OXSQH · Oxford Square Capital Corp.

Performance Summary

Oxford Square Capital Corp. reported a challenging fiscal year 2025 with a net decrease in net assets resulting from operations of -$18.7M, a significant reversal from the $5.9M net increase in FY 2024. The company generated $22.6M in net investment income, down from $26.4M in the prior year, but this was more than offset by substantial investment losses. Total investment income declined to $40.3M from $42.7M year-over-year, while total expenses remained relatively stable at $17.7M. The portfolio experienced -$24.3M in net change in unrealized depreciation on investments and -$17.0M in net realized losses, resulting in total net change in unrealized and realized losses of -$41.3M. The net asset value per common share declined to $1.69 from $2.30 at the end of FY 2024.

Revenue Analysis

The company's total investment income of $40.3M consisted of interest income ($21.1M), income from securitization vehicles and investments ($16.5M), and other income ($2.8M). Interest income declined from $24.9M in FY 2024, while income from securitization vehicles increased from $15.4M. Other income increased from $2.4M in the prior year. The company earned approximately $327,000 of PIK fees during the year. Investment income is derived from the company's portfolio of senior secured notes, CLO equity investments, and other securities. The company operates as a single operating and reporting segment with the primary business objective of maximizing its investment portfolio's total return.

Margins & Profitability

The company's net investment income of $22.6M represented a decline from $26.4M in FY 2024. The ratio of net investment income to average net assets was 14.69% for FY 2025, down from 17.35% in the prior year. Total expenses before incentive fees were $17.7M, with the largest components being interest expense ($9.2M), Base Fee ($4.2M), professional fees ($1.6M), and compensation expense ($950K). The ratio of expenses to average net assets was 11.54% for FY 2025, up from 10.66% in FY 2024. There were no Net Investment Income Incentive Fees or Capital Gains Incentive Fees payable for FY 2025, compared to $3.7M in Net Investment Income Incentive Fees in FY 2023.

Cash Flow & Balance Sheet

Net cash used in operating activities was -$13.7M for FY 2025, compared to net cash provided by operating activities of $25.7M in FY 2024. Cash flows from financing activities provided $30.7M, primarily from proceeds from issuance of 7.75% Unsecured Notes ($74.8M) and common stock ($35.3M), offset by distributions paid ($31.3M) and principal repayments of 6.25% Unsecured Notes ($44.8M). Total assets were $306.7M, with investments at fair value of $251.7M and cash equivalents of $51.2M. Total liabilities were $161.3M, primarily consisting of notes payable ($151.6M). Total net assets were $145.4M, down from $160.7M at the end of FY 2024.

Outlook

The company continues to operate as a business development company with the objective of maximizing total return through investments in corporate debt securities and CLO equity investments. Management noted that the company received an updated form of co-investment exemptive relief from the SEC in January 2026, which may impact future investment allocations. The Board authorized a 12-month Share Repurchase Program in October 2025, allowing repurchases of up to $25.0M of common stock. The company declared quarterly distributions of $0.035 per share for the first half of 2026. Risk factors include interest rate volatility, inflation, and the general illiquidity of the investment portfolio, with substantially all fair valued investments measured based upon Level 3 inputs.