PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited interim financial statements, showing decreased assets, NAV per share, and net investment income [Statements of Assets and Liabilities](index=4&type=section&id=Statements%20of%20Assets%20and%20Liabilities) Total assets and net assets decreased to **$274.8 million** and **$157.4 million**, with NAV per share at **$2.06** Statements of Assets and Liabilities Summary (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Investments (at fair value) | $241,507 | $260,853 | | Total Assets | $274,847 | $299,731 | | Total Liabilities | $117,424 | $139,065 | | **Total Net Assets** | **$157,423** | **$160,665** | | **Net Asset Value per Share** | **$2.06** | **$2.30** | [Schedule of Investments](index=5&type=section&id=Schedule%20of%20Investments) The **$241.5 million** investment portfolio was primarily Senior Secured Notes (**60.8%**) and CLO Equity (**37.0%**) Portfolio Composition by Asset Class (at Fair Value) | Asset Class | June 30, 2025 (Fair Value) | % of Total | Dec 31, 2024 (Fair Value) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Senior Secured Notes | $146.8M | 60.8% | $150.7M | 57.8% | | CLO Equity | $89.3M | 37.0% | $104.6M | 40.1% | | Equity and Other Investments | $5.3M | 2.2% | $5.6M | 2.1% | | **Total** | **$241.5M** | **100.0%** | **$260.9M** | **100.0%** | - As of June 30, 2025, the company's qualifying assets under Section 55(a) of the 1940 Act represented **67.6%** of its total assets, which is below the required **70%** threshold for acquiring new non-qualifying assets[28](index=28&type=chunk) [Statements of Operations](index=31&type=section&id=Statements%20of%20Operations) Total investment income decreased to **$19.7 million**, leading to a **$3.7 million** net decrease in net assets from operations Key Operational Results (Unaudited, in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Investment Income | $19,683 | $22,123 | | Total Expenses | $8,080 | $7,863 | | **Net Investment Income** | **$11,603** | **$14,259** | | Net Realized Losses | ($14,526) | ($38,535) | | Net Change in Unrealized (Depreciation)/Appreciation | ($814) | $27,766 | | **Net (Decrease)/Increase in Net Assets from Operations** | **($3,736)** | **$3,491** | | Net Investment Income per Share | $0.16 | $0.24 | | Net (Decrease)/Increase in Net Assets per Share | ($0.05) | $0.06 | [Statements of Changes in Net Assets](index=33&type=section&id=Statements%20of%20Changes%20in%20Net%20Assets) Net assets decreased by **$3.2 million** due to operational losses and distributions, partially offset by capital share transactions Reconciliation of Net Assets (Six Months Ended June 30, 2025, in thousands) | Item | Amount | | :--- | :--- | | Net Assets at Beginning of Period | $160,665 | | Net (Decrease) in Net Assets from Operations | ($3,736) | | Distributions to Stockholders | ($15,058) | | Net Increase from Capital Share Transactions | $15,552 | | **Net Assets at End of Period** | **$157,423** | [Statements of Cash Flows](index=34&type=section&id=Statements%20of%20Cash%20Flows) Net cash from operating activities was **$4.3 million**, financing used **$9.5 million**, resulting in a **$5.1 million** net cash decrease Summary of Cash Flows (Six Months Ended, in thousands) | Cash Flow Activity | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $4,329 | $26,661 | | Net Cash from Financing Activities | ($9,461) | ($2,387) | | **Net (Decrease)/Increase in Cash** | **($5,132)** | **$24,274** | | Cash at End of Period | $29,794 | $30,014 | [Notes to Financial Statements](index=35&type=section&id=Notes%20to%20Financial%20Statements) Details accounting policies, Level 3 investment valuation, borrowings, and subsequent events, with a **235%** asset coverage ratio - The company's investment portfolio is valued using Level 3 inputs due to the general illiquidity of the market for its investments[77](index=77&type=chunk)[78](index=78&type=chunk) - The Board of Directors determines the fair value quarterly, with assistance from management and third-party valuation firms[77](index=77&type=chunk)[78](index=78&type=chunk) - As of June 30, 2025, the company's asset coverage ratio for borrowed amounts was **235%**, well above the **150%** minimum required by the 1940 Act[139](index=139&type=chunk) - Subsequent to quarter-end, the company redeemed an additional **$10.0 million** of its **6.25%** Unsecured Notes on July 18, 2025[217](index=217&type=chunk) - The company completed a public offering of approximately **$65.0 million** of **7.75%** Unsecured Notes due 2030 on August 7, 2025[218](index=218&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=66&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, noting a **$241.5 million** portfolio, decreased investment income, and an improved **2.2** credit grade [Portfolio Composition and Investment Activity](index=70&type=section&id=Portfolio%20Composition%20and%20Investment%20Activity) The investment portfolio's fair value decreased to **$241.5 million** due to losses and repayments, with a **14.46%** weighted average debt yield Reconciliation of Investment Portfolio (in millions) | Description | Six Months Ended June 30, 2025 | | :--- | :--- | | Beginning Portfolio Value | $260.9 | | Portfolio Investments Acquired | $16.0 | | Debt Repayments & Sales | ($19.6) | | Net Realized Losses | ($14.5) | | Net Change in Unrealized Depreciation | ($0.8) | | Other (PIK, Accretion, etc.) | ($1.5) | | **Ending Portfolio Value** | **$241.5** | - The weighted average annualized yield on debt investments was approximately **14.46%** as of June 30, 2025[227](index=227&type=chunk) [Portfolio Grading](index=72&type=section&id=Portfolio%20Grading) The debt portfolio's weighted average grade improved to **2.2**, with **82.6%** of investments rated Grade 2 for full repayment Debt Portfolio Grading by Fair Value (June 30, 2025) | Grade | Summary Description | Fair Value | % of Debt Portfolio | | :--- | :--- | :--- | :--- | | 1 | Outperforming expectations | $0M | 0.0% | | 2 | Full repayment expected | $121.3M | 82.6% | | 3 | Closer monitoring required | $25.5M | 17.4% | | 4 | Loss of interest expected | $0M | 0.0% | | 5 | Loss of principal expected | $0M | 0.0% | [Results of Operations](index=73&type=section&id=Results%20of%20Operations) Total investment income decreased to **$19.7 million**, leading to a **$3.7 million** net decrease in net assets from operations - The decrease in total investment income for the six months ended June 30, 2025, was primarily due to a decrease in interest income from debt investments[259](index=259&type=chunk) - For the six months ended June 30, 2025, the company recognized net realized losses on investments of approximately **$14.5 million**[274](index=274&type=chunk) - The company also recognized a net change in unrealized depreciation of approximately **$0.8 million** for the six months ended June 30, 2025[275](index=275&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) The company held **$29.8 million** in cash, sourced liquidity from operations and ATM proceeds, maintaining a **235%** asset coverage ratio - Cash and cash equivalents stood at approximately **$29.8 million** as of June 30, 2025[282](index=282&type=chunk) - The company raised a net total of approximately **$15.1 million** during the first six months of 2025 through its At-the-Market (ATM) stock offering program[286](index=286&type=chunk) Contractual Obligations (as of June 30, 2025, in millions) | Obligation | Principal Amount | Less than 1 year | 1 – 3 years | 3 – 5 years | | :--- | :--- | :--- | :--- | :--- | | 6.25% Unsecured Notes | $34.8 | $34.8 | $— | $— | | 5.50% Unsecured Notes | $80.5 | $— | $— | $80.5 | | **Total** | **$115.3** | **$34.8** | **$—** | **$80.5** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=84&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk, with a **100 basis point** rate change impacting annual investment income by **4.8%** Hypothetical Interest Rate Change Impact on Investment Income | Hypothetical Change in Base Rates | Estimated Percentage Change in Investment Income | | :--- | :--- | | Up 300 basis points | 14.4% | | Up 100 basis points | 4.8% | | Down 100 basis points | (4.8)% | | Down 300 basis points | (14.2)% | [Item 4. Controls and Procedures](index=84&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and procedures as of June 30, 2025, with no material internal control changes - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[314](index=314&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[316](index=316&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=86&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - As of the reporting date, the company is not a party to any material legal proceedings[318](index=318&type=chunk) [Item 1A. Risk Factors](index=86&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported for the six months ended June 30, 2025 - No material changes to risk factors were reported for the six months ended June 30, 2025[319](index=319&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=86&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued **106,066** unregistered shares valued at **$238,263** via its distribution reinvestment plan in Q2 2025 - In Q2 2025, **106,066** shares were issued via the distribution reinvestment plan, valued at approximately **$238,263**[320](index=320&type=chunk) [Item 3. Defaults Upon Senior Securities](index=86&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported [Item 4. Mine Safety Disclosures](index=86&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=86&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 trading plans during Q2 2025 [Item 6. Exhibits](index=87&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the report, including CEO and CFO certifications

Financial Data and Key Metrics Changes - For the quarter ended June 30, 2025, the company's net investment income was approximately $5.5 million or $0.08 per share, a decrease from approximately $6.1 million or $0.09 per share in the prior quarter [4] - The net asset value per share decreased to $2.06 compared to $2.90 in the prior quarter [4] - Total investment income for the second quarter was approximately $9.5 million, down from approximately $10.2 million in the prior quarter [5] - The company recorded combined net unrealized and realized losses on investments of approximately $1.1 million or $0.01 per share, compared to losses of approximately $14.2 million or $0.20 per share in the prior quarter [5] Business Line Data and Key Metrics Changes - The investment activity during the quarter included repayments of approximately $233,000 [5] - The company issued approximately 4.9 million shares of common stock in an aftermarket offering, resulting in net proceeds of approximately $11.6 million [5] Market Data and Key Metrics Changes - The US loan market performance strengthened, with US loan prices increasing from 96.31% of par as of March 31 to 97.07% of par as of June 30 [6][7] - The twelve-month trailing default rate for the loan index increased to 1.11% by principal amount at the end of the quarter from 0.82% at the end of March [7] - The distressed ratio, defined as a percentage of loans with prices below 80% of par, ended the quarter at 3.06% compared to 3.21% at the end of March [8] Company Strategy and Development Direction - The company announced a public offering of $65 million in aggregate principal amount of unsecured notes, which will be used for investments and repayment of existing debt [6] - The company focuses on portfolio management strategies designed to maximize long-term total returns [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the US loan market showed signs of improvement compared to the prior quarter, indicating a potentially favorable operating environment [6] - The company has historically been able to take a longer-term view towards its investment strategy as a permanent capital vehicle [10] Other Important Information - The Board of Directors declared monthly distributions of $0.035 per share for each of the months ending October, November, and December 2025 [5] Q&A Session Summary - No questions were raised during the Q&A session, and the call concluded without any inquiries from participants [13][14]

Financial Performance - Net investment income per share was $008 in Q2 2025, compared to $013 in Q2 2024[7] - Distributions declared and paid were $0105 per share for each quarter from Q2 2024 to Q2 2025[7] - Net asset value was $206 per share at the end of Q2 2025, a decrease from $243 in Q2 2024[7] - Total fair value of investments was $2415 million in Q2 2025, down from $2521 million in Q2 2024[7] - Net assets were $1574 million in Q2 2025, compared to $1524 million in Q2 2024[7] Portfolio Composition and Activity - New investments were $0 million in Q2 2025, a significant decrease from $288 million in Q2 2024[9] - The portfolio consisted of 50% first-lien secured debt, 11% second-lien secured debt, 37% CLO equity, and 2% other investments as of Q2 2025[9] - The weighted average yield of total investments at current cost was 116% in Q2 2025, compared to 118% in Q2 2024[9] - 608% of the company's investments are in senior secured debt[22] Debt and Non-Accrual Status - Principal amount of debt outstanding was $1153 million in Q2 2025[7] - Total non-accrual investments at fair value were $50 million in Q2 2025[28]

[Key Financial and Operational Highlights for Q2 2025](index=1&type=section&id=Key%20Financial%20and%20Operational%20Highlights%20for%20Q2%202025) Q2 2025 highlights include a NAV per share of $2.06, NII of $5.5 million, and $9.5 million in total investment income Key Financial Metrics (Q2 2025 vs Q1 2025) | Metric | Q2 2025 (ended June 30) | Q1 2025 (ended March 31) | | :--- | :--- | :--- | | **Net Asset Value (NAV) per Share** | $2.06 | $2.09 | | **Net Investment Income (NII)** | ~$5.5 million | ~$6.1 million | | **NII per Share** | $0.08 | $0.09 | | **Total Investment Income** | ~$9.5 million | ~$10.2 million | Q2 2025 Investment Income Breakdown | Source | Income Amount ($) | | :--- | :--- | | Debt Investments | $5.1 million | | CLO Equity Investments | $3.9 million | | Other Income | $0.6 million | Weighted Average Investment Yields (at cost) | Investment Type | June 30, 2025 (%) | March 31, 2025 (%) | | :--- | :--- | :--- | | Debt Investments | 14.5% | 14.3% | | CLO Equity Investments (Effective Yield) | 8.8% | 9.0% | | CLO Equity Investments (Cash Distribution Yield) | 13.8% | 15.5% | - The net increase in net assets from operations for Q2 2025 was approximately **$4.4 million**, composed of **$5.5 million** in NII, offset by **$2.4 million** in net realized losses, and supplemented by **$1.3 million** in net unrealized appreciation[1](index=1&type=chunk) - During the second quarter, the company issued approximately **4.9 million** shares of common stock through an "at-the-market" offering, resulting in net proceeds of approximately **$11.6 million**[1](index=1&type=chunk)[2](index=2&type=chunk) [Declaration of Common Stock Distributions](index=1&type=section&id=Declaration%20of%20Common%20Stock%20Distributions) The Board declared monthly common stock distributions of $0.035 per share for October, November, and December 2025 Common Stock Distribution Schedule | Month Ending | Record Date | Payment Date | Amount Per Share ($) | | :--- | :--- | :--- | :--- | | October 31, 2025 | October 17, 2025 | October 31, 2025 | $0.035 | | November 30, 2025 | November 14, 2025 | November 28, 2025 | $0.035 | | December 31, 2025 | December 17, 2025 | December 31, 2025 | $0.035 | [Financial Statements](index=3&type=section&id=Financial%20Statements) Financial statements detail the company's position as of June 30, 2025, with total assets of $274.8 million and net assets of $157.4 million [Statements of Assets and Liabilities (Balance Sheet)](index=3&type=section&id=STATEMENTS%20OF%20ASSETS%20AND%20LIABILITIES) As of June 30, 2025, total assets were $274.8 million, total liabilities $117.4 million, and total net assets $157.4 million, with NAV per share at $2.06 Balance Sheet Summary | Account | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Total Investments (Fair Value) | 241,507,000 | 260,852,859 | | Total Assets | 274,846,650 | 299,730,974 | | Total Liabilities | 117,423,934 | 139,065,494 | | **Total Net Assets** | **157,422,716** | **160,665,480** | | **Net Asset Value per Share** | **$2.06** | **$2.30** | [Statements of Operations (Income Statement)](index=4&type=section&id=STATEMENTS%20OF%20OPERATIONS) For Q2 2025, total investment income was $9.5 million, with net investment income of $5.5 million ($0.08 per share) Quarterly Performance (Three Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Total Investment Income | 9,522,181 | 11,445,456 | | Total Expenses | 4,022,616 | 3,723,550 | | **Net Investment Income** | **5,499,565** | **7,721,906** | | Net Increase in Net Assets from Operations | 4,385,357 | 5,259,005 | | **NII per Share** | **$0.08** | **$0.13** | Year-to-Date Performance (Six Months Ended June 30) | Metric | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Total Investment Income | 19,683,231 | 22,122,880 | | **Net Investment Income** | **11,603,439** | **14,259,462** | | Net (Decrease)/Increase in Net Assets from Operations | (3,736,160) | 3,490,615 | | **NII per Share** | **$0.16** | **$0.24** | [Financial Highlights](index=5&type=section&id=FINANCIAL%20HIGHLIGHTS) Key per-share data and performance ratios for Q2 2025 include a total return based on NAV of 3.59% and an annualized expense ratio of 10.78% Per Share Data (Three Months Ended June 30) | Per Share Data | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | NAV at beginning of period | $2.09 | $2.42 | | Net Investment Income | $0.08 | $0.13 | | Net Realized/Unrealized Losses | ($0.02) | ($0.04) | | Total Distributions | ($0.11) | ($0.11) | | **NAV at end of period** | **$2.06** | **$2.43** | Total Return (Three Months Ended June 30) | Return Metric | 2025 (%) | 2024 (%) | | :--- | :--- | :--- | | Total Return based on Market Value | (10.49)% | (4.06)% | | Total Return based on Net Asset Value | 3.59% | 4.75% | Key Ratios (Annualized, Three Months Ended June 30) | Ratio | 2025 (%) | 2024 (%) | | :--- | :--- | :--- | | Ratio of expenses to average net assets | 10.78% | 11.15% | | Ratio of net investment income to average net assets | 14.26% | 20.04% | [Corporate Information](index=6&type=section&id=Corporate%20Information) Oxford Square Capital Corp. is a BDC primarily investing in syndicated bank loans and CLO tranches, with forward-looking statement disclaimers included - The company is a **business development company (BDC)** that principally invests in syndicated bank loans and, to a lesser extent, in debt and equity tranches of collateralized loan obligation (CLO) vehicles[13](index=13&type=chunk) - The press release contains forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties[14](index=14&type=chunk)

Group 1 - Oxford Square Capital Corp. will hold a conference call to discuss second quarter 2025 earnings on August 7, 2025, at 9:00 AM Eastern time [1] - The toll-free dial-in number for the conference call is 1-800-549-8228, and the conference identification number is 03418 [1] - A recording of the call will be available for 30 days after the event, with the replay pass-code number being 03418 [1] Group 2 - Oxford Square Capital Corp. is a publicly-traded business development company that primarily invests in syndicated bank loans [2] - The company also invests in debt and equity tranches of collateralized loan obligation (CLO) vehicles, including warehouse facilities [2] - Warehouse facilities are financing structures designed to aggregate loans that may be used to form the basis of a CLO vehicle [2]

Core Viewpoint - Oxford Square Capital Corp. has announced a public offering of $65 million in unsecured notes with a 7.75% interest rate, maturing on July 31, 2030, with the option for early redemption starting July 31, 2027 [1][2]. Group 1: Offering Details - The offering is expected to close on August 7, 2025, and includes an option for underwriters to purchase an additional $9.75 million in notes [2]. - The notes will be listed on the NASDAQ Global Select Market under the trading symbol "OXSQH" [2]. Group 2: Use of Proceeds - The net proceeds from the offering will be used to repay existing indebtedness, acquire investments, and for general corporate purposes [3]. Group 3: Company Overview - Oxford Square Capital Corp. is a publicly-traded business development company that primarily invests in syndicated bank loans and, to a lesser extent, in debt and equity tranches of collateralized loan obligation (CLO) vehicles [6].

Core Viewpoint - Oxford Square Capital Corp. has announced a registered public offering of notes, with terms to be determined through negotiations with underwriters [1] Group 1: Offering Details - The public offering price and terms of the notes will be negotiated between the company and the underwriters [1] - The company plans to grant underwriters a 30-day option to purchase additional notes to cover over-allotments [1] - The notes are expected to be listed on the NASDAQ Global Select Market and to begin trading within 30 days of the original issue date [2] Group 2: Use of Proceeds - The net proceeds from the offering are expected to be used for repaying indebtedness, acquiring investments in line with the company's investment objectives, and for general corporate purposes [2] Group 3: Management and Underwriters - Lucid Capital Markets, LLC and Piper Sandler & Co. are acting as joint book-running managers for the offering [3] - Clear Street LLC, InspereX LLC, Janney Montgomery Scott LLC, and William Blair & Company, L.L.C. are serving as lead managers for the offering [3] Group 4: Company Overview - Oxford Square Capital Corp. is a publicly-traded business development company that primarily invests in syndicated bank loans and, to a lesser extent, in debt and equity tranches of collateralized loan obligation (CLO) vehicles [6] - CLO investments may also include warehouse facilities, which are financing structures used to aggregate loans for CLO vehicles [6]

Group 1 - The article highlights the focus on closed-end funds and the importance of timing in trades related to market price deviations [1] - A small fraction of BDC bonds currently offers yields to worst above 8%, with the article focusing on two notable exceptions [2] - The investing group Trade With Beta provides features such as frequent picks for mispriced preferred stocks and baby bonds, along with weekly reviews of over 1200 equities [2]

Core Viewpoint - Oxford Square Capital Corp. (OXSQ) is experiencing significant selling pressure, with a 7.5% decline over the past four weeks, but is positioned for a potential trend reversal due to being in oversold territory and positive earnings outlook from analysts [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to determine if a stock is oversold, with a reading below 30 typically indicating this condition [2]. - OXSQ's current RSI reading is 27.24, suggesting that the heavy selling may be exhausting itself and a trend reversal could be imminent [5]. Group 2: Fundamental Analysis - There is strong consensus among sell-side analysts that OXSQ will report better earnings than previously predicted, with the consensus EPS estimate increasing by 14.3% over the last 30 days [7]. - OXSQ holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8].

Core Viewpoint - The article provides an overview of the preferred stock and baby bond market, highlighting both individual news and broader market trends, while emphasizing the expertise of the ADS Analytics team in generating income ideas from various security types [1]. Group 1: Market Overview - The preferred stock and baby bond market is analyzed from both a bottom-up and top-down perspective, focusing on individual events and overall market conditions [1]. Group 2: Analyst Expertise - ADS Analytics consists of analysts with extensive experience in research and trading at leading global investment banks, specializing in income-generating ideas across different security types, including CEFs, ETFs, mutual funds, BDCs, and individual preferred stocks and baby bonds [1].