SecProbe.io

CORRESP
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July 21, 2017

VIA EDGAR

Mr. Jeff Long

Division of Investment Management

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Telephone:	(202) 551-6983

email: longjw@sec.gov

    Re:
    Equus Total Return, Inc. (“Equus” or the “Fund”) Annual Report on Form 10-K for the Year Ended December 31, 2016 (File No. 814-0098)

Dear Mr. Long:

As you know, Equus is a closed-end fund that
has elected to be classified as a business development company (“BDC”) pursuant to the Investment Company Act of 1940
(the “1940 Act”). On behalf of Equus, this letter serves as the Fund’s response to comments received from the
Division of Investment Management (the “Division”) on behalf of the Securities and Exchange Commission (the “Commission”)
via telephone on June 13, 2017 concerning the Fund’s Annual Report on Form 10-K filed with the Commission on March 13, 2017
(sometimes referred to hereinafter as the “10-K”) and the Fund’s subsequent disclosure obligations pursuant to
the 1940 Act and the Securities Exchange Act of 1934 (the “Exchange Act”). We thank you for your input and this letter
is intended to respond accordingly. Each paragraph number of this letter corresponds to your comments as set forth below.

COMMENT 1:

Please explain whether Equus Energy, LLC (“Equus
Energy”) and Equus Media Development Company, Inc. (“EMDC”) should be consolidated with Equus Total Return, Inc.
pursuant to Rule 3-09 of Regulation S-X. Please refer to the Division of Investment Management’s Guidance Update of October
2014.

RESPONSE: As discussed in more detail below,
we do not believe that the financial results of Equus Energy and EMDC, both wholly-owned subsidiaries of the Fund, should be consolidated
with those of Equus, principally because (i) Equus Energy and EMDC are not themselves investment companies or otherwise extensions
of the Fund’s investment operations, and (ii) any such consolidation would be immaterial to the financial statements of the
Fund and would, contrary to the intended purpose of consolidation, not provide meaningful information to investors concerning the
Fund’s investment holdings.

700 LOUISIANA STREET

48TH FLOOR

HOUSTON, TX 77002

TEL: (713) 529-0900

FAX: (713) 529-9545

Mr. Jeff Long

Division of Investment Management

U.S. Securities and Exchange Commission

July 21, 2017

Page 2 of 14

About Equus Energy and EMDC

Equus Energy is a wholly-owned subsidiary of
the Fund, organized in November 2011 to acquire oil and gas properties and other energy-related concerns. In December 2011, Equus
contributed $250,000 to the capital of Equus Energy. On December 27, 2012 Equus 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 consist
of 111 producing and non-producing oil and gas wells, including associated development rights of approximately 20,920 acres situated
on 12 separate properties in Texas and Oklahoma. The working interests are held by EQS Energy Holdings, Inc., a taxable wholly-owned
subsidiary of Equus Energy. As of June 30, 2017, the sole tangible asset of Equus Energy consists of $39,000 in cash.

EMDC is a wholly-owned subsidiary of the Fund
organized in January 2007 for the purpose of acquiring and developing creative properties such as film scripts for release in various
entertainment mediums. EMDC’s sole assets presently consist of approximately $211,000 cash and these scripts which, due to
the earlier expiration of certain production and distribution rights, is valued at $0.

The relatively simple corporate structure of
Equus and its subsidiaries is expressed in the following diagram:

700 LOUISIANA STREET

48TH FLOOR

HOUSTON, TX 77002

TEL: (713) 529-0900

FAX: (713) 529-9545

Mr. Jeff Long

Division of Investment Management

U.S. Securities and Exchange Commission

July 21, 2017

Page 3  of 14

General Standard for Consolidation

Controlled and wholly-owned enterprises of an
investment company that are not themselves investment companies should not be consolidated with the parent company. According to
Section 7.08 of the Audit and Accounting Guide for Investment Companies:

[I]t is not appropriate for an investment company to consolidate
an investee that is not an investment company. Rather, an investment company’s controlling ownership interests in noninvestment
company investees should be measured in accordance with guidance in FASB ASC 946-320, which requires investments in debt and equity
securities to be initially measured at their transaction price and subsequently measured at fair value.

In addition, Rule 6-03(c) of Regulation S-X provides that subsidiaries
of investment companies such as Equus Energy and EMDC are not required to be consolidated. Specifically, the rule states that,
in respect of investment companies:

[financial] statements of the registrant may be consolidated
only with the statements of subsidiaries which are investment companies.

Neither of Equus Energy nor EMDC are investment
companies pursuant to Section 3(a)(1) of the 1940 Act, inasmuch as, among other things, neither company: (i) holds itself out as
being primarily in the business of investing, reinvesting, or trading in securities, (ii) is engaged in the business of issuing
face-amount certificates of the installment type, or (iii) holds investment securities having a fair value exceeding 40% of its
total assets.

We note that, although Equus Energy and EMDC
are not consolidated with Equus, separate summary financial statements of Equus Energy have been included in the Fund’s quarterly
and annual reports with the Commission since the first quarter of 2013, consistent with Rule 3-09 of Regulation S-X and various
Guidance Updates from the Division.

Guidance from the Division

The Division has nevertheless taken the position
that certain wholly-owned subsidiaries of BDCs, even if the same are not investment companies, should consolidate their financial
statements with those of the BDC. The Division has stated the following in its Guidance Update No. 2014-11, dated October 2014
(hereinafter, the “Guidance Update”):

In reviewing registration statements and financial statements,
the staff has observed a number of BDCs that have wholly owned subsidiaries, for example, in order to facilitate investment in
a portfolio company. Certain of these BDCs do not consolidate such subsidiaries, even though the design and purpose of the subsidiary

700 LOUISIANA STREET

48TH FLOOR

HOUSTON, TX 77002

TEL: (713) 529-0900

FAX: (713) 529-9545

Mr. Jeff Long

Division of Investment Management

U.S. Securities and Exchange Commission

July 21, 2017

Page 4  of 14

(e.g., a holding company) may be to act as an extension
of the BDC’s investment operations and to facilitate the execution of the BDC’s investment strategy. As part of the
registration statement and financial statement review process, the staff has generally suggested BDCs consolidate such subsidiaries,
because the staff believes that consolidation provides investors with the most meaningful financial presentation in those statements.[1]

Application of the Guidance Update to Equus
Energy and EMDC

When examined in light of the Guidance Update,
neither Equus Energy nor EMDC should be consolidated within the Fund’s financial statements, principally for the following
reasons:

 · Facilitation of Investment in a Portfolio Company – Equus Energy and EMDC
are portfolio companies of Equus, and were not created as conduits to facilitate the Fund’s investment in another portfolio
company. Other than cash, the sole assets of Equus Energy and EMDC consist of equity in EQS Energy Holdings, Inc., a taxable subsidiary
of Equus Energy, and various entertainment scripts, respectively.

 · Design and Purpose – Each of Equus Energy and EMDC were structured as “one-off”
special purpose vehicles that were specifically designed for the management of oil and gas assets and entertainment properties,
respectively. These entities were not created as holding companies, but rather as stand-alone operating companies in their own
right.

 · Extension of Investment Operations – Neither of Equus Energy or EMDC have
invested in the securities of other issuers, but rather in operating assets. Further, unlike a BDC or any other investment company,
neither of Equus Energy or EMDC holds itself out as being in the business of investing and reinvesting in securities. The mere
fact that these entities are wholly-owned subsidiaries does not, by itself, mean that they are therefore extensions of the Fund’s
investment operations.

 · Immateriality – Even if the financial statements of Equus Energy and EMDC
were consolidated with those of the Fund, the result would be a negligible change to the Fund’s financial statements. In
the case of EMDC, it had no revenues or income during each of the two years ended December 31, 2016, and, as noted above, its assets
consisted solely of approximately $211,000 in cash and various film scripts valued at $0. On a stand-alone basis, Equus Energy
had de minimus assets and operations in each of the two years ended December 31, 2016 and presently holds cash of $39,000
as its only tangible asset. As the financial statements and narrative regarding Equus Energy are already presented in the footnotes
to the Fund’s financial statements, the consolidation of Equus Energy and EMDC with the financial statements of the Fund
would detract from, rather than result in,

_____________________

[1]
In a footnote comment in the Guidance Update, the Division further states that, “In
the staff’s view, RICs in similar circumstances also should consolidate wholly owned subsidiaries (e.g., a RIC that uses
a wholly owned subsidiary as a ‘blocker’).”

[2]
26 USC §851(b)(3)(B)(i). The fair value of the Fund’s holding in PalletOne
represented 22.2% and 21.5% of the Fund’s total assets at December 31, 2016 and March 31, 2017, respectively.

700 LOUISIANA STREET

48TH FLOOR

HOUSTON, TX 77002

TEL: (713) 529-0900

FAX: (713) 529-9545

Mr. Jeff Long

Division of Investment Management

U.S. Securities and Exchange Commission

July 21, 2017

Page 5  of 14

  I meaningful financial presentation concerning information about these two companies,
and would subsume minor income statement and balance sheet figures of Equus Energy and EMDC in the financial statements of a much
larger enterprise. Further, any such consolidation would result only in a balance sheet reclassification, and would have no impact
on the Fund’s Statement of Operations.

 · No Meaningful Benefit to Investors – If the financial statements of Equus
Energy and EMDC were consolidated with those of the Fund, given the lack of operations and relatively insignificant assets involved,
the financial statements of Equus would change only slightly, but the Fund’s Schedule of Investments would have to be modified.
Instead of displaying Equus Energy, its cost, fair value, and the nature of the securities held by the Fund therein, the Schedule
would display EQS Energy Holdings, Inc., a taxable subsidiary of Equus Energy. There would be no meaningful benefit to investors
from this change of presentation, and would instead show EQS Energy Holdings as the investee company of the Fund.

Due to the immateriality of the operations and
assets in question, we respectfully request that the Office of the Chief Accountant consider waiving this requirement for the Fund.
Moreover, we will continue to monitor the situation and, to the extent these operations or assets become material to Equus, we
will consolidate the same with the financial statements of the Fund.

COMMENT 2:

Given the present fair value of the Fund’s holding
in PalletOne, Inc. (“PalletOne”) relative to the fair value of the net assets of Equus, please include PalletOne’s
financial statements in the footnotes to the Fund’s future filings on Forms 10-Q and 10-K, or include a hyperlink to PalletOne’s
financial statements in these filings. Please refer to the Division of Investment Management’s letter to Chief Financial
Officers, dated November 7, 1997, for guidance (hereinafter, the “Guidance Letter”).

RESPONSE: As of December 31, 2016 and March
31, 2017, the fair value of the Fund’s investment in PalletOne represented approximately 37.9% and 40.3%, respectively, of
the Fund’s non-cash assets. While the fair value of this holding is substantial relative to other investments of Equus, we
believe a requirement to include PalletOne’s financial statements with those of the Fund, or the inclusion of a link to these
statements, is not in keeping with standards regarding non-control positions in privately-held companies, and is otherwise inconsistent
with disclosures made by peer BDCs of Equus. Moreover, the Guidance Letter appears to address, and is more applicable to, a fund
of funds structure and not the single fund structure of Equus that invests directly in portfolio securities.

700 LOUISIANA STREET

48TH FLOOR

HOUSTON, TX 77002

TEL: (713) 529-0900

FAX: (713) 529-9545

Mr. Jeff Long

Division of Investment Management

U.S. Securities and Exchange Commission

July 21, 2017

Page  6 of 14

Equus presently holds 350,000 shares of PalletOne
common stock equal to 18.7% of PalletOne’s common stock outstanding. Pursuant to a Shareholders Agreement entered into by
the Fund and the various stockholders of PalletOne at the time of its initial investment (since restated with non-material changes),
Equus is entitled to appoint two directors to PalletOne’s seven member board of directors, although the Fund presently does
not have representation on the PalletOne board. Further, the consent of Equus is required for four of the remaining five other
directors of PalletOne.

Even though Equus is PalletOne’s largest
shareholder, it can neither unilaterally determine the outcome of any shareholder measure or block any such measure proposed by
other shareholders. Further, although Equus has the right to appoint two of PalletOne’s seven directors, it does not control
the PalletOne board and cannot, by contract or otherwise, unilaterally compel PalletOne or its board to adopt any particular course
of action.

The Guidance Update discussed in Comment 1 above
also instructive, inasmuch as it references federal statutes for registered investment companies (RICs) in support of the Division’s
premise regarding consolidation of financial statements of wholly-owned BDC subsidiaries. Among other requirements, these statutes
prohibit a RIC from investing more than 25% of its total assets in the securities of a single issuer.[2]
However, the statutes and applicable commentary have confirmed that changes in the value of the security following initial investment,
absent a follow-on investment or other subsequent investment transaction involving the security, will not result in a violation
of RIC requirements.[3] In other words, the 25% portfolio
limitation applicable to RICs has been designed to avoid punishment for investments in growth companies such as PalletOne and,
absent a follow-on investment, does not require subsequent revaluation to determine ongoing compliance.

This concept has relevance to the Division’s
comments regarding PalletOne. In October 2001, Equus invested $350,000 to acquire 350,000 shares of PalletOne common stock. Equus
has not made a follow-on investment in PalletOne since that time. The appreciation in the fair value of this holding, from $0 at
December 31, 2009 to $16.7 million at March 31, 2017, should not, absent an interim investment or similar transaction involving
the securities of PalletOne, penalize Equus for holding onto its investment and working to increase its value.	 Moreover, a
policy requiring public disclosure of the financial statements of non-controlled portfolio investments such as PalletOne would
likely place BDCs at a disadvantage relative to other private and public funds. Such a policy would