COMMITMENTS AND CONTINGENCIES

9 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments

In the normal course of business, the Company is a party to financial instruments with off-balance sheet risk, consisting primarily of unused commitments to extend financing to the Company’s portfolio companies. Because commitments may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. Additionally, our commitment to fund delayed draw term loans generally is triggered upon the satisfaction of certain pre-negotiated terms and conditions, such as meeting certain financial performance hurdles or financial covenants, which may limit a borrower's ability to draw on such delayed draw term loans.

The balances of unused commitments to extend financing as of December 31, 2022 and March 31, 2022 were as follows (amounts in thousands):


	December 31,		March 31,
Portfolio Company	2022		2022
Revolving Loans

Acacia BuyerCo V LLC	$	2,000	$	—
Acceleration, LLC	5,000		—
Air Conditioning Specialist, Inc.	1,000		1,000
American Teleconferencing Services, Ltd. (DBA Premiere Global Services, Inc.)	148		117
ArborWorks, LLC	1,000		3,000
ATS Operating, LLC	2,500		1,500
Cadmium, LLC	—		308
Catbird NYC, LLC	4,000		4,000
Central Medical Supply LLC	1,200		1,200
Dynamic Communities, LLC	—		500
Exact Borrower, LLC	2,500		—
Fast Sandwich, LLC	—		3,100
FM Sylvan, Inc.	10,000		—
Gains Intermediate, LLC	2,500		—
GrammaTech, Inc.	2,500		2,500
GS Operating, LLC	—		1,540
Gulf Pacific Acquisition, LLC	757		—
ISI Enterprises, LLC	1,200		1,200
ITA Holdings Group, LLC	—		1,250
Klein Hersh, LLC	—		938
Lash OpCo, LLC	247		481
Lighting Retrofit International, LLC (DBA Envocore)	2,083		2,083
Lightning Intermediate II, LLC	1,852		—
Mako Steel LP	283		943
Microbe Formulas LLC	1,627		—
Muenster Milling Company, LLC	7,000		5,000
NeuroPsychiatric Hospitals, LLC	600		600
New Skinny Mixes, LLC	4,000		—
NinjaTrader, Inc.	2,500		2,500
NWN Parent Holdings, LLC	90		1,380
Opco Borrower, LLC (DBA Giving Home Health Care)	667		—
Outerbox, LLC	2,000		—


	December 31,	March 31,
Portfolio Company	2022	2022
Pipeline Technique Ltd.	3,333	—
Roof OpCo, LLC	1,833	3,056
Roseland Management, LLC	1,425	1,425
RTIC Subsidiary Holdings LLC	822	—
Shearwater Research, Inc.	2,446	2,446
SIB Holdings, LLC	205	655
South Coast Terminals LLC	1,935	1,935
Spotlight AR, LLC	2,000	2,000
Student Resource Center, LLC	—	1,333
Systec Corporation (DBA Inspire Automation)	1,500	1,150
Versicare Management LLC	2,500	—
Wall Street Prep, Inc.	1,000	1,000
Well-Foam, Inc.	4,500	4,500
Winter Services Operations, LLC	4,444	2,000
Zenfolio Inc.	—	1,000
Total Revolving Loans	87,197	57,640
Delayed Draw Term Loans
Acacia BuyerCo V LLC	10,000	—
Acceleration, LLC	5,000	—
Central Medical Supply LLC	1,400	1,400
CityVet Inc.	—	7,000
Exact Borrower, LLC	2,500	—
Flip Electronics, LLC	—	2,818
FoodPharma Subsidiary Holdings, LLC	—	5,470
Gains Intermediate, LLC	17,000	—
GS Operating, LLC	—	3,205
Gulf Pacific Acquisition, LLC	1,515	—
Infolinks Media Buyco, LLC	2,250	2,250
KMS, LLC	2,286	4,571
Lash OpCo, LLC	—	2,846
Muenster Milling Company, LLC	—	6,000
NeuroPsychiatric Hospitals, LLC	—	10,000
New Skinny Mixes, LLC	3,000	—
NinjaTrader, Inc.	4,692	4,692
Roof OpCo, LLC	—	4,644
Shearwater Research, Inc.	—	3,262
SIB Holdings, LLC	—	1,871
STATinMED, LLC	119	—
Systec Corporation (DBA Inspire Automation)	3,000	3,000
US CourtScript Holdings, Inc.	5,000	—
Versicare Management LLC	5,000	—
Winter Services Operations, LLC	4,444	4,444
Zips Car Wash, LLC - B	—	3,801


	December 31,		March 31,
Portfolio Company	2022		2022
Total Delayed Draw Term Loans	67,206		71,274
Other
Catbird NYC, LLC	125		125
Infolinks Media Buyco, LLC	412		412
I-45 SLF LLC	4,800		4,800
Total Other	5,337		5,337
Total unused commitments to extend financing	$	159,740	$	134,251

As of December 31, 2022, 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 December 31, 2022, the Company had $0.9 million 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, $0.4 million expire in February 2023, $0.2 million expire in April 2023, and $0.3 million expire in August 2023. As of December 31, 2022, 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 evaluate its leases to determine whether they should be classified as operating or financing leases. The Company previously had an operating lease for its office space that commenced October 1, 2014 and expired February 28, 2022. In March 2021, the Company executed an agreement to lease new office space that commenced on February 1, 2022 and expires September 30, 2032. The Company identified the foregoing as an operating lease.

ASC 842 indicates that an ROU asset and lease liability should be recorded based on the effective date. As such, CSWC recorded an ROU asset, which is included in other assets on the Consolidated Statements of Assets and Liabilities, and a lease liability, which is included in other liabilities on the Consolidated Statements of Assets and Liabilities, as of February 1, 2022. The Company has recorded lease expense on a straight-line basis.

Total lease expense incurred for the three and nine months ended December 31, 2022 was $63.1 thousand and $189.2 thousand, respectively. For the three and nine months ended December 31, 2021, total lease expense incurred was $58.1 thousand and $174.4 thousand, respectively. As of December 31, 2022, the asset related to the operating lease was $1.9 million and the lease liability was $2.9 million. As of December 31, 2022, the remaining lease term was 9.8 years and the discount rate was 6.89%.

The following table shows future minimum payments under the Company's operating leases as of December 31, 2022 (in thousands):


Year ending March 31,	Rent Commitment
2023	$	92
2024	406
2025	416
2026	426
2027	436
Thereafter	2,578
Total	$	4,354

Contingencies

We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on us in connection with the

activities of our portfolio companies. To our knowledge, we have no currently pending material legal proceedings to which we are party or to which any of our assets are subject.