OXSQ 10-K & 10-Q changes, risk factors and insider trading
Oxford Square Capital Corp. (also OXSQG, OXSQH) · Nasdaq · CIK 1259429 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “The outcome of the U.S. presidential, congressional and other elections creates significant uncertainty with respect to the legal, tax and regulatory regime in which we and our portfolio companies will operate.”
Removed heading “Your interest in us may be diluted if you do not fully exercise your subscription rights in any rights offering.”
Removed heading “The effect of global climate change may impact the operations of our portfolio companies.”
Removed heading “We are subject to risks related to corporate social responsibility.”
Largest changes
“Changes in the composition of the U.S. government following an election could result in changes to U.S. and non-U.S. fiscal, tax and other policies, as well as the global financial markets generally. Any significant changes in economic policy, the regulation of the asset management industry, international trade policy and/or tax law, among other things, could have a material adverse impact on us and our investments. General fluctuations in the market prices of securities and interest rates could affect our investment opportunities and the value of our investments. …”see in full comparison
“Although we assess our and our portfolio companies’ banking relationships as we believe necessary or appropriate, our and our portfolio companies’ access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our respective current and projected future business operations could be significantly impaired by factors that affect us or our portfolio companies, the financial institutions with which we, or our portfolio companies have arrangements directly, or the financial services industry or economy in general. …”see in full comparison
“Cash held by us and by our portfolio companies in non-interest-bearing and interest-bearing operating accounts may exceed the FDIC insurance limits. If such banking institutions were to fail, we or our portfolio companies could lose all or a portion of those amounts held in excess of such FDIC insurance limitations. …”see in full comparison
see in full comparisonTheGeopoliticalIsrael-Hamas war and the conflict between Russia and Ukraine and in the Middle East,conflicts and resulting market volatility, could also adversely affect the Company’s business, operating results, and financial condition. The extent and duration or escalation of such conflicts, resulting sanctions and resulting future market disruptions are impossible to predict, but could be significant. Any disruptions resulting from such conflicts and any future conflict (including cyberattacks, espionage or the use or threatened use of nuclear weapons) or resulting from actual or threatened responses to such actions could cause disruptions to any of our portfolio companies located inEuropeaffectedor the Middle Eastregions or that have substantial business relationships with companies in affected regions. It is not possible to predict the duration or extent of longer-term consequences of these conflicts, which could include further sanctions, retaliatory and escalating measures, embargoes, regional instability, geopolitical shifts and adverse effects on or involving macroeconomic conditions, the energy sector, supply chains, inflation, security conditions, currency exchange rates and financial markets around the globe. Any such market disruptions could affect our portfolio companies’ operations and, as a result, could have a material adverse effect on our business, financial condition and results of operations.
“The effect of global climate change may impact the operations of our portfolio companies.”see in full comparison
“There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity. To the extent weather conditions are affected by climate change, energy use could increase or decrease depending on the duration and magnitude of any changes. …”see in full comparison
Full comparison: every changed paragraph (36)
On April 3, 2019, we completed an underwritten public offering of approximately $44.8 million in aggregate principal amount of 6.25% Unsecured Notes. The 6.25% Unsecured Notes will mature on April 30, 2026, and may be redeemed in whole or in part at any time or from time to time at our option on or after April 30, 2022. The 6.25% Unsecured Notes bear interest at a rate of 6.25% per year payable quarterly on January 31, April 30, July 31, and October 31, of each year. The 6.25% Unsecured Notes are our general unsecured obligations, rank equally in right of payment with our future senior unsecured debt, and rank senior in right of payment to any potential subordinated debt, should any be issued in the future.
On May 20, 2021, the Companywe completed an underwritten public offering of approximately $80.5 million in aggregate principal amount of 5.50% Unsecured Notes. The 5.50% Unsecured Notes will mature on July 31, 2028, and may be redeemed in whole or in part at any time or from time to time at the Company’sour option on or after May 31, 2024. The 5.50% Unsecured Notes bear interest at a rate of 5.50% per year payable quarterly on January 31, April 30, July 31, and October 31, of each year. The 5.50% Unsecured Notes are our general unsecured obligations, rank equally in right of payment with our future senior unsecured debt, and rank senior in right of payment to any potential subordinated debt, should any be issued in the future.
On August 7, 2025, we completed an underwritten public offering of approximately $74.8 million in aggregate principal amount of 7.75% Unsecured Notes. The 7.75% Unsecured Notes will mature on July 31, 2030, and may be redeemed in whole or in part at any time or from time to time at our option on or after July 31, 2027. The 7.75% Unsecured Notes bear interest at a rate of 7.75% per year payable quarterly on January 31, April 30, July 31, and October 31, of each year. The 7.75% Unsecured Notes are our general unsecured obligations, rank equally in right of payment with our future senior unsecured debt, and rank senior in right of payment to any potential subordinated debt, should any be issued in the future.
Our charter permits our Board of Directors to reclassify any authorized but unissued shares of stock into one or more classes of preferred stock. We are currently authorized to issue up to 100,000,000 shares of common stock, of which 69,789,52787,510,727 shares are issued and outstanding as of FebruaryMarch 27,2, 2025.2026. In the event our Board of Directors opts to reclassify a portion of our unissued shares of common stock into a class of preferred stock, those preferred shares would have a preference over our common stock with respect to distributions and liquidation. The cost of any such reclassification would be borne by our existing common stockholders. The class voting rights of any preferred shares we may issue could make it more difficult for us to take some actions that may, in the future, be proposed by our Board of Directors and/or the holders of our common stock, such as a merger, exchange of securities, liquidation, or alteration of the rights of a class of our securities, if these actions were perceived by the holders of preferred shares as not in their best interests. The issuance of preferred shares convertible into shares of common stock might also reduce the net income and net asset value per share of our common stock upon conversion. These effects, among others, could have an adverse effect on your investment in our common stock.
On January 6, 2026, we received an updated form of co-investment exemptive relief from the SEC to allow certain managed funds and investment vehicles, each of whose investment adviser is Oxford Square Management or an investment adviser controlling, controlled by or under common control with Oxford Square Management, to participate in negotiated co-investment transactions where doing so is consistent with regulatory requirements and other pertinent factors, and pursuant to the conditions of the exemptive relief (the “Co-Investment Order”). The Co-Investment Order, which supersedes the co-investment order issued to us on June 14, 2017, is a new form of co-investment exemptive relief that adopts a more flexible requirement that allocations be “fair and equitable” to us and that Oxford Square Management considers the interests of us and other affiliated 1940 Act-regulated funds that rely on the Co-Investment Order in allocations and which minimizes certain board approval requirements as compared to the prior form of co-investment exemptive relief. Among other things, under the Co-Investment Order, the terms, conditions, price, class of securities to be purchased in respect of a particular investment, the date on which such investment is to be made and any registration rights applicable thereto, must be generally the same for us and each other participating affiliated entity. The requirements of the Co-Investment Order (including any requirements for board approval thereunder), as well as other regulatory requirements associated with us and other affiliated 1940 Act-regulated funds that rely on the Co-Investment Order, potentially will impact the investment allocations among participating entities (including, for the avoidance of doubt, us) or otherwise impact allocation results. Any changes to the Co-Investment Order or the rules and other guidance promulgated by the SEC and its staff under the 1940 Act could impact allocations made available to us and thereby affect (and potentially decrease) the allocation made to us or otherwise impact the process for allocations in transactions in which we participate.
On October 13, 2016, we filed an exemptive application with the SEC to permit us to co-invest with funds or entities managed by Oxford Square Management or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. On June 14, 2017, the SEC issued an order permitting the Company and certain of its affiliates to complete negotiated co-investment transactions in portfolio companies, subject to certain conditions, or the “Order.” Subject to satisfaction of certain conditions to the Order, the Company and certain of its affiliates are now permitted, together with any future BDCs, registered closed-end funds and certain private funds, each of whose investment adviser is Oxford Square’s investment adviser or an investment adviser controlling, controlled by, or under common control with Oxford Square Management, to co-invest in negotiated investment opportunities where doing so would otherwise be prohibited under the 1940 Act, providing the Company’s stockholders with access to a broader array of investment opportunities. Pursuant to the Order, we are permitted to co-invest in such investment opportunities with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.
Because we will borrow money and may issue debt securities or preferred stock to make investments, our net investment income is dependent upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds. In periods of rising interest rates, our interest income will increase as the majority of our portfolio bears interest at variable rates while our cost of funds will also increase, which could result in an increase to our net investment income. Conversely, if interest rates decrease, we may earn less interest income from investments and our cost of funds will also decrease, which could result in lower net investment income. Additionally, in periods of declining interest rates, the rate of prepayments has historically tended to increase (as does price fluctuation) as borrowers are motivated to pay off debt and refinance at new lower rates. During such periods, we would expect reinvestment of the prepayment proceeds by us to generally be at lower rates of return than the return on the assets that were prepaid. From time to time, we may also enter into certain hedging transactions to mitigate our exposure to changes in interest rates. However, we cannot assure you that such transactions will be successful in mitigating our exposure to interest rate risk. There can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.
Your interest in us may be diluted if you do not fully exercise your subscription rights in any rights offering.
In the event we issue subscription rights or warrants to purchase shares of our common stock, stockholders who do not fully exercise their rights or warrants should expect that they will, at the completion of the offer, own a smaller proportional interest in us than would otherwise be the case if they fully exercised their rights or warrants. We cannot state precisely the amount of any such dilution in share ownership because we do not know at this time what proportion of the shares will be purchased as a result of the offer.
In addition, if the subscription price is less than our net asset value per share, then our stockholders would experience an immediate dilution of the aggregate net asset value of their shares as a result of the offer. The amount of any decrease in net asset value is not predictable because it is not known at this time what the subscription price, warrant exercise price or net asset value per share will be on the expiration date of such rights offering or what proportion of the shares will be purchased as a result of the offer. Such dilution could be substantial.
FromOur timebusiness toand time, capital marketsoperations may experiencebe periodsadversely ofaffected volatility and instability for a variety of reasons. In addition to the factors described above, other factors described herein that may affectby market, economic and geopolitical conditions, and thereby adversely affect the Company including, without limitation, economic slowdown in the United States and internationally, changes in interest rates and/or a lack of availability of credit in the United States and internationally, commodity price volatility and changes in law and/or regulation, and uncertainty regarding government and regulatory policy. The full impact of any such risks is uncertain and difficult to predict.
Capital markets volatility and instability have also occurred in the past and may occur in the future. ForAt example,various fromtimes, 2008such todisruptions 2009,in the globalpast capitalhave marketsresulted werein, unstableand asmay evidenced byin the future result in, a lack of liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and various foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. There have been more recent periods of volatility and there can be no assurance that adverse market conditions will not repeat themselves in the future. Furthermore, uncertainty between the United States and other countries with respect to trade policies, treaties and tariffs, among other factors, have caused volatility in the global markets, and we cannot assure you that these market conditions will not continue or worsen in the future. Terrorist acts, acts of war, geopolitical tensions, natural disasters, or disease outbreaks, pandemics or other public health crises may cause periods of market instability and volatility and may disrupt the operations of us and our portfolio companies for extended periods of time. If similar adverse and volatile market conditions repeat in the future, we and other companies in the financial services sector may have to access, if available, alternative markets for debt and equity capital in order to grow. Equity capital may be particularly difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than the net asset value per share without first obtaining approval for such issuance from our stockholders and our Board of Directors, including all of our directors who are not “interested persons” of the Company, as defined in the 1940 Act.
Moreover,Such conditions may occur for a prolonged period of time, and may materially worsen in the re-appearance of market conditions similar to those experienced from 2008 through 2009 for any substantial length of time or worsened market conditions,future, including as a result of U.S. government shutdowns or the perceived creditworthiness of the United States, could make it difficult for us to borrow money or to extend the maturity of or refinance any indebtedness we may have under similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if any, may be at a higher cost and on less favorable terms and conditions than would currently be available. If we are unable to raise or refinance debt, stockholders may not benefit from the potential for increased returns on equity resulting from leverage and we may be limited in our ability to make new commitments or to fund existing commitments to our portfolio companies.
TheGeopolitical Israel-Hamas war and the conflict between Russia and Ukraine and in the Middle East,conflicts and resulting market volatility, could also adversely affect the Company’s business, operating results, and financial condition. The extent and duration or escalation of such conflicts, resulting sanctions and resulting future market disruptions are impossible to predict, but could be significant. Any disruptions resulting from such conflicts and any future conflict (including cyberattacks, espionage or the use or threatened use of nuclear weapons) or resulting from actual or threatened responses to such actions could cause disruptions to any of our portfolio companies located in Europeaffected or the Middle Eastregions or that have substantial business relationships with companies in affected regions. It is not possible to predict the duration or extent of longer-term consequences of these conflicts, which could include further sanctions, retaliatory and escalating measures, embargoes, regional instability, geopolitical shifts and adverse effects on or involving macroeconomic conditions, the energy sector, supply chains, inflation, security conditions, currency exchange rates and financial markets around the globe. Any such market disruptions could affect our portfolio companies’ operations and, as a result, could have a material adverse effect on our business, financial condition and results of operations.
The outcome of the U.S. presidential, congressional and other elections creates significant uncertainty with respect to the legal, tax and regulatory regime in which we and our portfolio companies will operate.
Changes in the composition of the U.S. government following an election could result in changes to U.S. and non-U.S. fiscal, tax and other policies, as well as the global financial markets generally. Any significant changes in economic policy, the regulation of the asset management industry, international trade policy and/or tax law, among other things, could have a material adverse impact on us and our investments. General fluctuations in the market prices of securities and interest rates could affect our investment opportunities and the value of our investments. We could also be affected by difficult conditions in the capital markets and any overall weakening of the financial services industry. Ongoing disruptions in the global credit markets could affect issuers’ ability to pay debts and obligations on a timely basis. If defaults occur, we could lose both invested capital in, and anticipated profits from, any affected investments.
While the current U.S. administration has signaled a reduced emphasis on regulation, past U.S. administrations supported an enhanced regulatory agenda. Changes in regulation can impose greater costs on certain sectors, including financial services, or otherwise impact the competitive environment for obligors, which could adversely impact us and our clients.
The effect of global climate change may impact the operations of our portfolio companies.
There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity. To the extent weather conditions are affected by climate change, energy use could increase or decrease depending on the duration and magnitude of any changes. Increases in the cost of energy could adversely affect the cost of operations of our portfolio companies if the use of energy products or services is material to their business. A decrease in energy use due to weather changes may affect some of our portfolio companies’ financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions. Energy companies could also be affected by the potential for lawsuits against or taxes or other regulatory costs imposed on greenhouse gas emitters, based on links drawn between greenhouse gas emissions and climate change.
ThereThe U.S. government has beenindicated ongoingits discussionintent, made proposals and commentarytaken regarding potential significant changesactions to Unitedalter Statesits approach to international trade policies,policy and in some cases to renegotiate, or potentially terminate, existing bilateral or multi-lateral trade agreements and treaties and tariffs. There is significant uncertainty about the future relationship between the United States and other countries with respectforeign tocountries. theSome tradeforeign policies,governments, treatiesincluding andChina, tariffs.have instituted retaliatory tariffs on certain U.S. goods. These developments, or the perception that anymore of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity and restrict our portfolio companies’ access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us.
There is uncertainty as to further actions that may be taken under the current U.S. presidential administration with respect to U.S. trade policy. Further governmental actions related to the imposition of tariffs or other trade barriers, or changes to international trade agreements or policies, could further increase costs, decrease margins, reduce the competitiveness of products and services offered by current and future portfolio companies and adversely affect the revenues and profitability of companies whose businesses rely on goods imported from outside of the United States.
Certain of our service providers may be impacted by hybrid work policies adopted by companies following the COVID-19 pandemic, which are obstructing the regular functioning of business workforces (including requiring employees to work from external locations and their homes).
Artificial intelligence (“AI”) refers to computer systems capable of performing tasks that typically require human intelligence, including but not limited to machine learning, natural language processing, and generative and agentic AI technologies. These systems are designed to analyze data, learn from patterns, make decisions and solve problems. AI and its current and potential future applications including in the private investment and financial industries, as well as the legal and regulatory frameworks within which AI operates, continue to rapidly evolve. Investors should be aware that the use of AI tools, while potentially beneficial, presents a range of risks and may result in material adverse consequences (including the risks discussed in further detail below) for us or our third-party service providers or counterparties, and no assurance can be given that any controls adopted to govern the use of AI will fully mitigate the risks associated with AI technologies.
AI tools may produce inaccurate, biased, insufficient, discriminatory, misleading, incomplete, undetectable manipulative or otherwise flawed responses due to (among other things) limitations in training data, algorithmic design or operational oversight. Such deficiencies may result in operational errors, investment losses, reputational, financial, or social harm, legal liability, regulatory scrutiny or other adverse effects. The deployment and supervision of AI tools may increase operational and compliance risks. Inappropriate use of AI tools or overreliance on AI outputs without adequate human oversight may further exacerbate these risks.
The legal and regulatory environment relating to AI is uncertain and evolving and future changes, such as those related to privacy, data protection and intellectual property, could have an impact on the use of AI and existing or emerging technologies that could impact us. It is possible that future changes in applicable legal and regulatory requirements could increase compliance costs. Any of these risks could adversely affect us. Additionally, regulatory actions or legal challenges may impose restrictions or obligations that affect operational efficiency or compliance posture.
The misuse of AI tools, whether intentional or inadvertent, may expose us to additional risks. In addition, AI tools and technology are evolving rapidly and the integration of AI in systems and operations create new risks that can be difficult to assess and anticipate.
Artificial intelligence, including machine learning and similar tools and technologies that collect, aggregate, analyze or generate data or other materials, or collectively, AI, and its current and potential future applications including in the private investment and financial industries, as well as the legal and regulatory frameworks within which AI operates, continue to rapidly evolve.
Recent technological advances in AI pose risks to the Company, the Adviser, and our portfolio investments. The CompanyWe and our portfolio investments could also be exposed to the risks of AI if third-party service providers or any counterparties, whether or not known to the Company,us, also use AI in their business activities. We and our portfolio companies may not be in a position to control the use of AI technology in third-party products or services.
The use of third-party and open-source AI tools (if any) can pose additional risks relating to data protection and information security, including the potential exposure of confidential information to unauthorized recipients and the misuse of intellectual property, which could adversely affect us.
Use of AI could include the input of confidential information in contravention of applicable policies, contractual or other obligations or restrictions, resulting in such confidential information becoming part accessible by other third-party AI applications and users. While the Adviser does not currently use AI to make investment recommendations, theThe use of AI could also exacerbate or create new and unpredictable risks to our business, theOxford Adviser’sSquare Management’s business, and the business of our portfolio companies, including by potentially significantly disrupting the markets in which we and our portfolio companies operate or subjecting us, our portfolio companies and theOxford AdviserSquare Management to increased competition and regulation, which could materially and adversely affect business, financial condition or results of operations of us, our portfolio companies and theOxford Adviser.Square InManagement. addition, theThe use of AI by bad actors could heighten the security vulnerabilities and sophistication and effectiveness of cyber and security attacks experienced by our portfolio companies and theOxford Adviser.Square Management.
Independent of its context of use, AI technology is generally highly reliant on the collection and analysis of large amounts of data, and it is not possible or practicable to incorporate all relevant data into the model that AI technology utilizes to operate. Certain data in such models will inevitably contain a degree of inaccuracy and error — potentially materially so — and could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness of AI technology. To the extent that we or our portfolio investments are exposed to the risks of AI use, any such inaccuracies or errors could have adverse impacts on the Company or our investments.
We are subject to risks related to corporate social responsibility.
Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities. We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as environmental stewardship, corporate governance and transparency and considering ESG factors in our investment processes. Adverse incidents with respect to ESG activities could impact the value of our brand, the cost of our operations and relationships with investors, all of which could adversely affect our business and results of operations. Additionally, new regulatory initiatives related to ESG could adversely affect our business.
Cash held by us and by our portfolio companies in non-interest-bearing and interest-bearing operating accounts may exceed the FDIC insurance limits. If such banking institutions were to fail, we or our portfolio companies could lose all or a portion of those amounts held in excess of such FDIC insurance limitations. In addition, actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems, which could adversely affect our and our portfolio companies’ business, financial condition, results of operations, or prospects.
Although we assess our and our portfolio companies’ banking relationships as we believe necessary or appropriate, our and our portfolio companies’ access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our respective current and projected future business operations could be significantly impaired by factors that affect us or our portfolio companies, the financial institutions with which we, or our portfolio companies have arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which we or our portfolio companies have financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us or our portfolio companies to acquire financing on acceptable terms or at all.
Our cash is held in accounts at a U.S. banking institution that we believe is of high quality. Cash held in non-interest-bearing and interest-bearing operating accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we could lose all or a portion of those amounts held in excess of such insurance limitations. While the FDIC took control of two such banking institutions, Silicon Valley Bank (“SVB”), on March 10, 2023 and Signature Bank (“Signature”) on March 12, 2023, we did not have any accounts with SVB or Signature and therefore did not experience any specific risk of loss. As the FDIC continues to address the situation with SVB, Signature Bank and other similarly situated banking institutions, the risk of loss in excess of insurance limitations has generally increased. Any material loss that we may experience in the future could have an adverse effect on our ability to pay our operational expenses or make other payments and may require us to move our accounts to other banks, which could cause a temporary delay in making payments to our vendors and employees and cause other operational inconveniences.
Management's Discussion & Analysis (MD&A)
Largest changes
“Oxford Square Management, Oxford Lane Management, Oxford Park Management and Oxford Gate Management are subject to a written policy with respect to the allocation of investment opportunities among the Company, Oxford Lane Capital Corp., Oxford Park Income Fund, Inc., Oxford Bridge II, LLC and the Oxford Gate Funds. …”see in full comparison
The following are our outstanding principal amounts, carrying values and fair values of our borrowings as of December 31,see in full comparison20242025 and December 31,2023.2024. The fair value of the6.25%5.50% UnsecuredNotesNotes, 7.75% Unsecured Notes, and5.50%6.25% Unsecured Notes are based upon the closing price on the last day of the period. The6.25%5.50% Unsecured Notes and5.50%7.75% Unsecured Notes are listed on the NASDAQ Global Select Market (trading symbol “OXSQZOXSQG” and “OXSQGOXSQH”, respectively). The 6.25% Unsecured Notes were formerly listed on the NASDAQ Global Select Market under the trading symbol “OXSQZ” until they were fully repaid and delisted on September 19, 2025.
“For the year ended December 31, 2025, we recognized net realized losses on investments of approximately $16.8 million, which primarily represents sales and restructurings of senior secured notes.”see in full comparison
The total principal outstanding on income producing debt investments as of December 31,see in full comparison20242025 and December 31,20232024 was approximately$199.5$188.0 million and$247.7$199.5 million, respectively. As of December 31, 2025, our income producing debt investments had stated interest rates of between 6.47% and 12.97% and maturity dates of between 3 and 91 months. As of December 31, 2024, our income producing debt investments had stated interest rates of between 7.61% and 13.13% and maturity dates of between 3 and 82 months.As of December 31, 2023, our debt investments had stated interest rates of between 9.22% and 16.00% and maturity dates of between 0 and 74 months.In addition, our total portfolio had a weighted average yield on debt investments of approximately15.76%14.53% as of December 31,2024,2025, compared to a weighted average yield on debt investments of13.30%15.76% as of December 31,2023.2024.
“Oxford Square Management, Oxford Lane Management, Oxford Park Management and Oxford Gate Management are subject to a written policy with respect to the allocation of investment opportunities among the Company, Oxford Lane Capital Corp., Oxford Park Income Fund, Inc., Oxford Bridge II, LLC and the Oxford Gate Funds. …”see in full comparison
“On October 30, 2025, the Board of Directors authorized a 12-month Share repurchase Program. Under the Share Repurchase Program, we may repurchase, during the 12-month period commencing on October 30, 2025, up to $25.0 million in the aggregate of our outstanding common stock in the open market. The timing, manner, price and amount of any share repurchases will be determined by us, in our discretion, based upon the evaluation of economic and market conditions, our stock price, applicable legal, contractual and regulatory requirements and other factors. …”see in full comparison
Full comparison: every changed paragraph (31)
• general economic, political and industry trends and other external factors, including government shutdowns and uncertainty surrounding the financial and political stability of the United States and other countries;
• an economic downturn could impair our portfolio companies’ and CLO investments’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies and CLO investments;
We generally expect to invest between $5 million and $50$25 million in each of our portfolio companies, although this investment size may vary proportionately as the size of our capital base changes and market conditions warrant. We expect that our investment portfolio will be diversified among a large number of investments with few investments, if any, exceeding 5.0% of the total portfolio. As of December 31, 2024,2025, our debt investments (excluding debt investments on non-accrual status) had stated interest rates of between 7.61%6.47% and 13.13%12.97% and maturity dates of between 3 and 8291 months. In addition, our total portfolio had a weighted average annualized yield on debt investments of approximately 15.76%14.53% as of December 31, 2024.2025.
The total fair value of our investment portfolio was approximately $260.9$251.7 million and $266.9$260.9 million as of December 31, 20242025 and December 31, 2023,2024, respectively. The decrease in the value of investments during the year ended December 31, 20242025 was due primarily to repayments of principal of approximately $75.0$47.6 million, sales of securities totaling approximately $11.8$10.7 million, and realized losses of approximately $96.2$16.8 million, partially offset by a net change inand unrealized appreciation on our investment portfoliodepreciation of approximately $75.7$24.3 million (which incorporates reductions to CLO equity cost value of $13.0$7.7 million), andpartially offset by purchases of investments of approximately $112.2$92.1 million. Refer to the table below, which reconciles the investment portfolio for the year ended December 31, 20242025 and the year ended December 31, 2023.2024.
(1) Total may not sum due to rounding.
As of December 31, 2025, we had investments in debt securities of, or loans to, 19 portfolio companies, with a fair value of approximately $147.3 million, CLO equity investments of approximately $95.1 million, and equity and other investments of approximately $9.4 million. As of December 31, 2024, we had investments in debt securities of, or loans to, 21 portfolio companies, with a fair value of approximately $150.7 million, CLO equity investments of approximately $104.6 million and equity and other investments of approximately $5.6 million.
As of December 31, 2024, we had investments in debt securities of, or loans to, 21 portfolio companies, with a fair value of approximately $150.7 million, CLO equity investments of approximately $104.6 million and equity and other investments of approximately $5.6 million. As of December 31, 2023, we had investments in debt securities of, or loans to, 19 portfolio companies, with a fair value of approximately $179.5 million, CLO equity investments of approximately $82.2 million and equity and other investments of approximately $5.3 million.
The decrease in total investment income of approximately $9.1$2.3 million for the year ended December 31, 20242025 from the year ended December 31, 20232024 was largely due to a decrease of stated interest income from our debt investments (approximately $10.0$7.1 million) resulting from multiple restructurings and refinancings that occurred during the year ended December 31, 2024 and2025, a decrease in floating interest rates.rates, and lower average outstanding principal of debt investments. That decrease was partially offset by an increase in money market fund income from overnightsecuritization investedvehicles cashand interest earnedinvestments of approximately $0.9$1.0 million, as well as an increase in other income of approximately $0.4 million.
The total principal outstanding on income producing debt investments as of December 31, 20242025 and December 31, 20232024 was approximately $199.5$188.0 million and $247.7$199.5 million, respectively. As of December 31, 2025, our income producing debt investments had stated interest rates of between 6.47% and 12.97% and maturity dates of between 3 and 91 months. As of December 31, 2024, our income producing debt investments had stated interest rates of between 7.61% and 13.13% and maturity dates of between 3 and 82 months. As of December 31, 2023, our debt investments had stated interest rates of between 9.22% and 16.00% and maturity dates of between 0 and 74 months. In addition, our total portfolio had a weighted average yield on debt investments of approximately 15.76%14.53% as of December 31, 2024,2025, compared to a weighted average yield on debt investments of 13.30%15.76% as of December 31, 2023.2024.
Total operating expenses for the year ended December 31, 20242025 decreasedincreased by approximately $8.2$1.5 million compared to the year ended December 31, 2023.2024. The decreaseincrease in 20242025 is attributable primarily to lower Net Investment Income Incentive Fees, excise tax, andhigher interest expense.
Interest expense decreasedincreased by approximately $3.0$1.4 million in 20242025 compared to 2023. The decrease in 2024 was due to the full paydown of the 6.50% Unsecured Notes throughout 2023.2024. The aggregate accrued interest on existing debt which remained payable as of December 31, 20242025 and 20232024 was approximately $1.7 million and $1.2 million.million, respectively.
The Base Fee decreased by approximately $0.3$0.1 million infor 2024the year ended December 31, 2025 compared to 2023the year ended December 31, 2024, due to lower average adjusted gross assets in 2024.2025. The Base Fee which remained payable to Oxford Square Management as of December 31, 20242025 and 20232024 was approximately $1.2$1.0 million and $1.0$1.2 million, respectively.
Compensation expense was approximately $950,000 for the year ended December 31, 2025, compared to approximately $747,000 for the year ended December 31, 2024,2024. comparedCompensation toexpense approximately $825,000 for the year ended December 31, 2023, reflectingreflects the allocation of compensation expensessalaries for the services of our Chief Financial Officer, accounting personnel, and other administrative support staff. As of December 31, 20242025, andthere 2023,was approximately $26,000 of compensation expense payable. As of December 31, 2024, there was no compensation expense payable.
General and administrative expenses, which consist primarily of market data services, listing fees, office supplies, facilities costs and other miscellaneous expenses were approximately $598,000$616,000 for the year ended December 31, 20242025 and decreasedincreased by approximately $40,000$18,000 from the year ended December 31, 2023.2024. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement.
There was no Net Investment Income Incentive Fee for the yearyears ended December 31, 2025 and 2024, primarily as a result of the Net Investment Income Incentive Fee being reduced as the result of the Total Return Requirement. Net Investment Income Incentive Fees for the year ended December 31, 2023 were approximately $3.7 million. The Net Investment Income Incentive Fee is calculated and payable quarterly in arrears based on the amount by which (x) the “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter exceeds (y) the “Preferred Return Amount” for the calendar quarter. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income accrued during the calendar quarter minus our operating expenses for the quarter (including the Base Fee, expenses payable under the Administration Agreement with Oxford Funds, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Refer to “Note 7. Related Party Transactions” in the notes to our financial statements.
For the year ended December 31, 2025, we recognized net realized losses on investments of approximately $16.8 million, which primarily represents sales and restructurings of senior secured notes.
For the year ended December 31, 2025, our net change in unrealized depreciation was approximately $24.3 million, comprised of approximately $2.0 million in gross unrealized appreciation, approximately $45.3 million in gross unrealized depreciation and approximately $19.0 million relating to the reversal of prior period net unrealized depreciation as investment gains and losses were realized. This includes net unrealized appreciation of approximately $7.7 million resulting from reductions to the cost value of our CLO equity investments representing the difference between distributions received, or entitled to be received, on our investments held in CLO equity subordinated notes and fee notes, of approximately $24.1 million and the effective yield interest income recognized on our CLO equity subordinated notes and the amortized cost adjusted income on our CLO equity fee notes of approximately $16.5 million.
The components of the net change in unrealized appreciation/(depreciation) during the year ended December 31, 2025 were as follows ($ in millions):
For the year ended December 31, 2023, we recognized net realized losses on investments of approximately $17.1 million, which primarily represents sales of multiple CLO equity investments.
For the year ended December 31, 2023, our net change in unrealized appreciation was approximately $7.1 million, composed of approximately $16.6 million in gross unrealized appreciation, approximately $28.7 million in gross unrealized depreciation and approximately $19.2 million relating to the reversal of prior period net unrealized depreciation as investment gains and losses were realized. This includes net unrealized appreciation of approximately $15.3 million resulting from reductions to the cost value of our CLO equity investments representing the difference between distributions received, or entitled to be received, on our investments held in CLO equity subordinated notes and fee notes, of approximately $32.0 million and the effective yield interest income recognized on our CLO equity subordinated notes and the amortized cost adjusted income on our CLO equity fee notes of approximately $16.7 million.
The components of the net change in unrealized appreciation/(depreciation) during the year ended December 31, 2023 were as follows ($ in millions):
Net investment income for the year ended December 31, 20242025 was approximately $26.4$22.6 million, compared to $27.4$26.4 million for the year ended December 31, 2023.2024. The change was primary the result of lowerhigher operating expenses,expenses partially offset byand a decrease in investment income, as discussed above. For the year ended December 31, 2024,2025, the net increase in net assets resulting from net investment income per common share was $0.42$0.30 (basic and diluted), compared to $0.51$0.42 (basic and diluted) for the year ended December 31, 2023,2024, based on the weighted average common shares outstanding for the respective periods.
Net Decrease/Increase in Net Assets Resulting from Operations
Net increasedecrease in net assets resulting from operations for the year ended December 31, 20242025 was approximately $5.9$18.7 million, compared to a net increase of $17.2$5.9 million for year ended December 31, 2023.2024. The change year over year was largely due to approximately $41.3 million of net realized and unrealized losses for the year ended December 31, 2025, compared to approximately $20.6 million of net realized and unrealized losses for the year ended December 31, 2024, compared to approximately $10.1 million of net realized and unrealized losses for the year ended December 31, 2023, as discussed above. For the year ended December 31, 2024,2025, the net increasedecrease in net assets resulting from operations per common share was $0.09$0.25 (basic and diluted), compared to a net increase in net assets per common share of $0.32$0.09 (basic and diluted) for the year ended December 31, 2023,2024, based on the weighted average common shares outstanding for the respective periods.
During the year ended December 31, 2024,2025, cash and cash equivalents increased from approximately $5.7$34.9 million at the beginning of the period to approximately $34.9$51.9 million at the end of the period. Net cash providedused byin operating activities for the year ended December 31, 2024,2025, consisting primarily of the items described in “— Results of Operations,” was approximately $25.7$13.7 million, largely reflecting purchases of new investments of approximately $98.2 million, offset by repayments of principal of approximately $75.0$47.6 million, proceeds from the sale of investments of approximately $11.8$10.7 million and reductions to CLO equity cost value of approximately $13.0 million, partially offset by purchases of new investments of approximately $100.2$7.7 million. During the year ended December 31, 2024,2025, net cash provided by financing activities was approximately $3.5$30.7 million, reflecting the proceeds from issuance of common stock from our ATM program (net of underwriting fees and offering costs) of approximately $29.2$34.8 million and net proceeds from the issuance of 7.75% Unsecured Notes of approximately $71.9 million, partially offset by the payment of distributions of approximately $25.8$31.3 million and principal repayment of 6.25% Unsecured Notes of approximately $44.8 million.
On October 30, 2025, the Board of Directors authorized a 12-month Share repurchase Program. Under the Share Repurchase Program, we may repurchase, during the 12-month period commencing on October 30, 2025, up to $25.0 million in the aggregate of our outstanding common stock in the open market. The timing, manner, price and amount of any share repurchases will be determined by us, in our discretion, based upon the evaluation of economic and market conditions, our stock price, applicable legal, contractual and regulatory requirements and other factors. The Share Repurchase Program is expected to be in effect until October 30, 2026, unless extended or until the aggregate repurchase amount has been expended. The Share Repurchase Program does not require us to repurchase any specific number of shares, and we cannot assure stockholders that any shares will be repurchased under the Share Repurchase Program. The Share Repurchase Program may be suspended, extended, modified or discontinued at any time. During the fiscal year ended December 31, 2025, we did not repurchase any shares of our common stock pursuant to the Share Repurchase Program.
The following are our outstanding principal amounts, carrying values and fair values of our borrowings as of December 31, 20242025 and December 31, 2023.2024. The fair value of the 6.25%5.50% Unsecured NotesNotes, 7.75% Unsecured Notes, and 5.50%6.25% Unsecured Notes are based upon the closing price on the last day of the period. The 6.25%5.50% Unsecured Notes and 5.50%7.75% Unsecured Notes are listed on the NASDAQ Global Select Market (trading symbol “OXSQZOXSQG” and “OXSQGOXSQH”, respectively). The 6.25% Unsecured Notes were formerly listed on the NASDAQ Global Select Market under the trading symbol “OXSQZ” until they were fully repaid and delisted on September 19, 2025.
The weighted average stated interest rate and weighted average maturity on all our debt outstanding as of December 31, 20242025 were 5.77%6.58% and 2.83.5 years, respectively, and as of December 31, 20232024 were 5.77% and 3.82.8 years, respectively. The aggregate accrued interest which remained payable as of December 31, 20242025, andwas 2023,approximately $1.7 million. The aggregate accrued interest which remained payable as of December 31, 2024, was approximately $1.2 million.
(1) Totals may not sum due to rounding
Oxford Square Management, Oxford Lane Management, Oxford Park Management and Oxford Gate Management are subject to a written policy with respect to the allocation of investment opportunities among the Company, Oxford Lane Capital Corp., Oxford Park Income Fund, Inc., Oxford Bridge II, LLC and the Oxford Gate Funds. Where investments are suitable for more than one entity, the allocation policy generally provides that, depending on size and subject to current and anticipated cash availability, the absolute size of the investment as well as its relative size compared to the total assets of each entity, current and anticipated weighted average costs of capital, among other factors, an investment amount will be determined by the adviser to each entity. On January 6, 2026, we received an updated form of co-investment exemptive relief from the SEC to allow certain managed funds and investment vehicles, each of whose investment adviser is Oxford Square Management or an investment adviser controlling, controlled by or under common control with Oxford Square Management, to participate in negotiated co-investment transactions where doing so is consistent with regulatory requirements and other pertinent factors, and pursuant to the conditions of the Co-Investment Order. The Co-Investment Order, which supersedes the co-investment order issued to us on June 14, 2017, is a new form of co-investment exemptive relief that adopts a more flexible requirement that allocations be “fair and equitable” to us and that Oxford Square Management considers the interests of us and other affiliated 1940 Act-regulated funds that rely on the Co-Investment Order in allocations and which minimizes certain board approval requirements as compared to the prior form of co-investment exemptive relief. Among other things, under the Co-Investment Order, the terms, conditions, price, class of securities to be purchased in respect of a particular investment, the date on which such investment is to be made and any registration rights applicable thereto, must be generally the same for us and each other participating affiliated entity. The requirements of the Co-Investment Order (including any requirements for board approval thereunder), as well as other regulatory requirements associated with us and other affiliated 1940 Act-regulated funds that rely on the Co-Investment Order, potentially will impact the investment allocations among participating entities (including, for the avoidance of doubt, us) or otherwise impact allocation results. Any changes to the Co-Investment Order or the rules and other guidance promulgated by the SEC and its staff under the 1940 Act could impact allocations made available to us and thereby affect (and potentially decrease) the allocation made to us or otherwise impact the process for allocations in transactions in which we participate.
Oxford Square Management, Oxford Lane Management, Oxford Park Management and Oxford Gate Management are subject to a written policy with respect to the allocation of investment opportunities among the Company, Oxford Lane Capital Corp., Oxford Park Income Fund, Inc., Oxford Bridge II, LLC and the Oxford Gate Funds. Where investments are suitable for more than one entity, the allocation policy generally provides that, depending on size and subject to current and anticipated cash availability, the absolute size of the investment as well as its relative size compared to the total assets of each entity, current and anticipated weighted average costs of capital, among other factors, an investment amount will be determined by the adviser to each entity. If the investment opportunity is sufficient for each entity to receive its investment amount, then each entity receives the investment amount; otherwise, the investment amount is reduced pro rata. On June 14, 2017, the Securities and Exchange Commission issued the Order permitting the Company and certain of its affiliates to complete negotiated co-investment transactions in portfolio companies, subject to certain conditions. Subject to satisfaction of certain conditions to the Order, the Company and certain of its affiliates are now permitted, together with any future BDCs, registered closed-end funds and certain private funds, each of whose investment adviser is the Company’s investment adviser or an investment adviser controlling, controlled by, or under common control with the Company’s investment adviser, to co-invest in negotiated investment opportunities where doing so would otherwise be prohibited under the 1940 Act, providing the Company’s stockholders with access to a broader array of investment opportunities. Pursuant to the Order, we are permitted to co-invest in such investment opportunities with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. There have been no material changes known to us during the six months ended June 30, 2026, to the risk factors discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025.
Full comparison: every changed paragraph (1)
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in “Item 1A —1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. There have been no material changes known to us during the threesix months ended MarchJune 31,30, 2026, to the risk factors discussed in “Item 1A. — Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.
Management's Discussion & Analysis (MD&A)
New heading “Net Increase in Net Assets Resulting from Operations”
Removed heading “Net Decrease Net Assets Resulting from Operations”
Largest changes
“• disruptions related to tariffs and other trade or sanctions issues;”see in full comparison
“For the three months ended March 31, 2026, we recognized net realized losses of approximately $30.7 million, which were primarily attributable to a restructuring of a senior secured loan and an extinguishment of a CLO equity position.”see in full comparison
“• the impact of interruptions in the supply chain on our portfolio companies, including potential shortages of oil and other energy sources;”see in full comparison
“For the three months ended March 31, 2026, our net change in unrealized appreciation was approximately $1.1 million, composed of $1.0 million in gross unrealized appreciation, $30.2 million in gross unrealized depreciation and approximately $30.3 million relating to the reversal of prior period net unrealized depreciation as investment gains and losses were realized. …”see in full comparison
Full comparison: every changed paragraph (69)
• general economic, political and industry trends and other external factors, including government shutdowns and uncertainty surrounding international armed conflicts and war and the financial and political stability of the United States and other countries;
• disruptions related to tariffs and other trade or sanctions issues;
• the impact of interruptions in the supply chain on our portfolio companies, including potential shortages of oil and other energy sources;
We generally expect to invest between $5 million and $25 million in each of our portfolio companies, although this investment size may vary proportionately as the size of our capital base changes and market conditions warrant. We expect that our investment portfolio will be diversified among a large number of investments with few investments, if any, exceeding 5.0% of the total portfolio. As of MarchJune 31,30, 2026, our debt investments (including convertible notes and excluding non-accrual loans) had stated interest rates of between 6.42%6.14% and 17.0%17.00% and maturity dates of between 2825 and 8885 months. In addition, our total portfolio had a weighted average annualized yield on debt investments of approximately 14.74%14.95% as of MarchJune 31,30, 2026.
The weighted average annualized yield of our debt investments is not the same as a return on investment for our stockholders but, rather, relates to a portion of our investment portfolio and is calculated before the payment of all of our fees and expenses. The weighted average annualized yield was computed using the effective interest rates as of MarchJune 31,30, 2026, including accretion of original issue discount (“OID”) and excluding any debt investments on non-accrual status. There can be no assurance that the weighted average annualized yield will remain at its current level.
During the three months ended June 30, 2026, U.S. loan market performance improved versus the three months ended March 31, 2026, U.S. loan market performance weakened versus the prior quarter.2026. U.S. loan prices, as defined by the Morningstar/LSTA US Leveraged Loan Index, decreasedincreased from 96.64% of par as of December 31, 2025 to 94.63% of par as of March 31, 2026 to 94.96% of par as of June 30, 2026.
As of MarchJune 31,30, 2026, the Company’s Board of Directors approved the fair value of the Company’s investment portfolio of approximately $235.4$252.8 million in good faith in accordance with the Company’s valuation procedures.
The preparation of financial statements and related disclosures in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the financial statements, and (iii) revenues and expenses during the periods reported. Our critical accounting estimates, including those relating to the valuation of our investment portfolio, are described below. Actual results could materially differ from those estimates. The critical accounting estimates should be read in conjunction with our risk factors as disclosed in Item 1A. — Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2025. See “Note 3. Summary of Significant Accounting Policies” to our financial statements for the three and six months ended MarchJune 31,30, 2026 for more information on our critical accounting policies.
ASC 820 clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition.
ASC 820 clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
We consider the attributes of current market conditions on an on-going basis and have determined that due to the general illiquidity of the market for our investment portfolio, whereby little or no market data exists, substantially all of our fair valued investments are measured based upon Level 3 inputs as of MarchJune 31,30, 2026 and December 31, 2025.
The total fair value of our investment portfolio was approximately $235.4$252.8 million and $251.7 million as of MarchJune 31,30, 2026, and December 31, 2025, respectively. The decreaseincrease in the value of investments during the threesix month period ended MarchJune 31,30, 2026, was due primarily to net realized losses of approximately $30.7 million, and debt repayments of approximately $0.4 million, which were partially offset by investment acquisitions of approximately $15.8$35.7 million andmillion, net change in unrealized appreciation on our investment portfolio of approximately $1.1$5.1 million (which incorporates reductions to CLO equity cost value of $3.9approximately $6.7 million)., accretion of discounts on investments of approximately $2.1 million, and PIK income of approximately $1.7 million, partially offset by net realized losses of approximately $36.0 million and debt repayments of approximately $0.9 million.
A reconciliation of the investment portfolio for the threesix months ended MarchJune 31,30, 2026 and the year ended December 31, 2025 follows:
(1) For the threesix months ended MarchJune 31,30, 2026, the reductions to CLO equity cost value of approximately $3.9$6.7 million represented the distributions received, or entitled to be received, on our investments held in CLO equity subordinated and income notes of approximately $7.1$13.3 million, plus the amortization of cost on our CLO fee notes of approximately $38,000,$74,000, less the effective yield interest income recognized on our CLO equity subordinated and income notes of approximately $3.2$6.7 million. For the year ended December 31, 2025, the reductions to CLO equity cost value of approximately $7.7 million represented the distributions received, or entitled to be received, on our investments held in CLO equity subordinated and income notes of approximately $24.1 million, plus the amortization of cost on our CLO fee notes of approximately $57,000, less the effective yield interest income recognized on our CLO equity subordinated and income notes of approximately $16.5 million.
During the threesix months ended MarchJune 31,30, 2026 we purchased approximately $15.8 million in portfolio investments, which represented $3.0 million of investments in existing portfolio companies and approximately $12.8 million of investments in new portfolio companies. During the year ended December 31, 2025, we purchased approximately $92.1$35.7 million in portfolio investments, including additional investments of approximately $30.9$3.0 million in existing portfolio companies and approximately $61.2$32.7 million in new portfolio companies.
During the year ended December 31, 2025, we purchased approximately $92.1 million in portfolio investments, including additional investments of approximately $30.9 million in existing portfolio companies and approximately $61.2 million in new portfolio companies.
For the threesix months ended MarchJune 31,30, 2026, we did not sell any portfolio investments. For the year ended December 31, 2025, we recognized proceeds from the sales of securities of approximately $10.7 million. Also, during the threesix months ended MarchJune 31,30, 2026 and the year ended December 31, 2025, we had loan principal repayments of approximately $0.4$0.9 million and $47.6 million, respectively.
As of MarchJune 31,30, 2026, we had investments in senior secured debt securities of, or loans to, 1920 portfolio companies, with a fair value of approximately $150.8$147.2 million, CLO equity investments of approximately $72.2$90.3 million, and equity and other investments of approximately $12.4$15.4 million.
The following table indicates the quarterly portfolio investment activity for the past fivesix quarters:
The following table shows the fair value of our portfolio of investments by asset class as of MarchJune 31,30, 2026 and December 31, 2025:
Qualifying assets must represent at least 70.0% of the Company’s total assets at the time of acquisition of any additional non-qualifying assets. As of MarchJune 31,30, 2026 and December 31, 2025, we held qualifying assets that represented 74.5%69.4% and 68.8%, respectively, of the total assets. No additional non-qualifying assets were acquired during the periods when qualifying assets were less than 70.0% of the total assets.
The following table shows our portfolio of investments by industry at fair value, as of MarchJune 31,30, 2026 and December 31, 2025:
(1) Reflects our equity investments in CLOs as of MarchJune 31,30, 2026, and December 31, 2025, respectively.
We have adopted a credit grading system to monitor the quality of our debt investment portfolio. As of MarchJune 31,30, 2026 and December 31, 2025, our portfolio had a weighted average grade of 2.22.1 and 2.2, respectively, based upon the fair value of the debt investments in the portfolio. Equity andsecurities, convertible securitiesdebt, and investments in CLOs are not graded.
As of MarchJune 31,30, 2026 and December 31, 2025, our debt investment portfolio was graded as follows:
AWe expect that a portion of our investments are, and we expect will continue to be,be in the grades 3, 4 or 5 categories from time to time, and, as such, we arewill be required to work with troubled portfolio companies to improve their business and protect our investment. The number and amount of investments included in grades 3, 4 or 5 may fluctuate from period to period.
Set forth below is a comparison of our results of operations for the three and six months ended MarchJune 31,30, 2026 to the three and six months ended MarchJune 31,30, 2025.
Investment income for the three months ended MarchJune 31,30, 2026 and March 31, 2025 was approximately $8.9$9.4 million and $10.2$9.5 million, respectively. Investment income for the six months ended June 30, 2026 and 2025 was approximately $18.3 million and $19.7 million, respectively. The following tables set forth the components of investment income for the three and six months ended MarchJune 31,30, 2026 and March 31, 2025:
(2) For the threesix months ended MarchJune 31,30, 2025, the Companywe earned approximately $131,000 of PIK fees.
The decrease in total investment income for the three and six months ended MarchJune 31,30, 2026 was primarily due to a decrease in interest income and income from securitization vehicles and investments for the three and six months ended MarchJune 31,30, 2026.
The total principal value of income producing debt investments (including convertible notes and excluding non-accrual loansdebt) as of MarchJune 31,30, 2026 and March 31, 2025 was approximately $185.9$188.6 million and $182.5$183.2 million, respectively. As of MarchJune 31,30, 2026, our debt investments had a range of stated interest rates of 6.42%6.14% and 17.0%17.00% and maturity dates of between 2825 and 8885 months compared to a range of stated interest rates of 7.07%7.08% and 12.87%12.70% and maturity dates of between 04 and 8380 months as of MarchJune 31,30, 2025. In addition, our total debt portfolio had a weighted average yield on income accruing debt investments of approximately 14.74%14.95% as of MarchJune 31,30, 2026, compared to approximately 14.31%14.46% as of MarchJune 31,30, 2025. As of MarchJune 31,30, 2026, one debt investment was on non-accrual status with a fair value of approximately $3.5 million2026 and had a total principal value of approximately $8.8 million. As of March 31, 2025, we had no debt investments on non-accrual status.
Income from securitization vehicles for the three months ended MarchJune 31,30, 2026 and March 31, 2025, was approximately $3.2$3.5 million and $4.0$3.9 million, respectively. Income from securitization vehicles for the six months ended June 30, 2026 and 2025, was approximately $6.7 million and $7.8 million, respectively. The total principal outstanding on our investments in CLOs (excluding fee notes) as of MarchJune 31,30, 2026 and March 31, 2025, was approximately $341.4$390.7 million and $336.2$330.0 million, respectively. The weighted average yield on CLO equity investments as of MarchJune 31,30, 2026 and March 31, 2025, was approximately 7.3%8.14% and 9.0%,8.85%, respectively.
Total expenses for the three months ended MarchJune 31,30, 2026,2026 and 2025, were approximately $4.8$4.3 million and $4.0 million, comparedrespectively. toTotal approximately $4.1 millionexpenses for the threesix months ended MarchJune 31,30, 2025.2026 Thatand increase2025, inwere expensesapproximately was$9.1 primarilymillion dueand to$8.1 anmillion, increase in interest expense.respectively. These amounts consisted of base management fees, interest expense, professional fees, compensation expense, general and administrative expenses, net investment income incentive fees, and excise tax, as well as related excise tax reversals. That increase for the three and incentivesix fees.months ended June 30, 2026 was primarily due to an increase in interest expense.
The base management fee for both the three months ended June 30, 2026 and 2025 was approximately $1.0 million. The base management fee for the threesix months ended MarchJune 31,30, 2026 was approximately $1.0$2.0 million compared with $1.1$2.1 million for the threesix months ended MarchJune 31,30, 2025. That decrease for the three months ended March 31, 2026 was due largely to a decrease in the weighted average gross assets.
There waswere no net investment income incentive feefees for the three and six months ended MarchJune 31,30, 2026 and 2025.
Interest expense for the three and six months ended MarchJune 31,30, 2026, was approximately $2.8 million and $5.6 million, respectively, which primarily relates to our 5.50% unsecured notes due 2028 (the “5.50% Unsecured Notes”) and 7.75% unsecured notes due 2030 (the “7.75% Unsecured Notes”). Interest expense for the three and six months ended MarchJune 31,30, 2025, was approximately $2.0$1.9 million and $3.9 million, respectively, which primarily relates to our 5.50% Unsecured Notes and 6.25% unsecured notes due 2026 (the “6.25% Unsecured Notes”).
Professional fees, consisting of legal, consulting, valuation, audit and tax services,fees, were approximately $347,000$441,000 for the three months ended MarchJune 31,30, 2026, compared to approximately $323,000$444,000 for the three months ended MarchJune 31,30, 2025. ThatProfessional increasefees were approximately $788,000 for the threesix months ended MarchJune 31,30, 20262026, was primarily duecompared to higherapproximately legal$768,000 fees,for partiallythe offsetsix bymonths lowerended consultingJune fees.30, 2025.
Compensation expense was approximately $247,000$232,000 for the three months ended MarchJune 31,30, 2026, compared to approximately $240,000$228,000 for the three months ended MarchJune 31,30, 2025. Compensation expense was approximately $479,000 for the six months ended June 30, 2026, compared to approximately $468,000 for the six months ended June 30, 2025. Compensation expense reflects the allocation of compensation expenses for the services of our Chief Financial Officer, accounting personnel, and other administrative support staff.
General and administrative expenses, consisting primarily of directors’ fees, insurance, listing fees, transfer agent and custodian fees, marketoffice data services,supplies, facilities costscosts, and other expenses, waswere approximately $313,000$359,000 for the three months ended MarchJune 31,30, 2026, compared to approximately $355,000$360,000 for the three months ended MarchJune 31,30, 2025. General and administrative expenses were approximately $671,000 for the six months ended June 30, 2026, compared to approximately $715,000 for the six months ended June 30, 2025. Office supplies, facilities costs and other expenses are allocated to us under the terms of the Administration Agreement.
Excise tax was approximately $(524,000) for the three months ended June 30, 2026, which represents a reversal of 2025 estimated excise tax as well as 2026 estimated excise tax, as the Company projects that there will not be any excise tax due for these periods. This compared to $25,000 for the three months ended June 30, 2025. Excise tax was approximately $(419,000) for the six months ended June 30, 2026, which represents a reversal of previously accrued 2025 excise tax, as the Company projects that there will not be any excise tax due for this period. This compared to $145,000 for the six months ended June 30, 2025.
Excise tax was approximately $105,000 for the three months ended March 31, 2026, compared to approximately $121,000 for the three months ended March 31, 2025.
There was no net investment income incentive fee (“Net Investment Income Incentive Fee”) recorded for the three and six months ended MarchJune 31,30, 2026 and 2025. The Net Investment Income Incentive Fee is calculated and payable quarterly in arrears based on the amount by which (x) the “Pre-Incentive Fee Net Investment Income” for the immediately preceding calendar quarter exceeds (y) the “Preferred Return Amount” for the calendar quarter. For this purpose, “Pre-Incentive Fee Net Investment Income” means interest income, dividend income and any other income accrued during the calendar quarter minus our operating expenses for the quarter (including the Base Fee, expenses payable under the Administration Agreement with Oxford Funds, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Refer to “Note 7. Related Party Transactions” in the notes to our financial statements.
The expense attributable to the capital gains incentive fee (the “Capital Gains Incentive Fee”), as reported under GAAP, is calculated as if the Company’s entire portfolio had been liquidated at period end, and therefore is calculated on the basis of net realized and unrealized gains and losses at the end of each period. That expense (or the reversal of such an expense) related to that hypothetical liquidation of the portfolio (and assuming no other changes in realized or unrealized gains and losses) would only become payable to our investment adviser in the event of a complete liquidation of our portfolio as of period end and the termination of the Investment Advisory Agreement on such date. For the three and six months ended MarchJune 31,30, 2026 and 2025, no accrual was required as a result of the impact of accumulated net unrealized depreciation and net realized losses on our portfolio.
The amount of the Capital Gains Incentive Fee which will actually be payable is determined in accordance with the terms of the Investment Advisory Agreement and is calculated as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). The terms of the Investment Advisory Agreement state that the Capital Gains Incentive Fee calculation is based on net realized gains, if any, offset by gross unrealized depreciation for the calendar year. No effect is given to gross unrealized appreciation in this calculation. For the three and six months ended MarchJune 31,30, 2026 and 2025, such an accrual was not required under the terms of the Investment Advisory Agreement.
For the three months ended March 31, 2026, we recognized net realized losses of approximately $30.7 million, which were primarily attributable to a restructuring of a senior secured loan and an extinguishment of a CLO equity position.
For the three months ended March 31, 2026, our net change in unrealized appreciation was approximately $1.1 million, composed of $1.0 million in gross unrealized appreciation, $30.2 million in gross unrealized depreciation and approximately $30.3 million relating to the reversal of prior period net unrealized depreciation as investment gains and losses were realized. This includes net unrealized appreciation of approximately $3.9 million resulting from reductions to the cost value of our CLO equity investments representing the difference between distributions received, or entitled to be received, on our investments held in CLO equity subordinated notes and fee notes, of approximately $7.1 million and the effective yield interest income recognized on our CLO equity subordinated notes and the amortized cost adjusted income on our CLO equity fee notes of approximately $3.2 million. The most significant components of the net change in unrealized appreciation during the three months ended March 31, 2026, were as follows (in millions):
For the three months ended MarchJune 31,30, 2025,2026, we recognized net realized losses on investments of approximately $12.2$5.2 million.
For the three months ended MarchJune 31,30, 2025,2026, our net change in unrealized depreciationappreciation was approximately $2.1$4.1 million, composed of $2.4$9.4 million in gross unrealized appreciation, $16.6$7.8 million in gross unrealized depreciation and approximately $12.1$2.5 million relating to the reversal of prior period net unrealized depreciation as investment gains and losses were realized. This includes net unrealized appreciation of approximately $1.7$2.8 million resulting from reductions to the cost value of our CLO equity investments representing the difference between distributions received, or entitled to be received, on our investments held in CLO equity subordinated notes and fee notes, of approximately $5.7$6.3 million and the effective yield interest income recognized on our CLO equity subordinated notes and the amortized cost adjusted income on our CLO equity fee notes of approximately $4.0$3.5 million. The most significant components of the net change in unrealized depreciationappreciation during the three months ended MarchJune 31,30, 2025,2026, were as follows (in millions):
For the six months ended June 30, 2026, we recognized net realized losses on investments of approximately $36.0 million.
For the six months ended June 30, 2026, our net change in unrealized appreciation was approximately $5.1 million, composed of $2.8 million in gross unrealized appreciation, $30.4 million in gross unrealized depreciation and approximately $32.8 million relating to the reversal of prior period net unrealized depreciation as investment gains and losses were realized. This includes net unrealized appreciation of approximately $6.7 million resulting from reductions to the cost value of our CLO equity investments representing the difference between distributions received, or entitled to be received, on our investments held in CLO equity subordinated notes and fee notes, of approximately $13.3 million and the effective yield interest income recognized on our CLO equity subordinated notes and the amortized cost adjusted income on our CLO equity fee notes of approximately $6.7 million. The most significant components of the net change in unrealized appreciation during the six months ended June 30, 2026, were as follows (in millions):
Net investment income for the three months ended June 30, 2026 and 2025 was approximately $5.1 million and $5.5 million, respectively. Net investment income for the six months ended June 30, 2026 and 2025 was approximately $9.3 million and $11.6 million, respectively. The decreases in net investment income were primarily due to a decrease in income from securitization vehicles and investments as well as an increase in interest expense, partially offset by a decrease in excise tax.
Net investment income for the three months ended March 31, 2026 and March 31, 2025 was approximately $4.1 million and $6.1 million, respectively.
For the three months ended March 31, 2026, the net increase in net assets resulting from net investment income per common share was $0.05 (basic and diluted), compared to the net increase in net assets resulting from net investment income per share of $0.09 (basic and diluted) for the three months ended March 31, 2025. The per share decrease was primarily due to a decrease in investment income, an increase in expenses, and an increase in weighted average shares of common stock outstanding.
Net Decrease Net Assets Resulting from Operations
Net decrease in net assets resulting from operations for the three months ended March 31, 2026 was approximately $25.5 million compared with a net decrease in net assets resulting from operations of approximately $8.1 million for the three months ended March 31, 2025.
For the three months and six months ended MarchJune 31,30, 2026, the net decreaseincrease in net assets resulting from operationsnet investment income per common share was $0.29$0.05 and $0.10 (basic and diluted), compared to athe net decreaseincrease in net assets resulting from operationsnet investment income per share of $0.12$0.08 and $0.16 (basic and diluted) for the three and six months ended MarchJune 31,30, 2025.
Net Increase in Net Assets Resulting from Operations
Net increase in net assets resulting from operations for the three months ended June 30, 2026 was approximately $4.0 million compared with a net increase in net assets resulting from operations of approximately $4.4 million for the three months ended June 30, 2025.
Net decrease in net assets resulting from operations for the six months ended June 30, 2026 was approximately $21.5 million compared with a net decrease in net assets resulting from operations of approximately $3.7 million for the six months ended June 30, 2025.
For the three months ended June 30, 2026, the net increase in net assets resulting from operations per common share was $0.04 (basic and diluted), compared to a net increase in net assets resulting from operations per share of $0.06 (basic and diluted) for the three months ended June 30, 2025. For the six months ended June 30, 2026, the net decrease in net assets resulting from operations per common share was $0.23 (basic and diluted), compared to a net decrease in net assets resulting from operations per share of $0.05 (basic and diluted) for the six months ended June 30, 2025.
OXSQ insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 2 Form 4 filings (2 insiders, 1 trade date, 289,407 shares, about $332.8K) and open-market sales in 1 filing (1 insider, 1 trade date, 5,000 shares, about $6.8K). Net open-market shares: 284,407 (purchases minus sales); net value about $326.0K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-03 | Novak Steven P |
Open-market sale | 5,000 | $1.36 | $6.8K |
| 2026-05-20 | Rosenthal Saul B |
Open-market purchase | 144,703 | $1.15 | $166.4K |
| 2026-05-20 | Cohen Jonathan H |
Open-market purchase | 144,704 | $1.15 | $166.4K |
Well-known investors holding OXSQ (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Two Sigma Investments | 2026-06-30 | 68,742 | $90.7K | 0.0% | Reduced 5% |