OXSQ Oxford Square Capital Corporation

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

Current Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):

 

August 10, 2023

 

OXFORD SQUARE CAPITAL CORP.

(Exact name of registrant as specified in its charter)

 

Maryland		814-00638		20-0188736
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

8 Sound Shore Drive, Suite 255

Greenwich, CT 06830

(Address of principal executive offices and zip code)

 

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

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

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. ☐

 

 

 

Item 2.02 Results of Operations and Financial Condition

 

On August 10, 2023, Oxford Square Capital Corp. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2023. The text of the press release is included as Exhibit 99.1 to this Form 8-K.

 

The information set forth under this Item 2.02, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information set forth under this Item 2.02, including Exhibit 99.1, shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended, unless it is specifically incorporated by reference therein.

 

Item 7.01 Regulation FD Disclosure

 

On August 10, 2023, the Company issued a press release, included herewith as Exhibit 99.1, announcing the declaration of distributions for the months ending October 31, 2023, November 30, 2023, and December 31, 2023, as well as announcing the declaration of a special distribution to be paid on September 29, 2023. Additionally, on August 10, 2023, the Company made available on its website, www.oxfordsquarecapital.com, supplemental investor information with respect to the aforementioned earnings press release.

 

The information disclosed under this Item 7.01, including Exhibit 99.1 hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information provided herein shall not be deemed incorporated by reference into any filing made under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing

 

Item 9.01 Financial Statements and Exhibits.

 

(a)

Not applicable.

 

(b)

Not applicable.

 

(c)

Not applicable.

 

(d)

Exhibits.

 

Exhibit No.		Description
99.1		Press release dated August 10, 2023

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 15, 2023	OXFORD SQUARE CAPITAL CORP.
	By:	/s/ Saul B. Rosenthal
		Saul B. Rosenthal
		President

 

 

2

Exhibit 99.1

 

Oxford Square Capital Corp. Announces Net Asset Value and Selected Financial Results for the Quarter Ended June 30, 2023.

 

Oxford Square Also Announces Declaration of Distributions on Common Stock for the Months Ending October 31, November 30, and December 31, 2023 and a Special Distribution of $0.12 Per Share Payable on September 29, 2023.

 

GREENWICH, CT – 8/10/2023 –Oxford Square Capital Corp. (NasdaqGS: OXSQ) (NasdaqGS: OXSQL) (NasdaqGS: OXSQZ) (NasdaqGS: OXSQG) (the “Company,” “we,” “us” or “our”) announced today its financial results and related information for the quarter ended June 30, 2023.

 

·

On August 3, 2023, our Board of Directors declared the following distributions on our common stock:

 

Month Ending	Record Date	Payment Date	Amount Per Share
September 30, 2023*	September 15, 2023	September 29, 2023	$0.120
October 31, 2023	October 17, 2023	October 31, 2023	$0.035
November 30, 2023	November 16, 2023	November 30, 2023	$0.035
December 31, 2023	December 15, 2023	December 29, 2023	$0.035

* Special Distribution.

 

·

Net asset value (“NAV”) per share as of June 30, 2023 stood at $2.88, compared with a NAV per share on March 31, 2023 of $2.80.

 

·

Net investment income (“NII”) was approximately $6.7 million, or $0.13 per share, for the quarter ended June 30, 2023, compared with approximately $6.5 million, or $0.13 per share, for the quarter ended March 31, 2023.

 

·

Total investment income for the quarter ended June 30, 2023 amounted to approximately $13.5 million, compared with approximately $12.9 million for the quarter ended March 31, 2023.

 

o

For the quarter ended June 30, 2023 we recorded investment income from our portfolio as follows:

 

§

$8.8 million from our debt investments; and

 

§

$4.7 million from our CLO equity investments and other income.

 

·

Our total expenses for the quarter ended June 30, 2023 were approximately $6.8 million, compared with total expenses of approximately $6.5 million for the quarter ended March 31, 2023.

 

·

As of June 30, 2023, the following metrics applied (note that none of these metrics represented a total return to shareholders):

o

The weighted average yield of our debt investments was 12.8% at current cost, compared with 12.4% as of March 31, 2023;

 

o

The weighted average effective yield of our CLO equity investments at current cost was 9.2%, compared with 9.1% as of March 31, 2023; and

 

o

The weighted average cash distribution yield of our cash income producing CLO equity investments at current cost was 18.4%, compared with 15.3% as of March 31, 2023.

 

·

For the quarter ended June 30, 2023, we recorded a net increase in net assets resulting from operations of approximately $11.6 million, consisting of:

o

NII of approximately $6.7 million;

o

Net realized losses of approximately $3.3 million; and

o

Net unrealized appreciation of approximately $8.3 million.

 

·

During the second quarter of 2023, we did not make any new investments and received approximately $14.3 million from sales and repayments of investments.

 

·

Our weighted average credit rating was 2.2 based on total fair value and 2.5 based on total principal amount as of June 30, 2023, compared with a weighted average credit rating of 2.2 based on total fair value and 2.5 based on total principal amount as of March 31, 2023.

 

·

As of June 30, 2023, we had three debt investments (in one portfolio company) on non-accrual status, with a combined fair value of approximately $450,000. Also, as of June 30, 2023, our preferred equity investments in one of our portfolio companies were on non-accrual status, which had an aggregate fair value of approximately $8.4 million.

 

We will hold a conference call to discuss second quarter results today, Thursday, August 10^th, 2023 at 9:00 AM ET. The toll-free dial-in number is 1-833-470-1428, access code number 351878. There will be a recording available for 30 days. If you are interested in hearing the recording, please dial 1-866-813-9403. The replay pass-code number is 209713.

 

A presentation containing further detail regarding our quarterly results of operations has been posted under the Investor Relations section of our website at www.oxfordsquarecapital.com.

 

 

OXFORD SQUARE CAPITAL CORP.
STATEMENTS OF ASSETS AND LIABILITIES

 

		June 30, 2023				December 31, 2022
		(unaudited)
ASSETS
Non-affiliated/non-control investments (cost: $478,419,709 and $495,000,997, respectively)		$	297,723,804			$	310,347,097
Affiliated investments (cost: $16,836,822 and $16,836,822, respectively)			8,422,453				4,349,818
Cash and cash equivalents			43,029,280				9,019,164
Interest and distributions receivable			4,122,925				3,492,716
Other assets			960,242				785,640
Total assets		$	354,258,704			$	327,994,435
LIABILITIES
Notes payable – 6.50% Unsecured Notes, net of deferred issuance costs of $244,640 and $405,657, respectively		$	64,125,585			$	63,964,568
Notes payable – 6.25% Unsecured Notes, net of deferred issuance costs of $661,146 and $776,766, respectively			44,129,604				44,013,984
Notes payable – 5.50% Unsecured Notes, net of deferred issuance costs of $1,962,575 and $2,153,762 respectively			78,537,425				78,346,238
Base Fee and Net Investment Income Incentive Fee payable to affiliate			2,557,012				1,323,573
Accrued interest payable			1,216,109				1,216,109
Accrued expenses			1,280,810				458,001
Total liabilities			191,846,545				189,322,473
NET ASSETS
Common stock, $0.01 par value, 100,000,000 shares authorized; 56,395,751 and 49,844,796 shares issued and outstanding, respectively			563,957				498,447
Capital in excess of par value			451,031,685				434,737,950
Total distributable earnings/(accumulated losses)			(289,183,483	)			(296,564,435	)
Total net assets			162,412,159				138,671,962
Total liabilities and net assets		$	354,258,704			$	327,994,435
Net asset value per common share		$	2.88			$	2.78

 

 

OXFORD SQUARE CAPITAL CORP.
STATEMENTS OF OPERATIONS – (unaudited)

 

		Three Months Ended June 30, 2023				Three Months Ended June 30, 2022				Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
INVESTMENT INCOME
From non-affiliated/non-control investments:
Interest income – debt investments		$	8,799,180			$	5,674,538			$	17,093,340			$	10,924,687
Income from securitization vehicles and investments			4,329,300				4,062,469				8,708,795				8,503,664
Other income			384,500				202,544				652,643				377,070
Total investment income from non-affiliated/non-control investments			13,512,980				9,939,551				26,454,778				19,805,421
Total investment income			13,512,980				9,939,551				26,454,778				19,805,421
EXPENSES
Interest expense			3,087,951				3,087,952				6,173,317				6,173,318
Base Fee			1,257,688				1,565,181				2,417,334				3,171,684
Professional fees			281,928				310,931				617,808				655,453
Compensation expense			190,159				219,830				457,124				454,833
General and administrative			730,149				412,129				1,103,322				756,231
Total expenses before incentive fees			5,547,875				5,596,023				10,768,905				11,211,519
Net Investment Income Incentive Fees			1,299,324				—				2,529,308				—
Total expenses			6,847,199				5,596,023				13,298,213				11,211,519
Net investment income			6,665,781				4,343,528				13,156,565				8,593,902
Net change in unrealized appreciation/(depreciation) on investments:
Non-Affiliate/non-control investments			4,900,785				(46,845,141	)			3,957,995				(60,535,837	)
Affiliated investments			3,352,146				602,253				4,072,635				803,100
Total net change in unrealized appreciation/(depreciation) on investments			8,252,931				(46,242,888	)			8,030,630				(59,732,737	)
Net realized losses:
Non-affiliated/non-control investments			(3,331,308	)			(1,536,051	)			(3,331,308	)			(493,765	)
Total net realized losses			(3,331,308	)			(1,536,051	)			(3,331,308	)			(493,765	)
Net increase/(decrease) in net assets resulting from operations		$	11,587,404			$	(43,435,411	)		$	17,855,887			$	(51,632,600	)
Net increase in net assets resulting from net investment income per common share (Basic and Diluted):		$	0.13			$	0.09			$	0.26			$	0.17
Net increase/(decrease) in net assets resulting from operations per common share (Basic and Diluted):		$	0.23			$	(0.87	)		$	0.36			$	(1.04	)
Weighted average shares of common stock outstanding (Basic and Diluted):			50,542,374				49,736,300				50,202,259				49,718,630
Distributions per share		$	0.105			$	0.105			$	0.210			$	0.210

 

 

FINANCIAL HIGHLIGHTS – (unaudited)

		Three Months Ended June 30, 2023				Three Months Ended June 30, 2022				Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
Per Share Data
Net asset value at beginning of period		$	2.80			$	4.65			$	2.78			$	4.92
Net investment income(1)			0.13				0.09				0.26				0.17
Net realized and unrealized gains/(losses)(2)			0.10				(0.96	)			0.09				(1.21	)
Net increase/(decrease) in net asset value from operations			0.23				(0.87	)			0.35				(1.04	)
Distributions per share from net investment income			(0.11	)			(0.09	)			(0.21	)			(0.17	)
Tax return of capital distributions(3)			—				(0.02	)			—				(0.04	)
Total distributions			(0.11	)			(0.11	)			(0.21	)			(0.21	)
Effect of shares issued			(0.04	)			—				(0.04	)			—
Net asset value at end of period		$	2.88			$	3.67			$	2.88			$	3.67
Per share market value at beginning of period		$	3.16			$	4.19			$	3.12			$	4.08
Per share market value at end of period		$	2.65			$	3.64			$	2.65			$	3.64
Total return based on Market Value(4)			(13.00	)%			(10.75	)%			(9.15	)%			(6.00	)%
Total return based on Net Asset Value(5)			6.61	%			(18.82	)%			11.15	%			(21.14	)%
Shares outstanding at end of period			56,395,751				49,761,360				56,395,751				49,761,360
Ratios/Supplemental Data(8)
Net assets at end of period (000’s)		$	162,412			$	182,793			$	162,412			$	182,793
Average net assets (000’s)		$	144,439			$	207,048			$	141,852			$	222,414
Ratio of expenses to average net assets(6)			18.96	%			10.81	%			18.75	%			10.08	%
Ratio of net investment income to average net assets(6)			18.46	%			8.39	%			18.55	%			7.73	%
Portfolio turnover rate(7)			1.48	%			1.79	%			2.60	%			12.19	%

 

(1)

Represents per share net investment income for the period, based upon weighted average shares outstanding.

(2)

Net realized and unrealized gains/(losses) include rounding adjustments to reconcile change in net asset value per share.

(3)

Management monitors available taxable earnings, including net investment income and realized capital gains, to determine if a tax return of capital may occur for the year. To the extent the Company’s taxable earnings fall below the total amount of the Company’s distributions for that fiscal year, a portion of those distributions may be deemed a tax return of capital to the Company’s stockholders. The ultimate tax character of the Company’s earnings cannot be determined until tax returns are prepared after the end of the fiscal year. The amounts and sources of distributions reported are only estimates (based on an average of the reported tax character historically) and are not being provided for U.S. tax reporting purposes.

(4)

Total return based on market value equals the increase or decrease of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming distribution reinvestment prices obtained under the Company’s distribution reinvestment plan, excluding any discounts. Total return is not annualized.

(5)

Total return based on net asset value equals the increase or decrease of ending net asset value over beginning net asset value, plus distributions, divided by the beginning net asset value. Total return is not annualized.

(6)

Annualized.

(7)

Portfolio turnover rate is calculated using the lesser of the year-to-date cash investment sales and debt repayments or year-to-date cash investment purchases over the average of the total investments at fair value.

(8)

The following table provides supplemental performance ratios (annualized) measured for the three and six months ended June 30, 2023 and 2022:

 

		Three Months Ended June 30, 2023				Three Months Ended June 30, 2022				Six Months Ended June 30, 2023				Six Months Ended June 30, 2022
Ratio of expenses to average net assets:
Operating expenses before incentive fees			15.36	%			10.81	%			15.18	%			10.08	%
Net investment income incentive fees			3.60	%			—	%			3.57	%			—	%
Ratio of expenses, excluding interest expenseto average net assets			10.41	%			4.85	%			10.05	%			4.53	%

 

 

About Oxford Square Capital Corp.

Oxford Square Capital Corp. is a publicly-traded business development company principally investing in syndicated bank loans and debt and equity tranches of collateralized loan obligation (“CLO”) vehicles. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle.

 

Forward-Looking Statements

 

This press release contains forward-looking statements subject to the inherent uncertainties in predicting future results and conditions. Any statements that are not statements of historical fact (including statements containing the words “believes,” “plans,” “anticipates,” “expects,” “estimates” and similar expressions) should also be considered to be forward-looking statements. These statements are not guarantees of future performance, conditions or results and involve a number of risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements. These factors are identified from time to time in our filings with the Securities and Exchange Commission. We undertake no obligation to update such statements to reflect subsequent events, except as may be required by law.

 

Contact:

Bruce Rubin

203-983-5280

 

 

 

v3.23.2

Cover	Aug. 10, 2023
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 10, 2023
Entity File Number	814-00638
Entity Registrant Name	OXFORD SQUARE CAPITAL CORP.
Entity Central Index Key	0001259429
Entity Tax Identification Number	20-0188736
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	8 Sound Shore Drive
Entity Address, Address Line Two	Suite 255
Entity Address, City or Town	Greenwich
Entity Address, State or Province	CT
Entity Address, Postal Zip Code	06830
City Area Code	203
Local Phone Number	983-5275
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common stock, par value $0.01 per share
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	OXSQ
Security Exchange Name	NASDAQ
6.50% Notes due 2024
Title of 12(b) Security	6.50% Notes due 2024
Trading Symbol	OXSQL
Security Exchange Name	NASDAQ
6.25% Notes due 2026
Title of 12(b) Security	6.25% Notes due 2026
Trading Symbol	OXSQZ
Security Exchange Name	NASDAQ
5.50% Notes due 2028
Title of 12(b) Security	5.50% Notes due 2028
Trading Symbol	OXSQG
Security Exchange Name	NASDAQ

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