8-K - OXSQ - Equibles

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):

November 7, 2022

OXFORD SQUARE CAPITAL CORP.

(Exact name of registrant as specified in its charter)

Maryland	000-50398	20-0188736

| (State or other jurisdiction<br> of incorporation) | (Commission File Number) | (I.R.S. Employer <br><br>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 FinancialCondition

On November 7, 2022, Oxford Square Capital Corp. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2022. 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 November 7, 2022, the Company issued a press release, included herewith as Exhibit 99.1, announcing the declaration of distributions for the months ending January 31, 2023, February 28, 2023 and March 31, 2023. Additionally, on November 7, 2022, 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.
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(c)	Not applicable.
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(d)	Exhibits.
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Exhibit No.	Description
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99.1	Press release dated November 7, 2022

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: November 9, 2022	OXFORD SQUARE CAPITAL CORP.
	By:	/s/ Saul B. Rosenthal
		Saul B. Rosenthal
		President

Exhibit 99.1

Oxford Square Capital Corp. Announces Net AssetValue and Selected Financial Results for the Quarter Ended September 30, 2022 and Declaration of Distributions on Common Stock for theMonths Ending January 31, February 28, and March 31, 2023

GREENWICH, CT – 11/7/2022 –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 September 30, 2022.

·	On October 20, 2022, our Board of Directors declared the following distributions on our common stock:
Month Ending	Record Date	Payment Date	Amount Per Share
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January 31, 2023	January 17, 2023	January 31, 2023	$0.035
February 28, 2023	February 14, 2023	February 28, 2023	$0.035
March 31, 2023	March 17, 2023	March 31, 2023	$0.035
·	Net asset value (“NAV”) per share as of September 30, 2022 stood at $3.34, compared with a NAV per share on June 30, 2022<br>of $3.67.
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·	Net investment income (“NII”), calculated in accordance with U.S. generally accepted accounting principles, was approximately<br>$5.6 million, or $0.11 per share, for the quarter ended September 30, 2022, compared with approximately $4.3 million, or $0.09 per share,<br>for the quarter ended June 30, 2022.
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·	Total investment income for the quarter ended September 30, 2022 amounted to approximately $11.4 million, compared with approximately<br>$9.9 million for the quarter ended June 30, 2022.
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o	For the quarter ended September 30, 2022 we recorded investment income from our portfolio as follows:
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§	$6.8 million from our debt investments; and
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§	$4.6 million from our CLO equity investments and other income.
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·	Our total expenses for the quarter ended September<br>30, 2022 were approximately $5.8 million, compared with total expenses of approximately $5.6 million for the quarter ended June 30, 2022.
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·	As of September 30, 2022, the following metrics applied (note that none of these metrics represented a total return to shareholders):
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o	The weighted average yield of our debt investments was 10.4% at current cost, compared with 9.0% as of<br>June 30, 2022;
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o	The weighted average effective yield of our CLO equity investments at current cost was 9.0%, compared<br>with 9.5% as of June 30, 2022; and
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o	The weighted average cash distribution yield of our cash income producing CLO equity investments at current<br>cost was 16.6%, compared with 20.7% as of June 30, 2022.
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·	For the quarter ended September 30, 2022, we recorded a net decrease in net assets resulting from operations of approximately $11.1<br>million, consisting of:
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o	NII of approximately $5.6 million;
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o	Net realized gains of approximately $56,000; and
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o	Net unrealized depreciation of approximately $16.8 million.
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·	During the third quarter of 2022, we made investments of approximately $3.9 million, and received approximately<br>$12.8 million from sales and repayments of investments.
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·	Our weighted average credit rating was 2.2 based<br>on total fair value and 2.4 based on total principal amount as of September 30, 2022, compared with a weighted average credit rating of<br>2.1 based on total fair value and 2.3 based on total principal amount as of June 30, 2022.
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·	As of September 30, 2022, we had three debt investments (in one portfolio company) on non-accrual status,<br>with a combined fair value of approximately $466,000. Also, as of September 30, 2022, our preferred equity investments in one of our portfolio<br>companies were on non-accrual status, which had an aggregate fair value of approximately $2.2 million.
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We will hold a conference call to discuss third quarter results today, Monday, November 7^th^, 2022 at 9:00 AM ET. The toll-free dial-in number is 1-844-200-6205, access code number 016364. 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 807558.

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

			December 31, <br> 2021

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
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

All values are in US Dollars.

OXFORD SQUARE CAPITAL CORP.

STATEMENTS OF OPERATIONS – (unaudited)

	Three Months <br> Ended <br> September 30, <br> 2022			Three Months <br> Ended <br> September 30, <br> 2021		Nine Months <br> Ended <br> September 30, 2022			Nine Months <br> Ended <br> September 30, <br> 2021
INVESTMENT INCOME
From non-affiliated/non-control investments:
Interest income – debt investments	$	6,805,339		$	4,527,514	$	17,730,026		$	12,351,940
Income from securitization vehicles and investments		4,402,463			5,071,854		12,906,127			13,849,299
Other income		190,330			198,263		567,400			798,088
Total investment income from non-affiliated/non-control <br> investments		11,398,132			9,797,631		31,203,553			26,999,327
Total investment income		11,398,132			9,797,631		31,203,553			26,999,327
EXPENSES
Interest expense		3,090,535			3,090,535		9,263,853			7,405,358
Base Fee		1,408,729			1,774,727		4,580,413			4,598,461
Professional fees		417,390			349,626		1,072,843			1,604,845
Compensation expense		234,517			185,855		689,350			551,452
General and administrative		691,115			414,920		1,447,346			1,258,610
Total expenses before incentive fees		5,842,286			5,815,663		17,053,805			15,418,726
Net Investment Income Incentive Fees		—			—		—			—
Total expenses		5,842,286			5,815,663		17,053,805			15,418,726
Net investment income		5,555,846			3,981,968		14,149,748			11,580,601
Net change in unrealized (depreciation)/appreciation on investments:
Non-Affiliate/non-control investments		(17,373,881	)		5,558,192		(77,909,718	)		39,141,482
Affiliated investments		615,332			73,571		1,418,432			73,571
Total net change in unrealized (depreciation)/appreciation on investments		(16,758,549	)		5,631,763		(76,491,286	)		39,215,053
Net realized gains/(losses):
Non-affiliated/non-control investments		55,787			1,651,408		(437,978	)		(11,239,243	)
Total net realized gains/(losses)		55,787			1,651,408		(437,978	)		(11,239,243	)
Net (decrease)/increase in net assets resulting from operations	$	(11,146,916	)	$	11,265,139	$	(62,779,516	)	$	39,556,411
Net increase in net assets resulting from net investment income per common share (Basic and Diluted):	$	0.11		$	0.08	$	0.28		$	0.23
Net (decrease)/increase in net assets resulting from operations per common share (Basic and Diluted):	$	(0.22	)	$	0.23	$	(1.26	)	$	0.80
Weighted average shares of common stock outstanding (Basic and Diluted):		49,773,782			49,634,535		49,737,216			49,610,734
Distributions per share	$	0.105		$	0.105	$	0.315		$	0.315

FINANCIAL HIGHLIGHTS – (unaudited)

	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021			Nine Months Ended September 30, 2022			Nine Months Ended September 30, 2021
Per Share Data
Net asset value at beginning of period	$	3.67		$	4.91		$	4.92		$	4.55
Net investment income^(1)^		0.11			0.08			0.28			0.23
Net realized and unrealized (losses)/gains^(2)^		(0.33	)		0.15			(1.54	)		0.57
Net (decrease)/increase in net asset value from operations		(0.22	)		0.23			(1.26	)		0.80
Distributions per share from net investment income		(0.15	)		(0.09	)		(0.32	)		(0.26	)
Tax return of capital distributions^(3)^		0.04			(0.02	)		—			(0.06	)
Total distributions		(0.11	)		(0.11	)		(0.32	)		(0.32	)
Effect of shares issued/repurchased, gross		—			—			—			—
Net asset value at end of period	$	3.34		$	5.03		$	3.34		$	5.03
Per share market value at beginning of period	$	3.64		$	4.91		$	4.08		$	3.05
Per share market value at end of period	$	3.01		$	4.05		$	3.01		$	4.05
Total return based on Market Value^(4)^		(14.79	)%		(15.52	)%		(19.90	)%		42.66	%
Total return based on Net Asset Value^(5)^		(6.13	)%		4.58	%		(25.71	)%		17.47	%
Shares outstanding at end of period		49,800,274			49,655,275			49,800,274			49,655,275
Ratios/Supplemental Data^(8)^
Net assets at end of period (000’s)	$	166,548		$	249,645		$	166,548		$	249,645
Average net assets (000’s)	$	174,670		$	246,554		$	206,324		$	241,062
Ratio of expenses to average net assets^(6)^		12.95	%		9.44	%		10.98	%		8.53	%
Ratio of net investment income to average net assets^(6)^		13.16	%		6.46	%		9.18	%		6.41	%
Portfolio turnover rate^(7)^		3.53	%		1.39	%		16.42	%		8.20	%
(1)	Represents per share net investment income for the period, based<br>upon weighted average shares outstanding.
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(2)	Net realized and unrealized gains/(losses) include rounding<br>adjustments to reconcile change in net asset value per share.
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(3)	Management monitors available taxable earnings, including net<br>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<br>taxable earnings fall below the total amount of the Company’s distributions for that fiscal year, a portion of those distributions<br>may be deemed a tax return of capital to the Company’s stockholders. The ultimate tax character of the Company’s earnings<br>cannot be determined until tax returns are prepared after the end of the fiscal year. The amounts and sources of distributions reported<br>are only estimates and are not being provided for U.S. tax reporting purposes. For the three months ended September 30, 2022, the<br>tax return of capital includes an adjustment to reflect a reversal of the previously estimated tax return of capital for the six months<br>ended June 30, 2022.
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(4)	Total return based on market value equals the increase or decrease<br>of ending market value over beginning market value, plus distributions, divided by the beginning market value, assuming distribution<br>reinvestment prices obtained under the Company’s distribution reinvestment plan, excluding any discounts. Total return is not annualized.
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(5)	Total return based on net asset value equals the increase or<br>decrease of ending net asset value over beginning net asset value, plus distributions, divided by the beginning net asset value. Total<br>return is not annualized.
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(6)	Ratios for the three and nine months ended September 30, 2022<br>are annualized and include excise tax, which is a non-recurring expense that is not annualized. For the three and nine months ended September<br>30, 2022, excise tax represented of 0.14% and 0.12% of average net assets, respectively. Ratios for the three and nine months ended September<br>30, 2021 are annualized.
(7)	Portfolio turnover rate is calculated using the lesser of the<br>year-to-date cash investment sales and debt repayments or year-to-date cash investment purchases over the average of the total investments<br>at fair value.
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(8)	The following table provides supplemental performance ratios,<br>which are annualized and include excise tax, which is a non-recurring expense that is not annualized, measured for the three and<br>nine months ended September 30, 2022 and 2021:
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Ratio of expenses to average net assets:
Operating expenses before incentive fees	12.95	%	9.44	%	10.98	%	8.53	%
Net investment income incentive fees	—	%	—	%	—	%	—	%
Ratio of expenses, excluding interest expense	5.87	%	4.42	%	4.99	%	4.43	%

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, including the impact of COVID-19 and related changes in base interest rates and significant market volatility on our business, our portfolio companies, our industry and the global economy. 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