EQUUS TOTAL RETURN, INC. (NYSE:EQS) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement.

On April 24, 2017, Equus Total Return, Inc. (Equus or the
Company) entered into a Stock Purchase Agreement and Plan of
Merger (Merger Agreement) with ETR Merger Sub, Inc., a
newly-formed wholly-owned subsidiary of the Company, certain
shareholders of U.S. Gas Electric, Inc. (USGE), and MVC Capital,
Inc. (MVC) as a selling shareholder of USGE and as representative
of the selling USGE shareholders. The transactions embodied in
the Merger Agreement constitute a Consolidation as defined in the
Companys Plan of Reorganization within the meaning of Section
2(a)(33) of the Investment Company Act of 1940 (the 1940 Act).
The full text of the Merger Agreement is attached as an exhibit
to this Current Report.

The Merger Agreement provides for a two-stage transaction to
accomplish the Consolidation. The first stage of the
Consolidation consists of the Acquisition, which is the
acquisition of approximately 90% of the common and preferred
stock of USGE by the Company. The second stage of the
Consolidation consists of the Merger, which is the merger of
Merger Sub with and into USGE. USGE will survive the merger as a
wholly-owned subsidiary of the Company and the separate corporate
existence of Merger Sub will cease. After the completion of the
Merger, the Certificate of Incorporation of Merger Sub in effect
immediately prior to the effective time will be the Certificate
of Incorporation of the surviving entity. After the completion of
the Merger, the officers of USGE immediately prior to the
effective time will be the officers of the surviving entity and
the individuals designated by the Company in accordance with the
Merger Agreement prior to the closing of the Merger will be the
members of the board of directors of the surviving entity.

Summary of the Merger Agreement

The Consolidation will result in USGE becoming a wholly-owned
subsidiary of the Company, and the operations of USGE, as an
energy services company, becoming the predominant operations of
the consolidated companies.

Stage 1 Acquisition of 90% of USGE. The first stage of
the Consolidation involves the Acquisition by the Company, from
certain USGE shareholders, including MVC (collectively, the
Initial Sellers), of at least 90% of the common and preferred
stock of USGE. The closing of the Acquisition is referred to
herein as the Initial Closing.

Stage 2 Merger of Merger Sub with and into USGE. The
second stage of the Consolidation involves the Merger of Merger
Sub with and into USGE, with USGE as the surviving entity.
Notably, the stockholders of USGE remaining after the Initial
Closing will, as a result of the Merger, cease to be stockholders
of USGE and will instead have the right to receive their pro rata
portion of the consideration paid by Buyer to the Merger
Agreement and become stockholders of the Company.

Issuance of Consideration Shares. The aggregate
consideration to be tendered by the Company to the stockholders
of USGE as part of the Consolidation consists of 32,606,539
newly-issued common stock of the Company (the Common
Consideration Shares) and $40 million of newly-issued Series A
Convertible Preferred Stock of the Company (the Preferred
Consideration Shares), which will have the rights, designations,
and preferences set forth in the Certificate of Designations
attached as an exhibit to this Current Report. The Common
Consideration Shares and the Preferred Consideration Shares
(together, the Consideration Shares) to be issued in connection
with the Acquisition will be sold to an exemption to registration
under Section 4(a)(2) of the Securities Act of 1933, as amended.
With respect to the issuance of Consideration Shares in the
Merger, the Company will prepare, and the Company will file with
the Securities and Exchange Commission (SEC), a registration
statement on Form S-4.

Change of Corporate Name. Upon completion of the
Acquisition, the Company will change its corporate name from
Equus Total Return, Inc. to USGE, Inc.

Representations and Warranties. The Merger Agreement
generally contains reciprocal representations and warranties of
each of the Initial Sellers, USGE and the Company that are
typical for a public company merger, and are qualified by
information contained in SEC filings made by any party to the
agreement.

Conditions to Completion. The completion of the
Consolidation is subject to the satisfaction or, to the extent
legally permissible, the waiver of a number of conditions in the
Merger Agreement, such as:

the absence of any injunctions, writs, or restraining orders enjoining the Acquisition, Merger or other transaction contemplated by the Merger Agreement;

the withdrawal of the Companys election to be classified as a business development company under the 1940 Act;

the expiration of all applicable waiting periods under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, Delaware law, the Securities Exchange Act of 1934, or any other relevant governmental authority;

authorization from the Federal Energy Regulatory Commission in accordance with Section 203 of the Federal Power Act;

approval for listing of the Common Consideration Shares and the shares of the common stock issuable upon conversion of the Preferred Consideration Shares by the New York Stock Exchange;

the accuracy of certain representations and warranties concerning the Company, USGE, and the stockholders of USGE as set forth in the Merger Agreement;

the compliance of the Company, USGE, and the Initial Sellers with all applicable covenants as set forth in the Merger Agreement;

the filing of certain notices and the receipt of certain consents to the Consolidation by USGE;

the redemption of certain shares of preferred stock issued by USGE; and

with respect to the Merger, the effectiveness of a Registration Statement on Form S-4 registering the Consideration Shares to be received by the Remaining USGE Shareholders to the Merger.

Covenants. The Merger Agreement also contains mutual
customary pre-closing covenants of the Company and USGE,
including covenants, among others, each to conduct their
businesses in the ordinary course and in compliance in all
material respects with all applicable laws and to refrain from
taking certain actions without the other partys consent.

Termination of the Merger Agreement. The Merger
Agreement may be terminated at any time prior to the completion
of the Acquisition in any of the following ways:

by the mutual written consent of the parties to the Merger Agreement; and

by the Company, USGE, or MVC as the Sellers Representative of the USGE stockholders in certain circumstances.

The foregoing description of the Merger Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the Merger Agreement, which is
filed as Exhibit 2.1 and is incorporated by reference into this
report.

The Merger Agreement has been included to provide investors and
security holders with information regarding its terms. It is not
intended to provide any other factual information about the
Company, USGE, MVC or any of their respective subsidiaries or
affiliates. The representations, warranties and covenants
contained in the Merger Agreement (a) were made by the parties
thereto only for purposes of that agreement and as of specific
dates; (b) were made solely for the benefit of the parties to the
Merger Agreement; (c) may be subject to limitations agreed upon
by the contracting parties, including being qualified by
confidential disclosures exchanged between the parties in
connection with the execution of the Merger Agreement (such
disclosures include information that has been included in public
disclosures, as well as additional non-public information); (d)
may have been made for the purposes of allocating contractual
risk between the parties to the Merger Agreement instead of
establishing these matters as facts; and (e) may be subject to
standards of materiality applicable to the contracting parties
that differ from those applicable to investors. Accordingly, the
Merger Agreement is included with this filing only to provide
investors with information regarding the terms of the Merger
Agreement, and not to provide investors with any other factual
information regarding the Company, USGE, MVC or their respective
businesses. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as
characterizations of the actual state of facts or condition of
the Company, USGE, MVC or any of their respective subsidiaries or
affiliates. Additionally, the representations, warranties,
covenants, conditions and other terms of the Merger Agreement may
be subject to subsequent waiver or modification. Moreover,
information concerning the subject matter of the representations,
warranties and covenants may change after the date of the Merger
Agreement, which subsequent information may or may not be fully
reflected in the Companys public disclosures. The Merger
Agreement should not be read alone, but should instead be read in
conjunction with the other information regarding the Company that
is or will be contained in, or incorporated by reference into,
the Forms 10-K, Forms 10-Q and other documents that are filed
with the SEC.

Other Agreements At the Initial Closing, MVC and the
Company will enter into a Stockholder Agreement, to which the
parties will agree that for a period of ten months following the
Initial Closing, the Board of Directors of the Company will be
comprised of nine (9) directors, (i) five (5) of whom shall be
designated by MVC and (ii) four (4) of whom shall be the
individuals who are currently members of the Board of Directors
of the Company and set forth on Exhibit A thereto (the Legacy
Directors) and certain other matters relating to the removal and
replacement of the Legacy Directors during such period, subject
to the terms and conditions of the Stockholder Agreement. A form
of the Stockholder Agreement, which is incorporated herein by
reference, is included as Exhibit M to the Merger Agreement,
which is filed as Exhibit 2.1 to this Current Report on Form 8-K
and incorporated by reference into this report.

In addition, at the Initial Closing, MVC and the Company will
enter into a Lock-Up Agreement, to which MVC will agree for a
period of twelve months following the Initial Closing not to
transfer any of the Consideration Shares received by MVC, subject
to the terms and conditions of the Lock-Up Agreement and certain
exceptions as set forth in the Lock-Up Agreement. A form of the
Lock-Up Agreement, which is incorporated herein by reference, is
included as Exhibit H to the Merger Agreement, which is filed as
Exhibit 2.1 to this Current Report on Form 8-K and incorporated
by reference into this report.

AMENDMENT TO SHARE EXCHANGE AGREEMENT

On April 24, 2017, in connection with the entry into the Merger
Agreement, MVC and the Company entered into Amendment No. 1 to
the Share Exchange Agreement, between the Company and MVC, dated
as of May 14, 2014 (the Amendment), to which the parties agreed
that the Companys obligation to use reasonable best efforts to
effect the events of reorganization as described in the Share
Exchange Agreement are removed from the Share Exchange Agreement,
provided that such Amendment is subject to termination in
connection with the termination of the Merger Agreement in
certain circumstances, as set forth in the Amendment, in which
event the termination provided for in the Amendment will be
deemed null and void and of no force or effect. The foregoing
description of the Amendment does not purport to be complete and
is subject to, and qualified in its entirety by, the full text of
the Amendment, which is filed as Exhibit 2.2 to this Current
Report on Form 8-K and incorporated by reference into this
report.

Item 3.02 Unregistered Sales of Equity
Securities.

The information set forth in Item 1.01 above is incorporated
herein by reference.

Item 5.03 Amendments to Articles of Incorporation or
Bylaws; Change in Fiscal Year.

to the Merger Agreement, the Company approved the adoption of a
Certificate of Designations with respect to the Preferred
Consideration Shares to be issued to the USGE stockholders in
connection with the Consolidation described in Item 1.01 above.
The Certificate of Designations will be filed with the Secretary
of State of Delaware in connection with the Initial Closing. The
full text of the Certificate of Designations is attached as an
Exhibit to this Current Report.

Item 5.07 Submission of Matters to a Vote of Security
Holders.

On April 24, 2017, holders of a majority of the outstanding
common stock of the Company approved the following actions, which
will become effective twenty days after mailing of an information
statement to shareholders of the Company in accordance with the
requirements of the Securities Exchange Act of 1934:

Approval of, and authorization of the Company to execute, the
Merger Agreement and related documents;

Conditional upon the Initial Closing:

–

approval of the issuance of the Common Consideration Shares and the Preferred Consideration Shares;

–

approval of the amendment and restatement of the Companys Certificate of Incorporation;

–

approval of an increase in the number of shares of the Companys authorized common stock from 50,000,000 to 100,000,000;

–

approval of the change of the Companys corporate name to USGE, Inc.;

–

approval of a change to the nature of the Companys business to that of a retail and commercial energy services provider;

–

approval of a 3-for-1 reverse split of the Companys outstanding shares of common stock; and

–

approval of the Companys 2017 Equity Incentive Plan which provides for grants of common stock purchase options, restricted stock, stock appreciation rights, restricted stock units, performance shares, and stock bonuses to directors, officers, employees, consultants, and independent contractors of the Company and its subsidiaries who are deemed eligible for participation therein. The Company has reserved 650,000 shares of its common stock (following the effectiveness of the reverse split described above), for issuance under the Incentive Plan, which will terminate ten years from its effective date unless sooner terminated by the Companys board of directors.

Item 8.01 Other Events.

On April 24, 2017, the Company issued a press release announcing
its entry into the Merger Agreement. The text of the press
release is included as Exhibit 99.1 to this Current Report and is
incorporated herein by reference.

No Offer or Solicitation

The information in this communication is for informational
purposes only and is neither an offer to purchase, nor a
solicitation of an offer to sell, subscribe for or buy any
securities or the solicitation of any vote or approval in any
jurisdiction to or in connection with the proposed transactions
or otherwise, nor shall there be any sale, issuance or transfer
of securities in any jurisdiction in contravention of applicable
law. No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, and otherwise in accordance
with applicable law.

Additional Information about the Proposed Transaction and
Where to Find It

The proposed transaction involving the Company and USGE will be
submitted to the stockholders of USGE for their consideration. In
connection with the proposed transaction, the Company will file
with the SEC a registration statement on Form S-4 (the
Registration Statement), which will include a prospectus with
respect to the shares to be issued in the proposed transaction.
The Registration Statement will contain important information
about the proposed transaction and related matters. SECURITY
HOLDERS ARE URGED AND ADVISED TO READ THE REGISTRATION STATEMENT
CAREFULLY WHEN THEY BECOME AVAILABLE, AS WELL AS ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC AND ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. The Registration Statement and other
relevant materials (when they become available) and any other
documents filed or furnished by the Company with the SEC may be
obtained free of charge at the SEC’s website at www.sec.gov. In
addition, security holders will be able to obtain free copies of
the Registration Statement from the Company by going to its
investor relations page on its corporate website at
www.equuscap.com/investor.htm.

Item 9.01 Financial Statements and Exhibits.

to Item 601(b)(2) of Regulation S-K, certain schedules, exhibits
and similar attachments to the Merger Agreement have not been
filed with this exhibit. The schedules contain various items
relating to the representations and warranties made by the
parties to the agreement. The exhibits contain the forms of
various agreements and other documents to be executed and
delivered by the parties upon the closing of the transaction. The
Company agrees to furnish supplementally any omitted schedule,
exhibit or similar attachment to the SEC upon request.

(d) Exhibits.

2.1		Stock Purchase Agreement and Plan of Merger, dated April 24, 2017, among Equus Total Return, Inc., ETR Merger Sub, Inc., and certain shareholders of U.S. Gas Electric, Inc.
2.2		Amendment No. 1 to Share Exchange Agreement, dated April 24, 2017, between Equus Total Return, Inc. and MVC Capital, Inc.
3(i).1		Certificate of Designations of Series A Convertible Preferred Stock of Equus Total Return, Inc.
99.1		Press release issued on April 24, 2017 by Equus Total Return, Inc.

About EQUUS TOTAL RETURN, INC. (NYSE:EQS)

Equus Total Return, Inc. (the Fund) is a closed-end management investment company. The Fund is a business development company whose investment objective is to maximize the total return to its stockholders in the form of current investment income and long-term capital gains by investing in the debt and equity securities of small and middle market capitalization companies that are generally not publicly traded at the time of its investment. In addition, it may invest with other co-investors, including private equity firms, business development companies, small business investment companies, venture capital groups, institutional investors and individual investors. It invests in a range of sectors, including energy, media, business products and services, shipping products and services, financial services and others. The Fund’s investments in portfolio securities consist of fixed-rate debt securities, limited liability company investments, common stock, and secured and subordinated debt.

EQUUS TOTAL RETURN, INC. (NYSE:EQS) Recent Trading Information

EQUUS TOTAL RETURN, INC. (NYSE:EQS) closed its last trading session 00.00 at 2.46 with 3,731 shares trading hands.