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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001193125-03-081396.txt : 20031114
<SEC-HEADER>0001193125-03-081396.hdr.sgml : 20031114
<ACCEPTANCE-DATETIME>20031114114628
ACCESSION NUMBER:		0001193125-03-081396
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20030930
FILED AS OF DATE:		20031114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			EQUUS II INC
		CENTRAL INDEX KEY:			0000878932
		IRS NUMBER:				760345915
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	814-00098
		FILM NUMBER:		031001567

	BUSINESS ADDRESS:	
		STREET 1:		2929 ALLEN PKWY STE 2500
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77019
		BUSINESS PHONE:		7135290900

	MAIL ADDRESS:	
		STREET 1:		2929 ALLEN PARKWAY
		STREET 2:		STE 2500
		CITY:			HOUSTON
		STATE:			TX
		ZIP:			77019
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.htm
<DESCRIPTION>FORM 10-Q FOR QUARTER PERIOD ENDED SEPTEMBER 30, 2003
<TEXT>
<HTML><HEAD>
<TITLE>Form 10-Q for Quarter Period Ended September 30, 2003</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

<HR SIZE="3" NOSHADE COLOR="#000000" ALIGN="left"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="5"><B>SECURITIES AND EXCHANGE COMMISSION </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"><B>Washington, D.C. 20549 </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><HR WIDTH="17%" SIZE="1" NOSHADE COLOR="#000000"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="5"><B>FORM 10-Q </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>(Mark
One) </B></FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="3"><B><FONT FACE="WINGDINGS">&#120;</FONT><B></B></B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="3"><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:5%"><FONT FACE="Times New Roman" SIZE="2"><B>For the quarterly period ended September 30, 2003 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>OR </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="5%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="3"><B></B></FONT><FONT FACE="WINGDINGS" SIZE="3" COLOR="#000000"><B>&#168;</B></FONT><FONT FACE="Times New Roman" SIZE="3"><B><B></B></B></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="3"><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:5%"><FONT FACE="Times New Roman" SIZE="2"><B>For the transition period
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to
<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Commission File Number 0-19509 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><HR WIDTH="17%" SIZE="1"
NOSHADE COLOR="#000000"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="6"><B>EQUUS II INCORPORATED </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Exact name of registrant as specified in its charter) </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"><FONT FACE="Times New Roman" SIZE="2"><B>Delaware</B></FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"><FONT FACE="Times New Roman" SIZE="2"><B>76-0345915</B></FONT></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(State or other jurisdiction of</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>incorporation or organization)</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(I.R.S. Employer</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="1"><B>Identification No.)</B></FONT></P></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>2929 Allen Parkway, Suite 2500</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Houston, Texas</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="48%"><FONT FACE="Times New Roman" SIZE="2"><B>77019-2120</B></FONT></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>(Address of principal</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="1"><B>executive offices)</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" ALIGN="center" WIDTH="48%"><FONT FACE="Times New Roman" SIZE="1"><B>(Zip Code)</B></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Registrant&#146;s
telephone number, including area code: (713) 529-0900 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><HR WIDTH="17%" SIZE="1" NOSHADE COLOR="#000000"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">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.&nbsp;&nbsp;Yes&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#120;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;&nbsp;</FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2"><U></U> </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Indicate by check mark whether the registrant is an accelerated filer (as
defined in 12b-2 of the Exchange Act).&nbsp;&nbsp;Yes&nbsp;&nbsp;</FONT><FONT FACE="WINGDINGS" SIZE="2" COLOR="#000000">&#168;</FONT><FONT FACE="Times New Roman" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;&nbsp;<FONT
FACE="WINGDINGS">&#120;</FONT><U></U> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">There were 6,233,021
shares of the registrant&#146;s common stock, $.001 par value, outstanding, as of November 12, 2003. The net asset value of a share at September 30, 2003 was $12.48. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P><HR SIZE="3" NOSHADE COLOR="#000000" ALIGN="left">

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">(A Delaware Corporation) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">
<A NAME="index"></A>INDEX </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>PAGE</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="9%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">PART&nbsp;I.</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">FINANCIAL INFORMATION</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="9%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Item&nbsp;1.</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Financial Statements</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Balance Sheets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_1">- September 30, 2003 and December 31, 2002 </A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">1</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Statements of Operations</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_2">- For the three months ended September 30, 2003 and 2002</A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">2</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_3">- For the nine months ended September 30, 2003 and 2002</A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">3</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Statements of Changes in Net Assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_4">- For the nine months ended September 30, 2003 and 2002 </A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">4</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Statements of Cash Flows</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_5">- For the nine months ended September 30, 2003 and 2002 </A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">5</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Selected Per Share Data and Ratios</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_6">- For the nine months ended September 30, 2003 and 2002 </A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">7</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Schedule of Portfolio Securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_7">- September 30, 2003 </A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">8</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_8">Notes to Financial Statements</A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">14</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="9%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Item&nbsp;2.</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_9">Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">21</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="9%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Item&nbsp;3.</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_10">Quantitative and Qualitative Disclosure about Market Risk</A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">26</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="9%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Item&nbsp;4.</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_11">Controls and Procedures</A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">27</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="9%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">PART&nbsp;II.</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">OTHER INFORMATION</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="9%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Item&nbsp;6.</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_12">Exhibits and Reports on Form 8-K </A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">28</FONT></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3" WIDTH="82%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">
<A HREF="#tx67515_13">SIGNATURE </A></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">29</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>



<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B><U>Part&nbsp;I</U>.</B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B><U>Financial Information</U> </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B><U>Item&nbsp;1</U>.</B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B><U>Financial Statements</U> </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">
<A NAME="tx67515_1"></A>EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">BALANCE SHEETS </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">SEPTEMBER 30, 2003 AND DECEMBER 31, 2002 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2003</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2002</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Assets</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Investments in portfolio securities at fair value (cost $83,185,761 and $92,611,224, respectively)</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">82,749,052</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">87,194,210</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Restricted cash &amp; temporary investments, at cost which approximates fair value</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">64,670,715</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">58,000,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Cash</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">804</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">442</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Temporary cash investments, at cost which approximates fair value</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">18,052</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">516,236</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Accounts receivable</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">15,453</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">15,330</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Accrued interest and dividends receivable</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,903,489</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,610,639</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">151,357,565</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">148,336,857</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Liabilities and net assets</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Liabilities:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Accounts payable</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">112,968</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">200,882</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Due to management company</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">388,998</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">384,880</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Revolving line of credit</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">9,065,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12,775,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Payable for securities purchased</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">63,990,948</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Line of credit promissory note</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">58,000,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total liabilities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">73,557,914</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">71,360,762</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Commitments and contingencies</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Preferred stock, $.001 par value, 5,000,000 shares authorized, no shares outstanding</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Common stock, $.001 par value, 25,000,000 shares authorized, 6,233,021 shares outstanding</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,233</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,233</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Additional paid-in capital</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">83,331,755</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">82,496,540</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Undistributed net investment income (loss)</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,385,892</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(423,919</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Undistributed net capital gains (losses)</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(7,487,520</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">314,255</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Unrealized depreciation of portfolio securities, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(436,709</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(5,417,014</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total net assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">77,799,651</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">76,976,095</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="76%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets per share</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.48</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.35</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">1 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">
<A NAME="tx67515_2"></A>EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">STATEMENTS OF OPERATIONS </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2003</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2002</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Investment income:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Interest income from portfolio securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">800,605</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">551,072</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Dividend income from portfolio securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">89,833</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">233,727</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Interest from temporary cash investments</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">765</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,107</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Other income</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">190,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total investment income</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">891,203</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">976,906</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Expenses:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Management fees</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">388,998</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">372,179</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Non-cash compensation expense</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">629,171</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Director fees and expenses</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">57,893</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">61,344</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Professional fees</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">52,991</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">43,637</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Administrative fees</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12,500</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12,500</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Mailing, printing and other expenses</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">31,954</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">19,611</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Interest expense</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">216,296</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">123,936</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Franchise taxes</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total expenses</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,395,803</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">633,207</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net investment income (loss)</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(504,600</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">343,699</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Realized gain on sales of portfolio securities, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">279,572</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Unrealized depreciation of portfolio securities, net:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">End of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(436,709</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(8,302,433</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Beginning of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(881,020</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(6,006,467</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Change in unrealized depreciation</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">444,311</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,295,966</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total increase (decrease) in net assets from operations</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">219,283</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(1,952,267</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">2 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">
<A NAME="tx67515_3"></A>EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">STATEMENTS OF OPERATIONS </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2003</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2002</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Investment income:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Interest income from portfolio securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,227,811</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,347,426</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Dividend income from portfolio securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,883,973</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,304,713</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Interest from temporary cash investments</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,888</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">18,894</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Other income</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">240,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total investment income</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,115,672</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,911,033</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Expenses:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Management fees</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,172,324</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,147,271</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Non-cash compensation expense (benefit)</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">835,215</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(14,434</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Director fees and expenses</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">171,309</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">183,513</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Professional fees</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">191,187</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">143,204</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Administrative fees</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">37,500</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">37,500</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Mailing, printing and other expenses</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">91,926</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">47,889</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Interest expense</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">739,644</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">384,608</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Excise tax</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">36,832</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">36,832</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Franchise taxes</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">29,924</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">50,964</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total expenses</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,305,861</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,017,347</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net investment income</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,809,811</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">893,686</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Realized gain (loss) on sales of portfolio securities, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(7,801,775</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">399,301</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Unrealized depreciation of portfolio securities, net:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">End of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(436,709</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(8,302,433</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Beginning of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(5,417,014</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(4,492,994</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Change in unrealized depreciation, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">4,980,305</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(3,809,439</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total decrease in net assets from operations</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(11,659</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,516,452</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">3 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">
<A NAME="tx67515_4"></A>EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">STATEMENTS OF CHANGES IN NET ASSETS </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2003</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2002</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Operations:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net investment income</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,809,811</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">893,686</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Realized gain (loss) on sales of portfolio securities, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(7,801,775</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">399,301</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Change in unrealized depreciation of portfolio securities, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">4,980,305</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(3,809,439</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Decrease in net assets from operations</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(11,659</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,516,452</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Capital Transactions:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Non-cash compensation expense (benefit)</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">835,215</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(14,434</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Increase (decrease) in net assets from capital transactions</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">835,215</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(14,434</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Increase (decrease) in net assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">823,556</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,530,886</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets at beginning of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">76,976,095</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">76,966,831</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="78%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets at end of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">77,799,651</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">74,435,945</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">4 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">
<A NAME="tx67515_5"></A>EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">STATEMENTS OF CASH FLOWS </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2003</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2002</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Cash flows from operating activities:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Interest and dividends received</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,877,952</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,116,877</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Cash paid to management company, directors, bank and suppliers</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,554,442</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,217,419</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net cash provided (used) by operating activities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,323,510</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(1,100,542</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Cash flows from investing activities:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Purchase of portfolio securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,280,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(5,365,973</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Proceeds from sales of portfolio securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,664,011</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,541,225</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Principal payments from portfolio securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,184,547</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">743,522</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Sales (purchases) of restricted cash &amp; temporary investments, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(6,670,715</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,000,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Advances to portfolio companies</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(123</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(257</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net cash provided (used) by investing activities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(4,102,280</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">7,918,517</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Cash flows from financing activities:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Borrowings under brokerage margin account</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">240,888,503</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Repayments under brokerage margin account</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(176,897,555</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Advances from bank</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,965,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">185,810,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Repayments to bank</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(65,675,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(192,635,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net cash provided (used) by financing activities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,280,948</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(6,825,000</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Decrease in cash and cash equivalents</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(497,822</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(7,025</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Cash and cash equivalents at beginning of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">516,678</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">33,677</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="74%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Cash and cash equivalents at end of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">18,856</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">26,652</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="6%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">5 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">STATEMENTS OF CASH FLOWS </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Continued) </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2003</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2002</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Reconciliation of decrease in net assets from operations to net cash provided (used) by operating activities:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Decrease in net assets from operations</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(11,659</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,516,452</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Adjustments to reconcile decrease in net assets from operations to net cash provided (used) by operating
activities:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Realized (gain) loss on sales of portfolio securities, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">7,801,775</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(399,301</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Increase (decrease) in unrealized depreciation, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(4,980,305</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,809,439</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Accrued interest and dividends exchanged for portfolio securities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(944,870</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(1,485,165</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Increase in accrued interest and dividends receivable</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(1,292,850</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(308,991</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Non-cash compensation expense (benefit)</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">835,215</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(14,434</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Decrease in accounts payable</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(87,914</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(172,983</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Increase (decrease) in due to management company</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">4,118</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(12,655</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net cash provided (used) by operating activities</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,323,510</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(1,100,542</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">6 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">
<A NAME="tx67515_6"></A>EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">SUPPLEMENTAL INFORMATION &#150; SELECTED PER SHARE DATA AND RATIOS </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2">(Unaudited) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2003</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2002</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Investment income</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.98</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.47</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Expenses</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.53</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.33</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net investment income</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.45</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.14</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Realized gain (loss) on sale of portfolio securities, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(1.25</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.06</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Change in unrealized depreciation of portfolio securities, net</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.80</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(0.61</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Decrease in net assets from operations</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(0.41</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Capital Transactions:</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Non-cash compensation expense</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.13</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Increase in net assets from capital transactions</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.13</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net increase (decrease) in net assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">0.13</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(0.41</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets at beginning of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.35</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.35</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets at end of period</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.48</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">11.94</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets at end of period - diluted</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.28</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">11.94</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Weighted average number of shares outstanding during year, in thousands</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,233</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,233</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Market value</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">8.60</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6.44</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Ratio of expenses to average net assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">4.27</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2.66</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Ratio of net investment income to average net assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3.63</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1.18</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD>
<TD HEIGHT="8" COLSPAN="4"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="86%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Ratio of decrease in net assets from operations to average net assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(0.02</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)%</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(3.32</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)%</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">7 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">
<A NAME="tx67515_7"></A>SCHEDULE OF PORTFOLIO SECURITIES </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">SEPTEMBER 30, 2003 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom" WIDTH="65%" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Portfolio Company</B></FONT></P><HR WIDTH="102" SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Date of</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="1"><B>Initial&nbsp;Investment</B></FONT></P><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Cost</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Fair Value</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Alenco Holding Corporation</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">January&nbsp;2002</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>(formerly Alenco Window Holdings II, LLC)</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Manufacturer &amp; distributor of alumimnum and vinyl windows</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 22,657 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">227</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,500,000</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>American Trenchless Technology, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">February&nbsp;2001</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Boring, tunneling and directional drilling</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 4,160 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,324,694</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 50% membership interest in Glendale, LLC</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">300,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">300,000</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>The Bradshaw Group</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">May&nbsp;2000</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Sells and services midrange and high-speed printing equipment</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Prime + 2% promissory note with a face amount of $398,383 </FONT><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><SUP>(2)</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 15% promissory note</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP> (2)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">459,545</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 1,335,000 shares of preferred stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,335,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to buy 2,229,450 shares of common stock for $0.01 through May 2008</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Champion Window Holdings, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">March&nbsp;1999</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Manufacturer &amp; distributor of residential windows</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 1,400,000 shares of common stock</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP> (1)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,400,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">17,500,000</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to purchase 10,000 shares of common stock stock at $7.18 through July 2008</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">53,200</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>CMC Investments, LLC</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">December&nbsp;2001</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Manufacturer of oil and gas drilling rigs</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="65%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 21% membership interest</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">525,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">65,000</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">8 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">SCHEDULE OF PORTFOLIO SECURITIES </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">SEPTEMBER 30, 2003 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">Unaudited) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Continued) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom" WIDTH="66%" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Portfolio Company</B></FONT></P><HR WIDTH="117" SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Date of</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="1"><B>Initial&nbsp;Investment</B></FONT></P><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Cost</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Fair Value</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Container Acquisition, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">February&nbsp;1997</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Shipping container repair &amp; storage</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 7% promissory note </FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(1)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,250,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,250,000</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 78,318 shares of preferred stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">7,831,800</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Conditional warrant to buy up to 370,588 shares of common stock at $0.01 through February 2007</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 1,370,000 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,370,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 85% membership interest in CCI-ANI Finance, LLC</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,571,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">500,000</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Doane PetCare Enterprises, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">October&nbsp;1995</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Manufacturer of private label pet food</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 1,943,598 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,936,643</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,000,000</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>The Drilltec Corporation</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">August&nbsp;1998</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Provides protection &amp; packaging for pipe &amp; tubing</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Prime + 9.75% promissory note </FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(2)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,000,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>ENGlobal, Inc. (AMEX: ENG)</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">December&nbsp;2001</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>(formerly Industrial Data Systems Corporation)</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Engineering and consulting services</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 9.5% promissory note</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP> (1)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,450,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,450,000</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 2,371,251 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,449,192</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">5,095,306</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Conditional option to acquire 200,000 shares of common stock</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; margin-left:6.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">(conditional upon a change of control)</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Equicom, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">July&nbsp;1997</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Radio stations</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 10% promissory notes</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,606,730</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,700,000</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 657,611 shares of preferred stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,576,110</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 452,000 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">141,250</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Equipment Support Services, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">December&nbsp;1999</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Equipment rental</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 8% promissory note </FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(2)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,138,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 35,000 shares of preferred stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,929,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 35,000 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">101,500</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">9 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">SCHEDULE OF PORTFOLIO SECURITIES </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">SEPTEMBER 30, 2003 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Continued) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom" WIDTH="66%" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Portfolio Company</B></FONT></P><HR WIDTH="102" SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Date of</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="1"><B>Initial&nbsp;Investment</B></FONT></P><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Cost</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Fair Value</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Jones Industrial Services, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">July 1998</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>(formerly United Industrial Services, Inc.)</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Field service for petrochemical &amp; power generation industries</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 35,000 shares of preferred stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,500,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,775,000</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to buy 63,637 shares of common stock at $0.01 through June 2008</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">100</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>NCI Building Systems, Inc. (NYSE: NCS)</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">April&nbsp;1989</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Design &amp; manufacture metal buildings</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 200,000 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">159,784</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,980,000</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>PalletOne, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">October&nbsp;2001</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Wooden pallet manufacturer</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 3,465,000 shares of preferred stock</FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP> (1)(3)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,465,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,300,000</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 350,000 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">350,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Reliant Window Holdings, LLC</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">February&nbsp;2001</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Manufacturer &amp; distributor of aluminum &amp; vinyl windows</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 36.86% membership interest</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,686</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">5,200,000</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Sovereign Business Forms, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">August 1996</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Business forms manufacturer</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 15% promissory notes </FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(1)(3)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">4,226,224</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">4,226,224</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 20,452 shares of preferred stock </FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(1)(3)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,045,200</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,705,000</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to buy 551,894 shares of common stock at $1 per share through August 2006</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to buy 25,070 shares of common stock at $1.25 per share through October 2007</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to buy 273,450 shares of common stock at $1 per share through October 2009</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Spectrum Management, LLC</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="11%"><FONT FACE="Times New Roman" SIZE="2">December&nbsp;1999</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Business &amp; personal property protection</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 285,000 units of Class A equity interest</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,850,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">4,000,000</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="66%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 16% subordinated promissory note </FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(1)</SUP></FONT><FONT
FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,303,698</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,303,698</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">10 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">SCHEDULE OF PORTFOLIO SECURITIES </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">SEPTEMBER 30, 2003 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Continued) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom" WIDTH="63%" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Portfolio Company</B></FONT></P><HR WIDTH="102" SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Date of</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="1"><B>Initial&nbsp;Investment</B></FONT></P><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Cost</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Fair Value</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Sternhill Partners I, LP</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="12%"><FONT FACE="Times New Roman" SIZE="2">March&nbsp;2000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Venture capital fund</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 3% limited partnership interest</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,041,604</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">700,000</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Strategic Holdings, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="12%"><FONT FACE="Times New Roman" SIZE="2">September&nbsp;1995</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Processor of recycled glass</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 15% promissory note</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,750,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,750,000</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 3,822,157 shares of Series B preferred stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,820,624</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,820,624</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to buy 225,000 shares of common stock at $0.4643 per share through August 2005</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">144,600</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to buy 100,000 shares of common stock at $1.50 per share through August 2005</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrant to buy 2,219,237 shares of common stock at $0.01 per share through November 2005</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,434,600</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 3,089,751 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,088,389</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,620,800</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 15% promissory note of SMIP, Inc.</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">175,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">175,000</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 1,000 shares of SMIP, Inc. common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">150,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">100,000</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Turfgrass America, Inc.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="12%"><FONT FACE="Times New Roman" SIZE="2">May 1999</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Grows, sells &amp; installs warm season turfgrasses</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 12% subordinated promissory note</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">288,580</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">288,580</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 12% subordinated promissory note</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">502,035</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">502,035</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 12% subordinated promissory note with a face amount of $4,000,000</FONT><FONT FACE="Times New Roman" SIZE="1"
COLOR="#000000"><SUP>(3)</SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000"></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,900,507</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,609,385</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 1,507,226 shares of convertible preferred stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">768,638</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- Warrants to buy 250,412 shares of common stock at $0.51 per share through April 2010</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 211,184 shares of common stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">600,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">&#151;&nbsp;&nbsp;</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD>
<TD HEIGHT="8" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><B>Vanguard VII, L.P.</B></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center" WIDTH="12%"><FONT FACE="Times New Roman" SIZE="2">June 2000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2"><I>Venture capital fund</I></FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:5.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">- 1.3% limited partnership interest</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,500,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">700,000</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="63%"> <P STYLE="margin-left:9.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">83,185,761</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="7%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">82,749,052</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(1)</SUP></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income-producing. All other securities are considered non-income producing.
</FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(2)</SUP></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">As of September 30, 2003, the Fund has reduced the fair value of these notes to zero and has
discontinued recognizing any additional interest income on these notes due to conditions specific to the respective Portfolio Companies. However, the Portfolio Companies are still liable for such notes and related interest, and they may be collected
in the future. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"></FONT><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP>(3)</SUP></FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="1" COLOR="#000000"><SUP></SUP></FONT><FONT FACE="Times New Roman" SIZE="2" COLOR="#000000">Income on these securities may be paid-in-kind by the issuance of additional securities or
through the accretion of original issue discount. </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2">The accompanying notes are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">11 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">SCHEDULE OF PORTFOLIO SECURITIES </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">SEPTEMBER 30, 2003 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Continued) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Substantially all of the Fund&#146;s portfolio securities are restricted from public sale without prior registration under
the Securities Act of 1933. The Fund negotiates certain aspects of the method and timing of the disposition of the Fund&#146;s investment in each portfolio company, including registration rights and related costs. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">In connection with the investments in American Trenchless Technology, Inc.,
Champion Window Holdings, Inc., Container Acquisition, Inc., The Drilltec Corporation, Jones Industrial Services, Inc., Sovereign Business Forms, Inc., Strategic Holdings, Inc. and Turfgrass America, Inc., rights have been obtained to demand the
registration of such securities under the Securities Act of 1933, providing certain conditions are met. The Fund does not expect to incur significant costs, including costs of any such registration, in connection with the future disposition of its
portfolio securities. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">As defined in the Investment Company Act
of 1940, at September 30, 2003, the Fund was considered to have a controlling interest in Champion Window Holdings, Inc., Container Acquisition, Inc., The Drilltec Corporation, Equicom, Inc., PalletOne, Inc., Reliant Window Holdings, LLC, Sovereign
Business Forms, Inc., Spectrum Management LLC, and Strategic Holdings, Inc. The fair value of the Fund&#146;s investment in ENGlobal, Inc. includes a discount of $1,552,547 from the closing market price to reflect the estimated effect of
restrictions on the sale of such securities at September 30, 2003. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">Income was earned in the amount of $4,993,897 and $1,725,576 for the nine months ended September 30, 2003 and 2002, respectively, on portfolio securities of companies in which the Fund has a controlling interest. Income was earned in the
amount of $873,267 and $1,062,749 for the nine months ended September 30, 2003 and 2002, respectively, on portfolio securities of companies that are affiliates of the Fund but are not controlled by the Fund. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">As defined in the Investment Company Act of 1940, all of the Fund&#146;s
investments are in eligible portfolio companies except Sternhill Partners I, L.P. and Vanguard VII, L.P. The Fund provides significant managerial assistance to all of the portfolio companies in which it has invested, except Doane PetCare
Enterprises, Inc. (&#147;Doane&#148;), Equipment Support Services, Inc., Sternhill Partners I, L.P., and Vanguard VII, L.P. The Fund provides significant managerial assistance to portfolio companies that comprise 96% of the total value of the
investments in portfolio companies at September 30, 2003. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The
accompanying notes are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">12 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2">SCHEDULE OF PORTFOLIO SECURITIES </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">JUNE 30, 2003 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Continued) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The investments in portfolio securities held by the Fund are not geographically diversified. All of the Fund&#146;s
portfolio companies (except for Doane, PalletOne, Inc. and certain investments in the venture capital funds) are headquartered in Texas, although several have significant operations in other states. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund&#146;s investments in portfolio securities consist of the following
types of securities at September 30, 2003: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="80%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom" WIDTH="62%" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Type of Securities</B></FONT></P><HR WIDTH="97" SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Cost</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Fair Value</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Percentage<BR>of&nbsp;Fair&nbsp;Value</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="62%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Common Stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">16,071,679</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">34,796,106</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">42.0</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="62%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Secured and Subordinated Debt</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">27,050,319</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">22,254,922</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">26.9</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="62%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Limited Liability Company Investments</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">5,249,686</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">10,065,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">12.2</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="62%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Preferred Stock</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">31,271,372</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">11,600,624</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">14.0</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="62%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Options and Warrants</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,101</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,632,400</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">3.2</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="62%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Limited Partnership Investments</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,541,604</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,400,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">1.7</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="62%"> <P STYLE="margin-left:3.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">83,185,761</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">82,749,052</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">100.0</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="5%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The following is a
summary by industry of the Fund&#146;s investments as of September 30, 2003: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="80%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom" WIDTH="79%" ALIGN="center"> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Industry</B></FONT></P><HR WIDTH="43" SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Fair Value</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>Percentage</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Business Products and Services</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">11,234,922</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">13.6</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Commercial Building Products</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,980,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">4.8</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Consumer Goods</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,000,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">2.4</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Engineering and Consulting Services</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">7,545,306</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">9.1</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Industrial Products and Services</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">19,120,624</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">23.1</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Media</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">2,700,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">3.3</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Residential Building Products</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">26,253,200</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">31.7</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Shipping Products and Services</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">5,050,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">6.1</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Turfgrass and Landscape Products</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">3,400,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">4.1</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Venture Funds and Other</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">1,465,000</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">1.8</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="79%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Total</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="9%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">82,749,052</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD ALIGN="right" COLSPAN="1" VALIGN="bottom" WIDTH="2%"><FONT FACE="Times New Roman" SIZE="2">100.0</FONT></TD>
<TD COLSPAN="1" NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">%</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="4%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">The accompanying notes
are an </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">integral part of these financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">13 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">
<A NAME="tx67515_8"></A>EQUUS II INCORPORATED </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">NOTES TO FINANCIAL STATEMENTS </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"
ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">SEPTEMBER 30, 2003 AND 2002 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(Unaudited) </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(1)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Organization and Business Purpose</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Equus II Incorporated (the &#147;Fund&#148;), a Delaware corporation, was formed by Equus Investments II, L.P. (the &#147;Partnership&#148;) 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. The shares of the Fund trade on the New York Stock
Exchange under the symbol EQS. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund seeks to achieve
capital appreciation by making investments in equity and equity-oriented securities issued by privately-owned companies in transactions negotiated directly with such companies. The Fund seeks to invest primarily in companies which intend to grow
either by acquiring other businesses, including leveraged buyouts, or internally. The Fund may also invest in recapitalizations of existing businesses or special situations from time to time. The Fund&#146;s investments in Portfolio Companies
consist principally of equity securities such as common and preferred stock, but also include other equity-oriented securities such as debt convertible into common or preferred stock or debt combined with warrants, options or other rights to acquire
common or preferred stock. The Fund elected to be treated as a business development company under the Investment Company Act of 1940. For tax purposes, the Fund has elected to be treated as a regulated investment company (&#147;RIC&#148;). The Fund
has entered into a management agreement with Equus Capital Management Corporation, a Delaware corporation (the &#147;Management Company&#148;). </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(2)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Liquidity and Financing Arrangements</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Liquidity and Revolving Line of Credit</B> &#150; The Fund has a $10,000,000 revolving line of credit with Bank of America, N.A. that expires on
November 30, 2003. The Fund uses its revolving line of credit for liquidity to pay operating expenses of the Fund and for new and follow-on investments in portfolio securities. The Fund had $9,065,000 outstanding under this line of credit at
September 30, 2003, which is collateralized by the Fund&#146;s investments in portfolio securities. As of November 12, 2003, the Fund&#146;s availability under the revolving line of credit is approximately $240,000. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The line of credit, as amended, provides that any proceeds received from the
sale of portfolio securities or from repayments by Portfolio Companies of the principal amount of loans must be used to pay down the line of credit. As such payments are made, the Fund&#146;s availability under the facility is reduced by a
corresponding amount. The lender has asked the Fund to take steps to pay off the line of credit. Accordingly, the Fund has been in discussions with interested parties regarding the sale of certain portfolio securities. Due to the Fund&#146;s limited
cash resources currently available, the Fund may be required to obtain borrowings from other parties and refinance its existing line of credit in order to maintain liquidity. Subsequent to September 30, 2003, the Fund entered into a contract,
subject to certain conditions, to sell its investment in Strategic Holdings, Inc (&#147;SHI&#148;). The proceeds from this sale, if consummated, should enable the Fund to pay its line of credit in full. The lender indicated it will extend the line
of credit to January 31, 2004, release certain collateral and permit additional secured borrowings from other parties during such period, but no definitive agreement has been executed. The Fund is also pursuing arrangements to refinance the line of
credit with other lenders. There can be no assurance that the Fund can sell securities sufficient to pay off the line of credit, extend the existing line of credit, obtain additional third party financing, or obtain a replacement facility. Should
the Fund be unable to do so, the </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">14 </FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">Fund may be required to sell portfolio securities at values that could be materially less than the Management Company&#146;s estimates of fair value.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund has declared a dividend of its net taxable investment
income for 2003, estimated to be approximately $4.5 million, payable on January 16, 2004. The dividend will be paid by issuing shares of common stock, unless shareholders of the Fund request payment in cash, by specific election. Based on historical
elections, the Fund would expect approximately 40% of the Fund&#146;s shareholders to elect to receive their dividend in cash. If the Fund is unable to complete the sale of SHI and obtain an extension of the line of credit or obtain additional
financing, it may not have the funds to pay the cash portion of the dividend. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Under certain circumstances, the Fund may be called on to make follow-on investments in certain Portfolio Companies. The Fund has guaranteed obligations to financial institutions on behalf of Equicom, Inc.
(&#147;Equicom&#148;) in the amount of $268,520. The Fund has made loans to Equicom from time to time to enable the company to service its debt, but the Management Company does not expect the Fund to advance more than $225,000 in the last quarter of
2003 for such purpose. In addition, the Fund has committed to invest up to an additional $2 million in Container Acquisition, Inc., in connection with a proposed refinancing of the company. Also, the Fund committed to invest up to $5,550,000 in the
two venture capital funds in its portfolio. At September 30, 2003, $3,570,000 of such amount had been funded. The Management Company does not expect the Fund to advance more than $450,000 of its remaining commitments to the venture capital funds in
the last quarter of 2003. However, if the Fund does not have sufficient funds to make follow-on investments, the Portfolio Company in need of the investment may be negatively impacted. Also, the Fund&#146;s equity interest in and its estimated fair
value of the Portfolio Company could be reduced. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The interest
rate on the line of credit is currently prime + 4%. At September 30, 2003, the interest rate was 8.00%. The Fund also pays interest at the rate of &#188;% per annum on the unused portion of the line of credit. The average daily balances outstanding
on the Fund&#146;s line of credit during the nine months ended September 30, 2003 and 2002 was $10,994,432 and $10,451,773, respectively. During the nine months ended September 30, 2003 and 2002, the amount of interest paid in cash was $732,214 and
$398,875, respectively. The line of credit restricts the Fund&#146;s ability to incur additional indebtedness, pay dividends, merge with another entity, dispose of assets outside the ordinary course of business and engage in certain transactions
with affiliates. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>RIC Borrowings, Restricted Cash and
Temporary Investments</B> &#150; The Fund had a $100,000,000 line of credit promissory note with Bank of America N.A. through January 1, 2003, with interest payable at 1/2% over the rate earned on its money market account. Because of the nature and
size of its portfolio investments, the Fund periodically borrowed money under this line of credit promissory note to make qualifying investments to maintain its tax status as a regulated investment company (&#147;RIC&#148;) under the Internal
Revenue Code. The Fund had $58,000,000 outstanding on such note at December 31, 2002, which was collateralized by restricted temporary cash investments of $58,000,000. Pursuant to the terms of the note, the Fund was required to repay the outstanding
borrowings within five business days of the initial borrowing date. The Fund repaid the outstanding quarter end borrowings within this time period. The Fund&#146;s line of credit promissory note expired on January 1, 2003. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">During September 2003, the Fund borrowed $63,990,948 to make qualifying
investments to maintain its RIC status by utilizing an established margin account with a securities brokerage firm. The Fund collateralized such borrowings with restricted cash and temporary investments in U.S. Treasury bills of $64,670,715 and
other portfolio securities of $3,980,000. The U.S. Treasury bills were sold, and the total amount borrowed was repaid on October 1, 2003. The Management Company believes the Fund will be able to use this financing arrangement to maintain its RIC
status. However, there is no assurance that such arrangement will be available to the Fund in the future. If the Fund is unable to borrow funds in </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">15 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">the future to make qualifying investments, the Fund may no longer qualify as a RIC. Failure to continue to qualify as a RIC could be material to the
Fund&#146;s shareholders in that the Fund would be subject to corporate income tax on its net investment income and net realized gains, and any distributions to shareholders would be subject to income tax as ordinary dividends. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(3)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Significant Accounting Policies</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Valuation of Investments</B> &#150; Portfolio investments are carried at fair value with the net change in unrealized appreciation or depreciation
included in the determination of net assets. Valuations of portfolio securities are performed in accordance with accounting principles generally accepted in the United States and the financial reporting policies of the Securities and Exchange
Commission (&#147;SEC&#148;). The applicable methods prescribed by such principles and policies are described below: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><U>Publicly-traded portfolio securities</U> &#150; Investments in companies whose securities are publicly traded are valued at their quoted market price
at the close of business on the valuation date, less a discount to reflect the estimated effects of restrictions on the sale of such securities (&#147;Valuation Discount&#148;), if applicable. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><U>Privately-held portfolio securities</U> &#150; The fair value of
investments for which no market exists (including 95% of the investments of the Fund at September 30, 2003) is determined on the basis of procedures established in good faith by the Board of Directors of the Fund. As a general principle, the current
&#147;fair value&#148; of an investment is the amount the Fund might reasonably expect to receive for it upon its current sale, in an orderly manner. Appraisal valuations are necessarily subjective and the Management Company&#146;s estimate of
values may differ materially from amounts actually received upon the disposition of portfolio securities. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Generally, cost is the primary factor used to determine fair value until significant developments affecting the Portfolio Company (such as results of
operations or changes in general market conditions) provide a basis for use of an appraisal valuation. Thereafter, portfolio investments are carried at appraised values as determined quarterly by the Management Company, subject to the approval of
the Board of Directors. Appraisal valuations are based upon such factors as a Portfolio Company&#146;s earnings, cash flow and net worth, the market prices for similar securities of comparable companies, an assessment of the company&#146;s current
and future financial prospects and various other factors and assumptions. In the case of unsuccessful operations, the appraisal may be based upon liquidation value. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Most of the Fund&#146;s common equity investments are appraised at a multiple of historical free cash flow generated by the
Portfolio Company in its most recent fiscal year, less outstanding funded indebtedness and other senior securities such as preferred stock. Projections of current year free cash flow may be utilized and adjustments for non-recurring items are
considered. Multiples utilized are estimated based on the Management Company&#146;s experience in the private company marketplace, and are necessarily subjective in nature. Most of the Portfolio Companies utilize a high degree of leverage. The
banking environment currently has resulted in pressure on several of these Portfolio Companies to reduce the amount of leverage in order to maintain such financing. From time to time, Portfolio Companies are in default of certain covenants in their
loan agreements. When the Management Company has a reasonable belief that the Portfolio Company will be able to restructure the loan agreements to adjust for any defaults, the Portfolio Company&#146;s securities continue to be valued assuming that
the company is a going concern. In the event a Portfolio Company cannot generate adequate cash flow to meet the principal and interest payments on such indebtedness or is not successful in refinancing the debt upon its maturity, the Fund&#146;s
investment could be reduced or eliminated through foreclosure on the Portfolio Company&#146;s assets or the Portfolio Company&#146;s reorganization or bankruptcy. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">16 </FONT></P>


<p Style='page-break-before:always'>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund may also use, when available, third-party transactions in a Portfolio Company&#146;s securities
as the basis of valuation (the &#147;private market method&#148;). The private market method will be used only with respect to completed transactions or firm offers made by sophisticated, independent investors. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The fair values of debt securities, which are generally held to maturity, are
determined on the basis of the terms of the debt securities and the financial conditions of the issuer. 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="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Because of the inherent uncertainty of the valuation of
portfolio securities which do not have readily ascertainable market values, amounting to $78,769,052 (including $5,095,306 in publicly-traded securities, net of a $1,552,547 Valuation Discount) and $82,653,260 (including $1,230,650 in
publicly-traded securities, net of a $228,003 Valuation Discount) at September 30, 2003 and December 31, 2002, respectively, the Fund&#146;s estimate of fair value may materially differ from the value that would have been used had a ready market
existed for the securities. Appraised values do not reflect brokers&#146; fees or other normal selling costs which might become payable on disposition of such investments. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On a daily basis, the Fund adjusts its net asset value for the changes in the value of its publicly held securities and
material changes in the value of its private securities and reports those amounts to Lipper Analytical Services, Inc. Weekly and daily net asset values appear in various publications, including <U>Barron&#146;s</U> and <U>The Wall Street
Journal</U>. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Investment Transactions</B> &#150; Investment
transactions are recorded on the accrual method. Realized gains and losses on investments sold are computed on a specific identification basis. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Cash Flows</B> &#150; For purposes of the Statements of Cash Flows, the Fund considers all highly liquid temporary cash investments purchased with an
original maturity of three months or less to be cash equivalents. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2"><B>Federal Income Taxes</B> &#150; The Fund intends 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 shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund borrows money from time to time to maintain its tax status
under the Internal Revenue Code as a RIC. See Note 2 for further discussion of the Fund&#146;s RIC borrowings. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Reclassifications &#150; </B>Certain reclassifications have been made to the prior years&#146; amounts to conform to current year presentation.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">17 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><B>Stock-Based Compensation &#150; </B>The Fund accounts for stock-based compensation using the intrinsic
value method in accordance with the provisions of APB No. 25. Had the Fund accounted for the options using the fair value method under SFAS 123, the decrease in net assets from operations for the nine months ended September 30, 2003 and 2002,
respectively, would have been: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2003</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>2002</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" ><FONT SIZE="1">&nbsp;</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Decrease in net assets from operations, as reported</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(11,659</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,516,453</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Stock-based employee compensation expense (benefit) included in decrease in net assets from operations</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">835,215</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(14,434</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Stock-based employee compensation expense determined using fair value method</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(53,909</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(80,177</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="1" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="80%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Pro forma increase (decrease) in net assets from operations</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="4%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">769,647</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="6%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">(2,611,064</FONT></TD>
<TD NOWRAP VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">)</FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE ALIGN="right" COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR SIZE="3" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom"><HR WIDTH="0" SIZE="3" NOSHADE ALIGN="left" COLOR="#ffffff"></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(4)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Management</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund has entered into a management agreement with the Management Company. Pursuant to such agreement, the Management Company performs certain
services, including certain management and administrative services necessary for the operation of the Fund. The Management Company receives a management fee at an annual rate of 2% of the net assets of the Fund, paid quarterly in arrears. The
Management Company also receives compensation for providing certain investor communication services, of which $37,500 is included in the accompanying Statements of Operations for each of the nine months ended September 30, 2003 and 2002. The
management fees paid by the Fund represent the Management Company&#146;s primary source of revenue and support. The Management Company is controlled by a privately-owned corporation. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">As compensation for services provided to the Fund, each director who is not an officer of the Fund 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 each committee meeting attended, and reimbursement of all out-of-pocket expenses relating to attendance at such
meetings. In addition, each director who is not an officer of the Fund is granted incentive stock options to purchase shares of the Fund&#146;s stock from time to time. (See Note 8). Certain officers of the Fund serve as directors of Portfolio
Companies, and may receive and retain fees, including non-employee director stock options, from such Portfolio Companies in consideration for such service. Additionally, two officers of the Management Company serve as directors of the Fund.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Management Agreement will continue in effect until June
30, 2004, and from year-to&#150;year thereafter provided such continuance is approved at least annually by (i) a vote of a majority of the outstanding shares of the Fund or (ii) a majority of the directors who are not &#147;interested persons&#148;
of the Fund, at a meeting called for the purpose of voting on such approval. The Management Agreement may be terminated at any time, without the payment of any penalty, by a vote of the Board of Directors of the Fund or the holders of a majority of
the Fund&#146;s shares on 60 days&#146; written notice to the Management Company, and would automatically terminate in the event of its &#147;assignment&#148; (as defined in the Investment Company Act). </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(5)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Federal Income Tax Matters</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund is required to make distributions of any net taxable investment income on an annual basis, and may elect to distribute or retain net taxable
realized capital gains. The Internal Revenue Service approved the Fund&#146;s request, effective October 31, 1998, to change its year-end for determining capital gains for purposes of Section 4982 of the Internal Revenue Code from December 31 to
October 31. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">18 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund was not required to make any distributions for 2002 under income tax regulations. As of December
31, 2002, the Fund had a capital loss carryforward of $2,218,000, which may be used to offset future taxable capital gains. If not utilized, the loss carryforward will expire in 2006. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(6)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Dividends</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund declared no dividends during the nine months ended September 30, 2003 and 2002. In November 2003, the Fund declared a dividend equivalent to its
net taxable investment income for 2003, estimated to be approximately $4.5 million, or $0.72 per share. The dividend is payable to the shareholders of record on November 30, 2003. The dividend will be paid by the issuance of additional shares of
common stock, unless shareholders request payment in cash, by specific election. Based on historical elections, the Fund would expect approximately 40% of the Fund&#146;s shareholders to elect to receive their dividend in cash. Payment of the
dividend is expected to occur in January 2004. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(7)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Portfolio Securities</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">During the nine months ended September 30, 2003, the Fund made follow-on investments of $3,224,870 in eight companies, including $944,870 in accrued
interest and dividends in the form of additional portfolio securities and accretion of original issue discount on promissory notes. In addition, the Fund realized a net capital loss of $7,801,775 during the nine months ended September 30, 2003.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">During the nine months ended September 30, 2002, the Fund
invested $483,749 in one new company and made follow-on investments of $6,367,389 in eleven companies, including $1,485,165 in accrued interest and dividends in the form of additional portfolio securities and accretion of original issue discount on
promissory notes. In addition, the Fund realized a net capital gain of $399,301 during the nine months ended September 30, 2002. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(8)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Stock Option Plan</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Shareholders have approved the Equus II Incorporated 1997 Stock Incentive Plan (&#147;Stock Incentive Plan&#148;), which authorizes the Fund to issue
options to the directors and officers of the Fund in an aggregate amount of up to 20% of the outstanding shares of common stock of the Fund. The Stock Incentive Plan provides that each director who is not an officer of the Fund is, on the first
business day following each annual meeting, granted an incentive stock option to purchase 2,200 shares of the Fund&#146;s common stock. Options are issued to the officers of the Fund at the discretion of the compensation committee in accordance with
the Stock Incentive Plan. The options have a ten year life and vest 50% six months after the grant date and 16<FONT SIZE="1"><SUP>&nbsp;2</SUP></FONT><FONT SIZE="2">/</FONT><FONT SIZE="1">3</FONT><FONT FACE="Times New Roman" SIZE="2"
COLOR="#000000">% on the first, second and third anniversaries of the date of the grant. </FONT></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Under the Stock Incentive Plan, options to purchase 1,105,500 and 1,086,800 shares of the Fund&#146;s common stock with a weighted average exercise price
of $8.41 and $8.42 per share were outstanding at September 30, 2003 and 2002, respectively. Of these options, 752,938 and 571,988 shares, with a weighted average exercise price per share of $8.75 and $9.07 were exercisable at September 30, 2003 and
2002, respectively. Of the outstanding options at September 30, 2003, 1,059,300 have exercise prices ranging from $7.43 to $14.15 and the remaining options have exercise prices ranging from $21.82 to $24.95. These options expire in May 2007 through
May 2013. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On August 8, 2003, options to purchase 5,500 shares
of the Fund&#146;s common stock at a price of $8.63 per share were issued to a new director, upon his election to the board of directors of the Fund. On May 12, 2003, options to acquire a total of 13,200 shares at $7.43 per share were issued to the
non-officer directors. On November 14, 2001, options to acquire a total of 990,000 shares at $7.69 per share were issued to officers of the Fund. The officer options include dividend equivalent rights. Generally accepted </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">19 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">accounting principles require that the options be accounted for using variable plan accounting. The Fund is currently discussing with the Securities and
Exchange Commission certain matters regarding the Fund&#146;s Stock Incentive Plan including, whether a business development company is authorized to issue options that include dividend equivalent rights. Since November 2001, no cash dividends have
been declared by the Fund. Consequently, no amounts have accumulated to the benefit of the option holders related to the dividend equivalent rights. Variable plan accounting resulted in non-cash compensation expense (benefit) of $835,215 and
$(14,434) during the nine months ended September 30, 2003 and 2002, respectively. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">If all outstanding options for which the market price exceeds the exercise price at September 30, 2003 had been exercised, the Fund&#146;s net asset value would have been reduced by $0.20 per share, assuming the Fund
had used the proceeds from the exercise of such options to repurchase shares at the market price pursuant to the treasury stock method. As of December 31, 2002, all outstanding options were &#147;out of the money&#148; and would not have had a
dilutive effect on net assets per share if exercised, assuming the Fund had used the proceeds from the exercise of such options to repurchase shares at the market price pursuant to the treasury stock method. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(9)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Subsequent Events</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On October 1, 2003, the Fund sold the U.S. Treasury bills for $63,989,932 and repaid the margin loan. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On October 10, 2003, the Fund advanced $75,000 to Equicom, Inc. pursuant to a
10% promissory note, thereby reducing the commitment to provide funding to Equicom by a like amount. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On October 14, 2003, the Fund committed to invest up to an additional $2,000,000 in Container Acquisition, Inc. (&#147;Container&#148;) under certain
circumstances. On October 21, 2003, $500,000 of such commitment was advanced to Container. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Subsequent to September 30, 2003, the Fund entered into a contract, subject to certain conditions, to sell its investment in Strategic Holdings, Inc. Proceeds from such sale are expected to approximate the value
reflected for such investment in the accompanying financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">20 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B><U>
<A NAME="tx67515_9"></A>Item&nbsp;2.</U></B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B><U>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations.</U> </B></FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Significant Accounting Policies </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><I>Valuation of Investments</I> &#150; Portfolio investments are carried at
fair value with the net change in unrealized appreciation or depreciation included in the determination of net assets. Valuations of portfolio securities are performed in accordance with accounting principles generally accepted in the United States
and the financial reporting policies of the Securities and Exchange Commission (&#147;SEC&#148;). The applicable methods prescribed by such principles and policies are described below: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><U>Publicly-traded portfolio securities</U> &#150; Investments in companies whose securities are publicly traded are valued
at their quoted market price at the close of business on the valuation date, less a discount to reflect the estimated effects of restrictions on the sale of such securities (&#147;Valuation Discount&#148;), if applicable. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2"><U>Privately-held portfolio securities</U> &#150; The fair value of
investments for which no market exists (95% of the investments held by the Fund at September 30, 2003) is determined on the basis of procedures established in good faith by the Board of Directors of the Fund. As a general principle, the current
&#147;fair value&#148; of an investment would be the amount the Fund might reasonably expect to receive for it upon its current sale, in an orderly manner. Appraisal valuations are necessarily subjective and the Management Company&#146;s estimate of
values may differ materially from amounts actually received upon the disposition of portfolio securities. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Generally, cost is the primary factor used to determine fair value until significant developments affecting the Portfolio Company (such as results of
operations or changes in general market conditions) provide a basis for use of an appraisal valuation. Thereafter, portfolio investments are carried at appraised values as determined quarterly by the Management Company, subject to the approval of
the Board of Directors. Appraisal valuations are based upon such factors as a Portfolio Company&#146;s earnings, cash flow and net worth, the market prices for similar securities of comparable companies, an assessment of the company&#146;s current
and future financial prospects and various other factors and assumptions. In the case of unsuccessful operations, the appraisal may be based upon liquidation value. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Most of the Fund&#146;s common equity investments are appraised at a multiple of historical free cash flow generated by the
Portfolio Company in its most recent fiscal year, less outstanding funded indebtedness and other senior securities such as preferred stock. Projections of current year free cash flow may be utilized and adjustments for non-recurring items are
considered. Multiples utilized are estimated based on the Management Company&#146;s experience in the private company marketplace, and are necessarily subjective in nature. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Most of the Portfolio Companies utilize a high degree of leverage. The banking environment currently has resulted in
pressure on several of these Companies to reduce the amount of leverage in order to maintain such financing. From time to time, Portfolio Companies are in default of certain covenants in their loan agreements. When the Management Company has a
reasonable belief that the Portfolio Company will be able to restructure the loan agreements to adjust for any defaults, the Portfolio Company&#146;s securities continue to be valued assuming that the company is a going concern. In the event a
Portfolio Company cannot generate adequate cash flow to meet the principal and interest payments on such indebtedness or is not successful in refinancing the debt upon its maturity, the Fund&#146;s investment could be reduced or eliminated through
foreclosure on the Portfolio Company&#146;s assets or the Portfolio Company&#146;s reorganization or bankruptcy. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">21 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund may also use, when available, third-party transactions in a Portfolio Company&#146;s securities
as the basis of valuation (the &#147;private market method&#148;). The private market method will be used only with respect to completed transactions or firm offers made by sophisticated, independent investors. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The fair values of debt securities, which are generally held to maturity, are
determined on the basis of the terms of the debt securities and the financial conditions of the issuer. 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="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Because of the inherent uncertainty of the valuation of
portfolio securities which do not have readily ascertainable market values, the Fund&#146;s estimate of fair value may materially differ from the value that would have been used had a ready market existed for the securities. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On a daily basis, the Fund adjusts its net asset value for the changes in the
value of its publicly held securities and material changes in the value of its private securities and reports those amounts to Lipper Analytical Services, Inc. Weekly and daily net asset values appear in various publications, including
<U>Barron&#146;s</U> and <U>The Wall Street Journal</U>. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2"><I>Federal Income Taxes</I> &#150; The Fund intends to comply with the requirements of the Internal Revenue Code necessary to qualify as a regulated investment company (&#147;RIC&#148;) and, as such, will not be subject to federal income
taxes on otherwise taxable income (including net realized capital gains) which is distributed to shareholders. Therefore, no provision for federal income taxes is recorded in the financial statements. The Fund borrows money from time to time to
maintain its tax status under the Internal Revenue Code as a RIC. See Note 2 for further discussion of the Fund&#146;s RIC borrowings. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Liquidity and Capital Resources </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">At September 30, 2003, the Fund had $82,749,052 of its assets invested in portfolio securities of 18 companies and two venture capital funds. </FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund has a $10,000,000 revolving line of credit with Bank of America,
N.A. that expires on November 30, 2003. The Fund uses its revolving line of credit for liquidity to pay operating expenses of the Fund and for new and follow-on investments in portfolio securities. The Fund had $9,065,000 outstanding under this line
of credit at September 30, 2003, which is collateralized by the Fund&#146;s investments in portfolio securities. As of November 12, 2003, the Fund&#146;s availability under the revolving line of credit is approximately $240,000. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The line of credit, as amended, provides that any proceeds received from the
sale of portfolio securities or from repayments by portfolio companies of the principal amount of loans must be used to pay down the line of credit. The line of credit also restricts the Fund&#146;s ability to incur additional indebtedness, pay
dividends, merge with another entity, dispose of assets outside the ordinary course of business and engage in certain transactions with affiliates. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The lender has asked the Fund to take steps to pay off the line of credit. Accordingly, the Fund has been in discussions with interested parties regarding
the sale of certain portfolio securities. Due to the Fund&#146;s limited cash resources currently available, the Fund may be required to obtain borrowings from other parties and refinance its existing line of credit in order to maintain liquidity.
Subsequent to September 30, 2003, the Fund entered into a contract, subject to certain conditions, to sell its investment in Strategic Holdings, Inc (&#147;SHI&#148;). The proceeds from this sale, if consummated, should enable the Fund to pay its
line of credit in full. The lender indicated it will extend the line of credit to January 31, 2004, release certain collateral and permit additional secured borrowings from other parties during such period, </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">but no definitive agreement has been executed. The Fund is also pursuing arrangements to refinance the line of credit with another lender. There can be no
assurance that the Fund can sell securities sufficient to pay off the line of credit, extend the existing line of credit, obtain additional third party financing or obtain a replacement facility. Should the Fund be unable to do so, the Fund may be
required to sell portfolio securities at values that could be materially less than Management&#146;s estimates of fair value. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund has declared a dividend of its net taxable investment income for 2003, estimated to be approximately $4.5 million, payable on January 16, 2004.
The dividend will be paid by issuing shares of common stock, unless shareholders of the Fund request payment in cash, by specific election. Based on historical elections, the Fund would expect approximately 40% of the shareholders to elect to
receive their dividend in cash. If the Fund is unable to complete the sale of SHI and obtain an extension of the line of credit or obtain additional financing, it may not have the funds to pay the cash portion of the dividend. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Under certain circumstances, the Fund may be called on to make follow-on
investments in certain Portfolio Companies. The Fund has guaranteed obligations to financial institutions on behalf of Equicom, Inc. (&#147;Equicom&#148;) in the amount of $268,520. The Fund has made loans to Equicom from time to time to enable the
company to service its debt, but the Management Company does not expect the Fund to advance more than $225,000 in the last quarter of 2003 for such purpose. In addition, the Fund has committed to invest up to an additional $2 million in Container
Acquisition, Inc., in connection with a proposed refinancing of the company. Also, the Fund committed to invest up to $5,550,000 in the two venture capital funds in its portfolio. At September 30, 2003, $3,570,000 of such amount had been funded. The
Management Company does not expect the Fund to advance more than $450,000 of its remaining commitments to the venture capital funds in the last quarter of 2003. If the Fund does not have sufficient funds to make follow-on investments, the Portfolio
Company in need of the investment may be negatively impacted. Also, the Fund&#146;s equity interest in and its estimated fair value of the Portfolio Company could be reduced. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Net cash provided (used) by operating activities was $1,323,510 and $(1,100,542) for the nine months ended September 30,
2003 and 2002, respectively. Approximately $22.3 million in estimated value of the Fund&#146;s investments are in the form of notes receivable from Portfolio Companies. At September 30, 2003, two of these notes, with an estimated fair value of
$6,835,609 provide that interest is paid in kind or that the original issue discount is accreted over the life of the notes, by adding such amount to the principal of the notes. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Because of the nature and size of its portfolio investments, the Fund periodically borrowed money under a line of credit
promissory note to make qualifying investments to maintain its tax status under the Internal Revenue Code as a regulated investment company (&#147;RIC&#148;). The Fund&#146;s line of credit promissory note expired on January 1, 2003. Management
believes the Fund will be able to borrow sufficient funds to maintain its RIC status in the future by utilizing an established margin account with a securities brokerage firm, supplemented by collateralized loans from banks, if necessary. However,
there are no assurances that such arrangement will be available to the Fund in the future. If the Fund is unable to borrow funds to make qualifying investments, the Fund 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 shareholders would be subject to income tax as ordinary dividends. Failure to continue to qualify as a RIC could be material to the Fund&#146;s shareholders.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">At September 30, 2003, the Fund had $63,990,948 of its total
assets of $151,357,565 invested in U.S. Treasury bills. These securities were held by a securities brokerage firm in an established margin account that is utilized to enable the Fund to achieve adequate diversification to maintain its pass-through
tax status as a regulated investment company, and were pledged along with cash and securities to secure the payment of the margin account balance. The U.S. Treasury bills were sold and such amount was repaid to the brokerage firm on October 1, 2003.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">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 contingencies or to make follow-on or new investments. Pursuant to the restrictions in the Fund&#146;s existing line of credit, the Fund is not allowed to incur additional indebtedness unless approved by the lender.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">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 shareholders will be able to claim their proportionate
share of the federal income taxes paid by the Fund on such gains as a credit against their own federal income tax liabilities. Shareholders 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="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Results of Operations
</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Investment Income and Expense </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Net investment income after all expenses amounted to $2,809,811 and $893,686
for the nine months ended September 30, 2003 and 2002, respectively. Income from portfolio securities was $6,111,784 for the nine months ended September 30, 2003 and $2,652,139 for the comparable period in 2002. The increase in 2003 is primarily
attributable to a $3,500,000 cash dividend received from Champion Window Holdings, Inc. in 2003. Professional fees increased to $191,187 in 2003 from $143,204 in 2002. This increase is due to additional fees related to the 2002 audit. Interest
expense increased to $739,644 in 2003 from $384,608 in 2002 due to an increase in the interest rate on the loan for 2003 and additional fees paid to renew the line of credit. The current interest rate for 2003 is prime + 4% per annum, which was
8.00% at September 30, 2003. This interest rate is approximately four percentage points higher than the rate paid in 2002. In addition, the average daily balances outstanding on the lines of credit increased to $10,994,432 during the nine months
ended September 30, 2003 from $10,506,112 during the comparable period in 2002. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">The Management Company receives management fee compensation at an annual rate of 2% of the net assets of the Fund paid quarterly in arrears. Such fees amounted to $1,172,324 and $1,147,271 during the nine months ended
September 30, 2003 and 2002, respectively. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On November 14,
2001, options to acquire a total of 990,000 shares of common stock at $7.69 per share (market price on date of grant) were issued to officers of the Fund. These options include dividend equivalent rights. Generally accepted accounting principles
require that the options be accounted for using variable plan accounting. The Fund is currently discussing with the Securities and Exchange Commission certain matters regarding the Fund&#146;s Stock Incentive Plan including, whether a business
development company is authorized to issue options that include dividend equivalent rights. Since November 2001, no cash dividends have been declared by the Fund. Consequently, no amounts have accumulated to the benefit of the option holders related
to the dividend equivalent rights. However, variable plan accounting resulted in recorded non-cash compensation expense (benefit) of $835,215 and $(14,434) during the nine months ended September 30, 2003 and 2002, respectively. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Realized Gains and Losses on Sales of Portfolio Securities </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">During the nine months ended September 30, 2003, the Fund realized net
capital losses of $7,801,775 from the sale of securities of seven Portfolio Companies. The Fund received $197,986 for its remaining investment in Milam Enterprises, LLC, realizing a capital gain of $196,075. The Fund received $2,406,398 from Doane
PetCare Enterprises, Inc. for payment in full of its 15% promissory note, </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">realizing a capital gain of $551,850 relating to the unamortized original issue discount. In addition, the Fund received $500,000 for its investment in FS
Strategies, Inc., realizing a capital loss of $8,758,667. Also, the Fund sold 8,863 shares of Weatherford International common stock for $353,409, realizing a capital loss of $160,202. In addition, the Fund received $3,452 from ENGlobal Corporation
in payment for 3,596 shares of common stock, realizing a capital gain of $1,350. On September 30, 2003, the Fund received $690,000 from the liquidation of GCS RE, Inc., realizing a capital gain of $369,076. Also, the Fund realized a net short term
capital loss of $1,258 from the purchase and sale of U.S. Treasury Bills during 2003. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">During the nine months ended September 30, 2002, the Fund realized net capital gains of $399,301 from the sale of securities of three Portfolio Companies. The Fund sold 60,595 shares of its investment in Weatherford
International for $2,844,558, realizing a capital loss of $666,922. In addition, the Fund sold its investment in Travis International, Inc. for $921,577, realizing a capital gain of $918,091. Also, the Fund received proceeds from Jones Industrial
Holdings, Inc. for the redemption of 18,667 warrants, realizing a capital gain of $148,132.<B> </B> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>Unrealized Appreciation and Depreciation of Portfolio Securities </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Net unrealized depreciation on investments decreased by $4,980,305 during the nine months ended September 30, 2003 from $5,417,014 to $436,709. Such
change resulted from increases in the estimated fair value of eight of the Fund&#146;s Portfolio Companies aggregating $7,395,883, decreases in the estimated fair value of eleven of the Fund&#146;s Portfolio Companies aggregating $11,547,082 and the
transfer of $9,131,504 in net unrealized depreciation to net capital loss from the sale or disposition of investments in four of the Fund&#146;s Portfolio Companies. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Net unrealized depreciation on investments increased by $3,809,439 during the nine months ended September 30, 2002 from
$4,492,995 to $8,302,433. Such increase resulted from increases in the estimated fair value of eleven of the Fund&#146;s Portfolio Companies aggregating $10,011,215, decreases in the estimated fair value of thirteen of the Fund&#146;s Portfolio
Companies aggregating $13,407,271 and the transfer of $413,383 in unrealized appreciation to net capital gain from the sale or disposition of investments in three of the Fund&#146;s Portfolio Companies. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Dividends </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund declared no dividends during the nine months ended September 30, 2003 and 2002. In November 2003, the Fund declared
a dividend equivalent to its net taxable investment income for 2003, estimated to be approximately $4.5 million, or $0.72 per share. The dividend is payable to the shareholders of record on November 30, 2003. The dividend will be paid by the
issuance of additional shares of common stock, unless shareholders request payment in cash, by specific election. Based on historical elections, the Fund would expect approximately 40% of the Fund&#146;s shareholders to elect to receive their
dividend in cash. Payment of the dividend is expected to occur in January 2004. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2"><B>Portfolio Investments </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">During the nine months
ended September 30, 2003, the Fund made follow-on investments of $3,224,870 in eight portfolio companies, including $944,870 in accrued interest and dividends received in the form of additional portfolio securities and accretion of original issue
discount on a promissory note. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">For the nine months ended
September 30, 2003, the Fund received an additional 1,321 and 146,833 shares of preferred stock of Sovereign Business Forms, Inc. (&#147;Sovereign&#148;) and ENGlobal Corporation (&#147;ENG&#148;) in dividends, respectively. In addition, Sovereign
elected to convert $480,488 of accrued interest into the balance of the 15% promissory notes due to the Fund. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">25 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">During the nine months ended September 30, 2003, ENG made principal payments of $330,000 on its 9.5%
promissory note, reducing the note balance to $2,450,000. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On
February 28, 2003, the Fund received $2,406,398 from Doane PetCare Enterprises, Inc. for payment in full of its 15% promissory note, realizing a capital gain of $551,850. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On March 3, 2003, the Fund invested an additional $300,000 in Vanguard VII, L.P. pursuant to a $3,000,000 commitment made in
June 2000. $1,500,000 of such commitment has been funded through September 30, 2003. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">During the nine months ended September 30, 2003, the Fund advanced $490,000 to Equicom, Inc. pursuant to a 10% promissory note, thereby reducing the guarantee commitment to Equicom&#146;s lender by a like amount.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On June 4, 2003, the Fund invested an additional $240,000 in
Sternhill Partners I, L.P. pursuant to a $2,550,000 commitment made in March 2000. $2,070,000 of such commitment has been funded through September 30, 2003. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On July 2, 2003, the Fund received a cash dividend of $3,500,000 from its investment in Champion Window Holdings, Inc. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On June 19, 2003 and July 14, 2003, the Fund invested $400,000 and $850,000,
respectively in Container Acquisition, Inc. in exchange for a 7% promissory note. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">On August 19, 2003, ENG exercised its right to convert all of its outstanding Series A preferred stock into common stock. As a result, the Fund&#146;s investment of $2,734,833 in Series A preferred stock was converted
into 1,149,089 shares of common stock. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">During the nine months
ended September 30, 2003, original issue discount of $118,703 was accreted on the 12% promissory note from Turfgrass America, Inc., bringing the note balance to $3,900,507. The original issue discount is being accreted over the life of the note.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Subsequent Events </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On October 1, 2003, the Fund sold U.S. Treasury bills for $63,989,932 and
repaid the margin loan. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On October 10, 2003, the Fund advanced
$75,000 to Equicom, Inc. pursuant to a 10% promissory note, thereby reducing the commitment to provide funding to Equicom by a like amount. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">On October 14, 2003, the Fund committed to invest up to an additional $2,000,000 in Container Acquisition, Inc. (&#147;Container&#148;) under certain
circumstances. On October 21, 2003, $500,000 of such commitment was advanced to Container. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">Subsequent to September 30, 2003, the Fund entered into a contract, subject to certain conditions, to sell its investment in Strategic Holdings, Inc. Proceeds from such sale are expected to approximate the value
reflected for such investment in the accompanying financial statements. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B><U>
<A NAME="tx67515_10"></A>Item&nbsp;3.</U></B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B><U>Quantitative and Qualitative Disclosure about Market Risk</U> </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund is subject to financial market risks, including changes in interest rates with respect to its investments in debt securities and its outstanding
debt payable, as well as changes in marketable equity </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">security prices. The Fund does not use derivative financial instruments to mitigate any of these risks. The return on the Fund&#146;s investments is
generally not affected by foreign currency fluctuations. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The
Fund&#146;s investment in portfolio securities consists of some fixed rate debt securities. Since the debt securities are generally priced at a fixed rate, changes in interest rates do not directly impact interest income. In addition, changes in
market interest rates are not typically a significant factor in the Fund&#146;s determination of fair value of these debt securities, since the securities are generally held to maturity. These fair values are determined on the basis of the terms of
the debt security and the financial condition of the issuer. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">The Fund&#146;s liabilities include debts payable to a financial institution. The revolving credit facilities are priced at floating rates of interest, based on LIBOR or the prime rate plus additional charges. As a result of the floating
rate, a change in interest rates could result in either an increase or decrease in the Fund&#146;s interest expense. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">A major portion of the Fund&#146;s investment portfolio consists of debt and equity investments in private companies. Modest changes in the public equity
markets 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 realized on these investments. A portion of the Fund&#146;s investment portfolio also consists of common stocks 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="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund is classified as a &#147;non-diversified&#148; investment company under the Investment Company Act, which means the Fund is not limited in the
proportion of its assets that may be invested in the securities of a single issuer. Generally, the Fund does not initially invest more than 15% of the value of its net assets in a single Portfolio Company. However, follow-on investments, a
disproportionate increase in the value of one Portfolio Company or the sale of investments may result in greater than 15% of the Fund&#146;s net assets being invested in a single Portfolio Company. While these restrictions limit the exposure of the
capital of the Fund in any single investment, to the extent the Fund takes large positions in the securities of a small number of issuers, the Fund will be exposed to a greater risk of loss and the Fund&#146;s net asset value and the market price of
its common stock may fluctuate as a result of changes in the financial condition, or results of operations of, the stock price of, or in the market&#146;s assessment of any single Portfolio Company to a greater extent than would be the case if it
were a &#147;diversified&#148; company holding numerous investments. The Fund currently has investments in 18 Portfolio Companies and two venture capital funds. The value of one investment exceeds 22% of the value of the Fund&#146;s net assets and
the value of another exceeds 21%. The value of the Fund&#146;s investments in three entities which are involved in the manufacture of residential windows exceeds 33% of the Fund&#146;s net asset value at September 30, 2003. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B><U>
<A NAME="tx67515_11"></A>Item&nbsp;4.</U></B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B><U>Controls and Procedures</U> </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">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&#146;s rules and forms, and that such information is accumulated and communicated to the
Fund&#146;s management, including its Chairman and Chief Executive Officer and President and Principal Financial and Accounting Officer, as appropriate, to allow timely decisions regarding required disclosure. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">The Fund&#146;s Chairman and Chief Executive Officer and President and
Principal Financial and Accounting Officer have evaluated the effectiveness of the Fund&#146;s disclosure controls and procedures as of the end of the quarter covered by report. Based on their evaluation, the Fund&#146;s Chairman and Chief </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">27 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">Executive Officer and President and Principal Financial and Accounting Officer concluded that the Fund&#146;s disclosure controls and procedures were
effective in ensuring that information relating to the Fund was made known to them by others within the Fund in a timely manner, particularly during the period in which this Quarterly Report on Form 10-Q was being prepared, and that no changes are
required at this time. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">There have been no significant changes
in the Fund&#146;s internal controls during the quarter that have materially affected or is reasonably likely to affect the Fund&#146;s internal controls over financial reporting. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2"><B><U>
<A NAME="tx67515_12"></A>Item&nbsp;6.</U></B></FONT></TD>
<TD WIDTH="1%" VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B><U>Exhibits and Reports on Form 8-K.</U> </B></FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(a)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Exhibits</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="92%" BORDER="0">

<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="2">31.</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="95%"><FONT FACE="Times New Roman" SIZE="2">Quarterly Certification Required by Rules 13a-14 and 15-d-14 under the Securities Exchange Act of 1934</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="95%"> <P STYLE="margin-left:2.50em; text-indent:-2.50em"><FONT FACE="Times New Roman" SIZE="2">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certification by the Chief Executive Officer</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="95%"> <P STYLE="margin-left:2.50em; text-indent:-2.50em"><FONT FACE="Times New Roman" SIZE="2">(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certification by the President and Principal Financial and Accounting
Officer</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="2">32.</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="95%"><FONT FACE="Times New Roman" SIZE="2">Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer and the President and Principal Financial and Accounting
Officer</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="2">99.1</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="95%"><FONT FACE="Times New Roman" SIZE="2">Press Release dated November 5, 2003</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="2">99.2</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="95%"><FONT FACE="Times New Roman" SIZE="2">Press Release dated November 5, 2003</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top" ALIGN="right" WIDTH="3%"><FONT FACE="Times New Roman" SIZE="2">99.3</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="95%"><FONT FACE="Times New Roman" SIZE="2">Press Release dated November 13, 2003</FONT></TD></TR>
</TABLE></DIV> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Reports on Form 8-K filed subsequent to quarter ended September 30, 2003</U> </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:8%"><FONT FACE="Times New Roman" SIZE="2">No reports on Form 8-K were filed by the Fund during the period for which this report is filed. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">28 </FONT></P>


<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>
<A NAME="tx67515_13"></A>SIGNATURE </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">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="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD VALIGN="bottom" WIDTH="46%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Date: November 14, 2003</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="46%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">EQUUS II INCORPORATED</FONT></P></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT><FONT SIZE="">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top" WIDTH="46%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;Nolan Lehmann</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2"><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="46%"><FONT FACE="Times New Roman" SIZE="1"><B>Nolan Lehmann</B></FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="46%"><FONT FACE="Times New Roman" SIZE="1"><B>President</B></FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="46%"><FONT FACE="Times New Roman" SIZE="1"><B>Principal Financial and Accounting Officer</B></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">29 </FONT></P>

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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>dex311.htm
<DESCRIPTION>CERTIFICATION BY CEO (SECTION 302)
<TEXT>
<HTML><HEAD>
<TITLE>Certification by CEO (Section 302)</TITLE>
</HEAD>
 <BODY BGCOLOR="WHITE">

 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT 31.1 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Section 302 Certifications </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">I, Sam P. Douglass, certify that: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">I have reviewed this quarterly report on Form 10-Q of Equus II Incorporated; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">2.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">3.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">4.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The registrant&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)). </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(a)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(c)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter (the
registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting; and </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">5.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s
auditors and the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions): </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(a)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant&#146;s ability to record, process, summarize and report financial information; and </FONT></TD></TR></TABLE>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">


<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="8%"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(b)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.
</FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Date: November 14, 2003
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P><DIV ALIGN="right">
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="40%" BORDER="0">

<TR>
<TD HEIGHT="16"></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="100%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;Sam P. Douglass</FONT></P></TD></TR>
<TR>
<TD VALIGN="bottom"><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR>
<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Sam P. Douglass</B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Chairman</B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Chief Executive Officer</B></FONT></TD></TR>
</TABLE></DIV>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>dex312.htm
<DESCRIPTION>CERTIFICATION BY PRES. AND PRINCIPAL FINANCIAL & ACCOUNTING OFFICE (SECTION 302)
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<TITLE>Certification by Pres. and principal financial &amp; accounting Office (Section 302)</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT 31.2 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>Section 302 Certifications </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">I, Nolan Lehmann, certify that: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">1.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">I have reviewed this quarterly report on Form 10-Q of Equus II Incorporated; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">2.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">3.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report; </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">4.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The registrant&#146;s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) . </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">a.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">b.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">c.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter (the
registrant&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting; and </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">5.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s
auditors and the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions): </FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">a.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant&#146;s ability to record, process, summarize and report financial information; and </FONT></TD></TR></TABLE>

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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">b.</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.
</FONT></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">Date: November 14, 2003
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<TD VALIGN="top" WIDTH="100%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;Nolan Lehmann</FONT></P></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Nolan Lehmann</B></FONT></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>President</B></FONT></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Principal Financial and Accounting Officer</B></FONT></TD></TR>
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<TYPE>EX-32
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<FILENAME>dex32.htm
<DESCRIPTION>CERTIFICATION
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT 32 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
<P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">CERTIFICATION PURSUANT TO </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">(18 U.S.C. SECTION 1350) </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">In connection with the accompanying Quarterly Report of Equus II Incorporated (the &#147;Company&#148;) on Form 10-Q for the
period ended September 30, 2003 (the &#147;Report&#148;), we, Sam P. Douglass, Chairman and Chief Executive Officer of the Company and Nolan Lehmann, President and Principal Financial and Accounting Officer, hereby certify that: </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(1)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><FONT FACE="Times New Roman" SIZE="2">(2)</FONT></TD>
<TD ALIGN="left" VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. </FONT></TD></TR></TABLE> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Dated: November 14, 2003<U></U> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P><DIV ALIGN="right">
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<TD VALIGN="top" WIDTH="100%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;Sam P. Douglass</FONT></P></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Sam P. Douglass</B></FONT></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Chairman</B></FONT></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Chief Executive Officer</B></FONT></TD></TR>
</TABLE></DIV> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P><DIV ALIGN="right">
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<TD VALIGN="top" WIDTH="100%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">/s/&nbsp;&nbsp;&nbsp;&nbsp;Nolan Lehmann</FONT></P></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Nolan Lehmann</B></FONT></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>President</B></FONT></TD></TR>
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<TD VALIGN="bottom" WIDTH="100%"><FONT FACE="Times New Roman" SIZE="1"><B>Principal Financial and Accounting Officer</B></FONT></TD></TR>
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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>6
<FILENAME>dex991.htm
<DESCRIPTION>PRESS RELEASE
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT 99.1 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="bottom" WIDTH="70%"><FONT FACE="Times New Roman" SIZE="3"><B>FOR IMMEDIATE RELEASE</B></FONT></TD>
<TD VALIGN="bottom" WIDTH="15%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"><B>CONTACT:</B></FONT></TD>
<TD VALIGN="bottom" WIDTH="15%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" ALIGN="center"><FONT FACE="Times New Roman" SIZE="3"><B>Nolan&nbsp;Lehmann</B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="15%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="15%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>(713) 529-0900</B></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EQUUS II
INCORPORATED ANNOUNCES </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>AGREEMENT TO SELL PORTFOLIO COMPANY </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>HOUSTON, TX &#150; November 5, 2003&#151;Equus II Incorporated (NYSE: EQS)</B> today announced that it has entered into a contract,
subject to certain conditions, to sell its entire investment interest in Strategic Holdings, Inc., a portfolio company. The proceeds of such sale to Equus are expected to approximate the value assigned to this investment in its last quarterly
report, which was over $16 million. The expected net proceeds will enable the Fund to pay in full its line of credit, which has approximately $10 million outstanding. The contract is subject to the buyer obtaining satisfactory financing to complete
the transaction, and is expected to close before year-end. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Sam P. Douglass,
Chairman and CEO commented, &#147;We are pleased that we have been able to negotiate a contract which, if consummated, will enable us to repay the Fund&#146;s indebtedness in full and give us additional capital to explore new investment
opportunities. We are proud of the effort put forth by the management team at Strategic Holdings over the last several years, which resulted in an increase in the recorded value of this investment from $10.2 million at December 31, 2001 to over $16
million currently. Their efforts have enabled us to achieve liquidity and a reasonable valuation for this investment, and we wish them well in their continuing roles with the acquiring entity.&#148; </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Equus II is a business development company and seeks to generate current distributions of net
investment income and long-term capital gains by making equity-oriented investments in small to medium-sized privately owned companies. The current portfolio consists of investments in 18 businesses in various industries and two venture capital
funds. Information on Equus II Incorporated and other Equus entities may be obtained on the Internet at <U>www.equuscap.com</U>. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>&#147;Safe Harbor&#148; Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains statements relating to future results of the
Company (including certain projections and business trends) that are &#147;forward-looking statements&#148; as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of
certain risks and uncertainties, including those which are more fully set forth in the Fund&#146;s Form 10-K for the year ended December 31, 2002. </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"># # # </FONT></P>
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<TYPE>EX-99.2
<SEQUENCE>7
<FILENAME>dex992.htm
<DESCRIPTION>PRESS RELEASE
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT 99.2 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="bottom" WIDTH="70%"><FONT FACE="Times New Roman" SIZE="3"><B>FOR IMMEDIATE RELEASE</B></FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="11%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="3"><B>CONTACT:</B></FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="15%"><FONT FACE="Times New Roman" SIZE="3"><B>Nolan&nbsp;Lehmann</B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="15%"><FONT FACE="Times New Roman" SIZE="2"><B>(713) 529-0900</B></FONT></TD></TR>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left"></TD></TR></TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EQUUS II
INCORPORATED DECLARES </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>NET INVESTMENT INCOME DIVIDEND FOR 2003 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>HOUSTON, TX&#151;November 5, 2003&#151;</B><B>Equus II Incorporated (NYSE: EQS)</B> announced today a dividend of its net investment
income for the year 2003, currently estimated to be $0.72 per share. The dividend will be payable on or before January 16, 2004, to shareholders of record as of November 30, 2003. Shares of EQS will trade ex-dividend beginning November 26, 2003. The
dividend will be payable in shares of common stock of EQS or in cash by specific election. Such election must be made by shareholders prior to December 30, 2003. If no election is made, shareholders will receive stock. The stock issued in the
dividend will be valued at the average closing market price of EQS for the ten trading days ending December 30, 2003. Cash will be paid in lieu of issuing any fractional shares. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Based on our current understanding, it is estimated that over 75% of the dividend will qualify for the 15% rate of tax imposed on certain
dividends pursuant to the 2003 Tax Act. The balance will be taxable to the shareholders as ordinary income. The dividend will be reportable by EQS shareholders on their 2003 U.S. Federal Income Tax Return, whether it is taken in additional shares of
common stock or in cash. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Sam P. Douglass, Chairman of Equus, commented,
&#147;We are pleased to announce our first annual dividend since 2000, due to the performance of our portfolio companies in the gradually recovering economy. We are also pleased to announce that the majority of the dividend will qualify for lower
tax rates established by the 2003 Tax Act.&#148; </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Equus II is a business
development company and seeks to generate current distributions of investment income and long-term capital gains by making equity investments in small to medium-sized privately owned companies. The current portfolio consists of 18 businesses in
various industries and two venture capital funds. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Information on Equus II
Incorporated and other Equus entities may be obtained on the Internet. Our home page address is <B>www.equuscap.com.</B> </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B><I>&#147;Safe Harbor&#148; Statement Under the Private Securities Litigation Reform Act of 1995 </I></B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><I>This press release contains statements relating to future results of the Fund (including certain projections and business trends) that are &#147;forward-looking statements&#148; as defined in the Private Securities
Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including those that are more fully set forth in the Fund&#146;s Form 10-K for the year ended December 31, 2002.
</I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"># # # </FONT></P>
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<TYPE>EX-99.3
<SEQUENCE>8
<FILENAME>dex993.htm
<DESCRIPTION>PRESS RELEASE
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>EXHIBIT 99.3 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" STYLE="BORDER-COLLAPSE:COLLAPSE" ALIGN="center">

<TR>
<TD VALIGN="bottom" WIDTH="70%"><FONT FACE="Times New Roman" SIZE="3"><B>FOR IMMEDIATE RELEASE</B></FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="11%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="3"><B>CONTACT:</B></FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="15%"><FONT FACE="Times New Roman" SIZE="3"><B>Nolan&nbsp;Lehmann</B></FONT></TD></TR>
<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="2%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="15%"><FONT FACE="Times New Roman" SIZE="2"><B>(713) 529-0900</B></FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>EQUUS II
INCORPORATED ANNOUNCES </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>THIRD QUARTER NET ASSET VALUE </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>HOUSTON, TX&#151;November 13, 2003&#151;Equus II Incorporated (NYSE: EQS)</B> reports net assets as of September 30, 2003, of $77.8
million, equivalent to $12.48 ($12.28 diluted) per share. Comparative data is summarized below: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TR>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>9/30/03</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>6/30/03</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>12/31/02</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="2" ALIGN="center"><FONT FACE="Times New Roman" SIZE="1"><B>9/30/02</B></FONT><BR><HR SIZE="1" NOSHADE COLOR="#000000"></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="52%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">77,799,651</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">76,951,198</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">76,976,095</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">74,435,945</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="52%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Shares outstanding</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,233,021</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,233,021</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,233,021</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6,233,021</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="52%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets per share</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.48</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.35</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.35</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">11.94</FONT></TD></TR>
<TR>
<TD VALIGN="top" WIDTH="52%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Net assets per share&#151;diluted*</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.28</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.28</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">12.35</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">11.94</FONT></TD></TR>
<TR BGCOLOR="#cceeff">
<TD VALIGN="top" WIDTH="52%"> <P STYLE="margin-left:1.00em; text-indent:-1.00em"><FONT FACE="Times New Roman" SIZE="2">Market price per share</FONT></P></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">8.60</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">7.96</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6.64</FONT></TD>
<TD VALIGN="bottom" WIDTH="3%" ><FONT SIZE="1">&nbsp;&nbsp;</FONT></TD>
<TD VALIGN="bottom" WIDTH="1%"><FONT FACE="Times New Roman" SIZE="2">$</FONT></TD>
<TD VALIGN="bottom" WIDTH="8%" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2">6.44</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">The stock price of EQS increased by
8.0% during the third quarter, 29.5% for the year-to-date, and 33.5% over the last twelve months, which has resulted in a narrowing of the discount from net asset value. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Net assets increased in the aggregate during the quarter by approximately $848,000, due primarily to increases in value of the Fund&#146;s
investments in Champion Window and our two public company holdings, NCI Building Systems, Inc. (NYSE:NCS) and ENGlobal Corporation (AMEX:ENG). These increases were partially offset by decreases in the fair value of Container Acquisition, Inc. and
Equicom, Inc., among others. Over the last twelve months, net assets have increased by approximately $3.4 million, or 4.5%. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">As previously announced, the Fund has entered into an agreement to sell its investment in Strategic Holdings, Inc., the glass recycling company. The agreement is subject
to the buyer obtaining satisfactory financing. If consummated, proceeds from such sale to Equus would enable the Fund to pay in full its outstanding line of credit. Pending the completion of such sale, management continues to work on extending or
refinancing the current credit facility, as further disclosed in the Fund&#146;s annual and quarterly reports. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">Also, the Fund has previously announced that its board of directors has declared a dividend equal to its projected net taxable investment income for 2003, estimated to be approximately $.72 per share. Over 75% of this
dividend should qualify for the lower rate on dividend income set forth in the 2003 Tax Act. The dividend is expected to be paid on or before January 16, 2004 to shareholders of record as of November 30, 2003. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Sam P. Douglass, Chairman and CEO commented, &#147;We are pleased that the Fund was able to
announce its first dividend since 2000, due to the performance of our portfolio companies. We are also pleased with the continued success of the Fund&#146;s investments in the residential window market, and are enthused about the possibility of a
sale of our second largest portfolio investment. However, increases in the value </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">of the residential window investments, coupled with a sale of Strategic, would result in a greater concentration of our
portfolio in the building products industry. We will explore new investment opportunities with the excess proceeds from the sale, to attempt to provide more diversification for the Fund&#146;s portfolio.&#148; </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Equus II is a business development company and seeks to generate current distributions and
long-term capital gains by making equity investments in small to medium-sized privately owned companies. The current portfolio consists of investments in 18 businesses in various industries and two venture capital funds. Information on Equus II
Incorporated and its investment adviser may be obtained on the Internet at <U>www.equuscap.com</U>. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">* Diluted net asset value is computed using the treasury stock method for outstanding stock options. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><I>&#147;Safe Harbor&#148; Statement Under the Private Securities Litigation Reform Act of 1995: This press release contains statements relating to future results of the
Company (including certain projections and business trends) that are &#147;forward-looking statements&#148; as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of
certain risks and uncertainties, including those which are more fully set forth in the Fund&#146;s Form 10-K for the year ended December 31, 2002. </I></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"># # # </FONT></P>
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