COMMITMENTS AND CONTINGENCIES

9 Months Ended

Dec. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

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 unfunded debt commitments as of December 31, 2023 and March 31, 2023 were as follows (amounts in thousands):

	December 31,		March 31,
Portfolio Company	2023		2023
Revolving Loans
Acacia BuyerCo V LLC	$	2,000	$	2,000
Acceleration, LLC	3,050		1,300
Air Conditioning Specialist, Inc.	1,675		1,200
American Teleconferencing Services, Ltd.	—		154
ArborWorks, LLC	1,196		1,000
ATS Operating, LLC	2,000		2,000
Bond Brand Loyalty ULC	2,000		—
Catbird NYC, LLC	4,000		4,000
Cavalier Buyer, Inc.	2,000		2,000
CDC Dental Management Co., LLC	2,000		—
Central Medical Supply LLC	1,200		1,200
Damotech Inc.	3,000		—
Edge Autonomy Holdings, LLC	4,000		—
Exact Borrower, LLC	2,500		2,500
FM Sylvan, Inc.	5,000		8,000
FS Vector LLC	2,000		—
Gains Intermediate, LLC	2,500		2,500
GPT Industries, LLC	3,000		3,000
GrammaTech, Inc.	2,500		2,500
Gulf Pacific Acquisition, LLC	555		657
HH-Inspire Acquisition, Inc.	46		—
Ignite Visibility LLC	2,000		—
Institutes of Health, LLC	1,000		—
ISI Enterprises, LLC	2,000		2,000
Island Pump and Tank, LLC	1,500		1,000
ITA Holdings Group, LLC	3,525		—
Lash OpCo, LLC	202		138
LGM Pharma LLC	1,500		—
Lighting Retrofit International, LLC	2,083		2,083
Lightning Intermediate II, LLC	1,296		1,852
LKC Technologies, Inc.	2,000		—
Mako Steel LP	1,887		943
Mammoth BorrowCo, Inc.	3,750		—
Microbe Formulas LLC	1,627		1,627

	December 31,	March 31,
Portfolio Company	2023	2023
Muenster Milling Company, LLC	—	7,000
New Skinny Mixes, LLC	3,500	4,000
NinjaTrader, Inc.	2,500	2,500
NWN Parent Holdings, LLC	—	480
Opco Borrower, LLC	833	833
Outerbox, LLC	2,000	2,000
Pipeline Technique Ltd.	2,278	2,833
Pool Service Holdings, LLC	1,000	—
Roof OpCo, LLC	3,056	3,056
Roseland Management, LLC	1,700	1,425
RTIC Subsidiary Holdings LLC	1,151	548
Shearwater Research, Inc.	—	2,446
South Coast Terminals LLC	1,742	1,935
Spotlight AR, LLC	2,000	2,000
Swensons Drive-In Restaurants, LLC	1,500	—
Systec Corporation	1,000	400
Versicare Management LLC	2,500	2,500
Wall Street Prep, Inc.	1,000	1,000
Well-Foam, Inc.	4,500	4,500
Winter Services Operations, LLC	—	4,444
Total Revolving Loans	102,852	87,554
Delayed Draw Term Loans
AAC New Holdco Inc.	166	199
Acacia BuyerCo V LLC	—	2,500
Acceleration, LLC	—	5,000
Air Conditioning Specialist Inc.	750	—
Central Medical Supply LLC	1,400	1,400
CityVet, Inc.	5,000	—
Exact Borrower, LLC	—	2,500
Gains Intermediate, LLC	—	5,000
Gulf Pacific Acquisition, LLC	1,212	1,212
Ignite Visibility LLC	2,000	—
Infolinks Media Buyco, LLC	—	2,250
ITA Holdings Group, LLC	854	—
KMS, LLC	—	2,286
Mammoth BorrowCo, Inc.	2,875	—
New Skinny Mixes, LLC	3,000	3,000
NinjaTrader, Inc.	—	4,692
Pool Service Holdings, LLC	5,600	—
Versicare Management LLC	—	2,600
Winter Services Operations, LLC	—	4,444
Total Delayed Draw Term Loans	22,857	37,083

	December 31,		March 31,
Portfolio Company	2023		2023
Other
Command Group Acquisition, LLC	7,500		—
Total Other	7,500		—
Total Unfunded Debt Commitments	$	133,209	$	124,637

The following table provides additional information regarding the expiration year of the Company’s unfunded debt commitments (amounts in thousands):

	December 31, 2023		March 31, 2023
Unfunded Debt Commitments
Expiring during:
2024	$	7,666	$	31,625
2025	21,762		10,637
2026	9,777		6,712
2027	27,473		38,062
2028	35,982		35,318
2029	30,549		2,283
Total Unfunded Debt Commitments	$	133,209	$	124,637

The balances of unfunded equity commitments as of December 31, 2023 and March 31, 2023 were as follows (amounts in thousands):

	December 31, 2023		March 31, 2023
Unfunded Equity Commitments
Catbird NYC, LLC	$	125	$	125
Infolinks Media Buyco, LLC	412		412
Total Unfunded Equity Commitments	$	537	$	537

As of December 31, 2023, 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, 2023, the Company had $0.6 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 2024, $0.2 million expire in April 2024 and $20.4 thousand expire in August 2024. As of December 31, 2023, 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 each of the three months ended December 31, 2023 and 2022 was $63.1 thousand. Total lease expense incurred for each of the nine months ended December 31, 2023 and 2022 was $189.2 thousand. As of both December 31, 2023 and March 31, 2023, the asset related to the operating lease was $1.8 million, respectively, and the lease

liability was $2.7 million and $2.8 million, respectively. As of December 31, 2023, the remaining lease term was 8.75 years and the discount rate was 7.63%.

The following table shows future minimum payments under the Company's operating leases as of December 31, 2023 (in thousands):

Year ending March 31,	Rent Commitment
2024	$	103
2025	416
2026	426
2027	436
2028	446
Thereafter	2,132
Total	$	3,959

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.