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| Texas                                                          |   | 75-1072796                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

| 5400 Lyndon B Johnson Freeway, Suite 1300, Dallas, Texas |   | 75240      |
|----------------------------------------------------------|--------|------------|
| (Address of principal executive offices)                 |   | (Zip Code) |

| Large accelerated filer ☐ | Accelerated filer **☒** | Non-accelerated filer ☐ | Smaller reporting company ☐ |
|---------------------------------|-------------------------------|-------------------------------|-----------------------------------|

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| PART I     | FINANCIAL INFORMATION | Page                                                                                                                           |
|------------|-----------------------|--------------------------------------------------------------------------------------------------------------------------------|
|       |                  |                                                                                                                           |   |
|       | Item 1.               | Consolidated Financial Statements                                                                                              | 3 |
|       |                  | Consolidated Statements of Assets and Liabilities December 31, 2015 (Unaudited) and March 31, 2015                             | 3 |
|       |                  | Consolidated Statements of Operations (Unaudited) For the three and nine months ended December 31, 2015 and December 31, 2014  | 4 |
|       |                  | Consolidated Statements of Changes in Net Assets (Unaudited) For the nine months ended December 31, 2015 and December 31, 2014 | 5 |
|       |                  | Consolidated Statements of Cash Flows (Unaudited) For the three and nine months ended December 31, 2015 and December 31, 2014  | 6 |
|       |                  | Consolidated Schedule of Investments December 31, 2015 (Unaudited) and March 31, 2015                                          | 7 |
|       |                  | Notes to Consolidated Financial Statements                                                                                     | 14 |
|       | Item 2.               | Management's Discussion and Analysis of Financial Condition and Results of Operations                                          | 36 |
|       | Item 3.               | Quantitative and Qualitative Disclosures About Market Risk                                                                     | 43 |
|       | Item 4.               | Controls and Procedures                                                                                                        | 43 |
|       |                  |                                                                                                                           |   |
| PART II    | OTHER INFORMATION     |                                                                                                                           |
|       |                  |                                                                                                                           |   |
|       | Item 1.               | Legal Proceedings                                                                                                              | 44 |
|       | Item 1A.              | Risk Factors                                                                                                                   | 44 |
|       | Item 6.               | Exhibits                                                                                                                       | 47 |
|       |                  |                                                                                                                           |   |
| Signatures |                  | 48                                                                                                                             |

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Table of Contents

| Item 1. | Consolidated Financial Statements |
|---------|-----------------------------------|

|                                                                                                                                                       |   | December 31,2015 |    |   | March 31, 2015 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|---------|--------|----------------|--------|
| Assets                                                                                                                                                     |   | (Unaudited)      |    |   | (Audited)      |   |
| Investments at market or fair value                                                                                                                        |   |                  |    |   |                |   |
| Non-Control/Non-Affiliate investments (Cost: December 31, 2015 - $72,951, March 31, 2015 - $45,620)                                                        |   | $                | 72,946  |   |           | $      | 37,776 |   |
| Affiliate investments (Cost: December 31, 2015 - $444, March 31, 2015 - $6,944)                                                                            |   |             | 2,465   |   |           |   | 8,345 |   |
| Control investments (Cost: December 31, 2015 - $34,215, March 31, 2015 - $12,396)                                                                          |   |             | 59,524  |   |           |   | 489,415 |   |
| Total investments (Cost: December 31, 2015 - $107,610, March 31, 2015 - $64,960)                                                                           |   |             | 134,935 |   |           |   | 535,536 |   |
| Cash and cash equivalents                                                                                                                                  |   |             | 143,680 |   |           |   | 225,797 |   |
| Receivables                                                                                                                                                |   |             |    |   |           |   |   |   |
| Dividends and interest                                                                                                                                     |   |             | 695     |   |           |   | 77 |   |
| Escrow                                                                                                                                                     |   |             | 3,424   |   |           |   | 2,854 |   |
| Other                                                                                                                                                      |   |             | 514     |   |           |   | 1,392 |   |
| Income tax receivable                                                                                                                                      |   |             | 1,018   |   |           |   | 95 |   |
| Net pension assets                                                                                                                                         |   |             | -       |   |           |   | 10,294 |   |
| Deferred tax asset                                                                                                                                         |   |             | 1,544   |   |           |   | - |   |
| Other assets                                                                                                                                               |   |             | 770     |   |           |   | 827 |   |
| Total assets                                                                                                                                               |   | $                | 286,580 |   |           | $      | 776,872 |   |
|                                                                                                                                                            |   |             |    |   |           |   |   |   |
| Liabilities                                                                                                                                                |   |             |    |   |           |   |   |   |
| Other liabilities                                                                                                                                          |   | $                | 5,780   |   |           | $      | 4,923 |   |
| Payable for unsettled transaction                                                                                                                          |   |             | 4,850   |   |           |   | - |   |
| Income tax payable                                                                                                                                         |   |             | 2,948   |   |           |   | - |   |
| Accrued restoration plan liability                                                                                                                         |   |             | 2,217   |   |           |   | 3,119 |   |
| Deferred income taxes                                                                                                                                      |   |             | -       |   |           |   | 1,412 |   |
| Total liabilities                                                                                                                                          |   |             | 15,795  |   |           |   | 9,454 |   |
| Commitments and Contingencies (Note 10)                                                                                                                    |   |             |    |   |           |   |   |   |
|                                                                                                                                                       |   |             |    |   |           |   |   |   |
| Net Assets                                                                                                                                                 |   |             |    |   |           |   |   |   |
| Common stock, $0.25 par value: authorized, 25,000,000  shares; issued, 18,064,044 shares at December 31, 2015 and 17,904,844 shares at March 31, 2015 |   |             | 4,516   |   |           |   | 4,476 |   |
| Additional capital                                                                                                                                         |   |             | 279,455 |   |           |   | 298,338 |   |
| Accumulated net investment loss                                                                                                                            |   |             | (16,574 | )      |           |   | (4,390 | ) |
| Accumulated net realized gain                                                                                                                              |   |             | -       |   |           |   | 22,355 |   |
| Unrealized appreciation of investments                                                                                                                     |   |             | 27,325  |   |           |   | 470,576 |   |
| Treasury stock - at cost, 2,339,512 shares                                                                                                                 |   |             | (23,937 | )      |           |   | (23,937 | ) |
| Total net assets                                                                                                                                           |   |             | 270,785 |   |           |   | 767,418 |   |
| Total liabilities and net assets                                                                                                                           |   | $                | 286,580 |   |           | $      | 776,872 |   |
| Net asset value per share (15,724,532 shares outstanding at December 31, 2015 and 15,565,332 at March 31, 2015)                                       |   | $                | 17.22   |   |           | $      | 49.30 |   |

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Table of Contents

|                                                                  |   | Three Months Ended December 31, |   |   | Nine Months Ended December 31, |   |
|-----------------------------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|--------|
|                                                                  |   | 2015                            |   |   | 2014                           |   |   | 2015 |   |   | 2014 |   |
| Investment income:                                                    |   |                                 |   |   |                                |   |   |  |   |   |  |   |
| Interest and dividends                                                |   |                                 |   |   |                                |   |   |  |   |   |  |   |
| Non-control/Non-affiliate investments                                 |   | $                               | 1,282  |   |                           | $      | 233 |   |   | $ | 2,527 |   |   | $ | 890 |   |
| Affiliate investments                                                 |   |                            | -      |   |                           |   | - |   |   |   | - |   |   |   | - |   |
| Control investments                                                   |   |                            | 1,612  |   |                           |   | 7,300 |   |   |   | 1,912 |   |   |   | 7,900 |   |
| Interest income from cash and cash equivalents                        |   |                            | 133    |   |                           |   | 33 |   |   |   | 292 |   |   |   | 70 |   |
| Fees and other income                                                 |   |                            | 280    |   |                           |   | 147 |   |   |   | 618 |   |   |   | 428 |   |
|                                                                  |   |                            | 3,307  |   |                           |   | 7,713 |   |   |   | 5,349 |   |   |   | 9,288 |   |
| Operating expenses:                                                   |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Compensation                                                          |   |                            | 1,675  |   |                           |   | 1,120 |   |   |   | 5,629 |   |   |   | 3,516 |   |
| Spin-off compensation plan                                            |   |                            | 461    |   |                           |   | - |   |   |   | 1,131 |   |   |   | - |   |
| Share-based compensation                                              |   |                            | 195    |   |                           |   | 95 |   |   |   | 923 |   |   |   | 287 |   |
| Spin-off Professional Fees                                            |   |                            | 249    |   |                           |   | - |   |   |   | 6,961 |   |   |   | - |   |
| General and Administrative                                            |   |                            | 1,354  |   |                           |   | 2,018 |   |   |   | 3,378 |   |   |   | 3,505 |   |
|                                                                  |   |                            | 3,934  |   |                           |   | 3,233 |   |   |   | 18,022 |   |   |   | 7,308 |   |
| (Loss) income before income taxes                                     |   |                            | (627   | )      |                           |   | 4,480 |   |   |   | (12,673 | ) |   |   | 1,980 |   |
| Income tax (benefit) expense                                          |   |                            | (607   | )      |                           |   | 51 |   |   |   | (489 | ) |   |   | 273 |   |
| Net investment (loss) income                                          |   | $                               | (20    | )      |                           | $      | 4,429 |   |   | $ | (12,184 | ) |   | $ | 1,707 |   |
| Realized (loss) gain:                                                 |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Non-control/Non-affiliate investments                                 |   | $                               | (6,259 | )      |                           | $      | 111,229 |   |   | $ | (9,591 | ) |   | $ | 143,084 |   |
| Affiliate investments                                                 |   |                            | (2,142 | )      |                           |   | - |   |   |   | (1,458 | ) |   |   | - |   |
| Control investments                                                   |   |                            | 231    |   |                           |   | - |   |   |   | 231 |   |   |   | (1,175 | ) |
| Total net realized (loss) gain on investments before income tax  |   |                            | (8,170 | )      |                           |   | 111,229 |   |   |   | (10,818 | ) |   |   | 141,909 |   |
|                                                                  |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in unrealized appreciation of investments     |   |                            | 7,060  |   |                           |   | (84,964 | ) |   |   | 12,939 |   |   |   | (123,791 | ) |
|                                                                  |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net realized and unrealized gain (loss) on investments                |   |                            | (1,110 | )      |                           |   | 26,265 |   |   |   | 2,121 |   |   |   | 18,118 |   |
|                                                                  |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| (Decrease) increase in net assets from operations                     |   | $                               | (1,130 | )      |                           | $      | 30,694 |   |   | $ | (10,063 | ) |   | $ | 19,825 |   |
|                                                                  |   |                            |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net investment (loss) income per share – basic and diluted |   | $                               | (.00   | )      |                           | $      | .28 |   |   | $ | (.77 | ) |   | $ | .11 |   |

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Table of Contents

|                                                                |   | Nine Months Ended December 31, |     |
|---------------------------------------------------------------------|--------|--------------------------------|----------|
|                                                                |   | 2015                           |     |   | 2014 |   |
| Operations:                                                         |   |                                |     |   |  |   |
| Net investment (loss) gain                                          |   | $                              | (12,184  | ) |   | $ | 1,707 |   |
| Net realized (loss) gain on investments                             |   |                           | (10,818  | ) |   |   | 141,909 |   |
| Net increase (decrease) in unrealized appreciation of investments   |   |                           | 12,939   |   |   |   | (123,791 | ) |
| (Decrease) increase in net assets from operations                   |   |                           | (10,063  | ) |   |   | 19,825 |   |
| Distributions from:                                                 |   |                           |     |   |   |   |   |   |
| Undistributed net investment loss                                   |   |                           | -        |   |   |   | (3,083 | ) |
| Undistributed net realized gain                                     |   |                           | (1,544   | ) |   |   | - |   |
| Taxes incurred on deemed capital gain distributions                 |   |                           | (2,948   | ) |   |   | (54,370 | ) |
| Distributions of CSW Industrials, Inc.                              |   |                           |     |   |   |   |   |   |
| Decrease in unrealized appreciation related to spin-off investments |   |                           | (456,189 | ) |   |   | - |   |
| Distribution from additional capital                                |   |                           | (27,199  | ) |   |   | - |   |
| Capital share transactions:                                         |   |                           |     |   |   |   |   |   |
| Exercise of employee stock options                                  |   |                           | 387      |   |   |   | 163 |   |
| Share-based compensation expense                                    |   |                           | 923      |   |   |   | 287 |   |
| Decrease in net assets                                              |   |                           | (496,633 | ) |   |   | (37,178 | ) |
| Net assets, beginning of period                                     |   |                           | 767,418  |   |   |   | 770,388 |   |
| Net assets, end of period                                           |   | $                              | 270,785  |   |   | $ | 733,210 |   |

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Table of Contents

|                                                                                                                 |   | Nine Months Ended December 31, |    |
|----------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|
|                                                                                                                 |   | 2015                           |    |   | 2014 |   |
| Cash flows from operating activities                                                                                 |   |                                |    |   |  |   |
| (Decrease) increase in net assets from operations                                                                    |   | $                              | (10,063 | ) |   | $ | 19,825 |   |
| Adjustments to reconcile (decrease) increase in net assets from operations to net cash used in operating activities: |   |                           |    |   |   |   |   |   |
| Depreciation and amortization                                                                                        |   |                           | 63      |   |   |   | 29 |   |
| Net pension benefit                                                                                                  |   |                           | (296    | ) |   |   | (410 | ) |
| Net realized loss (gain) on investments                                                                              |   |                           | 10,818  |   |   |   | (141,909 | ) |
| Net (increase) decrease in unrealized appreciation of investments                                                    |   |                           | (12,939 | ) |   |   | 123,791 |   |
| Share-based compensation expense                                                                                     |   |                           | 923     |   |   |   | 287 |   |
| Increase in dividend and interest receivable                                                                         |   |                           | (618    | ) |   |   | (6,587 | ) |
| Increase in escrow receivables                                                                                       |   |                           | (570    | ) |   |   | - |   |
| Decrease (increase) in other receivables                                                                             |   |                           | 878     |   |   |   | (303 | ) |
| Increase in income tax receivable                                                                                    |   |                           | (923    | ) |   |   | (97 | ) |
| Increase in other assets                                                                                             |   |                           | (4      | ) |   |   | (589 | ) |
| (Decrease) Increase in other liabilities                                                                             |   |                           | (64     | ) |   |   | 13 |   |
| Increase in payable for unsettled transaction                                                                        |   |                           | 4,850   |   |   |   | - |   |
| Increase in deferred income taxes                                                                                    |   |                           | 434     |   |   |   | 70 |   |
| Net cash used in operating activities                                                                                |   |                           | (7,511  | ) |   |   | (5,880 | ) |
| Cash flows from investing activities                                                                                 |   |                           |    |   |   |   |   |   |
| Net proceeds from disposition of and return of capital on investments                                                |   |                           | 19,638  |   |   |   | 170,598 |   |
| Purchases of securities                                                                                              |   |                           | (80,087 | ) |   |   | (525 | ) |
| Net cash (used in) provided by Investing activities                                                                  |   |                           | (60,449 | ) |   |   | 170,073 |   |
| Cash flows from financing activities                                                                                 |   |                           |    |   |   |   |   |   |
| Distributions from undistributed net investment income                                                               |   |                           | -       |   |   |   | (3,083 | ) |
| Distributions from undistributed net realized gain                                                                   |   |                           | (1,544  | ) |   |   | - |   |
| Proceeds from exercise of employee stock options                                                                     |   |                           | 387     |   |   |   | 163 |   |
| Cash distribution to CSW Industrials                                                                                 |   |                           | (13,000 | ) |   |   | - |   |
| Net cash used in financing activities                                                                                |   |                           | (14,157 | ) |   |   | (2,920 | ) |
| Net (decrease) increase in cash and cash equivalents                                                                 |   |                           | (82,117 | ) |   |   | 161,273 |   |
| Cash and cash equivalents at beginning of period                                                                     |   |                           | 225,797 |   |   |   | 88,163 |   |
| Cash and cash equivalents at end of period                                                                           |   | $                              | 143,680 |   |   | $ | 249,436 |   |

| Summary of Non-Cash Financing Activities                               |   |        |    |   |        |   |
|------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|
| Cost of Investments spun-off1                                |   | $      | 6,981   |   |   | $      | - |   |
| Decrease in unrealized appreciation due to the spin-off of CSWI1       |   |   | 456,189 |   |   |   | - |   |
| Net Pension Assets1                                                    |   |   | 9,687   |   |   |   | - |   |
| Change in deferred tax liabilities1                          |   |   | 3,391   |   |   |   | - |   |
| Taxes incurred on deemed capital gain distribution           |   |   | 2,948   |   |   |   | 54,370 |   |
| Cash component of Spin-Off Compensation for CSWI employees   |   |   | 921     |   |   |   | - |   |

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Table of Contents

| Portfolio Company1                          | Type of Investment                                     | Industry                             |   | Spread Above Index2           |   |   | Maturity   |   |   | Principal |      |   | Cost   |      |      | Value3 |       |
|---------------------------------------------|--------------------------------------------------------|--------------------------------------|--------|-------------------------------|--------|--------|------------|--------|--------|-----------|-----------|--------|--------|-----------|-----------|--------|------------|
| Non-control/Non-affiliate Investments4      |                                                   |                                 |   |                               |   |   |            |   |   |           |      |   |        |      |      |        |       |
|                                        |                                                   |                                 |   |                               |   |   |            |   |   |           |      |   |        |      |      |        |       |
| 360 HOLDINGS III CORP.                      | Senior secured debt                                    | Consumer products & retail       |   | L+9.00%(Floor 1.00%)          |   |   | 10/1/2021  |   |   | $         | 7,000,000 |   |   | $         | 6,720,780 |   |       | $ | 6,720,780 |   |
|                                        |                                                   |                                 |   |                               |   |   |            |   |   |      |      |   |   |      |      |   |       |   |   |   |
| ARGON MEDICAL DEVICES                       | Senior secured debt                                    | Healthcare products                  |   | L+9.50%(Floor 1.00%)          |   |   | 12/23/2021 |   |   |      | 5,000,000 |   |   |      | 4,850,000 |   |       |   | 4,850,000 |   |
|                                        |                                                   |                                 |   |                               |   |   |            |   |   |      |      |   |   |      |      |   |       |   |   |   |
| BDF ACQUISITION CORP.                       | Senior secured debt                                    | Consumer products & retail       |   | L+8.00%(Floor 1.00%)          |   |   | 2/12/2022  |   |   |      | 5,000,000 |   |   |      | 4,797,023 |   |       |   | 4,797,023 |   |
|                                        |                                                   |                                 |   |                               |   |   |            |   |   |      |      |   |   |      |      |   |       |   |   |   |
| CAST AND CREW PAYROLL, LLC                  | Senior secured debt                                    | Media, marketing & entertainment |   | L+7.75%(Floor 1.00%)          |   |   | 8/12/2023  |   |   |      | 5,000,000 |   |   |      | 4,969,697 |   |       |   | 4,969,697 |   |
|                                        |                                                   |                                 |   |                               |   |   |            |   |   |      |      |   |   |      |      |   |       |   |   |   |
| DEEPWATER CORROSION SERVICES, INC.          | 127,004 shares of Series A convertible preferred stock | Energy services (upstream)           |   |  -                       |   |   |  -    |   |   |  -   |      |   |   | 8,000,000 |      |   |       | 4,281,000 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
| FREEDOM TRUCK FINANCE, LLC5,6               | Senior secured debt                                    | Financial services                   |   | Prime plus 9.75%(Floor 3.25%) |   |   | 4/15/2016  |   |   |      | 4,563,368 |   |   |      | 4,563,368 |   |       |   | 4,563,368 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
| LTI HOLDINGS, INC.                          | Senior secureddebt                                     | Industrial products                  |   | L+9.25%(Floor 1.00%)          |   |   | 4/30/2023  |   |   |      | 7,000,000 |   |   |      | 6,833,894 |   |       |   | 6,833,894 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
| PREPAID LEGAL SERVICES. INC.                | Senior secured debt                                    | Consumer services                    |   | L+9.00%(Floor 1.25%)          |   |   | 7/1/2020   |   |   |      | 5,000,000 |   |   |      | 4,938,623 |   |       |   | 4,938,623 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
|  RESEARCH NOW GROUP, INC.              |  Senior secured debt                              |  Business services              |   | L+8.75%(Floor 1.00%)          |   |   | 3/18/2022  |   |   |      | 7,000,000 |   |   |      | 6,903,240 |   |       |   | 6,903,240 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
|  ROYAL HOLDINGS, INC.                  |  Senior secured debt                              |  Specialty chemicals            |   | L+7.50%(Floor 1.00%)          |   |   | 7/6/2023   |   |   |      | 1,000,000 |   |   |      | 992,822   |   |       |   | 992,822 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
| TITANLINER, INC.                            | 339,277 shares of Series A convertible preferred stock | Energy services (upstream)           |   |  -                       |   |   |  -    |   |   |  -   |      |   |   | 3,204,222 |      |   |       | 5,820,000 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
|                                        | Senior subordinated debt                               |                                 |   |  8.50%                   |   |   | 6/30/2017  |   |   |      | 2,747,000 |   |   |      | 2,747,000 |   |       |   | 2,747,000 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   | 5,951,222  |   |   |   | 8,567,000 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
| TRAX DATA REFINERY, INC.                    | Common stock                                           | Software & IT services           |   |  -                       |   |   |  -    |   |   |  -   |      |   |   | 817,781   |      |   |       | 1,916,000 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
| WATER PIK, INC.                             | Senior secured debt                                    | Consumerproducts & retail        |   | L+8.75%(Floor 1.00%)          |   |   | 1/8/2021   |   |   |      | 4,780,702 |   |   |      | 4,663,299 |   |       |   | 4,663,299 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
| WINZER CORPORATION                          | Senior subordinated debt                               | Distribution                         |   |  11.00%                  |   |   | 5/31/2021  |   |   |      | 8,100,000 |   |   |      | 7,949,343 |   |       |   | 7,949,343 |   |
|                                        |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      |   |       |   |   |   |   |   |
| Total Non-control/Non-affiliate Investments |                                                   |                                 |   |                          |   |   |       |   |   |      |      |   |   |      |      | $      | 72,951,092 |   |   | $ | 72,946,089 |   |

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| Affiliate Investments7      |                           |                |   |         |   |   |         |   |   |         |   |   |        |    |   |        |    |
|-----------------------------|--------------------------------|---------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|---------|--------|--------|---------|
|                        |                           |                |   |         |   |   |         |   |   |         |   |   |        |    |   |        |    |
| kSEP HOLDINGS, INC.         | 861,591 shares of common stock | Healthcare products |   |  - |   |   |  - |   |   |  - |   |   | $      | 443,518 |   |   | $       | 2,465,000 |   |
|                        |                           |                |   |    |   |   |    |   |   |    |   |   |   |    |   |   |    |   |   |   |   |   |
| Total Affiliate Investments |                           |                |   |    |   |   |    |   |   |    |   |   |   |    |   | $      | 443,518 |   |   | $ | 2,465,000 |   |

| Control Investments8      |                                                   |                  |   |         |   |   |         |   |   |         |   |   |        |       |   |        |        |
|---------------------------|--------------------------------------------------------|-----------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|------------|--------|--------|-------------|
|                      |                                                   |                  |   |         |   |   |         |   |   |         |   |   |        |       |   |        |        |
| I-45 SLF, LLC6, 9, 10     | 80% LLC equity interest                                | Multi-sector holdings |   |  - |   |   |  - |   |   |  - |   |   | $      | 28,800,000 |   |   | $           | 28,423,874 |   |
|                      |                                                   |                  |   |    |   |   |    |   |   |    |   |   |   |       |   |   |        |   |   |   |   |   |
| MEDIA RECOVERY, INC.10    | 800,000 shares of Series A convertible preferred stock | Industrial products   |   |  - |   |   |  - |   |   |  - |   |   |   | 800,000    |   |   |        | 5,200,000 |   |
|                      |                                                   |                  |   |    |   |   |    |   |   |    |   |   |   |       |   |   |        |   |   |   |   |   |
|                           | 4,000,002 shares of common stock                       |                  |   |  - |   |   |  - |   |   |  - |   |   |   | 4,615,000  |   |   |        | 25,900,000 |   |
|                      |                                                   |                  |   |    |   |   |    |   |   |    |   |   |   |       |   |   | 5,415,000   |   |   |   | 31,100,000 |   |
|                      |                                                   |                  |   |    |   |   |    |   |   |    |   |   |   |       |   |   |        |   |   |   |   |   |
| Total Control Investments |                                                   |                  |   |    |   |   |    |   |   |    |   |   |   |       |   | $      | 34,215,000  |   |   | $ | 59,523,874 |   |
| TOTAL INVESTMENTS11       |                                                   |                  |   |    |   |   |    |   |   |    |   |   |   |       |   | $      | 107,609,610 |   |   | $ | 134,934,963 |   |

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

| 2 | 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”) which reset daily, monthly, quarterly, or semiannually.  For each the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at December 31, 2015.  Certain investments are subject to a LIBOR or Prime interest rate floor. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3 | Investments are carried at fair value in accordance with the Investment Company Act of 1940 (the “1940 Act”) and Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 820, Fair Value Measurements and Disclosures.  We determine in good faith the fair value of our Investment portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by our Board of Directors. See Note 4 to the consolidated financial statements. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments. At December 31, 2015, approximately 54.1% of the Company’s investment assets are non-control investments. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | The investment has $2.9 million unfunded commitment. |
|---|------------------------------------------------------|

| 6 | Indicates assets that are considered “non-qualifying assets” under section 55(a) of the 1940 Act.  Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as control investments. At December 31, 2015, approximately 1.8% of the Company’s investment assets are affiliate investments. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 8 | Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where greater than 50% of the board representation is maintained. At December 31, 2015, approximately 44.1% of the Company’s investment assets are control investments. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9 | The investment has approximately $39.2 million unfunded commitment. |
|---|---------------------------------------------------------------------|

| 10 | Income producing through dividends on distributions. |
|----|------------------------------------------------------|

| 11 | The cumulative gross unrealized appreciation for federal income tax purposes is approximately $31.4 million; cumulative gross unrealized depreciation for federal income tax purposes is $4.1 million.  Cumulative net unrealized appreciation is $27.3 million, based on a tax cost of $107.6 million. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Portfolio Company1                      | Type of Investment                                        | Industry                   |   | Spread Above Index2 |   |   | Maturity |      |   | Principal |   |      | Cost   |            |   | Value3    |      |
|-----------------------------------------|-----------------------------------------------------------|----------------------------|--------|---------------------|--------|--------|----------|-----------|--------|-----------|--------|-----------|--------|-----------------|--------|-----------|-----------|
| Non-control/Non-affiliate Investments4  |                                                      |                       |   |                     |   |   |          |      |   |           |   |      |        |            |   |           |      |
|                                    |                                                      |                       |   |                     |   |   |          |      |   |           |   |      |        |            |   |           |      |
| ATLANTIC CAPITAL BANCSHARES, INC.5      | 300,000 shares of common stock                            | Financial services         |   |  -             |   |   |  -  |      |   |  -   |   |      | $      |  3,000,000 |   |      | $         |  3,779,000 |   |
|                                    |                                                      |                       |   |                |   |   |     |      |   |      |   |      |   |            |   |      |      |   |   |   |   |   |
| BALLAST POINT VENTURES II, L.P.5        | 2.1% Limited partnership interest                         | Multi-sector holdings      |   |  -             |   |   |  -  |      |   |  -   |   |      |   | 2,634,790       |   |      |      | 3,288,000 |   |
|                                    |                                                      |                       |   |                |   |   |     |      |   |      |   |      |   |            |   |      |      |   |   |   |   |   |
| BANKCAP PARTNERS FUND I, L.P.5          | 5.5% Limited partnership interest                         | Multi-sector holdings      |   |  -             |   |   |  -  |      |   |  -   |   |      |   | 5,071,514       |   |      |      | 4,771,000 |   |
|                                    |                                                      |                       |   |                |   |   |     |      |   |      |   |      |   |            |   |      |      |   |   |   |   |   |
| CAPITALSOUTH PARTNERS FUND III, L.P.5   | 1.9% Limited partnership interest                         | Multi-sector holdings      |   |  -             |   |   |  -  |      |   |  -   |   |      |   | 433,403         |   |      |      | 232,000 |   |
|                                    |                                                      |                       |   |                |   |   |     |      |   |      |   |      |   |            |   |      |      |   |   |   |   |   |
| DEEPWATER CORROSION SERVICES, INC.      | 127,004 shares of Series A Convertible Preferred Stock    | Energy services (upstream) |   |  -             |   |   |  -  |      |   |  -   |   |      |   | 8,000,000       |   |      |      | 2,532,000 |   |
|                                    |                                                      |                       |   |                |   |   |     |      |   |      |   |      |   |            |   |      |      |   |   |   |   |   |
| DIAMOND STATE VENTURES, L.P.5           | 1.4% Limited partnership interest                         | Multi-sector holdings      |   |  -             |   |   |  -  |      |   |  -   |   |      |   | –         |   |      |      | 16,000 |   |
|                                    |                                                      |                       |   |                |   |   |     |      |   |      |   |      |   |            |   |      |      |   |   |   |   |   |
| FIRST CAPITAL GROUP OF TEXAS III, L.P.5 | 3.0% Limited partnership interest                         | Multi-sector holdings      |   |  -             |   |   |  -  |      |   |  -   |   |      |   | 778,895         |   |      |      | 108,000 |   |
|                                    |                                                      |                       |   |                |   |   |     |      |   |      |   |      |   |            |   |      |      |   |   |   |   |   |
| iMEMORIES, INC.6                        | 17,391,304 shares of Series B convertible preferred stock | Software & IT services |   |  -             |   |   |  -  |      |   |  -   |   |      |   | 4,000,000       |   |      |      | – |   |
|                                         | 4,684,967 shares of Series C convertible preferred stock  |                       |   |  -             |   |   |  -  |      |   |  -   |   |      |   | 1,078,479       |   |      |      | – |   |
|                                         | Convertible debt6                                         |                       |   |                | 10.00% |   |     | 7/31/2016 |   |      |   | 1,188,000 |   |            |   | 1,188,000 |      |   |   | – |   |
|                                         | Senior secured debt6                                 |                       |   |                | 18.00% |   |     | 7/31/2016 |   |      |   | 148,507   |   |            |   | 148,507   |      |   |   | 159,000 |   |
|                                    |                                                      |                       |   |                |   |   |     |      |   |      |   |      |   |            |   |      | 6,414,986 |   |   |   | 159,000 |   |

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| INSTAWARES HOLDING COMPANY, LLC             | 3,846,154 shares of Class D convertible preferred stock                  | Software & IT services           |   | -                   |   |   | -         |      |   | -         |   |      |   | 5,000,000       |   |      |             | 5,000,000 |   |
|---------------------------------------------|--------------------------------------------------------------------------|--------------------------------------|--------|---------------------|--------|--------|-----------|-----------|--------|-----------|--------|-----------|--------|-----------------|--------|-----------|------------------|-----------|--------|
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |
| RESEARCH NOW GROUP, INC.                    | Senior secured debt                                                      | Business services                    |   | L+8.75%(Floor1.00%) |   |   | 3/18/2022 |      |   | 7,000,000 |   |      |   | 6,895,231       |   |      |             | 6,895,231 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |
| STARTECH SEED FUND II5                      | 3.2% Limited partnership interest                                        | Multi-sector holdings                |   | -                   |   |   | -         |      |   | -         |   |      |   | 622,783         |   |      |             | 14,000    |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |
| TITANLINER, INC.                            | 339,277 shares of Series A convertible preferred stock                   | Energy services (upstream)           |   |  -             |   |   |  -   |      |   |  -   |   |      |   | 3,204,222       |   |      |             | 5,939,000 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
|                                        | Senior subordinated debt                                                 |                                 |   |                | 8.50%  |   |      | 6/30/2017 |   |      |   | 2,747,000 |   |            |   | 2,747,000 |             |      |   | 2,747,000 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      | 5,951,222        |      |   |   | 8,686,000 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
| TRAX DATA REFINERY, INC.                    | 211,368 shares of common stock                                           | Software & IT services           |   |  -             |   |   |  -   |      |   |  -   |   |      |   | 817,781         |   |      |             | 2,296,000 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
| Total Non-Control/Non-Affiliate Investments |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   | $         |  45,620,605 |      |   | $ |  37,776,231 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
| Affiliate Investments7                      |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
| BOXX TECHNOLOGIES, INC.                     | 3,125,354 shares of Series B convertible preferred stock                 | Technology products & components |   |  -             |   |   |  -   |      |   |  -   |   |      | $      |  1,500,000 |   |      | $                | 2,362,000 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
| kSEP HOLDINGS, INC.                         | 861,591 shares of common stock                                           | Healthcare products                  |   |  -             |   |   |  -   |      |   |  -   |   |      |   | 443,518         |   |      |             | 1,863,000 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
| WELLOGIX, INC.                              | 4,788,371 shares of Series A-1 convertible participating preferred stock | Software & IT services           |   |  -             |   |   |  -   |      |   |  -   |   |      |   | 5,000,000       |   |      |             | 4,120,000 |   |
|                                        |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   |      |             |      |   |   |   |   |
| Total Affiliate Investments                 |                                                                     |                                 |   |                |   |   |      |      |   |      |   |      |   |            |   | $         |  6,943,518  |      |   | $ |  8,345,000 |   |

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| Control Investments8               |                                                                             |                                   |   |         |   |   |         |   |   |         |   |   |        |          |   |        |             |
|------------------------------------|----------------------------------------------------------------------------------|----------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|---------------|--------|--------|------------------|
|                               |                                                                             |                                   |   |         |   |   |         |   |   |         |   |   |        |          |   |        |             |
| BALCO, INC.                        | 445,000 shares of common stock and 60,920 shares Class B non-voting common stock | Building & infrastructure products |   |  - |   |   |  - |   |   |  - |   |   | $      |  624,920 |   |   | $                |  5,100,000 |   |
|                               |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   |   |             |   |   |   |   |   |
| CAPSTAR HOLDINGS CORPORATION       | 500 shares of common stock and 1,000,000 shares of preferred stock               | Real estate                            |   |  - |   |   |  - |   |   |  - |   |   |   | 4,703,619     |   |   |             | 10,871,000 |   |
|                               |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   |   |             |   |   |   |   |   |
| HUMAC COMPANY5                     | 1,041,000 shares of common stock                                                 | Financial services                     |   |  - |   |   |  - |   |   |  - |   |   |   | –       |   |   |             | 244,000 |   |
|                               |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   |   |             |   |   |   |   |   |
| MEDIA RECOVERY, INC.9              | 800,000 shares of Series A convertible preferred stock                           | Industrial products                    |   |  - |   |   |  - |   |   |  - |   |   |   | 800,000       |   |   |             | 4,300,000 |   |
|                               |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   |   |             |   |   |   |   |   |
|                               | 4,000,002 shares of common stock                                                 |                                   |   |  - |   |   |  - |   |   |  - |   |   |   | 4,615,000     |   |   |             | 21,700,000 |   |
|                               |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   |   | 5,415,000        |   |   |   | 26,000,000 |   |
| THE RECTORSEAL CORPORATION         | 27,907 shares of common stock                                                    | Specialty chemicals                    |   |  - |   |   |  - |   |   |  - |   |   |   | 52,600        |   |   |             | 358,200,000 |   |
|                               |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   |   |             |   |   |   |   |   |
| THE WHITMORE MANUFACTURING COMPANY | 80 shares of common stock                                                        | Specialty chemicals                    |   |  - |   |   |  - |   |   |  - |   |   |   | 1,600,000     |   |   |             | 89,000,000 |   |
|                               |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   |   |             |   |   |   |   |   |
| Total Control Investments          |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   | $      |  12,396,139 |   |   | $ |  489,415,000 |   |
|                               |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   |   |             |   |   |   |   |   |
| TOTAL INVESTMENTS10                |                                                                             |                                   |   |    |   |   |    |   |   |    |   |   |   |          |   | $      | 64,960,262       |   |   | $ | 535,536,231 |   |

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

| 2 | 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”) which reset daily, monthly, quarterly, or semiannually.  For each the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at March 31, 2015.  Certain investments are subject to a LIBOR or Prime interest rate floor. |
|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 3 | Investments are carried at fair value in accordance with the Investment Company Act of 1940 (the “1940 Act”) and Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 820, Fair Value Measurements and Disclosures.  We determine in good faith the fair value of our Investment portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by our Board of Directors. See Note 4 to the consolidated financial statements. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4 | Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments. At March 31, 2015, approximately 7.1% of the Company’s investment assets are non-control investments. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5 | Indicates assets that the Company believes do not represent “qualifying assets” under section 55(a) of the 1940 Act.  Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Investment was on non-accrual status as of March 31, 2015, meaning the Company has ceased recognizing interest income on the investment. |
|---|------------------------------------------------------------------------------------------------------------------------------------------|

| 7 | Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as control investments. At March 31, 2015, approximately 1.5% of the Company’s investment assets are affiliate investments. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8 | Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or maintains greater than 50% of the board representation. At March 31, 2015, approximately 91.4% of the Company’s investment assets are control investments. |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9 | Income producing through dividends on distributions. |
|---|------------------------------------------------------|

| 10 | The cumulative gross unrealized appreciation for federal income tax purposes is approximately $487.0 million; cumulative gross unrealized depreciation for federal income tax purposes is $13.5 million.  Cumulative net unrealized appreciation is $473.5 million, based on a tax cost of $62.0 million. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11 | Changes to the Consolidated Schedule of Investments at March 31, 2015 are presentation changes only to conform to current period presentation. |
|----|------------------------------------------------------------------------------------------------------------------------------------------------|

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| 1. | ORGANIZATION AND BASIS OF PRESENTATION |
|----|----------------------------------------|

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| 3. | INVESTMENTS |
|----|-------------|

|                          |   | Cost                  |   |   | Percentage of Total Portfolio |   |   | Fair Value |   |   | Percentage of Total Portfolio |   |
|-------------------------------|--------|-----------------------|--------|--------|-------------------------------|--------|--------|------------|--------|--------|-------------------------------|--------|
|                          |   | (dollars in millions) |   |
| December 31, 2015:            |   |                       |   |   |                               |   |   |            |   |   |                               |   |
| 1st lien notes                |   | $                     | 11.3   |   |                          |   | 10.5   | %          |   | $      | 11.3                          |   |   |   | 8.4 | % |
| 2nd lien notes                |   |                  | 38.9   |   |                          |   | 36.2   |       |   |   | 38.9                          |   |   |   | 28.9 |   |
| Subordinated debt             |   |                  | 10.7   |   |                          |   | 9.9    |       |   |   | 10.7                          |   |   |   | 7.9 |   |
| Preferred & common equity |   |                  | 17.9   |   |                          |   | 16.6   |       |   |   | 45.6                          |   |   |   | 33.8 |   |
| I-45 SLF, LLC                 |   |                  | 28.8   |   |                          |   | 26.8   |       |   |   | 28.4                          |   |   |   | 21.0 |   |
|                          |   | $                     | 107.6  |   |                          |   | 100.0  | %          |   | $      | 134.9                         |   |   |   | 100.0 | % |
| March 31, 2015:               |   |        |   |   |        |   |   |        |   |   |       |   |
|-------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|
| 2nd lien notes                |   | $      | 6.9    |   |   |   | 10.6   | %      |   | $      | 6.9   |   |   |   | 1.3 | % |
| Subordinated debt             |   |   | 4.1    |   |   |   | 6.2    |   |   |   | 2.9   |   |   |   | 0.5 |   |
| Preferred & common equity |   |   | 44.4   |   |   |   | 68.5   |   |   |   | 517.3 |   |   |   | 96.6 |   |
| Partnership interest          |   |   | 9.5    |   |   |   | 14.7   |   |   |   | 8.4   |   |   |   | 1.6 |   |
|                          |   | $      | 64.9   |   |   |   | 100.0  | %      |   | $      | 535.5 |   |   |   | 100.0 | % |
|                                   |   | Cost                  |   |   | Percentage of Total Portfolio |   |   | Fair Value |   |   | Percentage of Total Portfolio |   |
|----------------------------------------|--------|-----------------------|--------|--------|-------------------------------|--------|--------|------------|--------|--------|-------------------------------|--------|
|                                   |   | (dollars in millions) |   |
| December 31, 2015:                     |   |                       |   |   |                               |   |   |            |   |   |                               |   |
| I-45 SLF, LLC1                         |   | $                     | 28.8   |   |                          |   | 26.8   | %          |   | $      | 28.4                          |   |   |   | 21.1 | % |
| Consumer Products and Retail           |   |                  | 16.2   |   |                          |   | 15.1   |       |   |   | 16.2                          |   |   |   | 12.0 |   |
| Energy Services (Upstream)             |   |                  | 14.0   |   |                          |   | 13.1   |       |   |   | 12.9                          |   |   |   | 9.6 |   |
| Industrial Products                    |   |                  | 12.2   |   |                          |   | 11.3   |       |   |   | 37.9                          |   |   |   | 28.1 |   |
| Distribution                           |   |                  | 7.9    |   |                          |   | 7.3    |       |   |   | 7.9                           |   |   |   | 5.9 |   |
| Business Services                      |   |                  | 6.9    |   |                          |   | 6.4    |       |   |   | 6.9                           |   |   |   | 5.1 |   |
| Healthcare Products                    |   |                  | 5.3    |   |                          |   | 4.9    |       |   |   | 7.3                           |   |   |   | 5.4 |   |
| Media, Marketing, & Entertainment  |   |                  | 5.0    |   |                          |   | 4.6    |       |   |   | 5.0                           |   |   |   | 3.7 |   |
| Consumer Services                      |   |                  | 4.9    |   |                          |   | 4.6    |       |   |   | 4.9                           |   |   |   | 3.6 |   |
| Financial Services                     |   |                  | 4.6    |   |                          |   | 4.3    |       |   |   | 4.6                           |   |   |   | 3.4 |   |
| Specialty Chemicals                    |   |                  | 1.0    |   |                          |   | 0.9    |       |   |   | 1.0                           |   |   |   | 0.7 |   |
| Software & IT Services             |   |                  | 0.8    |   |                          |   | 0.7    |       |   |   | 1.9                           |   |   |   | 1.4 |   |
|                                   |   | $                     | 107.6  |   |                          |   | 100.0  | %          |   | $      | 134.9                         |   |   |   | 100.0 | % |
|                                   |   |                  |   |   |                          |   |   |       |   |   |                          |   |   |   |   |   |
| March 31, 2015:                        |   |                  |   |   |                          |   |   |       |   |   |                          |   |   |   |   |   |
| Software & IT Services             |   | $                     | 17.2   |   |                          |   | 26.5   | %          |   | $      | 11.5                          |   |   |   | 2.1 | % |
| Energy Services (Upstream)             |   |                  | 14.0   |   |                          |   | 21.6   |       |   |   | 11.2                          |   |   |   | 2.1 |   |
| Multi-sector Holdings                  |   |                  | 9.5    |   |                          |   | 14.6   |       |   |   | 8.6                           |   |   |   | 1.6 |   |
| Business Services                      |   |                  | 6.9    |   |                          |   | 10.7   |       |   |   | 6.9                           |   |   |   | 1.3 |   |
| Industrial Products                    |   |                  | 5.4    |   |                          |   | 8.3    |       |   |   | 26.0                          |   |   |   | 4.9 |   |
| Real Estate                            |   |                  | 4.7    |   |                          |   | 7.3    |       |   |   | 10.9                          |   |   |   | 2.0 |   |
| Financial Services                     |   |                  | 3.0    |   |                          |   | 4.6    |       |   |   | 3.8                           |   |   |   | 0.7 |   |
| Specialty Chemicals                    |   |                  | 1.7    |   |                          |   | 2.6    |       |   |   | 447.2                         |   |   |   | 83.5 |   |
| Technology Products & Components   |   |                  | 1.5    |   |                          |   | 2.3    |       |   |   | 2.4                           |   |   |   | 0.4 |   |
| Building & Infrastructure Products |   |                  | 0.6    |   |                          |   | 0.9    |       |   |   | 5.1                           |   |   |   | 1.0 |   |
| Healthcare Products                    |   |                  | 0.4    |   |                          |   | 0.6    |       |   |   | 1.9                           |   |   |   | 0.4 |   |
|                                   |   | $                     | 64.9   |   |                          |   | 100.0  | %          |   | $      | 535.5                         |   |   |   | 100.0 | % |

|  | 1 | I-45 SLF, LLC is a joint venture between CSWC and Main Street Capital.  This entity primarily invests in syndicated senior secured loans in the upper middle market.  The portfolio companies in I-45 include multi-sector holdings, which are similar to those in which CSWC invests directly. See Note 13 for further discussion. |
|--|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 4. | FAIR VALUE MEASUREMENTS |
|----|-------------------------|

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|  | · | Level 1:  Investments whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Level 2: Investments whose values are based on quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Level 3: Investments whose values are based on unobservable inputs that are significant to the overall fair value measurement. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------|

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| Type                      | Valuation Technique                 |   | Fair Value at 12/31/2015 (in millions) |   | Significant Unobservable Inputs |            | Range  |   |            | Weighted Average |   |
|---------------------------|-------------------------------------|--------|----------------------------------------|--------|---------------------------------|-----------------|--------|--------|-----------------|------------------|--------|
|                      |                                |   |                                        |   |                            |            |        |   |            |                  |   |
| Equity Investments        | Enterprise Value Waterfall Approach |   | $                                      | 45.6   |                            | EBITDA Multiple |   |   | 4.3x - 7.5x     |                  |   |   | 6.8x |   |
|                      |                                |   |                                   |   |                            | Discount Rate   |   |   | 11.20% - 13.55% |                  |   |   | 13.10% |   |
| Debt Investments          | Income Approach                     |   |                                   | 43.8   |                            | Discount Rate   |   |   | 8.25% - 11.75%  |             |   |   | 9.90% |   |
|                           | Market Approach                     |   |                                   | 17.1   |                            | Cost            |   |   | N/A             |                  |   |   | N/A |   |
|                      |                                |   |                                   | 60.9   |                            |            |   |   |            |             |   |   |   |   |
| Total Level 3 Investments |                                |   | $                                      | 106.5  |                            |            |   |   |            |             |   |   |   |   |

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| Type                      | Valuation Technique |   | Fair Value at 3/31/2015 (in millions) |   | Significant Unobservable Inputs |                                | Range  |   |          | Weighted Average |   |
|---------------------------|---------------------|--------|---------------------------------------|--------|---------------------------------|-------------------------------------|--------|--------|---------------|------------------|--------|
|                      |                |   |                                       |   |                            |                                |        |   |          |                  |   |
| Equity Investments        | Market Approach     |   | $                                     | 494.1  |                            | EBITDA Multiple                     |   |   | 3.00x - 7.75x |                  |   |   | 7.15x |   |
|                           | Market Approach     |   |                                  | 4.2    |                            | Recent Transaction Price            |   |   | N/A           |                  |   |   | N/A |   |
|                           | Market Approach     |   |                                  | 15.0   |                            | Cash and Asset Value                |   |   | N/A           |             |   |   | N/A |   |
|                           | Market Approach     |   |                                  | 3.8    |                            | Multiple of Tangible Book Value     |   |   | 1.43x         |             |   |   | 1.43x |   |
|                           | Market Approach     |   |                                  | 0.2    |                            | Market Value of Held for Securities |   |   | N/A           |             |   |   | N/A |   |
|                      |                |   |                                  | 517.3  |                            |                                |   |   |          |             |   |   |   |   |
|                      |                |   |                                  |   |                            |                                |   |   |          |             |   |   |   |   |
| Debt Investments          | Face Value          |   |                                  | 6.9    |                            | Recent Transaction Price            |   |   | N/A           |             |   |   | N/A |   |
|                           | Market Approach     |   |                                  | 2.7    |                            | Expected Cash Flow                  |   |   | N/A           |             |   |   | N/A |   |
|                           | Liquidation Value   |   |                                  | 0.2    |                            |                                |   |   |          |             |   |   |   |   |
|                      |                |   |                                  | 9.8    |                            |                                |   |   |          |             |   |   |   |   |
| Total Level 3 Investments |                |   | $                                     | 527.1  |                            |                                |   |   |          |             |   |   |   |   |
|                                     |   |        |   |   |                                                          | Fair Value Measurementsat December 31, 2015 Using           |    |
|------------------------------------------|--------|--------|--------|--------|---------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|---------|
| Asset Category                           |   | Total  |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |                                                                                                          |    | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
| 1st lien notes                           |   | $      | 11.3   |   |                                                          | $                                                                                                             | − |   |   | $ | − |   |   | $ | 11.3 |   |
| 2nd lien notes                           |   |   | 38.9   |   |                                                          |                                                                                                          | − |   |   |   | − |   |   |   | 38.9 |   |
| Subordinated debt                        |   |   | 10.7   |   |                                                          |                                                                                                          | − |   |   |   | − |   |   |   | 10.7 |   |
| Preferred & common equity            |   |   | 45.6   |   |                                                          |                                                                                                          | − |   |   |   | − |   |   |   | 45.6 |   |
| Investments measured at net asset value1 |   |   | 28.4   |   |                                                          |                                                                                                          | − |   |   |   | − |   |   |   | − |   |
| Total Investments                        |   | $      | 134.9  |   |                                                          | $                                                                                                             | − |   |   | $ | − |   |   | $ | 106.5 |   |
|                          |   |        |   |   | Fair Value Measurementsat March 31, 2015 Using      |   |
|-------------------------------|--------|--------|--------|--------|---------------------------------------------------------------|--------|
| Asset Category                |   | Total  |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |   |
| 2nd lien notes                |   | $      | 6.9    |   |                                                          | $      | − |   |   | $ | − |   |   | $ | 6.9 |   |
| Subordinated debt             |   |   | 2.9    |   |                                                          |   | − |   |   |   | − |   |   |   | 2.9 |   |
| Preferred & common equity |   |   | 517.3  |   |                                                          |   | − |   |   |   | − |   |   |   | 517.3 |   |
| Partnership Interests1        |   |   | 8.4    |   |                                                          |   | − |   |   |   | − |   |   |   | − |   |
| Total Investments             |   | $      | 535.5  |   |                                                          | $      | − |   |   | $ | − |   |   | $ | 527.1 |   |

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|                          |   | Fair Value 3/31/15 |    |   | Net Unrealized Appreciation (Depreciation) |   |    | Unrealized Depreciation due to spin-off of CSWI |   |   | Purchases of Investments1 |   |   | Divestitures |    |   | Distributions |   |    | Fair Value at 12/31/15 |   |
|-------------------------------|--------|--------------------|---------|--------|--------------------------------------------|--------|---------|-------------------------------------------------|--------|--------|---------------------------|--------|--------|--------------|---------|--------|---------------|--------|---------|------------------------|--------|
| 1st lien notes                |   | $                  | − |   |                                       | $      | − |                                            |   | $      | −                   |   |   | $            | 11.3    |   |          | $      | − |                   |   | $ | − |   |   | $ | 11.3 |   |
| 2nd lien notes                |   |               | 6.9     |   |                                       |   | − |                                            |   |   | −                   |   |   |         | 32.0    |   |          |   | − |                   |   |   | − |   |   |   | 38.9 |   |
| Subordinated debt             |   |               | 2.9     |   |                                       |   | 1.1     |                                            |   |   | −                   |   |   |         | 8.0     |   |          |   | (1.3    | )                      |   |   | − |   |   |   | 10.7 |   |
| Preferred & Common Equity |   |               | 517.3   |   |                                       |   | 11.0    |                                            |   |   | (456.2                    | )      |   |         | − |   |          |   | (19.5   | )                      |   |   | (7.0 | )* |   |   | 45.6 |   |
| Total Investments             |   | $                  | 527.1   |   |                                       | $      | 12.1    |                                            |   | $      | (456.2                    | )      |   | $            | 51.3    |   |          | $      | (20.8   | )                      |   | $ | (7.0 | ) |   | $ | 106.5 |   |

| 5. | INCOME TAXES |
|----|--------------|

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| 6. | ACCUMULATED NET REALIZED GAINS ON INVESTMENTS |
|----|-----------------------------------------------|

| 7. | SPIN-OFF COMPENSATION PLAN |
|----|----------------------------|

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| 8. | EMPLOYEE STOCK BASED COMPENSATION PLANS |
|----|-----------------------------------------|

----

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|                                  |   | Number of Options |     |   | Weighted Average Exercise Price |   |
|---------------------------------------|--------|-------------------|----------|--------|---------------------------------|--------|
| 2009 Plan                             |   |                   |     |   |                                 |   |
| Balance at March 31, 2013             |   |              | 170,908  |   |                            | $      | 22.37 |   |
| Granted                               |   |              | 85,000   |   |                            |   | 35.25 |   |
| Exercised                             |   |              | (69,108  | )      |                            |   | 22.27 |   |
| Canceled/Forfeited                    |   |              | (63,000  | )      |                            |   | 22.08 |   |
| Balance at March 31, 2014             |   |              | 123,800  |   |                            |   | 31.40 |   |
| Granted                               |   |              | 259,000  |   |                            |   | 36.60 |   |
| Exercised                             |   |              | (6,800   | )      |                            |   | 23.95 |   |
| Canceled/Forfeited                    |   |              | (4,000   | )      |                            |   | 23.95 |   |
| Balance at March 31, 2015             |   |              | 372,000  |   |                            |   | 35.24 |   |
| Granted                               |   |              | –  |   |                            |   | – |   |
| Exercised                             |   |              | (8,000   | )      |                            |   | 19.18 |   |
| Canceled/Forfeited                    |   |              | –  |   |                            |   | – |   |
| Spin-off adjustments                  |   |              | (1,487   | )*     |                            | NA     |   |
| Balance at December 31, 2015          |   |              | 362,513  |   |                            | $      | 11.21 | * |
|                                  |   |              |     |   |                            |   |   |   |
| 1999 Plan                             |   |              |     |   |                            |   |   |   |
| Balance at March 31, 2013             |   |              | 246,000  |   |                            | $      | 33.00 |   |
| Granted                               |   |              | –  |   |                            |   | – |   |
| Exercised                             |   |              | (108,000 | )      |                            |   | 30.37 |   |
| Canceled/Forfeited                    |   |              | (100,000 | )      |                            |   | 38.25 |   |
| Balance at March 31, 2014             |   |              | 38,000   |   |                            |   | 26.68 |   |
| Granted                               |   |              | –  |   |                            |   | – |   |
| Exercised                             |   |              | (22,000  | )      |                            |   | 29.10 |   |
| Canceled/Forfeited                    |   |              | –  |   |                            |   | – |   |
| Balance at March 31, 2015             |   |              | 16,000   |   |                            |   | 23.37 |   |
| Granted                               |   |              | –  |   |                            |   | – |   |
| Exercised                             |   |              | (10,000  | )      |                            |   | 23.37 |   |
| Canceled/Forfeited                    |   |              | –  |   |                            |   | – |   |
| Spin-off adjustments                  |   |              | (26      | )*     |                            | NA     |   |
| Balance at December 31, 2015          |   |              | 5,974    |   |                            | $      | 7.36 | * |
|                                  |   |              |     |   |                            |   |   |   |
| Combined Balance at December 31, 2015 |   |              | 368,487  |   |                            | $      | 11.15 | * |

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| December 31, 2015 | Weighted AverageRemaining Contractual Term |   | Aggregate IntrinsicValue |      |
|-------------------|--------------------------------------------|--------|--------------------------|-----------|
| Outstanding       | 2.1 years                                  |   | $                        | 2,457,760 |   |
| Exercisable       | 1.8 years                                  |   | $                        | 884,671   |   |

| *Certain adjustments were made to the exercise price and number of shares of Capital Southwest awards using volumetric weighted-average prices for the 10-day period immediately prior to and immediately following the distribution with the intention of preserving the economic value of the awards immediately prior to the distribution for all Capital Southwest employees. |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|

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| Restricted stock available for issuance as of March 31, 2015            |   |   | 31,240        |   |
|-------------------------------------------------------------------------|--------|--------|---------------|--------|
| Additional restricted stock approved under the plan                     |   |   | 450,000       |   |
| Restricted stock granted during the nine months ended December 31, 2015 |   |   | (143,000      | )      |
| Forfeiture of restricted stock                                          |   |   |               | 1,800  |   |
| Restricted stock available for issuance as of December 31, 2015         |   |   | 340,040  |   |
| Restricted Stock Awards       |   | Number of Shares |    |   | Weighted Average Fair Value Per Share at grant date |   |    | Weighted Average Remaining Vesting Term (in Years) |   |
|-------------------------------|--------|------------------|---------|--------|-----------------------------------------------------|--------|---------|----------------------------------------------------|--------|
| Unvested at March 31, 2015    |   |             | 142,960 |   |                                                | $      | 17.07   |                                               |   |   | 2.6 |   |
| Granted                       |   |             | 143,000 |   |                                                |   | − |                                               |   |   | − |   |
| Vested                        |   |             | (43,333 | )      |                                                |   | − |                                               |   |   | − |   |
| Forfeited                     |   |             | (1,800  | )      |                                                |   | − |                                               |   |   | − |   |
| Unvested at December 31, 2015 |   |             | 240,827 |   |                                                | $      | 15.95   |                                               |   |   | 3.1 |   |

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| Individual Cash Incentive Awards |   | Number of Awards |    |   | Weighted Average Baseline Net Asset Value Per Award |   |    | Weighted Average Remaining Vesting Term (in Years) |   |
|----------------------------------|--------|------------------|---------|--------|-----------------------------------------------------|--------|---------|----------------------------------------------------|--------|
| Unvested at March 31, 2015       |   |             | 82,000  |   |                                                | $      | 45.40   |                                               |   |   | 3.3 |   |
| Granted                          |   |             | − |   |                                                |   | − |                                               |   |   | − |   |
| Vested                           |   |             | − |   |                                                |   | − |                                               |   |   | − |   |
| Forfeited or expired             |   |             | (6,000  | )      |                                                |   | − |                                               |   |   | − |   |
| Unvested at December 31, 2015    |   |             | 76,000  |   |                                                | $      | 45.72   |                                               |   |   | 2.6 |   |

| 9. | OTHER EMPLOYEE COMPENSATION |
|----|-----------------------------|

| 10. | COMMITMENTS AND CONTINGENCIES |
|-----|-------------------------------|

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| 11. | SUMMARY OF PER SHARE INFORMATION |
|-----|----------------------------------|

|                                                              |   | Three Months EndedDecember 31, |       |   | Nine Months EndedDecember 31, |   |
|-------------------------------------------------------------------|--------|--------------------------------|------------|--------|-------------------------------|--------|
| Per Share Data                                                    |   | 2015                           |       |   | 2014                          |   |   | 2015 |   |   | 2014 |   |
| Investment income                                                 |   | $                              | .21        |   |                          | $      | .50 |   |   | $ | .34 |   |   | $ | .60 |   |
| Operating expenses                                                |   |                           | (.25       | )      |                          |   | (.21 | ) |   |   | (1.14 | ) |   |   | (.48 | ) |
| Income taxes                                                      |   |                           | .04        |   |                          |   | (.01 | ) |   |   | .03 |   |   |   | (.01 | ) |
| Net investment (loss) income                                      |   |                           | (.00       | )      |                          |   | .28 |   |   |   | (.77 | ) |   |   | .11 |   |
| Distributions from undistributed net investment income            |   |                           | .10        |   |                          |   | (.10 | ) |   |   | - |   |   |   | (.20 | ) |
| Distributions from undistributed net realized gain                |   |                           | (.10       | )      |                          |   | - |   |   |   | (.10 | ) |   |   | - |   |
| Distribution to CSWI                                              |   |                           | (.06       | )      |                          |   | - |   |   |   | (1.73 | ) |   |   | - |   |
| Decrease in unrealized appreciation due to distributions to CSWI  |   |                           | -          |   |                          |   | - |   |   |   | (29.01 | ) |   |   | - |   |
| Taxes incurred on deemed capital gain distributions               |   |                           | (.19       | )      |                          |   | - |   |   |   | (.19 | ) |   |   | - |   |
|  Net realized (loss) gain                                    |   |                           | (.52       | )      |                          |   | 3.66 |   |   |   | (.69 | ) |   |   | 5.63 |   |
| Net increase (decrease) in unrealized appreciation of investments |   |                           | .45        |   |                          |   | (5.47 | ) |   |   | .82 |   |   |   | (7.96 | ) |
| Capital Share transactions:                                       |   |                           |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Exercise of employee stock options                                |   |                           | -          |   |                          |   | - |   |   |   | (.03 | ) |   |   | (.01 | ) |
| Issuance of restricted stock*                                     |   |                           | (.15       | )      |                          |   | - |   |   |   | (.44 | ) |   |   | (.40 | ) |
| Share based compensation expense                                  |   |                           | .01        |   |                          |   | .01 |   |   |   | .06 |   |   |   | .02 |   |
|  Decrease in net asset value                                 |   |                           | (.46       | )      |                          |   | (1.62 | ) |   |   | (32.08 | ) |   |   | (2.81 | ) |
| Net asset value                                                   |   |                           |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Beginning of period                                               |   |                           | 17.68      |   |                          |   | 48.79 |   |   |   | 49.30 |   |   |   | 49.98 |   |
| End of period                                                     |   | $                              | 17.22      |   |                          | $      | 47.17 |   |   | $ | 17.22 |   |   | $ | 47.17 |   |
|                                                              |   |                           |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental Data                                                 |   |                           |       |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average fully diluted shares outstanding                 |   |                           | 15,751,242 |   |                          |   | 15,448,884 |   |   |   | 15,694,706 |   |   |   | 15,440,012 |   |
| Common shares outstanding at the end of the period                |   |                           | 15,724,532 |   |                          |   | 15,543,332 |   |   |   | 15,724,532 |   |   |   | 15,543,332 |   |

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| 12. | SIGNIFICANT SUBSIDIARY |
|-----|------------------------|

|                    |   | December 31, 2015 |       |
|-------------------------|--------|-------------------|------------|
| Current Assets          |   | $                 | 10,925,658 |   |
| Non-Current Assets      |   |              | 16,204,347 |   |
| Current Liabilities     |   |              | 1,904,949  |   |
| Non-Current Liabilities |   | $                 | 1,135,752  |   |
|     |   | Three months ended 12/31/2015 |      |   | Nine months ended 12/31/2015 |   |
|----------|--------|-------------------------------|-----------|--------|------------------------------|--------|
| Revenue  |   | $                             | 4,905,170 |   |                         | $      | 15,071,652 |   |
| Net Loss |   |                          | (374,245  | )      |                         |   | (1,794,574 | ) |

| 13. | I-45 SLF, LLC |
|-----|---------------|

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|  Portfolio Company               |   Industry                          |  Investment Type |  Maturity Date | Current Interest Rate1,3    |   | Principal |      |   | Cost   |   |       | Fair Value2 |   |
|---------------------------------------|-----------------------------------------------|-----------------------|---------------------|-----------------------------|--------|-----------|-----------|--------|--------|--------|------------|-------------|--------|
|  Ahead, LLC                      |  Business services                       |  First Lien      |  11/2/2020     |  L+ 6.50%(Floor 0.00%) |   | $         | 5,000,000 |   |   | $      | 4,854,048  |        |   | $ | 4,875,000 |   |
|  ATX Networks Corp.              |  Technology products & components    |  First Lien      |  6/11/2021     |  L+6.00%(Floor 1.00%)  |   |      | 4,987,469 |   |   |   | 4,925,605  |        |   |   | 4,912,657 |   |
|  BDF Acquisition Corp.           |  Consumer products & retail          |  Second Lien     |  2/7/2022      |  L+8.00%(Floor 1.00%)  |   |      | 3,000,000 |   |   |   | 2,853,676  |        |   |   | 2,854,000 |   |
|  Compuware Corporation           |  Software & IT services              |  First Lien      |  12/15/2019    |  L+5.25%(Floor 1.00%)  |   |      | 2,961,039 |   |   |   | 2,847,699  |        |   |   | 2,810,026 |   |
|  CRGT                            |  Aerospace & defense                 |  First Lien      |  12/19/2019    |  L+6.50%(Floor 1.00%)  |   |      | 3,974,522 |   |   |   | 3,969,554  |        |   |   | 3,954,650 |   |
|  Digital River                   |  Software & IT services              |  First Lien      |  2/12/2021     |  L+6.50%(Floor 1.00%)  |   |      | 5,415,452 |   |   |   | 5,382,125  |        |   |   | 5,361,297 |   |
|  Hunter Defense                  |  Aerospace & Defense                 |  First Lien      |  8/5/2019      |  L+5.50%(Floor 1.00%)  |   |      | 2,960,526 |   |   |   | 2,949,424  |        |   |   | 2,930,921 |   |
|  Industrial Container Services   |  Containers & packaging              |  First Lien      |  8/31/2016     |  L+5.75%(Floor 1.00%)  |   |      | 4,986,710 |   |   |   | 4,955,586  |        |   |   | 4,955,792 |   |
|  Integro Parent Inc.             |  Business services                       |  First Lien      |  10/7/2022     |  L+5.75%(Floor 1.00%)  |   |      | 5,000,000 |   |   |   | 4,801,205  |        |   |   | 4,887,500 |   |
|  iPayment, Inc.                  |  Financial services                      |  First Lien      |  5/8/2017      |  L+5.25%(Floor 1.50%)  |   |      | 5,000,000 |   |   |   | 4,900,000  |        |   |   | 4,807,125 |   |
|  Jet Support Services, Inc.      |  Aerospace & Defense                 |  First Lien      |  8/31/2021     |  L+6.50%(Floor 1.00%)  |   |      | 4,937,500 |   |   |   | 4,826,406  |        |   |   | 4,665,937 |   |
|  Kendra Scott                    |  Consumer products & retail          |  First Lien      |  7/17/2020     |  L+6.00%(Floor 1.00%)  |   |      | 4,000,000 |   |   |   | 3,992,520  |        |   |   | 3,970,000 |   |
|  Milk Specialties                |  Food, agriculture & beverage        |  First Lien      |  11/9/2018     |  L+7.00%(Floor 1.25%)  |   |      | 4,000,000 |   |   |   | 3,995,000  |        |   |   | 4,003,340 |   |
|  Mood Media Corporation          |  Media, marketing & entertainment    |  First Lien      |  5/1/2019      |  L+6.00%(Floor 1.00%)  |   |      | 4,561,321 |   |   |   | 4,441,586  |        |   |   | 4,350,360 |   |
|  New Media Holdings II LLC       |  Media, marketing & entertainment    |  First Lien      |  6/4/2020      |  L+6.25%(Floor 1.00%)  |   |      | 4,974,874 |   |   |   | 4,962,918  |        |   |   | 4,931,344 |   |
|  Prepaid Legal Services, Inc.    |  Consumer services                       |  First Lien      |  7/1/2019      |  L+5.25%(Floor 1.25%)  |   |      | 5,000,000 |   |   |   | 4,993,750  |        |   |   | 4,978,150 |   |
|  Stardust Finance Holdings, Inc. |  Buildings & infrastructure products |  First Lien      |  3/13/2022     |  L+5.50%(Floor 1.00%)  |   |      | 4,987,437 |   |   |   | 4,938,955  |        |   |   | 4,850,283 |   |
|  TaxACT                          |  Financial services                      |  First Lien      |  12/31/2022    |  L+6.00%(Floor 1.00%)  |   |      | 5,000,000 |   |   |   | 4,850,000  |        |   |   | 4,875,000 |   |
|  Water Pik, Inc.                 |  Consumer products & retail          |  First Lien      |  7/8/2020      |  L+4.75%(Floor 1.00%)  |   |      | 1,204,836 |   |   |   | 1,201,918  |        |   |   | 1,196,300 |   |
|                                  |                                          |  Second Lien     |  1/8/2021      |  L+8.75%(Floor 1.00%)  |   |      | 1,912,281 |   |   |   | 1,865,644  |        |   |   | 1,866,274 |   |
|                                  |                                          |                  |                |                        |   |      |      |   |   |   |       |        |   |   |   |   |
| Total Investments                     |                                          |                  |                |                        |   |      |      |   |   | $      | 82,507,619 |        |   | $ | 82,035,956 |   |

|  | 1 | Represents the interest rate as of December 31, 2015. All interest rates are payable in cash, unless otherwise noted. |
|--|---|-----------------------------------------------------------------------------------------------------------------------|

|  | 2 | Represents the fair value determined utilizing a similar process as the Company in accordance with ASC 820. 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. |
|--|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 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”) which reset daily, monthly, quarterly, or semiannually.  For each the Company has provided the spread over LIBOR or Prime and the current contractual interest rate in effect at December 31, 2015.  Certain investments are subject to a LIBOR or Prime interest rate floor. |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                   |   | As of December 31, 2015 |   |
|--------------------------------------------------------|--------|-------------------------|--------|
| Selected Balance Sheet Information:                    |   |                         |   |
| Investments in bank debt, at fair value (cost $82,508) |   | $                       | 82,036 |   |
| Cash and cash equivalents                              |   |                    | 4,809  |   |
| Interest receivable                                    |   |                    | 131    |   |
| Other assets                                           |   |                    | 1,181  |   |
| Total assets                                           |   | $                       | 88,157 |   |
|                                                   |   |                    |   |   |
| Senior credit facility payable                         |   | $                       | 5,000  |   |
| Payable for unsettled transactions                     |   |                    | 47,251 |   |
| Other liabilities                                      |   |                    | 376    |   |
| Total liabilities                                      |   | $                       | 52,627 |   |
| Members’ equity                                  |   |                    | 35,530 |   |
| Total liabilities and net assets                       |   | $                       | 88,157 |   |
|                                          |   | Period from Inception through December 31, 2015 |   |
|-----------------------------------------------|--------|-------------------------------------------------|--------|
| Selected Statement of Operations Information: |   |                                                 |   |
| Total revenues                                |   | $                                               | 468    |   |
| Total expenses                                |   |                                            | 126    |   |
| Net unrealized depreciation                   |   |                                            | (471   | ) |
| Net realized gains                            |   |                                            | 9      |   |
| Net loss                                      |   | $                                               | (120   | ) |

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| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
|---------|---------------------------------------------------------------------------------------|

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|  | · | Investment Rating 1 represents the least amount of risk in our portfolio. The investment is performing above underwriting expectations and the trends and risk factors are favorable. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Investment Rating 2 indicates the investment is performing as expected at the time of underwriting and the risk factors are neutral to favorable. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Investment Rating 3 involves an investment performing below underwriting expectations and indicates that the investment requires closer monitoring.  The portfolio company or investment may be out of compliance with financial covenants and interest payments may be impaired, however principal payments are generally not past due. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Investment Rating 4 indicates that the investment is performing materially below underwriting expectations and the risk of the investment has increased substantially.  Interest and principal payments on our investment are likely to be impaired. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                      |   | Three Months EndedDecember 31, |   |   | Net Change |   |
|---------------------------------------------------------------------------|--------|--------------------------------|--------|--------|------------|--------|
|                                                                      |   | 2015                           |   |   | 2014       |   |   | Amount |   |   | % |   |
|                                                                      |   | (in thousands)                 |   |
| Total investment income                                                   |   | $                              | 3,307  |   |       | $      | 7,713 |   |   | $ | (4,406 | ) |   |   | (57 | %) |
| Total expenses                                                            |   |                           | (3,934 | )      |       |   | (3,233 | ) |   |   | (701 | ) |   |   | 22 | % |
| Net investment (loss) income                                              |   |                           | (627   | )      |       |   | 4,480 |   |   |   | (5,107 | ) |   |   | (114 | %) |
| Net realized gain (loss) from investments                                 |   |                           | (8,170 | )      |       |   | 111,229 |   |   |   | (119,399 | ) |   |   |   |   |
| Net change in net unrealized appreciation (depreciation) from investments |   |                           | 7,060  |   |       |   | (84,964 | ) |   |   | 92,024 |   |   |   |   |   |
| Income tax (benefit) provision                                            |   |                           | (607   | )      |       |   | 51 |   |   |   | (658 | ) |   |   |   |   |
| Net (decrease) increase in net assets resulting from operations      |   | $                              | (1,130 | )      |       | $      | 30,694 |   |   | $ | (31,824 | ) |   |   | (104 | %) |
|                |   | Proceeds |      |   | Cost   |   |      | Realized gain (loss) |   |
|---------------------|--------|----------|-----------|--------|--------|--------|-----------|----------------------|--------|
| Humac Company       |   | $        | 231,000   |   |   | $      | -         |                 |   | $  | 231,000 |   |
| iMemories, Inc.     |   |     | 150,030   |   |   |   | 6,414,986 |                 |   |   | (6,264,956 | ) |
| Water Pik           |   |     | 5,482     |   |   |   | -         |                 |   |   | 5,482 |   |
| Wellogix, Inc.      |   |     | 2,858,105 |   |   |   | 5,000,000 |                 |   |   | (2,141,895 | ) |
| Total realized loss |   |     |      |   |   |   |      |                 |   | $ | (8,170,369 | ) |

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|                    |   | Proceeds |       |   | Cost   |   |      | Realized gain (loss) |   |
|-------------------------|--------|----------|------------|--------|--------|--------|-----------|----------------------|--------|
| Alamo Group, Inc.       |   | $        | 81,120,834 |   |   | $      | 2,007,263 |                 |   | $ | 79,113,571 |   |
| Encore Wire Corporation |   |     | 35,906,725 |   |   |   | 3,790,949 |                 |   |   | 32,115,776 |   |
| Total realized gain     |   |     |       |   |   |   |      |                 |   | $ | 111,229,347 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                         |   | Three Months EndedDecember 31, |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                         |   | 2015                           |   | 2014 |
| kSep Holdings, Inc.                                                                    |   | $                              | 522,000 |   | NA |
| Trax Data Refinery, Inc.                                                               |   |                           | (284,000 | ) | NA |
| I-45 SLF, LLC                                                                          |   |                           | (376,126 | ) | NA |
| Deepwater Corrosion Services, Inc.                                                                                                                                                                                                                                                                                                                                                                           |   |                           | (573,000 | ) | (1,176,000) |
|                                                                      |   | Nine Months EndedDecember 31, |    |   | Net Change |   |
|---------------------------------------------------------------------------|--------|-------------------------------|---------|--------|------------|--------|
|                                                                      |   | 2015                          |    |   | 2014       |   |   | Amount |   |   | % |   |
|                                                                      |   | (in thousands)                |    |
| Total investment income                                                   |   | $                             | 5,349   |   |       | $      | 9,288 |   |   | $ | (3,939 | ) |   |   | (42 | %) |
| Total expenses                                                            |   |                          | (18,022 | )      |       |   | (7,308 | ) |   |   | (10,714 | ) |   |   | 147 | % |
| Net investment (loss) income                                              |   |                          | (12,673 | )      |       |   | 1,980 |   |   |   | (14,653 | ) |   |   | (740 | %) |
| Net realized gain (loss) from investments                                 |   |                          | (10,818 | )      |       |   | 141,909 |   |   |   | (152,727 | ) |   |   |   |   |
| Net change in net unrealized appreciation (depreciation) from investments |   |                          | 12,939  |   |       |   | (123,791 | ) |   |   | 136,730 |   |   |   |   |   |
| Income tax (benefit) provision                                            |   |                          | (489    | )      |       |   | 273 |   |   |   | (762 | ) |   |   |   |   |
| Net (decrease) increase in net assets resulting from operations           |   | $                             | (10,063 | )      |       | $      | 19,825 |   |   | $ | (29,888 | ) |   |   | (149 | %) |

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|                                 |   | Proceeds |      |   | Cost   |   |      | Realized gain (loss) |   |
|--------------------------------------|--------|----------|-----------|--------|--------|--------|-----------|----------------------|--------|
| Alamo Group, Inc.                    |   | $        | 36,872    |   |   | $      | -         |                 |   | $ | 36,872 |   |
| Atlantic Capital Bancshares, Inc.    |   |     | 3,956,401 |   |   |   | 3,000,000 |                 |   |   | 956,401 |   |
| Ballast Point Ventures II, L.P.      |   |     | 3,507,598 |   |   |   | 2,634,790 |                 |   |   | 872,808 |   |
| BankCap Partners, L.P.               |   |     | 1,596,999 |   |   |   | 5,071,514 |                 |   |   | (3,474,515 | ) |
| Boxx Technologies, Inc.              |   |     | 2,184,184 |   |   |   | 1,500,000 |                 |   |   | 684,184 |   |
| Capital South Partners Fund II, L.P. |   |     | 50,000    |   |   |   | 433,403   |                 |   |   | (383,403 | ) |
| Diamond State Ventures, L.P.         |   |     | 27,500    |   |   |   | -         |                 |   |   | 27,500 |   |
| First Capital Group of Texas         |   |     | 20,000    |   |   |   | 778,894   |                 |   |   | (758,894 | ) |
| Humac Company                        |   |     | 231,000   |   |   |   | -         |                 |   |   | 231,000 |   |
| iMemories, Inc.                      |   |     | 150,030   |   |   |   | 6,414,986 |                 |   |   | (6,264,956 | ) |
| Instawares Holding Company, LLC      |   |     | 5,000,000 |   |   |   | 5,000,000 |                 |   |   | - |   |
| StarTech Seed Fund II                |   |     | 14,000    |   |   |   | 622,783   |                 |   |   | (608,783 | ) |
| Water Pik                            |   |     | 5,482     |   |   |   | -         |                 |   |   | 5,482 |   |
| Wellogix, Inc.                       |   |     | 2,858,105 |   |   |   | 5,000,000 |                 |   |   | (2,141,895 | ) |
| Total realized loss                  |   |     |      |   |   |   |      |                 |   | $ | (10,818,199 | ) |
|                             |   | Proceeds |        |   | Cost   |   |       | Realized gain (loss) |   |
|----------------------------------|--------|----------|-------------|--------|--------|--------|------------|----------------------|--------|
| Alamo Group, Inc.                |   | $        | 114,975,105 |   |   | $      | 2,190,937  |                 |   | $ | 112,784,168 |   |
| Capitala Finance Corporation     |   |     | 2,019,661   |   |   |   | 1,363,799  |                 |   |   | 655,862 |   |
| CapitalSouth Partners Fund III   |   |     | 34,054      |   |   |   | 34,054     |                 |   |   | - |   |
| Cinatra Clean Technologies, Inc. |   |     | 2,458,706   |   |   |   | 17,288,383 |                 |   |   | (14,829,677 | ) |
| Discovery Alliance, LLC          |   |     | 139,713     |   |   |   | 1,315,000  |                 |   |   | (1,175,287 | ) |
| Encore Wire Corporation          |   |     | 49,544,138  |   |   |   | 5,200,000  |                 |   |   | 44,344,138 |   |
| North American Energy Partners   |   |     | 588,577     |   |   |   | 236,986    |                 |   |   | 351,591 |   |
| StarTech Seed Fund II            |   |     | 75,706      |   |   |   | 75,706     |                 |   |   | - |   |
| Tristate Capital Holdings, Inc.  |   |     | 706,928     |   |   |   | 928,486    |                 |   |   | (221,558 | ) |
| Total realized gain              |   |     |        |   |   |   |       |                 |   | $ | 141,909,237 |   |

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|                               |   | Nine Months EndedDecember 31, |      |
|------------------------------------|--------|-------------------------------|-----------|
|                               |   | 2015                          |      |   | 2014 |   |
| Media Recovery, Inc.               |   | $                             | 5,100,000 |   |   | $ | 100,000 |   |
| Deepwater Corrosion Services, Inc. |   |                          | 1,749,000 |   |   |   | (1,144,000 | ) |
| kSep Holdings, Inc. .              |   |                          | 602,000   |   |   | NA |   |
| I-45 SLF, LLC                      |   |                          | (376,126  | ) |   |   | NA |   |
| Trax Data Refinery, Inc.           |   |                          | (380,000  | ) |   | NA |   |

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| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
|---------|------------------------------------------------------------|

| Item 4. | Controls and Procedures |
|---------|-------------------------|

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| Item 1. | Legal Proceedings |
|---------|-------------------|

| Item 1A. | Risk Factors |
|----------|--------------|

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| Item 6. | Exhibits |
|---------|----------|

|   | Exhibit No. | Description                                                                                                                                                                                     |
|--------|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 31.1        | Certification of President and Chief Executive Officer required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), filed herewith.          |
|   | 31.2        | Certification of Chief Financial Officer required by Rule 13a-14(a) of the Exchange Act, filed herewith.                                                                                        |
|   | 32.1        | Certification of President and Chief Executive Officer required by Rule 13a-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith. |
|   | 32.2        | Certification of Chief Financial Officer required by Rule 13a-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith.               |

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|             | CAPITAL SOUTHWEST CORPORATION |                                  |
|------------------|-------------------------------|---------------------------------------|
|             |                          |                                  |   |
| February 9, 2016 | By:                           | /s/ Bowen S. Diehl                    |   |
| Date             |                          | Bowen S. Diehl                        |   |
|                  |                          | President and Chief Executive Officer |   |
|             |                          |                                  |   |
| February 9, 2016 | By:                           | /s/ Michael S. Sarner                 |   |
| Date             |                          | Michael S. Sarner                     |   |
|                  |                          | Chief Financial Officer               |   |

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