What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-05-26 compared with 2020-06-02 · 1066 added, 994 removed, 1213 unchanged (63% of the section changed)

1 unchanged sentence

Index to Financial Statements

Reports of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Assets and Liabilities as of March 31, 2021 and 2020

7 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of assets and liabilities, including the consolidated schedules of investments, of Capital Southwest Corporation and Subsidiaries (the Company) as of March 31, 2020 and 2019, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years ended March 31, 2020, the related notes to the consolidated financial statements, and the Schedule of Investments in and Advances to Affiliates of the Company listed in Schedule 12-14 for the year ended March 31, 2020 (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years ended March 31, 2020, in conformity with accounting principles generally accepted in the United States of America , and in our opinion, the related Schedule of Investments in and Advances to Affiliates, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated June 2, 2020, expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We have audited the accompanying consolidated statements of assets and liabilities of Capital Southwest Corporation and Subsidiaries (the Company), including the consolidated schedules of investments, as of March 31, 2021 and 2020, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended March 31, 2021, the related notes to the consolidated financial statements, and the Schedule of Investments in and Advances to Affiliates of the Company listed in Schedule 12-14 for the year ended March 31, 2021 (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2021 and 2020, and the results of its operations, changes in net assets, and cash flows for each of the three years in the period ended March 31, 2021, in conformity with accounting principles generally accepted in the United States of America, and in our opinion, the related Schedule of Investments in and Advances to Affiliates, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our procedures included confirmation of investments owned as of March 31, 2021 and 2020, by correspondence with the custodians and/or brokers or the underlying investee.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our procedures included confirmation of investments owned as of March 31, 2020 and 2019, by correspondence with the custodians, portfolio companies or agents or by other appropriate procedures where replies from custodians, portfolio companies or agents were not received.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the fair value of investments using significant unobservable inputs and assumptions

At March 31, 2021, the fair value of the Company’s investments categorized as Level 3 investments within the fair value hierarchy (Level 3 investments) totaled $688,432 thousand.

Management determines, and the Board of Directors approves, the fair value of the Company’s Level 3 investments by applying the methodologies outlined in Notes 2 and 4 to the consolidated financial statements.

We identified the evaluation of the fair value of investments using significant unobservable inputs and assumptions as a critical audit matter.

Auditing the fair value of the Company’s Level 3 investments is complex, as the unobservable inputs and assumptions used by the Company are highly judgmental and could have a significant effect on the fair value measurements of such investments.

Changes in these techniques, inputs and assumptions could have a significant impact on the fair value of investments.

The primary procedures we performed to address this critical audit matter included the following, among others:

• We obtained an understanding of the relevant controls related to the Company’s process to determine fair value of its Level 3 investments, including controls over the Company’s methods and selection of significant unobservable inputs.

• We evaluated the appropriateness of the Company’s valuation methodologies used for Level 3 investments, such as the discounted cash flow or enterprise value, and management’s asset coverage analysis.

We also tested whether assumptions used by management, including revenue or EBITDA multiples and discounts rates, were reasonable by comparing these inputs to market information obtained from external sources.

• Valuation specialists, with specialized skill and knowledge, were involved in our testing.

• We evaluated the reasonableness of any significant changes in valuation methodologies from the prior year-end.

• We evaluated the Company’s historical ability to estimate fair value by comparing the transaction price of available transactions occurring subsequent to the prior period valuation date against the fair value estimate determined by the Company in the prior period.

• We evaluated subsequent events and other available information and considered whether they corroborated or contradicted the Company’s year-end valuations.

• We tested broker quotes using third party quotes, if available.

/s/ RSM US LLP

1 unchanged sentence

Chicago, Illinois

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Capital Southwest Corporation and Subsidiaries

Opinion on the Internal Control Over Financial Reporting

We have audited Capital Southwest Corporation and Subsidiaries' (the Company) internal control over financial reporting as of March 31, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2020, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of assets and liabilities, including the consolidated schedules of investments, of the Company as of March 31, 2020 and 2019, and the related consolidated statements of operations, changes in net assets and cash flows for each of the three years ended March 31, 2020, the related notes to the consolidated financial statements and our report dated June 2, 2020 expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

Chicago, Illinois

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(In thousands except share and per share data)

March 31, March 31,

Investments at fair value:

9 unchanged sentences

Dividends and interest 10,533 10,389

Escrow 1,150 1,643

Income tax receivable 155 147

1 unchanged sentence

Debt issuance costs (net of accumulated amortization of $3,582 and $2,720, respectively) 2,246 2,980

Other assets 1,284 1,531

Total assets $ 735,584 $ 584,959

December 2022 Notes (Par value:

2 unchanged sentences

$125,000 and $75,000, respectively) 122,879 73,484

January 2026 Notes (Par value:

$140,000 and $0, respectively) 138,425 —

Credit facility 120,000 154,000

6 unchanged sentences

Common stock, $0.25 par value:

authorized, 40,000,000 shares at March 31, 2020 and 25,000,000 at March 31, 2019;

authorized, 40,000,000 shares;

issued, 23,344,836 shares at March 31, 2021 and 20,337,610 shares at March 31, 2020 $ 5,836 $ 5,085

10 unchanged sentences

Years Ended March 31,

2021 2020 2019

Investment income:

11 unchanged sentences

Operating expenses:

Spin-off compensation plan

Compensation 7,756 7,310 7,715

Share-based compensation 2,944 2,853 2,271

Interest 17,941 15,836 12,178

Professional fees 2,193 2,029 1,737

5 unchanged sentences

Net investment income $ 31,671 $ 28,232 $ 23,710

Net realized gain

Realized (loss) gain

Non-control/Non-affiliate investments $ (6,908) $ 1,335 $ 2,124

2 unchanged sentences

Taxes on deemed distribution of long-term capital gains — (3,461) —

Total net realized gain on investments, net of tax

Net unrealized (depreciation) appreciation on investments

Total net realized (loss) gain on investments, net of tax (8,536) 42,231 20,854

Net unrealized appreciation (depreciation) on investments

Non-control/Non-affiliate investments 21,218 (14,250) (934)

2 unchanged sentences

Income tax (provision) benefit (2,236) (683) 178

Total net unrealized (depreciation) appreciation on investments, net of tax

Net realized and unrealized (losses) gains on investments

Net (decrease) increase in net assets from operations

Total net unrealized appreciation (depreciation) on investments, net of tax 28,755 (92,814) (11,506)

Net realized and unrealized gains (losses) on investments 20,219 (50,583) 9,348

Realized losses on extinguishment of debt (1,007) — —

Net increase (decrease) in net assets from operations $ 50,883 $ (22,351) $ 33,058

Pre-tax net investment income per share - basic and diluted $ 1.79 $ 1.68 $ 1.48

Net investment income per share - basic and diluted $ 1.66 $ 1.57 $ 1.42

Net (decrease) increase in net assets from operations - basic and diluted

Net increase (decrease) in net assets from operations - basic and diluted $ 2.67 $ (1.24) $ 2.45

Weighted average shares outstanding – basic 19,060,131 17,999,836 16,727,254

5 unchanged sentences

Years Ended March 31,

2021 2020 2019

Net investment income $ 31,671 $ 28,232 $ 23,710

Net realized gain on investments

Net realized (loss) gain on investments (8,536) 45,692 20,854

Taxes on deemed distribution of long-term capital gains — (3,461) —

Net unrealized (depreciation) appreciation on investments, net of tax

Net (decrease) increase in net assets from operations

Net unrealized appreciation (depreciation) on investments, net of tax 28,755 (92,814) (11,506)

Realized losses on extinguishment of debt (1,007) — —

Net increase (decrease) in net assets from operations 50,883 (22,351) 33,058

Dividends to shareholders (39,945) (50,343) (38,010)

Spin-off compensation plan distribution

Capital share transactions:

5 unchanged sentences

Repurchase of common stock — (9,209) (185)

(Decrease) increase in net assets

Increase (decrease) in net assets 64,029 (53,741) 17,675

Net assets, beginning of year 272,222 325,963 308,288

5 unchanged sentences

Years Ended March 31,

2021 2020 2019

Cash flows from operating activities

Net (decrease) increase in net assets from operations

Adjustments to reconcile net (decrease) increase in net assets from operations to net cash used in operating activities:

Net increase (decrease) in net assets from operations $ 50,883 $ (22,351) $ 33,058

Adjustments to reconcile net increase (decrease) in net assets from operations to net cash used in operating activities:

Purchases and originations of investments (219,349) (196,606) (229,598)

4 unchanged sentences

Net pension benefit (110) (82) (51)

Realized (gain) loss on investments before income tax

Realized loss (gain) on investments before income tax 8,549 (46,084) (20,854)

Realized losses on extinguishment of debt 1,007 — —

Taxes payable on deemed distribution of long-term capital gains — 3,461 —

Net change in unrealized appreciation on investments

Net unrealized (appreciation) depreciation on investments (30,991) 92,131 11,684

Accretion of discounts on investments (2,347) (1,938) (1,390)

8 unchanged sentences

Decrease (increase) in other assets 95 (644) 4,236

(Decrease) increase in other liabilities

Increase (decrease) in other liabilities 6,779 (543) (695)

Increase (decrease) in payable for unsettled transaction — (1,158) 1,158

Increase (decrease) in taxes payable

Decrease in taxes payable (463) (3,142) —

Net cash used in operating activities (68,252) (47,947) (94,706)

5 unchanged sentences

Debt issuance costs paid (540) (742) (1,827)

Proceeds from notes

Proceeds from issuance of December 2022 Notes — — 19,524

Proceeds from issuance of October 2024 Notes 49,000 73,500 —

Proceeds from issuance of January 2026 Notes 138,571 — —

Redemption of December 2022 Notes (77,136) — —

Dividends to shareholders (39,945) (50,343) (42,535)

2 unchanged sentences

Repurchase of common stock — (9,209) (185)

Spin-off Compensation Plan distribution

Net cash provided by financing activities 86,121 51,767 96,723

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents 17,869 3,820 2,017

Cash and cash equivalents at beginning of year 13,744 9,924 7,907

3 unchanged sentences

Cash paid for interest 11,738 13,944 10,912

Supplemental disclosure of noncash financing activities:

Dividends declared, not yet paid

The accompanying Notes are an integral part of these Consolidated Financial Statements.

2 unchanged sentences

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

Industry Rate 3

Maturity Principal Cost 16

Non-control/Non-affiliate Investments 5

AAC HOLDINGS, INC.

First Lien - Priming

Healthcare services

P +13.50% (Floor 1.00%)/Q, Current Coupon 16.75%

First Lien 16

L+6.75% (Floor 1.00%)/Q, 4.00% PIK, Current Coupon 13.33%

ACE GATHERING, INC.

Second Lien 15

Energy services (midstream)

L+8.50% (Floor 2.00%)/Q, Current Coupon 10.50%

ADAMS PUBLISHING GROUP, LLC

Media, marketing & entertainment

L+7.50% (Floor 1.75%)/Q, Current Coupon 9.29%

AAC NEW HOLDCO INC.

First Lien Healthcare services 10.00%, 8.00% PIK 12/11/2020 6/25/2025 $ 7,981 $ 7,981 $ 7,941

374,543 shares common stock — 12/11/2020 — — 1,785 1,785

Warrants (Expiration - December 11, 2025) — 12/11/2020 — — 2,198 2,198

11,964 11,924

ACCELERATION PARTNERS, LLC 8,13

First Lien Media, marketing & entertainment L+8.21% (Floor 1.00%)/Q, Current Coupon 9.21% 12/1/2020 12/1/2025 8,750 8,500 8,750

Delayed Draw Term Loan 10

L+8.21% (Floor 1.00%)/Q, Current Coupon 9.21% 12/1/2020 12/1/2025 2,965 2,889 2,965

AG KINGS HOLDINGS INC.

Food, agriculture & beverage

L+10.02% (Floor 1.00%)/M, Current Coupon 12.69%

1,000 Preferred Units 9

— 12/1/2020 — — 1,000 1,000

1,000 Class A Common Units 9

— 12/1/2020 — — — —

12,389 12,715

ACE GATHERING, INC.

Second Lien 15

Energy services (midstream) L+10.50% (Floor 2.00%)/Q, Current Coupon 12.50% 12/13/2018 12/13/2023 9,438 9,319 8,975

ADAMS PUBLISHING GROUP, LLC First Lien Media, marketing & entertainment L+7.00% (Floor 1.75%)/Q, Current Coupon 8.75% 7/2/2018 7/2/2023 9,920 9,795 9,920

ALLIANCE SPORTS GROUP, L.P.

Senior subordinated debt

Consumer products & retail

Senior subordinated debt Consumer products & retail 14.00% PIK 8/1/2017 2/1/2023 11,134 11,043 10,989

Unsecured convertible note 6.00% PIK 7/15/2020 9/30/2024 173 173 173

3.88% preferred membership interest — 8/1/2017 — — 2,500 2,500

AMERICAN NUTS OPERATIONS LLC 13

First Lien - Term Loan

Food, agriculture and beverage

L+9.50% (Floor 1.00%)/Q, Current Coupon 11.41%

First Lien - Term Loan C 10

L+9.50% (Floor 1.00%)/Q, Current Coupon 11.41%

3,000,000 units of Class A common stock 9

13,716 13,662

ALLOVER MEDIA, LLC Revolving Loan 10

Media, marketing & entertainment L+8.50% (Floor 1.00%) 3/10/2021 3/10/2026 — (39) —

First Lien L+8.50% (Floor 1.00%)/Q, Current Coupon 9.50% 3/10/2021 3/10/2026 13,000 12,742 12,742

12,703 12,742

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

AMERICAN TELECONFERENCING SERVICES, LTD.

(DBA PREMIERE GLOBAL SERVICES, INC.)

Telecommunications

Industry Rate 3

Maturity Principal Cost 16

AMERICAN NUTS OPERATIONS LLC 13

First Lien - Term Loan Food, agriculture and beverage L+8.00% (Floor 1.00%)/Q, Current Coupon 9.00% 4/10/2018 4/10/2023 17,019 16,856 17,019

First Lien - Term Loan C 10

L+8.00% (Floor 1.00%)/Q, Current Coupon 9.00% 12/21/2018 4/10/2023 1,804 1,785 1,804

0.5%, L+9.00% PIK (Floor 1.00%)/Q, Current Coupon 11.35%

AMWARE FULFILLMENT LLC

L+9.50% (Floor 1.00%)/M, Current Coupon 10.95%

3,000,000 units of Class A common stock 9

— 4/10/2018 — — 3,000 2,752

21,641 21,575

AMERICAN TELECONFERENCING SERVICES, LTD.

(DBA PREMIERE GLOBAL SERVICES, INC.) First Lien Telecommunications L+6.50% (Floor 1.00%)/Q, Current Coupon 7.50% 9/21/2016 6/8/2023 5,915 5,865 3,141

Second Lien 0.5%, L+9.00% PIK (Floor 1.00%)/Q, Current Coupon 10.50% 11/3/2016 6/6/2024 2,341 2,317 55

AMWARE FULFILLMENT LLC First Lien Distribution L+9.00% (Floor 1.00%)/M, Current Coupon 10.00% 7/29/2016 12/31/2021 17,407 17,315 17,407

ASC ORTHO MANAGEMENT COMPANY, LLC 13

Revolving Loan

Healthcare services

L+7.50% (Floor 1.00%)/Q, Current Coupon 8.70%

L+7.50% (Floor 1.00%)/Q, Current Coupon 9.41%

Revolving Loan Healthcare services L+7.50% (Floor 1.00%)/Q, Current Coupon 8.50% 8/31/2018 8/31/2023 1,500 1,485 1,410

First Lien L+7.50% (Floor 1.00%)/Q, Current Coupon 8.50% 8/31/2018 8/31/2023 8,854 8,756 8,322

Second Lien 13.25% PIK 8/31/2018 12/1/2023 4,237 4,191 3,822

2,042 Common Units 9

— 8/31/2018 — — 750 356

15,182 13,910

BINSWANGER HOLDING CORP.

L+8.50% (Floor 1.00%)/M, Current Coupon 9.96%

First Lien Distribution L+8.50% (Floor 1.00%)/M, Current Coupon 9.50% 3/9/2017 3/9/2022 10,942 10,890 10,942

900,000 shares of common stock — 3/9/2017 — — 900 924

11,790 11,866

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

Industry Rate 3

Maturity Principal Cost 16

BLASCHAK COAL CORP.

Second Lien Term Loan 15

Commodities & mining

L+11.00%/Q, (Floor 1.00%) 1.00% PIK, Current Coupon 13.91%

Commodities & mining L+13.00%, 1.00% PIK (Floor 1.00%)/Q, Current Coupon 15.00% 7/30/2018 7/30/2023 8,712 8,617 8,233

Second Lien- Term Loan B 15

L+11.00%/Q, (Floor 1.00%) 1.00% PIK, Current Coupon 13.43%

L+13.00%, 1.00% PIK (Floor 1.00%)/Q, Current Coupon 15.00% 3/30/2020 7/30/2023 2,016 1,986 1,905

10,603 10,138

BROAD SKY NETWORKS LLC 13

Revolving Loan 10

Telecommunications L+7.50% (Floor 1.00%)/Q, Current Coupon 8.50% 12/11/2020 12/11/2025 500 453 496

First Lien L+7.50% (Floor 1.00%)/Q, Current Coupon 8.50% 12/11/2020 12/11/2025 15,000 14,715 14,880

1,000,000 Series A Preferred units 9

— 12/11/2020 — — 1,000 1,000

16,168 16,376

CALIFORNIA PIZZA KITCHEN, INC.

First Lien Restaurants L+10.00% (Floor 1.50%)/Q, Current Coupon 11.50% 11/23/2020 11/23/2024 669 652 668

First Lien Rolled Up 1.00%, L+11.00% PIK (Floor 1.50%)/Q, Current Coupon 13.50% 11/23/2020 11/23/2024 741 739 737

Second Lien 1.00%, L+12.50% PIK (Floor 1.50%)/Q, Current Coupon 15.00% 11/23/2020 5/23/2025 814 814 796

48,423 shares of common stock — 11/23/2020 — — 1,317 1,317

CAPITAL PAWN HOLDINGS, LLC First Lien Consumer products & retail L+7.25% (Floor 1.00%)/Q, Current Coupon 8.25% 12/21/2017 7/8/2023 8,854 8,840 8,854

CHEMISTRY RX HOLDINGS, LLC First Lien Specialty chemicals L+7.00% (Floor 1.00%)/Q, Current Coupon 8.00% 3/15/2021 3/13/2026 8,000 7,841 7,841

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

CALIFORNIA PIZZA KITCHEN, INC.

L+6.00% (Floor 1.00%)/M, Current Coupon 7.62%

CAPITAL PAWN HOLDINGS, LLC

Consumer products & retail

L+9.50%/Q, Current Coupon 11.41%

CLICKBOOTH.COM, LLC

Revolving Loan

Media, marketing & entertainment

L+8.50% (Floor 1.00%)/Q, Current Coupon 9.5%

L+8.50% (Floor 1.00%)/Q, Current Coupon 10.41%

Industry Rate 3

Maturity Principal Cost 16

CITYVET, INC.

Delayed Draw Term Loan 10

Healthcare services L+7.50% (Floor 1.00%)/Q, Current Coupon 8.50% 3/5/2021 3/5/2026 3,250 3,053 3,053

271,739 Class A units 9

— 3/5/2021 — — 500 500

CLICKBOOTH.COM, LLC Revolving Loan 10

Media, marketing & entertainment L+8.50% (Floor 1.00%) 12/5/2017 1/31/2025 — (5) —

First Lien L+8.50% (Floor 1.00%)/Q, Current Coupon 9.50% 12/5/2017 1/31/2025 18,525 18,308 18,525

18,303 18,525

DANFORTH ADVISORS, LLC 13

Revolving Loan 10

Business services

L+7.25% (Floor 2.00%)/Q, Current Coupon 9.25%

875 Class A equity units 9

DELPHI INTERMEDIATE HEALTHCO, LLC 16

Revolving Loan

Healthcare services

L+9.50% (Floor 1.00%)/Q, Current Coupon 11.97%

L+9.50% (Floor 1.00%)/Q, Current Coupon 11.20%

Business services — 9/28/2018 — — 875 2,855

L+8.00% (Floor 2.00%)/Q, Current Coupon 10.00%

First Lien Business services L+8.00% (Floor 2.00%)/Q, Current Coupon 10.00% 6/28/2019 6/28/2024 5,820 5,737 5,878

DUNN PAPER, INC.

Paper & forest products

L+8.75% (Floor 1.00%)/M, Current Coupon 9.75%

Second Lien Paper & forest products L+8.75% (Floor 1.00%)/M, Current Coupon 9.75% 9/28/2016 8/26/2023 3,000 2,974 3,000

ELECTRONIC TRANSACTION CONSULTANTS LLC 13

Revolving Loan 10

Software & IT services L+7.50% (Floor 1.00%) 7/24/2020 7/24/2025 — (56) —

First Lien L+7.50% (Floor 1.00%)/Q, Current Coupon 8.50% 7/24/2020 7/24/2025 10,000 9,845 9,840

1,000 Class A units 9

— 7/24/2020 — — 1,000 1,000

10,789 10,840

ESCP DTFS, INC.

First Lien - Term Loan A Industrial services L+6.50% (Floor 1.75%)/Q, Current Coupon 8.25% 1/31/2020 1/31/2025 5,350 5,269 4,986

First Lien - Term Loan B L+8.50% (Floor 1.75%)/Q, Current Coupon 10.25% 1/31/2020 1/31/2025 5,350 5,270 4,986

Delayed Draw Term Loan B1 L+6.50% (Floor 1.75%)/Q, Current Coupon 8.25% 1/31/2020 1/31/2025 500 491 466

Delayed Draw Term Loan B2 L+8.50% (Floor 1.75%)/Q, Current Coupon 10.25% 1/31/2020 1/31/2025 500 491 466

11,521 10,904

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

ENVIRONMENTAL PEST SERVICE MANAGEMENT COMPANY, LLC

Consumer services

L+7.00%(Floor 1.00%)/Q, Current Coupon 8.91%

Delayed Draw Term Loan 10

L+7.00%(Floor 1.00%)/Q, Current Coupon 8.91%

ESCP DTFS, INC.

First Lien - Term Loan A

Industrial services

L+6.50%(Floor 1.75%)/Q, Current Coupon 8.27%

First Lien - Term Loan B

L+8.50%(Floor 1.75%)/Q, Current Coupon 10.27%

Delayed Draw Term Loan A1 10

L+6.50%(Floor 1.75%)

Delayed Draw Term Loan A2 10

L+8.50%(Floor 1.75%)

Delayed Draw Term Loan B1 10

L+6.50%(Floor 1.75%)

Delayed Draw Term Loan B2 10

L+8.50%(Floor 1.75%)

FAST SANDWICH, LLC

Revolving Loan 10

L+9.00% (Floor 1.00%)/Q, 5.0% PIK

L+9.00% (Floor 1.00%)/Q, 5.0% PIK,Current Coupon 15.91%

GS OPERATING, LLC

L+6.50%(Floor 1.50%)/M, Current Coupon 8.00%

Industry Rate 3

Maturity Principal Cost 16

FAST SANDWICH, LLC Revolving Loan 10

Restaurants L+9.00% (Floor 1.00%) 5/24/2018 5/23/2023 — (32) —

First Lien L+9.00% (Floor 1.00%)/Q,Current Coupon 10.00% 5/24/2018 5/23/2023 3,359 3,332 3,023

FLIP ELECTRONICS, LLC 8,13

First Lien Technology products & components L+8.05% (Floor 1.00%)/M, Current Coupon 9.05% 1/4/2021 1/2/2026 15,500 15,177 15,252

2,000,000 Common Units 9

— 1/4/2021 — — 2,000 2,285

17,177 17,537

GS OPERATING, LLC First Lien Distribution L+6.50%(Floor 1.50%)/M, Current Coupon 8.00% 3/6/2020 2/24/2025 7,920 7,791 7,920

IAN, EVAN, & ALEXANDER CORPORATION (DBA EVERWATCH) Revolving Loan 10

Aerospace & defense L+8.50% (Floor 1.00%) 7/31/2020 7/31/2025 — (34) —

First Lien L+8.50% (Floor 1.00%)/Q, Current Coupon 9.50% 7/31/2020 7/31/2025 9,668 9,493 9,668

ICS DISTRIBUTION, LLC 8

Industrial services

L+8.21%(Floor 2.00%)/Q, Current Coupon 10.21%

First Lien Industrial services L+8.48% (Floor 2.00%)/Q, Current Coupon 10.48% 10/31/2019 10/31/2024 20,500 20,121 20,275

JVMC HOLDINGS CORP.

First Lien Financial services L+7.75% (Floor 1.00%)/M, Current Coupon 8.75% 2/28/2019 2/28/2024 7,047 7,000 6,850

KLEIN HERSH, LLC Revolving Loan 10

Business services L+8.00% (Floor 0.75%) 11/13/2020 11/13/2025 — (17) —

First Lien L+8.00% (Floor 0.75%)/S, Current Coupon 8.75% 11/13/2020 11/13/2025 14,813 14,534 14,813

14,517 14,813

First Lien 15

Distribution L+6.00% (Floor 1.00%)/Q, Current Coupon 7.00% 1/5/2021 11/23/2025 16,000 15,923 15,968

LANDPOINT HOLDCO, INC.

First Lien Business services L+11.00%(Floor 1.00%)/Q, Current Coupon 12.00% 12/30/2019 12/30/2024 18,840 18,540 17,239

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

IENERGIZER LIMITED

Business services

L+6.00%(Floor 1.00%)/M, Current Coupon 7.00%

JVMC HOLDINGS CORP.

Financial services

L+6.50% (Floor 1.00%)/M, Current Coupon 7.50%

LANDPOINT HOLDCO, INC.

Business Services

L+7.00%(Floor 1.00%)/Q, Current Coupon 8.96%

Industry Rate 3

Maturity Principal Cost 16

LGM PHARMA, LLC 13

Healthcare products

L+8.50% (Floor 1.00%)/M, Current Coupon 10.02%

First Lien Healthcare products L+8.50% (Floor 1.00%)/M, Current Coupon 9.50% 11/15/2017 11/15/2023 11,424 11,315 11,424

Delayed Draw Term Loan L+10.00% (Floor 1.00%)/Q, Current Coupon 11.00% 7/24/2020 11/15/2023 2,488 2,448 2,487

142,278.89 units of Class A common stock 9

LIGHTING RETROFIT INTERNATIONAL, LLC (DBA ENVOCORE)

Environmental services

6%, L+3.00% PIK (Floor 2.00%)/Q, Current Coupon 11.00%

— 11/15/2017 — — 1,600 2,309

15,363 16,220

LIGHTING RETROFIT INTERNATIONAL, LLC (DBA ENVOCORE) First Lien Environmental services 7.50%, L+1.50% PIK (Floor 2.00%)/Q, Current Coupon 11.00% 6/30/2017 6/30/2022 14,027 13,984 12,021

25,603 shares of Series C preferred stock 8/13/2018 — — 25 —

396,825 shares of Series B preferred stock — 6/30/2017 — — 500 —

MEDIA RECOVERY, INC.

Industrial Products

14,509 12,021

MAKO STEEL LP Revolving Loan 10

Business services L+7.25% (Floor (0.75%)/Q, Current Coupon 8.00% 03/15/2021 03/13/2026 660 623 647

First Lien L+7.25% (Floor (0.75%)/Q, Current Coupon 8.00% 03/15/2021 03/13/2026 8,113 7,952 7,952

NINJATRADER, INC.

Revolving Loan 10

Financial Services

L+6.00% (Floor 1.50%)/Q, Current Coupon 7.90%

Financial services L+6.75% (Floor 1.50%) 12/18/2019 12/18/2024 — (6) —

First Lien L+6.75% (Floor 1.50%)/Q, Current Coupon 8.25% 12/18/2019 12/18/2024 19,250 18,784 19,250

Delayed Draw Term Loan 10

L+6.75% (Floor 1.50%)/Q 12/31/2020 12/18/2024 — (36) —

2,000,000 Preferred Units 9

— 12/18/2019 — — 2,000 6,223

20,742 25,473

RESEARCH NOW GROUP, INC.

Second Lien Business services L+9.50% (Floor 1.00%)/M, Current Coupon 10.50% 12/8/2017 12/20/2025 10,500 9,980 10,132

ROSELAND MANAGEMENT, LLC Revolving Loan 10

Healthcare services L+7.00% (Floor 2.00%)/Q, Current Coupon 9.00% 11/9/2018 11/9/2023 500 482 500

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

RESEARCH NOW GROUP, INC.

Business services

L+9.50% (Floor 1.00%)/M, Current Coupon 11.26%

Healthcare products

L+9.86% (Floor 2.00%)/M, Current Coupon 11.86%

Industry Rate 3

Maturity Principal Cost 16

First Lien L+7.00% (Floor 2.00%)/Q, Current Coupon 9.00% 11/9/2018 11/9/2023 14,270 14,108 14,270

13,811 Class A Units — 11/9/2018 — — 1,381 1,720

15,971 16,490

RTIC SUBSIDIARY HOLDINGS, LLC Revolving Loan 10

Consumer products & retail L+7.75% (Floor 1.25%)/Q, Current Coupon 9.00% 9/1/2020 9/1/2025 329 317 329

First Lien L+7.75% (Floor 1.25%)/Q, Current Coupon 9.00% 9/1/2020 9/1/2025 7,135 7,054 7,135

First Lien Healthcare products L+9.68% (Floor 2.00%)/M, Current Coupon 11.68% 3/21/2019 3/21/2024 16,750 16,422 16,750

100 shares of common stock — 3/21/2019 — — 1,000 967

17,422 17,717

TAX ADVISORS GROUP, LLC 13

1 unchanged sentence

Financial services — 6/23/2017 — — 541 1,539

TRINITY 3, LLC 13

Technology products & components

L+7.50% (Floor 1.50%)/Q, Current Coupon 9.41%

TRAFERA, LLC (FKA TRINITY 3, LLC) 13

First Lien 15

Technology products & components L+7.00% (Floor 1.00%)/Q, Current Coupon 8.00% 9/30/2020 9/30/2025 9,975 9,838 9,975

896.43 Class A units 9

1,114 Preferred Units

Media, marketing & entertainment

1,443 Common Units

USA DEBUSK, LLC

Industrial Services

L+5.75% (Floor 1.00%)/M, Current Coupon 6.75%

— 11/15/2019 — — 1,205 3,204

11,043 13,179

USA DEBUSK, LLC First Lien Industrial services L+5.75% (Floor 1.00%)/M, Current Coupon 6.75% 2/25/2020 10/22/2024 7,900 7,782 7,892

VISTAR MEDIA INC.

Media, marketing & entertainment

L+7.5% (Floor 2.00%)/M, Current Coupon 9.5%

First Lien Media, marketing & entertainment L+7.50%, 2.50% PIK (Floor 2.00%)/M, Current Coupon 12.00% 2/17/2017 4/3/2023 11,481 10,920 11,481

171,617 shares of Series A preferred stock — 4/3/2019 — — 1,874 3,904

Warrants (Expiration - April 3, 2029) — 4/3/2019 — — 620 1,853

13,414 17,238

VTX HOLDINGS, INC.

First Lien Software & IT services L+9.00% (Floor 2.00%)/Q, Current Coupon 11.00% 7/23/2019 7/23/2024 21,575 21,181 21,575

1,397,707 Series A Preferred units — 7/23/2019 — — 1,398 1,654

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

VTX HOLDINGS, INC.

Software & IT services

L+8.87% (Floor 2.00%)/Q, Current Coupon 10.87%

1,000,000 series A Preferred units

Industry Rate 3

Maturity Principal Cost 16

22,579 23,229

ZENFOLIO INC.

Revolving Loan Business services L+9.00% (Floor 1.00%)/Q, Current Coupon 10.00% 7/17/2017 7/17/2023 2,000 1,992 1,820

First Lien L+9.00% (Floor 1.00%)/Q, Current Coupon 10.00% 7/17/2017 7/17/2023 14,888 14,722 13,548

16,714 15,368

Total Non-control/Non-affiliate Investments $ 540,556 $ 546,028

Affiliate Investments 6

CENTRAL MEDICAL SUPPLY LLC 13

Revolving Loan 10

Healthcare services L+9.00% (Floor 1.75%)/Q, Current Coupon 10.75% 5/22/2020 5/22/2025 $ 300 $ 275 $ 276

First Lien L+9.00% (Floor 1.75%)/Q, Current Coupon 10.75% 5/22/2020 5/22/2025 7,500 7,371 6,908

Delayed Draw Capex Term Loan 10

L+9.00% (Floor 1.75%)/Q, Current Coupon 10.75% 5/22/2020 5/22/2025 100 75 92

875,000 Preferred Units 9

— 5/22/2020 — — 875 641

CHANDLER SIGNS, LLC 13

1 unchanged sentence

Business services — 1/4/2016 — — 1,500 1,343

DELPHI BEHAVIORAL HEALTH GROUP, LLC First Lien Healthcare services L+9.50% (Floor 1.00%)/M, Current Coupon 10.50% 4/8/2020 4/7/2023 1,414 1,414 1,398

First Lien L+7.50% (Floor 1.00%)/M, Current Coupon 8.50% 4/8/2020 4/7/2023 1,580 1,580 1,500

1,681.04 Common Units — 4/8/2020 — — 3,615 3,615

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

Industry Rate 3

Maturity Principal Cost 16

DYNAMIC COMMUNITIES, LLC 13

Revolving Loan 10

Business services

L+8.00% (Floor 1.00%)

L+8.00% (Floor 1.00%)/M, Current Coupon 9.00%

Business services L+3.75%, 7.75% PIK (Floor 1.00%) 7/17/2018 7/17/2023 — (2) —

First Lien L+3.75%, 7.75% PIK (Floor 1.00%)/Q, Current Coupon 12.50% 7/17/2018 7/17/2023 11,061 10,950 9,966

Senior subordinated debt 25% PIK 12/4/2020 1/16/2024 372 372 372

2,000,000 Preferred Units 9

— 7/17/2018 — — 2,000 1,274

13,320 11,612

GRAMMATECH, INC.

Revolving Loan 10

Software & IT services

L+7.50% (Floor 2.00%)/Q, Current Coupon 9.50%

Software & IT services L+7.50% (Floor 2.00%) 11/1/2019 11/1/2024 — (31) —

First Lien L+7.50% (Floor 2.00%)/Q, Current Coupon 9.50% 11/1/2019 11/1/2024 11,500 11,346 11,420

1,000 Class A units — 11/1/2019 — — 1,000 1,208

12,315 12,628

ITA HOLDINGS GROUP, LLC 13

Revolving Loan 10

Transportation & logistics

L+9.00% (Floor 1.00%)

First Lien - Term Loan

L+8.00% (Floor 1.00%)/Q, Current Coupon 9.91%

First Lien - Term B Loan

L+11.00% (Floor 1.00%)/Q, Current Coupon 12.91%

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2020

Portfolio Company 1

First Lien - PIK Note A

First Lien - PIK Note B

Transportation & logistics L+9.00% (Floor 1.00%) 2/14/2018 2/14/2023 — (23) —

First Lien - Term Loan L+7.00% (Floor 1.00%)/Q, Current Coupon 8.00% 2/14/2018 2/14/2023 10,071 9,996 10,061

First Lien - Term B Loan L+10.00% (Floor 1.00%)/Q, Current Coupon 11.00% 6/5/2018 2/14/2023 5,036 4,984 5,101

First Lien - PIK Note A 10.00% PIK 3/29/2019 2/14/2023 2,678 2,282 2,630

First Lien - PIK Note B 10.00% PIK 3/29/2019 2/14/2023 106 106 103

Warrants (Expiration - March 29, 2029) 9

— 3/29/2019 — — 538 2,968

9.25% Class A Membership Interest 9

ROSELAND MANAGEMENT, LLC

Revolving Loan 10

Healthcare services

L+7.00% (Floor 2.00%)/Q, Current Coupon 9.00%

10,000 Class A Units

Healthcare services

L+10.00% (Floor 2.00%)/M, 7.00% PIK, Current Coupon 19.00%

— 2/14/2018 — — 1,500 2,532

19,383 23,395

SIMR, LLC First Lien Healthcare services L+17.00% PIK (Floor 2.00%)/M, Current Coupon 19.00% 9/7/2018 9/7/2023 13,661 13,527 12,103

9,374,510.2 Class B Common Units — 9/7/2018 — — 6,107 —

ZENFOLIO INC.

Revolving Loan

Business services

L+9.00% (Floor 1.00%)/Q, Current Coupon 10.34%

L+9.00% (Floor 1.00%)/Q, Current Coupon 10.91%

190 shares of common stock

Total Affiliate Investments

19,634 12,103

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2021

Type of Interest Acquisition Fair

Portfolio Company 1

Industry Rate 3

Maturity Principal Cost 16

First Lien Media, marketing, & entertainment L+8.00% (Floor 1.00%)/Q, Current Coupon 9.00% 9/17/2020 9/16/2025 8,500 8,344 8,500

500,000 Class A Common Units 9

— 9/17/2020 — — 500 1,235

Total Affiliate Investments $ 90,201 $ 85,246

Control Investments 7

I-45 SLF LLC 9,11

80% LLC equity interest

Multi-sector holdings

80% LLC equity interest Multi-sector holdings — 10/20/2015 — — $ 72,800 $ 57,158

Total Control Investments $ 72,800 $ 57,158

TOTAL INVESTMENTS 12

$ 703,557 $ 688,432

1 All debt investments are income-producing, unless otherwise noted.

26 unchanged sentences

cumulative gross unrealized depreciation for federal income tax purposes is $27.3 million.

Cumulative net unrealized depreciation is $44.1 million , based on a tax cost of $597.7 million .

Our investment in ASC Ortho Management Company, LLC common units, Danforth Advisors, LLC Class A units, American Nuts Operations LLC Class A common stock, LGM Pharma, LLC Class A common stock, NinjaTrader, LLC preferred units, Trinity 3, LLC Class A units, Tax Advisors Group, LLC Class A units, Chandler Signs, LLC Class A-1 common stock, Dynamic Communities, LLC Preferred units, and ITA Holdings Group, LLC Class A membership interest are held through a wholly-owned taxable subsidiary of the Company.

Cumulative net unrealized appreciation is $12.9 million, based on a tax cost of $700.9 million.

13 Our investments in Acceleration Partners preferred and common units, American Nuts Operations LLC Class A common stock, ASC Ortho Management Company, LLC common units, Broad Sky Networks LLC Series A Preferred units, CityVet, Inc.

Class A units, Danforth Advisors, LLC common units, Electronic Transaction Consultants LLC Class A units, Flip Electronics, LLC common units, LGM Pharma, LLC Class A common stock, NinjaTrader, LLC preferred units, Tax Advisors Group, LLC Class A units, Trafera, LLC Class A units, Central Medical Supply LLC Preferred units, Chandler Signs, LP Class A-1 common stock, Dynamic Communities, LLC Preferred units, ITA Holdings Group, LLC membership interest and Sonobi, Inc.

Class A common units are held through a wholly-owned taxable subsidiary of the Company.

14 The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act").

These investments are generally subject to certain limitations on resale, and may be deemed "restricted securities" under the Securities Act.

These investments, which as of March 31, 2021 represented 204.7% of the Company's net assets or 93.6% of the Company's total assets, are generally subject to certain limitations on resale, and may be deemed "restricted securities" under the Securities Act.

15 The investment is structured as a split lien term loan, which provides the Company with a first lien priority on certain assets of the obligor and a second lien priority on different assets of the obligor.

Investment was on non-accrual status as of March 31, 2020 , meaning the Company has ceased to recognize interest income on the investment.

The current interest rate and terms disclosed on investments on non-accrual reflect the terms at the time of placement on non-accrual status.

16 Represents amortized cost.

Negative cost in this column represents the original issue discount of certain undrawn revolvers and delayed draw term loans.

17 The investment is structured as a first lien first out term loan.

A brief description of the portfolio company in which we made an investment that represents greater than 5% of our total assets as of March 31, 2021 is included in Note 16.

4 unchanged sentences

March 31, 2020

Type of Interest Acquisition Fair

Portfolio Company 1

Investment 2,14

Industry Rate 3

Maturity Principal Cost Value 4

Non-control/Non-affiliate Investments 5

AAC HOLDINGS, INC.

Healthcare services

First Lien - Priming Healthcare services P +13.50% (Floor 1.00%)/Q, Current Coupon 16.75% 3/21/2019 4/15/2020 $ 1,968 $ 1,969 $ 1,968

First Lien 16

L+6.75% (Floor 1.00%)/Q, 4.00% PIK, Current Coupon 13.33% 6/28/2017 6/30/2023 9,079 8,915 3,977

Healthcare services

L+11.00% (Floor 1.00%)/M

ACE GATHERING, INC.

Second Lien 15

Energy services (midstream)

L+8.50% (Floor 2.00%)/Q, Current Coupon 11.09%

ADAMS PUBLISHING GROUP, LLC

Media, marketing & entertainment

L+7.50% (Floor 1.00%)/Q, Current Coupon 10.30%

Delayed Draw Term Loan 10

L+7.50% (Floor 1.00%)

Energy services (midstream) L+8.50% (Floor 2.00%)/Q, Current Coupon 10.50% 12/13/2018 12/13/2023 9,688 9,532 9,445

ADAMS PUBLISHING GROUP, LLC First Lien Media, marketing & entertainment L+7.50% (Floor 1.75%)/Q, Current Coupon 9.29% 7/2/2018 7/2/2023 10,730 10,572 10,312

Delayed Draw Term Loan L+7.50% (Floor 1.75%)/Q, Current Coupon 9.25% 7/2/2018 7/2/2023 344 320 330

10,892 10,642

AG KINGS HOLDINGS INC.

Food, agriculture & beverage

L+10.02% (Floor 1.00%)/M, Current Coupon 12.69%

First Lien Food, agriculture & beverage L+10.02% (Floor 1.00%)/M, Current Coupon 12.69% 8/4/2016 8/8/2021 9,308 9,194 5,445

ALLIANCE SPORTS GROUP, L.P.

Senior subordinated debt

Consumer products & retail

Senior subordinated debt Consumer products & retail 11.00% 8/1/2017 2/1/2023 10,100 9,980 9,747

3.88% preferred membership interest — 8/1/2017 — — 2,500 2,335

12,480 12,082

AMERICAN NUTS OPERATIONS LLC 13

First Lien - Term Loan

Food, agriculture and beverage

L+9.50% (Floor 1.00%)/Q, Current Coupon 12.30%

First Lien - Term Loan Food, agriculture and beverage L+9.50% (Floor 1.00%)/Q, Current Coupon 11.41% 4/10/2018 4/10/2023 17,194 16,963 16,884

First Lien - Term Loan C 10

1 unchanged sentence

3,000,000 units of Class A common stock 9

— 4/10/2018 — — 3,000 1,523

21,744 20,178

AMERICAN TELECONFERENCING SERVICES, LTD.

Telecommunications

L+6.50% (Floor 1.00%)/Q, Current Coupon 9.24%

L+9.50% (Floor 1.00%)/Q, Current Coupon 12.30%

(DBA PREMIERE GLOBAL SERVICES, INC.) First Lien Telecommunications L+6.50% (Floor 1.00%)/Q, Current Coupon 8.24% 9/21/2016 6/8/2023 5,926 5,856 3,348

Second Lien 0.5%, L+9.00% PIK (Floor 1.00%)/Q, Current Coupon 11.35% 11/3/2016 6/6/2024 2,111 2,072 792

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2020

Type of Interest Acquisition Fair

Portfolio Company 1

Investment 2,14

AMWARE FULFILLMENT LLC

L+9.50% (Floor 1.00%)/M, Current Coupon 12.10%

Industry Rate 3

Maturity Principal Cost Value 4

AMWARE FULFILLMENT LLC First Lien Distribution L+9.50% (Floor 1.00%)/M, Current Coupon 10.95% 7/29/2016 12/31/2020 12,027 11,988 11,991

ASC ORTHO MANAGEMENT COMPANY, LLC 13

Revolving Loan 10

Healthcare services

L+7.50% (Floor 1.00%)

L+7.50% (Floor 1.00%)/Q, Current Coupon 10.30%

Revolving Loan Healthcare services L+7.50% (Floor 1.00%)/Q, Current Coupon 8.70% 8/31/2018 8/31/2023 1,500 1,480 1,425

First Lien L+7.50% (Floor 1.00%)/Q, Current Coupon 9.41% 8/31/2018 8/31/2023 9,028 8,894 8,577

Second Lien 13.25% PIK 8/31/2018 12/1/2023 3,709 3,649 3,275

2,042 Common Units 9

— 8/31/2018 — — 750 356

14,773 13,633

BINSWANGER HOLDING CORP.

L+8.00% (Floor 1.00%)/M, Current Coupon 10.60%

First Lien Distribution L+8.50% (Floor 1.00%)/M, Current Coupon 9.96% 3/9/2017 3/9/2022 11,604 11,500 11,163

900,000 shares of common stock — 3/9/2017 — — 900 636

12,400 11,799

BLASCHAK COAL CORP.

Second Lien 15

Commodities & mining

L+10.00%/Q, 1.00% PIK, Current Coupon 13.81%

Second Lien Term Loan 15

Commodities & mining L+11.00%/Q, (Floor 1.00%) 1.00% PIK, Current Coupon 13.91% 7/30/2018 7/30/2023 8,624 8,497 8,451

Second Lien- Term Loan B 15

L+11.00%/Q, (Floor 1.00%) 1.00% PIK, Current Coupon 13.43% 3/30/2020 7/30/2023 2,000 1,960 1,960

10,457 10,411

CALIFORNIA PIZZA KITCHEN, INC.

L+6.00% (Floor 1.00%)/M, Current Coupon 8.50%

CAPITAL PAWN HOLDINGS, LLC

Consumer products & retail

L+9.50%/Q, Current Coupon 12.30%

CLICKBOOTH.COM, LLC

Revolving Loan 10

Media, marketing & entertainment

L+8.50% (Floor 1.00%)

L+8.50% (Floor 1.00%)/Q, Current Coupon 11.31%

DANFORTH ADVISORS, LLC 13

Revolving Loan 10

Business services

L+7.25% (Floor 2.00%)/Q, Current Coupon 10.05%

L+7.25% (Floor 2.00%)

875 Class A equity units 9

First Lien Restaurants L+6.00% (Floor 1.00%)/M, Current Coupon 7.62% 8/19/2016 8/23/2022 4,825 4,802 2,441

CAPITAL PAWN HOLDINGS, LLC First Lien Consumer products & retail L+9.50%/Q, Current Coupon 11.41% 12/21/2017 7/8/2020 11,097 11,068 11,075

CLICKBOOTH.COM, LLC Revolving Loan Media, marketing & entertainment L+8.50% (Floor 1.00%)/Q, Current Coupon 9.5% 12/5/2017 1/31/2025 1,086 1,080 1,086

First Lien L+8.50% (Floor 1.00%)/Q, Current Coupon 10.41% 12/5/2017 1/31/2025 19,000 18,739 19,000

19,819 20,086

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2020

Type of Interest Acquisition Fair

Portfolio Company 1

Investment 2,14

Industry Rate 3

Maturity Principal Cost Value 4

DANFORTH ADVISORS, LLC 13

Revolving Loan 10

Business services L+7.25% (Floor 2.00%)/Q, Current Coupon 9.25% 9/28/2018 9/28/2023 500 486 500

First Lien L+7.25% (Floor 2.00%)/Q, Current Coupon 9.25% 9/28/2018 9/28/2023 7,250 7,141 7,250

875 Class A equity units 9

— 9/28/2018 — — 875 1,445

DELPHI INTERMEDIATE HEALTHCO, LLC 16

Healthcare services

L+7.50% (Floor 1.00%)/Q, Current Coupon 10.23%

DIGITAL RIVER, INC.

Software & IT services

L+6.00% (Floor 1.00%)/Q, Current Coupon 8.60%

Revolving Loan Healthcare services L+9.50% (Floor 1.00%)/Q, Current Coupon 11.97% 10/2/2019 10/3/2022 1,223 1,223 1,223

First Lien L+9.50% (Floor 1.00%)/Q, Current Coupon 11.20% 11/3/2017 10/3/2022 10,605 10,533 5,101

First Lien Business Services L+8.00% (Floor 2.00%)/Q, Current Coupon 10.00% 6/28/2019 6/28/2024 11,940 11,730 11,940

DUNN PAPER, INC.

Paper & forest products

L+8.75% (Floor 1.00%)/M, Current Coupon 11.25%

ELITE SEM, INC.

Media, marketing & entertainment

L+8.40% (Floor 1.00%)/M, Current Coupon 11.00%

1,443 Investment Units (Preferred)

ENVIRONMENTAL PEST SERVICE MANAGEMENT COMPANY, LLC

Consumer services

L+7.25% (Floor 1.00%)/Q, Current Coupon 10.06%

Second Lien Paper & forest products L+8.75% (Floor 1.00%)/M, Current Coupon 9.75% 9/28/2016 8/26/2023 3,000 2,965 3,000

ENVIRONMENTAL PEST SERVICE MANAGEMENT COMPANY, LLC First Lien Consumer services L+7.00%(Floor 1.00%)/Q, Current Coupon 8.91% 6/22/2018 6/22/2023 15,292 15,103 15,292

Delayed Draw Term Loan 10

L+7.00%(Floor 1.00%)/Q, Current Coupon 8.91% 6/22/2018 6/22/2023 6,110 6,015 6,111

FAST SANDWICH, LLC

Revolving Loan 10

21,118 21,403

ESCP DTFS, INC.

First Lien - Term Loan A Industrial services L+6.50%(Floor 1.75%)/Q, Current Coupon 8.27% 1/31/2020 1/31/2025 5,350 5,253 5,253

First Lien - Term Loan B L+8.50%(Floor 1.75%)/Q, Current Coupon 10.27% 1/31/2020 1/31/2025 5,350 5,253 5,253

Delayed Draw Term Loan A1 10

L+6.50%(Floor 1.75%) 1/31/2020 1/31/2025 — (10) —

L+9.00% (Floor 1.00%)/Q, Current Coupon 11.80%

JVMC HOLDINGS CORP.

Financial services

L+6.50% (Floor 1.00%)/M, Current Coupon 9.00%

Delayed Draw Term Loan 10

Delayed Draw Term Loan A2 10

L+8.50%(Floor 1.75%) 1/31/2020 1/31/2025 — (10) —

LGM PHARMA, LLC 13

Healthcare products

L+8.50% (Floor 1.00%)/M, Current Coupon 10.99%

Delayed Draw Term Loan

L+8.50% (Floor 1.00%)/M, Current Coupon 10.99%

110,000 units of Class A common stock 9

Delayed Draw Term Loan B1 10

L+6.50%(Floor 1.75%) 1/31/2020 1/31/2025 — (3) —

Delayed Draw Term Loan B2 10

L+8.50%(Floor 1.75%) 1/31/2020 1/31/2025 — (3) —

10,480 10,506

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2020

Type of Interest Acquisition Fair

Portfolio Company 1

Investment 2,14

LIGHTING RETROFIT INTERNATIONAL, LLC

Environmental services

L+9.25% (Floor 1.00%)/Q, Current Coupon 11.84%

Industry Rate 3

Maturity Principal Cost Value 4

FAST SANDWICH, LLC Revolving Loan 10

Restaurants L+9.00% (Floor 1.00%)/Q, 5.0% PIK 5/24/2018 5/23/2023 — (43) —

First Lien L+9.00% (Floor 1.00%)/Q, 5.0% PIK,Current Coupon 15.91% 5/24/2018 5/23/2023 3,393 3,354 3,179

GS OPERATING, LLC First Lien Distribution L+6.50%(Floor 1.50%)/M, Current Coupon 8.00% 3/6/2020 2/24/2025 8,000 7,842 7,842

ICS DISTRIBUTION, LLC 8

First Lien Industrial services L+8.21%(Floor 2.00%)/Q, Current Coupon 10.21% 10/31/2019 10/29/2024 18,000 17,617 17,617

IENERGIZER LIMITED First Lien 9

Business services L+6.00%(Floor 1.00%)/M, Current Coupon 7.00% 4/17/2019 4/17/2024 12,000 11,899 12,000

JVMC HOLDINGS CORP.

First Lien Financial services L+6.50% (Floor 1.00%)/M, Current Coupon 7.50% 2/28/2019 2/28/2024 8,183 8,115 8,183

LANDPOINT HOLDCO, INC.

First Lien Business Services L+7.00%(Floor 1.00%)/Q, Current Coupon 8.96% 12/30/2019 12/30/2024 19,500 19,128 19,110

LGM PHARMA, LLC 13

First Lien Healthcare products L+8.50% (Floor 1.00%)/M, Current Coupon 10.02% 11/15/2017 11/15/2022 11,541 11,400 11,472

110,000 units of Class A common stock 9

— 11/15/2017 — — 1,100 821

12,500 12,293

LIGHTING RETROFIT INTERNATIONAL, LLC (DBA ENVOCORE) First Lien Environmental services 6%, L+3.00% PIK (Floor 2.00%)/Q, Current Coupon 11.00% 6/30/2017 6/30/2022 13,439 13,364 12,149

25,603 shares of Series C preferred stock — 8/13/2018 — — 25 —

396,825 shares of Series B preferred stock — 6/30/2017 — — 500 —

13,889 12,149

MEDIA RECOVERY, INC.

Earnout Industrial Products — 11/25/2019 — — 1,517 —

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2020

Type of Interest Acquisition Fair

Portfolio Company 1

Investment 2,14

Industry Rate 3

Maturity Principal Cost Value 4

NINJATRADER, INC.

Revolving Loan 10

Financial Services L+6.00% (Floor 1.50%)/Q, Current Coupon 7.90% 12/18/2019 12/18/2024 1,100 1,093 1,100

First Lien L+6.00% (Floor 1.50%)/Q, Current Coupon 7.90% 12/18/2019 12/18/2024 18,250 17,902 18,250

2,000,000 Preferred Units 9

— 12/18/2019 — — 2,000 2,000

20,995 21,350

RESEARCH NOW GROUP, INC.

Business services

L+9.50% (Floor 1.00%)/M, Current Coupon 12.00%

Healthcare products

L+10.00% (Floor 2.00%)/M, Current Coupon 12.49%

Second Lien Business services L+9.50% (Floor 1.00%)/M, Current Coupon 11.26% 12/8/2017 12/20/2025 10,500 9,904 10,217

First Lien Healthcare products L+9.86% (Floor 2.00%)/M, Current Coupon 11.86% 3/21/2019 3/21/2024 16,750 16,332 16,482

100 shares of common stock — 3/21/2019 — — 1,000 1,000

17,332 17,482

TAX ADVISORS GROUP, LLC 13

1 unchanged sentence

Financial services — 6/23/2017 — — 541 1,053

TRINITY 3, LLC 13

First Lien Technology products & components L+7.50% (Floor 1.50%)/Q, Current Coupon 9.41% 11/15/2019 11/15/2024 14,161 13,894 14,048

562.5 Class A units 9

— 11/15/2019 — — 563 563

14,457 14,611

1,114 Preferred Units Media, marketing & entertainment — 2/1/2017 — — 1,114 3,100

1,443 Common Units — 2/1/2017 — — 277 1,756

USA DEBUSK, LLC First Lien Industrial Services L+5.75% (Floor 1.00%)/M, Current Coupon 6.75% 2/25/2020 10/22/2024 7,980 7,833 7,833

VISTAR MEDIA INC.

Media, marketing & entertainment

L+10.00% (Floor 1.00%)/M, Current Coupon 12.60%

Warrants (Expiration - February 17, 2027)

First Lien Media, marketing & entertainment L+7.5% (Floor 2.00%)/M, Current Coupon 9.5% 2/17/2017 4/3/2023 11,416 10,605 11,416

171,617 shares of Series A preferred stock — 4/3/2019 — — 1,874 4,776

Warrants (Expiration - April 3, 2029) — 4/3/2019 — — 620 2,718

13,099 18,910

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2020

Type of Interest Acquisition Fair

Portfolio Company 1

Investment 2,14

Industry Rate 3

Maturity Principal Cost Value 4

VTX HOLDINGS, INC.

First Lien Software & IT services L+8.87% (Floor 2.00%)/Q, Current Coupon 10.87% 7/23/2019 7/23/2024 20,075 19,581 19,914

1,000,000 series A Preferred units — 7/23/2019 — — 1,000 1,000

20,581 20,914

Total Non-control/Non-affiliate Investments $ 436,463 $ 421,280

1 unchanged sentence

CHANDLER SIGNS, LLC 13

Senior subordinated debt

Business services

12.00% / 1.00% PIK

1,500,000 units of Class A-1 common stock 9

Business services — 1/4/2016 — $ — $ 1,500 $ 3,110

DYNAMIC COMMUNITIES, LLC 13

Revolving Loan 10

Business services

L+8.00% (Floor 1.00%)

L+8.00% (Floor 1.00%)/M, Current Coupon 10.59%

Business services L+8.00% (Floor 1.00%) 7/17/2018 7/17/2023 — (3) —

First Lien L+8.00% (Floor 1.00%)/M, Current Coupon 9.00% 7/17/2018 7/17/2023 10,780 10,625 9,928

2,000,000 Preferred Units 9

— 7/17/2018 — — 2,000 1,850

12,622 11,778

GRAMMATECH, INC.

Revolving Loan Software & IT services L+7.50% (Floor 2.00%)/Q, Current Coupon 9.50% 11/1/2019 11/1/2024 2,500 2,460 2,460

First Lien L+7.50% (Floor 2.00%)/Q, Current Coupon 9.50% 11/1/2019 11/1/2024 11,500 11,312 11,316

1000 Class A units — 11/1/2019 — — 1,000 1,000

14,772 14,776

ITA HOLDINGS GROUP, LLC 13

Revolving Loan 10

Transportation & logistics L+9.00% (Floor 1.00%) 2/14/2018 2/14/2023 — (31) —

First Lien - Term Loan L+8.00% (Floor 1.00%)/Q, Current Coupon 9.91% 2/14/2018 2/14/2023 10,030 9,910 9,900

First Lien - Term B Loan L+11.00% (Floor 1.00%)/Q, Current Coupon 12.91% 6/5/2018 2/14/2023 5,015 4,940 5,136

First Lien - PIK Note A 10.00% PIK 3/29/2019 2/14/2023 2,425 1,950 2,233

First Lien - PIK Note B 10.00% PIK 3/29/2019 2/14/2023 96 96 88

Warrants (Expiration - March 29, 2029) 9

— 3/29/2019 — — 538 2,762

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

1 unchanged sentence

March 31, 2020

Type of Interest Acquisition Fair

Portfolio Company 1

Investment 2,14

ITA HOLDINGS GROUP, LLC 13

Revolving Loan 10

Transportation & logistics

L+9.00% (Floor 1.00%)/Q, 1.00% PIK, Current Coupon 12.60%

First Lien - Term Loan

L+8.00% (Floor 1.00%)/Q, 1.00% PIK, Current Coupon 11.60%

First Lien - Term B Loan

L+11.00% (Floor 1.00%)/Q, 1.00% PIK, Current Coupon 14.60%

First Lien - PIK Note A

First Lien - PIK Note B

Warrants (Expiration - March 29, 2029) 9

Industry Rate 3

Maturity Principal Cost Value 4

9.25% Class A Membership Interest 9

ROSELAND MANAGEMENT, LLC

Revolving Loan 10

Healthcare services

L+7.00% (Floor 2.00%)

L+7.00% (Floor 2.00%)/Q, Current Coupon 9.80%

— 2/14/2018 — — 1,500 2,099

18,903 22,218

ROSELAND MANAGEMENT, LLC Revolving Loan 10

Healthcare services L+7.00% (Floor 2.00%)/Q, Current Coupon 9.00% 11/9/2018 11/9/2023 500 475 500

First Lien L+7.00% (Floor 2.00%)/Q, Current Coupon 9.00% 11/9/2018 11/9/2023 10,369 10,228 10,369

10,000 Class A Units — 11/9/2018 — — 1,000 1,334

Healthcare services

L+9.00% (Floor 2.00%)/M, Current Coupon 11.62%

11,703 12,203

SIMR, LLC First Lien Healthcare services L+10.00% (Floor 2.00%)/M, 7.00% PIK, Current Coupon 19.00% 9/7/2018 9/7/2023 11,693 11,522 11,190

9,374,510.2 Class B Common Units — 9/7/2018 — — 6,107 1,742

17,629 12,932

ZENFOLIO INC.

Revolving Loan 10

Business services

L+9.00% (Floor 1.00%)

L+9.00% (Floor 1.00%)/Q, Current Coupon 11.60%

Revolving Loan Business services L+9.00% (Floor 1.00%)/Q, Current Coupon 10.34% 7/17/2017 7/17/2022 2,000 1,991 1,888

First Lien L+9.00% (Floor 1.00%)/Q, Current Coupon 10.91% 7/17/2017 7/17/2022 13,906 13,704 13,127

190 shares of common stock — 7/17/2017 — — 1,900 —

CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES

CONSOLIDATED SCHEDULE OF INVESTMENTS

March 31, 2019

Portfolio Company 1

Investment 2,14

17,595 15,015

Total Affiliate Investments $ 94,724 $ 92,032

1 unchanged sentence

I-45 SLF LLC 9,11

80% LLC equity interest

Multi-sector holdings

MEDIA RECOVERY, INC.

800,000 shares of Series A convertible preferred stock

Industrial products

4,000,002 shares of common stock

PRISM SPECTRUM HOLDINGS, LLC 13

Environmental services

L+9.50% (Floor 2.25%)/M, Current Coupon 12.12%

96,498.32 Class A units 9

80% LLC equity interest Multi-sector holdings — 10/20/2015 — — $ 68,000 $ 39,760

Total Control Investments $ 68,000 $ 39,760

TOTAL INVESTMENTS 12

$ 599,187 $ 553,072

1 All debt investments are income-producing, unless otherwise noted.

Equity investments and warrants are non-income producing, unless otherwise noted.

All of the Company’s investments, unless otherwise noted, are encumbered as security for the Company’s senior secured credit facility.

2 All of the Company’s investments, unless otherwise noted, are pledged as collateral for the Company’s senior secured credit facility

3 The majority of investments bear interest at a rate that may be determined by reference to London Interbank Offered Rate (“LIBOR” or “L”) or Prime (“P”) and reset daily (D), monthly (M), quarterly (Q), or semiannually (S).

5 unchanged sentences

Refer to Note 4 for further discussion.

Non-Control/Non-Affiliate investments are generally defined by the Investment Company Act of 1940 (the “1940 Act”) as investments that are neither control investments nor affiliate investments.

5 Non-Control/Non-Affiliate investments are generally defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments that are neither control investments nor affiliate investments.

At March 31, 2020, approximately 76.2% of the Company’s investment assets were non-control/non-affiliate investments.

9 unchanged sentences

Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

As of March 31, 2019, approximately 16.1% of the Company's investment assets are non-qualifying assets.

As of March 31, 2020, approximately 11.9% of the Company's assets are non-qualifying assets.

10 The investment has an unfunded commitment as of March 31, 2020.

3 unchanged sentences

cumulative gross unrealized depreciation for federal income tax purposes is $63.4 million.

Cumulative net unrealized appreciation is $45.0 million, based on a tax cost of $477.8 million.

ASC Ortho Management Company, LLC common units, Danforth Advisors, LLC common units, American Nuts Operations LLC Class A common stock, LGM Pharma, LLC Class A common stock, Tax Advisors Group, LLC Class A units, Chandler Signs, LP Class A-1 common stock, Dynamic Communities, LLC Preferred units, ITA Holdings Group, LLC membership interest, and Prism Spectrum Holdings LLC Class A units are held through a wholly-owned taxable subsidiary.

Cumulative net unrealized depreciation is $44.1 million, based on a tax cost of $597.7 million.

13 Our investment in ASC Ortho Management Company, LLC common units, Danforth Advisors, LLC Class A units, American Nuts Operations LLC Class A common stock, LGM Pharma, LLC Class A common stock, NinjaTrader, LLC preferred units, Trinity 3, LLC Class A units, Tax Advisors Group, LLC Class A units, Chandler Signs, LLC Class A-1 common stock, Dynamic Communities, LLC Preferred units, and ITA Holdings Group, LLC Class A membership interest are held through a wholly-owned taxable subsidiary of the Company.

14 The Company generally acquires its investments in private transactions exempt from registration under the Securities Act of 1933, as amended (the "Securities Act").

3 unchanged sentences

The current interest rate and terms disclosed on investments on non-accrual reflect the terms at the time of placement on non-accrual status.

17 Negative cost in this column represents the original issue discount of certain undrawn revolvers and delayed draw term loans.

A brief description of the portfolio company in which we made an investment that represents greater than 5% of our total assets as of March 31, 2020 is included in Note 16.

Significant Subsidiaries.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

15 unchanged sentences

Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year that generated such taxable income.

Capital Southwest Management Corporation (“CSMC”), a wholly-owned subsidiary of CSWC, is the management company for CSWC.

CSMC generally incurs all normal operating and administrative expenses, including, but not limited to, salaries and related benefits, rent, equipment and other administrative costs required for its day-to-day operations.

Capital Southwest Management Corporation (“CSMC”), a wholly-owned subsidiary of CSWC, was the management company for CSWC.

Effective December 31, 2020, CSMC merged with and into CSWC, with CSWC continuing as the surviving entity in the merger.

Prior to December 31, 2020, CSMC generally incurred all normal operating and administrative expenses, including, but not limited to, salaries and related benefits, rent, equipment and other administrative costs required for its day-to-day operations (the “Administrative Expenses”).

After December 31, 2020, the Administrative Expenses will be directly incurred by CSWC.

The Company continues to be internally managed and the merger has no impact on the day-to-day operations of the business.

CSWC also has a direct wholly owned subsidiary that has been elected to be a taxable entity (the “Taxable Subsidiary”).

2 unchanged sentences

We focus on investing in companies with histories of generating revenues and positive cash flow, established market positions and proven management teams with strong operating discipline.

We target senior debt investments and equity investments in lower middle market ("LMM") companies, as well as first and second lien syndicated loans in upper middle market ("UMM") companies.

Our target LMM companies typically have annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) between $3.0 million and $15.0 million, and our LMM investments generally range in size from $5.0 million to $25.0 million.

Our UMM investments generally include syndicated first and second lien loans in companies with EBITDA generally greater than $50.0 million and typically range in size from $5.0 million to $15.0 million.

We target senior debt investments and equity investments in lower middle market ("LMM") companies, as well as first and second lien loans in upper middle market ("UMM") companies.

Our target LMM companies typically have annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) generally between $3.0 million and $20.0 million, and our LMM investments generally range in size from $5.0 million to $25.0 million.

Our UMM investments generally include first and second lien loans in companies with EBITDA generally greater than $20.0 million and typically range in size from $5.0 million to $15.0 million.

We make available significant managerial assistance to the companies in which we invest as we believe that providing managerial assistance to an investee company is critical to its business development activities.

On April 20, 2021, our wholly owned subsidiary, Capital Southwest SBIC I, LP (“SBIC I”) received a license from the U.S.

Small Business Administration (the “SBA”) to operate as an SBIC under Section 301(c) of the Small Business Investment Act of 1958.

SBIC I will have an investment strategy substantially similar to ours and make similar types of investments in accordance with SBA regulations.

SBIC I and its general partner will be consolidated for U.S.

GAAP reporting purposes, and the portfolio investments held by it will be included in the consolidated financial statements.

Basis of Presentation

3 unchanged sentences

One of the exceptions to this general principle occurs if the investment company has an investment in an operating company that provides services to the investment company.

Accordingly, the consolidated financial statements include CSMC, our management company, and the Taxable Subsidiary.

Accordingly, the consolidated financial statements include the Taxable Subsidiary.

Prior to the merger of CSMC into CSWC that became effective December 31, 2020, we consolidated the results of CSWC's wholly owned management company.

Portfolio Investment Classification

14 unchanged sentences

government securities or high-quality debt securities maturing in one year or less from the time of investment.

Additionally, in order to qualify as a RIC for U.S.

Additionally, in order to qualify for RIC tax treatment for U.S.

federal income tax purposes, we must, among other things meet the following requirements:

32 unchanged sentences

Consolidation As permitted under Regulation S-X and ASC 946, we generally do not consolidate our investment in a portfolio company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to CSWC.

Accordingly, we consolidated the results of CSWC’s wholly-owned Taxable Subsidiary and CSWC’s wholly-owned management company, CSMC.

Prior to its dissolution, we consolidated the results of CSWC’s wholly-owned subsidiary, CSVC.

Accordingly, we consolidate the results of CSWC's wholly-owned Taxable Subsidiary.

Prior to the merger of CSMC into CSWC, we consolidated the results of CSWC’s wholly-owned management company, CSMC.

All intercompany balances have been eliminated upon consolidation.

9 unchanged sentences

If a loan or debt security’s status significantly improves regarding its ability to service debt or other obligations, it will be restored to accrual basis.

As of March 31, 2020 , we had four investments on non-accrual status, which comprised of approximately 3.3% of our total investment portfolio's fair value and approximately 5.8% of its cost.

As of March 31, 2019 , we had one investment on non-accrual status, which represented approximately 1.6% of our total investment portfolio's fair value and approximately 1.9% of its cost.

As of March 31, 2021, we did not have any investments on non-accrual status.

As of March 31, 2020, we had four investments on non-accrual status, which represented approximately 3.3% of our total investment portfolio's fair value and approximately 5.8% of its cost.

To maintain RIC tax treatment, non-cash sources of income such as accretion of interest income may need to be paid out to shareholders in the form of distributions, even though CSWC may not have collected the interest income.

For the year ended March 31, 2020 , approximately 3.1% of CSWC’s total investment income was attributable to non-cash interest income for the

accretion of discounts associated with debt investments, net of any premium reduction.

For the year ended March 31, 2021, approximately 3.5% of CSWC’s total investment income was attributable to non-cash interest income for the accretion of discounts associated with debt investments, net of any premium reduction.

Payment-in-Kind Interest The Company currently holds, and expects to hold in the future, some investments in its portfolio that contain payment-in-kind (“PIK”) interest and dividend provisions.

The PIK interest and dividends, computed at the contractual rate specified in each loan agreement, are added to the principal balance of the loan, rather than being paid to the Company in cash, and are recorded as interest and dividend income.

Thus, the actual collection of PIK interest and dividends may be deferred until the time of debt principal repayment or disposition of the equity investment.

PIK interest and dividends, which are non-cash sources of income, are included in the Company’s taxable income and therefore affect the amount the Company is required to distribute to shareholders to maintain its qualification as a RIC for U.S.

For the year ended March 31, 2020, approximately 3.1% of CSWC’s total investment income was attributable to non-cash interest income for the accretion of discounts associated with debt investments, net of any premium reduction.

Payment-in-Kind Interest The Company currently holds, and expects to hold in the future, some investments in its portfolio that contain payment-in-kind (“PIK”) interest provisions.

The PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan, rather than being paid to the Company in cash, and is recorded as interest income.

Thus, the actual collection of PIK interest may be deferred until the time of debt principal repayment.

PIK interest, which is a non-cash source of income, is included in the Company’s taxable income and therefore affects the amount the Company is required to distribute to shareholders to maintain its qualification as a RIC for U.S.

federal income tax purposes, even though the Company has not yet collected the cash.

Generally, when current cash interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the investment on non-accrual status and will generally cease recognizing PIK interest and dividend income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest and dividend income is deemed to be collectible.

The Company writes off any accrued and uncollected PIK interest and dividends when it is determined that the PIK interest and dividends are no longer collectible.

As of March 31, 2020 and 2019 , we have not written off any accrued and uncollected PIK interest and dividends from prior periods.

Generally, when current cash interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the investment on non-accrual status and will generally cease recognizing PIK interest income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or due to a restructuring such that the interest income is deemed to be collectible.

The Company writes off any accrued and uncollected PIK interest when it is determined that the PIK interest is no longer collectible.

As of March 31, 2021 and 2020, we have not written off any accrued and uncollected PIK interest from prior periods.

For the year ended March 31, 2021, we did not have any investments for which we stopped accruing PIK interest.

For the year ended March 31, 2020, we had two investments for which we stopped accruing PIK interest.

For the year ended March 31, 2019, there were no investments for which we stopped accruing PIK interest.

For the years ended March 31, 2020 and 2019 , approximately 3.5% and 1.3% , respectively, of CSWC’s total investment income was attributable to non-cash PIK interest and dividend income.

For the years ended March 31, 2021 and 2020, approximately 10.7% and 3.5%, respectively, of CSWC’s total investment income was attributable to non-cash PIK interest income.

Warrants In connection with the Company's debt investments, the Company will sometimes receive warrants or other equity-related securities from the borrower.

1 unchanged sentence

Any resulting difference between the face amount of the debt and its recorded fair value resulting from the assignment of value to the warrants is treated as original issue discount (“OID”), and accreted into interest income using the effective interest method over the term of the debt investment.

Debt Issuance Costs Debt issuance costs include commitment fees and other costs related to CSWC’s senior secured credit facility and its notes (as discussed further in Note 5).

Debt Issuance Costs Debt issuance costs include commitment fees and other costs related to CSWC’s senior secured credit facility and its unsecured notes (as discussed further in Note 5).

The costs in connection with the credit facility have been capitalized and are amortized into interest expense over the term of the credit facility.

The costs in connection with the notes are a direct deduction from the related debt liability and amortized into interest expense over the term of the December 2022 Notes and the October 2024 Notes (as defined below).

The costs in connection with the unsecured notes are a direct deduction from the related debt liability and amortized into interest expense over the term of the December 2022 Notes (as defined below), the October 2024 Notes (as defined below) and the January 2026 Notes (as defined below).

Deferred Offering Costs Deferred offering costs include registration expenses related to shelf registration statements and expenses related to the launch of the "at-the-market" ("ATM") program through which we can sell, from time to time, shares of our common stock (the "Equity ATM Program").

2 unchanged sentences

Upon the completion of an equity offering or a debt offering, the deferred expenses are charged to additional paid-in capital or debt issuance costs, respectively.

If no offering is completed prior to the expiration of the shelf registration statement, the deferred costs are charged to expense.

Leases The Company is obligated under an operating lease pursuant to which it is leasing an office facility from a third party with a remaining term of approximately two years.

If there are any deferred offering costs remaining at the expiration of the shelf registration statement, these deferred costs are charged to expense.

Realized Losses on Extinguishment of Debt Upon the repayment of debt obligations that are deemed to be extinguishments, the difference between the principal amount due at maturity adjusted for any unamortized debt issuance costs is recognized as a loss (i.e., the unamortized debt issuance costs are recognized as a loss upon extinguishment of the underlying debt obligation).

Leases The Company is obligated under an operating lease pursuant to which it is leasing an office facility from a third party with a remaining term of approximately one year.

The operating lease is included as an operating lease right-of-use ("ROU") asset and operating lease liability in the accompanying Consolidated Statements of Assets and Liabilities.

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By meeting these requirements, we will not be subject to corporate federal income taxes on ordinary income or capital gains timely distributed to shareholders.

In order to qualify as a RIC, the Company is required to timely distribute to its shareholders at least 90% of investment company taxable income, as defined by the Code,

In order to qualify as a RIC, the Company is required to timely distribute to its shareholders at least 90% of investment company taxable income, as defined by the Code, each year.

Investment company taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses.

12 unchanged sentences

See Note 6 for further discussion.

CSMC, a wholly-owned subsidiary of CSWC, and the Taxable Subsidiary are not RICs and are required to pay taxes at the corporate rate of 21% as of December 31, 2019 .

For tax purposes, CSMC and the Taxable Subsidiary have elected to be treated as taxable entities, and therefore are not consolidated for tax purposes and are taxed at normal corporate tax rates based on taxable income and, as a result of their activities, may generate income tax expense or benefit.

The taxable income, or loss, of each of CSMC and the Taxable Subsidiary may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences.

CSMC, a former wholly-owned subsidiary of CSWC, was not a RIC and was required to pay taxes at the corporate rate of 21%.

Effective December 31, 2020, CSMC merged with and into CSWC and, as a result, the calendar year ended December 31, 2020 is the last year in which the Company will incur tax expense or benefit related to CSMC.

For tax purposes, CSMC had elected to be treated as a taxable entity, and therefore CSMC was not consolidated for tax purposes and was taxed at normal corporate tax rates based on taxable income and, as a result of its activities, may generate income tax expense or benefit.

The taxable income, or loss, of CSMC may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences.

This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in our consolidated financial statements.

Management evaluates tax positions taken or expected to be taken in the course of preparing the Company’s consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority.

The Taxable Subsidiary, a wholly-owned subsidiary of CSWC, is not a RIC and is required to pay taxes at the corporate rate of 21%.

For tax purposes, the Taxable Subsidiary has elected to be treated as a taxable entity, and therefore is not consolidated for tax purposes and is taxed at normal corporate tax rates based on taxable income and, as a result of its activities, may generate income tax expense or benefit.

The taxable income, or loss, of the Taxable Subsidiary may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences.

This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in our consolidated financial statements.

applicable tax authority.

Tax positions with respect to tax at the CSWC level not deemed to meet the “more-likely-than-not” threshold would be recorded as an expense in the current year.

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Accordingly, we recognize stock-based compensation cost on a straight-line basis for all share-based payments awards granted to employees.

The fair value of stock options are determined on the date of grant using the Black-Scholes pricing model and are expensed over the requisite service period of the related stock options.

For restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant.

1 unchanged sentence

We recognize forfeitures as they occur.

We issue new shares upon the exercise of stock options.

The unvested shares of restricted stock awarded pursuant to CSWC’s equity compensation plans are participating securities and are included in the basic and diluted earnings per share calculation.

On October 26, 2010, we received an exemptive order from the SEC permitting us to issue restricted stock to our executive officers and certain key employees (the “Original Order”).

On August 22, 2017, we received an exemptive order that supersedes the Original Order (the “Exemptive Order”) and, in addition to the relief granted under the Original Order, allows us to withhold shares to satisfy tax withholding obligations related to the vesting of restricted stock granted pursuant to the 2010 Restricted Stock Award Plan (the “2010 Plan”) and to pay the exercise price of options to purchase shares of our common stock granted pursuant to the 2009 Stock Incentive Plan (the “2009 Plan”).

At the year ended March 31, 2020 , there was no adjustment made for the dilutive effect of stock-based awards as there are no options to acquire shares of common stock outstanding.

At the years ended March 31, 2019 and 2018 , weighted-average basic shares were adjusted for the diluted effect of stock-based awards of 7,115 and 64,899 , respectively.

The right to grant restricted stock awards under the 2010 Plan will terminate ten years after the date that the 2010 Plan was approved by the Company’s shareholders, which is July 18, 2021.

In connection with the termination of the 2010 Plan, the Company’s Board of Directors of Company approved the Capital Southwest Corporation 2021 Employee Restricted Stock Award Plan (the “2021 Employee Plan”) as part of the compensation packages for its employees, the terms of which are, in all material respects, identical to the 2010 Plan.

In connection therewith, on March 29, 2021, we filed an exemptive application with the SEC that would supersede the Exemptive Order (the “Superseding Exemptive Order”) to permit the Company to (i) issue restricted stock as part of the compensation package for its employees in the 2021 Employee Plan, and (ii) withhold shares of the Company’s common stock or purchase shares of the Company’s common stock from the participants to satisfy tax withholding obligations relating to the vesting of restricted stock pursuant to the 2021 Employee Plan.

In addition, on March 29, 2021, we filed an exemptive application with the SEC (the “Non-Employee Director Plan Exemptive Order”) to permit the Company to (i) issue restricted stock as part of the compensation package for non-employee directors of the Board of Directors (the “Non-Employee Directors”) under the Capital Southwest Corporation 2021 Non-Employee Director Restricted Stock Award Plan (the “Non-Employee Director Plan”), and (ii) withhold shares of the Company’s common stock or purchase shares of the Company’s common stock from the Non-Employee Directors to satisfy tax withholding obligations relating to the vesting of restricted stock pursuant to the Non-Employee Director Plan.

There can be no assurance if and when the Company will receive the Superseding Exemptive Order or the Non-Employee Director Plan Exemptive Order.

The terms of the Superseding Exemptive Order and the Non-Employee Director Plan Exemptive Order, if received, is expected to be substantially similar to the Exemptive Order.

Each of the 2021 Employee Plan and the Non-Employee Director Plan will also be subject to shareholder approval upon receipt of the Superseding Exemptive Order and the Non-Employee Director Plan Exemptive Order, respectively.

At the years ended March 31, 2021 and 2020, there was no adjustment made for the dilutive effect of stock-based awards as there are no options to acquire shares of common stock outstanding.

At the year ended March 31, 2019, weighted-average basic shares were adjusted for the diluted effect of stock-based awards of 7,115.

Shareholder Distributions Distributions to common shareholders are recorded on the ex-dividend date.

1 unchanged sentence

Net realized capital gains, if any, are generally distributed, although the Company may decide to retain such capital gains for investment.

Presentation Presentation of certain amounts in the Consolidated Financial Statements for the prior year comparative financial statements is updated to conform to the current period presentation.

Recently Issued or Adopted Accounting Standards In February 2016, the FASB issued ASU 2016-02, Leases , which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months.

The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases.

The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply.

In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, which affects narrow aspects of the guidance issued in the amendments in ASU 2016-02.

The new guidance is effective for annual periods beginning after December 15, 2018, and interim periods therein.

CSWC adopted ASU 2016-02 effective April 1, 2019.

Under ASC 842, Leases, ("ASC 842"), CSWC evaluates leases to determine if the leases are considered financing or operating leases.

The Company currently has one operating lease for office space for which the Company has recorded a right-of-use asset and lease liability for the operating lease obligation included in other assets and other liabilities, respectively, in the Consolidated Statements of Assets and Liabilities.

Non-lease components (maintenance, property tax, insurance and parking) are not included in the lease cost.

The lease expense is presented as a single lease cost that is amortized on a straight-line basis over the life of the lease.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which changes the fair value measurement disclosure requirements of ASC 820.

The key provisions include new, eliminated and modified disclosure requirements.

The new guidance is effective for fiscal years beginning after December 15, 2019, including interim periods therein.

Early application is permitted.

CSWC elected to early adopt ASU 2018-13 effective April 1, 2019.

No significant changes to the fair value disclosures were necessary in the notes to the consolidated financial statements in order to comply with ASU 2018-13.

In March 2019, the SEC issued Final Rule Release No.

33-10618, FAST Act Modernization and Simplification of Regulation S-K , which amends certain SEC disclosure requirements.

The amendments are intended to simplify certain disclosure requirements, improve readability and navigability of disclosure documents, and discourage repetition and disclosure of immaterial information.

The amendments are effective for all filings submitted on or after May 2, 2019.

The Company adopted the requisite amendments effective May 2, 2019.

As it pertains to the Company for this Annual Report on Form 10-K, there were no significant changes to the Company’s consolidated financial position or disclosures.

Presentation Presentation of certain amounts in the Consolidated Financial Statements for the prior year comparative consolidated financial statements is updated to conform to the current period presentation.

Recently Issued or Adopted Accounting Standards In March 2020, the FASB issued ASU 2020-04, "Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting." The amendments in this update provide optional expedients and exceptions for applying U.S.

GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities.

The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and certain lenders.

Many of these agreements include language for choosing an alternative successor rate when LIBOR reference is no longer considered to be appropriate.

With respect to other agreements, the Company intends to work with its portfolio companies and lenders to modify agreements to choose an alternative successor rate.

Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts.

The standard is effective as of March 12, 2020 through December 31, 2022 and the Company plans to apply the amendments in this update to account for contract modifications due to changes in reference rates.

The Company does not believe that it will have a material impact on its consolidated financial statements and disclosures.

In May 2020, the SEC adopted rule amendments that will impact the requirement of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies or certain acquired funds (the “Final Rules”).

The Final Rules adopted a new definition of “significant subsidiary” set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act.

Rules 3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment company’s periodic reports for any portfolio company that meets the definition of “significant subsidiary.” The Final Rules adopt a new definition of “significant subsidiary” applicable only to investment companies that (i) modifies the investment test and the income test, and (ii) eliminates the asset test currently in the definition of “significant subsidiary” in Rule 1-02(w) of Regulation S-X.

The new Rule 1-02(w)(2) of Regulation S-X is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an investment company.

The Final Rules became effective on January 1, 2021, but voluntary compliance is permitted in advance of the effective date.

The Company applied the Final Rule and concluded it did not have a material impact on its consolidated financial statements.

In November 2020, the SEC issued a final rule that modernized and simplifies Management's Discussion and Analysis and certain financial disclosure requirements in Regulation S-K (the “Amendments”).

Specifically, the Amendments:

(i) eliminate Item 301 of Regulation S-K (Selected Financial Data);

(ii) simplify Item 302 of Regulation S-K (Supplementary Financial Information);

and (iii) amend certain aspects of Item 303 of Regulation S-K (Management's Discussion and Analysis of Financial Condition and Results of Operations).

The Amendments became effective on February 10, 2021 and compliance will be required for the registrants' fiscal year ending on or after August 9, 2021.

Early adoption of the Amendments is permitted on an item-by-item basis after the effective date;

however, a registrant must fully comply with each adopted item in its entirety.

The Company is currently evaluating the impact of the Amendments on its consolidated financial statements.

The following tables show the composition of the investment portfolio, at cost and fair value (with corresponding percentage of total portfolio investments), as of March 31, 2021 and 2020:

Percentage of

Total Portfolio

Percentage of

Total Portfolio

at Fair Value

Percentage of Percentage of

Fair Total Portfolio Percentage of Total Portfolio

Value at Fair Value Net Assets Cost at Cost

(dollars in thousands)

1 unchanged sentence

First lien loans 1

$ 524,161 76.1 % 155.9 % $ 530,366 75.4 %

Second lien loans 2

36,919 5.4 11.0 40,198 5.7

Subordinated debt 11,534 1.7 3.4 11,588 1.6

1 unchanged sentence

Common equity & warrants 36,052 5.2 10.7 33,227 4.7

Financial instruments 3

I-45 SLF LLC 3

57,158 8.3 17.0 72,800 10.4

$ 688,432 100.0 % 204.7 % $ 703,557 100.0 %

March 31, 2020:

First lien loans 1

$ 427,447 77.3 % 157.0 % $ 446,925 74.6 %

Second lien loans 2

37,139 6.7 13.6 38,580 6.4

Subordinated debt 9,747 1.8 3.6 9,980 1.7

1 unchanged sentence

Common equity & warrants 22,355 4.0 8.2 21,609 3.6

Financial instruments 4

— — — 1,517 0.3

I-45 SLF LLC 3

39,760 7.2 14.6 68,000 11.3

$ 553,072 100.0 % 203.1 % $ 599,187 100.0 %

1 Included in first lien loans are loans structured as first lien last out loans.

1 unchanged sentence

As of March 31, 2021 and 2020, the fair value of the first lien last out loans are $85.6 million and $59.5 million, respectively.

Included in second lien loans are loans structured as split lien term loans.

2 Included in first lien loans and second lien loans are loans structured as split lien term loans.

These loans provide the Company with a first lien priority on certain assets of the obligor and a second lien priority on different assets of the obligor.

As of March 31, 2020 and 2019 , the fair value of the split lien term loans are $19.9 million and $18.3 million, respectively.

Included in financial instruments is the earnout received in connection with the sale of Media Recovery, Inc.

As of March 31, 2021 and 2020, the fair value of the split lien term loans included in first lien loans is $25.9 million and $0, respectively.

As of March 31, 2021 and 2020, the fair value of the split lien term loans included in second lien loans is $19.1 million and $19.9 million, respectively.

3 I-45 SLF LLC is a joint venture between CSWC and Main Street Capital Corporation.

2 unchanged sentences

See Note 16 for further discussion.

4 Included in financial instruments is the earnout received in connection with the sale of Media Recovery, Inc.

The following tables show the composition of the investment portfolio by industry, at cost and fair value (with corresponding percentage of total portfolio investments), as of March 31, 2021 and 2020:

Percentage of

Total Portfolio

Percentage of

Total Portfolio

at Fair Value

Percentage of Percentage of

Total Portfolio Percentage of Total Portfolio

Fair Value at Fair Value Net Assets Cost at Cost

(dollars in thousands)

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I-45 SLF LLC 1

Industrial Services

57,158 8.3 17.0 72,800 10.3

Distribution 53,160 7.7 15.8 52,819 7.5

Software & IT Services 46,696 6.8 13.9 45,683 6.5

Financial Services

Industrial Services 39,071 5.7 11.6 39,424 5.6

Healthcare Products 33,937 4.9 10.1 32,785 4.7

Food, Agriculture & Beverage

Consumer Products and Retail

Transportation & Logistics

Consumer Services

Financial Services 33,861 4.9 10.1 28,283 4.0

Technology Products & Components 30,716 4.5 9.1 28,220 4.0

Consumer Products & Retail 29,980 4.4 8.9 29,927 4.2

Transportation & Logistics 23,395 3.4 7.0 19,383 2.8

Food, Agriculture & Beverage 21,575 3.1 6.4 21,641 3.1

Telecommunications 19,572 2.8 5.8 24,350 3.5

Environmental Services 12,021 1.7 3.6 14,510 2.1

Commodities & Mining 10,138 1.5 3.0 10,603 1.5

Aerospace & Defense 9,668 1.4 2.9 9,459 1.3

Energy Services (Midstream) 8,975 1.3 2.7 9,319 1.3

Telecommunications

Specialty Chemicals 7,841 1.1 2.3 7,841 1.1

Restaurants 6,542 1.1 1.9 6,822 1.0

Paper & Forest Products 3,000 0.4 0.9 2,974 0.4

Industrial Products

Percentage of

Total Portfolio

Percentage of

Total Portfolio

at Fair Value

$ 688,432 100.0 % 204.7 % $ 703,557 100.0 %

Percentage of Percentage of

Total Portfolio Percentage of Total Portfolio

Fair Value at Fair Value Net Assets Cost at Cost

(dollars in thousands)

March 31, 2020:

I-45 SLF LLC 1

Healthcare Services

Media, Marketing, & Entertainment

Industrial Products

Business Services $ 92,365 16.7 % 33.9 % $ 92,879 15.5 %

Environmental Services

Media, Marketing, & Entertainment 54,494 10.0 20.0 45,202 7.5

Healthcare Services 51,037 9.2 18.7 66,744 11.1

I-45 SLF LLC 1

39,760 7.2 14.6 68,000 11.3

Industrial Services 35,956 6.5 13.2 35,931 6.0

Software & IT Services 35,690 6.5 13.1 35,353 5.9

Distribution 31,632 5.7 11.6 32,229 5.5

Financial Services 30,586 5.5 11.2 29,651 4.9

Healthcare Products 29,775 5.4 10.9 29,832 5.0

1 unchanged sentence

Consumer Products and Retail 23,157 4.2 8.5 23,549 3.9

Consumer Services

Transportation & Logistics 22,218 4.0 8.2 18,903 3.2

Energy Services (Midstream)

Financial Services

Consumer Services 21,403 3.9 7.9 21,118 3.5

Technology Products & Components 14,610 2.6 5.4 14,457 2.4

Environmental Services 12,148 2.2 4.5 13,889 2.3

Commodities & Mining 10,411 1.9 3.8 10,458 1.7

Software & IT Services

Energy Services (Midstream) 9,445 1.7 3.5 9,532 1.6

Restaurants 5,621 1.0 2.1 8,113 1.4

Telecommunications 4,140 0.7 1.5 7,928 1.3

Paper & Forest Products 3,000 0.5 1.1 2,965 0.5

Industrial Products — — — 1,517 0.3

$ 553,072 100.0 % 203.1 % $ 599,187 100.0 %

1 I-45 SLF LLC is a joint venture between CSWC and Main Street Capital Corporation.

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The following tables summarize the composition of the investment portfolio by geographic region of the United States, at cost and fair value (with corresponding percentage of total portfolio investments), as of March 31, 2021 and 2020:

Percentage of

Total Portfolio

Percentage of

Total Portfolio

at Fair Value

Percentage of Percentage of

Total Portfolio Percentage of Total Portfolio

Fair Value at Fair Value Net Assets Cost at Cost

(dollars in thousands)

March 31, 2021:

Southwest $ 196,956 28.6 % 58.6 % $ 200,091 28.4 %

Northeast 153,761 22.3 45.7 150,595 21.4

Southeast 120,168 17.5 35.7 125,317 17.8

West 90,910 13.2 27.0 87,363 12.5

Midwest 69,479 10.1 20.7 67,391 9.6

I-45 SLF LLC 1

International

57,158 8.3 17.0 72,800 10.3

$ 688,432 100.0 % 204.7 % $ 703,557 100.0 %

March 31, 2020:

Southwest $ 167,082 30.2 % 61.3 % $ 167,192 27.9 %

Northeast 124,250 22.4 45.6 121,201 20.2

Southeast 107,541 19.4 39.5 122,547 20.5

West 58,985 10.7 21.7 65,135 10.9

Midwest 43,454 7.9 16.0 43,214 7.2

I-45 SLF LLC 1

39,760 7.2 14.6 68,000 11.3

International 12,000 2.2 4.4 11,898 2.0

$ 553,072 100.0 % 203.1 % $ 599,187 100.0 %

1 I-45 SLF LLC is a joint venture between CSWC and Main Street Capital.

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ASC 820 defines fair value in terms of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date excluding transaction costs.

Under ASC 820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset.

820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset.

The principal market is the market in which the reporting entity would sell or transfer the asset with the greatest volume and level of activity for the asset.

In determining the

principal market for an asset or liability under ASC 820, it is assumed that the reporting entity has access to the market as of the measurement date.

In determining the principal market for an asset or liability under ASC 820, it is assumed that the reporting entity has access to the market as of the measurement date.

The Level 3 inputs to CSWC’s valuation process reflect our best estimate of the assumptions that would be used by market participants in pricing the investment in a transaction in the principal or most advantageous market for the asset.

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In addition, under the Income Approach, CSWC also determines the appropriateness of the use of third-party broker quotes, if any, as a significant Level 3 input in determining fair value.

In determining the appropriateness of the use of third-party broker quotes, CSWC evaluates the level of actual transactions used by the broker to develop the quote, whether the quote was

an indicative price or binding offer, the depth and consistency of broker quotes, the source of the broker quotes, and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices.

In determining the appropriateness of the use of third-party broker quotes, CSWC evaluates the level of actual transactions used by the broker to develop the quote, whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes, the source of the broker quotes, and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices.

To the extent sufficient observable inputs are available to determine fair value, CSWC may use third-party broker quotes or other independent pricing to determine the fair value of certain debt investments.

28 unchanged sentences

at March 31, 2021 Using

Quoted Prices in

Active Markets

for Identical

Asset Category

Quoted Prices in Significant

Active Markets Other Significant

for Identical Observable Unobservable

Assets Inputs Inputs

Asset Category Total (Level 1) (Level 2) (Level 3)

First lien loans $ 524,161 — — $ 524,161

7 unchanged sentences

at March 31, 2020 Using

Quoted Prices in

Active Markets

for Identical

Quoted Prices in Significant

Active Markets Other Significant

for Identical Observable Unobservable

Assets Inputs Inputs

Asset Category 2

Total (Level 1) (Level 2) (Level 3)

First lien loans $ 427,447 — — $ 427,447

9 unchanged sentences

We are permitted to sell or transfer our membership interest and must deliver written notice of such transfer to the other member no later than 60 business days prior to the sale or transfer.

The table below presents the Valuation Techniques and Significant Level 3 Inputs (ranges and weighted averages) used in the valuation of CSWC’s debt and equity securities at March 31, 2020 and 2019 .

Unobservable inputs were weighted by the relative fair value of the investments.

The table is not intended to be all inclusive, but instead captures the significant unobservable inputs relevant to our determination of fair value.

Fair Value at

March 31, 2020

(in thousands)

First lien loans

Income Approach

Discount Rate

The tables below present the Valuation Techniques and Significant Level 3 Inputs (ranges and weighted averages) used in the valuation of CSWC’s debt and equity securities at March 31, 2021 and 2020.

Significant Level 3 Inputs were weighted by the relative fair value of the investments.

The tables are not intended to be all inclusive, but instead capture the significant unobservable inputs relevant to our determination of fair value.

Fair Value at Significant

Valuation March 31, 2021 Unobservable Weighted

Type Technique (in thousands) Inputs Range Average

First lien loans Income Approach $ 465,712 Discount Rate 6.3% - 28.8% 10.9%

Third Party Broker Quote 53.1 - 99.9 87.9

Market Approach

Second lien loans

Income Approach

Discount Rate

10.3% - 19.8%

Market Approach 58,449 Cost 93.9 - 98.0 97.6

Exit Value 100.0 - 101.0 100.2

Second lien loans Income Approach 36,864 Discount Rate 9.9% - 17.6% 14.4%

Third Party Broker Quote 96.5 - 97.8 96.6

Subordinated debt

Income Approach

Discount Rate

Preferred equity

Enterprise Value Waterfall Approach

EBITDA Multiple

Market Approach 55 Exit Value 2.4 2.4

Subordinated debt Income Approach 11,534 Discount Rate 6.2% - 29.3% 13.4%

Preferred equity Enterprise Value Waterfall Approach 22,608 EBITDA Multiple 6.9x - 10.8x 8.9x

Discount Rate 12.7% - 22.4% 19.3%

17.2% - 22.9%

Common equity & warrants

Enterprise Value Waterfall Approach

EBITDA Multiple

Common equity & warrants Enterprise Value Waterfall Approach 34,013 EBITDA Multiple 5.6x - 11.5x 8.1x

Discount Rate 12.9% - 29.8% 20.0%

15.4% - 22.7%

Financial instruments

Option Pricing Model

Assumed Volatility

Market Approach 2,039 Cost 100.0 100.0

Exit Value 284.4 284.4

Total Level 3 Investments $ 631,274

Fair Value at

March 31, 2019

(in thousands)

First lien loans

Income Approach

Discount Rate

Fair Value at Significant

Valuation March 31, 2020 Unobservable Weighted

Type Technique (in thousands) Inputs Range Average

First lien loans Income Approach $ 401,266 Discount Rate 7.0% - 52.5% 12.0%

Third Party Broker Quote 43.8 - 56.5 49.9

Market Approach

100.0 - 102.0

Second lien loans

Income Approach

Discount Rate

11.5% - 41.9%

Market Approach 26,181 Cost 98.0 - 98.2 98.1

Second lien loans Income Approach 37,139 Discount Rate 10.3% - 19.8% 12.7%

Third Party Broker Quote 37.5 37.5

Subordinated debt

Income Approach

Discount Rate

12.6% - 15.0%

Preferred equity

Enterprise Value Waterfall Approach

EBITDA Multiple

Subordinated debt Income Approach 9,747 Discount Rate 13.3% 13.3%

Preferred equity Enterprise Value Waterfall Approach 16,624 EBITDA Multiple 7.4x - 11.4x 9.3x

Discount Rate 17.2% - 22.9% 19.3%

15.5% - 19.3%

Common equity & warrants

Enterprise Value Waterfall Approach

EBITDA Multiple

Common equity & warrants Enterprise Value Waterfall Approach 22,355 EBITDA Multiple 5.3x - 11.4x 8.2x

Discount Rate 15.4% - 22.7% 19.2%

13.9% - 21.0%

Market Approach

Financial instruments Option Pricing Model — Assumed Volatility 2.0% 2.0%

Total Level 3 Investments $ 513,312

4 unchanged sentences

The following table provides a summary of changes in the fair value of investments measured using Level 3 inputs during the years ended March 31, 2021 and 2020 (in thousands):

Fair Value 3/31/2019

Realized & Unrealized Gains (Losses)

Purchases of Investments 1

PIK Interest Capitalized

Conversion of Security

Fair Value 3/31/2020

YTD Unrealized Appreciation (Depreciation) on Investments held at period end

Fair Value March 31, 2020 Realized & Unrealized Gains (Losses) Purchases of Investments 1

Repayments PIK Interest Capitalized Divestitures Conversion of Security Fair Value March 31, 2021 YTD Unrealized Appreciation (Depreciation) on Investments held at period end

First lien loans $ 427,447 $ (308) $ 199,362 $ (98,567) $ 5,919 $ — $ (9,692) $ 524,161 $ (2,525)

3 unchanged sentences

Common equity & warrants 22,355 2,082 4,881 — — (2,180) 8,914 36,052 1,658

Financial Instruments

Total Investments $ 513,312 $ 9,844 $ 208,896 $ (98,817) $ 7,880 $ (9,841) $ — $ 631,274 $ 2,642

Fair Value 3/31/2018

Realized & Unrealized Gains (Losses)

Purchases of Investments 1

PIK Interest Capitalized

Conversion of Security from Debt to Equity

Fair Value 3/31/2019

YTD Unrealized Appreciation (Depreciation) on Investments held at period end

Fair Value March 31, 2019 Realized & Unrealized Gains (Losses) Purchases of Investments 1

Repayments PIK Interest Capitalized Divestitures Conversion of Security from Debt to Equity Fair Value March 31, 2020 YTD Unrealized Appreciation (Depreciation) on Investments held at period end

First lien loans $ 317,544 $ (16,987) $ 189,293 $ (51,133) $ 1,360 $ (12,630) $ — $ 427,447 $ (17,370)

3 unchanged sentences

Common equity & warrants 72,665 (784) 1,003 — — (48,933) (1,596) 22,355 2,291

Financial instruments — (1,517) 1,517 — — — — — (1,517)

Total Investments $ 458,328 $ (20,042) $ 198,544 $ (55,952) $ 2,078 $ (69,644) $ — $ 513,312 $ (16,969)

4 unchanged sentences

The Company had the following borrowings outstanding as of March 31, 2021 and 2020 (amounts in thousands):

March 31, 2020

March 31, 2019

March 31, 2021 March 31, 2020

Credit Facility $ 120,000 $ 154,000

5 unchanged sentences

Total October 2024 Notes 122,879 73,484

January 2026 Notes 140,000 —

Unamortized debt issuance costs and debt discount (1,575) —

Total January 2026 Notes 138,425 —

Total Borrowings $ 381,304 $ 303,296

14 unchanged sentences

The Credit Agreement modified certain covenants in the Credit Facility, including:

(1) to provide for a minimum senior coverage ratio of 2-to-1 (in addition to the asset coverage ratio noted below), (2) to increase the minimum obligors’ net worth test from $160 million to $180 million, (3) to reduce the minimum consolidated interest coverage ratio from 2.50-to-1 to 2.25-to-1 as of the last day of any fiscal quarter, and (4) to provide for the fact that the Company will not declare or pay a dividend or distribution in cash or other property unless immediately prior to and after giving effect thereto the Company's asset coverage ratio exceeds 150% (and certain other conditions are satisfied).

(1) to provide for a minimum senior coverage ratio of 2-to-1 (in addition to the asset coverage ratio noted below), (2) to increase the minimum obligors’ net

worth test from $160 million to $180 million, (3) to reduce the minimum consolidated interest coverage ratio from 2.50-to-1 to 2.25-to-1 as of the last day of any fiscal quarter, and (4) to provide for the fact that the Company will not declare or pay a dividend or distribution in cash or other property unless immediately prior to and after giving effect thereto the Company's asset coverage ratio exceeds 150% (and certain other conditions are satisfied).

The Credit Facility also contains certain affirmative and negative covenants, including but not limited to:

(1) certain reporting requirements, (2) maintaining RIC and BDC status, (3) maintaining a minimum

shareholders’ equity, (4) maintaining a minimum consolidated net worth, and (5) at any time the outstanding advances exceed 90% of the borrowing base, maintaining a minimum liquidity of not less than 10% of the covered debt amount.

On May 23, 2019, CSWC entered into an Incremental Assumption Agreement that increased the total commitments under the accordion feature of the Credit Facility by $25 million, which increased total commitments from $270 million to $295 million.

(1) certain reporting requirements, (2) maintaining RIC and BDC status, (3) maintaining a minimum shareholders’ equity, (4) maintaining a minimum consolidated net worth, and (5) at any time the outstanding advances exceed 90% of the borrowing base, maintaining a minimum liquidity of not less than 10% of the covered debt amount.

On May 23, 2019, CSWC entered into an Incremental Assumption Agreement, which increased the total commitments under the Credit Facility by $25 million.

The increase was executed under the accordion feature of the Credit Facility and increased total commitments from $270 million to $295 million.

On March 19, 2020, CSWC entered into an Incremental Assumption Agreement that increased the total commitments under the accordion feature of the Credit Facility by $30 million, which increased total commitments from $295 million to $325 million.

On December 10, 2020, CSWC entered into Amendment No.

1 to the Credit Agreement, which expanded the accordion feature from $350 million to $400 million.

In addition, on December 10, 2020, the Company entered into an Incremental Commitment Agreement that increased the total commitments under the Credit Agreement from $325 million to $340 million.

The Credit Facility also contains customary events of default, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, bankruptcy, and change of control, with customary cure and notice provisions.

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There are no changes to the covenants or the events of default in the Credit Facility as a result of the Amendment.

The Credit Facility is secured by (1) substantially all of the present and future property and assets of the Company and the guarantors and (2) 100% of the equity interests in the Company’s wholly-owned subsidiaries.

As of March 31, 2021, substantially all of the Company’s assets were pledged as collateral for the Credit Facility.

13 unchanged sentences

The 2022 Notes Agent receives a commission from the Company equal to up to 2% of the gross sales of any December 2022 Notes sold through the 2022 Notes Agent under the debt distribution agreement.

The 2022 Notes Agent is not required to sell any specific principal amount of December 2022 Notes, but will use its commercially reasonable efforts consistent with its sales and trading practices to sell the December 2022 Notes.

The 2022 Notes Agent is not

required to sell any specific principal amount of December 2022 Notes, but will use its commercially reasonable efforts consistent with its sales and trading practices to sell the December 2022 Notes.

The December 2022 Notes trade “flat,” which means that purchasers in the secondary market will not pay, and sellers will not receive, any accrued and unpaid interest on the December 2022 Notes that is not reflected in the trading price.

During the year ended March 31, 2020 , the Company did not sell any December 2022 Notes.

The Company has no current intention of issuing additional December 2022 Notes under this ATM debt distribution agreement.

Accordingly, during the three months ended June 30, 2019, the Company amortized $0.2 million of the remaining debt issuance costs associated with the ATM debt distribution agreement, which is included in interest expense in the Consolidated Statement of Operations for the year ended March 31, 2020.

All issuances of December 2022 Notes rank equally in right of payment and form a single series of notes.

As of March 31, 2020 , the carrying amount of the December 2022 Notes was $75.8 million on an aggregate principal amount of $77.1 million at a weighted average effective yield of 5.93%.

As of March 31, 2020 , the fair value of the December 2022 Notes was $67.9 million .

The fair value is based on the closing price of the security of The Nasdaq Global Select Market, which is a Level 1 input under ASC 820.

On September 29, 2020, the Company redeemed $20,000,000 in aggregate principal of the $77,136,175 in aggregate principal amount of issued and outstanding December 2022 Notes.

On December 10, 2020, the Company redeemed $20,000,000 in aggregate principal of the $57,136,175 in aggregate principal amount of issued and outstanding December 2022 Notes.

On January 21, 2021, the Company redeemed the remaining $37,136,175 in aggregate principal amount of issued and outstanding December 2022 Notes.

The December 2022 Notes were redeemed at 100% of their principal amount, plus the accrued and unpaid interest thereon, through, but excluding each of the redemption dates.

Accordingly, the Company recognized realized losses on extinguishment of debt, equal to the write-off of the related unamortized debt issuance costs, of $1.0 million during the year ended March 31, 2021.

The Company recognized interest expense related to the December 2022 Notes, including amortization of deferred issuance costs, of $3.5 million and $5.3 million for the years ended March 31, 2021 and 2020, respectively.

Average borrowings for the years ended March 31, 2021 and 2020 were $53.8 million and $77.1 million, respectively.

The indenture governing the December 2022 Notes contains certain covenants including but not limited to (i) a requirement that the Company comply with the asset coverage requirement of Section 61 of the 1940 Act as modified by Section 61(a) of the 1940 Act or any successor provisions thereto, after giving effect to any exemptive relief granted to the Company by the SEC, (ii) a requirement, subject to a limited exception, that the Company will not declare any cash dividend, or declare any other cash distribution, upon a class of its capital stock, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, the Company has the minimum asset coverage required pursuant to Section 61 of the 1940 Act or any successor provision thereto after deducting the amount of such dividend, distribution or purchase price, as the case may be, giving effect to any exemptive relief granted to the Company by the SEC and (iii) a requirement to provide financial information to the holders of the December 2022 Notes and the trustee under the indenture if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934, as amended, (the "Exchange Act").

The December 2022 Notes had a weighted average effective yield of 5.93%.

The indenture governing the December 2022 Notes contains certain covenants including but not limited to (i) a requirement that the Company comply with the asset coverage requirement of Section 18(a)(1)(A) of the 1940 Act as modified by Section 61(a) of the 1940 Act or any successor provisions thereto, after giving effect to any exemptive relief granted to the Company by the SEC, (ii) a requirement, subject to limited exception, that the Company will not declare any cash dividend, or declare any other cash distribution, upon a class of its capital stock, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend or distribution, or at the time of any such purchase, the Company has the minimum asset coverage required pursuant to Section 61(a) of the 1940 Act, or any successor provision thereto, after deducting the amount of such dividend, distribution or purchase price, as the case may be, giving effect to any exemptive relief granted to the Company by the SEC and (iii) a requirement to provide financial information to the holders of the December 2022 Notes and the trustee under the indenture if the Company should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

The indenture and supplement relating to the December 2022 Notes also provides for customary events of default.

2 unchanged sentences

In September 2019, the Company issued $65.0 million in aggregate principal amount of 5.375% Notes due 2024 (the “Existing October 2024 Notes”).

On October 8, 2019, the Company issued an additional $10.0 million in aggregate principal amount of the October 2024 Notes (the "Additional October 2024 Notes" together with the Existing October 2024 Notes, the "October 2024 Notes").

The Additional October 2024 Notes are being treated as a single series with the Existing October 2024 Notes under the indenture and have the same terms as the Existing October 2024 Notes.

In October 2019, the Company issued an additional $10.0 million in aggregate principal amount of the October 2024 Notes (the "Additional October 2024 Notes").

In August 2020, the Company issued an additional $50.0 million in aggregate principal amount of the October 2024 Notes (the "New Notes" together with the Existing October 2024 Notes and the Additional October 2024 Notes, the "October 2024 Notes").

The Additional October 2024 Notes and the New Notes are being treated as a single series with the Existing October 2024 Notes under the indenture and have the same terms as the Existing October 2024 Notes.

The October 2024 Notes mature on October 1, 2024 and may be redeemed in whole or in part at any time prior to July 1, 2024, at par plus a “make-whole” premium, and thereafter at par.

4 unchanged sentences

This is a Level 3 fair value measurement under ASC 820 based on a valuation model using a discounted cash flow analysis.

The Company recognized interest expense related to the October 2024 Notes, including amortization of deferred issuance costs, of $2.2 million for the year ended March 31, 2020 .

Since the issuance of the October 2024 Notes, average borrowings were $74.4 million .

The indenture governing the October 2024 Notes contains certain covenants, including certain covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act, or any successor provisions, whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC, and to provide financial information to the holders of the October 2024 Notes and the trustee under the indenture if the Company is no longer subject to the reporting requirements under the Exchange Act.

The Company recognized interest expense related to the October 2024 Notes, including amortization of deferred issuance costs, of $6.3 million and $2.2 million, respectively, for the years ended March 31, 2021 and 2020.

For the year ended March 31, 2021, average borrowings were $106.1 million.

Since the issuance of the October 2024 Notes through March 31, 2020, average borrowings were $74.4 million.

whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC, to comply with Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act, or any successor provisions, after giving effect to any exemptive relief granted to the Company by the SEC and subject to certain other exceptions, and to provide financial information to the holders of the October 2024 Notes and the trustee under the indenture if the Company is no longer subject to the reporting requirements under the Exchange Act.

These covenants are subject to important limitations and exceptions that are described in the indenture and the second supplemental indenture relating to the October 2024 Notes.

In addition, holders of the Notes can require the Company to repurchase some or all of the October 2024 Notes at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest to, but not including, the repurchase date upon the occurrence of a “Change of Control Repurchase Event,” as defined in the second supplemental indenture relating to the October 2024 Notes.

January 2026 Notes

In December 2020, the Company issued $75.0 million in aggregate principal amount of 4.50% Notes due 2026 (the "Existing January 2026 Notes").

In February 2021, the Company issued an additional $65.0 million in aggregate principal amount of the January 2026 Notes (the "Additional January 2026 Notes" together with the Existing January 2026 Notes, the "January 2026 Notes").

The Additional January 2026 Notes were issued at a price of 102.11% of the aggregate principal amount of the Additional January 2026 Notes, resulting in a yield-to-maturity of approximately 4.0% at issuance.

The January 2026 Notes mature on January 31, 2026 and may be redeemed in whole or in part at any time prior to October 31, 2025, at par plus a "make-whole" premium, and thereafter at par.

The January 2026 Notes bear interest at a rate of 4.50% per year, payable semi-annually on January 31 and July 31 of each year, beginning on July 31, 2021.

The January 2026 Notes are the direct unsecured obligations of the Company and rank pari passu with our other outstanding and future unsecured unsubordinated indebtedness and are effectively subordinated to all of our existing and future secured indebtedness, including borrowings under our Credit Facility.

As of March 31, 2021, the carrying amount of the January 2026 Notes was $138.4 million on an aggregate principal amount of $140.0 million at a weighted average effective yield of 4.46%.

As of March 31, 2021, the fair value of the January 2026 Notes was $138.8 million.

This is a Level 3 fair value measurement under ASC 820 based on a valuation model using a discounted cash flow analysis.

The Company recognized interest expense related to the January 2026 Notes, including amortization of deferred issuance costs, of $1.2 million for the year ended March 31, 2021.

Since the issuance of the January 2026 Notes on December 29, 2020 through March 31, 2021, average borrowings were $99.5 million.

The indenture governing the January 2026 Notes contains certain covenants, including certain covenants requiring the Company to comply with Section 18(a)(1)(A) as modified by Section 61(a)(2) of the 1940 Act, or any successor provisions, whether or not the Company continues to be subject to such provisions of the 1940 Act, but giving effect, in either case, to any exemptive relief granted to the Company by the SEC, to comply with Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act, or any successor provisions, after giving effect to any exemptive relief granted to the Company by the SEC and subject to certain other exceptions, and to provide financial information to the holders of the January 2026 Notes and the trustee under the indenture if the Company is no longer subject to the reporting requirements under the Exchange Act.

These covenants are subject to important limitations and exceptions that are described in the indenture and the third supplemental indenture relating to the January 2026 Notes.

In addition, holders of the Notes can require the Company to repurchase some or all of the January 2026 Notes at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest to, but not including, the repurchase date upon the occurrence of a “Change of Control Repurchase Event,” as defined in the third supplemental indenture relating to the January 2026 Notes.

Contractual Payment Obligations

1 unchanged sentence

Years Ending March 31,

2022 2023 2024 2025 2026 Thereafter Total

Credit Facility $ — $ — $ 120,000 $ — $ — $ — $ 120,000

December 2022 Notes

October 2024 Notes — — — 125,000 — — 125,000

January 2026 Notes — — — — 140,000 — 140,000

Total $ — $ — $ 120,000 $ 125,000 $ 140,000 $ — $ 385,000

We have elected to be treated as a RIC under Subchapter M of the Code and have a tax year end of December 31.

11 unchanged sentences

During the quarter ended March 31, 2021, CSWC declared regular dividends in the amount of $10.9 million, or $0.52 per share ($0.42 per share in regular dividends and $0.10 in supplemental dividends).

During the tax year ended December 31, 2019 , we declared total dividends of $49.2 million or $2.72 per share ($1.57 per share in regular dividends, $0.40 per share in supplemental dividends and $0.75 in special dividends).

We declared quarterly dividends of $0.48 per share in March 2019 ($0.38 per share in regular dividends and $0.10 per share in supplemental dividends), $0.49 per share ($0.39 per share in regular dividends and $0.10 per share in supplemental dividends) in June 2019 , $0.50 per share ($0.40 per share in regular dividends and $0.10 per share in supplemental dividends) in September 2019 , and $1.25 per share ($0.40 per share in regular dividends, $0.10 per share in supplemental dividends and $0.75 in special dividends) in December 2019 .

During the tax year ended December 31, 2020, we declared total dividends of $38.5 million or $2.04 per share ($1.64 per share in regular dividends and $0.40 per share in supplemental dividends).

We declared quarterly dividends of $0.51 per share in March 2020 ($0.41 per share in regular dividends and $0.10 per share in supplemental dividends), $0.51 per share ($0.41 per share in regular dividends and $0.10 per share in supplemental dividends) in June 2020, $0.51 per share ($0.41 per share in regular dividends and $0.10 per share in supplemental dividends) in September 2020, and $0.51 per share ($0.41 per share in regular dividends and $0.10 per share in supplemental dividends) in December 2020.

For the tax year ended December 31, 2019, we declared total dividends of $49.2 million or $2.72 per share.

We declared quarterly dividends of $0.28 per share in March 2018 , $0.89 per share ($0.29 per share in regular dividends and $0.60 per share in supplemental dividends) in June 2018 , $0.44 per share ($0.34 per share in regular dividends and $0.10 per share in supplemental dividends) in September 2018 , and $0.46 per share ($0.36 per share in regular dividends and $0.10 per share in supplemental dividends) in December 2018 .

We declared quarterly dividends of $0.48 per share ($0.38 per share in regular dividends and $0.10 per share in supplemental dividends) in March 2019, $0.49 per share ($0.39 per share in regular dividends and $0.10 per share in supplemental dividends) in June 2019, $0.50 per share ($0.40 per share in regular dividends and $0.10 per share in supplemental dividends) in September 2019, and $1.25 per share ($0.40 per share in regular dividends, $0.10 per share in supplemental dividends and $0.75 in special dividends) in December 2019.

For the tax year ended December 31, 2018, we declared total dividends of $34.2 million, or $2.07 per share.

We declared quarterly dividends of $0.45 per share ($0.19 in regular dividends and $0.26 in supplemental dividends) in March 2017, $0.21 per share in June 2017, $0.24 per share in September 2017, and $0.26 per share in December 2017.

We declared quarterly dividends of $0.28 per share in March 2018, $0.89 per share ($0.29 per share in regular dividends and $0.60 per share in supplemental dividends) in June 2018, $0.44 per share ($0.34 per share in regular dividends and $0.10 per share in supplemental dividends) in September 2018, and $0.46 per share ($0.36 per share in regular dividends and $0.10 per share in supplemental dividends) in December 2018.

Book and tax basis differences relating to shareholder dividends and distributions and other permanent book and tax differences are typically reclassified among the CSWC’s capital accounts.

1 unchanged sentence

accordingly, for the fiscal years ended March 31, 2021 and 2020, CSWC reclassified for book purposes amounts arising from permanent book/tax differences related to the tax treatment of return of capital and/or deemed distributions, tax treatment of investments upon disposition, and non-deductible expenses, as follows (amounts in thousands):

March 31, 2020

March 31, 2019

Year ended Year ended

March 31, 2021 March 31, 2020

Additional capital $ (3,981) $ 10,808

2 unchanged sentences

Therefore, the determination of tax attributes made on an interim basis for fiscal year end may not be representative of the actual tax attributes determined at tax year end.

For tax purposes, the 2019 dividends totaled $2.72 per share and were comprised of (1) ordinary income totaling approximately $1.3033 per share and (2) long-term capital gains totaling approximately $1.4167 per share.

For tax purposes, the 2020 dividends totaled $2.04 per share and were comprised entirely of ordinary income.

Included in ordinary income per share is approximately $0.167 per share of qualified dividend income.

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Of the qualified dividends of $3.0 million, 8.0% are eligible for the dividends received deduction.

For tax purposes, the 2018 dividends totaled $2.07 per share and were comprised of (1) ordinary income totaling approximately $0.739 per share, (2) long term capital gains totaling approximately $1.332 per share, and (3) qualified dividend income totaling approximately $0.121 per share.

In addition, 57.99% of each of the ordinary distributions represent interest-related dividends and 37.08% of each of the ordinary distributions represents short-term capital gains dividends.

Included in ordinary income per share is approximately $0.189 per share of qualified dividend income.

In addition, 88.73% of each of the ordinary distributions represent interest-related dividends and 2.64% of the ordinary distribution paid on March 29, 2019 represents short-term capital gains dividends.

95.07% of total distributions represent the portion of CSWC’s dividends received by non-U.S.

9 unchanged sentences

Distributions on tax basis 1

$ 37,517 $ 48,108

1 Includes only those distributions which reduce estimated taxable income.

1 unchanged sentence

We intend to meet the applicable qualifications to be taxed as a RIC in future periods.

The following reconciles net (decrease) increase in assets resulting from operations to estimated RIC taxable income for the years ended March 31, 2020 , 2019 and 2018 :

The following reconciles net increase (decrease) in net assets resulting from operations to estimated RIC distributable income for the years ended March 31, 2021, 2020 and 2019:

Years ended March 31,

Reconciliation of RIC Taxable Income 1

Net (decrease) increase in net assets resulting from operations

Net change in unrealized depreciation (appreciation) on investments

Income/gain (expense/loss) recognized for tax on pass-through entities

Realized (loss) gain recognized for tax

2021 2020 2019

Reconciliation of RIC Distributable Income 1

Net increase (decrease) in net assets resulting from operations $ 50,883 $ (22,351) $ 33,058

Net change in unrealized (appreciation) depreciation on investments (28,755) 92,814 11,506

(Expense/loss) income/gain recognized for tax on pass-through entities (11,000) 177 223

Realized gain (loss) recognized for tax 2,206 (2,302) 761

Capital loss carryover 2

Net operating loss - management company and taxable subsidiary (378) (587) (256)

1 unchanged sentence

Other book tax differences 870 (304) 98

Estimated taxable income (loss) before deductions for distributions

Estimated distributable income before deductions for distributions $ 32,816 $ 72,019 $ 46,271

Distributions 3 :

Ordinary $ 38,917 $ 23,540 $ 15,468

Capital gains — 25,703 21,625

2 unchanged sentences

Estimated annual RIC undistributed taxable income $ (6,101) $ 6,293 $ 9,178

The calculation of taxable income for each period is an estimate and will not be finally determined until the Company files its tax return each year.

Final taxable income may be different than this estimate.

Includes only those distributions which reduce estimated taxable income.

1 The calculation of distributable income for each period is an estimate and will not be finally determined until the Company files its tax return each year.

Final distributable income may be different than this estimate.

2 At March 31, 2021, the Company had short term capital loss carryforwards of $0.7 million and long term capital loss carryforwards of $17.2 million to offset future capital gains.

These capital loss carryforwards are not subject to expiration.

3 Includes only those distributions which reduce estimated distributable income.

As of March 31, 2021, 2020 and 2019, the components of estimated RIC accumulated earnings on a tax basis were as follows (amounts in thousands):

1 unchanged sentence

Components of RIC Accumulated Earnings on a Tax Basis 1

2021 2020 2019

Undistributed ordinary income - tax basis $ 21,083 $ 25,766 $ 19,532

Undistributed net realized gain

Undistributed net realized (loss) gain (17,924) 749 384

Unrealized (depreciation) appreciation on investments (766) (47,487) 45,724

Other temporary differences (663) — (917)

Distributions payable 2

Components of distributable earnings at year-end $ 1,730 $ (20,972) $ 64,723

1 unchanged sentence

Final taxable income may be different than this estimate.

Includes only those distributions which reduce estimated taxable income.

As of March 31, 2020 , including the RIC and the Taxable Subsidiary, the cost of investments for U.S.

federal income tax purposes was $597.7 million , with such investments having a gross unrealized appreciation of $19.3 million and gross unrealized depreciation of $63.4 million .

A RIC may elect to retain all or a portion of its long-term capital gains by designating them as a “deemed distribution” to its shareholders and paying a federal tax on the long-term capital gains for the benefit of its shareholders.

1 unchanged sentence

Shareholders then add the amount of the “deemed distribution” net of such tax to the basis of their shares.

For the tax year ended December 31, 2020, we distributed all long-term capital gains and therefore had no deemed distributions to our shareholders or federal taxes incurred related to such items.

For the tax year ended December 31, 2019, we had net long-term capital gains of $42.2 million, of which $25.7 million was distributed to shareholders as capital gains dividends.

We elected to retain net long-term capital gains of $16.5 million and designate the retained amount as a "deemed distribution" to our shareholders.

As a result, we incurred federal taxes on the retained

amount on behalf of our shareholders in the amount of $3.5 million for the tax year ended December 31, 2019.

For the tax years ended December 31, 2018 and 2017 , we distributed all long-term capital gains and therefore had no deemed distributions to our shareholders or federal taxes incurred related to such items.

CSMC and the Taxable Subsidiary, wholly-owned subsidiaries of CSWC, are not RICs and are required to pay taxes at the current corporate rate.

For tax purposes, CSMC and the Taxable Subsidiary have elected to be treated as taxable entities, and therefore are not consolidated for tax purposes and are taxed at normal corporate tax rates based on their taxable income and, as a result of their activities, may generate income tax expense or benefit.

As a result, we incurred federal taxes on the retained amount on behalf of our shareholders in the amount of $3.5 million for the tax year ended December 31, 2019.

For the tax year ended December 31, 2018, we

distributed all long-term capital gains and therefore had no deemed distributions to our shareholders or federal taxes incurred related to such items.

In addition, we have a wholly-owned taxable subsidiary, or the Taxable Subsidiary, which holds a portion of one or more of our portfolio investments that are listed on the Consolidated Schedule of Investments.

The Taxable Subsidiary is consolidated for financial reporting purposes in accordance with U.S.

GAAP, so that our consolidated financial statements reflect our investments in the portfolio companies owned by the Taxable Subsidiary.

The purpose of the Taxable Subsidiary is to permit us to hold certain interests in portfolio companies that are organized as limited liability companies, or LLCs (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of our gross income for federal income tax purposes must consist of qualifying investment income.

Absent the Taxable Subsidiary, a proportionate amount of any gross income of a partnership or LLC (or other pass-through entity) portfolio investment would flow through directly to us.

To the extent that our income did not consist of investment income, it could jeopardize our ability to qualify as a RIC and therefore cause us to incur significant amounts of corporate-level U.S.

federal income taxes.

Where interests in LLCs (or other pass-through entities) are owned by the Taxable Subsidiary, however, the income from those interests is taxed to the Taxable Subsidiary and does not flow through to us, thereby helping us preserve our RIC status and resultant tax advantages.

The Taxable Subsidiary is not consolidated for U.S.

federal income tax purposes and may generate income tax expense as a result of their ownership of the portfolio companies.

This income tax expense, or benefit, and the related tax assets and liabilities, if any, are reflected in our Consolidated Statement of Operations.

As of March 31, 2021, the cost of investments held at the RIC for U.S.

federal income tax purposes was $681.9 million, with such investments having gross unrealized appreciation of $25.7 million and gross unrealized depreciation of $26.4 million, resulting in net unrealized depreciation of $0.7 million.

As of March 31, 2021, the cost of investments held at the Taxable Subsidiary for U.S.

federal income tax purposes was $18.9 million, with such investments having gross unrealized appreciation of $14.5 million and gross unrealized depreciation of $0.9 million, resulting in net unrealized appreciation of $13.6 million.

On a consolidated basis, the total investment portfolio has net unrealized appreciation of $12.9 million for U.S.

federal income tax purposes.

CSMC, a former wholly-owned subsidiary of CSWC, was not a RIC, and was required to pay taxes at the current corporate rate.

Effective December 31, 2020, CSMC merged with and into CSWC, which is not subject to corporate federal income taxes.

For tax purposes, CSMC had elected to be treated as a taxable entity, and therefore was not consolidated for tax purposes and was taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit.

The Taxable Subsidiary is not a RIC and is required to pay taxes at the current corporate rate.

For tax purposes, the Taxable Subsidiary has elected to be treated as a taxable entity, and therefore is not consolidated for tax purposes and is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit.

The taxable income, or loss, of CSMC and the Taxable Subsidiary may differ from book income, or loss, due to temporary book and tax timing differences and permanent differences.

This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in our consolidated financial statements.

CSMC records bonus accruals on a quarterly basis.

CSMC recorded bonus accruals on a quarterly basis.

Deferred taxes related to the changes in the restoration plan and bonus accruals are also recorded on a quarterly basis.

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Establishing a valuation allowance of a deferred tax asset requires management to make estimates related to expectations of future taxable income.

Estimates of future taxable income are based on forecasted cash flows from CSMC’s operations.

As of March 31, 2020 and 2019 , CSMC had a deferred tax asset of approximately $1.4 million and $1.8 million , respectively.

As of March 31, 2020 , we believe that we will be able to utilize all $1.4 million of our deferred tax assets.

We will continue to assess our ability to realize our existing deferred tax assets.

As of March 31, 2020 and 2019 , the Taxable Subsidiary had a deferred tax liability of $1.0 million and a deferred tax asset of $26.8 thousand, respectively.

As such, the deferred tax asset was written off.

As of March 31, 2020, CSMC had a deferred tax asset of approximately $1.4 million.

As of March 31, 2021 and 2020, the Taxable Subsidiary had a deferred tax liability of $3.3 million and $1.0 million, respectively.

Based on our assessment of our unrecognized tax benefits, management believes that all benefits will be realized and they do not contain any uncertain tax positions.

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Net operating loss carryforwards $ 224 $ —

Compensation — 776

Pension liability — 647

Net unrealized depreciation on investments

Interest 173 —

Total deferred tax asset 397 1,402

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Net unrealized appreciation on investments (2,931) (695)

Net basis differences in portfolio investments (811) (268)

Total deferred tax liabilities (3,742) (963)

Total net deferred tax assets

The Taxable Subsidiary is consolidated for financial reporting purposes in accordance with U.S.

GAAP, so that our consolidated financial statements reflect our investments in the portfolio companies owned by the Taxable Subsidiary.

Absent the Taxable Subsidiary, a proportionate amount of any gross income of a partnership or LLC (or other pass-through entity) portfolio investment would flow through directly to us.

To the extent that our income did not consist of investment income, it could jeopardize our ability to qualify as a RIC and therefore cause us to incur significant amounts of corporate-level U.S.

federal income taxes.

The Taxable Subsidiary is not consolidated for U.S.

federal income tax purposes and may generate income tax expense as a result of their ownership of the portfolio companies.

This income tax expense, or benefit, and the related tax assets and liabilities, if any, are reflected in our Consolidated Statement of Operations.

Total net deferred tax (liabilities) assets $ (3,345) $ 439

The income tax expense, or benefit, and the related tax assets and liabilities generated by CSWC, CSMC and the Taxable Subsidiary, if any, are reflected in CSWC’s consolidated financial statements.

For the year ended March 31, 2021, we recognized total net income tax expense of $2.4 million, principally consisting of a $0.6 million accrual for a 4% U.S.

federal excise tax on our estimated undistributed taxable income and a provision for U.S.

federal income taxes relating to CSMC of $1.8 million (all of which is related to the write off of the deferred tax asset at CSMC).

For the year ended March 31, 2020, we recognized total net income tax expense of $2.1 million, principally consisting of a $1.1 million accrual for a 4% U.S.

federal excise tax on our estimated undistributed taxable income, a provision for U.S.

federal income taxes relating to CSMC of $0.7 million (of which $0.3 million is current expense and $0.4 million is deferred expense) and $0.3 million of deferred tax expense relating to the Taxable Subsidiary.

For the year ended March 31, 2019 , we recognized a total net income tax provision of $1.0 million , principally consisting of a $0.9 million accrual for a 4% U.S.

federal excise tax on our estimated undistributed taxable income, a provision for deferred U.S.

federal income taxes relating to CSMC of $0.2 million and a $0.1 million benefit relating to the Taxable Subsidiary.

Although we believe our tax returns are correct, the final determination of tax examinations could be different from what was reported on the returns.

In our opinion, we have made adequate tax provisions for years subject to examination.

Generally, we are currently open to audit under the statute of limitations by the Internal Revenue Service as well as state taxing authorities for the years ended December 31, 2015 through 2018.

The following table sets forth the significant components of the income tax expense as of March 31, 2021, 2020 and 2019 (amounts in thousands):

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162(m) limitation 122 1,488 476

Valuation allowance

Excise tax 637 1,110 880

Write-off of deferred tax asset 1,837 — —

Tax related to Taxable Subsidiary 50 315 (109)

Prior year deferred tax true-up — — —

Compensation benefits

Stock compensation benefits (207) (1,129) (280)

Total income tax expense $ 2,442 $ 2,062 $ 1,048

Although we believe our tax returns are correct, the final determination of tax examinations could be different from what was reported on the returns.

In our opinion, we have made adequate tax provisions for years subject to examination.

Generally, we are currently open to audit under the statute of limitations by the Internal Revenue Service as well as state taxing authorities for the years ended December 31, 2017 through 2019.

SHAREHOLDERS’ EQUITY

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On August 22, 2017, we received the Exemptive Order that supersedes the Original Order and in addition to the relief granted under the Original Order, allows us to withhold shares to satisfy tax withholding obligations related to the vesting of restricted stock granted pursuant to the 2010 Restricted Stock Award Plan, or the 2010 Plan, and to pay the exercise price of options to purchase shares of our common stock granted pursuant to the 2009 Stock Incentive Plan, or the 2009 Plan.

During the year ended March 31, 2020 , the Company repurchased 19,865 shares at an aggregate cost of approximately $0.4 million and a weighted average price per share of $21.04 in connection with the vesting of restricted stock awards.

During the year ended March 31, 2021, the Company repurchased 15,309

shares at an aggregate cost of approximately $0.2 million and a weighted average price per share of $15.62 in connection with the vesting of restricted stock awards.

During the year ended March 31, 2020, the Company repurchased 19,865 shares at an aggregate cost of approximately $0.4 million and a weighted average price per share of $21.04 in connection with the vesting of restricted stock awards.

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During the year ended March 31, 2020, the Company sold 1,231,432 shares of its common stock under the Equity ATM Program at a weighted-average price of $21.71 per share, raising $26.7 million of gross proceeds.

Net proceeds were $26.2 million, after deducting commissions to the sales agents on shares sold.

Cumulative to date, the Company has sold 4,305,629 shares of its common stock under the Equity ATM Program at a weighted-average price of $19.47, raising $83.8 million of gross proceeds.

Net proceeds were $82.2 million after commissions to the sales agents on shares sold.

As of March 31, 2021, the Company has $16.2 million available under the Equity ATM Program.

On August 1, 2019, after receiving the requisite shareholder approval, the Company filed an amendment to its Amended and Restated Articles of Incorporation to increase the amount of authorized shares of common stock from 25,000,000 to 40,000,000.

Share Repurchase Program

In January 2016, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $10 million of its outstanding common stock in the open market at certain thresholds below its NAV per share, in accordance with guidelines specified in Rules 10b5-1(c)(1)(i)(B) and 10b-18 under the Securities Exchange Act of 1934.

On March 1, 2016, the Company entered into a share repurchase agreement, which became effective immediately and shall terminate on the earliest of:

(1) the date on which a total of $10 million worth of common shares have been purchased under the plan;

(2) the date on which the terms set forth in the purchase instructions have been met;

or (3) the date that is one trading day after the date on which insider notifies broker in writing that this agreement shall terminate.

During the year ended March 31, 2020 , the Company repurchased a total of 794,180 shares at an average price of $11.57 per share, including commissions paid and, as a result, the Company may repurchase up to an additional $43 thousand of its common stock under the share repurchase program.

On March 1, 2016, the Company entered into a share repurchase agreement, which became effective immediately and terminated on March 26, 2020 upon the Company's purchase of the aggregate gross dollar amount (inclusive of commission fees) of its common stock under the share repurchase program meeting the threshold set forth in the share repurchase agreement.

During the year ended March 31, 2020, the Company repurchased a total of 794,180 shares at an average price of $11.57 per share, including commissions paid.

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The following table summarizes the restricted stock outstanding as of March 31, 2021:

Weighted Average

Fair Value Per

Remaining Vesting

Restricted Stock Awards

Number of Shares

Share at grant date

Term (in Years)

Weighted Average Weighted Average

Fair Value Per Remaining Vesting

Restricted Stock Awards Number of Shares Share at grant date Term (in Years)

Unvested at March 31, 2019 454,027 $ 17.33 2.8

Granted 97,845 21.11 3.6

Vested (172,136) 16.58 —

Forfeited (20,150) 18.78 —

Unvested at March 31, 2020 359,586 $ 18.64 2.4

Granted 239,574 15.18 3.2

Vested (141,804) 17.61 1.8

Forfeited (27,580) 18.63 —

Unvested at March 31, 2021 429,776 $ 17.05 2.5

Stock Options

On July 20, 2009, shareholders approved our 2009 Plan, which provides for the granting of stock options to employees and officers and authorizes the issuance of common stock upon exercise of stock options for up to 560,000 shares.

All options are granted at or above market price, generally expire up to 10 years from the date of grant and are generally exercisable on or after the first anniversary of the date of grant in five annual installments.

On August 22, 2017, we received the Exemptive Order from the SEC that supersedes the Original Order and, in addition to the relief granted under the Original Order, allows us to withhold shares of our common stock to satisfy the exercise of options to purchase shares of our common stock granted pursuant to the 2009 Plan.

At March 31, 2020 , there are no options to acquire shares of common stock outstanding.

The 2009 Plan terminated on July 20, 2019, the tenth anniversary of the date that the 2009 Plan was approved by the Company's shareholders.

The following table summarizes activity in the 2009 Plan as of March 31, 2020 :

Number of Shares

Balance at March 31, 2017

Canceled/Forfeited

Balance at March 31, 2018

Canceled/Forfeited

Balance at March 31, 2019

Canceled/Forfeited

Balance at March 31, 2020

We recognize compensation cost using the straight-line method for all share-based payments.

The fair value of stock options is determined on the date of grant using the Black-Scholes pricing model and is expensed over the requisite service period of the related stock options.

Accordingly, for the year ended March 31, 2020 , there was no expense recognized.

For the years ended March 31, 2019 and 2018 , we recognized stock option compensation expense of $38.7 thousand , and $154.6 thousand , respectively, related to the stock options held by our employees and officers.

As of March 31, 2020 , there is no remaining unrecognized compensation expense related to stock options.

At March 31, 2020 , there are no remaining options outstanding.

During the year ended March 31, 2019 , no options were granted, 11,750 options vested with a total fair value of approximately $0.1 million and 195,608 options were exercised with an average exercise price of $11.09 .

At March 31, 2018 , the range of exercise prices was $7.55 to $11.66 and the weighted-average remaining contractual life of outstanding options was 5.6 years .

The total number of options exercisable under both the 2009 Plan and the 1999 Plan at March 31, 2018 was 183,658 shares with a weighted-average exercise price of $11.07 .

During the year ended March 31, 2018 , no options were granted, 69,272 options vested with a total fair value of approximately $0.4 million and 10,756 options were exercised with an average exercise price of $11.66 .

OTHER EMPLOYEE COMPENSATION

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The 401K Plan permits employees to defer a portion of their total annual compensation up to the Internal Revenue Service annual maximum based on age and eligibility.

We made contributions to the 401K Plan of up to 4.5% of the Internal Revenue Service’s annual maximum eligible compensation, all of which is fully vested immediately.

We made contributions to the 401K Plan of up to

4.5% of the Internal Revenue Service’s annual maximum eligible compensation, all of which is fully vested immediately.

During the years ended March 31, 2021, 2020 and 2019, we made matching contributions of approximately $0.2 million, $0.2 million, and $0.1 million, respectively.

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Years ended March 31,

2021 2020 2019

Net pension cost

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Years ended March 31,

2021 2020 2019

Change in benefit obligation

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Net actuarial loss recognized as a component of equity 1,098 1,091

Total $ (1,881) $ (1,991)

Accumulated benefit obligation $ (2,979) $ (3,082)

The corridor approach is used to amortize the actuarial gains or losses based on 10% of the projected benefit obligation.

The estimated net actuarial loss that will be amortized from equity into net pension cost during 2021 is approximately $35.0 thousand .

The following assumptions were used in estimating the actuarial present value of the projected benefit obligations:

Years ended March 31,

2021 2020 2019

Discount rate 2.75 % 3.25 % 3.75 %

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Years ended March 31,

2021 2020 2019

Discount rate 3.25 % 3.75 % 4.00 %

Following are the expected benefit payments for the next five years and in the aggregate for the years 2027-2031 (amounts in thousands):

2022 2023 2024 2025 2026 2027-2031

Restoration Plan $ 245 $ 241 $ 236 $ 230 $ 224 $ 1,012

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Since commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

Portfolio Company

Investment Type

(amounts in thousands)

Adams Publishing Group, LLC

March 31, March 31,

Portfolio Company Investment Type (amounts in thousands)

Acceleration Partners, LLC Delayed Draw Term Loan $ 216 $ —

AllOver Media, LLC Revolving Loan 2,000 —

American Nuts Operations LLC Term Loan C 384 384

Broad Sky Networks LLC Revolving Loan 2,000 —

Central Medical Supply LLC Revolving Loan 1,200 —

Central Medical Supply LLC Delayed Draw Capex Term Loan 1,400 —

Delayed Draw Term Loan 6,750 —

American Nuts Operations LLC

ASC Ortho Management Company, LLC

Revolving Loan

Clickbooth.com, LLC

Revolving Loan

Danforth Advisors, LLC

Revolving Loan

Dynamic Communities, LLC

Revolving Loan

Clickbooth.com, LLC Revolving Loan 1,086 —

Danforth Advisors, LLC Revolving Loan — 500

Dynamic Communities, LLC Revolving Loan 500 500

Electronic Transaction Consultants LLC Revolving Loan 3,704 —

Environmental Pest Service Management Company, LLC Delayed Draw Term Loan — 525

ESCP DTFS Inc.

Delayed Draw Term Loan — 5,250

Environmental Pest Service Management Company, LLC

Delayed Draw Term Loan

Fast Sandwich, LLC

Revolving Loan

ITA Holdings Group, LLC

Revolving Loan

JVMC Holdings Corp.

Delayed Draw Term Loan

NinjaTrader, LLC

Revolving Loan

Roseland Management, LLC

Revolving Loan

Zenfolio Inc.

Fast Sandwich, LLC Revolving Loan 3,100 4,150

GrammaTech, Inc.

Revolving Loan 2,500 —

Ian, Evan, & Alexander Corporation Revolving Loan 2,000 —

ITA Holdings Group, LLC Revolving Loan 2,000 2,000

Klein Hersh, LLC Revolving Loan 938 —

Mako Steel LP Revolving Loan 1,226 —

NinjaTrader, LLC Revolving Loan 1,500 400

NinjaTrader, LLC Delayed Draw Term Loan 2,655 —

Roseland Management, LLC Revolving Loan 1,500 1,500

RTIC Subsidiary Holdings LLC Revolving Loan 767 —

Total unused commitments to extend financing $ 37,426 $ 15,209

As of March 31, 2021, total revolving and delayed draw loan commitments included commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies.

As of March 31, 2020 and March 31, 2019, the Company had $3.4 million in letters of credit issued and outstanding under these commitments on behalf of portfolio companies.

As of March 31, 2021 and 2020, the Company had $3.5 million and $3.4 million, respectively, in letters of credit issued and outstanding under these commitments on behalf of portfolio companies.

For all of these letters of credit issued and outstanding, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations.

Of these letters of credit, $3.4 million expire in May 2021.

As of March 31, 2020 and March 31, 2019, none of the letters of credit issued and outstanding were recorded as a liability on the Company's balance sheet as such letters of credit are considered in the valuation of the investments in the portfolio company.

Of these letters of credit, $3.1 million expire in May 2022 and $0.4 million expire in July 2021.

As of March 31, 2021 and 2020, none of the letters of credit issued and outstanding were recorded as a liability on the Company's balance sheet as such letters of credit are considered in the valuation of the investments in the portfolio company.

Effective April 1, 2019, ASC 842 required that a lessee to evaluate its leases to determine whether they should be classified as operating or financing leases.

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After this date, the Company has recorded lease expense on a straight-line basis, consistent with the accounting treatment for lease expense prior to the adoption of ASC 842.

Total lease expense incurred for the year ended March 31, 2020 was $229 thousand .

Total lease expense for both the two years ended March 31, 2019 and 2018 was $233 thousand.

Total lease expense incurred for each of the three years ended March 31, 2021, 2020 and 2019 was $0.2 million.

As of March 31, 2021, the asset related to the operating lease was $0.2 million and the lease liability was $0.2 million.

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The following table shows future minimum payments under the Company's operating lease as of March 31, 2021 (in thousands):

Year ending March 31,

Rent Commitment

Year ending March 31, Rent Commitment

In March 2021, the Company executed an agreement to lease new office space, which is expected to commence during the third quarter of fiscal year 2022.

The office space will be approximately 13,373 square feet.

This lease will be classified as an operating lease and has a term of approximately 10 years.

Contingencies

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The following presents a summary of the unaudited quarterly consolidated financial information for the years ended March 31, 2021 and 2020 (in thousands except per share amounts):

First Second Third Fourth

2021 Quarter Quarter Quarter Quarter Total

Net investment income $ 6,819 $ 8,319 $ 8,517 $ 8,016 $ 31,671

Net realized gain (loss) on investments, net of tax

Net change in unrealized depreciation on investments, net of tax

Net increase (decrease) in net assets from operations

Net realized (loss) gain on investments, net of tax (5,547) (1,279) (127) (1,583) (8,536)

Net change in unrealized appreciation (depreciation) on investments, net of tax 7,605 9,636 7,271 4,243 28,755

Realized losses on extinguishment of debt — (286) (262) (459) (1,007)

Net increase in net assets from operations 8,877 16,390 15,399 10,217 50,883

Pre-tax net investment income per share 0.40 0.44 0.52 0.44 1.79

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Net increase (decrease) in net assets from operations per share 0.49 0.88 0.80 0.50 2.67

First Second Third Fourth

2020 Quarter Quarter Quarter Quarter Total

Net investment income $ 7,360 $ 6,815 $ 7,114 $ 6,943 $ 28,232

Net realized gain on investments

Net change in unrealized (depreciation) appreciation on investments, net of tax

Net increase in net assets from operations

Net realized gain (loss) on investments 1,217 283 40,818 (87) 42,231

Net change in unrealized depreciation on investments, net of tax (1,864) (4,369) (54,765) (31,816) (92,814)

Net increase (decrease) in net assets from operations 6,713 2,729 (6,833) (24,960) (22,351)

Pre-tax net investment income per share 0.44 0.42 0.44 0.40 1.68

Net investment income per share 0.42 0.38 0.39 0.37 1.57

Net increase in net assets from operations per share

Net increase (decrease) in net assets from operations per share 0.38 0.15 (0.38) (1.34) (1.24)

RELATED PARTY TRANSACTIONS

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The nature and extent of significant managerial assistance provided by us will vary according to the particular needs of each portfolio company.

During the years ended March 31, 2020 , 2019 , and 2018 , we received management and other fees from certain of our portfolio companies totaling $0.2 million , $0.3 million , and $0.4 million, respectively, which were recognized as fees and other income on the Consolidated Statements of Operations.

During the year ended March 31, 2021, we did not receive any management fees from our portfolio companies.

During the years ended March 31, 2020 and 2019, we received management and other fees from certain of our portfolio companies totaling $0.2 million and $0.3 million, respectively, which were recognized as fees and other income on the Consolidated Statements of Operations.

During the year ended March 31, 2020, we received a transaction fee of $1.2 million in connection with the sale of Media Recovery, Inc.

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The payment date for the dividend is June 30, 2021.

On May 28, 2020, the Board of Directors declared a total dividend of $0.51 per share, comprised of a regular dividend of $0.41 and a supplemental dividend of $0.10, for the quarter ended September 30, 2020 .

The record date for the dividend is September 15, 2020 .

The payment date for the dividend is September 30, 2020 .

The Company has been closely monitoring the COVID-19 pandemic, its broader impact on the global economy and the more recent impacts on the U.S.

As of June 2, 2020, there is no indication of a reportable subsequent event impacting the Company’s financial statements for the year ended March 31, 2020.

The Company cannot predict the extent to which its financial condition and results of operations will be affected at this time.

The potential impact to our results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19.

The Company continues to observe and respond to the evolving COVID-19 environment and its potential impact on areas across its business.

SELECTED PER SHARE DATA AND RATIOS

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Per Share Data:

2021 2020 2019 2018 2017

Investment income 1

$ 3.57 $ 3.45 $ 3.10 $ 2.18 $ 1.48

Operating expenses 1

(1.78) (1.76) (1.62) (1.16) (0.87)

Income taxes 1

Net investment income (loss) 1

Net realized gain (loss), net of tax 1

Net change in unrealized (depreciation) appreciation on investments, net of tax 1

Total (decrease) increase from investment operations

(0.13) (0.12) (0.06) (0.01) (0.11)

Net investment income 1

1.66 1.57 1.42 1.01 0.50

Net realized (loss) gain, net of tax 1

(0.45) 2.35 1.24 0.10 0.50

Net change in unrealized appreciation (depreciation) on investments, net of tax 1

1.51 (5.16) (0.68) 1.34 0.49

Realized losses on extinguishment of debt 1

(0.05) — — — —

Total increase (decrease) from investment operations 2.67 (1.24) 1.98 2.45 1.49

Dividends to shareholders (2.05) (2.75) (2.27) (0.99) (0.79)

Distribution from additional capital for spin-off

Spin-off Compensation Plan distribution, net of tax — — — (0.03) (0.08)

Decrease in unrealized appreciation due to distributions to CSWI

Exercise of employee stock options 2

— — (0.12) 0.01 (0.09)

(Issuance) forfeiture of restricted stock 3

(0.16) (0.06) (0.23) (0.18) (0.15)

Accretive (dilutive) effect of share issuances and repurchases 0.30 0.45 0.06 (0.04) —

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Net change in pension plan funded status — (0.01) (0.01) (0.05) —

(0.02) (0.19) 0.01 0.01 —

Increase (decrease) in net asset value 0.88 (3.49) (0.46) 1.28 0.46

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Beginning of year 15.13 18.62 19.08 17.80 17.34

End of year $ 16.01 $ 15.13 $ 18.62 $ 19.08 $ 17.80

Ratios and Supplemental Data

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Total investment return 5

118.56 % (37.52) % 38.34 % 6.61 % 27.88 %

Total return based on change in NAV 6

19.37 % (3.97) % 9.49 % 12.75 % 7.21 %

Per share market value at end of year $ 22.16 $ 11.42 $ 21.04 $ 17.02 $ 16.91

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SIGNIFICANT SUBSIDIARIES

Media Recovery Inc.

Media Recovery, Inc., dba SpotSee Holdings, through its subsidiary ShockWatch, provides solutions that currently enable over 3,000 customers and some 200 partners in 62 countries to detect mishandling that causes product damage and spoilage during transport and storage.

The ShockWatch product portfolio includes impact, tilt, temperature, vibration, and humidity detection systems and is widely used in the energy, transportation, aerospace, defense, food, pharmaceutical, medical device, consumer goods and manufacturing sectors.

On November 25, 2019, the Company sold its investment in Media Recovery, Inc.

Below is certain selected key financial data from Media Recovery, Inc.'s Balance Sheet at March 31, 2020 and 2019 and the twelve months ended March 31, 2020 , 2019 and 2018 Income Statement for the periods in which our investment in Media Recovery, Inc.

exceeded the threshold in at least one of the tests under Rule 3-09 of Regulation S-X (amounts in thousands).

March 31, 2020

March 31, 2019

Current Assets

Non-Current Assets

Current Liabilities

Non-Current Liabilities

Twelve Months Ended March 31,

Income from continuing operations

In September 2015, we entered into a limited liability company agreement with Main Street Capital Corporation ("Main Street") to form I-45 SLF LLC (the "I-45 LLC Agreement").

In September 2015, we entered into a limited liability company agreement with Main Street Capital Corporation ("Main Street") to form I-45 SLF LLC (the "Initial I-45 LLC Agreement").

I-45 SLF LLC began investing in UMM syndicated senior secured loans during the quarter ended December 31, 2015.

The initial equity capital commitment to I-45 SLF LLC totaled $85.0 million, consisting of $68.0 million from CSWC and $17.0 million from Main Street, all of which was funded as of March 31, 2020 .

CSWC owns 80% of I-45 SLF LLC and has a profits interest of 75.6% , while Main Street owns 20% and has a profits interest of 24.4% .

I-45 SLF LLC’s Board of Managers make all investment and operational decisions for the fund, and consists of equal representation from CSWC and Main Street.

On April 30, 2020, pursuant to the terms of the I-45 LLC Agreement, each of CSWC and Main Street made an additional equity capital commitment of $12.8 million and $3.2 million, respectively, which resulted in a total equity capital commitment to I-45 SLF LLC of $80.8 million and $20.2 million, respectively

The initial equity capital commitment to I-45 SLF LLC totaled $85.0 million, consisting of $68.0 million from CSWC and $17.0 million from Main Street.

On April 30, 2020, pursuant to the terms of the Initial I-45 LLC Agreement, each of CSWC and Main Street made an additional equity capital commitment of $12.8 million and $3.2 million, respectively, which resulted in a total equity capital commitment to I-45 SLF LLC of $80.8 million and $20.2 million, respectively.

On March 25, 2021, I-45 SLF LLC declared a return of capital dividend to its members in the amount of $10.0 million.

As of March 31, 2021, total funded equity capital totaled $91.0 million, consisting of $72.8 million from CSWC and $18.2 million from Main Street.

CSWC owns 80% of I-45 SLF LLC and has a profits interest of 76.2625% as of March 31, 2021, while Main Street owns 20% and currently has a profits interest of 23.7375% as of March 31, 2021.

I-45 SLF LLC’s Board of Managers makes all investment and operational decisions for the fund, and consists of equal representation from CSWC and Main Street.

On March 11, 2021, the Company and Main Street entered into the Second Amended and Restated Limited Liability Company Operating Agreement (the "Amendment"), which increased the current profits interest that is allocated to the Company on a pro rata basis from (a) 75.6% to (b) an amount equal to:

(i) 76.26250% as of the date of the Amendment through the quarter ended March 31, 2021;

(ii) 76.9250% for quarter ended June 30, 2021;

(iii) 77.58750% for the quarter ended September 30, 2021;

and (iv) 78.250% for the quarter ended December 31, 2021 and periods thereafter.

As of March 31, 2021 and 2020, I-45 SLF LLC had total assets of $177.8 million and $177.8 million, respectively.

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The portfolio companies in I-45 SLF LLC are in industries similar to those in which CSWC may invest directly.

As of March 31, 2020 , no credit investments were unsettled trades.

As of March 31, 2021, approximately $13.1 million of the credit investments were unsettled trades.

For the years ended March 31, 2020 and 2019 , I-45 SLF LLC declared total dividends of $12.7 million and $12.4 million , respectively.

As of March 31, 2020, none of the credit investments were unsettled trades.

For the years ended March 31, 2021 and 2020, I-45 SLF LLC declared total dividends of $18.7 million, $10 million of which was the return of capital dividend described above, and $12.7 million, respectively.

Additionally, I-45 SLF LLC closed on a $75.0 million 5-year senior secured credit facility (the “I-45 credit facility”) in November 2015.

4 unchanged sentences

In November 2019, the I-45 credit facility was amended to extend the maturity to November 2024 and to reduce the interest rate on borrowings to LIBOR plus 2.25% per annum.

the I-45 credit facility, $125.0 million has been drawn as of March 31, 2020 .

On April 30, 2020, the I-45 credit facility was amended to permanently reduce the facility amount through a prepayment of $15.0 million.

On April 30, 2020, the I-45 credit facility was amended to permanently reduce the facility amount through a prepayment of $15.0 million and to change the minimum utilization requirements.

In March 2021, the I-45 credit facility was amended to extend the maturity to March 25, 2026 and to reduce the interest rate on borrowings to LIBOR plus 2.15%.

Under the I-45 credit facility, $91.0 million has been drawn as of March 31, 2021.

At March 31, 2021, our investment in I-45 SLF LLC exceeded the 10% threshold in at least one of the tests under Rule 4-08(g) and exceeded the 20% threshold in at least one of the tests under Rule 3-09 of Regulation S-X.

Accordingly, we have included as an exhibit to our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 the financial statements of I-45 SLF LLC.

Below is certain summarized financial information for I-45 SLF LLC as of March 31, 2021 and 2020 and for the years ended March 31, 2021, 2020 and 2019 (amounts in thousands):

March 31, 2021 March 31, 2020

Selected Balance Sheet Information:

Investments, at fair value (cost $170,791 and $207,768) $ 164,351 $ 170,860

Cash and cash equivalents 10,419 3,739

Due from broker 152 38

Deferred financing costs 2,301 2,095

Interest receivable 553 1,076

Total assets $ 177,776 $ 177,808

Senior credit facility payable $ 91,000 $ 125,000

Payable for unsettled transactions 13,072 —

Other liabilities 2,131 3,029

Total liabilities $ 106,203 $ 128,029

Members’ equity 71,573 49,779

Total liabilities and net assets $ 177,776 $ 177,808

Years Ended March 31,

2021 2020 2019

Selected Statement of Operations Information:

Total revenues $ 13,930 $ 20,300 $ 21,397

Total expenses (4,565) (8,045) (8,759)

Net investment income 9,365 12,255 12,638

Net unrealized appreciation (depreciation) 30,467 (32,394) (6,647)

Net realized (losses) gains (15,313) 603 400

Net increase (decrease) in members’ equity resulting from operations $ 24,519 $ (19,536) $ 6,391

Below is a listing of the individual loans in I-45 SLF LLC’s portfolio as of March 31, 2021 and 2020:

I-45 SLF LLC Loan Portfolio as of March 31, 2021

Portfolio Company

Investment Type

Maturity Date

Current Interest Rate 1

AAC Holdings, Inc.

Healthcare services

First Lien - Priming Facility

P+13.50% (Floor 1.00%)

AAC Holdings, Inc.

Healthcare services

L+ 6.75% (Floor 1.00%), 4.00% PIK

Aerospace & defense

L+6.25% (Floor 0.75%)

Business services

L+5.50% (Floor 1.00%)

Portfolio Company Industry Investment Type Maturity Date Current Interest Rate 1

Principal Cost 2

AAC New Holdco Inc.

Healthcare services First Lien 6/25/2025 10.00%, 8.00% PIK $ 1,752 $ 1,752 $ 1,743

304,075 shares common stock — — — 1,449 1,449

Warrants (Expiration - December 11, 2025) — — — 482 482

ADS Tactical Aerospace & defense First Lien 3/19/2026 L+5.75%

(Floor 1.00%) 6,731 6,596 6,697

American Teleconferencing Services, Ltd.

Telecommunications

Telecommunications First Lien 6/8/2023 L+6.50%

(Floor 1.00%) 6,759 6,698 3,590

ATX Canada Acquisitionco Inc.

Technology products & components

L+7.00% (Floor 1.00%), 1.0% PIK

Technology products & components First Lien 12/31/2023 L+6.25%, 1.50% PIK

(Floor 1.00%) 4,464 4,462 4,084

California Pizza Kitchen, Inc.

Restaurants First Lien 11/23/2024 L+10.00%

(Floor 1.50%) 937 913 936

Software & IT services

Geo Parent Corporation

Building & infrastructure products

First Lien Rolled Up 11/23/2024 1.00%, L+11.00% PIK

(Floor 1.50%) 1,039 1,035 1,033

Second Lien 5/23/2025 1.00%, L+12.50% PIK

(Floor 1.50%) 1,141 1,141 1,115

67,841 shares common stock — — — 1,845 1,845

Corel Software & IT services First Lien 7/2/2026 L+5.00% 7,030 6,834 7,008

Geo Parent Corporation Building & infrastructure products First Lien 12/19/2025 L+5.25% 4,900 4,867 4,888

Go Wireless Holdings, Inc.

Consumer products & retail

Consumer products & retail First Lien 12/22/2024 L+6.50%

(Floor 1.00%) 6,848 6,816 6,839

Hunter Defense Technologies, Inc.

Aerospace & defense

(Floor 1.00%)

Print Solutions, LLC

Media, marketing & entertainment

Aerospace & defense First Lien 3/29/2023 L+6.00%

(Floor 1.00%) 6,122 6,049 6,091

InfoGroup Inc.

Software & IT services

Software & IT services First Lien 4/3/2023 L+5.00%

(Floor 1.00%) 2,880 2,870 2,741

Integro Parent Inc.

Business services

Business services First Lien 10/28/2022 L+5.75%

(Floor 1.00%) 3,253 3,226 3,201

Intermedia Holdings, Inc.

Software & IT services

Software & IT services First Lien 7/21/2025 L+6.00%

(Floor 1.00%) 5,735 5,712 5,748

Isagenix International, LLC

Consumer products & retail

Inventus Power, Inc.

Technology Products & Components First Lien 3/29/2024 L+5.00%

(Floor 1.00%) 7,000 6,930 6,930

JAB Wireless, Inc.

Telecommunications

Isagenix International, LLC Consumer products & retail First Lien 6/14/2025 L+5.75%

(Floor 1.00%) 1,823 1,812 1,376

Portfolio Company Industry Investment Type Maturity Date Current Interest Rate 1

Principal Cost 2

KORE Wireless Group Inc.

Telecommunications

Portfolio Company

Investment Type

Maturity Date

Current Interest Rate 1

Lab Logistics, LLC

Healthcare services

L+6.50% (Floor 1.00%)

Telecommunications First Lien 12/20/2024 L+5.50% 4,706 4,680 4,700

Lab Logistics, LLC Healthcare services First Lien 9/25/2023 L+7.25%

(Floor 1.00%) 6,305 6,255 6,305

Lift Brands, Inc.

Consumer services

L+7.00% (Floor 1.00%), 1.0% PIK

Consumer services Tranche A 6/29/2025 L+7.5%

(Floor 1.00%) 2,521 2,521 2,370

Tranche B 6/29/2025 9.50% PIK 531 531 424

Tranche C 6/29/2025 — 565 565 452

1,051 shares common stock — — — 749 749

Lightbox Intermediate, L.P.

Software & IT services

LOGIX Holdings Company, LLC

Telecommunications

Software & IT services First Lien 5/9/2026 L+5.00% 3,453 3,418 3,419

LOGIX Holdings Company, LLC Telecommunications First Lien 12/23/2024 L+5.75%

(Floor 1.00%) 5,890 5,863 5,683

LSF9 Atlantis Holdings, LLC

Telecommunications

Lulu's Fashion Lounge, LLC Consumer products & retail First Lien 8/26/2022 L+7.00%, 2.50% PIK

(Floor 1.00%) 3,686 3,633 3,152

Lulu's Fashion Lounge, LLC

Consumer products & retail

L+9.00% (Floor 1.00%)

Mills Fleet Farm Group LLC

Consumer products & retail

L+6.25% (Floor 1.00%), 0.75% PIK

Mills Fleet Farm Group LLC Consumer products & retail First Lien 10/24/2024 L+6.00%

(Floor 1.00%) 4,625 4,570 4,533

NBG Acquisition, Inc.

Wholesale First Lien 4/26/2024 L+5.50%

(Floor 1.00%) 2,738 2,714 2,468

Nomad Buyer, Inc.

Healthcare services

Novetta Solutions, LLC

Software & IT services

Novetta Solutions, LLC Software & IT services First Lien 10/17/2022 L+5.00%

(Floor 1.00%) 4,845 4,795 4,836

PaySimple - Delayed Draw 3

Software & IT services

PaySimple, Inc.

Software & IT services

Peraton Corp.

(fka MHVC Acquisition Corp.)

Aerospace & defense

(Floor 1.00%)

Software & IT services Delayed Draw Term Loan 8/23/2025 L+5.50% 1,369 1,346 1,365

First Lien 8/23/2025 L+5.50% 4,220 4,174 4,209

Pet Supermarket, Inc.

Consumer products & retail

Consumer products & retail First Lien 7/5/2022 L+5.50%

(Floor 1.00%) 4,760 4,750 4,641

PT Network, LLC

Healthcare products

L+5.50% (Floor 1.00%), 2.0% PIK

Signify Health, LLC

Healthcare services

L+4.50% (Floor 1.00%)

Consumer products & retail

TestEquity, LLC

Capital equipment

PT Network, LLC Healthcare products First Lien 11/30/2023 L+5.50%, 2.00% PIK

(Floor 1.00%) 4,465 4,465 4,465

TestEquity, LLC - Term Loan B

Capital equipment

TGP Holdings III LLC

Durable consumer goods

Research Now Group, Inc.

Business Services First Lien 12/20/2025 L+5.50%

(Floor 1.00%) 4,987 4,987 4,950

The Hoover Group, Inc.

Energy services (midstream)

Signify Health, LLC Healthcare services First Lien 12/23/2024 L+4.50%

(Floor 1.00%) 5,044 5,017 5,064

Portfolio Company

Investment Type

Maturity Date

Current Interest Rate 1

Time Manufacturing Acquisition

Capital equipment

Tacala, LLC Consumer products & retail Second Lien 2/7/2028 L+7.50%

(Floor 0.75%) 5,000 4,989 5,002

TestEquity, LLC Capital equipment First Lien 4/28/2022 L+6.25%

(Floor 1.00%) 3,816 3,808 3,358

First Lien - Term Loan B 4/28/2022 L+6.25%

(Floor 1.00%) 949 947 835

TGP Holdings III LLC Durable consumer goods Second Lien 9/25/2025 L+8.50%

(Floor 1.00%) 2,500 2,479 2,483

Time Manufacturing Acquisition Capital equipment First Lien 2/3/2023 L+5.00%

(Floor 1.00%) 5,802 5,785 5,824

Portfolio Company Industry Investment Type Maturity Date Current Interest Rate 1

Principal Cost 2

UniTek Global Services, Inc.

Telecommunications

L+5.50% (Floor 1.00%), 1.0% PIK

Telecommunications First Lien 8/20/2024 L+5.50%, 1.00% PIK

(Floor 1.00%) 2,736 2,721 2,480

TelePacific Corp.

Telecommunications

Telecommunications First Lien 5/2/2023 L+5.50%

(Floor 1.00%) 5,200 5,172 4,829

Vida Capital, Inc.

Financial services

VIP Cinema Holdings, Inc.

- Superiority DIP 5

Hotel, gaming & leisure

VIP Cinema Holdings, Inc.

Hotel, gaming & leisure

Financial services First Lien 10/1/2026 L+6.00% 3,805 3,760 3,672

YS Garments, LLC Consumer products & retail First Lien 8/9/2024 L+6.00%

(Floor 1.00%) 4,634 4,608 4,287

Wireless Vision Holdings, LLC 4

Telecommunications

L+8.91% (Floor 1.00%), 1.0% PIK

YS Garments, LLC

Consumer products & retail

Total Investments $ 170,791 $ 164,351

4 unchanged sentences

Certain investments are subject to a LIBOR or Prime interest rate floor.

Certain investments, as noted, accrue payment-in-kind ("PIK") interest.

2 Represents amortized cost.

3 Represents the fair value determined utilizing a similar process as the Company in accordance with ASC 820.

1 unchanged sentence

It is not included in the Company’s Board of Directors’ valuation process described elsewhere herein.

The investment has approximately $0.5 million in an unfunded delayed draw commitment as of March 31, 2020 .

The investment is structured as a first lien last out term loan and may earn interest in addition to the stated rate.

Investment was on non-accrual status as of March 31, 2020 , meaning the Company has ceased to recognize interest income on the investment.

I-45 SLF LLC Loan Portfolio as of March 31, 2020

Portfolio Company

Portfolio Company Industry Investment Type Maturity Date Current Interest Rate 1

Principal Cost Fair Value 2

AAC Holdings, Inc.

Healthcare services

Healthcare services First Lien - Priming Facility 3/31/2020 P+13.50%

(Floor 1.00%) $ 1,598 $ 1,598 $ 1,598

6/30/2023 L+ 6.75%

(Floor 1.00%),

Allen Media, LLC

Media, marketing & entertainment

4.00% PIK 7,371 7,264 3,225

ADS Tactical Aerospace & defense First Lien 7/26/2023 L+6.25%

(Floor 0.75%) 4,948 4,928 4,735

American Scaffold Holdings, Inc.

Aerospace & defense

ALKU, LLC Business services First Lien 7/29/2026 L+5.50%

(Floor 1.00%) 3,000 2,972 2,820

American Teleconferencing Services, Ltd.

Telecommunications

(Floor 1.00%)

ATI Investment Sub, Inc.

Technology products & components

Telecommunications First Lien 6/8/2023 L+6.50%

(Floor 1.00%) 6,771 6,623 3,825

ATX Canada Acquisitionco Inc.

Technology products & components

Technology products & components First Lien 6/11/2021 L+7.00%

(Floor 1.00%),

1.0% PIK 4,573 4,561 3,796

California Pizza Kitchen, Inc.

(Floor 1.00%)

Chloe Ox Parent, LLC (Censeo Health)

Healthcare services

(Floor 1.00%)

Consumer services

(Floor 1.00%)

Digital River, Inc.

Software & IT services

Restaurants First Lien 8/23/2022 L+6.00%

(Floor 1.00%) 6,760 6,741 3,418

Geo Parent Corporation

Building & infrastructure products

Corel Software & IT services First Lien 7/2/2026 L+5.00% 4,969 4,720 4,410

Geo Parent Corporation Building & infrastructure products First Lien 12/19/2025 L+5.25% 4,950 4,909 4,678

Go Wireless Holdings, Inc.

Consumer products & retail

Consumer products & retail First Lien 12/22/2024 L+6.50%

(Floor 1.00%) 6,213 6,170 5,042

Hunter Defense Technologies, Inc.

Aerospace & defense

(Floor 1.00%)

iEnergizer Limited

Business services

Aerospace & defense First Lien 3/29/2023 L+7.00%

(Floor 1.00%) 5,856 5,772 5,870

Print Solutions, LLC

Media, marketing & entertainment

Print Solutions, LLC Media, marketing & entertainment Second Lien 6/21/2023 L+8.75%

(Floor 1.00%) 3,000 2,976 413

InfoGroup Inc.

Software & IT services

Software & IT services First Lien 4/3/2023 L+5.00%

(Floor 1.00%) 2,910 2,895 2,610

Integro Parent Inc.

Business services

Business services First Lien 10/31/2022 L+5.75%

(Floor 1.00%) 3,301 3,256 3,252

Intermedia Holdings, Inc.

Software & IT services

Software & IT services First Lien 7/21/2025 L+6.00%

(Floor 1.00%) 5,794 5,765 5,301

Isagenix International, LLC

Healthcare products

Isagenix International, LLC Consumer products & retail First Lien 6/14/2025 L+5.75%

(Floor 1.00%) 1,953 1,939 728

JAB Wireless, Inc.

Telecommunications

Telecommunications First Lien 5/2/2023 L+8.00%

(Floor 1.00%) 7,840 7,791 7,703

KORE Wireless Group Inc.

Telecommunications

Telecommunications First Lien 12/20/2024 L+5.50% 4,754 4,721 4,398

Lab Logistics, LLC Healthcare services First Lien 9/25/2023 L+6.50%

(Floor 1.00%) 5,402 5,361 4,971

Lift Brands, Inc.

Consumer services

Consumer services First Lien 4/16/2023 L+7.00%

(Floor 1.00%),

LOGIX Holdings Company, LLC

Telecommunications

1.0% PIK 4,810 4,785 3,689

Portfolio Company Industry Investment Type Maturity Date Current Interest Rate 1

Principal Cost Fair Value 2

Lightbox Intermediate, L.P.

Software & IT services First Lien 5/9/2026 L+5.00% 2,978 2,938 2,933

LOGIX Holdings Company, LLC Telecommunications First Lien 12/23/2024 L+5.75%

(Floor 1.00%) 5,953 5,918 4,911

LSF9 Atlantis Holdings, LLC

Telecommunications

LSF9 Atlantis Holdings, LLC Telecommunications First Lien 5/1/2023 L+6.00%

(Floor 1.00%) 6,519 6,485 5,382

Lulu's Fashion Lounge, LLC

Consumer products & retail

Lulu's Fashion Lounge, LLC Consumer products & retail First Lien 8/26/2022 L+9.00%

(Floor 1.00%) 3,778 3,707 3,231

Mills Fleet Farm Group LLC

Consumer products & retail

Mills Fleet Farm Group LLC Consumer products & retail First Lien 10/24/2024 L+6.25%

(Floor 1.00%),

0.75% PIK 4,958 4,883 4,214

NBG Acquisition, Inc.

(Floor 1.00%)

New Era Technology, Inc.

Software & IT services

(Floor 1.00%)

Delayed Draw Term Loan

(Floor 1.00%)

New Media Holdings II LLC

Media, marketing & entertainment

Wholesale First Lien 4/26/2024 L+5.50%

(Floor 1.00%) 2,813 2,780 1,598

Nomad Buyer, Inc.

Healthcare services

Novetta Solutions, LLC

Software & IT services

Healthcare services First Lien 8/1/2025 L+5.00% 2,955 2,819 2,748

Novetta Solutions, LLC Software & IT services First Lien 10/17/2022 L+5.00%

(Floor 1.00%) 4,896 4,813 4,365

PaySimple - Delayed Draw 3

Software & IT services First Lien 8/23/2025 L+5.50% 934 920 850

PaySimple, Inc.

Software & IT services First Lien 8/23/2025 L+5.50% 4,263 4,206 3,879

Peraton Corp.

(fka MHVC Acquisition Corp.)

Aerospace & defense

(fka MHVC Acquisition Corp.) Aerospace & defense First Lien 4/29/2024 L+5.25%

(Floor 1.00%) 6,329 6,310 5,918

Pet Supermarket, Inc.

Consumer products & retail

(Floor 1.00%)

PT Network, LLC

Healthcare products

Consumer products & retail First Lien 7/5/2022 L+5.50%

(Floor 1.00%) 4,810 4,792 4,425

STL Parent Corp.

(American Railcar)

Transportation & logistics

Consumer products & retail

Teleguam Holdings, LLC

Telecommunications

PT Network, LLC Healthcare products First Lien 11/30/2023 L+5.50%

(Floor 1.00%),

Terra Millennium Corporation

Industrial products

2.0% PIK 4,418 4,418 4,024

Signify Health, LLC Healthcare services First Lien 12/23/2024 L+4.50%

(Floor 1.00%) 5,096 5,061 4,281

TestEquity, LLC

Capital equipment

Tacala, LLC Consumer products & retail Second Lien 2/7/2028 L+7.50% 4,500 4,492 3,521

TestEquity, LLC Capital equipment First Lien 4/28/2022 L+5.50%

(Floor 1.00%) 3,816 3,800 3,186

TGP Holdings III LLC

Durable consumer goods

TestEquity, LLC - Term Loan B Capital equipment First Lien 4/28/2022 L+5.50% 959 955 801

TGP Holdings III LLC Durable consumer goods Second Lien 9/25/2025 L+8.50%

(Floor 1.00%) 2,500 2,474 1,838

The Hoover Group, Inc.

Energy services (midstream)

Energy services (midstream) First Lien 1/28/2021 L+7.25%

(Floor 1.00%) 6,370 6,306 5,892

Time Manufacturing Acquisition

Capital equipment

Time Manufacturing Acquisition Capital equipment First Lien 2/3/2023 L+5.00%

(Floor 1.00%) 4,848 4,825 4,436

Turning Point Brands, Inc.

Consumer products & retail

UniTek Global Services, Inc.

Telecommunications

Telecommunications First Lien 8/26/2024 L+5.50%

(Floor 1.00%),

1.0% PIK 2,970 2,949 2,687

TelePacific Corp.

Telecommunications

Telecommunications First Lien 5/2/2023 L+6.00%

(Floor 1.00%) 5,200 5,158 4,056

Portfolio Company Industry Investment Type Maturity Date Current Interest Rate 1

Principal Cost Fair Value 2

Vida Capital, Inc.

Financial services First Lien 10/1/2026 L+6.00% 3,965 3,910 3,668

VIP Cinema Holdings, Inc.

Hotel, gaming & leisure

Hotel, gaming & leisure First Lien - Superiority DIP 5

5/20/2020 L+8.00% 719 708 129

3/1/2023 P+7.00%

(Floor 1.00%) 4,375 4,364 788

Wireless Vision Holdings, LLC 4

Telecommunications

(Floor 1.00%),

YS Garments, LLC

Consumer products & retail

Telecommunications First Lien 9/29/2022 L+8.91%

(Floor 1.00%),

1.0% PIK 7,327 7,253 6,264

YS Garments, LLC Consumer products & retail First Lien 8/9/2024 P+6.00% 4,813 4,777 4,355

Total Investments $ 207,768 $ 170,860

5 unchanged sentences

2 Represents the fair value determined utilizing a similar process as the Company in accordance with ASC 820.

However, the fair value is determined by the Board of Managers of the Joint Venture.

However, the determination of such fair value is determined by the Board of Managers of the Joint Venture.

It is not included in the Company’s Board of Directors’ valuation process described elsewhere herein.

1 unchanged sentence

4 The investment is structured as a first lien last out term loan and may earn interest in addition to the stated rate.

At March 31, 2020 , our investment in I-45 SLF LLC exceeded the 10% threshold in at least one of the tests under Rule 4-08(g) and exceeded the 20% threshold in at least one of the tests under Rule 3-09 of Regulation S-X.

Accordingly, we have included as an exhibit to our Annual Report on Form 10-K for the fiscal year ended March 31, 2020 the financial statements of I-45 SLF LLC.

Below is certain summarized financial information for I-45 SLF LLC as of March 31, 2020 and 2019 and for the years ended March 31, 2020 , 2019 and 2018 (amounts in thousands):

March 31, 2020

March 31, 2019

Selected Balance Sheet Information:

Investments, at fair value (cost $207,768 and $242,061)

Cash and cash equivalents

Due from broker

Deferred financing costs

Interest receivable

Senior credit facility payable

Payable for unsettled transactions

Other liabilities

Total liabilities

Members’ equity

Total liabilities and net assets

Years Ended March 31,

Selected Statement of Operations Information:

Total revenues

Total expenses

Net investment income

Net unrealized (depreciation) appreciation

Net realized gains

Net (decrease) increase in members’ equity resulting from operations

5 Investment was on non-accrual as of March 31, 2020, meaning the Company has ceased to recognize interest income on the investment.

SCHEDULE 12-14

1 unchanged sentence

(In thousands)

Portfolio Company

Type of Investment (1)

Amount of Interest or Dividends Credited in Income (2)

Fair Value at March 31, 2019

Gross Additions (3)

Gross Reductions (4)

Amount of Realized Gain/(Loss) (5)

Amount of Unrealized Gain/(Loss)

Fair Value at March 31, 2020

Portfolio Company Type of Investment (1) Amount of Interest or Dividends Credited in Income (2) Fair Value at March 31, 2020 Gross Additions (3) Gross Reductions (4) Amount of Realized Gain/(Loss) (5) Amount of Unrealized Gain/(Loss) Fair Value at March 31, 2021

Control Investments

80% LLC equity interest

Prism Spectrum Holdings, LLC

96,498.32 Class A units

Media Recovery, Inc.

800,000 shares Series A Convertible Preferred Stock, convertible into 800,000 shares common stock

4,000,002 shares common stock

I-45 SLF LLC 80% LLC equity interest $ 6,609 $ 39,760 $ 12,800 $ (8,000) $ — $ 12,598 $ 57,158

Total Control Investments $ 6,609 $ 39,760 $ 12,800 $ (8,000) $ — $ 12,598 $ 57,158

Portfolio Company

Type of Investment (1)

Amount of Interest or Dividends Credited in Income (2)

Fair Value at March 31, 2019

Gross Additions (3)

Gross Reductions (4)

Amount of Realized Gain/(Loss) (5)

Amount of Unrealized Gain/(Loss)

Fair Value at March 31, 2020

Affiliate Investments

Chandler Signs, LLC

Senior subordinated debt (12.00% cash, 1.00% PIK)

1,500,000 units of Class A-1 common stock

Dynamic Communities, LLC

Revolving loan

Central Medical Supply LLC Revolving loan $ 23 $ — $ 275 $ — $ — $ 1 $ 276

First lien 612 — 7,371 — — (463) 6,908

Delayed Draw Term Loan 16 — 75 — — 17 92

875,000 Preferred Units — — 875 — — (234) 641

Chandler Signs, LLC 1,500,000 units of Class A-1 common stock — 3,110 — — — (1,767) 1,343

Delphi Behavioral Health Group, LLC First lien 163 — 1,414 — — (16) 1,398

First lien 153 — 1,581 — — (81) 1,500

1,681.04 Common Units — — 3,615 — — — 3,615

Dynamic Communities, LLC Revolving loan 4 — 1 — — (1) —

First lien 1,235 9,928 465 (140) — (287) 9,966

Senior subordinated debt 29 — 372 — — — 372

2,000,000 Preferred units — 1,850 — — — (576) 1,274

GrammaTech, Inc.

Revolving loan 200 2,460 9 (2,500) — 31 —

First lien 1,142 11,316 35 — — 69 11,420

1,000 Class A Units — 1,000 — — — 208 1,208

ITA Holdings Group, LLC

Revolving loan

ITA Holdings Group, LLC Revolving loan 66 — 2,207 (2,200) — (7) —

First lien - Term Loan 965 9,900 86 — — 75 10,061

2 unchanged sentences

First Lien - PIK Note B 10 88 9 — — 6 103

Warrants — 2,762 — — — 206 2,968

9.25% Class A membership interest 33 2,099 — — — 433 2,532

Roseland Management, LLC

Revolving loan

Roseland Management, LLC Revolving loan 15 500 2 (500) — (2) —

First lien 244 10,369 7 (10,368) — (8) —

10,000 Class A Units — 1,334 — (1,334) — — —

SIMR, LLC First lien 2,410 11,190 2,005 — — (1,092) 12,103

9,374,510.2 Class B Common units — 1,742 — — — (1,742) —

Portfolio Company

Type of Investment (1)

Amount of Interest or Dividends Credited in Income (2)

Fair Value at March 31, 2019

Gross Additions (3)

Gross Reductions (4)

Amount of Realized Gain/(Loss) (5)

Amount of Unrealized Gain/(Loss)

Fair Value at March 31, 2020

First lien 447 — 8,344 — — 156 8,500

500,000 Class A Common Units — — 500 — — 735 1,235

Zenfolio Inc.

Revolving loan 53 1,888 1 (1,844) — (45) —

First lien 384 13,127 21 (12,821) — (327) —

190 shares of common stock — — — (272) (1,628) 1,900 —

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data