894	)	$	16,630

	Six Months ended June 30,
(in thousands)	2026			2025
Cash flow from operating activities:
Net increase in net assets resulting from operations	$	(441	)	$	3,857
Adjustments to reconcile net decrease in net assets resulting from operations to net cash used in operating activities:
Net realized (gain) loss:
Control investments		—			4,111
Non-affiliate investments		(1,230	)		—
Other		—			155
Net change in unrealized (appreciation) depreciation of portfolio securities:
Control investments		(2,500	)		(3,461	)
Non-affiliate investments		2,941			(6,382	)
Net change in unrealized depreciation of warrant liability		(539	)		—
Purchase of portfolio securities		—			(1,500	)
Write-off of receivable from portfolio company		—			(155	)
PIK interest payable		101			80
Amortization of debt discount		59			—
Transaction costs		—			307
Net proceeds from dispositions of portfolio securities		1,867			1,250
Changes in operating assets and liabilities:
Accounts receivable from affiliates		(480	)		(641	)
Accrued interest receivable		(633	)		(694	)
Other assets		18			(6	)
Accounts payable and accrued liabilities		151			226
Accounts payable to related parties		772			660
Net cash provided by (used in) operating activities		86			(2,193	)
Cash flows from financing activities:
Issuance of notes payable and warrant liability		—			2,000
Net cash provided by financing activities		—			2,000
Net increase in cash and cash equivalents		86			(193	)
Cash and cash equivalents and restricted cash at beginning of period		133			262
Cash and cash equivalents and restricted cash at end of period	$	219		$	69
Non-cash operating and financing activities:
Shares subscribed but not issued	$	503		$	—
Supplemental disclosure of cash flow information:
Interest paid in kind on note payable	$	101		$	3
Delaware franchise taxes paid	$	—		$	36

Name and Location of			Date of Initial					Cost of		Fair
Portfolio Company ⁽¹⁾	Industry		Investment		Investment	Principal		Investment		Value⁽²⁾

Control Investments: Majority-owned ⁽³⁾:
Morgan E&P, Inc. Houston, TX		Energy		April 2023	6,800,000 shares common stock ⁽⁵⁾				—	$	2,500
					12% senior secured promissory note due 5/28 ⁽⁵⁾⁽⁶⁾	$	10,500		10,500		10,500
									10,500		13,000
Total Control Investments: Majority-owned (represents 80.3% of total investments at fair value)									10,500		13,000
Non-Affiliate Investments: Less than 5% owned ⁽⁴⁾:
CitroTech, Inc. Pomona, CA		Environmental		February 2025	Warrants (exercisable into 312,500 common stock) ⁽⁵⁾				—		1,400
					325,691 shares common stock				782		1,798
									782		3,198
Total Non-Affiliate Investments (represents 19.7% of total investments at fair value)									782		3,198
Total Investments								$	11,282	$	16,198

Type of Securities	Cost		Fair Value		Fair Value as Percentage of Net Assets

Secured and subordinated debt		10,500		10,500		63.1	%
Warrants		—		1,400		8.4	%
Common stock		782		4,298		25.8	%
Total	$	11,282	$	16,198		97.4	%

			Fair Value Measurements as of June 30, 2026
(in thousands)	Total		Quoted Prices in Active Markets for Identical Assets Level 1)		Significant Unobservable Inputs (Level 3)
Assets
Investments:
Control investments	$	13,000	$	—	$	13,000
Non-affiliate investments		3,198		1,798		1,400
Total investments	$	16,198	$	1,798	$	14,400

			Fair Value Measurements as of December 31, 2025
(in thousands)	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Unobservable Inputs (Level 3)
Assets
Investments:
Control investments	$	10,500	$	—	$	10,500
Non-affiliate investments		6,776		4,776		2,000
Total investments	$	17,276	$	4,776	$	12,500

	Fair value measurements using significant unobservable inputs (Level 3)
(in thousands)	Control Investments			Non-affiliate Investments			Total
Fair value as of January 1, 2026	$	10,500		$	2,000		$12,500
Change in unrealized appreciation		5,000			—		5,000
Fair value as of March 31 2026		15,500			2,000		17,500
Change in unrealized appreciation		(2,500	)		(600	)	(3,100)
Fair value as of June 30, 2026	$	13,000		$	1,400		$14,400

(in thousands, except share and per-share data)	Three Months Ended June 30,						Six Months Ended June 30,
	2026			2025			2026			2025
Net income (loss) attributable to common shareholders	$	(4,553	)	$	(86	)	$	(441	)	$	3,857
Weighted average shares outstanding - basic		13,967			13,586			13,967			13,586
Effect of dilutive securities		—			—		$	—		$	(0.05	)
Weighted average shares outstanding - diluted		13,967			13,586			13,967			16,238
Basic earnings per share	$	(0.33	)	$	(0.01	)	$	(0.03	)	$	0.28
Diluted earnings per share	$	(0.33	)	$	(0.01	)	$	(0.03	)	$	0.24

(in thousands)	June 30, 2026			December 31, 2025
Accumulated undistributed net investment losses	$	(60,237	)	$	(58,468	)
Unrealized appreciation of portfolio securities, net		4,916			5,357
Unrealized appreciation of warrant payable		242			(297	)
Accumulated undistributed net capital gains		(4,815	)		(6,045	)
Accumulated deficit	$	(59,894	)	$	(59,453	)

	June 30, 2026	December 31, 2025
Note liability component:
Principal	$2,000,000	$2,000,000
PIK’d interest	282,778	182,222
Debt discount	-	(59,111)
Net carrying amount	$2,282,778	$2,123,111

Stock price	$1.24
Exercise price	$1.50
Expected volatility	27.8%
Expected term (years)	3.6
Risk free rate	4.17%
Dividend yield	0.0%

	June 30, 2026	December 31, 2025
Warrant liability component:
Warrant at inception	$560,000	$560,000
Unrealized (appreciation) depreciation on warrant liability	(241,702)	297,000
Net carrying amount of the warrant liability	$318,298	$857,000

	June 30, 2026			December 31, 2025
Assets:
Cash	$	10		$	18
Revenue receivables		(8	)		—
Joint interest billing receivables		2,078			2,014
Other receivables		703			49
Prepaids and other current assets		27			72
Current assets		2,810			2,153

Property, plant and equipment
Oil and gas properties, net - full cost method		7,556			11,644
Other property, plant and equipment, net		17			23
Total property, plant and equipment - net		7,573			11,667

Other noncurrent assets
Operating lease right-of-use assets, net		161			185
Total noncurrent assets		161			185

Total assets	$	10,544		$	14,005

Liabilities and Member's Deficit:

Current liabilities
Accounts payable	$	2,931		$	6,263
Revenue payable		334			214
Short-term loan payable		3,000			2,958
Current portion of operating lease liabilities		58			54
Current portion of long-term notes payable - Due to parent		10,500			10,500
Deferred Income		7			5
Due to parent		2,126			1,148
Accrued liabilities		6,426			10,544
Accrued liabilities - Due to parent		3,381			2,749
Total current liabilities		28,763			34,435

Long-term liabilities
Asset retirement obligations		3			5
Long-term operating lease liabilities		123			153
Note payable - Due to parent		—			—
Long-term accrued liabilities - Due to parent		—			—
Total long-term liabilities		126			158
Total liabilities		28,889			34,593

Stockholder's deficit
Preferred stock, $0.001 par value, 10,000,000 shares authorized,
0 shares issued		—			—
Common stock, $0.001 par value, 100,000,000 shares authorized,
6,800,000 shares issued		7			7
Common stock discount		(7	)		(7	)
Accumulated deficit		(18,345	)		(20,588	)
Total stockholder's deficit		(18,345	)		(20,588	)

Total liabilities and stockholders' deficit	$	10,544		$	14,005

	For The Three Months Ended June 30,						For the Six Months Ended June 30,
	2026			2025			2026			2025
Oil and gas revenue		2,459			32			2,724			205

Operating costs and expenses
Lease operating		540			13			562			56
Production and ad valorem taxes		242			2			268			18
Marketing, transportation and gathering		18			10			23			16
Depreciation, depletion, and amortization		693			13			727			64
Gain on debt extinguishment		(2,099	)		—			(2,099	)		—
General and administrative		886			218			1,314			526
Total operating costs and expenses		280			256			795			680
Loss from operations		2,179			(224	)		1,929			(475	)
Other income (expense)
Rental income		20			—			38			—
Gain on sale of property		1,372			—			1,372			—
Interest expense		(477	)		(319	)		(1,096	)		(634	)
Total other income (expense), net		915			(319	)		314			(634	)
Net income (loss)	$	3,094		$	(543	)	$	2,243		$	(1,109	)

	Six Months Ended
	June 30, 2026			June 30, 2025
Cash flows from operating activities:
Net income (loss)	$	2,243		$	(1,109	)
Adjustments to reconcile net loss to cash flows provided by (used in) operating activities:
Depreciation, depletion, amortization		727			64
Amortization of right-of-use asset		24			20
Gain on debt extinguishment		(2,099	)		—
Gain on sale of property		(1,372	)		—
Amortization of loan origination fees		42			—
Changes in operating assets and liabilities:
Accounts receivable - oil and natural gas sales		8			(154	)
Accounts receivable - joint interest billings		(64	)		67
Other receivables		(654	)		—
Prepaids and other current assets		45			(12	)
Accounts payable		(1,233	)		(52	)
Revenue payable		120			(105	)
Due to parent		978			769
Deferred income		2			—
Current portion of operating lease liabilities		(26	)		(23	)
Accrued liabilities		459			(102	)
Accrued liabilities - due to parent		632			—
Net cash provided by (used in) operating activities		(168	)		(3	)

Cash flows from investing activities:
Capital expenditures		(4,904	)		(2	)
Proceeds from sale of O&G properties		5,064			—
Net cash used in investing activities		160			(2	)

Net change in cash		(8	)		(5	)
Cash at beginning of period		18			15

Cash at end of period		10		$	10

Supplemental Disclosure of Cash Flow Information
Cash paid for interest:	$	395		$	—
Non-cash investing and financing activities
Changes in capital accounts payable and capital accruals	$	4,577		$	(20	)
Change in asset retirement obligations		3			—