UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
 (Mark One)
     [X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
          EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2007

                                       OR
     [ ]  TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES
          EXCHANGE ACT OF 1934

For the transition period from .............to .............

                         Commission File Number: 814-61

                          CAPITAL SOUTHWEST CORPORATION
             (Exact name of registrant as specified in its charter)

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

12900 Preston Road, Suite 700, Dallas, Texas                       75230
  (Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code: (972) 233-8242

Securities registered pursuant to section 12(b) of the Act: None

Securities  registered pursuant to section 12(g) of the Act:
Common Stock, $1.00 par value

Indicate by check mark if the  registrant is a well-known  seasoned  issuer,  as
defined in Rule 405 of the Securities Act. Yes    No X .

Indicate  by  check  mark if the  registrant  is not  required  to file  reports
pursuant to Section 13 or Section 15(d) of the Act. Yes    No X .

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ____.

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-K/A or any  amendment to
this Form 10-K/A. [X]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and large  accelerated  filer" in Rule 12b-2 of the Exchange  Act.  (Check
One):

 Large accelerated filer ____  Accelerated filer X    Non-accelerated filer ____

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes    No X .

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  as of September  30, 2006 was  $332,548,127,  based on the last sale
price of such stock as quoted by Nasdaq on such date (officers, directors and 5%
shareholders are considered affiliates for purposes of this calculation).

The  number of shares of common  stock  outstanding  as of  January  9, 2008 was
3,889,151.

         Documents Incorporated by Reference                  Part of Form 10-K
         -----------------------------------                  -----------------

Proxy Statement for Annual Meeting of Shareholders                  Part III
                 to be held July 16, 2007





                                TABLE OF CONTENTS


                                                                            Page

EXPLANATORY NOTE...............................................................1

PART I
         Item 1.      Business.................................................1
         Item 1A.     Risk Factors.............................................2
         Item 1B.     Unresolved Staff Comments................................5
         Item 2.      Properties...............................................6
         Item 3.      Legal Proceedings........................................6
         Item 4.      Submission of Matters to a Vote of Security Holders......6

PART II
         Item 5.      Market for Registrant's Common Equity, Related Stockholder
                         Matters and Issuer Purchases of Equity Securities.....6
         Item 6.      Selected Financial Data..................................7
         Item 7.      Management's Discussion and Analysis of Financial
                         Condition and Results of Operations...................7
         Item 7A.     Quantitative and Qualitative Disclosures About Market
                         Risk..................................................7
         Item 8.      Financial Statements and Supplementary Data..............7
         Item 9.      Changes in and Disagreements With Accountants on
                         Accounting and Financial Disclosure...................8
         Item 9A.     Controls and Procedures..................................8
         Item 9B.     Other Information.......................................10

PART III
         Item 10.     Directors, Executive Officers and Corporate Governance..10
         Item 11.     Executive Compensation..................................11
         Item 12.     Security Ownership of Certain Beneficial Owners and
                         Management and Related Stockholder Matters...........11
         Item 13.     Certain Relationships and Related Transactions, and
                         Director Independence................................12
         Item 14.     Principal Accountant Fees and Services..................12

PART IV
         Item 15.     Exhibits and Financial Statement Schedules..............12

Signatures ...................................................................13






                                     PART I

Explanatory Note Regarding Restatements

     Capital  Southwest  Corporation (the "Company") is filing this amendment to
its Annual  Report on Form 10-K for the year ended March 31, 2007,  to amend and
restate its consolidated  financial statements and per share data and ratios for
each of the fiscal years ended March,  31, 2007,  2006 and 2005 and our selected
per share  data and  ratios  for the years  ended  March 31,  2004 and 2003.  In
addition,  we are filing an amendment to our  Quarterly  Report on Form 10-Q for
the quarter ended June 30, 2007.

     After  reviewing the accounting  treatment for deferred taxes on unrealized
appreciation of investments, the Company has determined its long-standing policy
of recording deferred taxes on unrealized appreciation of investments was not in
conformity  with  generally  accepted  accounting  principles and its previously
issued financial  statements  required  restatement.  Specifically,  a Regulated
Investment  Company  (RIC) is  required  to  record  deferred  taxes  when it is
probable the RIC will not qualify  under  Subchapter  M of the Internal  Revenue
Code for a period longer that one year. Historically, management believed it was
probable the Company would not maintain its qualifying status as a RIC in future
years and recorded a deferred tax liability on the  unrealized  appreciation  of
investments.  However, upon further analysis, the Company determined it was only
reasonably  possible,  but not  probable,  the Company  would not  maintain  its
qualifying  status  as a RIC.  Thus  the  deferred  tax  liability  consistently
recorded  and  disclosed  should  not have been  recognized.  Additionally,  the
Company historically has accrued income taxes payable on its investment gains as
they have been  incurred,  as it has been the  Company's  practice to retain its
investment gains.  However,  RICs are required to accrue federal income taxes on
investment  gains that are  retained  only on the last day of the tax year.  The
Company  incorrectly  recorded the tax impact of its investment gains in periods
other  than the last day of its tax year,  December  31.  Therefore,  the income
taxes payable recorded at times other than the tax year end should not have been
recognized.  Furthermore,  the  Company  incorrectly  classified  its' return of
capital  contributions  cumulatively  as  "undistributed  net realized  gains on
investments."  RICs are required to classify return of capital  contributions as
"additional  capital" in the period in which tax basis amounts become permanent;
and reflect  undistributed  amounts  remaining  since its' previous tax year end
adjusted for  temporary tax basis  differences  as  "undistributed  net realized
gains on  investments."  The restatement will eliminate the accrual for deferred
taxes on unrealized  appreciation of  investments,  and income taxes payable and
related tax carryforwards on realized gains,  increasing the net asset value per
share and net assets from  operations for the periods  restated;  and reclassify
return of capital contributions to "additional capital."

     The summary of the effects of this change on our consolidated statements of
financial  condition as of March 31, 2007 and 2006, our consolidated  statements
of  operations,  our  consolidated  statements of cashflow and our  consolidated
statements  of changes in net assets for the years ended March 31,  2007,  2006,
and  2005  is  included  in  Note  2,  "Restatement  of  Consolidated  Financial
Statements,"  located  in the  notes to our  consolidated  financial  statements
elsewhere in this annual report amendment.

     The  following  information  has been  updated  to give the  effect  to the
restatement.  In accordance with Rule 12b-15, under the Security Exchange Act of
1934,  as amended,  the complete  text of each amended item is set forth in this
report,  even  though  much of the  disclosure  in the  restated  items  has not
changed.  The disclosure in this annual report amendment supersedes and replaces
corresponding  disclosures  in our annual report on Form 10-K for the year ended
March 31, 2007.

Item 1. Business

     We were organized as a Texas corporation on April 19, 1961. Until September
1969, we operated as a licensee under the Small Business Investment Act of 1958.
At that time, we transferred to our wholly-owned  subsidiary,  Capital Southwest
Venture Corporation ("CSVC"), certain assets and our license as a small business
investment company ("SBIC").  CSVC is a closed-end,  non-diversified  investment
company of the management  type registered  under the Investment  Company Act of
1940  (the  "1940  Act").  Prior to March  30,  1988,  we were  registered  as a
closed-end, non-diversified investment company under the 1940 Act. On that date,
we elected to become a business development company subject to the provisions of
the 1940 Act, as amended by the Small Business Incentive Act of 1980. Because we
wholly own CSVC, the portfolios of both entities are referred to collectively as
"our", "we" and "us".



                                       1


     We are a venture capital  investment  company whose objective is to achieve
capital  appreciation  through long-term  investments in businesses  believed to
have  favorable  growth  potential.  Our  investment  interests  are  focused on
expansion   financings,   management   buyouts,   recapitalizations,    industry
consolidations and early-stage financings in a broad range of industry segments.
Our  portfolio is a composite  of companies in which we have major  interests as
well  as  a  number  of  developing  companies  and  marketable   securities  of
established  publicly-owned  companies. We make available significant managerial
assistance  to the  companies  in which we invest  and  believe  that  providing
material  assistance  to such investee  companies is critical to their  business
development activities.

     The 12 largest  investments we own had a combined cost of $38,566,269 and a
value  of  $638,196,845,  representing  93.7% of the  value of our  consolidated
investment  portfolio at March 31, 2007.  For a narrative  description of the 12
largest  investments,  see  "Twelve  Largest  Investments  - March 31,  2007" in
Exhibit  13.1 of this Form 10-K/A  which is herein  incorporated  by  reference.
Certain of the  information  presented  on the 12 largest  investments  has been
obtained  from the  respective  companies  and,  in certain  cases,  from public
filings of such companies.  The financial  information  presented on each of the
respective companies is from such companies' audited financial statements.

     We compete for attractive  investment  opportunities  with venture  capital
partnerships  and  corporations,  venture  capital  affiliates of industrial and
financial companies, SBICs and wealthy individuals.

     The number of persons employed by us at March 31, 2007 was seven.

     Our internet  website address is  www.capitalsouthwest.com.  You can review
the filings we have made with the U.S. Securities and Exchange Commission,  free
of charge by linking  directly from our website to NASDAQ, a database that links
to EDGAR, the Electronic Data Gathering,  Analysis,  and Retrieval System of the
SEC.  You should be able to access our  annual  reports on Form 10-K,  quarterly
reports  on Form  10-Q,  current  reports  on Form 8-K and  amendments  to those
reports filed or furnished  pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934.  The charters  adopted by the  committees  of our board of
directors are also available on our website.

Item 1A. Risk Factors

     You  should  carefully  consider  the risks  described  below and all other
information  contained in this restated annual report on Form 10-K/A,  including
our consolidated  financial  statements and the related notes thereto. The risks
and  uncertainties  described below are not the only ones facing us.  Additional
risks and  uncertainties  not  presently  known to us, or not  presently  deemed
material by us, may also impair our  operations and  performance.  If any of the
following risks actually occur, our business,  financial condition or results of
operations could be materially adversely affected.  If that happens, the trading
price of our common  stock could  decline,  and you may lose all or part of your
investment.

There is  uncertainty  regarding  the  value of our  investments  in  restricted
securities.

     Our net  asset  value  is  based  on the  values  assigned  to the  various
investments  in  our  portfolio,  determined  in  good  faith  by our  board  of
directors.  Because of the inherent  uncertainty  of the  valuation of portfolio
securities which do not have readily ascertainable market values, our fair value
determinations  may differ  materially from the values which would be applicable
to unrestricted securities having a public market.

We have  identified a material  weakness in our internal  control over financial
reporting  ("ICFR"),  which  could  adversely  affect our  ability to report our
financial  condition and results of operations  accurately or on a timely basis.
As a result,  current and potential  stockholders  could lose  confidence in our
financial reporting,  which could harm our business and the trading price of our
stock.



                                       2


     As  required  by  Section  404  of the  Sarbanes-Oxley  Act  of  2002,  our
management  has  conducted an evaluation  of the  effectiveness  of our internal
control  over  financial  reporting  as of March 31,  2007.  We have  identified
material   weakness  in  our  internal   controls  over   financial   reporting,
specifically related to accounting for taxes and have concluded that as of March
31, 2007, we did not maintain effective control over financial reporting.

     A  material  weakness  is  a  control  deficiency,   or  a  combination  of
deficiencies,  that  result in more  than a remote  likelihood  that a  material
misstatement of our annual or interim financial statements will not be prevented
or detected. We determined as of November 19, 2007 we did not maintain effective
controls  related to  accounting  for taxes.  Management  believes  they will be
effective in remediation of the material  weakness  indentified in  Management's
Report on Internal  Control over Financial  Reporting  within the current fiscal
year.

     A material weakness in our internal control over financial  reporting could
adversely   impact  our  ability  to  provide  timely  and  accurate   financial
information. If we are unsuccessful in implementing or following our remediation
plan,  or fail to update our internal  control over  financial  reporting as our
business evolves,  we may be unable to report financial  information  timely and
accurately or to maintain effective disclosure controls and procedures. Any such
failure  in the future  could also  adversely  affect  the  results of  periodic
management   evaluations  and  annual  auditor   attestation  reports  regarding
disclosure  controls and  effectiveness  of our internal  control over financial
reporting  required under Section 404 of the  Sarbanes-Oxley Act of 2002 and the
rules promulgated  thereunder.  If we are unable to report financial information
in a timely and accurate manner or to maintain effective disclosure controls and
procedures,   we  could  be  subject  to,  among  other  things,  regulatory  or
enforcement actions by the SEC and NASDAQ, including a delisting from the NASDAQ
Stock Market.

We are  subject to  additional  risks in light of the  restatement  of our prior
period consolidated financial statements.

     As described in Note 2, "Restatement of Consolidated  Financial Statements"
of the notes to our  consolidated  financial  statements,  we have  restated our
consolidated  financial  statements  for the year ended  March 31,  2007 and all
years  represented  in our Form  10-K for the year  ended  March 31,  2007.  The
restatement of our  consolidated  financial  statements could expose us to legal
actions.  The  defense  of  any  such  actions  could  cause  the  diversion  of
management's attention and resources, and we could be required to pay damages to
settle such actions if any such  actions are not resolved in our favor.  Even if
resolved in our favor,  such actions could cause us to incur  significant  legal
and other  expenses.  Moreover,  we may be the  subject  of  negative  publicity
focusing on the restatement and negative  reactions from shareholders and others
with whom we do business.

The lack of liquidity of our  restricted  securities  may  adversely  affect our
business.

     Our portfolio contains many securities which are subject to restrictions on
sale because they were acquired from issuers in "private placement" transactions
or because we are deemed to be an affiliate  of the issuer.  Unless an exemption
from the  registration  requirements of the Securities Act of 1933 is available,
we will not be able to sell these  securities  publicly  without the expense and
time  required to register the  securities  under  applicable  federal and state
securities laws. In addition,  contractual or practical limitations may restrict
our ability to liquidate our securities in portfolio  companies,  because we may
own a relatively large percentage of the issuer's outstanding securities.  Sales
may also be limited by unfavorable  market  conditions.  The  illiquidity of our
investments may preclude or delay the disposition of such securities,  which may
make it  difficult  for us to obtain  cash equal to the value at which we record
our investments.

There is limited publicly available information regarding the companies in which
we invest.

     Many of the  securities  in our  portfolio  are  issued by  privately  held
companies.  There is generally little or no publicly available information about
such  companies,  and we must rely on the diligence of our  management to obtain
the information  necessary for our decision to invest. There can be no assurance



                                       3


that such diligence efforts will uncover all material  information  necessary to
make fully informed investment decisions.

Certain of our portfolio companies are highly leveraged.

     Many of our portfolio companies have incurred  substantial  indebtedness in
relation to their overall capital base. Such indebtedness  often has a term that
will  require  the  balance of the loan to be  refinanced  when it  matures.  If
portfolio companies cannot generate adequate cash flow to meet the principal and
interest payments on their  indebtedness,  the value of our investments could be
reduced or eliminated through  foreclosure on the portfolio  company's assets or
by the portfolio company's reorganization or bankruptcy.

Fluctuations may occur in our quarterly results.

     Our quarterly operating results may fluctuate materially due to a number of
factors including, among others, variations in and the timing of the recognition
of realized  and  unrealized  gains or losses,  the degree to which we encounter
competition in our portfolio  companies' markets,  the ability to find and close
suitable  investments,  and general  economic  conditions.  As a result of these
factors, results for any period should not be relied upon as being indicative of
performance  in future  periods.  See  "Management's  Discussion and Analysis of
Financial Condition and Results of Operations."

We may not continue to qualify for pass-through tax treatment.

     We may not  qualify for conduit  tax  treatment  as a Regulated  Investment
Company ("RIC") if we are unable to comply with the requirements of Subchapter M
of the Internal Revenue Code. If we fail to satisfy such  requirements and cease
to qualify for conduit tax treatment, we will be subject to federal taxes on our
net investment  income.  To the extent we had unrealized gains, we would have to
establish   reserves  for  taxes,   which  would  reduce  our  net  asset  value
accordingly.  In  addition,  if we,  as a RIC,  were to  decide to make a deemed
distribution of net realized  capital gains and retain the net realized  capital
gain, we would have to establish  appropriate  reserves for taxes, at the end of
the tax year, that we would have to pay on behalf of our shareholders.  The loss
of this  pass-through  tax treatment could have a material adverse effect on the
total return, if any, obtainable from an investment in our common stock.

     Historically, we have distributed net investment income semi-annually.  Our
current  intention is to continue these  distributions of ordinary income to our
shareholders.  Also, historically,  we have retained net realized capital gains,
paid the resulting tax at the corporate  level and retained the after-tax  gains
to  supplement  our equity  capital  and  support  continuing  additions  to our
portfolio. Our shareholders then report such capital gains on their tax returns,
receive credit for the tax we paid and are deemed to have  reinvested the amount
of the  retained  after-tax  gain.  We cannot  assure  you that we will  achieve
investment  results or maintain a RIC tax status  that will allow any  specified
level of cash  distributions  or our  shareholders'  current  tax  treatment  of
realized and retained capital gains.

Our financial  condition and results of operations will depend on our ability to
effectively manage any future growth.

     Sustaining  growth depends on our ability to identify,  evaluate,  finance,
and invest in companies that meet our investment  criteria.  Accomplishing  such
results on a  cost-effective  basis is a function of our marketing  capabilities
and skillful  management of the  investment  process.  Failure to achieve future
growth  could  have  a  material  adverse  effect  on  our  business,  financial
condition, and results of operations.

We are dependent upon management for our future success.

     Selection,  structuring  and  closing  our  investments  depends  upon  the
diligence and skill of our  management,  which is responsible  for  identifying,
evaluating,  negotiating,  monitoring  and  disposing  of our  investments.  Our
management's capabilities may significantly impact our results of operations. If



                                       4


we lose any member of our management team and he/she cannot be promptly replaced
with an  equally  capable  team  member,  our  results  of  operations  could be
significantly impacted.

We operate in a highly competitive market for investment opportunities.

     We compete with a number of private equity funds, other investment entities
and  individuals  for investment  opportunities.  Some of these  competitors are
substantially larger and have greater financial resources,  and some are subject
to different  and  frequently  less  stringent  regulation.  As a result of this
competition,  we may  not be able to take  advantage  of  attractive  investment
opportunities  from time to time and there can be no  assurance  that we will be
able to identify and make investments that satisfy our objectives.

Changes in laws or regulations governing our operations or our failure to comply
with those laws or regulations may adversely affect our business.

     We and our  portfolio  companies  are subject to  regulation by laws at the
local,  state and federal level.  These laws and  regulations,  as well as their
interpretation,  may be changed from time to time.  Accordingly,  any changes in
these laws and  regulations or failure to comply with them could have a material
adverse effect on our business.  Certain of these laws and  regulations  pertain
specifically to business development companies such as ours.

Failure to deploy new capital may reduce our return on equity.

     If we fail to invest our capital  effectively,  our return on equity may be
decreased, which could reduce the price of the shares of our common stock.

Investment  in shares of our common  stock  should not be  considered a complete
investment program.

     Our stock is intended for investors seeking long-term capital appreciation.
Our investments in portfolio  securities  generally  require many years to reach
maturity,  and such  investments  generally are  illiquid.  An investment in our
shares should not be considered a complete investment program.  Each prospective
purchaser  should take into account his or her investment  objectives as well as
his or her other investments when considering the purchase of our shares.

Our common stock often trades at a discount from net asset value.

     Our  common  stock  is  listed  on The  Nasdaq  Global  Market  ("NASDAQ").
Shareholders  desiring  liquidity  may sell  their  shares on NASDAQ at  current
market value,  which has often been below net asset value.  Shares of closed-end
investment  companies  frequently trade at discounts from net asset value, which
is a risk  separate and distinct  from the risk that a fund's  performance  will
cause its net asset value to decrease.

The market price of our common stock may fluctuate significantly.

     The market price and  marketability  of shares of our common stock may from
time to time be  significantly  affected  by  numerous  factors,  including  our
investment  results,  market  conditions,  and other  influences and events over
which we have no control and that may not be directly related to us.



Item 1B. Unresolved Staff Comments

     We have no unresolved staff comments to report pursuant to Item 1B.



                                       5



Item 2. Properties

     We maintain our offices at 12900 Preston Road,  Suite 700,  Dallas,  Texas,
75230, where we rent approximately 4,232 square feet of office space pursuant to
a lease agreement expiring in February 2008. On December 7, 2007, we renewed our
lease and extended our  commitment  through  February  2013. We believe that our
offices are adequate to meet our current and expected future needs.

Item 3. Legal Proceedings

     We have no material pending legal proceedings to which we are a party or to
which any of our property is subject.

Item 4. Submission of Matters to a Vote of Security Holders

     No matters were submitted to a vote of security  holders during the quarter
ended March 31, 2007.

                                     PART II

Item 5. Market for Registrant's  Common Equity,  Related Stockholder Matters and
        Issuer Purchases of Equity Securities

     Information  set  forth  under  the  captions  "Shareholder  Information  -
Shareholders,  Market Prices and  Dividends" in Exhibit 13.1 of this Form 10-K/A
is herein incorporated by reference.


                                Performance Graph

          The following graph compares our cumulative total  shareholder  return
     during the last five years  (based on the market  price of our common stock
     and  assuming  reinvestment  of all  dividends  and tax credits on retained
     long-term  capital  gains)  with the Total  Return  Index for NASDAQ  (U.S.
     Companies)  and with the Total  Return Index for Nasdaq  Financial  Stocks,
     both of which  indices  have been  prepared  by the Center for  Research in
     Security Prices at the University of Chicago.


                Comparison of Five Year Cumulative Total Returns

                                [GRAPH OMITTED]


           Nasdaq Total Return (U.S.)      Nasdaq Financial Stocks        Capital Southwest Corporation
                                                                 

2002            100.000                         100.000                          100.000
2003            73.397                          92.777                           70.744
2004            108.335                         133.387                          112.003
2005            109.059                         138.745                          118.299
2006            128.607                         162.999                          143.785
2007            133.404                         170.643                          241.089





                                       6


Item 6. Selected Financial Data

     See  Exhibit  13.1  "Selected  Consolidated  Financial  Data" of this  Form
10-K/A.

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

     See  Exhibit  13.1  "Selected  Consolidated  Financial  Data" of this  Form
10-K/A.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     We are subject to financial market risks,  including  changes in marketable
equity  security  prices.  We do not use  derivative  financial  instruments  to
mitigate any of these risks.

     Our  investment  performance  is a  function  of our  portfolio  companies'
profitability,  which may be affected by economic  cycles,  competitive  forces,
foreign  currency  fluctuations  and production costs including labor rates, raw
material prices and certain basic commodity prices. Most of the companies in our
investment  portfolio do not hedge their  exposure to raw material and commodity
price fluctuations. However, the portfolio company with the greatest exposure to
foreign  currency  fluctuations  generally  hedges  its  exposure.  All of these
factors may have an adverse  effect on the value of our  investments  and on our
net asset value.

     Our investment in portfolio  securities includes fixed-rate debt securities
which totaled  $6,109,238 at March 31, 2007,  equivalent to 0.9% of the value of
our total  investments.  Generally,  these debt securities are below  investment
grade and have relatively high fixed rates of interest, therefore; minor changes
in market yields of publicly-traded  debt securities have little or no effect on
the values of debt securities in our portfolio and no effect on interest income.
Our investments in debt securities are generally held to maturity and their fair
values are  determined  on the basis of the terms of the debt  security  and the
financial condition of the issuer.

     A  portion  of  our  investment  portfolio  consists  of  debt  and  equity
securities of private companies. We anticipate little or no effect on the values
of these  investments  from modest  changes in public market equity  valuations.
Should  significant  changes in market  valuations of comparable  publicly-owned
companies  occur,  there may be a corresponding  effect on valuations of private
companies,  which  would  affect the value and the amount and timing of proceeds
eventually  realized  from  these  investments.  A  portion  of  our  investment
portfolio also consists of restricted common stocks of publicly-owned companies.
The fair values of these  restricted  securities are influenced by the nature of
applicable resale restrictions,  the underlying earnings and financial condition
of the  issuers  of such  restricted  securities  and the market  valuations  of
comparable  publicly-owned companies. A portion of our investment portfolio also
consists of  unrestricted,  freely  marketable  common stocks of  publicly-owned
companies.  These freely marketable investments,  which are valued at the public
market price, are directly exposed to equity price risks, in that a change in an
issuer's  public market equity price would result in an identical  change in the
value of our investment in such security.

Item 8. Financial Statements and Supplementary Data

     See  Item 15 of this  Form  10-K/A  -  "Exhibits  and  Financial  Statement
Schedules".


                                       7




Selected Quarterly Financial Data (Unaudited)

     The following  presents a summary of the unaudited  quarterly  consolidated
financial information for the years ended March 31, 2007 and 2006.

                                                            First         Second         Third       Fourth
                                                           Quarter        Quarter       Quarter      Quarter        Total
                                                           -------        -------       -------      -------        -----
                                                         as restated    as restated    as restated  as restated   as restated
                                                                       (In thousands, except per share amounts)
                                                                                                     

2007
----
    Net investment income                             $       492     $    1,170        $ 1,617     $     954     $   4,233
    Net realized gain (loss) on investments                   397          9,219         19,531       (14,181)       14,966
    Net increase (decrease) in unrealized
        appreciation of investments                        (5,218)        (2,931)       132,210        23,621       147,682
    Net increase (decrease) in net assets
       from operations                                     (4,329)         7,458        153,358        10,394       166,881
    Net increase (decrease) in net assets
       from operations per share                            (1.12)          1.92          39.46          2.66         42.94

2006
----
    Net investment income                               $     574     $      666       $    893     $     256     $   2,389
    Net realized gain on investments                        5,261          5,915          6,317        (2,042)       15,451
    Net increase in unrealized
       appreciation of investments                          4,142         26,824         15,009        78,380       124,355
    Net increase in net assets
       from operations                                      9,977         33,405         22,219        76,594       142,195
    Net increase in net assets
       from operations per share                             2.59           8.66           5.76         19.83         36.84




Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure

     None.

Item 9A. Controls and Procedures

(i)  Disclosure Controls and Procedures.

     An  evaluation   was  performed   under  the   supervision   and  with  the
participation of our management,  including the President and Controller, of the
effectiveness  of the  design  and  operation  of our  disclosure  controls  and
procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act
of 1934). Based on that evaluation,  the President and Controller concluded that
our  disclosure  controls and procedures as of March 31, 2007 were not effective
due to a material  weakness in the  Company's  internal  control over  financial
reporting  disclosed in "Item 9A.  Controls  and  Procedures"  of the  Company's
Annual Report on Form 10-K/A, for the fiscal year ended March 31, 2007.

(ii) Internal Control Over Financial Reporting.

(a)  Management's annual report on internal control over financial reporting.

     Management  is  responsible  for  establishing  and  maintaining   adequate
controls over financial  reporting,  as such term is defined in Rules  13a-15(f)
and  15d-15(f)  under the  Securities  and Exchange Act of 1934.  The  Company's
internal  control  over  financial  reporting  ("ICFR")is  designed  to  provide




                                       8


reasonable  assurance  regarding  the  reliability  of financial  reporting  and
preparation of the financial statements for external purposes in accordance with
accounting principles generally accepted in the United States.

     Because of its  inherent  limitations,  internal  controls  over  financial
reporting  may not prevent or detect  misstatements.  Also,  projections  of any
evaluation of  effectiveness to future periods are subject to risk that controls
may become  inadequate  because of changes in conditions,  or that the degree of
compliance with policies and procedures may deteriorate.

     The Company has reassessed the  effectiveness  of its internal control over
financial  reporting as of November  19,  2007.  The Company has been subject to
Section 404 (Management's Assessment of Internal Controls) of the Sarbanes-Oxley
Act of 2002 since March 31, 2005. For purposes of Management's  internal control
evaluation,  the  following  from the the  Securities  and  Exchange  Commission
Federal  Register  SEC 17 CFR Part 241  ("SEC")  and Public  Company  Accounting
Oversight Board ("PCAOB") Auditing Standard No. 5 were considered.

     Deficiency in internal  control over  financial  reporting  exists when the
design or operation of a control does not allow management or employees,  in the
normal  course of  performing  their  assigned  functions,  to prevent or detect
misstatements on a timely basis.  Significant  deficiency is a deficiency,  or a
combination of deficiencies,  in internal control over financial  reporting that
are  less  severe  than a  material  weakness,  yet  important  enough  to merit
attention by those responsible for oversight of a company's financial reporting.
Material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial  reporting,  such that there is a reasonable  possibility
that a  material  misstatement  of the  company's  annual or  interim  financial
statements will not be prevented or detected on a timely basis.

     Under  the  supervision  and  with  the  participation  of our  management,
including  our  President  and  Controller,  we conducted an  evaluation  of the
effectiveness  of our internal  control over  financial  reporting in connection
with  preparation of the Amended Annual Report on Form 10-K/A for the year ended
March  31,  2007.  As a result  of this  assessment,  a  material  weakness  was
identified.

     The following  material  weakness was the basis for our conclusion at March
31, 2007:

     o    We did not maintain an adequate  process to assess and  determine  the
          probability of the Company  maintaining its qualifying status as a RIC
          subject to  subchapter M of the IRC over the next twelve months at any
          given quarter end.

     According to SEC and PCAOB  Auditing  Standard No. 5, one of the indicators
of a material weakness in internal control is a restatement of previously issued
financial  statements  to reflect  the  correction  of a material  misstatement.
Management  has concluded that ICFR as of March 31, 2007 was not effective as it
relates to the Company's accounting for taxes.

Impact on the Company's Financial Reporting and ICFR
     Management has identified a material weakness related to its accounting for
taxes, and has determined that a restatement of its previously  issued financial
statements is required.  Management  believes,  however,  the material  weakness
identified  does not have a pervasive  impact on ICFR and the restatement is not
an indication that other significant control deficiencies or material weaknesses
exist.

Remediation

     Management will add a formal  evaluation to consider whether it is probable
the Company  will not qualify as a RIC subject to  Subchapter  M of the IRC over
the next 12 months at any given quarter end. The  considerations  will primarily
include  review of current  investments  and  assessing the  probability  that a
non-qualifying  event will occur to a degree  the  Company  would not be able to
cure within  prescribed  timeframes.  Additionally,  the Company will review its
investment  gains  quarterly and calculate the tax impact on those gains it will
retain,  however, they will only record the tax liability at the last day of the
tax year.  Management  will also determine,  based on materiality,  any footnote
disclosure  that will be  required  during  the  interim  periods.  Furthermore,
Management  will  review and assess  temporary  and  permanent  differences  for
reclassification to "additional capital" at each tax year end. When



                                       9


considered  necessary by Management,  an independent attorney or accountant with
requisite knowledge of investment company taxation will be consulted in order to
provide necessary guidance.

     As a result, the Company will amend and restate its previously filed Annual
Report on Form 10-K for the fiscal  year ended  March 31, 2007 and its Form 10-Q
for the quarter ended June 30, 2007. Concurrent with this assessment, Management
concludes the Company's ICFR related to accounting for taxes was ineffective and
a material weakness exists.  Management  believes the actions taken to remediate
the internal control  deficiencies,  as more fully described above, are adequate
to address future  considerations of RIC status and related financial  statement
presentations and disclosures.

     There  were  no  other  changes  in the  Company's  internal  control  over
financial  reporting that have materially  affected or are reasonably  likely to
materially affect our ICFR during the year ended March 31, 2007.

(b)  Attestation report of the registered public accounting firm

     Grant Thornton, LLP, the independent registered public accounting firm that
audited the  consolidated  financial  statements of the Company  included in the
Amended  Annual  Report  on Form  10-K/A  has  issued  an  audit  report  on the
effectiveness of the Company's  internal control over financial  reporting as of
March 31, 2007. The report,  dated January 9, 2008,  which  expressed an opinion
that the Company had not maintained  effective  internal  control over financial
reporting  as of March 31,  2007 is based on  criteria  established  in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) and is set forth in our Exhibit 13.1.

Item 9B. Other Information

     None.

                                    PART III

Item 10. Directors, Executive Officers and Corporate Governance

     The section of our 2007 Proxy Statement  captioned  "Nominees for Director"
under  "Proposal 1.  Election of Directors"  identifies  members of our board of
directors and nominees, and is incorporated in this Item 10 by reference.

     The  names  and ages of our  executive  officers  as of  January  8,  2008,
together with certain biographical information, are as follows:

     William M. Ashbaugh, age 52, has served as Senior Vice President since 2005
          and Vice  President  since  2001.  He  previously  served as  Managing
          Director  in the  corporate  finance  departments  of  Hoak  Breedlove
          Wesneski & Co. from 1998 to 2001,  Principal Financial Securities from
          1997 to 1998 and Southwest Securities from 1995 to 1997.

     Gary L. Martin,  age 61, was named President and Chief Executive Officer in
          July 2007,  has been a director since July 1988 and has served as Vice
          President since 1984. He previously served as Vice President from 1978
          to 1980.  Since  1980,  Mr.  Martin  has  served as  President  of The
          Whitmore Manufacturing Company, a wholly-owned portfolio company.

     Jeffrey G.  Peterson,  age 34, was named  Secretary  in August 2007 and has
          served  as  Vice  President  and  Treasurer  since  2005  and  was  an
          Investment Associate since 2001. He previously held positions with the
          investment  banking  division of Scott &  Stringfellow,  Inc.  and the
          corporate lending division of Bank One.

     William R. Thomas, age 79, has served as Chairman of the Board of Directors
          since 1982. In July 2007, he retired from his role as President, which
          he held since 1980. In addition, he has been a director since 1972 and
          was previously Senior Vice President from 1969 to 1980.



                                       10




     The sections of our 2007 Proxy Statement captioned "Meetings and Committees
of the Board of Directors  under "Proposal 1. Election of Directors" and "Report
of the Audit Committee"  identifies  members of our audit committee of our board
of directors and our audit committee  financial expert,  and are incorporated in
this Item 10 by reference.

     The section of our 2007 Proxy Statement captioned "Section 16(a) Beneficial
Ownership Reporting Compliance" is incorporated in this Item 10 by reference.

          Code of Ethics

     We have  adopted  a code  of  ethics  that  applies  to all our  directors,
officers and employees. We have made the Code of Conduct and Ethics available on
our website at www.capitalsouthwest.com.

Item 11. Executive Compensation

     The  information  in the  section  of our 2007  Proxy  Statement  captioned
"Compensation  Discussion  and  Analysis"  is  incorporated  in this  Item 11 by
reference.

Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters

     The  information  in the  sections  of our 2007 Proxy  Statement  captioned
"Stock Ownership of Certain  Beneficial Owners" are incorporated in this Item 12
by reference.

     The table  below  sets  forth  certain  information  as of March  31,  2007
regarding  the shares of our common stock  available  for grant or granted under
stock option plans that (i) were approved by our shareholders, and (ii) were not
approved by our shareholders.

                      Equity Compensation Plan Information

                                                                                                Number of Securities
                          Number of Securities                                                 Remaining Available For
                            To Be Issued Upon            Weighted-Average Exercise          Future Issuance Under Equity
                               Exercise of                 Price Of Outstanding                  Compensation Plans
                          Outstanding Options,                   Options,                  (excluding securities reflected
Plan Category             Warrants And Rights               Warrants And Rights                      in column (a)
-------------             -------------------               -------------------                      -------------
                                                                                            
                                   (a)                              (b)                                  (c)
                                   ---                              ---                                  ---
Equity                           52,500                           $86.184                              58,500
compensation plans
approved by security
holders(1)
Equity                               -                                 -                                   -
compensation plans
not approved by
security holders                 ______                           ______                               ______

       Total                     52,500                           $86.184                              58,500
------


(1)  Includes the 1999 Stock Option Plan. For a description of this plan, please
     refer to Footnote 5 contained in our consolidated financial statements.



                                       11


Item 13.  Certain   Relationships   and  Related   Transactions,   and  Director
          Independence

     The  information  in the  sections  of our 2007 Proxy  Statement  captioned
"Meetings  and  Committees  of the  Board  of  Directors"  -  "Committee  Member
Independence"  and "Certain  Relationships  and Related Party  Transactions" are
incorporated in this Item 13 by reference.

Item 14. Principal Accountant Fees and Services

     The  information  in the  sections  of our 2007 Proxy  Statement  captioned
"Proposal 2:  Ratification of Appointment of Independent  Registered  Accounting
Firm" and "Audit and Other Fees" are incorporated in this Item 14 by reference.

                                     PART IV

Item 15. Exhibits and Financial Statement Schedules

     (a)(1)  The  following  information  included  in  Exhibit  13.1 is  herein
             incorporated by reference:

          (A)  Portfolio of Investments - March 31, 2007
               Consolidated  Statements of Financial  Condition - March 31, 2007
               and 2006
               Consolidated  Statements  of  Operations  - Years Ended March 31,
               2007, 2006 and 2005
               Consolidated  Statements  of Changes in Net Assets - Years  Ended
               March 31, 2007, 2006 and 2005
               Consolidated  Statements  of Cash Flows - Years  Ended  March 31,
               2007, 2006 and 2005

          (B)  Notes to Consolidated Financial Statements

          (C)  Notes to Portfolio of Investments

          (D)  Selected Per Share Data and Ratios

          (E)  Management's Report on Internal Control over Financial Reporting

          (F)  Reports of Independent Registered Public Accounting Firm

          (G)  Portfolio Changes During the Year

     (a)(2) All  schedules  are omitted  because they are not  applicable or not
required, or the information is otherwise supplied.

     (a)(3) See the Exhibit Index.










                                       12


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                               CAPITAL SOUTHWEST CORPORATION

                                                    /s/ Gary L. Martin
                                               By:___________________________
                                                    Gary L. Martin, President

Date:  January 9, 2008

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the date indicated.

         Signature                Title                                 Date
         ---------                -----                                 ----


 /s/  Gary L. Martin
_____________________           President                        January 9, 2008
      Gary L. Martin            (chief executive officer)

 /s/ William R. Thomas
______________________          Chairman of the Board            January 9, 2008
     William R. Thomas

 /s/  Donald W. Burton
_____________________           Director                         January 9, 2008
      Donald W. Burton

 /s/  Graeme W. Henderson
_____________________           Director                         January 9, 2008
    Graeme W. Henderson

 /s/  Gary L. Martin
_____________________           Director                         January 9, 2008
      Gary L. Martin

 /s/ Samuel B. Ligon
_____________________           Director                         January 9, 2008
      Samuel B. Ligon

 /s/  John H. Wilson
______________________          Director                         January 9, 2008
      John H. Wilson

 /s/ Tracy L. Morris
_____________________           Controller                       January 9, 2008
     Tracy  L. Morris           (chief financial/accounting officer)



                                       13




                                  EXHIBIT INDEX

     The  following  exhibits  are filed  with this  report or are  incorporated
herein by reference to a prior filing,  in accordance with Rule 12b-32 under the
Securities  Exchange  Act of 1934.  Asterisk  denotes  exhibits  filed with this
report. Double asterick denotes exhibits furnished with this report.

     Exhibit No.                       Description
     -----------                       -----------

       3.1(a)       Articles  of  Incorporation  and  Articles of  Amendment  to
                    Articles  of  Incorporation,  dated June 25,  1969 (filed as
                    Exhibit 1(a) and 1(b) to Amendment No. 3 to Form N-2 for the
                    fiscal year ended March 31, 1979).

       3.1(b)       Articles of  Amendment to Articles of  Incorporation,  dated
                    July 20, 1987 (filed as an exhibit to Form N-SAR for the six
                    month period ended September 30, 1987).

       3.2          By-Laws of the Company, as amended.

       4.1          Specimen of Common Stock  certificate  (filed as Exhibit 4.1
                    to Form 10-K for the fiscal year ended March 31, 2002).

       10.1         The RectorSeal Corporation and Jet-Lube, Inc. Employee Stock
                    Ownership  Plan as revised and restated  effective  April 1,
                    2007.

       10.2         Retirement   Plan  for   Employees   of  Capital   Southwest
                    Corporation  and Its  Affiliates  as  amended  and  restated
                    effective April 1, 2006.


       10.3         Capital Southwest Corporation and Its Affiliates Restoration
                    of  Retirement  Income Plan for  certain  highly-compensated
                    superseded plan participants  effective April 1, 1993 (filed
                    as Exhibit 10.4 to Form 10-K for the fiscal year ended March
                    31, 1995).

       10.4         Amendment  One to  Capital  Southwest  Corporation  and  Its
                    Affiliates Restoration of Retirement Income Plan for certain
                    highly-compensated  superceded plan  participants  effective
                    April 1, 1993  (filed as  Exhibit  10.6 to Form 10-K for the
                    fiscal year ended March 31, 1998).

       10.5         Capital Southwest Corporation  Retirement Income Restoration
                    Plan as amended and restated  effective April 1, 1989 (filed
                    as Exhibit 10.5 to Form 10-K for the fiscal year ended March
                    31, 1995).

       10.6         Form of Indemnification Agreement which has been established
                    with all  directors  and  executive  officers of the Company
                    (filed as Exhibit 10.9 to Form 8-K dated February 10, 1994).

       10.7         Capital Southwest  Corporation 1999 Stock Option Plan (filed
                    as  Exhibit  10.10 to Form 10-K for the  fiscal  year  ended
                    March 31, 2000).

       10.8         Severance Pay Agreement  with William M. Ashbaugh  (filed as
                    Exhibit 10.1 to Form 8-K dated July 18, 2005).

       10.9         Severance  Pay  Agreement  with Susan K.  Hodgson  (filed as
                    Exhibit 10.3 to Form 8-K dated July 18, 2005).

       10.10        Severance Pay Agreement  with Jeffrey G. Peterson  (filed as
                    Exhibit 10.4 to Form 8-K dated July 18, 2005).

                                       14





       13.1  *      Selected Consolidated Financial Data.

       21.1         List of subsidiaries of the Company.

       23.1  *      Consent of Independent  Registered  Public Accounting Firm -
                    Grant Thornton LLP.

       31.1  *      Certification  of  President  required by Rule  13a-14(a) or
                    Rule  15d-14(a) of the  Securities  Exchange Act of 1934, as
                    amended (the "Exchange Act"), filed herewith.

       31.2  *      Certification  of Controller  required by Rule  13a-14(a) or
                    Rule 15d-14(a) of the Exchange Act, filed herewith.

       32.1  **     Certification  of  President  required by Rule  13a-14(b) or
                    Rule  15d-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 Controller  required by Rule  13a-14(b) or
                    Rule  15d-14(b)  of the  Exchange  Act and  Section  1350 of
                    Chapter 63 of Title 18 of the United States Code,  furnished
                    herewith.