Oxford Square Capital Corp. [OXSQ] Filings

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

OXFORD SQUARE CAPITAL CORP.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Statements of Assets and Liabilities as of September 30, 2022 (unaudited) and December 31, 2021	1
	Schedule of Investments as of September 30, 2022 (unaudited)	2
	Schedule of Investments as of December 31, 2021	9
	Statements of Operations for the three and nine months ended September 30, 2022 and 2021 (unaudited)	16
	Statements of Changes in Net Assets for the three and nine months ended September 30, 2022 and 2021 (unaudited)	17
	Statements of Cash Flows for the nine months ended September 30, 2022 and 2021 (unaudited)	18
	Notes to Financial Statements (unaudited)	19
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62
Item 4.	Controls and Procedures	63

PART II. OTHER INFORMATION		64
Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	64
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	65
SIGNATURES		66

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.

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.

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.

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	%

Oxford Square Capital Corp. [OXSQ] Filings
Oxford Square Capital Corp. [OXSQL] Filings
Oxford Square Capital Corp. [OXSQZ] Filings
Oxford Square Capital Corp. [OXSQG] Filings
10-Q	[2022-11-08]
10-Q	[2022-07-28]
10-Q	[2022-04-28]
10-K	[2022-03-07]
10-Q	[2021-10-28]
10-Q	[2021-07-29]
10-Q	[2021-04-29]
10-K	[2021-03-22]
10-Q	[2020-10-28]
10-Q	[2020-07-29]
10-Q	[2020-04-29]
10-K	[2020-02-26]
10-Q	[2019-10-30]
10-Q	[2019-07-31]
10-Q	[2019-05-01]
10-K	[2019-02-28]
10-Q	[2018-10-31]
10-Q	[2018-08-01]
10-Q	[2018-05-02]
10-K	[2018-03-01]
10-Q	[2017-11-02]
10-Q	[2017-08-08]
10-Q	[2017-05-08]
10-K	[2017-03-03]
10-Q	[2016-11-07]
10-Q	[2016-08-05]
10-Q	[2016-05-05]
10-K	[2016-03-10]
10-Q	[2015-11-09]
10-Q	[2015-08-07]
10-Q	[2015-05-11]
10-K	[2015-03-04]
10-Q	[2014-11-06]
10-Q	[2014-08-08]
10-Q	[2014-05-12]
10-K	[2014-03-17]
10-Q	[2013-11-12]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-03-13]
10-Q	[2012-11-09]
10-Q	[2012-08-03]
10-Q	[2012-05-10]
10-K	[2012-03-15]

Oxford Square Capital Corp. [OXSQ] Filings

Oxford Square Capital Corp. [OXSQL] Filings

Oxford Square Capital Corp. [OXSQZ] Filings

Oxford Square Capital Corp. [OXSQG] Filings