10-Q 1 ea164061_10q.htm 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, 2023

   
   

 

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, 2023, was 58,129,685.

 

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,
2023

 

December 31,
2022

   

(unaudited)

   

ASSETS

 

 

 

 

 

 

 

 

Non-affiliated/non-control investments (cost: $443,889,440 and
$495,000,997, respectively)

 

$

277,807,167

 

 

$

310,347,097

 

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

 

 

7,709,623

 

 

 

4,349,818

 

Cash and cash equivalents

 

 

12,410,909

 

 

 

9,019,164

 

Interest and distributions receivable

 

 

4,036,483

 

 

 

3,492,716

 

Other assets

 

 

1,031,723

 

 

 

785,640

 

Total assets

 

$

302,995,905

 

 

$

327,994,435

 

LIABILITIES

 

 

 

 

 

 

 

 

Notes payable – 6.50% Unsecured Notes, net of deferred issuance costs of $36,343 and $405,657, respectively

 

$

14,333,882

 

 

$

63,964,568

 

Notes payable – 6.25% Unsecured Notes, net of deferred issuance costs of $602,377 and $776,766, respectively

 

 

44,188,373

 

 

 

44,013,984

 

Notes payable – 5.50% Unsecured Notes, net of deferred issuance costs of $1,865,397 and $2,153,762 respectively

 

 

78,634,603

 

 

 

78,346,238

 

Base Fee and Net Investment Income Incentive Fee payable to affiliate

 

 

2,360,018

 

 

 

1,323,573

 

Accrued interest payable

 

 

1,207,082

 

 

 

1,216,109

 

Accrued expenses

 

 

1,376,886

 

 

 

458,001

 

Total liabilities

 

 

142,100,844

 

 

 

189,322,473

 

COMMITMENTS AND CONTINGENCIES (Note 14)

 

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 100,000,000 shares authorized; 57,958,446 and 49,844,796 shares issued and outstanding, respectively

 

 

579,584

 

 

 

498,447

 

Capital in excess of par value

 

 

455,703,275

 

 

 

434,737,950

 

Total distributable earnings/(accumulated losses)

 

 

(295,387,798

)

 

 

(296,564,435

)

Total net assets

 

 

160,895,061

 

 

 

138,671,962

 

Total liabilities and net assets

 

$

302,995,905

 

 

$

327,994,435

 

Net asset value per common share

 

$

2.78

 

 

$

2.78

 

See Accompanying Notes.

1

Table of Contents

OXFORD SQUARE CAPITAL CORP.

SCHEDULE OF INVESTMENTS (unaudited)
September 30, 2023

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% of
Net
Assets(31)

Senior Secured Notes

     

 

   

 

   

 

     

 

Business Services

     

 

   

 

   

 

     

 

Access CIG, LLC

     

 

   

 

   

 

     

 

second lien senior secured notes, 13.41%
(SOFR + 7.75%), (0.00% floor) due
February 27, 2026
(4)(5)(14)(30)

 

February 14, 2018

 

$

16,754,000

 

$

16,793,428

 

$

16,321,244

   

 

       

 

   

 

   

 

     

 

Convergint Technologies, LLC

     

 

   

 

   

 

     

 

first lien senior secured notes, 10.07%
(SOFR + 4.75%), (0.75% floor) due
March 31, 2028
(4)(5)(6)(14)(25)

 

November 15, 2022

 

 

2,475,000

 

 

2,387,823

 

 

2,459,531

   

 

second lien senior secured notes, 12.18%
(SOFR+ 6.75%), (0.75% floor) due
March 29, 2029
(4)(5)(14)(25)

 

March 18, 2021

 

 

11,000,000

 

 

10,965,735

 

 

9,680,000

   

 

       

 

   

 

   

 

     

 

Premiere Global Services, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 13.00%
(Prime Rate + 5.50%), (1.00% floor) due September 9, 2021
(4)(5)(6)(16)(17)(29)

 

October 1, 2019

 

 

11,821,914

 

 

11,469,896

 

 

   

 

replacement revolver, 13.00%
(Prime Rate + 5.50%), (1.00% floor) due April 7, 2023
(4)(5)(17)(28)(29)

 

October 1, 2019

 

 

2,452,012

 

 

2,378,999

 

 

487,472

   

 

second lien senior secured notes, 17.00% PIK
(Prime Rate + 8.50%) (1.00% floor) due
June 6, 2024
(3)(4)(5)(17)(29)

 

October 1, 2019

 

 

15,991,521

 

 

9,817,795

 

 

   

 

       

 

   

 

   

 

     

 

Verifone Systems, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 9.65%
(SOFR + 4.00%), (0.00% floor) due
August 20, 2025
(4)(5)(6)(14)(30)

 

August 9, 2018

 

 

13,953,793

 

 

13,517,744

 

 

12,977,027

   

 

Total Business Services

     

 

   

$

67,331,420

 

$

41,925,274

 

26.1

%

       

 

   

 

   

 

     

 

Diversified Insurance

     

 

   

 

   

 

     

 

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

     

 

   

 

   

 

     

 

first lien senior secured notes, 10.63%
(SOFR + 5.00%), (0.00% floor) due
August 15, 2025
(4)(5)(6)(14)(30)

 

January 7, 2021

 

$

14,674,895

 

$

14,455,691

 

$

14,344,710

   

 

Total Diversified Insurance

     

 

   

$

14,455,691

 

$

14,344,710

 

8.9

%

       

 

   

 

   

 

     

 

Healthcare

     

 

   

 

   

 

     

 

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

     

 

   

 

   

 

     

 

second lien senior secured notes, 12.68%
(SOFR + 7.25%), (0.50% floor) due
January 5, 2029
(4)(5)(25)

 

January 22, 2021

 

$

12,000,000

 

$

11,951,885

 

$

4,560,000

   

 

       

 

   

 

   

 

     

 

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

     

 

   

 

   

 

     

 

first lien senior secured notes, 9.93%
(SOFR + 4.50%), (0.00% floor) due
April 3, 2025
(4)(5)(6)(14)(25)

 

October 31, 2018

 

 

18,857,315

 

 

18,677,472

 

 

13,841,269

   

 

(continued on next page)

See Accompanying Notes.

2

Table of Contents

OXFORD SQUARE CAPITAL CORP.

SCHEDULE OF INVESTMENTS (unaudited) — (continued)
September 30, 2023

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% of
Net
Assets(31)

Senior Secured Notes – (continued)

     

 

   

 

   

 

     

 

Healthcare – (continued)

     

 

   

 

   

 

     

 

Viant Medical Holdings, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 9.18%
(LIBOR + 3.75%), (0.00% floor) due
July 2, 2025
(4)(5)(6)(14)(15)

 

June 26, 2018

 

$

9,500,000

 

$

9,497,563

 

$

9,310,000

   

 

second lien senior secured notes, 13.18%
(LIBOR + 7.75%), (0.00% floor) due
July 2, 2026
(4)(5)(14)(15)

 

June 26, 2018

 

 

5,000,000

 

 

4,979,627

 

 

4,600,000

   

 

Total Healthcare

     

 

   

$

45,106,547

 

$

32,311,269

 

20.1

%

       

 

   

 

   

 

     

 

Software

     

 

   

 

   

 

     

 

Alvaria, Inc. (f/k/a Aspect Software, Inc.)

     

 

   

 

   

 

     

 

first lien senior secured notes, 10.88%
(SOFR + 5.25%), (0.75% floor) due
May 8, 2028
(4)(5)(6)(14)(30)

 

May 18, 2021

 

$

7,820,000

 

$

7,728,431

 

$

5,510,285

   

 

second lien senior secured notes, 14.66%
(SOFR + 9.00%), (0.75% floor) due
May 7, 2029
(4)(5)(14)(30)

 

May 3, 2021

 

 

7,000,000

 

 

6,830,466

 

 

3,150,000

   

 

       

 

   

 

   

 

     

 

Dodge Data & Analytics, LLC

     

 

   

 

   

 

     

 

first lien senior secured notes, 10.29%
(SOFR + 4.75%), (0.50% floor) due
February 23, 2029
(4)(5)(6)(14)(30)

 

February 10, 2022

 

 

4,937,500

 

 

4,875,699

 

 

4,033,345

   

 

second lien senior secured notes, 13.79%
(SOFR + 8.25%), (0.50% floor) due February 25, 2030
(4)(5)(14)(30)

 

February 10, 2022

 

 

15,000,000

 

 

14,808,737

 

 

10,387,500

   

 

       

 

   

 

   

 

     

 

Help/Systems Holdings, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 9.47%
(SOFR + 4.00%), (0.75% floor) due
November 19, 2026
(4)(5)(6)(14)(30)

 

October 6, 2022

 

 

4,458,935

 

 

4,216,514

 

 

4,269,430

   

 

second lien senior secured notes, 12.35%
(SOFR + 6.75%), (0.75% floor) due
November 19, 2027
(4)(5)(14)(30)

 

October 14, 2021

 

 

8,000,000

 

 

8,005,860

 

 

6,880,000

   

 

       

 

   

 

   

 

     

 

Kofax, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 10.72%
(SOFR + 5.25%), (0.50% floor) due
July 20, 2029
(4)(5)(6)(30)

 

February 1, 2023

 

 

4,962,500

 

 

4,651,305

 

 

4,367,000

   

 

       

 

   

 

   

 

     

 

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

     

 

   

 

   

 

     

 

first lien senior secured notes, 10.63%
(SOFR + 5.00%), (0.75% floor) due
July 27, 2028
(4)(5)(6)(14)(30)

 

May 17, 2022

 

 

1,974,874

 

 

1,883,952

 

 

1,471,281

   

 

second lien senior secured notes, 13.88%
(SOFR + 8.25%), (0.75% floor) due
July 27, 2029
(4)(5)(14)(30)

 

October 20, 2021

 

 

14,968,714

 

 

14,927,209

 

 

6,885,608

   

 

(continued on next page)

See Accompanying Notes.

3

Table of Contents

OXFORD SQUARE CAPITAL CORP.

SCHEDULE OF INVESTMENTS (unaudited) — (continued)
September 30, 2023

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% of
Net
Assets(31)

Senior Secured Notes – (continued)

     

 

   

 

   

 

     

 

Software – (continued)

     

 

   

 

   

 

     

 

Quest Software, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 9.77%
(SOFR + 4.25%), (0.50% floor) due
February 1, 2029
(4)(5)(6)(14)(30)

 

January 20, 2022

 

$

2,970,000

 

$

2,946,232

 

$

2,472,525

   

 

second lien senior secured notes, 13.02% (SOFR + 7.50%), (0.50% floor) due February 1, 2030(4)(5)(14)(30)

 

January 20, 2022

 

 

20,000,000

 

 

19,748,247

 

 

13,600,000

   

 

       

 

   

 

   

 

     

 

RSA Security, LLC

     

 

   

 

   

 

     

 

second lien senior secured notes, 13.18% (SOFR + 7.75%), (0.75% floor) due April 27, 2029(4)(5)(14)(25)

 

April 16, 2021

 

 

15,000,000

 

 

14,791,215

 

 

9,600,000

   

 

       

 

   

 

   

 

     

 

Veritas USA, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 10.43% (SOFR + 5.00%), (1.00% floor) due September 1, 2025(4)(5)(6)(25)

 

June 24, 2022

 

 

3,965,870

 

 

3,466,525

 

 

3,450,307

   

 

Total Software

     

 

   

$

108,880,392

 

$

76,077,281

 

47.3

%

       

 

   

 

   

 

     

 

Telecommunication Services

     

 

   

 

   

 

     

 

ConvergeOne Holdings, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 10.37% (LIBOR + 5.00%), (0.00% floor) due January 4, 2026(4)(5)(6)(10)

 

June 4, 2021

 

$

5,253,387

 

$

5,223,940

 

$

3,204,566

   

 

second lien senior secured notes, 13.87% (LIBOR + 8.50%), (0.00% floor) due January 4, 2027(4)(5)(10)

 

June 3, 2021

 

 

15,000,000

 

 

14,549,897

 

 

3,801,600

   

 

       

 

   

 

   

 

     

 

Global Tel Link Corp.

     

 

   

 

   

 

     

 

second lien senior secured notes, 15.52% (SOFR + 10.00%), (0.00% floor) due November 29, 2026(4)(5)(14)(30)

 

November 20, 2018

 

 

17,000,000

 

 

16,848,664

 

 

14,790,000

   

 

Total Telecommunication Services

     

 

   

$

36,622,501

 

$

21,796,166

 

13.5

%

       

 

   

 

   

 

     

 

Utilities

     

 

   

 

   

 

     

 

CLEAResult Consulting, Inc.

     

 

   

 

   

 

     

 

second lien senior secured notes, 12.67% (SOFR + 7.25%), (0.00% floor) due August 10, 2026(4)(5)(25)

 

August 3, 2018

 

$

7,650,000

 

$

7,657,050

 

$

7,210,125

   

 

Total Utilities