10-Q 1 s144324_10q.htm FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_______________________________

FORM 10-Q

_______________________________

 

(Mark One)

       
   

 

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

   

FOR THE QUARTERLY PERIOD ENDED September 30, 2022

 

 

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

   

COMMISSION FILE NUMBER: 814-00638

_______________________________

OXFORD SQUARE CAPITAL CORP.

(Exact name of registrant as specified in its charter)

_______________________________

 

MARYLAND

 

20-0188736

   
   

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

   

8 SOUND SHORE DRIVE, SUITE 255
GREENWICH, CONNECTICUT 06830
(Address of principal executive office)

(203) 983-5275
(Registrant’s telephone number, including area code)

_______________________________

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

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common stock, par value $0.01 per share

 

OXSQ

 

NASDAQ Global Select Market LLC

6.50% Notes due 2024

 

OXSQL

 

NASDAQ Global Select Market LLC

6.25% Notes due 2026

 

OXSQZ

 

NASDAQ Global Select Market LLC

5.50% Notes due 2028

 

OXSQG

 

NASDAQ Global Select Market LLC

_______________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer 

 

Accelerated filer 

   

Non-accelerated filer 

 

Smaller Reporting company 

   

Emerging growth company 

   

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares of the issuer’s common stock, $0.01 par value, outstanding as of November 7, 2022, was 49,815,875.

 

Table of Contents

i

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

OXFORD SQUARE CAPITAL CORP.

STATEMENTS OF ASSETS AND LIABILITIES

 

September 30,
2022

 

December 31,
2021

   

(unaudited)

   

ASSETS

 

 

 

 

 

 

 

 

Non-affiliated/non-control investments (cost: $491,139,187 and $495,212,632, respectively)

 

$

338,055,554

 

 

$

420,038,717

 

Affiliated investments (cost: $16,836,822 and $16,836,822, respectively)

 

 

2,190,923

 

 

 

772,491

 

Cash and cash equivalents

 

 

14,367,882

 

 

 

9,015,700

 

Interest and distributions receivable

 

 

2,561,703

 

 

 

3,064,477

 

Other assets

 

 

854,623

 

 

 

615,109

 

Total assets

 

$

358,030,685

 

 

$

433,506,494

 

LIABILITIES

 

 

 

 

 

 

 

 

Notes payable – 6.50% Unsecured Notes, net of deferred issuance costs of $487,501 and $730,361, respectively

 

$

63,882,724

 

 

$

63,639,864

 

Notes payable – 6.25% Unsecured Notes, net of deferred issuance costs of $835,535 and $1,009,924, respectively

 

 

43,955,215

 

 

 

43,780,826

 

Notes payable – 5.50% Unsecured Notes, net of deferred issuance costs of $2,250,940 and $2,539,305 respectively

 

 

78,249,060

 

 

 

77,960,695

 

Due to custodian

 

 

1,848,201

 

 

 

 

Base Fee and Net Investment Income Incentive Fee payable to affiliate

 

 

1,408,729

 

 

 

1,688,712

 

Accrued interest payable

 

 

1,216,109

 

 

 

1,216,109

 

Accrued expenses

 

 

922,832

 

 

 

625,163

 

Total liabilities

 

 

191,482,870

 

 

 

188,911,369

 

COMMITMENTS AND CONTINGENCIES (Note 13)

 

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 100,000,000 shares authorized; 49,800,274 and 49,690,059 shares issued and outstanding, respectively

 

 

498,002

 

 

 

496,900

 

Capital in excess of par value

 

 

434,860,405

 

 

 

434,462,322

 

Total distributable earnings/(accumulated losses)

 

 

(268,810,592

)

 

 

(190,364,097

)

Total net assets

 

 

166,547,815

 

 

 

244,595,125

 

Total liabilities and net assets

 

$

358,030,685

 

 

$

433,506,494

 

Net asset value per common share

 

$

3.34

 

 

$

4.92

 

See Accompanying Notes.

1

Table of Contents

OXFORD SQUARE CAPITAL CORP.

SCHEDULE OF INVESTMENTS (unaudited)
September 30, 2022

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% OF
NET
ASSETS

Senior Secured Notes

     

 

   

 

   

 

     

 

Business Services

     

 

   

 

   

 

     

 

Access CIG, LLC

     

 

   

 

   

 

     

 

second lien senior secured notes, 10.82%
(LIBOR + 7.75%), (0.00% floor) due February 27, 2026
(4)(5)(14)(16)

 

February 14, 2018

 

$

16,754,000

 

$

16,806,198

 

$

15,790,645

   

 

       

 

   

 

   

 

     

 

ConvergeOne Holdings, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 8.12%
(LIBOR + 5.00%), (0.00% floor) due
January 4, 2026
(4)(5)(6)(14)(15)

 

June 4, 2021

 

 

5,308,396

 

 

5,262,704

 

 

3,772,305

   

 

second lien senior secured notes, 11.62%
(LIBOR + 8.50%), (0.00% floor) due
January 4, 2027
(4)(5)(14)(15)

 

June 3, 2021

 

 

15,000,000

 

 

14,446,573

 

 

9,000,000

   

 

       

 

   

 

   

 

     

 

Convergint Technologies, LLC

     

 

   

 

   

 

     

 

second lien senior secured notes, 9.87%
(LIBOR + 6.75%), (0.75% floor) due
March 29, 2029
(4)(5)(14)(15)

 

March 18, 2021

 

 

11,000,000

 

 

10,955,478

 

 

10,193,370

   

 

       

 

   

 

   

 

     

 

OMNIA Partners, Inc.

     

 

   

 

   

 

     

 

second lien senior secured notes, 11.05%
(SOFR + 7.50%), (0.00% floor) due
May 22, 2026
(4)(5)(6)(14)(30)

 

May 17, 2018

 

 

13,812,665

 

 

13,776,850

 

 

13,536,412

   

 

       

 

   

 

   

 

     

 

Premiere Global Services, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 8.75%
(Prime Rate + 5.50%), (1.00% floor) due
June 8, 2023
(4)(5)(6)(17)(29)

 

October 1, 2019

 

 

11,821,914

 

 

11,469,896

 

 

   

 

replacement revolver, 8.75%
(Prime Rate + 5.50%), (1.00% floor) due
December 16, 2022
(4)(5)(17)(28)(29)

 

October 1, 2019

 

 

2,452,012

 

 

2,378,999

 

 

465,882

   

 

second lien senior secured notes, 0.50% Cash, 10.00% PIK (LIBOR + 9.00%) (1.00% floor) due June 6, 2024(3)(4)(5)(16)(17)

 

October 1, 2019

 

 

13,560,169

 

 

9,817,795

 

 

   

 

       

 

   

 

   

 

     

 

Verifone Systems, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 7.00%
(LIBOR + 4.00%), (0.00% floor) due
August 20, 2025
(4)(5)(6)(14)(16)

 

August 9, 2018

 

 

12,600,290

 

 

12,111,688

 

 

11,222,196

   

 

Total Business Services

     

 

   

$

97,026,181

 

$

63,980,810

 

38.4

%

       

 

   

 

   

 

     

 

Diversified Insurance

     

 

   

 

   

 

     

 

Affinion Insurance Solutions, Inc. (f/k/a
AIS Intermediate, LLC)

     

 

   

 

   

 

     

 

first lien senior secured notes, 7.81%
(LIBOR + 5.00%), (0.00% floor) due
August 15, 2025
(4)(5)(6)(14)(16)

 

January 7, 2021

 

$

15,209,069

 

$

14,876,226

 

$

14,676,752

   

 

Total Diversified Insurance

     

 

   

$

14,876,226

 

$

14,676,752

 

8.8

%

(continued on next page)

See Accompanying Notes.

2

Table of Contents

OXFORD SQUARE CAPITAL CORP.

SCHEDULE OF INVESTMENTS (unaudited) — (continued)
September 30, 2022

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% OF
NET
ASSETS

Senior Secured Notes – (continued)

     

 

   

 

   

 

     

 

Healthcare

     

 

   

 

   

 

     

 

Careismatic Brands, Inc. (f/k/a New Trojan Parent, Inc.)

     

 

   

 

   

 

     

 

second lien senior secured notes, 10.37%
(LIBOR + 7.25%), (0.50% floor) due
January 5, 2029
(4)(5)(14)(15)

 

January 22, 2021

 

$

12,000,000

 

$

11,944,263

 

$

10,740,000

   

 

       

 

   

 

   

 

     

 

HealthChannels, Inc. (f/k/a ScribeAmerica, LLC)

     

 

   

 

   

 

     

 

first lien senior secured notes, 7.62%
(LIBOR + 4.50%), (0.00% floor) due
April 3, 2025
(4)(5)(6)(14)(15)

 

October 31, 2018

 

 

19,069,532

 

 

18,783,369

 

 

15,255,626

   

 

       

 

   

 

   

 

     

 

Viant Medical Holdings, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 6.87%
(LIBOR + 3.75%), (0.00% floor) due
July 2, 2025
(4)(5)(6)(14)(15)

 

June 26, 2018

 

 

9,600,000

 

 

9,598,137

 

 

8,898,048

   

 

second lien senior secured notes, 10.87%
(LIBOR + 7.75%), (0.00% floor) due
July 2, 2026
(4)(5)(14)(15)

 

June 26, 2018

 

 

5,000,000

 

 

4,972,677

 

 

4,537,500

   

 

Total Healthcare

     

 

   

$

45,298,446

 

$

39,431,174

 

23.7

%

       

 

   

 

   

 

     

 

Plastics Manufacturing

     

 

   

 

   

 

     

 

Spectrum Holdings III Corp. (f/k/a KPEX Holdings, Inc.)

     

 

   

 

   

 

     

 

first lien senior secured notes, 6.37%
(LIBOR + 3.25%), (1.00% floor) due
January 31, 2025
(4)(5)(6)(14)(15)

 

June 24, 2020

 

$

12,870,035

 

$

12,357,714

 

$

11,776,082

   

 

Total Plastics Manufacturing

     

 

   

$

12,357,714

 

$

11,776,082

 

7.1

%

       

 

   

 

   

 

     

 

Software

     

 

   

 

   

 

     

 

Aspect Software, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 8.68%
(LIBOR + 5.25%), (0.75% floor) due
May 8, 2028
(4)(5)(6)(10)(14)

 

May 18, 2021

 

$

7,900,000

 

$

7,791,998

 

$

6,162,000

   

 

second lien senior secured notes, 11.19%
(LIBOR + 9.00%), (0.75% floor) due
May 7, 2029
(4)(5)(10)(14)

 

May 3, 2021

 

 

7,000,000

 

 

6,812,135

 

 

5,355,000

   

 

       

 

   

 

   

 

     

 

Dodge Data & Analytics, LLC

     

 

   

 

   

 

     

 

first lien senior secured notes, 7.58%
(SOFR + 4.75%), (0.50% floor) due
February 23, 2029
(4)(5)(6)(14)(25)

 

February 10, 2022

 

 

4,987,500

 

 

4,915,892

 

 

4,364,063

   

 

second lien senior secured notes, 11.08%
(SOFR + 8.25%), (0.50% floor) due
February 25, 2030
(4)(5)(14)(25)

 

February 10, 2022

 

 

15,000,000

 

 

14,788,680

 

 

12,000,000

   

 

       

 

   

 

   

 

     

 

Help/Systems Holdings, Inc.

     

 

   

 

   

 

     

 

second lien senior secured notes, 9.88%
(SOFR + 6.75%), (0.75% floor) due
November 19, 2027
(4)(5)(31)

 

October 14, 2021

 

 

8,000,000

 

 

8,010,252

 

 

7,660,000

   

 

       

 

   

 

   

 

     

 

(continued on next page)

See Accompanying Notes.

3

Table of Contents

OXFORD SQUARE CAPITAL CORP.

SCHEDULE OF INVESTMENTS (unaudited) — (continued)
September 30, 2022

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% OF
NET
ASSETS

Senior Secured Notes – (continued)

     

 

   

 

   

 

     

 

Software – (continued)

     

 

   

 

   

 

     

 

Magenta Buyer LLC (f/k/a McAfee Enterprise)

     

 

   

 

   

 

     

 

first lien senior secured notes, 7.87%
(LIBOR + 4.75%), (0.75% floor) due
July 27, 2028
(4)(5)(6)(14)(15)

 

May 17, 2022

 

$

1,994,975

 

$

1,889,184

 

$

1,795,478

   

 

second lien senior secured notes, 11.37%
(LIBOR + 8.25%), (0.75% floor) due
July 27, 2029
(4)(5)(14)(15)

 

October 20, 2021

 

 

14,968,714

 

 

14,924,742

 

 

13,708,797

   

 

       

 

   

 

   

 

     

 

Quest Software, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 6.98%
(SOFR + 4.25%), (0.50% floor) due
February 1, 2029
(4)(5)(14)(30)

 

January 20, 2022

 

 

3,000,000

 

 

2,972,725

 

 

2,205,000

   

 

second lien senior secured notes, 10.23%
(SOFR + 7.50%), (0.50% floor) due
February 1, 2030
(4)(5)(14)(30)

 

January 20, 2022

 

 

20,000,000

 

 

19,723,193

 

 

12,062,500

   

 

       

 

   

 

   

 

     

 

RSA Security, LLC

     

 

   

 

   

 

     

 

second lien senior secured notes, 10.52%
(LIBOR + 7.75%), (0.75% floor) due
April 27, 2029
(4)(5)(14)(16)

 

April 16, 2021

 

 

15,000,000

 

 

14,768,340

 

 

11,859,450

   

 

       

 

   

 

   

 

     

 

Veritas USA, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 8.67%
(LIBOR + 5.00%), (1.00% floor) due
September 1, 2025
(4)(5)(16)

 

June 24, 2022

 

 

2,000,000

 

 

1,711,107

 

 

1,579,160

   

 

Total Software

     

 

   

$

98,308,248

 

$

78,751,448

 

47.3

%

       

 

   

 

   

 

     

 

Telecommunications Services

     

 

   

 

   

 

     

 

Global Tel Link Corp.

     

 

   

 

   

 

     

 

second lien senior secured notes, 12.73%
(SOFR + 10.00%), (0.00% floor) due
November 29, 2026
(4)(5)(14)(30)

 

November 20, 2018

 

$

17,000,000

 

$

16,813,434

 

$

14,620,000

   

 

Total Telecommunication Services

     

 

   

$

16,813,434

 

$

14,620,000

 

8.8

%