10-Q 1 s128181_10q.htm 10-Q

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

___________________________________

FORM 10-Q

___________________________________

 

(Mark One)

   
   

S

 

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020

 

£

 

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

_______________________

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 S 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 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 S

   

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 S

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 October 27, 2020, was 49,589,607.

 

i

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OXFORD SQUARE CAPITAL CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

 

September 30,
20
20

 

December 31,
201
9

   

(unaudited)

   

ASSETS

 

 

 

 

 

 

 

 

Non-affiliated/non-control investments (cost: $443,810,054 and $467,828,907, respectively)

 

$

295,267,639

 

 

$

361,985,203

 

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

 

 

 

 

 

2,816,790

 

Cash equivalents

 

 

2,220,960

 

 

 

14,410,486

 

Restricted cash

 

 

 

 

 

2,050,452

 

Interest and distributions receivable

 

 

1,539,157

 

 

 

3,480,036

 

Other assets

 

 

690,468

 

 

 

523,626

 

Total assets

 

$

299,718,224

 

 

$

385,266,593

 

LIABILITIES

 

 

 

 

 

 

 

 

Notes payable – 6.50% Unsecured Notes (net of deferred issuance costs of $1,136,908 and $1,380,658, respectively)

 

$

63,233,317

 

 

$

62,989,567

 

Notes payable – 6.25% Unsecured Notes (net of deferred issuance costs of $1,301,850 and $1,476,878, respectively)

 

 

43,488,900

 

 

 

43,313,872

 

Notes payable – Credit Facility (net of deferred issuance costs of $0 and $10,051, respectively)

 

 

 

 

 

28,080,550

 

Base management fee and net investment income incentive fee payable to affiliate

 

 

1,123,449

 

 

 

1,480,653

 

Accrued interest payable

 

 

481,261

 

 

 

632,235

 

Accrued expenses

 

 

422,828

 

 

 

771,174

 

Total liabilities

 

 

108,749,755

 

 

 

137,268,051

 

COMMITMENTS AND CONTINGENCIES (Note 13)

 

 

 

 

 

 

 

 

NET ASSETS

 

 

 

 

 

 

 

 

Common stock, $0.01 par value, 100,000,000 shares authorized; 49,589,607 and 48,448,987 shares issued and outstanding, respectively

 

 

495,895

 

 

 

484,489

 

Capital in excess of par value

 

 

457,810,322

 

 

 

451,839,302

 

Total distributable earnings/(accumulated losses)

 

 

(267,337,748

)

 

 

(204,325,249

)

Total net assets

 

 

190,968,469

 

 

 

247,998,542

 

Total liabilities and net assets

 

$

299,718,224

 

 

$

385,266,593

 

Net asset value per common share

 

$

3.85

 

 

$

5.12

 

See Accompanying Notes.

1

OXFORD SQUARE CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited)
September 30, 2020

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% of Net
Assets

Senior Secured Notes

     

 

   

 

   

 

     

 

Aerospace and Defense

     

 

   

 

   

 

     

 

Novetta, LLC

     

 

   

 

   

 

     

 

first lien senior secured notes, 6.00% (LIBOR + 5.00%), (1.00% floor) due October 16, 2022(4)(5)(6)(16)

 

November 20, 2014

 

$

5,428,880

 

$

5,385,412

 

$

5,320,302

   

 

Total Aerospace and Defense

     

 

   

$

5,385,412

 

$

5,320,302

 

2.8

%

       

 

   

 

   

 

     

 

Business Services

     

 

   

 

   

 

     

 

Access CIG, LLC

     

 

   

 

   

 

     

 

second lien senior secured notes, 7.91% (LIBOR + 7.75%),
(0.00% floor) due February 27,
2026
(4)(5)(14)(15)

 

February 14, 2018

 

$

16,754,000

 

$

16,838,420

 

$

15,776,739

   

 

       

 

   

 

   

 

     

 

Convergint Technologies, LLC

     

 

   

 

   

 

     

 

second lien senior secured notes, 7.50% (LIBOR + 6.75%),
(0.75% floor) due February 2,
2026
(4)(5)(15)

 

January 29, 2018

 

 

1,500,000

 

 

1,493,297

 

 

1,350,000

   

 

       

 

   

 

   

 

     

 

Imagine! Print Solutions

     

 

   

 

   

 

     

 

second lien senior secured notes, 9.75% (LIBOR + 8.75%),
(1.00% floor) due June 21,
2023
(4)(5)(16)(17)

 

June 14, 2017

 

 

15,000,000

 

 

13,975,246

 

 

168,750

   

 

       

 

   

 

   

 

     

 

OMNIA Partners, Inc.

     

 

   

 

   

 

     

 

second lien senior secured notes, 7.72% (LIBOR + 7.50%),
(0.00% floor) due May 22,
2026
(4)(5)(14)(16)

 

May 17, 2018

 

 

14,000,000

 

 

13,946,374

 

 

12,670,000

   

 

       

 

   

 

   

 

     

 

Premiere Global Services, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 7.50% (LIBOR + 6.50%), (1.00% floor) due June 8, 2023(4)(5)(6)(14)(25)

 

October 1, 2019

 

 

14,286,783

 

 

13,770,313

 

 

9,197,117

   

 

second lien senior secured notes, 0.50% Cash, 10.00% PIK (LIBOR + 9.00%) (1.00% floor) due June 6, 2024(3)(4)(5)(14)(16)(17)

 

October 1, 2019

 

 

11,099,349

 

 

9,817,795

 

 

5,549,675

   

 

       

 

   

 

   

 

     

 

Verifone Systems, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 4.25% (LIBOR + 4.00%), (0.00% floor) due August 20, 2025(4)(5)(6)(14)(16)

 

August 9, 2018

 

 

10,867,348

 

 

10,344,008

 

 

9,726,276

   

 

Total Business Services

     

 

   

$

80,185,453

 

$

54,438,557

 

28.5

%

       

 

   

 

   

 

     

 

Diversified Insurance

     

 

   

 

   

 

     

 

AmeriLife Group LLC

     

 

   

 

   

 

     

 

second lien senior secured notes, 9.50% (LIBOR + 8.50%),
(1.00% floor) due March 18,
2028
(4)(5)(6)(25)

 

March 18, 2020

 

$

7,500,000

 

$

7,355,342

 

$

7,350,000

   

 

Total Diversified Insurance

     

 

   

$

7,355,342

 

$

7,350,000

 

3.8

%

(continued on next page)

See Accompanying Notes.

2

OXFORD SQUARE CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) — (continued)
September 30, 2020

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% of Net
Assets

Senior Secured Notes – (continued)

     

 

   

 

   

 

     

 

Education

     

 

   

 

   

 

     

 

Edmentum, Inc.
(f/k/a Plato, Inc.)

     

 

   

 

   

 

     

 

first lien senior secured notes, 5.50% (LIBOR + 4.50%), (1.00% floor) Cash, 4.00% PIK due June 9,
2021
(3)(4)(5)(6)(16)

 

April 25, 2013

 

$

6,184,402

 

$

6,172,645

 

$

5,813,338

   

 

Total Education

     

 

   

$

6,172,645

 

$

5,813,338

 

3.0

%

       

 

   

 

   

 

     

 

Healthcare

     

 

   

 

   

 

     

 

Keystone Acquisition Corp.

     

 

   

 

   

 

     

 

first lien senior secured notes, 6.25% (LIBOR + 5.25%), (1.00% floor) due May 1, 2024(4)(5)(6)(14)(16)

 

May 10, 2017

 

$

7,400,648

 

$

7,378,832

 

$

6,679,085

   

 

second lien senior secured notes, 10.25% (LIBOR + 9.25%),
(1.00% floor) due May 1,
2025
(4)(5)(14)(16)

 

May 10, 2017

 

 

13,000,000

 

 

12,886,481

 

 

10,725,000

   

 

       

 

   

 

   

 

     

 

Viant Medical Holdings, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 3.91% (LIBOR + 3.75%), (0.00% floor) due July 2, 2025(4)(5)(6)(14)(15)

 

June 26, 2018

 

 

9,800,000

 

 

9,799,040

 

 

9,040,500

   

 

second lien senior secured notes, 7.90% (LIBOR + 7.75%), (0.00% floor) due July 2, 2026(4)(5)(14)(15)

 

June 26, 2018

 

 

5,000,000

 

 

4,959,694

 

 

4,150,000

   

 

       

 

   

 

   

 

     

 

Healthport Technologies, LLC

     

 

   

 

   

 

     

 

first lien senior secured notes, 5.25% (LIBOR + 4.25%), (1.00% floor) due December 1, 2021(4)(5)(6)(14)(15)

 

April 12, 2019

 

 

16,467,538

 

 

15,435,940

 

 

15,798,627

   

 

       

 

   

 

   

 

     

 

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

     

 

   

 

   

 

     

 

first lien senior secured notes, 4.65% (LIBOR + 4.50%), (0.00% floor) due April 3, 2025(4)(5)(6)(15)

 

October 31, 2018

 

 

9,786,623

 

 

9,733,683

 

 

8,905,827

   

 

Total Healthcare

     

 

   

$

60,193,670

 

$

55,299,039

 

29.0

%

       

 

   

 

   

 

     

 

Logistics

     

 

   

 

   

 

     

 

Capstone Logistics Acquisition, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 5.50% (LIBOR + 4.50%), (1.00% floor) due October 7, 2021(4)(5)(6)(14)(15)

 

October 3, 2014

 

$

12,903,300

 

$

12,894,290

 

$

12,677,492

   

 

Total Logistics

     

 

   

$

12,894,290

 

$

12,677,492

 

6.6

%

(continued on next page)

See Accompanying Notes.

3

OXFORD SQUARE CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) — (continued)
September 30, 2020

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% of Net
Assets

Senior Secured Notes – (continued)

     

 

   

 

   

 

     

 

Plastics Manufacturing

     

 

   

 

   

 

     

 

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

     

 

   

 

   

 

     

 

first lien senior secured notes, 4.25% (LIBOR + 3.25%), (1.00% floor) due January 31, 2025(4)(5)(6)(25)

 

June 24, 2020

 

$

7,460,805

 

$

6,670,200

 

$

6,789,333

   

 

Total Plastics Manufacturing

     

 

   

$

6,670,200

 

$

6,789,333

 

3.6

%

Software

     

 

   

 

   

 

     

 

ECI Software Solutions, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 5.25% (LIBOR + 4.25%), (1.00% floor) due September 27,
2024
(4)(5)(6)(14)(15)

 

June 28, 2018

 

$

2,889,717

 

$

2,895,003

 

$

2,869,865

   

 

second lien senior secured notes, 9.00% (LIBOR + 8.00%),
(1.00% floor) due September 29,
2025
(4)(5)(14)(15)

 

September 19, 2017

 

 

15,000,000

 

 

14,924,044

 

 

14,906,250

   

 

       

 

   

 

   

 

     

 

Quest Software, Inc.

     

 

   

 

   

 

     

 

first lien senior secured notes, 4.51% (LIBOR + 4.25%), (0.00% floor) due May 16, 2025(4)(5)(6)(14)(16)

 

May 17, 2018

 

 

2,906,402

 

 

2,895,633

 

 

2,841,008

   

 

second lien senior secured notes, 8.51% (LIBOR + 8.25%),
(0.00% floor) due May 18,
2026
(4)(5)(14)(16)

 

May 17, 2018

 

 

12,500,000

 

 

12,398,878

 

 

11,650,000

   

 

Total Software

     

 

   

$

33,113,558

 

$

32,267,123

 

16.9

%

       

 

   

 

   

 

     

 

Telecommunications Services

     

 

   

 

   

 

     

 

Global Tel Link Corp.

     

 

   

 

   

 

     

 

second lien senior secured notes, 8.40% (LIBOR + 8.25%),
(0.00% floor) due November 29,
2026
(4)(5)(14)(15)

 

November 20, 2018

 

$

17,000,000

 

$

16,744,277

 

$

11,645,000

   

 

Total Telecommunication
Services

     

 

   

$

16,744,277

 

$

11,645,000

 

6.1

%

       

 

   

 

   

 

     

 

Utilities

     

 

   

 

   

 

     

 

CLEAResult Consulting, Inc.

     

 

   

 

   

 

     

 

second lien senior secured notes, 7.40% (LIBOR + 7.25%),
(0.00% floor) due August 10, 2026
(4)(5)(15)

 

August 3, 2018

 

$

7,650,000

 

$

7,670,063

 

$

6,923,250

   

 

Total Utilities

     

 

   

$

7,670,063

 

$

6,923,250

 

3.6

%

Total Senior Secured Notes

     

 

   

$

236,384,910

 

$

198,523,434

 

104.0

%

(continued on next page)

See Accompanying Notes.

4

OXFORD SQUARE CAPITAL CORP.

CONSOLIDATED SCHEDULE OF INVESTMENTS (unaudited) — (continued)
September 30, 2020

COMPANY/INVESTMENT(1)(20)

 

ACQUISITION
DATE

 

PRINCIPAL
AMOUNT

 

COST

 

FAIR
VALUE
(2)

 

% of Net
Assets

Collateralized Loan Obligation – Debt Investments

     

 

   

 

   

 

     

 

Structured Finance

     

 

   

 

   

 

     

 

AMMC CLO XII, Ltd.

     

 

   

 

   

 

     

 

CLO secured class F notes, 8.61% (LIBOR + 8.37%), due
November 10, 2030
(4)(5)(11)(12)(16)

 

July 29, 2020

 

$

992,323

 

$

672,705

 

$

672,696

   

 

       

 

   

 

   

 

     

 

Galaxy XXVIII CLO, Ltd.

     

 

   

 

   

 

     

 

CLO secured class F notes, 8.76% (LIBOR + 8.48%), due July 15, 2031(4)(5)(11)(12)(16)

 

June 29, 2018

 

 

1,000,000

 

 

937,766

 

 

724,300