CAPITAL SOUTHWEST CORP
For the period ended Sep 30, 2026. Filed Nov 2, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 2, 2026
What changed in Risk Factors?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-03.
0000017313-26-000095
Item 1A. Risk FactorsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-02.
0000017313-26-000168
Item 1A. Risk FactorsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 3 previous paragraphs and 6 current paragraphs.
1 unchanged; 2 reworded; 3 added; 0 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
We are exposed to risks associated with hedging transactions.
Current report
We seek to hedge against interest rate and credit risk by using structured financial instruments such as interest rate swaps, subject to the requirements of the 1940 Act. Use of structured financial instruments for hedging purposes may present significant risks, including the risk of loss of the amounts invested. Defaults by the other party to a hedging transaction can result in losses in the hedging transaction. Hedging activities also involve the risk of an imperfect correlation between the hedging instrument and the asset being hedged, which could result in losses both on the hedging transaction and on the instrument being hedged. Use of hedging activities may not prevent significant losses and could increase our losses. Further, hedging transactions may reduce cash available to pay distributions to our shareholders.
Current report
The success of our hedging strategy will depend on our ability to correctly identify appropriate exposures for hedging. In connection with our issuance of the September 2031 Notes, which bear interest at a fixed rate, we entered into interest rate swaps to continue to align the interest rates of our liabilities with our investment portfolio, which predominately consists of floating rate loans. In addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price movements in the portfolio positions being hedged may vary, as may the time period in which the hedge is effective relative to the time period of the related exposure.
Reworded paragraphs (2)
Previous wording
Investing in our common stock involves a number of significant risks. Other than the risk factor set forth below, there have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 that we filed with the SEC on May 19, 2026.
Current wording
Investing in our common stock involves a number of significant risks. Other than the risk factors set forth below, there have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2026 that we filed with the SEC on May 19, 2026.
Previous wording
While we currently are not subject to any pending or threatened litigation or proceedings under the Supplemental Indenture relating to the assertion made by certain holders of our 2029 Convertible Notes (as described under Item 5. Other Information), we may in the future become subject to litigation or proceedings instituted by such noteholders or by us. Even if lawsuits or proceedings against us are without merit, defending against these claims can result in substantial costs and divert management’s time and resources from the Company’s business. We also may be required to incur significant legal fees and other expenses related to any litigation or proceedings. The Company can neither predict the outcome of these potential lawsuits or proceedings, if any, nor can the Company predict the amount of time and expenses that will be required to resolve any such matters. An unfavorable resolution of any such litigation or proceeding that results in the adjustment of the 2029 Convertible Notes in the manner that certain noteholders are asserting would have a material adverse effect on the Company’s net asset value and net investment income and would be dilutive to the ownership interest of our existing shareholders.
Current wording
While we currently are not subject to any pending or threatened litigation or proceedings under the Supplemental Indenture relating to the assertion made by certain holders of our 2029 Convertible Notes, we may in the future become subject to litigation or proceedings instituted by such noteholders or by us. Even if lawsuits or proceedings against us are without merit, defending against these claims can result in substantial costs and divert management’s time and resources from the Company’s business. We also may be required to incur significant legal fees and other expenses related to any litigation or proceedings. The Company can neither predict the outcome of these potential lawsuits or proceedings, if any, nor can the Company predict the amount of time and expenses that will be required to resolve any such matters. An unfavorable resolution of any such litigation or proceeding that results in the adjustment of the 2029 Convertible Notes in the manner that certain noteholders are asserting would have a material adverse effect on the Company’s net asset value and net investment income and would be dilutive to the ownership interest of our existing shareholders.