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CUMULATIVE REDEEMABLE PREFERRED STOCK OFFERING | 6 Months Ended
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Mar. 31, 2024
Equity [Abstract] |
CUMULATIVE REDEEMABLE PREFERRED STOCK OFFERING | CUMULATIVE REDEEMABLE PREFERRED STOCK OFFERING In May 2023, we entered into a Dealer Manager Agreement pursuant to which we may sell a maximum of 6,000,000 shares of 6.25% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”), par value $0.001 per share, on a “reasonable best efforts” basis through our affiliated dealer manager, Gladstone Securities, at a public offering price of $25.00 per share. Pursuant to the Dealer Manager Agreement, the offering of the Series A Preferred Stock will terminate on the date that is the earlier of (1) December 31, 2026 (unless earlier terminated or extended by our Board of Directors) and (2) the date on which all 6,000,000 shares of Series A Preferred Stock offered are sold. See Note 4, “Related-Party Transactions—Other Transactions,” for a discussion of the commissions and fees to be paid to Gladstone Securities in connection with the Series A Offering. The Series A Preferred Stock is being sold pursuant to our shelf registration statement on Form N-2 (File No. 333-261398) (the “2021 Registration Statement”), under the Securities Act of 1933, as amended, and a prospectus supplement, dated May 31, 2023, and a base prospectus dated December 22, 2021. As of March 31, 2024, we had the ability to issue up to an additional $149.3 million in securities under the 2021 Registration Statement. During the three and six months ended March 31, 2024, we sold 70,044 shares of Series A Preferred Stock for gross proceeds of $1.8 million and net proceeds of $1.6 million. There were 70,044 and 0 shares of Series A Preferred Stock outstanding as of March 31, 2024 and September 30, 2023, respectively. In accordance with ASC 480-10-S99-3A, the Company’s Series A Preferred Stock has been classified in temporary equity on the Consolidated Statements of Assets and Liabilities. The Preferred Stock is recorded net of offering and issuance costs. Dividend payments to our preferred stockholders are included in preferred stock dividends on our Consolidated Statements of Operations, which totaled $8 thousand during the three and six months ended March 31, 2024. We may be required to mandatorily redeem some or all of the shares of our Series A Preferred Stock, at the Redemption Price, if we fail to maintain asset coverage of at least the minimum amount required by Sections 18 and 61 of the 1940 Act (which is currently 150%). The asset coverage on our “senior securities that are stock” as of March 31, 2024 was 212.4%, calculated in accordance with Sections 18 and 61 of the 1940 Act. DISTRIBUTIONS TO COMMON STOCKHOLDERS To qualify to be taxed as a RIC under Subchapter M of the Code, we must generally distribute to our stockholders, for each taxable year, at least 90% of our taxable ordinary income plus the excess of our net short-term capital gains over net long-term capital losses (“Investment Company Taxable Income”). The amount to be paid out as distributions to our stockholders is determined by our Board of Directors quarterly and is based on management’s estimate of Investment Company Taxable Income. Based on that estimate, our Board of Directors declares three monthly distributions to common stockholders each quarter. The federal income tax characteristics of all distributions will be reported to stockholders on the IRS Form 1099 after the end of each calendar year. Estimates of tax characterization made on a quarterly basis may not be representative of the actual tax characterization of cash distributions for the full year. Estimates made on a quarterly basis are updated as of each interim reporting date. For the calendar year ended December 31, 2023, 100.0% of distributions to common stockholders were deemed to be paid from ordinary income for 1099 stockholder reporting purposes. For the calendar year ended December 31, 2022, 93.2% of distributions to common stockholders were deemed to be paid from ordinary income and 6.8% of distributions were deemed to be return of capital for 1099 stockholder reporting purposes. We paid the following monthly distributions to common stockholders for the six months ended March 31, 2024 and 2023:
Fiscal Year |  | Declaration Date |  | Record Date |  | Payment Date |  | Distribution per Common Share
2024 |  | October 10, 2023 |  | October 20, 2023 |  | October 31, 2023 |  | $ | 0.0825 |
|  | October 10, 2023 |  | November 20, 2023 |  | November 30, 2023 |  | 0.0825 |
|  | October 10, 2023 |  | December 18, 2023 |  | December 29, 2023 |  | 0.0825 |
|  | January 9, 2024 |  | January 23, 2024 |  | January 31, 2024 |  | 0.0825 |
|  | January 9, 2024 |  | February 21, 2024 |  | February 29, 2024 |  | 0.0825 |
|  | January 9, 2024 |  | March 21, 2024 |  | March 29, 2024 |  | 0.0825 |
|  | Six Months Ended March 31, 2024: |  | $ | 0.495 |
Fiscal Year |  | Declaration Date |  | Record Date |  | Payment Date |  | Distribution per Common Share
2023 |  | October 11, 2022 |  | October 21, 2022 |  | October 31, 2022 |  | $ | 0.070 |
|  | October 11, 2022 |  | November 18, 2022 |  | November 30, 2022 |  | 0.070 |
|  | October 11, 2022 |  | December 20, 2022 |  | December 30, 2022 |  | 0.070 |
|  | January 10, 2023 |  | January 20, 2023 |  | January 31, 2023 |  | 0.075 |
|  | January 10, 2023 |  | February 17, 2023 |  | February 28, 2023 |  | 0.075 |
|  | January 10, 2023 |  | March 17, 2023 |  | March 31, 2023 |  | 0.075 |
|  | Six Months Ended March 31, 2023: |  | $ | 0.435 |
Aggregate distributions declared and paid to our common stockholders were approximately $21.5 million and $15.7 million for the six months ended March 31, 2024 and 2023, respectively, and were declared based on estimates of Investment Company Taxable Income for the respective fiscal years. For the fiscal year ended September 30, 2023, our current and accumulated earnings and profits exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $5.0 million of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year. For the six months ended March 31, 2024 and the fiscal year ended September 30, 2023, we recorded the following adjustments for book-tax differences to reflect tax character. Results of operations, total net assets, and cash flows were not affected by these adjustments.
| Six Months Ended March 31, 2024 |  | Year Ended September 30, 2023
Undistributed net investment income | $ | (213) |  |  | $ | (373) |
Accumulated net realized gain | 215 |  |  | 373 |
Capital in excess of par value | (2) |  |  | — |

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