CLEANSPARK, INC., 10-K filed on 12/1/2023
Annual Report
v3.23.3
Cover - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Sep. 30, 2023
Dec. 01, 2023
Mar. 31, 2023
Cover [Abstract]      
Document Type 10-K    
Amendment Flag false    
Document Annual Report true    
Document Transition Report false    
Document Period End Date Sep. 30, 2023    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2023    
Current Fiscal Year End Date --09-30    
Entity File Number 001-39187    
Entity Registrant Name CleanSpark, Inc.    
Entity Central Index Key 0000827876    
Entity Tax Identification Number 87-0449945    
Entity Incorporation, State or Country Code NV    
Entity Address, Address Line One 2370 Corporate Circle    
Entity Address, Address Line Two Suite 160    
Entity Address, City or Town Henderson    
Entity Address, State or Province NV    
Entity Address, Postal Zip Code 89074    
City Area Code 702    
Local Phone Number 989-7692    
Title of 12(b) Security Common Stock, par value $0.001 per share    
Trading Symbol CLSK    
Security Exchange Name NASDAQ    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Accelerated Filer    
Entity Small Business true    
Entity Emerging Growth Company false    
Document Financial Statement Error Correction [Flag] false    
Entity Shell Company false    
Entity Public Float     $ 269,522,542
Entity Common Stock, Shares Outstanding   184,749,641  
Documents Incorporated by Reference [Text Block]

Certain portions of the registrant’s definitive proxy statement to be delivered to its stockholders in connection with the registrant’s 2024 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K. Such definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K.

    
ICFR Auditor Attestation Flag true    
Share Price     $ 2.78
Auditor Location Houston, Texas    
Auditor Name MaloneBailey, LLP    
Auditor Firm ID 206    
v3.23.3
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Cash and cash equivalents    
Cash and cash equivalents $ 29,215 $ 20,463
Accounts receivable, net 5 27
Inventory 809 216
Prepaid expense and other current assets 12,034 7,931
Bitcoin 56,241 11,147
Derivative investment asset 2,697 2,956
Investment in debt security, AFS, at fair value 726 610
Current assets held for sale 445 7,426
Total current assets 102,172 50,776
Property and equipment, net 564,395 376,781
Operating lease right of use asset 688 551
Intangible assets, net 4,603 6,485
Deposits on mining equipment 75,959 12,497
Other long-term asset 5,718 3,990
Goodwill 8,043 0
Long-term assets held for sale 0 1,545
Total assets 761,578 452,625
Current liabilities    
Accounts payable and accrued liabilities 65,577 24,662
Current portion of operating lease liability 181 113
Current portion of finance lease liability 130 260
Current portion of long-term loans payable 6,992 7,786
Dividends payable 0 21
Current liabilities held for sale 1,175 1,199
Total current liabilities 74,055 34,041
Long-term liabilities    
Operating lease liability, net of current portion 519 447
Finance lease liability, net of current portion 9 180
Loans payable, net of current portion 8,911 13,433
Deferred income taxes 857 0
Long-term liabilities held for sale 0 512
Total Liabilities 84,351 48,613
Stockholders' equity    
Common stock; $0.001 par value; 300,000,000 shares authorized; 160,184,921 and 55,661,337 shares issued and outstanding, respectively 160 56
Preferred stock; $0.001 par value; 10,000,000 shares authorized; Series A shares; 2,000,000 authorized; 1,750,000 and 1,750,000 issued and outstanding, respectively 2 2
Additional paid-in capital 1,009,482 599,898
Accumulated other comprehensive income 226 110
Accumulated deficit (332,643) (196,054)
Total stockholders' equity 677,227 404,012
Total liabilities and stockholders' equity $ 761,578 $ 452,625
v3.23.3
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Sep. 30, 2023
Mar. 31, 2023
Sep. 30, 2022
Common Stock, Par or Stated Value Per Share $ 0.001   $ 0.001
Common Stock, Shares Authorized 300,000,000   300,000,000
Common stock, shares outstanding 160,184,921 96,950,555 55,661,337
Common stock, shares issued 160,184,921   55,661,337
Preferred Stock, Par or Stated Value Per Share $ 0.001   $ 0.001
Preferred Stock, Shares Authorized 10,000,000   10,000,000
Preferred stock, shares outstanding 1,750,000   1,750,000
Preferred Stock, Shares Issued 1,750,000   1,750,000
Series A Preferred Stock [Member]      
Preferred Stock, Shares Authorized 2,000,000   2,000,000
Preferred stock, shares outstanding 1,750,000   1,750,000
Preferred Stock, Shares Issued 1,750,000   1,750,000
v3.23.3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Revenues, net    
Bitcoin mining revenue, net $ 168,121 $ 131,000
Other services revenue 287 525
Total revenues, net 168,408 131,525
Costs and expenses    
Cost of revenues (exclusive of depreciation and amortization shown below) 93,580 41,234
Professional fees 10,869 6,469
Payroll expenses 45,714 40,920
General and administrative expenses 20,823 10,423
Loss (gain) on disposal of assets 1,931 (643)
Other impairment expense (related to bitcoin) 7,163 12,210
Impairment expense - other 0 250
Impairment expense - goodwill 0 12,048
Realized gain on sale of bitcoin (1,357) (2,567)
Depreciation and amortization 120,728 49,045
Total costs and expenses 299,451 169,389
Loss from operations (131,043) (37,864)
Other income (expense)    
Other Income 11 308
Change in fair value of contingent consideration 2,484 306
Realized gain on sale of equity security 0 1
Unrealized loss on equity security 0 (2)
Unrealized loss on derivative security (259) (1,950)
Interest income 481 190
Interest expense (2,977) (1,078)
Total other (expense) income (260) (2,225)
Loss before income tax expense (131,303) (40,089)
Income tax expense 857 0
Loss from continuing operations (132,160) (40,089)
Discontinued Operations    
Loss from discontinued operations (4,429) (17,237)
Income tax expense 0 0
Loss on discontinued operations (4,429) (17,237)
Net Loss (136,589) (57,326)
Preferred stock dividends 0 336
Net loss attributable to common shareholders (136,589) (57,662)
Other comprehensive income 116 115
Total comprehensive loss attributable to common shareholders $ (136,473) $ (57,547)
Loss from continuing operations per common share - basic $ (1.29) $ (0.95)
Weighted average common shares outstanding- basic 102,707,509 42,614,197
Loss from continuing operations per common share - diluted $ (1.29) $ (0.95)
Weighted average common shares outstanding - diluted 102,707,509 42,614,197
Loss on discontinued operations per common share - basic $ (0.04) $ (0.4)
Weighted average common shares outstanding - basic 102,707,509 42,614,197
Loss on discontinued operations per common share - diluted $ (0.04) $ (0.4)
Weighted average common shares outstanding - diluted 102,707,509 42,614,197
v3.23.3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($)
$ in Thousands
Total
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Deficit [Member]
Beginning Balance, Value at Sep. 30, 2021 $ 305,716 $ 2 $ 37 $ 444,074 $ (5) $ (138,392)
Beginning Balance, Shares at Sep. 30, 2021   1,750,000 37,395,945      
Options and restricted stock units issued for services , Shares     1,002,683      
Options and restricted stock units issued for services 31,466   $ 1 31,465    
Shares withheld for net settlement of restricted stock units related to tax withholdings (1,638)          
Shares withheld for net settlement of restricted stock units related to tax withholdings shares     (358,681)      
Shares Withheld for Net Settlement of Restricted Stock Units Related to Tax Withholdings, amount (1,638)     (1,638)    
Shares returned for settlement of contingent consideration and holdbacks related to business acquisition, Shares     (232,518)      
Exercise of options, shares     105,423      
Exercise of options, value 817     817    
Shares issued under equity offering, net of offering costs shares     17,740,081      
Shares issued under equity offering, net of offering costs value 125,048   $ 18 125,030    
Preferred stock dividends (336)         (336)
Shares issued for settlement of contingent consideration related to business acquisition, Shares     8,404      
Shares issued for settlement of contingent consideration related to business acquisition 150     150    
Net loss (57,326)         (57,326)
Other comprehensive income 115       115  
Ending Balance, Value at Sep. 30, 2022 404,012 $ 2 $ 56 599,898 110 (196,054)
Ending Balance, Shares at Sep. 30, 2022   1,750,000 55,661,337      
Shares issued for business acquisition, shares     1,590,175      
Shares of CLSK common stock 4,802   $ 1 4,801    
Options and restricted stock units issued for services , Shares     4,483,669      
Options and restricted stock units issued for services 24,142   $ 4 24,138    
Shares withheld for net settlement of restricted stock units related to tax withholdings (5,873)          
Shares withheld for net settlement of restricted stock units related to tax withholdings shares     (1,397,258)      
Shares Withheld for Net Settlement of Restricted Stock Units Related to Tax Withholdings, amount (5,872)   $ (1) (5,871)    
Shares returned for settlement of contingent consideration and holdbacks related to business acquisition, Shares     (83,417)      
Shares issued under equity offering, net of offering costs shares     98,829,525      
Shares issued under equity offering, net of offering costs value 383,776   $ 99 383,677    
Shares returned in relation to business acquisition, Value 0          
Shares issued for settlement of contingent consideration related to business acquisition, Shares     1,100,890      
Shares issued for settlement of contingent consideration related to business acquisition 2,840   $ 1 2,839    
Net loss (136,589)         (136,589)
Other comprehensive income 116       116  
Ending Balance, Value at Sep. 30, 2023 $ 677,227 $ 2 $ 160 $ 1,009,482 $ 226 $ (332,643)
Ending Balance, Shares at Sep. 30, 2023   1,750,000 160,184,921      
v3.23.3
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Cash Flows from Operating Activities    
Net loss $ (136,589) $ (57,326)
Less:Loss from discontinued operations 4,429 17,237
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: [Abstract]    
Unrealized loss on equity security 0 2
Realized gain on sale of equity security 0 (1)
Impairment of Bitcoin 7,163 12,210
Realized gain on sale of Bitcoin (1,357) (2,567)
Bitcoin issued for services 720 611
Impairment of goodwill 0 12,048
Impairment of investment in equity security 0 250
Unrealized loss on derivative asset 259 1,950
Gain on fair value of contingent consideration (2,484) (346)
Non-cash lease expense 246 113
Stock based compensation 24,142 31,466
Depreciation and amortization 120,728 49,045
Provision for bad debts 347 810
Amortization of debt discount 69 46
Loss (gain) on write-off and disposal of assets 1,931 (643)
Changes in operating assets and liabilities    
Mining of bitcoin (168,121) (131,000)
Proceeds from sale of bitcoin 116,271 133,201
(Decrease) in operating lease liabilities (70) (104)
Increase in accounts payable and accrued liabilities 7,673 16,040
(Increase) in prepaid expenses and other current assets (4,320) (2,393)
(Increase) in accounts receivables (108) (530)
(Increase) decrease in Inventory (593) (137)
Deferred income taxes 857 0
Long -term deposits paid (2,913) (2,176)
Net cash (used in) provided by operating activities from Continuing Operations (31,720) 77,806
Net cash provided by (used in) operating activities of Discontinued Operations 1,326 (6,362)
Net cash (used in) provided by operating activities (30,394) 71,444
Cash Flows from Investing Activities    
Payments on miners (including deposits) (239,416) (171,181)
Purchase of fixed assets (61,460) (19,286)
Purchase of intangible assets 0 (225)
Settlement of holdbacks related to contingent consideration 0 (625)
Land acquisition in Sandersville, GA (1,430) 0
Proceeds from sale of miners 34 3,498
Proceeds from the sale of equity securities 0 10
Acquisition of WAHA, net of cash received 0 (19,772)
Acquisition of Coinmaker LLC (9,389) 0
Acquisition of Mawson (22,518) (3,400)
Net cash used in investing activities - Continuing Operations (334,179) (210,981)
Net cash provided by investing activities - Discontinued Operations 2,250 0
Net cash used in investing activities (331,929) (210,981)
Cash Flows from Financing Activities    
Payments on loans (14,466) (2,778)
Payments on preferred dividends (21) (315)
Payments on finance leases (301) (432)
Refund of loan commitment fee 150 0
Proceeds from loan payable 1,937 0
Proceeds from equipment backed loan 0 19,620
Proceeds from exercise of options and warrants 0 817
Proceeds from equity offerings, net 383,776 125,048
Net cash provided by financing activities - Continued Operations 371,075 141,960
Net cash provided by financing activities - Discontinued Operations 0 0
Net cash provided by financing activities 371,075 141,960
Net increase in cash and cash equivalents 8,752 2,423
Cash and cash equivalents, beginning of period 20,463 18,040
Cash and cash equivalents, end of period 29,215 20,463
Supplemental Cash Flow Information [Abstract]    
Cash paid for interest 2,907 1,026
Cash paid for income taxes 0 0
Non-cash investing and financing transactions    
Shares issued for settlement of contingent consideration related to business acquisition 2,840 150
Fixed asset and miner purchases accrued not paid 27,369 0
Shares withheld for net settlement of restricted stock units related to tax withholdings 5,873 1,638
Fixed assets purchased through finance transactions 493 212
Software purchased with bitcoin 229 0
Shares issued for settlement of seller agreements related to acquisition   150
Preferred shares dividends accrued 0 21
Unrealized gain on investment in available-for-sale debt security $ 116 $ 115
v3.23.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Pay vs Performance Disclosure    
Net Income (Loss) $ (136,589) $ (57,326)
v3.23.3
Insider Trading Arrangements
 12 Months Ended
Sep. 30, 2023
Trading Arrangements, by Individual  
Rule 10b5-1 Arrangement Adopted false
Non-Rule 10b5-1 Arrangement Adopted false
Rule 10b5-1 Arrangement Terminated false
Non-Rule 10b5-1 Arrangement Terminated false
v3.23.3
1. ORGANIZATION AND LINE OF BUSINESS
 12 Months Ended
Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
ORGANIZATION AND LINE OF BUSINESS

1. ORGANIZATION AND LINE OF BUSINESS

Organization

CleanSpark is a bitcoin mining company. The Company independently owns and operates five data centers in Georgia for a total developed capacity of 230 MW. The Company is developing an additional 150 MW at its data center in Sandersville, GA. The Company does not currently host miners for any other companies. A partner in Massena, NY, hosts 50 MW for the Company. CleanSpark designs its infrastructure to responsibly support bitcoin, the world’s most important digital commodity and an essential tool for financial independence and inclusion.

Lines of Business

Bitcoin Mining Business

Through CleanSpark, Inc., and the Company’s wholly owned subsidiaries, ATL Data Centers LLC (“ATL”), CleanBlok, Inc. (“CleanBlok”), CleanSpark DW, LLC, and CleanSpark GLP, LLC, the Company mines bitcoin. The Company entered the bitcoin mining industry through its acquisition of ATL in December 2020. It acquired a second data center in August 2021 and has had a co-location agreement with New York-based Coinmint, LLC in place since July 2021. Bitcoin mining has now become the Company’s principal revenue generating business activity. The Company currently intends to acquire additional facilities, equipment and infrastructure capacity to continue to expand our bitcoin mining operations.

 

Through the Company’s subsidiaries CSRE Properties Norcross, LLC, CSRE Property Management Company, LLC, CSRE Properties, LLC, CSRE Properties Washington, LLC, CSRE Properties Sandersville, LLC, CSRE Properties Dalton, LLC, and CleanSpark HQ, LLC, the Company maintains real property holdings.
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 12 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Liquidity

The accompanying audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and have been filed with the SEC on December 1, 2023 (“Form 10-K”).

As shown in the accompanying audited consolidated financial statements, the Company incurred a net loss from continuing operations of $132,160 and $40,089 during the years ended September 30, 2023 and September 30, 2022, respectively. While the Company has experienced negative cash flows from investing activities due to its continued investments in capital expenditures in support of its bitcoin mining operations, it has generated positive cash flows from financing activities in fiscal year 2023. The Company used $31,720 in cash from its operations for fiscal 2023, however, the Company made a decision to sell fewer bitcoin than it generated and the increase in bitcoin held at the end of the year (for which the Company classifies as a current asset) was $56,241. The Company has sufficient working capital to support its ongoing operations for the next twelve months. In addition, the Company has access to equity financing through its at-the-market ("ATM") offering facility (see Note 12 - Stockholders' Equity). As of September 30, 2023 and September 30, 2022, the Company had working capital of $28,117 and $16,735, respectively.

Principles of Consolidation

The accompanying audited consolidated financial statements include the accounts of CleanSpark, Inc., and the Company’s wholly owned subsidiaries, ATL, CleanBlok, CleanSpark DW, LLC, CleanSpark GLP, LLC, CSRE Properties Norcross, LLC, CSRE Property Management Company, LLC, CSRE Properties, LLC, CSRE Properties Washington, LLC, CSRE Properties Sandersville, LLC, CSRE Properties Dalton, LLC, and CleanSpark HQ, LLC. All intercompany transactions have been eliminated upon consolidation of these entities.

As of June 30, 2022, the Company deemed its energy operations to be discontinued operations due to its strategic shift to strictly focus on its bitcoin mining operations and divest of its energy assets. The disposal groups related to the

energy operations are part of the following entities: CleanSpark LLC, CleanSpark Critical Power Systems Inc., GridFabric, LLC, Solar Watt Solutions, Inc, and CleanSpark II, LLC.

Liquidity

The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The evaluation of going concern under the accounting guidance requires significant judgment which involves the Company to consider that it has historically incurred losses in recent years as it has prepared to grow its business through expansion and acquisition opportunities. The Company must also consider its current liquidity as well as future market and economic conditions that may be deemed outside the control of the Company as it relates to obtaining financing and generating future profits. As of September 30, 2023, the Company had $29,215 available cash on-hand and bitcoin with a fair market value of $56,241. After considering its current liquidity and future market and economic conditions, the Company has concluded there is no substantial doubt about the Company’s ability to continue as a going concern.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include estimates used to review the Company’s goodwill impairment, intangible assets acquired, impairments and estimations of long-lived assets, valuation of derivative assets and liabilities, available-for-sale investments, allowances for uncollectible accounts, valuation of contingent consideration, and the valuations of share based awards. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

Our accounting policy on revenue recognition for our bitcoin mining segment (sole reporting unit as of September 2023 and 2022) by type of revenue is provided below.

Revenue from Contracts with Customers - Revenue from Bitcoin Mining

The Company recognizes revenue in accordance with ASC Topic 606 – Revenue from Contracts with Customers (ASC 606). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

1.
Identify the contract with the customer
2.
Identify the performance obligations in the contract
3.
Determine the transaction price
4.
Allocate the transaction price to the performance obligations in the contract
5.
Recognize revenue when the Company satisfies a performance obligation

Step 1: The Company enters into a contract with a bitcoin mining pool operator (i.e., the customer) to provide computing power to the mining pools. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company starts providing computing power to the mining pool operator (which occurs daily at midnight Universal Time Coordinated (UTC)). In exchange for providing computing power, the Company is entitled to a pro-rata share of the fixed bitcoin awards earned over the measurement period, plus a pro-rata fractional share of the global transaction fee rewards for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period. The Company’s pro-rata share is based on the proportion of computing power the Company contributed to the mining pool operator as compared to the bitcoin network’s algorithmic difficulty. The proportionate share of the transaction fee rewards earned are based on the Company’s computing power as compared to the total computing power contributed to the global network. Applying the criteria per ASC 606-10-25-1, the contract arises at the point that the Company provides computing power to the mining pool operator, which is beginning contract day at midnight UTC (contract inception), because customer consumption is in tandem with daily earnings of delivery of the computing power.

Step 2: In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

•
The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and
•
The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Based on these criteria, the Company has a single performance obligation in providing computing power services (i.e., hashrate) to the mining pool operator (i.e., customer). The performance obligation of computing power services is fulfilled daily over-time, as opposed to a point in time, because the Company provides the hashrate throughout the day and the customer simultaneously obtains control of it and uses the asset to produce bitcoin. The Company has full control of the mining equipment utilized in the mining pool and if the Company determines it will increase or decrease the processing power of its machines and/or fleet (i.e., for repairs or when power costs are excessive) the computing power provided to the customer will be reduced.

Step 3: The transaction consideration the Company earns is non-cash digital consideration in the form of bitcoin, which the Company measures at fair value on the date earned at the daily closing price, which is not materially different from the fair value at contract inception, which is the daily opening price. According to the customer contract, daily earnings are calculated from midnight-to-midnight UTC time, and the sub-account balance is credited one hour later at 1:00 AM UTC time. The Company utilizes Greenwich Mean Time (GMT), which is also the midnight of UTC time, since this is consistent with our customer contract in calculating our daily earnings from midnight-to-midnight UTC time.

The transaction consideration the Company earns is all variable since it is dependent on the daily computing power provided by the Company. The Company’s bitcoins earned through the contractual payout formula is not known until the Company’s computational hashrate contributed over the daily measurement period is fulfilled over-time daily between midnight-to-midnight UTC time. The Company’s proportionate amount of the global network transaction fee rewards earned are calculated at the end of each transactional day (midnight to midnight). There are no other forms of variable considerations, such as discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other similar items.

The Company fully constrains all variable consideration as a result of ASC 606-10-32-12a because the amount of consideration is highly susceptible to factors outside of our control as defined by the Company’s customer’s payout methodology. The variable consideration is constrained until the Company can reasonably estimate the amount of mining rewards by the end of a given transactional day based on the actual amount of computing power provided to the mining pool operators. By then, the Company considers it is highly probable that a significant reversal in the amount of revenues will not occur and includes such variable consideration in the transaction price.

Step 4: The transaction price is allocated to the single performance obligation upon verification for the provision of computing power to the mining pool operator. There is a single performance obligation (i.e., computing power or

hashrate) for the contract; therefore, all consideration from the mining pool operator is allocated to this single performance obligation.

Step 5: The Company’s performance is complete in transferring the hashrate service over-time (midnight to midnight) to the customer and the customer obtains control of that asset.

In exchange for providing computing power, the Company is entitled to a pro-rata share of the fixed bitcoin awards earned over the measurement period, plus a pro-rata fractional share of the global transaction fee rewards for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period, as applicable. The transaction consideration the Company receives is non-cash consideration, in the form of bitcoin. The Company measures the bitcoin at fair value on the date earned using the closing price of bitcoin on the date earned (midnight UTC).

There are no deferred revenues or other liability obligations recorded by the Company since there are no payments in advance of the performance. At the end of the 24 hour “midnight-to-midnight” period, there are no remaining performance obligations.

Revenues from data center services

The Company, through its wholly owned subsidiary ATL, previously provided data services, such as providing its customers with rack space, power and equipment, and cloud services, such as virtual services, virtual storage, and data backup services, generally based on monthly services provided at a defined price included in the contracts. The performance obligations are the services provided to a customer for the month based on the contract. The transaction price is the price agreed with the customer for the monthly services provided and the revenues are recognized monthly based on the services rendered for the month.

The total revenue recognized from data center services for the years ended September 30, 2023 and September 30, 2022 is $287 and $525, respectively. As of September 30, 2023, data center services are no longer provided to external customers.

Cost of Revenues

Bitcoin mining segment (sole reportable segment)

The Company includes energy costs and external co-location mining hosting fees in cost of revenues.

Cash and cash equivalents

Cash and cash equivalents includes cash in banks. None of the Company’s cash was restricted as of September 30, 2023 or September 30, 2022.

 

Accounts receivable

Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms. They are initially recorded at the invoiced amount upon the sale of goods or services to customers, and do not bear interest. The Company performs ongoing credit evaluation of its customers and management closely monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded.

Accounts receivable, net consists of the following:

 

($ in thousands)

 

September 30,
2023

 

 

September 30,
2022

 

Accounts Receivable, gross

 

$

353

 

 

$

247

 

Provision for doubtful allowances

 

 

(348

)

 

 

(220

)

Total Accounts Receivable, net

 

$

5

 

 

$

27

 

 

Inventory

Inventory balances mainly include supplies inventory used to maintain bitcoin mining facilities and are presented at net realizable value with cost being measured on a first-in, first-out basis. The Company periodically reviews inventories for unusable and obsolete items. Based on this evaluation, provisions are made to write inventories down to their net realizable value.

Prepaid expense and other current assets

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as a short-term pre-paid expense. Any costs expected to be incurred outside of one year would be considered other long-term assets.

Other current assets are assets that consist of supplies, deposits, and interest receivable. Deposits and interest we expect to receive within one year are shown as short-term. Those we expect to receive outside of one year are shown as other long-term assets.

Bitcoin

Bitcoin are included in current assets in the consolidated balance sheets due to the Company’s ability to sell it in a highly liquid marketplace and its intent to liquidate its bitcoin to support operations when needed. Bitcoin is recorded at cost less impairment. They are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles — Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above and in this Note 2 – Summary of Significant Accounting Policies. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment of bitcoin, the Company does not perform a qualitative assessment as allowed under ASC350-30-35-18A, and therefore goes directly to the quantitative assessment at the end of each reporting period. Quantitative impairment is measured using the lowest recognized selling price of the bitcoin at the time its fair value is being measured in accordance with ASC 820, Fair Value Measurement. Quoted prices are obtained from the Company's principal market (Coinbase). To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted as per ASC 350, Intangibles – Goodwill and Other.

Bitcoin earned by the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of bitcoin are included within operating activities as the Company sells its bitcoin within a short period of time subsequent to the mining of such bitcoin. The Company will evaluate time periods when the Company holds bitcoin for a longer period of time and sale so such would be recorded as investing activities. For the fiscal years ended September 30, 2023 and 2022, all cash proceeds received from sale of bitcoin were classified as operating cash flows in the accompanying consolidated statements of cash flows. Any realized gains or losses from such sales are included in total costs and expenses in the consolidated statements of operations and comprehensive loss. The Company accounts for its gains or losses in accordance with the "first-in, first-out" method of accounting.

Investment securities

Investment securities include debt securities and equity securities. Debt securities are classified as available for sale (“AFS”) and are reported as an asset in the Consolidated Balance Sheets at their estimated fair value. As the fair values of AFS debt securities change, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired securities. When AFS debt securities are sold, the unrealized gains or losses are reclassified from OCI to non-interest income. Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.

Interest income is recognized based on the coupon rate and increased by accretion of discounts earned or decreased by the amortization of premiums paid over the contractual life of the security.

For individual debt securities where the Company either intends to sell the security or more likely than not will not recover all of its amortized cost, OTTI (other than temporary impairment) is recognized in earnings equal to the entire difference between the security's cost basis and its fair value at the balance sheet date. For individual debt securities for which a credit loss has been recognized in earnings, interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized. Interest received after accruals have been suspended is recognized in income on a cash basis.

The Company holds investments in both publicly held and privately held equity securities. However, as described in Note 1, the Company is primarily doing business of in the bitcoin mining sector, and not in the business of investing in securities.

Privately held equity securities are recorded at cost and adjusted for observable transactions for same or similar investments of the issuer (referred to as the measurement alternative) or impairment. All gains and losses on privately held equity securities, realized or unrealized, are recorded through gains or losses on equity securities on the consolidated statement of operations and comprehensive loss.

Publicly held equity securities are based on fair value accounting with unrealized gains or losses resulting from changes in fair value reflected as unrealized gains or losses on equity securities in our consolidated statements of operations and comprehensive loss.

Concentration Risk

At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of Federal Deposit Insurance Corporation ("FDIC") limits. The cash balance in excess of the FDIC limits was $28,965 and $20,213 for the periods ended September 30, 2023 and September 30, 2022, respectively. The accounts offered by the custodian of the Company’s bitcoin, which totaled $56,241 and $11,147 as of September 30, 2023 and September 30, 2022, respectively, are not insured by the FDIC. The Company has not experienced any losses in such accounts.

The Company has certain customers and vendors who individually represented 10% or more of the Company’s revenue or capital expenditures. In fiscal year ended September 30, 2023, revenue is concentrated with one mining pool operator and all bitcoins reside in one exchange. Refer to Note 16 - Major Customers and Vendors.

Leases

In accordance with ASC 842, the Company assesses whether an arrangement contains a lease at contract inception. When an arrangement contains a lease, the Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in “Fixed Assets, net.” All other leases are categorized as operating leases.

The Company records right-of use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases is not easily determinable, the Company’s applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments.

Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less.

Some leases include multiple year renewal options. The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. Currently, the Company has no leases for which the option to renew is reasonably certain and therefore, options to renew were not factored into the calculation of its right of use asset and lease liability as of September 30, 2023.

For all classes of underlying assets, the Company has elected to not separate lease from non-lease components.

Stock-based compensation

The Company follows the guidelines in FASB Codification Topic ASC 718-10 Compensation-Stock Compensation, which requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period. The Company may issue compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model. For equity awards granted by the Company that are contingent upon market-based conditions, the Company fair values these awards using the Monte Carlo simulation model. For discussion of accounting for restricted stock units ("RSUs"), please refer Note 14 – Stock-Based Compensation.

Loss per share

The Company reports loss per share in accordance with FASB ASC 260-10 “Earnings Per Share,” which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. As of September 30, 2023 and 2022, there were 300,698 and 7,069,706, respectively, units of common stock equivalents that consist of options, warrants, and restricted stock units, as well as 5,250,000 shares issuable upon preferred stock conversions, that were excluded from the current and prior period diluted loss per share calculation as their effect is anti-dilutive. Provided below is the loss per share calculation for the years ended September 30, 2023 and 2022:

 

 

For the Year
Ended September 30,

 

 ($ in thousands, except share and per share)

 

2023

 

 

2022

 

Continuing Operations

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

Loss from continuing operations

 

$

(132,160

)

 

$

(40,089

)

Preferred stock dividends

 

 

—

 

 

 

336

 

Loss from continuing operations attributable to common shareholders

 

$

(132,160

)

 

$

(40,425

)

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

Weighted- average common shares outstanding,
   basic

 

 

102,707,509

 

 

 

42,614,197

 

Dilutive impact of stock options and other share-based awards

 

 

—

 

 

 

—

 

Dilutive impact of contingent shares issued for business acquisition

 

 

—

 

 

 

—

 

Weighted- average common shares outstanding,
   diluted

 

 

102,707,509

 

 

 

42,614,197

 

Loss from continuing operations per common share attributable to common shareholders

 

 

 

 

 

 

Basic

 

$

(1.29

)

 

$

(0.95

)

Diluted

 

$

(1.29

)

 

$

(0.95

)

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

Loss on discontinued operations

 

$

(4,429

)

 

$

(17,237

)

Denominator

 

 

 

 

 

 

Weighted- average common shares outstanding,
   basic

 

 

102,707,509

 

 

 

42,614,197

 

Dilutive impact of stock options and other share-based awards

 

 

—

 

 

 

—

 

Dilutive impact of contingent shares issued for business acquisition

 

 

—

 

 

 

—

 

Weighted- average common shares outstanding,
   diluted

 

 

102,707,509

 

 

 

42,614,197

 

Loss on discontinued operations per common share attributable to common shareholders

 

 

 

 

 

 

Basic

 

$

(0.04

)

 

$

(0.40

)

Diluted

 

$

(0.04

)

 

$

(0.40

)

 

Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Construction in progress is the construction or development of assets that has not yet been placed in service for its intended use. Depreciation for machinery and equipment, mining equipment, buildings, furniture and fixtures and leasehold improvements commences once they are ready for its intended use. Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or the terms of the related leases. Land is not depreciated.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

 

 

 

Useful life (years)

Land improvements

 

5 - 15

Building and building improvements

 

Shorter of lease term or 30 years

Leasehold improvements



Shorter of lease term or 15 years

Miners

 

3 - 5

Mining equipment

 

3 - 15

Infrastructure asset

 

Shorter of lease term or 15 years

Machinery and equipment

 

3 - 10

Furniture and fixtures

 

1 - 5

 

In accordance with the FASB ASC 360-10, "Property, Plant and Equipment” the carrying value of property and equipment, and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the years ended September 30, 2023 and September 30, 2022 the Company did not record an impairment expense for assets within its continuing operations. In connection with property and equipment in our discontinued operations, an impairment expense in the approximate amount of $32 was recognized in fiscal year ended September 30, 2022 and included in loss from discontinued operations in the consolidated statements of operations and comprehensive loss.

Business combinations, Intangible Assets and Goodwill

The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, Business Combinations, where the total purchase price is allocated to the identified assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The difference between the purchase price, including any contingent consideration, and the fair value of net assets acquired is recorded as goodwill. Contingent consideration transferred is initially recognized at fair value. Contingent consideration classified as a liability or an asset is remeasured to fair value each period until settlement, with changes recognized in profit or loss. Contingent consideration classified as equity is not remeasured. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

The Company reviews its indefinite lived intangibles and goodwill for impairment annually or whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies, the Company performed an assessment of indefinite lived intangibles and goodwill for the year end September 30, 2023.

During the years ended September 30, 2023 and 2022, the Company incurred the following impairment losses:

 

 ($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Impairment of bitcoin

 

$

7,163

 

 

$

12,210

 

Impairment of goodwill

 

 

—

 

 

 

12,048

 

Total impairment loss

 

$

7,163

 

 

$

24,258

 

 

2023 Goodwill Impairment analysis

In accordance with ASC 350-30-35-18A, an entity may first perform a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test, and has the unconditional option to bypass the qualitative assessment in any period and proceed directly to performing the quantitative analysis. In completing the 2023 annual goodwill impairment analysis, the Company elected to perform a quantitative assessment for our goodwill. The assessment involves comparing the carrying value of the entity, including goodwill, to its estimated fair value. In accordance with ASU 2017-04, a goodwill impairment charge is recorded for the amount by which the carrying value

unit exceeds the fair value of the reporting unit. In determining the fair value for which the quantitative assessment was performed, the Company engaged a valuation specialist to perform the quantitative impairment analysis. The valuation report included a combination of the market and income approach to test for goodwill impairment. The income approach is a valuation technique under which we estimate future cash flows using the financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, revenue is projected and applied to fixed and variable cost experience rates to arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair value, several factors were estimated, including projected operating results, growth rates, economic conditions, anticipated future cash flows and the discount rate. The market valuation approach evaluated the company's market value as compared to the net asset balance.

The fiscal year 2023 assessment indicated that no impairment of goodwill was necessary.

 

In completing the 2022 annual goodwill impairment analysis, there was an impairment recognized. In fiscal 2022, there was a sustained downturn in the price of bitcoin which resulted in the carrying value of the Company's goodwill to exceed the fair value.

The following table reflects goodwill activity for the years ended September 30, 2023 and 2022, respectively:

 

 ($ in thousands)

 

 

 

 

 

 

 

 

For the year ended September 30,

 

 

 

2023

 

 

2022

 

 Balance at beginning of Fiscal Year

 

$

—

 

 

$

12,048

 

 New Acquisitions

 

 

8,043

 

 

 

—

 

 Impairment

 

 

—

 

 

 

(12,048

)

 Balance at end of Fiscal Year

 

$

8,043

 

 

$

—

 

 

The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between two and twenty years as follows:

 

 

Useful life (years)

Websites

 

3

Software

 

4-7

Strategic contract

 

5

 

Fair Value Measurement of financial instruments, derivative asset and contingent consideration

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

 

Level 1

Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Level 2

Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.

Level 3

Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

 

The carrying value of cash, accounts payable, accrued expenses and short-term portion of loan payable approximate their fair values because of the short-term nature of these instruments. The carrying amount of the Company's long-term portion of loan payable is also stated at fair value since the stated rate of interest approximates market rates. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.

The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2023 and September 30, 2022:

September 30, 2023:

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Derivative investment asset

 

$

2,697

 

 

$

—

 

 

$

—

 

 

$

2,697

 

Investment in debt security

 

 

726

 

 

 

—

 

 

 

—

 

 

 

726

 

Total

 

$

3,423

 

 

$

—

 

 

$

—

 

 

$

3,423

 

 

September 30, 2022:

 

September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Derivative investment asset

 

$

2,956

 

 

$

—

 

 

$

—

 

 

$

2,956

 

Investment in debt security

 

 

610

 

 

 

—

 

 

 

—

 

 

 

610

 

Total

 

$

3,566

 

 

$

—

 

 

$

—

 

 

$

3,566

 

 

There were no transfers between Level 1, 2 or 3 during the years ended September 30, 2023 and 2022.

The activities of the financial instruments that are measured and recorded at fair value on the Company's balance sheets on a recurring basis during years ended September 30, 2023 and 2022 are included in Note 6 - Investments.

Income taxes

The Company’s calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. The Company recognizes tax liabilities for uncertain tax positions based on management’s estimate of whether it is more likely than not that additional taxes will be required. The Company had no uncertain tax positions as of September 30, 2023 and 2022.

Deferred income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based and other compensation, and other accrued expenses. A valuation allowance is established when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S., or the various state jurisdictions, may be materially different from managements estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Interest and penalties are included in tax expense.

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations and comprehensive loss in the provision for income taxes. As of September 30, 2023 and 2022, the Company had no accrued interest or penalties related to uncertain tax positions.

Income tax expense/(benefit) from operations for the years ended September 30, 2023 and 2022 was $0 and $0 in each period, which resulted primarily from maintaining a full valuation allowance against the Company's deferred tax assets.

Segment Reporting

The Company determines its operating segments based on how the Chief Operating Decision Maker views and evaluates operations, performance and allocates resources. Since June 30, 2022, the Company's only operating segment is the bitcoin mining business.

Discontinued Operations

The Company deemed its energy operations to be discontinued operations due to its strategic decision to strictly focus on its bitcoin mining operations and divest of the majority of its energy assets.

Through its discontinued operations segment, the Company previously provided energy solutions through its wholly-owned subsidiaries CleanSpark LLC, CleanSpark Critical Power Systems, Inc., GridFabric, LLC, and Solar Watt Solutions, Inc. These solutions consisted of engineering, design and software solutions, custom hardware solutions, Open Automated Demand response, solar, energy storage for microgrid and distributed energy systems. The Company has since sold the majority of its assets related to the Energy Segment, which included software and intellectual property, and inventory. See Note 3 – Discontinued Operations.

Commitments and contingencies

The Company is subject to the possibility of various loss contingencies and loss recoveries, such as legal proceedings and claims arising out of its business. The Company considers the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as the Company’s ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. The Company regularly evaluates current information available with its external and internal counsel to determine whether an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.

Recently issued accounting pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date. This new guidance is effective for the Company for its fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is evaluating its potential impact but does not expect the new standard to have a material impact on the Company's results of operations or cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on October 1, 2020 (“ASU 2016-13”). ASU 2016-13 requires entities to use a new forward-looking “expected loss” model that reflects expected credit losses, including credit losses related to trade receivables, and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates, which generally will result in the earlier recognition of allowances for losses. As the Company was a smaller reporting company at the time of issuance of the ASU, the Company adopted the ASU effective October 1, 2023, and adoption of the new standard did not have a material impact on the Company's results of operations or cash flows.

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40),” which reduces the number of accounting models in ASC 470-20 that require separate accounting for embedded conversion features. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. The treasury stock method should no longer be used to calculate diluted net income per share for convertible instruments. The amendment was effective for the Company effective October 1, 2022, including interim periods. The adoption did not have a material impact on the Company’s financial statements or disclosures.
v3.23.3
3. DISCONTINUED OPERATIONS
 12 Months Ended
Sep. 30, 2023
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS

3. DISCONTINUED OPERATIONS

The Company determined to make available for sale the asset groups related to its energy segment due to its strategic shift to strictly focus on its bitcoin mining operations. As a result, the energy segment's results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. Accordingly, the assets and liabilities of this segment are separately reported as “assets and liabilities held for sale” as of September 30, 2023 and 2022 in the consolidated balance sheets. The results of operations of this segment, for all periods, are separately reported as “discontinued operations” in the consolidated statements of operations and comprehensive loss. Provided below are the key areas of the financials that constitute the discontinued operations:

 

 

September 30,
2023

 

 

September 30,
2022

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Accounts receivable, net

 

$

126

 

 

$

2,813

 

Inventory

 

 

319

 

 

 

4,400

 

Prepaid expense and other current assets

 

 

—

 

 

 

213

 

Total current assets held for sale

 

$

445

 

 

$

7,426

 

 

 

 

 

 

 

Property and equipment, net

 

 

—

 

 

 

11

 

Operating lease right of use asset

 

 

—

 

 

 

665

 

Intangible assets, net

 

 

—

 

 

 

869

 

Long-term assets held for sale

 

$

—

 

 

$

1,545

 

 

 

 

 

 

 

 

Total assets held for sale

 

$

445

 

 

$

8,971

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

978

 

 

$

919

 

Contract liabilities

 

 

—

 

 

 

117

 

Operating lease liability

 

 

197

 

 

 

163

 

Total current liabilities held for sale

 

 

1,175

 

 

 

1,199

 

Long-term liabilities

 

 

 

 

 

 

Operating lease liability, net of current portion

 

 

—

 

 

 

512

 

Total liabilities held for sale

 

$

1,175

 

 

$

1,711

 

 

 

For the twelve months ended

 

 

September 30,
2023

 

 

September 30,
2022

 

Revenues, net

 

 

 

 

 

 

Energy hardware, software and services revenue

 

$

158

 

 

$

9,667

 

Total revenues, net

 

 

158

 

 

 

9,667

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization shown below)

 

 

936

 

 

 

8,711

 

Professional fees

 

 

115

 

 

 

116

 

Payroll expenses

 

 

426

 

 

 

4,911

 

General and administrative expenses

 

 

413

 

 

 

1,641

 

Impairment expense - fixed assets

 

 

—

 

 

 

32

 

Impairment expense - intangibles

 

—

 

 

 

1,402

 

Impairment expense - other

 

 

4,181

 

 

 

872

 

Impairment expense - goodwill

 

—

 

 

 

7,001

 

Depreciation and amortization

 

 

—

 

 

 

2,215

 

Total costs and expenses

 

 

6,071

 

 

 

26,901

 

 

 

 

 

 

 

Loss from operations

 

$

(5,913

)

 

$

(17,234

)

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

Gain on disposal of assets

 

 

1,508

 

 

 

—

 

Interest expense

 

 

(24

)

 

 

(3

)

Total other income (expense)

 

 

1,484

 

 

 

(3

)

 

 

 

 

 

 

Loss before income tax (expense) benefit

 

 

(4,429

)

 

 

(17,237

)

Income tax benefit (expense)

 

 

—

 

 

 

—

 

Net loss attributable to common shareholders

 

$

(4,429

)

 

$

(17,237

)
v3.23.3
4. ACQUISITIONS
 12 Months Ended
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
ACQUISITIONS

4. ACQUISITIONS

Coinmaker LLC Acquisition - Dalton, GA

On June 21, 2023, the Company completed the acquisition of two bitcoin mining facilities in Dalton, GA for $9,389. Each of the facilities are located on separate one acre sites, each of which are under land leases. The combined facilities are able to currently utilize 20 megawatts of power and are expected to host a total of approximately 6,000 miners. The transaction was accounted for as an asset acquisition, whereby the total purchase price is allocated first to the fair value of the assets acquired and any excess purchase price is allocated to the acquired assets pro-rata. No goodwill is calculated in an asset acquisition.

The preliminary allocation of the purchase price of the assets acquired are summarized below:

 


($ in thousands)

 

Preliminary
Allocation at
Acquisition Date

 

Land lease - right of use asset

 

$

266

 

Operating lease liability

 

 

(266

)

Building

 

 

1,328

 

Infrastructure

 

 

8,061

 

Total purchase price

 

$

9,389

 

There have been no subsequent adjustments to the allocation of the purchase price after the preliminary allocation.

 

Mawson Infrastructure Group - Sandersville, GA

On October 8, 2022, the Company completed the acquisition of a lease for approximately 16.35 acres of real property located in Sandersville, Washington County, Georgia (the “Mawson Property”), all personal property located on the Mawson Property, and 6,349 application-specific integrated circuit miners (the “ASICs”) from subsidiaries of Mawson Infrastructure Group, Inc. a Delaware corporation (“Mawson”), all pursuant to a Purchase and Sale Agreement dated September 8, 2022 and an Equipment Purchase and Sale Agreement dated September 8, 2022 (the "Mawson Transaction").

The Company paid the following consideration to Mawson for the Mawson Property: (i) $13,500 in cash; (ii) 1,590,175 shares (the “Closing Shares”) of the Company's common stock (which had a value of $4,803 based upon the closing price of the common stock on October 7, 2022), and (iii) $6,500 in seller financing in the form of a promissory note. The Company also paid $9,018 in cash within 15 days of the closing for the ASICs.

The following additional contingent consideration was included in the purchase price:

•
up to 1,100,890 shares of the Company's common stock (the “Earn-out Shares”) (which have a value of approximately $3,325 based upon the closing price of the Company's common stock on October 7, 2022), based upon the number of modular data centers on the Mawson Property occupied by Mawson being emptied and made available for our use. These Earn-out Shares had been classified as a liability in the Consolidated Balance Sheets in accordance with ASC 480, and accordingly was reported at fair value at the end of each reporting period. As of December 31, 2022, the fair value of this contingent liability was reduced to $2,840 from $3,325, resulting in a change in fair value of contingent consideration of $484 in Other Income (expense) in the Consolidated Statements of Operations and Comprehensive Loss. The shares associated with the earn-out were issued to Mawson in January 2023 (see Note 12 - Stockholders' Equity).
•
up to an additional $2,000 in a seller-financed earn-out payable at least 60 days post-closing if the Company receives written confirmation that it will be able to utilize at least an additional 150 megawatts ("MW") of power on the Mawson Property by the six month anniversary of the closing, April 8, 2023. Such written confirmation was not received by April 8, 2023 and accordingly, the Company determined this contingency criteria was not met by April 8, 2023 and it has not paid the additional consideration; however, Mawson has expressed the position, with which the Company disagrees, that this contingency criteria was in fact met. The Company is currently negotiating with the power provider and is confident that it will be able to reach an agreement to access at least 150 MW of power at the site later this year. The Company has adjusted the contingency liability to $0 as of June 30, 2023 and recognized $2,000 gain in Change in Fair Value of Contingent Consideration on the Statement of Operations and Comprehensive Loss.

The Company accounted for this transaction as an acquisition of a business. The fair value of the consideration given to Mawson and the other sellers in connection with the transaction and the allocation of the purchase price in accordance with ASC 820 were as follows:

 


($ in thousands)

 

Fair Value

 

Cash

 

$

22,518

 

Financing provided by seller

 

 

6,500

 

1,590,175 shares of CLSK common stock

 

 

4,803

 

Total purchase price

 

$

33,821

 

 

 

 

 

Contingent Consideration

 

 

 

Earn-out Shares of CLSK common stock

 

 

3,325

 

Megawatt earnout (up to $2,000 max)

 

 

2,000

 

Total contingent consideration

 

$

5,325

 

 

 

 

 

Total purchase sale agreement consideration-Combined

 

$

39,146

 

 


($ in thousands)

 

Allocation at
Acquisition Date

 

Right of use lease asset

 

$

5,010

 

Lease liability assumed

 

 

(5,100

)

Building

 

 

13,654

 

Infrastructure asset

 

 

4,465

 

Miners

 

 

12,914

 

Machinery and equipment

 

 

160

 

Goodwill

 

 

8,043

 

Total

 

$

39,146

 

There were no subsequent adjustments to the allocation of the purchase price after the preliminary allocation.

SPRE Commercial Group Inc. and WAHA Technologies Inc. - Washington, GA

On August 17, 2022, the Company, through its wholly owned subsidiary CSRE Properties Washington, LLC, (“CSRE”), completed the purchase of real property, together with all improvements situated thereon and all rights, easements and appurtenances belonging thereto (collectively, the “Property”), from SPRE Commercial Group, Inc. f/k/a WAHA, Inc. (“SPRE”), (the “Seller”), pursuant to a Land Purchase and Sale Agreement dated as of August 5, 2022 and amended on August 17, 2022.

Additionally, on August 17, 2022, in connection with the Land Purchase and Sale Agreement, the Company completed the purchase of a mix of S19 and S19 J Pro bitcoin miners with a total processing power equal to approximately 341,985 terahashes, pursuant to an equipment purchase and sale agreement (together with the Land Purchase and Sale Agreement, the “Acquisition”), from Waha Technologies, Inc., a Georgia corporation (“WAHA”, collectively with the Seller, "WAHA & SPRE" or the "Sellers"), an affiliate of the Seller. Pursuant to the Land Purchase and Sale Agreement and the Equipment Purchase and Sale Agreement the Company acquired substantially all of WAHA & SPRE's assets. The transaction was accounted for as an acquisition of a business.

Total consideration for the Property and miners consisted of (i) $1,962 in financing provided by the Seller to the Company at an interest rate of 12% per annum, to be repaid in 12 monthly installments of $174, (ii) the Company’s assumption of a mortgage with a maximum principal amount of $2,158 and an interest rate of 13% and (iii) $19,772 of cash consideration paid by the Company to the Seller. Acquisition related costs of $118, consisting primarily of legal and recording fees, were expensed as incurred in accordance with ASC 805 and are reflected in professional fees on the Consolidated Statements of Operations and Comprehensive Loss.

The Company determined the fair value of the consideration given to the Sellers in connection with the transaction and the allocation of the purchase price in accordance with ASC 820 were as follows:

 

Consideration:
($ in thousands)

 

Fair Value

 

Cash

 

$

19,772

 

Financing provided by SPRE

 

 

1,962

 

Mortgage assumed

 

 

2,158

 

Total Consideration

 

$

23,892

 

 

 

Purchase Price Allocation:
($ in thousands)

 

Allocation at
Acquisition
Date

 

Land

 

$

100

 

Building/Improvements

 

 

14,700

 

Miners

 

 

9,092

 

Total

 

$

23,892

 

 

The total purchase price was allocated to identifiable assets deemed acquired based on their estimated fair values. The fair values of the assets have been recorded and are reflected in property and equipment, net on the Company's Consolidated Balance Sheets in this annual report. The useful life for the building and improvements is estimated to be 30 years consistent with the Company's policy. The useful life for miners was estimated to be 3 years consistent with the Company's policy for depreciating used miners. Land is not depreciated. Financing provided by the Seller and the mortgage assumed have been recorded as loans payable and are reflected in the Company's Consolidated Balance Sheets.

Pro forma of Consolidated Financial Statements (Unaudited)

The following is the unaudited pro forma information assuming the consummation of each of the Mawson Transaction and WAHA Transaction occurred on October 1, 2021:

 

 

For the Year Ended

 

 ($ in thousands, except share and per share)

 

September 30, 2022

 

Net sales from continuing operations

 

$

209,304

 

Loss from continuing operations attributable to common shareholders

 

$

(33,758

)

Loss from continuing operations per common share - basic

 

$

(0.75

)

Weighted average common shares outstanding – basic

 

 

45,305,262

 

Loss from continuing operations per common share - diluted

 

$

(0.75

)

Weighted average common shares outstanding – diluted

 

 

45,305,262

 

 

Pro forma results of operations for the Mawson Transaction for the year ended September 30, 2023 were not presented since the Mawson Transaction occurred on October 8, 2022 and the results for the 8-day period would be immaterial. The WAHA Transaction was included during the entire year ended September 30, 2023. The unaudited pro forma consolidated financial results have been prepared for illustrative purposes only and do not purport to be indicative of the results of operations that would have actually resulted had the acquisitions occurred on the first day of the earliest period presented, or of future results of the consolidated entities. The unaudited pro forma consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition. All transactions that would be considered inter-company transactions for pro forma purposes have been eliminated.
v3.23.3
5. BITCOIN
 12 Months Ended
Sep. 30, 2023
Common Domain Members [Abstract]  
BITCOIN

5. BITCOIN

As of September 30, 2023 and 2022, the Company held 2,243 and 595 bitcoin, respectively. The following table presents the activities of the Company's bitcoin holdings for the years ended September 30, 2023 and 2022:

 

 ($ in thousands)

 

 

 

 

 

 

 

 

For the year ended September 30,

 

 

 

2023

 

 

2022

 

Balance at beginning of Fiscal Year

 

$

11,147

 

 

$

23,603

 

Addition of bitcoin

 

 

168,121

 

 

 

131,000

 

Carrying amount of bitcoin sold

 

 

(114,915

)

 

 

(130,635

)

Bitcoin issued for services

 

 

(720

)

 

 

(611

)

Bitcoin issued for software

 

 

(229

)

 

 

—

 

Impairment loss

 

 

(7,163

)

 

 

(12,210

)

Balance at end of Fiscal Year

 

$

56,241

 

 

$

11,147

 

 

The Company's bitcoin holdings are not subject to rehypothecation and do not serve as collateral for any existing loans or agreements. As of September 30, 2023, the Company held 95% of its bitcoin in cold storage and 5% in hot wallets.

v3.23.3
6. INVESTMENTS
 12 Months Ended
Sep. 30, 2023
Schedule of Investments [Abstract]  
INVESTMENTS

6. INVESTMENTS

As of September 30, 2023 and September 30, 2022, the Company had total investments of $3,423 and $3,566, respectively, that comprise of the following:

International Land Alliance, Inc.

On November 5, 2019, the Company entered in a binding Memorandum of Understanding (the “MOU”) with International Land Alliance, Inc. (“ILAL”), a Wyoming corporation, to lay a foundational framework where the Company will deploy its energy solutions products and services to ILAL, its energy projects, and its customers.

In connection with the MOU, and to support the power and energy needs of ILAL's development and construction of certain projects, the Company entered into a Securities Purchase Agreement (“SPA”), dated as of November 6, 2019, with ILAL.

Investment in Debt Securities (Preferred Stock) and related Embedded Derivative Asset

Pursuant to the terms of the SPA with ILAL, the Company purchased 1,000 shares of Series B Preferred Stock of ILAL (the “Series B Preferred Stock”) for an aggregate purchase price of $500 (the “Stock Transaction”), less certain expenses and fees. The Series B Preferred Stock accrue cumulative in-kind accruals at a rate of 12% per annum and were redeemable on August 6, 2020. The Series B Preferred Stock can be converted into common stock at a variable rate (refer the discussion on embedded derivative assets below). This variable conversion ratio will increase by 10% with the occurrence of certain events. Since the investments were not redeemed on August 6, 2020, they are now redeemable at the Company`s option in cash or into common stock, based on the conversion ratio. The Series B Preferred Stock is recorded as an AFS debt security and is reported at its estimated fair value as of September 30, 2023. Any change in the fair values of AFS debt securities are reported net of income tax as an element of Other Comprehensive income.

The Company accrued no interest (net of allowance) on our available-for-sale debt securities, as of September 30, 2023 and 2022, respectively. The fair value of our investment in debt securities is $726 and $610 as of September 30, 2023 and 2022, respectively. The Company has included gain on fair value of preferred stock amounting to $116 and $115 for the years ended September 30, 2023 and 2022, respectively, as part of other comprehensive income in the Consolidated Statements of Operations and Comprehensive Loss.

The Company has deemed this variable conversion feature of ILAL preferred stock as an embedded derivative instrument in accordance with ASC Topic No. 815. This topic requires the Company to account for the conversion feature on its balance sheet at fair value and account for changes in fair value as a derivative gain or loss. Unrealized gain or loss on fair valuation of this embedded feature is recognized as an income in the Consolidated Statements of Operations and Comprehensive Loss.

Total fair value of investment in Derivative assets as of September 30, 2023 and 2022 is $2,697 and $2,956, respectively. The Company fair values the debt security as a straight debt instrument based on liquidation value and accrued interest to date. The fair value of the derivative asset is based on the difference in the fair value of the debt security determined as a straight debt instrument and the fair value of the debt security if converted as of the reporting date.

Commitment shares - Common stock of ILAL

Pursuant to the terms of the SPA with ILAL, the Company received 350,000 shares (commitment shares) of ILAL's common stock. The commitment shares were fully earned at the time of execution of the agreement. The Company sold 334,611 shares at various prices and fair valued the remaining 15,389 shares at the closing stock price of ILAL

as of September 30, 2021. During the year ended September 30, 2022, the Company sold 15,389 commitment shares, and recorded realized gain on sale of shares for $1.

Investment in Equity Securities - LawClerk

In February 2020, the Company made a $250 strategic relationship investment in LawClerk for 200,000 Series A Preferred Shares of LawClerk. This investment is recorded on a cost basis and adjusted for observable transactions for same or similar investments of the issuer (referred to as the measurement alternative) or impairment. The Company annually performs impairment analysis on this investment and concluded that the investment was not recoverable and accordingly recorded an impairment of $250 for the year ended September 30, 2022.

Refer the table below for a reconciliation of carrying value of all investments for the year ended September 30, 2023 and 2022:

 

 ($ in thousands)

 

ILAL
Debt
Securities

 

 

ILAL
Derivative
Asset

 

 

ILAL
Equity
Securities

 

 

Law
Clerk
Equity
Securities

 

Balance as of September 30, 2021

 

$

494

 

 

$

4,906

 

 

$

11

 

 

$

250

 

Shares sold during the year

 

 

—

 

 

 

—

 

 

 

(10

)

 

 

—

 

Realized gain on fair value recognized in other income (expense)

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

Unrealized loss recognized in other income (expense)

 

 

—

 

 

 

(1,950

)

 

 

(2

)

 

 

—

 

Impairment loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(250

)

Unrealized gain on fair value recognized in Other comprehensive income

 

 

116

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance as of September 30, 2022

 

$

610

 

 

$

2,956

 

 

$

—

 

 

$

—

 

Unrealized loss on derivative asset

 

 

—

 

 

 

(259

)

 

 

 

 

 

 

Unrealized gain on fair value recognized in other comprehensive income

 

 

116

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance as of September 30, 2023

 

$

726

 

 

$

2,697

 

 

$

—

 

 

$

—

 
v3.23.3
7. PROPERTY AND EQUIPMENT
 12 Months Ended
Sep. 30, 2023
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT

7. PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of September 30, 2023 and September 30, 2022:

 

 ($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Land

 

$

4,144

 

 

$

2,978

 

Land improvements

 

 

1,564

 

 

 

1,530

 

Building and improvements

 

 

52,198

 

 

 

32,332

 

Leasehold improvements

 

 

672

 

 

 

114

 

Miners

 

 

527,868

 

 

 

356,501

 

Mining equipment

 

 

18,706

 

 

 

17,587

 

Infrastructure

 

 

45,612

 

 

 

12,422

 

Machinery and equipment

 

 

1,907

 

 

 

1,269

 

Furniture and fixtures

 

 

386

 

 

 

331

 

Construction in progress

 

 

81,875

 

 

 

4,816

 

Total

 

$

734,932

 

 

$

429,880

 

Less: accumulated depreciation

 

 

(170,537

)

 

 

(53,099

)

Property and equipment, net

 

$

564,395

 

 

$

376,781

 

 

Depreciation expense for the years ended September 30, 2023 and 2022 was $118,615 and $47,082, respectively. During the year ended September 30, 2023, $1,966 of property and equipment was disposed of for a loss of $1,931.

The Company placed in service property and equipment of $231,135 during the year ended September 30, 2023. This increase in fixed assets primarily consisted of miners and mining equipment amounting to $175,558.

On April 7, 2023, CleanSpark HQ, LLC (“HQLLC”), a single member limited liability company and subsidiary wholly owned by the Company, purchased certain real property located at 10424 South Eastern Ave., Suite 200, Henderson, Nevada (the "Eastern Property") for $4,100. The property consists of approximately 15,000 square feet of office space. The Company intends to utilize this office space as its new corporate headquarters. The real property is recorded in construction in progress as of September 30, 2023, and includes an additional $560 in building improvements. The completion is expected to occur in the first quarter of fiscal year 2024.

On May 1, 2023, the Company entered into a Purchase and Sale agreement with the Development Authority of Washington County to purchase 16.35 acres of land that was previously leased by the Company and an additional 10 acres of parcels in Sandersville, GA ("Sandersville Land") for a purchase price of $1,300 (the agreement was subsequently amended in June 2023 to increase the purchase price to $1,400). The leased land had been subject to an operating lease which was acquired by the Company under the Mawson Transaction. In accordance with ASC 842-Leases, the Company reassessed the lease classification as a finance lease and recorded land at the present value of the lease term (net of the carrying amount of the operating lease at time of conversion) and the land was recorded at $1,167. The land was also reclassified from finance lease right of use asset to land upon final payment being made on June 30, 2023.

Construction in progress: The Eastern Property is recorded in construction in progress. The Company is also expanding its facilities in Georgia, including infrastructure, building, and land improvements to expand its mining operations.

As of September 30, 2023 and September 30, 2022, the Company has outstanding deposits for miners and mining equipment totaling $75,959 and $12,497, respectively. These deposits are paid to vendors and manufacturers to purchase miners. The deposits are to be applied to the purchase price when either the vendor ships the miners or when the miners are received, depending on the contracted terms. Such deposits are recorded in long-term assets on the Consolidated Balance Sheets. If miners are purchased with terms that pass title to the goods at time of shipment, then such miners are recorded in construction in progress until they are physically received and placed in service.

v3.23.3
8. INTANGIBLE ASSETS
 12 Months Ended
Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS

8. INTANGIBLE ASSETS

Intangible assets consist of the following as of September 30, 2023 and 2022:

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 ($ in thousands)

 

Intangible assets

 

 

Accumulated amortization

 

 

Net intangible assets

 

 

Intangible assets

 

 

Accumulated amortization

 

 

Net intangible assets

 

Software

 

$

440

 

 

$

(90

)

 

$

350

 

 

$

210

 

 

$

—

 

 

$

210

 

Websites

 

 

15

 

 

 

(8

)

 

 

7

 

 

 

23

 

 

 

(11

)

 

 

12

 

Strategic Contract

 

 

9,800

 

 

 

(5,554

)

 

 

4,246

 

 

 

9,800

 

 

 

(3,537

)

 

 

6,263

 

Total

 

$

10,255

 

 

$

(5,652

)

 

$

4,603

 

 

$

10,033

 

 

$

(3,548

)

 

$

6,485

 

 

Amortization expense for the years ended September 30, 2023 and 2022 was $2,113 and $1,963, respectively.

During the years ended September 30, 2023 and 2022, the Company did not incur impairment losses related to the above intangible assets.

The strategic contract relates to supply of a critical input to our bitcoin mining business at significantly lower prices compared to market.

The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows:

 

Fiscal Year

 

 

 

 ($ in thousands)

 

September 30, 2023

 

2024

 

 

2,053

 

2025

 

 

2,050

 

2026

 

 

415

 

2027

 

 

78

 

2028

 

 

7

 

Total

 

$

4,603

 
v3.23.3
9. LEASES
 12 Months Ended
Sep. 30, 2023
Leases [Abstract]  
LEASES

9. LEASES

On October 1, 2019, the Company adopted the amendments to ASC 842, leases which require lessees to recognize lease assets and liabilities arising from operating leases on the balance sheet. The Company adopted the new lease guidance using the modified retrospective approach and elected the transition option issued under ASU 2018-11, Leases (Topic 842) Targeted Improvements, allowing entities to continue to apply the legacy guidance in ASC 840, Leases, to prior periods, including disclosure requirements.

The Company’s operating leases are office spaces and finance leases which are primarily related to equipment used at its data center.

The Company's lease costs recognized in the Consolidated Statements of Operations and Comprehensive Loss consist of the following:

 

 

 

For the year ended

 

 ($ in thousands)

 

September 30,
2023

 

 

September 30,
2022

 

Operating lease cost (1)

 

$

267

 

 

$

113

 

Finance lease cost:

 

 

 

 

 

 

Depreciation expense of financed assets

 

$

197

 

 

$

379

 

Interest on lease obligations

 

$

33

 

 

$

38

 

 

(1)
Included in general and administrative expenses.

Other lease information is as follows:

 

 

 

For the year ended

 

 ($ in thousands)

 

September 30,
2023

 

 

September 30,
2022

 

Cash paid for amounts included in
   measurement of lease obligations:

 

 

 

 

 

 

Operating cash outflows from operating leases

 

$

274

 

 

$

131

 

Operating cash outflows from finance leases

 

$

33

 

 

$

38

 

Financing cash outflows from finance leases

 

$

301

 

 

$

519

 

 

 

September 30,
2023

 

 

September 30,
2022

 

Weighted-average remaining lease term -
   operating leases

 

3.8 years

 

 

1.5 years

 

Weighted-average remaining lease term -
   finance leases

 

0.9 years

 

 

1.5 years

 

Weighted-average discount rate - operating leases

 

 

5.40

%

 

 

4.50

%

Weighted-average discount rate - finance leases

 

 

5.50

%

 

 

5.50

%

 

The following is a schedule of the Company's lease liabilities by contractual maturity as of September 30, 2023:

 

($ in thousands)

Fiscal Year

 

Operating
Leases

 

 

Finance
Leases

 

2024

 

$

214

 

 

$

134

 

2025

 

 

201

 

 

 

9

 

2026

 

 

203

 

 

 

—

 

2027

 

 

106

 

 

 

—

 

2028

 

41

 

 

 

—

 

Gross lease liabilities

 

 

765

 

 

 

143

 

Less: imputed interest

 

 

(65

)

 

 

(3

)

Present value of lease liabilities

 

$

700

 

 

$

140

 

Less: Current portion of lease liabilities

 

 

(181

)

 

 

(130

)

Total lease liabilities, net of current portion

 

$

519

 

 

$

10

 
v3.23.3
10. LOANS
 12 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
LOAN

10. LOANS

As of September 30, 2023, the Company had a gross balance outstanding of $16,080, netted against discount on the loans payable of $177. Total principal payments on loans during the years ended September 30, 2023 and 2022 was $14,466 and $2,779, respectively. The following table reflects our outstanding loans as of September 30, 2023 and September 30, 2022:

 

 

 

 

 

 

 

September 30, 2023

 

 

September 30, 2022

 

($ in thousands)

 

Maturity Date

 

Rate

 

Debt Balance, Net

 

 

Debt Balance, Net

 

Master Equipment Financing Arrangement

 

Apr-25

 

13.80%

 

$

11,603

 

 

$

17,073

 

Mortgage - Corporate Facility

 

Apr-25

 

10.00%

 

 

1,950

 

 

 

—

 

SPRE Commercial Group, Inc.

 

Aug-23

 

12.00%

 

 

—

 

 

 

1,807

 

Marquee Funding Partners

 

Jul-26 - Feb-27

 

13.00%

 

 

1,725

 

 

 

2,127

 

Auto & Equipment Loans

 

Oct-26 - Jun -29

 

0.99-9.60%

 

 

625

 

 

 

212

 

Total Loans Outstanding

 

 

 

 

 

$

15,903

 

 

$

21,219

 

Less: current portion of long-term loans

 

 

 

 

 

 

(6,992

)

 

 

(7,786

)

Long-term loans, excluding current portion

 

 

 

 

 

$

8,911

 

 

$

13,433

 

The following table reflects the principal amount of loan maturities due over the next five years and beyond as of September 30, 2023:

 

($ in thousands)

 

5-Year Loan Maturities

 

Outstanding Loan

 

FY 2024

 

 

FY 2025

 

 

FY 2026

 

 

FY 2027

 

 

FY 2028

 

 

Thereafter

 

 

Total

 

Master Equipment Financing Arrangement

 

$

6,509

 

 

$

5,221

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

11,730

 

Mortgage - Corporate Facility

 

 

—

 

 

 

2,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,000

 

Marquee Funding Partners

 

 

458

 

 

 

521

 

 

 

592

 

 

 

154

 

 

 

—

 

 

 

—

 

 

 

1,725

 

Auto & Equipment Loans

 

 

152

 

 

 

159

 

 

 

147

 

 

 

83

 

 

 

69

 

 

 

15

 

 

 

625

 

Total principal amount of loan payments by fiscal year

 

$

7,119

 

 

$

7,901

 

 

$

739

 

 

$

237

 

 

$

69

 

 

$

15

 

 

$

16,080

 

Unamortized deferred financing costs and discounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(177

)

Total loan book value as of September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

15,903

 

 

Description of Outstanding Loans

Master Equipment Financing Agreement

On April 22, 2022, the Company entered into a Master Equipment Financing Agreement with Trinity Capital Inc. (the "Lender"). The Master Equipment Financing Agreement provided for up to $35,000 of borrowings to finance the Company’s acquisition of blockchain computing equipment. The Company received a loan of $20,000 at closing, with the remaining $15,000 fundable upon the Company's request, if requested no later than December 31, 2022, subject to certain customary conditions. The Company did not request the funding and agreed with the Lender that the related 1% loan commitment fee for the unused portion would be refunded to the Company, which was received in December 2022. The borrowings under the Master Equipment Financing Agreement are collateralized by 3,336 S19j Pro miners, which are located at the Company's College Park, GA and Norcross, GA sites.

The Company recorded an original loan discount of approximately $379, of which $150 was refunded and $56 and $46 was amortized and recorded to interest expense during the years ended September 30, 2023 and 2022.

Mortgage - Corporate Office

On May 10, 2023, HQLLC completed a refinancing transaction whereby it borrowed a net $1,937 against the equity of the real property purchased in April that is intended for the future Corporate Office (see Note 7 - Property and Equipment). The loan agreement has a two-year term, 10% interest rate and monthly interest only payments until maturity.

Marquee Funding Partners

In connection with the acquisition of WAHA, certain assets were encumbered with mortgages which the Company assumed. The mortgages assumed have a combined balance of $1,725, remaining payment terms ranging from 35-42 months and annual interest of 13%.

SPRE Commercial Group, Inc.

In connection with the acquisition of WAHA, the Company entered into a financing arrangement with the seller. The loan had a term of 12 months with monthly payments of $174 and a stated interest rate of 12%. The loan matured in fiscal year 2023 and no amount is outstanding as of September 30, 2023.

Auto Loans

The Company has entered into various financing arrangements to purchase vehicles and non-miner equipment with combined principal amount of $625 as of September 30, 2023. The loans vary in terms from 36-72 months with annual interest rates ranging from 0.99% - 9.60%. The loans are secured with the purchased vehicles and equipment. During the year ended September 30, 2023, the Company entered into five separate agreements for the purchase of machinery and equipment and mining equipment with a combined principal of $493, with terms ranging from 36-72 months and interest rates ranging from 0.99%-9.60%.

v3.23.3
11. INCOME TAXES
 12 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES

11. INCOME TAXES

The Company provides for income taxes under FASB ASC 740, Accounting for Income Taxes. FASB ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.

FASB ASC 740 requires the reduction of deferred tax assets by a valuation allowance, if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance has been recorded.

Due to the enactment of the Tax Reform Act of 2017, we have calculated our federal taxes using an estimated corporate tax rate of 21%. U.S. Tax codes and laws may be subject to further reform or adjustment which may have a material impact to the Company’s deferred tax assets and liabilities.

For the years ended September 30, 2023 and 2022 the Company's loss from continuing operations before provision for income taxes were as follows:

 

($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Domestic

 

$

(131,303

)

 

$

(40,089

)

Foreign

 

 

—

 

 

 

—

 

Loss before income taxes

 

$

(131,303

)

 

$

(40,089

)

The components of the provision for income taxes in the years ended September 30, 2023 and 2022 were as follows:

 

($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Current:

 

 

 

 

 

 

     Federal

 

$

—

 

 

$

—

 

     State

 

 

—

 

 

 

—

 

Deferred:

 

 

 

 

 

 

     Federal

 

$

857

 

 

$

—

 

     State

 

 

—

 

 

 

—

 

Provision for income taxes

 

$

857

 

 

$

—

 

The effective income tax rate for the periods ended September 30, 2023 and 2022 as a percentage of pre-tax income is (0.65%) and 0%, respectively. The significant reconciling items between the effective tax rate and the statutory tax rate for the period ended September 30, 2023 consist of valuation allowance, adjustments to deferred taxes, state taxes and permanent items. A detailed breakout is provided below:

 

($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Tax benefit at federal statutory rate

 

$

(27,574

)

 

$

(8,417

)

State taxes (net of federal benefit)

 

 

5,820

 

 

 

(303

)

Meals and entertainment

 

 

18

 

 

 

30

 

Stock based compensation

 

 

356

 

 

 

2,061

 

162(m) Excess Executive Compensation

 

 

6,823

 

 

 

—

 

ISO - Disqualifying Dispositions

 

 

(127

)

 

 

(58

)

Deferred only adjustment

 

 

(13,794

)

 

 

4,408

 

R&D Credits

 

 

—

 

 

 

(200

)

Discontinued Operations

 

 

—

 

 

 

(3,750

)

Other

 

 

485

 

 

 

(3

)

Change in Valuation Allowance

 

 

28,850

 

 

 

6,232

 

 

 

$

857

 

 

$

—

 

Deferred income taxes are the result of timing differences between GAAP accounting and tax basis of certain assets and liabilities, timing of income and expense recognition of certain items, and net operating loss carry-forwards. These differences result in deferred tax assets and liabilities, which are recorded in the balance sheet, net of valuation allowance. The Company evaluates the realizability of its deferred tax assets and assesses the need for a valuation allowance on an ongoing basis. In evaluating its deferred tax assets, the Company considers whether it is more likely than not that the deferred income tax assets will be realized. The ultimate realization of deferred tax assets depends upon generating sufficient future taxable income prior to the expiration of the tax attributes. This assessment requires significant judgment.

The significant components of the Company's deferred tax assets and liabilities as of September 30, 2023 and 2022 were as follows:

 

($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Deferred Tax Assets:

 

 

 

 

 

 

     Right of Use - Lease Liability

 

$

183

 

 

$

269

 

     Charitable Contributions

 

 

64

 

 

 

7

 

     Section 1231 Loss Carryforwards

 

 

983

 

 

 

1,183

 

     Tax Credits

 

 

200

 

 

 

401

 

     Stock Based Compensation

 

 

4,512

 

 

 

3,740

 

     Interest Expense Carryforwards

 

 

653

 

 

 

194

 

     Intangible Assets

 

 

6,999

 

 

 

—

 

     Net Operating Loss carryforwards

 

 

66,333

 

 

 

93,052

 

     Other

 

 

2,078

 

 

 

—

 

     Gross Deferred Tax Assets

 

$

82,005

 

 

$

98,846

 

Valuation Allowance

 

 

(54,608

)

 

 

(28,756

)

Total deferred tax assets, net of valuation allowance

 

$

27,397

 

 

$

70,090

 

 

 

 

 

 

 

 

Deferred Tax Liabilities

 

 

 

 

 

 

     Right of Use - Lease Asset

 

$

(180

)

 

$

(265

)

     Prepaid Expenses

 

 

(636

)

 

 

(222

)

     Unrealized Gain on Derivative Asset

 

 

—

 

 

 

(85

)

     Unrealized Gain on Equity Security

 

 

—

 

 

 

(63

)

     Gain/Loss on Sale of Assets not on TR

 

 

—

 

 

 

(26

)

     Other

 

 

(898

)

 

 

—

 

     Fixed Assets & Intangible Assets

 

 

(26,540

)

 

 

(69,429

)

Net Deferred Tax Liability

 

$

(857

)

 

$

—

 

For balance sheet presentation, the Company nets non-current deferred tax assets (net of valuation allowance) and liabilities. The following table summarizes the presentation:

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

 

 

 

 

 

 

Net Non-current Deferred Tax Liabilities

 

$

(857

)

 

$

—

 

In accordance with ASC 740, Accounting for Income Taxes, the Company evaluates its deferred income taxes to determine if valuation allowances are required. Pursuant to U.S. income tax accounting standards, companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a “more-likely-than-not” standard. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. The Company considers the scheduled reversal of deferred tax liabilities. To fully utilize the net operating loss (“NOL”) carryforward, the Company will need to generate sufficient future taxable income in each respective jurisdiction. Due primarily to the Company’s history of losses, it is more likely than not that all or a portion of its deferred tax assets as of September 30, 2023 will not be realized.

The Company recorded a valuation allowance to offset the DTA that is not considered realizable for the tax year ended September 30, 2023 and September 30, 2022.

 

 

 

As of September 30,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Valuation Allowance

 

$

(54,608

)

 

$

(28,756

)

 

 

 

 

 

 

 

 

As of September 30, 2023, the Company had approximately $270,400 of federal and $96,400 of state net operating loss carryforwards available to reduce future taxable income, of which federal net operating loss carryforwards of approximately $237,700 have an indefinite life. The federal net operating losses will begin to expire on September 30, 2025, while state net operating losses will begin to expire in the year ending September 30, 2036.

The Company's ability to utilize its federal and state net operating loss carryforwards and federal tax credit carryforwards to reduce future taxable income and future taxes, respectively, may be subject to restrictions attributable to equity transactions that may have resulted in a change in ownership as defined by Internal Revenue Code ("IRC") Section 382. The Company is in the process of completing a detailed study for the year ended September 30, 2023, but does not expect that the results of this study will have a material impact on its financial statements.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that is greater than a 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

The Company records interest and penalties related to unrecognized tax benefits in income tax expense, if any exist. The Company has no liability, interest or penalties for unrecognized tax benefits as of September 30, 2023. The Company does not anticipate the need to record a liability for unrecognized tax benefits within the coming year.

The Company files income tax returns in the U.S. federal and state jurisdictions. The 2019-2022 tax years generally remain subject to examination by the IRS and various state taxing authorities, although the Company is not currently under examination in any jurisdiction.

In August 2022, two pieces of U.S. tax legislation that have significant tax-related provisions were signed into law: (1) the Creating Helpful Incentives to Produce Semiconductors Act of 2022 (the “CHIPS Act”), which creates a new advanced manufacturing investment credit under new Internal Revenue Code Section 48D, and (2) the Inflation Reduction Act of 2022 (the “IRA”), which has a number of tax-related provisions, including: (a) a 15 percent book minimum tax on “adjusted financial statement income of applicable corporations,” (b) a plethora of clean energy tax incentives in the form of tax credits, and (c) a one percent excise tax on certain corporate stock buybacks. The Company will monitor additional guidance and impact that the CHIPS Act, the IRA and other potential legislation may have on its income taxes. For the period ended September 30, 2023, the Company does not believe the provisions from these legislative updates will have any material impact on the Company's income taxes.
v3.23.3
15. RELATED PARTY TRANSACTIONS
 12 Months Ended
Sep. 30, 2023
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

15. RELATED PARTY TRANSACTIONS

Zachary Bradford Chief Executive Officer, Director and Former Chief Financial Officer

During the year ended September 30, 2022, the Company paid Blue Chip Accounting, LLC (“Blue Chip”) $47 for accounting, tax, administrative services and reimbursement for office supplies. Blue Chip was 50% beneficially owned by Mr. Bradford. None of the services were associated with work performed by Mr. Bradford. The services consisted of preparing and filing tax returns, bookkeeping, accounting and administrative support assistance. During the year ended September 30, 2022, $5 was paid to Blue Chip for rent. The sublease and engagement for accounting services was terminated on December 31, 2021.

v3.23.3
12. STOCKHOLDERS' EQUITY
 12 Months Ended
Sep. 30, 2023
Equity [Abstract]  
STOCKHOLDERS EQUITY

12. STOCKHOLDERS’ EQUITY

Overview

The Company’s authorized capital stock consists of 300,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $0.001 per share. As of September 30, 2023, there were 160,184,921 shares of common stock issued and outstanding and 1,750,000 shares of preferred stock issued and outstanding. As of September 30, 2022, there were 55,661,337 shares of common stock issued and outstanding and 1,750,000 shares of preferred stock issued and outstanding.

Under the Certificate of Designation for the Series A Preferred Stock, holders of shares of Series A Preferred Stock are entitled to quarterly dividends on 2% of our earnings before interest, taxes and amortization. The dividends are payable in cash or common stock. The preferred stock dividend for the year ended September 30, 2023 was $0. The preferred stock dividend for fiscal year ended September 30, 2022 was $335, which the Company paid $314 and had a preferred stock dividend payable in the amount of $21, which was subsequently paid in fiscal year 2023. The holders of the Series A Preferred Stock will also have a liquidation preference on the stated value of $0.02 per share plus any accumulated but unpaid dividends. The holders are further entitled to have us redeem their Series A Preferred Stock for three shares of common stock in the event of a change of control and they are entitled to vote together with the holders of our common stock on all matters submitted to stockholders at a rate of forty-five (45) votes for each share held.

Amendment to Articles of Incorporation

In March 2023, the Company's stockholders approved an amendment to the Company's Articles of Incorporation to increase the number of shares of common stock authorized and outstanding from 100,000,000 to 300,000,000.

Common stock issuances for the year ended September 30, 2023

The Company issued 98,829,525 shares of common stock through its ATM offering facility, net of offering costs, resulting in net proceeds of $383,776.

The Company issued 4,483,669 shares of common stock in relation to the settlement of restricted stock awards and withheld 1,397,258 shares of common stock of $5,873 for net settlement.

The Company issued 1,590,175 shares of common stock valued at $4,802 as consideration in connection with business acquisitions.

The Company issued 1,100,890 shares of common stock valued at $2,840 in settlement of the contingent purchase price in connection with the Mawson Transaction.

Common stock returned during the year ended September 30, 2023

The Company had 83,417 shares of common stock returned in connection with the ATL acquisition due to nonsatisfaction of certain milestones.

Common stock issuances for the year ended September 30, 2022

The Company issued 1,002,586 shares of common stock in relation to the settlement of restricted stock awards and stock options and withheld 358,681 shares of common stock of $1,638 for net settlement.

The Company issued 105,423 shares of common stock in relation to the exercise of stock options with proceeds received of 817.

The Company issued 5,238 shares of common stock valued at $60 as compensation for Director services.

The Company issued 8,404 shares of common stock valued at $150 for settlement of contingent consideration related to business acquisition.

The Company issued 17,740,081 shares of common stock through its ATM offering facility, net of offering costs, for net proceeds of $125,048.

Common stock returned during the year ended September 30, 2022

The Company had 232,518 shares of common stock returned back to the Company as part of the settlement of contingent consideration and holdbacks related to business acquisition.
v3.23.3
13. STOCK WARRANTS
 12 Months Ended
Sep. 30, 2023
Stock Warrants  
12. STOCK WARRANTS

13. STOCK WARRANTS

The following is a summary of stock warrant activity during the years ended September 30, 2023 and 2022.

 

 

Number of
Warrant
Shares

 

 

Weighted
Average
Exercise
Price ($)

 

Balance, September 30, 2021

 

 

615,554

 

 

$

30.72

 

Warrants granted

 

 

—

 

 

 

—

 

Warrants expired

 

 

(413,334

)

 

 

39.38

 

Balance, September 30, 2022

 

 

202,220

 

 

$

13.03

 

Warrants granted

 

 

—

 

 

 

—

 

Warrants expired

 

 

(16,660

)

 

 

8.00

 

Balance, September 30, 2023

 

 

185,560

 

 

$

13.49

 

 

As of September 30, 2023, there are warrants exercisable to purchase 185,560 shares of common stock in the Company and there are no warrants that are unvested. All outstanding warrants contain provisions allowing a cashless exercise at their respective exercise prices.

As of September 30, 2023, the outstanding warrants have a weighted average remaining term of 2.15 years and an intrinsic value of $2.

During the years ended September 30, 2023 and 2022, there were no exercise of warrants.
v3.23.3
14. STOCK-BASED COMPENSATION
 12 Months Ended
Sep. 30, 2023
Equity [Abstract]  
STOCK-BASED COMPENSATION

14. STOCK-BASED COMPENSATION

The Company sponsors a stock-based incentive compensation plan known as the 2017 Incentive Plan (the “Plan”), which was established by the Board of Directors of the Company on June 19, 2017. On October 7, 2020, the Company executed a first amendment to the Plan to increase its share pool from 300,000 to 1,500,000 shares of common stock.

Effective September 15, 2021, following approval by our stockholders, the Plan was amended to (i) increase the number of shares of common stock authorized for issuance under the Plan by an additional 2,000,000 shares, resulting in an aggregate of 3,500,000 shares of common stock authorized for issuance under the Plan, and (ii) revise Section 19 of the Plan to more closely align with the provisions of Section 422 of the Internal Revenue Code of 1986, as amended, and Section 17.2 of the Plan.

In March 2023, the stockholders approved an amendment to the Plan, as amended to date, to (i) increase the number of shares authorized for issuance thereunder from 3,500,000 shares of common stock to 11,512,000 shares and (ii) add an evergreen provision to, on April 1st and October 1st of each year, automatically increase the maximum number of shares of common stock available under the Plan to fifteen percent (15% ) of the Company's outstanding shares of common stock, in each case as of the last day of the immediately preceding month. On March 31, 2023, there were 96,950,555 outstanding shares of common stock, and accordingly on April 1, 2023, the total shares authorized for issuance under the Plan increased to 14,542,583.

As of September 30, 2023, there were 715,896 shares available and authorized for issuance under the Plan.

The Plan allows the Company to grant incentive stock options, non-qualified stock options, stock appreciation rights, common stock, units of common stock, restricted stock, performance shares and performance units. Other than incentive stock options that are granted to participants who owns more than 10% of the total combined voting power of all classes of the stock of the Company or of its parent or subsidiary corporations (a “Ten Percent Stockholder”), stock options are exercisable for up to ten years, at an option price per share not less than the fair market value on the date the option is granted. The incentive stock options are limited to persons who are regular full-time employees of the Company or Ten Percent Stockholders at the date of the grant of the option. Non-qualified stock options and the other types of awards issuable under the Plan may be granted to any person, including, but not limited to, employees, independent agents, consultants and attorneys, who the Company’s Compensation Committee believes have contributed, or will contribute, to the success of the Company. The option vesting schedule for options granted is determined by the Compensation Committee at the time of the grant. The Plan provides for accelerated vesting of unvested options if there is a change in control, as defined in the Plan.

The Company granted 24,482 and 89,445 non-qualified options pursuant to the Plan during the years ended September 30, 2023 and 2022.

The Company recognized $24,142 and $31,466 for the years ended September 30, 2023 and September 30, 2022, respectively, in stock-based compensation.

STOCK OPTIONS

The following is a summary of stock option activity during the year ended September 30, 2023 and 2022:

 

 

Number of
Option Shares

 

 

Weighted Average
Exercise Price ($)

 

Balance, September 30, 2021

 

 

1,547,029

 

 

$

18.35

 

Options granted

 

 

215,750

 

 

$

14.47

 

Options expired

 

 

—

 

 

$

-

 

Options canceled/forfeited

 

 

(238,418

)

 

$

15.40

 

Options exercised

 

 

(105,423

)

 

$

7.43

 

Balance, September 30, 2022

 

 

1,418,938

 

 

$

19.11

 

Options granted

 

 

789,750

 

 

$

5.72

 

Options expired

 

 

(44,600

)

 

$

6.05

 

Options canceled/forfeited

 

 

(193,630

)

 

$

10.77

 

Options exercised

 

 

—

 

 

$

-

 

Balance, September 30, 2023

 

 

1,970,458

 

 

$

14.86

 

As of September 30, 2023, there are options exercisable to purchase 1,065,882 shares of common stock in the Company and 904,576 unvested options outstanding that cannot be exercised until vesting conditions are met. As of September 30, 2023, the outstanding options have a weighted average remaining term of 5.47 years and an aggregate intrinsic value of $50.

Option activity for the year ended September 30, 2023

During the year ended September 30, 2023, no stock options were exercised.

For the year ended September 30, 2023, the Company also granted 789,750 options with a total fair value of $4,513 to purchase shares of common stock to employees.

The Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2023:

 

Fair value assumptions Options:

 

September 30, 2023

 

Risk free interest rate

 

2.65% - 4.44%

 

Expected term (years)

 

5.06 - 5.85

 

Expected volatility

 

157.1% - 194.9%

 

Expected dividends

 

 

0

%

As of September 30, 2023, the Company expects to recognize $6,923 of stock-based compensation for the non-vested outstanding options over a weighted-average period of 2.17 years.

Option activity for the year ended September 30, 2022

During the year ended September 30, 2022, a total of 105,423 shares of the Company’s common stock were issued in connection with the exercise of common stock options at exercise prices ranging from $4.65 to $15.10, for net proceeds of $817.

For the year ended September 30, 2022, the Company also granted to employees 215,750 options with a total fair value of $3,121 to purchase shares of common stock.

The Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2022:

 

Fair value assumptions Options:

 

September 30, 2022

 

Risk free interest rate

 

1.04% - 3.65%

 

Expected term (years)

 

4.99 - 7.35

 

Expected volatility

 

187.2% - 533.0%

 

Expected dividends

 

 

0

%

RESTRICTED STOCK UNITS

The Company grants restricted stock units ("RSU"s) that contain either a) service conditions, b) performance conditions, or c) market performance conditions. RSUs containing service conditions vest monthly or annually. RSUs containing performance conditions generally vest over 1 year, and the number of shares earned depends on the achievement of predetermined Company metrics. RSUs that contain market conditions will vest based on the terms of the agreement and generally are either 1 year or over the employee's term of employment.

The Company recognizes the expense equal to the total fair value of the common stock price on the grant date. The expense is recognized ratably over the service period.

The following table summarizes the performance-based restricted stock units at the maximum award amounts based upon the respective performance share agreements. Actual shares that will vest depend on the attainment of the performance-based criteria.

 

 

Number of
Shares

 

 

Weighted
Average
Fair Value
Per Share

 

 

Aggregate
Intrinsic Value

 

Outstanding at September 30, 2021

 

 

10,995

 

 

$

27.73

 

 

$

—

 

Granted

 

 

7,306,250

 

 

 

7.18

 

 

 

 

Vested

 

 

(1,757,938

)

 

 

13.37

 

 

 

 

Forfeited

 

 

(110,759

)

 

 

15.27

 

 

 

 

Outstanding at September 30, 2022

 

 

5,448,548

 

 

$

4.93

 

 

$

17,326

 

Granted

 

 

3,880,552

 

 

 

3.65

 

 

 

 

Vested

 

 

(3,813,617

)

 

 

4.58

 

 

 

 

Cancelled

 

 

(40,000

)

 

 

-

 

 

 

 

Forfeited

 

 

(4,048

)

 

 

29.34

 

 

 

 

Outstanding at September 30, 2023

 

 

5,471,435

 

 

$

4.18

 

 

$

20,846

 

During the year ended September 30, 2023, the Company granted 3,880,552 RSUs, which consisted of 360,552 time-based RSUs, 60,000 performance-based RSUs (of which 40,000 market-based awards were exchanged and reflected in the table above as cancelled). Additionally, on September 29, 2023, the Compensation Committee granted 3,460,000 market-based restricted stock units to senior leadership of the Company. The market-based awards vest 33% each tranche based upon the Company's stock price reaching 200%, 300% and 400% of the stock price on the date of grant. Each tranche will vest upon the target stock price being met for at least 10 of 20 consecutive trading days and the awards are not dependent on a defined service period. The total fair value of the award is approximately $13,160 and is amortized over a weighted average period of less than 1 year.

During the year ended September 30, 2022, the Company granted 7,306,250 share of restricted stock awards. Certain of the awards were issued in the first quarter of fiscal year 2022, and comprised of 120,000 service condition based awards, 146,250 that were performance condition-based awards, and 910,000 that were market condition-based awards. The market condition based RSUs consist of 60,000 units that were perpetual in nature, and therefore, were given a derived service period of 5 years. The remaining 810,000 RSUs had a stated service period of 1 year.

In the fourth quarter of fiscal year 2022, on September 12, 2022, the Compensation Committee granted additional grants as follows:

(1) 2,565,000 service condition based RSUs which vest over a 3-year period beginning on the grant date;

(2) 2,565,000 performance based RSUs, of which, 2,381,781 vested in fiscal year 2023; and

(3) 760,000 restricted stock units, which vested in March 2023 when approved by our stockholders.

 

The Compensation Committee also modified previously issued awards from the first quarter of fiscal year 2022 as follows:

(1) granted immediate vesting of the 810,000 market based awards; and

(2) modified the market condition based 60,000 units that were perpetual in nature, and 10,000 unvested service condition RSUs, and were replaced with

(2a) 120,000 service condition-based RSUs that vest over a 3-year period, and

(2b) 120,000 performance-based RSUs, of which $111,429 vested in fiscal year 2023.

 

The fair value of the market based RSUs were determined using the Monte Carlo simulation and is in the following range: $11.03 - $17.89 per unit. The inputs of market-based RSUs for each of the fiscal years are as follows:

 

Fair value assumptions - Market-based RSUs granted:

 

September 30, 2023

 

 

September 30, 2022

Risk free interest rate

 

 

4.59

%

 

0.14% - 1.26%

Expected term (years)

 

 

10.00

 

 

1.00 - 5.00

Expected volatility

 

 

129.70

%

 

111.37% - 172.18%

Cost of equity

 

 

21.55

%

 

20.00% - 21.00%

As of September 30, 2023, the Company had approximately $22,300 unrecognized compensation cost related to restricted stock unit awards that will be recognized over a weighted average period of 1.6 years.

The Company recognized stock-based compensation expenses related to restricted stock units, of $17,720 and $23,661 for fiscal years ended 2023 and 2022.

v3.23.3
17. COMMITMENTS AND CONTINGENCIES
 12 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

17. COMMITMENTS AND CONTINGENCIES

Future hosting agreements

On March 29, 2022, the Company entered into a hosting agreement with Lancium LLC (“Lancium”). Pursuant to the agreement, Lancium has agreed to host, power and provide maintenance and other related services to the Company's mining equipment to be placed at Lancium facilities. Further, Lancium committed to provide 200 megawatts in support of the Company's mining equipment. In addition, for a period of two and a half years following the operations commencement date, the Company will have an option to increase the power capacity supplied to the equipment up to 500 MW or 40% of the aggregate capacity of all facilities owned and operated by Lancium, whichever is lesser. As of the date of this filing, the Company has not deployed any miners pursuant to the co-location mining services at Lancium’s facility in Texas. Lancium has informed the Company that it is experiencing significant delays due to the tightening of capital in the current market climate. The Company does not have any expected timeline on the readiness of these facilities for the foreseeable future. If Lancium’s situation improves in a timeline acceptable to the Company, it would anticipate utilizing Lancium as intended but there can be no assurance that Lancium's situation or market conditions will improve.

Contractual future payments

The following table sets forth certain information concerning our obligations to make contractual future payments towards our agreements as of September 30, 2023:

 

 ($ in thousands)

 

Fiscal Year 2024

 

 

Fiscal Year 2025

 

 

Fiscal Year 2026

 

 

Fiscal Year 2027

 

 

Fiscal Year 2028

 

 

Thereafter

 

 

Total

 

Recorded contractual obligations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease obligations

 

$

214

 

 

$

201

 

 

$

203

 

 

$

106

 

 

$

41

 

 

$

—

 

 

$

765

 

Finance lease obligations

 

 

134

 

 

 

9

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

143

 

Loans

 

 

8,766

 

 

 

8,463

 

 

 

821

 

 

 

94

 

 

 

74

 

 

 

15

 

 

 

18,233

 

Construction in progress

 

 

33,293

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,293

 

Total

 

$

42,407

 

 

$

8,673

 

 

$

1,024

 

 

$

200

 

 

$

115

 

 

$

15

 

 

$

52,434

 

Contingent consideration

Mawson Property Acquisition

In connection with the Mawson Transaction (as discussed in Note 4), the Company and seller agreed to up to $2,000 of seller financing if the Company received, by April 8, 2023, written confirmation reasonably acceptable to it that it will be able to utilize at least 150 MW of additional power at the site. Such written confirmation was not

received by April 8, 2023. See Note 4 for additional description of the resolution of this contingency. As of September 30, 2023, the Company has $0 recorded as contingent liability associated with the Mawson Transaction.

Legal contingencies

Bishins v. CleanSpark, Inc. et al.

On January 20, 2021, Scott Bishins (“Bishins”), individually, and on behalf of all others similarly situated (together, the “Class”), filed a class action complaint (the “Class Complaint”) in the United States District Court for the Southern District of New York against the Company, its Chief Executive Officer, Zachary Bradford (“Bradford”), and its Chief Financial Officer at the time, Lori Love (“Love”) (such action, the “Class Action”).

On December 2, 2021, the Court appointed Darshan Hasthantra as lead Plaintiff (together, with Bishins, the “Plaintiffs”), and Glancy, Prongay and Murray LLP as class counsel.

Hasthantra filed an Amended Complaint on February 28, 2022 (the “Amended Class Complaint”). In the Amended Class Complaint, Love is no longer a defendant and S. Matthew Schultz (“Schultz”) has been added as a defendant (the Company, Bradford and Schultz, collectively, the “Defendants”). The Amended Class Complaint alleges that, between December 10, 2020 and August 16, 2021 (the “Class Period”), Defendants made material misstatements and omissions regarding the Company’s acquisition of ATL and its anticipated expansion of bitcoin mining operations. In particular, Plaintiffs allege that Defendants: (1) were misleading in their various public announcements related to the timeline for expanding ATL’s mining capacity; and (2) failed to disclose other material conditions purportedly related to the Company’s acquisition of ATL, including that an ATL predecessor had filed for bankruptcy about six months prior to the acquisition, that another bitcoin miner had declined to acquire ATL, and that a related party had performed an audit of ATL for the Company. The Amended Class Complaint seeks: (a) certification of the Class, (b) an award of compensatory damages to the Class, and (c) an award of reasonable costs and expenses incurred by the Class in the litigation.

To date, no class has been certified in the Class Action.

The Company filed a Motion to Dismiss in April 2022 which, after briefing, was denied in January 2023. On February 15, 2023, the Company filed its answer responding to Plaintiffs’ claims and asserting affirmative defenses. The case is moving forward in discovery.

The Company believes that the claims raised in the Amended Class Complaint are without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims.

The Class Action may distract the Company and cost the Company’s management time, effort and expense to defend against the claims made in the Amended Class Complaint. Notwithstanding the Company’s belief that the claims are without merit, no assurance can be given as to the outcome of the Class Action, and in the event the Company does not prevail in such action, the Company, its business, financial condition and results of operations could be materially and adversely affected.

Shareholder Derivative Actions

Consolidated Ciceri Derivative Actions

On May 26, 2021, Andrea Ciceri (“Ciceri”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action (the “Ciceri Derivative Action”) in the United States District Court in the District of Nevada against certain of the Company’s officers and directors (collectively referred to as “Ciceri Derivative Defendants”) (Ciceri v. Bradford, Schultz, Love, Beynon, McNeill and Wood). On June 22, 2021, Mark Perna (“Perna”) (Ciceri, Perna, and Ciceri Derivative Defendants collectively referred to as the “Parties”) filed a verified shareholder derivative action (the “Perna Derivative Action”) in the same Court against the same Ciceri Derivative Defendants, making substantially similar allegations. On June 29, 2021, the Court consolidated the Ciceri Derivative Action with the Perna Derivative Action in accordance with a stipulation among the parties (the consolidated case referred to as the “Consolidated Ciceri Derivative Action”). The Consolidated Ciceri Derivative Action alleges that Ciceri Derivative Defendants: (1) made materially false and misleading public statements about the Company’s business and prospects; (2) did not maintain adequate internal controls; and (3) did not disclose several related party transactions benefitting insiders, questionable uses of corporate assets, and excessive compensation. The claims asserted against all Ciceri Derivative

Defendants include breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets. On or about November 2, 2021, plaintiffs in the Consolidated Ciceri Derivative Action withdrew their claim for contribution under Sections 10(b) and 21D of the Securities and Exchange Act, which had been asserted against only Bradford and Love. The Consolidated Derivative Action seeks declaratory relief, monetary damages, and imposition of adequate corporate governance and internal controls. Plaintiffs were given the opportunity to submit an Amended Complaint by November 25, 2021, but elected not to. In January 2022, the Parties agreed to stay the entirety of the case pending the outcome of the Motion to Dismiss in the Class Action. On January 5, 2023, the Class Action Motion to Dismiss was denied, thereby terminating the stay in this matter. On April 20, 2023, the Ciceri Derivative Defendants filed a Motion to Dismiss the Consolidated Derivative Action. Plaintiffs’ filed their opposition on June 12, 2023 and Defendants’ filed their reply in further support of their Motion to Dismiss on July 13, 2023.

In June 2023, the Company’s Board of Directors appointed a special litigation committee (the “SLC”), comprised of independent Directors and represented by independent counsel. The SLC was established to investigate, evaluate and prosecute as appropriate any and all claims asserted in the Consolidated Ciceri Derivative Action as well as the Consolidated Smith Derivative Actions (defined below). In October 2023, the SLC moved to intervene and stay the Consolidated Ciceri Derivative Action. The Ciceri Plaintiffs did not oppose that motion and, accordingly, on October 23, 2023, the Court granted it, staying the case until July 23, 2024, pending the completion of the SLC’s investigation. The Ciceri Defendants’ Motion to Dismiss was denied as moot, but may be re-filed if and when the stay is lifted.

The Company believes that the claims raised in that case are without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims.

The Consolidated Ciceri Derivative Action may distract the Company and cost the Company’s management time, effort and expense to defend against the claims. Notwithstanding the Company’s belief that the claims are without merit, no assurance can be given as to the outcome of the Consolidated Derivative Action, and in the event the Company does not prevail in such action, the Company, its business, financial condition and results of operations could be materially and adversely affected.

Consolidated Smith Derivative Actions

On February 21, 2023, Brandon Smith (“Smith”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action in the Eighth Judicial District Court of the State of Nevada in and for Clark County against certain of the Company’s officers and directors (Smith v. Bradford, Love, Schultz, Beynon, McNeill and Wood).

On February 24, 2023, Plaintiff Nicholas Iraci (“Iraci”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action (the “Iraci Derivative Action”) in the Eighth Judicial District Court of the State of Nevada in and for Clark County against certain of the Company’s officers and directors (Iraci v. Bradford, Love, Schultz, Beynon, McNeill and Wood).

On March 1, 2023, Plaintiff Eric Atanasoff (“Atanasoff”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action (the “Atanasoff Derivative Action”) in the Eighth Judicial District Court of the State of Nevada in and for Clark County against certain of the Company’s Officers and Directors (Atanasoff v. Bradford, Schultz, Beynon, McNeill, and Wood).

On March 8, 2023, Plaintiff Travis France (“France”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action (the “France Derivative Action”) in the Eighth Judicial District Court of the State of Nevada in and for Clark County against certain of the Company’s officers and directors (France v. Bradford, Love, Tadayon, Schultz, Beynon, McNeill and Wood).

The Smith Derivative Action, Iraci Derivative Action, Atanasoff Derivative Action and France Derivative Action each contain substantially similar allegations, namely that the defendants: (1) made materially false and misleading public statements about the Company’s business and prospects; (2) were misleading in their various public announcements related to the timeline for expanding ATL’s mining capacity; (3) failed to disclose other material conditions purportedly related to the Company’s acquisition of ATL, including that an ATL predecessor had filed for bankruptcy about six months prior to the acquisition, that another bitcoin miner had declined to acquire ATL, and that a related party had performed an audit of ATL for the Company; (4) did not maintain adequate internal controls; and (5) did not disclose several related party transactions benefitting insiders and excessive compensation.

Between February and June 2023, the respective parties to the Smith Derivative Action, Iraci Derivative Action, Atanasoff Derivative Action and France Derivative Action litigated federal court versus state court jurisdictional

issues and, ultimately, each of the aforementioned derivative actions were consolidated into the Smith Derivative Action in the Eighth Judicial District Court of Nevada (the “Consolidated Smith Derivative Actions”).

The claims asserted in the operative Consolidated Smith Derivative Actions include breach of fiduciary duties, unjust enrichment and corporate waste. The damages sought include monetary damages, restitution, declaratory relief, litigation costs, and imposition of adequate corporate governance and internal controls. In September 2023, the Consolidated Smith Derivative Action filed a Motion to Dismiss the case based on the fact that the Plaintiffs lack standing, do not successfully rebut the business judgment rule, and fail to allege certain elements of the claims they assert.

In June 2023, the Company’s Board of Directors appointed the SLC, comprised of independent Directors and represented by independent counsel. The SLC was established to investigate, evaluate and prosecute as appropriate any and all claims asserted in the Consolidated Ciceri Derivative Action (defined above) as well as the Consolidated Smith Derivative Actions. In October 2023, the SLC moved to intervene and stay the Consolidated Smith Derivative Action, which the Plaintiffs opposed. On November 6, 2023, the Court held a hearing on the SLC’s motion during which it granted the SLC’s motion to intervene and stayed the Consolidated Smith Derivative Action for five months. The Court has not yet entered an order memorializing its decision.

The Company believes that the claims raised in Consolidated Smith Derivative Actions are without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims.

The Consolidated Smith Derivative Actions may distract the Company and cost the Company’s management time, effort and expense to defend against the claims. Notwithstanding the Company’s belief that the claims are without merit, no assurance can be given as to the outcome of the Consolidated Smith Derivative Actions, and in the event the Company does not prevail in such action, the Company, its business, financial condition and results of operations could be materially and adversely affected.

Solar Watt Solutions, Inc., v. Pathion, Inc.

On January 6, 2022, Solar Watt Solutions, Inc., (“SWS”) filed suit in the Superior Court of the State of California in the County of Santa Clara against Pathion, Inc. (“Pathion”) for breach of contract, conversion, unjust enrichment and negligent misrepresentation. Prior to its acquisition by the Company, SWS paid Pathion $419 for solar batteries and related equipment for delivery in August 2019, later amended to November 2019. Pathion never delivered any of the items purchased by SWS. Pathion’s breach resulted in SWS being unable to complete a separate contract and cost the end-user client over $15 per month in electricity costs. SWS is seeking an award of compensatory damages totaling over $500. Pathion filed an answer on or around February 16, 2022, generally denying the claims asserted by SWS. SWS served discovery on Pathion in May 2022; Pathion did not serve responses. Accordingly, SWS filed a Motion for Order Establishing Admissions and for Sanctions on July 25, 2022 and was awarded $2 in sanctions. The parties are currently engaged in the discovery process and a trial date is scheduled for March 2024.

Darfon America Corp. vs. CleanSpark, Inc.

On August 18, 2022, Darfon America Corp. ("Darfon") filed a breach of contract suit in connection with a purchase contract for batteries. Plaintiff contends that the Company ordered batteries and did not pay for them. Plaintiff was seeking $5,400 in damages and additional costs and fees. The Company contends, among other things, that the batteries did not meet the necessary specifications.

On January 27, 2023, the Superior Court of the State of California in the County of San Diego orally granted Plaintiff’s Motion for a pre-judgment Writ of Attachment. While no written order has been received as of the date of this filing, this Writ of Attachment will likely provide Plaintiff with right to seek a lien on any Company assets located in California. The Company had recorded a legal reserve of $1,100 in December 2022 in connection with this matter, which had represented the Plaintiff’s unmitigated damages less what the Company has already paid. In April 2023, the Company settled the suit with Darfon for a total amount of $3,800. The Company recorded the additional settlement expense of $2,700 in March 2023, which is included in professional fees on the consolidated statement of operations and comprehensive loss. The case was dismissed with prejudice effective July 27, 2023.

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The outcome of litigation is inherently uncertain. In the opinion of management,

there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims.

v3.23.3
16. MAJOR CUSTOMERS AND VENDORS
 12 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Major Customers, Policy

16. MAJOR CUSTOMERS AND VENDORS

The Company had one mining pool operator (Foundry Digital) in fiscal years ended September 30, 2023 and 2022.

 

The Company had the following significant suppliers of mining equipment, with the percentage based on purchase amounts.

 

 

Year Ended

 

 

September 30, 2023

 

 

September 30, 2022

 

Cryptech Solutions

 

 

25

%

 

 

88

%

Bitmain Technologies Ltd.

 

 

75

%

 

 

12

%
v3.23.3
18. SUBSEQUENT EVENTS
 12 Months Ended
Sep. 30, 2023
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

18. SUBSEQUENT EVENTS

We have evaluated events occurring between the end of the most recent fiscal year and the date the financial statements were issued through December 1, 2023. There were no material subsequent events except as disclosed below:

At-the-Market Equity Issuances

From October 1, 2023 through December 1, 2023, the Company issued 24,475,832 shares under its ATM offering facility resulting in net proceeds of $99,336.

Issuance of Shares under Restricted Stock Grants

In October 2023, the Company settled and issued 88,888 shares to members of its Board of Directors in connection with time-based RSUs that vested on September 30, 2023.

Purchase Agreement

On October 6, 2023, the Company executed an agreement to purchase 4.4 exahashes per second (EH/s) of the recently announced Antminer S21 bitcoin mining machines, which have an efficiency rating of 17.5 joules per terahash (J/TH). The delivery of the mining machines are set to begin in January 2024. The agreement allows for 20% of the purchase price to be paid to the seller 365 days after the date that machines are ready-to-ship. The purchase was made pursuant to the terms of a Future Sales and Purchase Agreement entered into by and between the Company and BITMAIN TECHNOLOGIES DELAWARE LIMITED on October 6, 2023. The Company plans to use the mining machines to expand its digital currency mining activities through its wholly-owned subsidiaries.
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 12 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Basis of Presentation and Liquidity

Basis of Presentation and Liquidity

The accompanying audited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and have been filed with the SEC on December 1, 2023 (“Form 10-K”).

As shown in the accompanying audited consolidated financial statements, the Company incurred a net loss from continuing operations of $132,160 and $40,089 during the years ended September 30, 2023 and September 30, 2022, respectively. While the Company has experienced negative cash flows from investing activities due to its continued investments in capital expenditures in support of its bitcoin mining operations, it has generated positive cash flows from financing activities in fiscal year 2023. The Company used $31,720 in cash from its operations for fiscal 2023, however, the Company made a decision to sell fewer bitcoin than it generated and the increase in bitcoin held at the end of the year (for which the Company classifies as a current asset) was $56,241. The Company has sufficient working capital to support its ongoing operations for the next twelve months. In addition, the Company has access to equity financing through its at-the-market ("ATM") offering facility (see Note 12 - Stockholders' Equity). As of September 30, 2023 and September 30, 2022, the Company had working capital of $28,117 and $16,735, respectively.
Principles of Consolidation

Principles of Consolidation

The accompanying audited consolidated financial statements include the accounts of CleanSpark, Inc., and the Company’s wholly owned subsidiaries, ATL, CleanBlok, CleanSpark DW, LLC, CleanSpark GLP, LLC, CSRE Properties Norcross, LLC, CSRE Property Management Company, LLC, CSRE Properties, LLC, CSRE Properties Washington, LLC, CSRE Properties Sandersville, LLC, CSRE Properties Dalton, LLC, and CleanSpark HQ, LLC. All intercompany transactions have been eliminated upon consolidation of these entities.

As of June 30, 2022, the Company deemed its energy operations to be discontinued operations due to its strategic shift to strictly focus on its bitcoin mining operations and divest of its energy assets. The disposal groups related to the

energy operations are part of the following entities: CleanSpark LLC, CleanSpark Critical Power Systems Inc., GridFabric, LLC, Solar Watt Solutions, Inc, and CleanSpark II, LLC.
Liquidity

Liquidity

The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. The evaluation of going concern under the accounting guidance requires significant judgment which involves the Company to consider that it has historically incurred losses in recent years as it has prepared to grow its business through expansion and acquisition opportunities. The Company must also consider its current liquidity as well as future market and economic conditions that may be deemed outside the control of the Company as it relates to obtaining financing and generating future profits. As of September 30, 2023, the Company had $29,215 available cash on-hand and bitcoin with a fair market value of $56,241. After considering its current liquidity and future market and economic conditions, the Company has concluded there is no substantial doubt about the Company’s ability to continue as a going concern.
Use of estimates

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include estimates used to review the Company’s goodwill impairment, intangible assets acquired, impairments and estimations of long-lived assets, valuation of derivative assets and liabilities, available-for-sale investments, allowances for uncollectible accounts, valuation of contingent consideration, and the valuations of share based awards. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition

Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

Our accounting policy on revenue recognition for our bitcoin mining segment (sole reporting unit as of September 2023 and 2022) by type of revenue is provided below.

Revenue from Contracts with Customers - Revenue from Bitcoin Mining

The Company recognizes revenue in accordance with ASC Topic 606 – Revenue from Contracts with Customers (ASC 606). The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

1.
Identify the contract with the customer
2.
Identify the performance obligations in the contract
3.
Determine the transaction price
4.
Allocate the transaction price to the performance obligations in the contract
5.
Recognize revenue when the Company satisfies a performance obligation

Step 1: The Company enters into a contract with a bitcoin mining pool operator (i.e., the customer) to provide computing power to the mining pools. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company starts providing computing power to the mining pool operator (which occurs daily at midnight Universal Time Coordinated (UTC)). In exchange for providing computing power, the Company is entitled to a pro-rata share of the fixed bitcoin awards earned over the measurement period, plus a pro-rata fractional share of the global transaction fee rewards for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period. The Company’s pro-rata share is based on the proportion of computing power the Company contributed to the mining pool operator as compared to the bitcoin network’s algorithmic difficulty. The proportionate share of the transaction fee rewards earned are based on the Company’s computing power as compared to the total computing power contributed to the global network. Applying the criteria per ASC 606-10-25-1, the contract arises at the point that the Company provides computing power to the mining pool operator, which is beginning contract day at midnight UTC (contract inception), because customer consumption is in tandem with daily earnings of delivery of the computing power.

Step 2: In order to identify the performance obligations in a contract with a customer, a company must assess the promised goods or services in the contract and identify each promised good or service that is distinct. A performance obligation meets ASC 606’s definition of a “distinct” good or service (or bundle of goods or services) if both of the following criteria are met:

•
The customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (i.e., the good or service is capable of being distinct); and
•
The entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (i.e., the promise to transfer the good or service is distinct within the context of the contract).

Based on these criteria, the Company has a single performance obligation in providing computing power services (i.e., hashrate) to the mining pool operator (i.e., customer). The performance obligation of computing power services is fulfilled daily over-time, as opposed to a point in time, because the Company provides the hashrate throughout the day and the customer simultaneously obtains control of it and uses the asset to produce bitcoin. The Company has full control of the mining equipment utilized in the mining pool and if the Company determines it will increase or decrease the processing power of its machines and/or fleet (i.e., for repairs or when power costs are excessive) the computing power provided to the customer will be reduced.

Step 3: The transaction consideration the Company earns is non-cash digital consideration in the form of bitcoin, which the Company measures at fair value on the date earned at the daily closing price, which is not materially different from the fair value at contract inception, which is the daily opening price. According to the customer contract, daily earnings are calculated from midnight-to-midnight UTC time, and the sub-account balance is credited one hour later at 1:00 AM UTC time. The Company utilizes Greenwich Mean Time (GMT), which is also the midnight of UTC time, since this is consistent with our customer contract in calculating our daily earnings from midnight-to-midnight UTC time.

The transaction consideration the Company earns is all variable since it is dependent on the daily computing power provided by the Company. The Company’s bitcoins earned through the contractual payout formula is not known until the Company’s computational hashrate contributed over the daily measurement period is fulfilled over-time daily between midnight-to-midnight UTC time. The Company’s proportionate amount of the global network transaction fee rewards earned are calculated at the end of each transactional day (midnight to midnight). There are no other forms of variable considerations, such as discounts, rebates, refunds, credits, price concessions, incentives, performance bonuses, penalties, or other similar items.

The Company fully constrains all variable consideration as a result of ASC 606-10-32-12a because the amount of consideration is highly susceptible to factors outside of our control as defined by the Company’s customer’s payout methodology. The variable consideration is constrained until the Company can reasonably estimate the amount of mining rewards by the end of a given transactional day based on the actual amount of computing power provided to the mining pool operators. By then, the Company considers it is highly probable that a significant reversal in the amount of revenues will not occur and includes such variable consideration in the transaction price.

Step 4: The transaction price is allocated to the single performance obligation upon verification for the provision of computing power to the mining pool operator. There is a single performance obligation (i.e., computing power or

hashrate) for the contract; therefore, all consideration from the mining pool operator is allocated to this single performance obligation.

Step 5: The Company’s performance is complete in transferring the hashrate service over-time (midnight to midnight) to the customer and the customer obtains control of that asset.

In exchange for providing computing power, the Company is entitled to a pro-rata share of the fixed bitcoin awards earned over the measurement period, plus a pro-rata fractional share of the global transaction fee rewards for the respective measurement period, less net digital asset fees due to the mining pool operator over the measurement period, as applicable. The transaction consideration the Company receives is non-cash consideration, in the form of bitcoin. The Company measures the bitcoin at fair value on the date earned using the closing price of bitcoin on the date earned (midnight UTC).

There are no deferred revenues or other liability obligations recorded by the Company since there are no payments in advance of the performance. At the end of the 24 hour “midnight-to-midnight” period, there are no remaining performance obligations.

Revenues from data center services

The Company, through its wholly owned subsidiary ATL, previously provided data services, such as providing its customers with rack space, power and equipment, and cloud services, such as virtual services, virtual storage, and data backup services, generally based on monthly services provided at a defined price included in the contracts. The performance obligations are the services provided to a customer for the month based on the contract. The transaction price is the price agreed with the customer for the monthly services provided and the revenues are recognized monthly based on the services rendered for the month.

The total revenue recognized from data center services for the years ended September 30, 2023 and September 30, 2022 is $287 and $525, respectively. As of September 30, 2023, data center services are no longer provided to external customers.
Cost of Revenues

Cost of Revenues

Bitcoin mining segment (sole reportable segment)

The Company includes energy costs and external co-location mining hosting fees in cost of revenues.

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents includes cash in banks. None of the Company’s cash was restricted as of September 30, 2023 or September 30, 2022.

Accounts receivable

Accounts receivable

Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms. They are initially recorded at the invoiced amount upon the sale of goods or services to customers, and do not bear interest. The Company performs ongoing credit evaluation of its customers and management closely monitors outstanding receivables based on factors surrounding the credit risk of specific customers, historical trends, and other information. The carrying amount of accounts receivable is reviewed periodically for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best estimate of the amounts that will not be collected is recorded.

Accounts receivable, net consists of the following:

 

($ in thousands)

 

September 30,
2023

 

 

September 30,
2022

 

Accounts Receivable, gross

 

$

353

 

 

$

247

 

Provision for doubtful allowances

 

 

(348

)

 

 

(220

)

Total Accounts Receivable, net

 

$

5

 

 

$

27

 

 
Inventory

Inventory

Inventory balances mainly include supplies inventory used to maintain bitcoin mining facilities and are presented at net realizable value with cost being measured on a first-in, first-out basis. The Company periodically reviews inventories for unusable and obsolete items. Based on this evaluation, provisions are made to write inventories down to their net realizable value.

Prepaid expense and other current assets

Prepaid expense and other current assets

The Company records a prepaid expense for costs paid but not yet incurred. Those expected to be incurred within one year are recognized and shown as a short-term pre-paid expense. Any costs expected to be incurred outside of one year would be considered other long-term assets.

Other current assets are assets that consist of supplies, deposits, and interest receivable. Deposits and interest we expect to receive within one year are shown as short-term. Those we expect to receive outside of one year are shown as other long-term assets.
Bitcoin

Bitcoin

Bitcoin are included in current assets in the consolidated balance sheets due to the Company’s ability to sell it in a highly liquid marketplace and its intent to liquidate its bitcoin to support operations when needed. Bitcoin is recorded at cost less impairment. They are classified as indefinite-lived intangible assets in accordance with ASC 350, Intangibles — Goodwill and Other, and are accounted for in connection with the Company’s revenue recognition policy detailed above and in this Note 2 – Summary of Significant Accounting Policies. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment of bitcoin, the Company does not perform a qualitative assessment as allowed under ASC350-30-35-18A, and therefore goes directly to the quantitative assessment at the end of each reporting period. Quantitative impairment is measured using the lowest recognized selling price of the bitcoin at the time its fair value is being measured in accordance with ASC 820, Fair Value Measurement. Quoted prices are obtained from the Company's principal market (Coinbase). To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted as per ASC 350, Intangibles – Goodwill and Other.

Bitcoin earned by the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of bitcoin are included within operating activities as the Company sells its bitcoin within a short period of time subsequent to the mining of such bitcoin. The Company will evaluate time periods when the Company holds bitcoin for a longer period of time and sale so such would be recorded as investing activities. For the fiscal years ended September 30, 2023 and 2022, all cash proceeds received from sale of bitcoin were classified as operating cash flows in the accompanying consolidated statements of cash flows. Any realized gains or losses from such sales are included in total costs and expenses in the consolidated statements of operations and comprehensive loss. The Company accounts for its gains or losses in accordance with the "first-in, first-out" method of accounting.
Investment securities

Investment securities

Investment securities include debt securities and equity securities. Debt securities are classified as available for sale (“AFS”) and are reported as an asset in the Consolidated Balance Sheets at their estimated fair value. As the fair values of AFS debt securities change, the changes are reported net of income tax as an element of OCI, except for other-than-temporarily-impaired securities. When AFS debt securities are sold, the unrealized gains or losses are reclassified from OCI to non-interest income. Securities classified as AFS are securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as AFS would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company’s assets and liabilities, liquidity needs, decline in credit quality, and regulatory capital considerations.

Interest income is recognized based on the coupon rate and increased by accretion of discounts earned or decreased by the amortization of premiums paid over the contractual life of the security.

For individual debt securities where the Company either intends to sell the security or more likely than not will not recover all of its amortized cost, OTTI (other than temporary impairment) is recognized in earnings equal to the entire difference between the security's cost basis and its fair value at the balance sheet date. For individual debt securities for which a credit loss has been recognized in earnings, interest accruals and amortization and accretion of premiums and discounts are suspended when the credit loss is recognized. Interest received after accruals have been suspended is recognized in income on a cash basis.

The Company holds investments in both publicly held and privately held equity securities. However, as described in Note 1, the Company is primarily doing business of in the bitcoin mining sector, and not in the business of investing in securities.

Privately held equity securities are recorded at cost and adjusted for observable transactions for same or similar investments of the issuer (referred to as the measurement alternative) or impairment. All gains and losses on privately held equity securities, realized or unrealized, are recorded through gains or losses on equity securities on the consolidated statement of operations and comprehensive loss.

Publicly held equity securities are based on fair value accounting with unrealized gains or losses resulting from changes in fair value reflected as unrealized gains or losses on equity securities in our consolidated statements of operations and comprehensive loss.
Concentration Risk

Concentration Risk

At times throughout the year, the Company may maintain cash balances in certain bank accounts in excess of Federal Deposit Insurance Corporation ("FDIC") limits. The cash balance in excess of the FDIC limits was $28,965 and $20,213 for the periods ended September 30, 2023 and September 30, 2022, respectively. The accounts offered by the custodian of the Company’s bitcoin, which totaled $56,241 and $11,147 as of September 30, 2023 and September 30, 2022, respectively, are not insured by the FDIC. The Company has not experienced any losses in such accounts.

The Company has certain customers and vendors who individually represented 10% or more of the Company’s revenue or capital expenditures. In fiscal year ended September 30, 2023, revenue is concentrated with one mining pool operator and all bitcoins reside in one exchange. Refer to Note 16 - Major Customers and Vendors.

Leases

Leases

In accordance with ASC 842, the Company assesses whether an arrangement contains a lease at contract inception. When an arrangement contains a lease, the Company categorizes leases with contractual terms longer than twelve months as either operating or finance. Finance leases are generally those leases that allow us to substantially utilize or pay for the entire asset over its estimated life. Assets acquired under finance leases are recorded in “Fixed Assets, net.” All other leases are categorized as operating leases.

The Company records right-of use ("ROU") assets and lease obligations for its finance and operating leases, which are initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases is not easily determinable, the Company’s applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments.

Lease term is defined as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are defined as leases with an initial term of 12 months or less.

Some leases include multiple year renewal options. The Company’s decision to exercise these renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. Currently, the Company has no leases for which the option to renew is reasonably certain and therefore, options to renew were not factored into the calculation of its right of use asset and lease liability as of September 30, 2023.

For all classes of underlying assets, the Company has elected to not separate lease from non-lease components.
Stock -based compensation

Stock-based compensation

The Company follows the guidelines in FASB Codification Topic ASC 718-10 Compensation-Stock Compensation, which requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Stock-based compensation expense for stock options is recognized on a straight-line basis over the requisite service period. The Company may issue compensatory shares for services including, but not limited to, executive, management, accounting, operations, corporate communication, financial and administrative consulting services. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model. For equity awards granted by the Company that are contingent upon market-based conditions, the Company fair values these awards using the Monte Carlo simulation model. For discussion of accounting for restricted stock units ("RSUs"), please refer Note 14 – Stock-Based Compensation.
Loss per share

Loss per share

The Company reports loss per share in accordance with FASB ASC 260-10 “Earnings Per Share,” which provides for calculation of “basic” and “diluted” earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. As of September 30, 2023 and 2022, there were 300,698 and 7,069,706, respectively, units of common stock equivalents that consist of options, warrants, and restricted stock units, as well as 5,250,000 shares issuable upon preferred stock conversions, that were excluded from the current and prior period diluted loss per share calculation as their effect is anti-dilutive. Provided below is the loss per share calculation for the years ended September 30, 2023 and 2022:

 

 

For the Year
Ended September 30,

 

 ($ in thousands, except share and per share)

 

2023

 

 

2022

 

Continuing Operations

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

Loss from continuing operations

 

$

(132,160

)

 

$

(40,089

)

Preferred stock dividends

 

 

—

 

 

 

336

 

Loss from continuing operations attributable to common shareholders

 

$

(132,160

)

 

$

(40,425

)

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

Weighted- average common shares outstanding,
   basic

 

 

102,707,509

 

 

 

42,614,197

 

Dilutive impact of stock options and other share-based awards

 

 

—

 

 

 

—

 

Dilutive impact of contingent shares issued for business acquisition

 

 

—

 

 

 

—

 

Weighted- average common shares outstanding,
   diluted

 

 

102,707,509

 

 

 

42,614,197

 

Loss from continuing operations per common share attributable to common shareholders

 

 

 

 

 

 

Basic

 

$

(1.29

)

 

$

(0.95

)

Diluted

 

$

(1.29

)

 

$

(0.95

)

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

Loss on discontinued operations

 

$

(4,429

)

 

$

(17,237

)

Denominator

 

 

 

 

 

 

Weighted- average common shares outstanding,
   basic

 

 

102,707,509

 

 

 

42,614,197

 

Dilutive impact of stock options and other share-based awards

 

 

—

 

 

 

—

 

Dilutive impact of contingent shares issued for business acquisition

 

 

—

 

 

 

—

 

Weighted- average common shares outstanding,
   diluted

 

 

102,707,509

 

 

 

42,614,197

 

Loss on discontinued operations per common share attributable to common shareholders

 

 

 

 

 

 

Basic

 

$

(0.04

)

 

$

(0.40

)

Diluted

 

$

(0.04

)

 

$

(0.40

)
Property and equipment

Property and equipment

Property and equipment are stated at cost less accumulated depreciation. Construction in progress is the construction or development of assets that has not yet been placed in service for its intended use. Depreciation for machinery and equipment, mining equipment, buildings, furniture and fixtures and leasehold improvements commences once they are ready for its intended use. Leasehold improvements are depreciated on a straight-line basis over the shorter of their estimated useful lives or the terms of the related leases. Land is not depreciated.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

 

 

 

Useful life (years)

Land improvements

 

5 - 15

Building and building improvements

 

Shorter of lease term or 30 years

Leasehold improvements



Shorter of lease term or 15 years

Miners

 

3 - 5

Mining equipment

 

3 - 15

Infrastructure asset

 

Shorter of lease term or 15 years

Machinery and equipment

 

3 - 10

Furniture and fixtures

 

1 - 5

 

In accordance with the FASB ASC 360-10, "Property, Plant and Equipment” the carrying value of property and equipment, and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. During the years ended September 30, 2023 and September 30, 2022 the Company did not record an impairment expense for assets within its continuing operations. In connection with property and equipment in our discontinued operations, an impairment expense in the approximate amount of $32 was recognized in fiscal year ended September 30, 2022 and included in loss from discontinued operations in the consolidated statements of operations and comprehensive loss.

Business combinations, Intangible Assets and Goodwill

Business combinations, Intangible Assets and Goodwill

The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805, Business Combinations, where the total purchase price is allocated to the identified assets acquired and liabilities assumed based on their estimated fair values. The purchase price is allocated using the information currently available, and may be adjusted, up to one year from acquisition date, after obtaining more information regarding, among other things, asset valuations, liabilities assumed and revisions to preliminary estimates. The difference between the purchase price, including any contingent consideration, and the fair value of net assets acquired is recorded as goodwill. Contingent consideration transferred is initially recognized at fair value. Contingent consideration classified as a liability or an asset is remeasured to fair value each period until settlement, with changes recognized in profit or loss. Contingent consideration classified as equity is not remeasured. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

The Company reviews its indefinite lived intangibles and goodwill for impairment annually or whenever events or circumstances indicate that the carrying amount of the asset exceeds its fair value and may not be recoverable. In accordance with its policies, the Company performed an assessment of indefinite lived intangibles and goodwill for the year end September 30, 2023.

During the years ended September 30, 2023 and 2022, the Company incurred the following impairment losses:

 

 ($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Impairment of bitcoin

 

$

7,163

 

 

$

12,210

 

Impairment of goodwill

 

 

—

 

 

 

12,048

 

Total impairment loss

 

$

7,163

 

 

$

24,258

 

 

2023 Goodwill Impairment analysis

In accordance with ASC 350-30-35-18A, an entity may first perform a qualitative assessment to determine whether it is necessary to perform the quantitative impairment test, and has the unconditional option to bypass the qualitative assessment in any period and proceed directly to performing the quantitative analysis. In completing the 2023 annual goodwill impairment analysis, the Company elected to perform a quantitative assessment for our goodwill. The assessment involves comparing the carrying value of the entity, including goodwill, to its estimated fair value. In accordance with ASU 2017-04, a goodwill impairment charge is recorded for the amount by which the carrying value

unit exceeds the fair value of the reporting unit. In determining the fair value for which the quantitative assessment was performed, the Company engaged a valuation specialist to perform the quantitative impairment analysis. The valuation report included a combination of the market and income approach to test for goodwill impairment. The income approach is a valuation technique under which we estimate future cash flows using the financial forecast from the perspective of an unrelated market participant. Using historical trending and internal forecasting techniques, revenue is projected and applied to fixed and variable cost experience rates to arrive at the future cash flows. A terminal value was then applied to the projected cash flow stream. Future estimated cash flows were discounted to their present value to calculate the estimated fair value. The discount rate used was the value-weighted average of our estimated cost of capital derived using both known and estimated customary market metrics. In determining the estimated fair value, several factors were estimated, including projected operating results, growth rates, economic conditions, anticipated future cash flows and the discount rate. The market valuation approach evaluated the company's market value as compared to the net asset balance.

The fiscal year 2023 assessment indicated that no impairment of goodwill was necessary.

 

In completing the 2022 annual goodwill impairment analysis, there was an impairment recognized. In fiscal 2022, there was a sustained downturn in the price of bitcoin which resulted in the carrying value of the Company's goodwill to exceed the fair value.

The following table reflects goodwill activity for the years ended September 30, 2023 and 2022, respectively:

 

 ($ in thousands)

 

 

 

 

 

 

 

 

For the year ended September 30,

 

 

 

2023

 

 

2022

 

 Balance at beginning of Fiscal Year

 

$

—

 

 

$

12,048

 

 New Acquisitions

 

 

8,043

 

 

 

—

 

 Impairment

 

 

—

 

 

 

(12,048

)

 Balance at end of Fiscal Year

 

$

8,043

 

 

$

—

 

 

The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between two and twenty years as follows:

 

 

Useful life (years)

Websites

 

3

Software

 

4-7

Strategic contract

 

5
Fair Value Measurement of financial instruments, derivative asset and contingent consideration

Fair Value Measurement of financial instruments, derivative asset and contingent consideration

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

 

Level 1

Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Level 2

Quoted prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.

Level 3

Unobservable inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best information available in the circumstances.

 

The carrying value of cash, accounts payable, accrued expenses and short-term portion of loan payable approximate their fair values because of the short-term nature of these instruments. The carrying amount of the Company's long-term portion of loan payable is also stated at fair value since the stated rate of interest approximates market rates. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.

The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2023 and September 30, 2022:

September 30, 2023:

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Derivative investment asset

 

$

2,697

 

 

$

—

 

 

$

—

 

 

$

2,697

 

Investment in debt security

 

 

726

 

 

 

—

 

 

 

—

 

 

 

726

 

Total

 

$

3,423

 

 

$

—

 

 

$

—

 

 

$

3,423

 

 

September 30, 2022:

 

September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Derivative investment asset

 

$

2,956

 

 

$

—

 

 

$

—

 

 

$

2,956

 

Investment in debt security

 

 

610

 

 

 

—

 

 

 

—

 

 

 

610

 

Total

 

$

3,566

 

 

$

—

 

 

$

—

 

 

$

3,566

 

 

There were no transfers between Level 1, 2 or 3 during the years ended September 30, 2023 and 2022.

The activities of the financial instruments that are measured and recorded at fair value on the Company's balance sheets on a recurring basis during years ended September 30, 2023 and 2022 are included in Note 6 - Investments.
Income taxes

Income taxes

The Company’s calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. The Company recognizes tax liabilities for uncertain tax positions based on management’s estimate of whether it is more likely than not that additional taxes will be required. The Company had no uncertain tax positions as of September 30, 2023 and 2022.

Deferred income taxes are recognized in the consolidated financial statements for the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates. Temporary differences arise from net operating losses, differences in depreciation methods of archived images, and property and equipment, stock-based and other compensation, and other accrued expenses. A valuation allowance is established when it is determined that it is more likely than not that some or all of the deferred tax assets will not be realized.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S., or the various state jurisdictions, may be materially different from managements estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Interest and penalties are included in tax expense.

The Company includes interest and penalties arising from the underpayment of income taxes in the consolidated statements of operations and comprehensive loss in the provision for income taxes. As of September 30, 2023 and 2022, the Company had no accrued interest or penalties related to uncertain tax positions.

Income tax expense/(benefit) from operations for the years ended September 30, 2023 and 2022 was $0 and $0 in each period, which resulted primarily from maintaining a full valuation allowance against the Company's deferred tax assets.
Segment Reporting

Segment Reporting

The Company determines its operating segments based on how the Chief Operating Decision Maker views and evaluates operations, performance and allocates resources. Since June 30, 2022, the Company's only operating segment is the bitcoin mining business.
Discontinued Operations

Discontinued Operations

The Company deemed its energy operations to be discontinued operations due to its strategic decision to strictly focus on its bitcoin mining operations and divest of the majority of its energy assets.

Through its discontinued operations segment, the Company previously provided energy solutions through its wholly-owned subsidiaries CleanSpark LLC, CleanSpark Critical Power Systems, Inc., GridFabric, LLC, and Solar Watt Solutions, Inc. These solutions consisted of engineering, design and software solutions, custom hardware solutions, Open Automated Demand response, solar, energy storage for microgrid and distributed energy systems. The Company has since sold the majority of its assets related to the Energy Segment, which included software and intellectual property, and inventory. See Note 3 – Discontinued Operations.

Commitments and contingencies

Commitments and contingencies

The Company is subject to the possibility of various loss contingencies and loss recoveries, such as legal proceedings and claims arising out of its business. The Company considers the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as the Company’s ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. The Company regularly evaluates current information available with its external and internal counsel to determine whether an accrual is required, an accrual should be adjusted or a range of possible loss should be disclosed.
Recently issued accounting pronouncements

Recently issued accounting pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts. Under the current business combinations guidance, such assets and liabilities are recognized by the acquirer at fair value on the acquisition date. This new guidance is effective for the Company for its fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is evaluating its potential impact but does not expect the new standard to have a material impact on the Company's results of operations or cash flows.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments on October 1, 2020 (“ASU 2016-13”). ASU 2016-13 requires entities to use a new forward-looking “expected loss” model that reflects expected credit losses, including credit losses related to trade receivables, and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates, which generally will result in the earlier recognition of allowances for losses. As the Company was a smaller reporting company at the time of issuance of the ASU, the Company adopted the ASU effective October 1, 2023, and adoption of the new standard did not have a material impact on the Company's results of operations or cash flows.

In August 2020, the FASB issued ASU 2020-06, “Debt - Debt with Conversion and Other Options (subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (subtopic 815-40),” which reduces the number of accounting models in ASC 470-20 that require separate accounting for embedded conversion features. As a result, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the effective interest rate of convertible debt instruments will be closer to the coupon interest rate. Further, the diluted net income per share calculation for convertible instruments will require the Company to use the if-converted method. The treasury stock method should no longer be used to calculate diluted net income per share for convertible instruments. The amendment was effective for the Company effective October 1, 2022, including interim periods. The adoption did not have a material impact on the Company’s financial statements or disclosures.
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
 12 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Schedule of Accounts Receivable

Accounts receivable, net consists of the following:

 

($ in thousands)

 

September 30,
2023

 

 

September 30,
2022

 

Accounts Receivable, gross

 

$

353

 

 

$

247

 

Provision for doubtful allowances

 

 

(348

)

 

 

(220

)

Total Accounts Receivable, net

 

$

5

 

 

$

27

 

 
Schedule of Earnings Per Share Basic and Diluted Provided below is the loss per share calculation for the years ended September 30, 2023 and 2022:

 

 

For the Year
Ended September 30,

 

 ($ in thousands, except share and per share)

 

2023

 

 

2022

 

Continuing Operations

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

Loss from continuing operations

 

$

(132,160

)

 

$

(40,089

)

Preferred stock dividends

 

 

—

 

 

 

336

 

Loss from continuing operations attributable to common shareholders

 

$

(132,160

)

 

$

(40,425

)

 

 

 

 

 

 

 

Denominator

 

 

 

 

 

 

Weighted- average common shares outstanding,
   basic

 

 

102,707,509

 

 

 

42,614,197

 

Dilutive impact of stock options and other share-based awards

 

 

—

 

 

 

—

 

Dilutive impact of contingent shares issued for business acquisition

 

 

—

 

 

 

—

 

Weighted- average common shares outstanding,
   diluted

 

 

102,707,509

 

 

 

42,614,197

 

Loss from continuing operations per common share attributable to common shareholders

 

 

 

 

 

 

Basic

 

$

(1.29

)

 

$

(0.95

)

Diluted

 

$

(1.29

)

 

$

(0.95

)

 

 

 

 

 

 

Discontinued Operations

 

 

 

 

 

 

Numerator

 

 

 

 

 

 

Loss on discontinued operations

 

$

(4,429

)

 

$

(17,237

)

Denominator

 

 

 

 

 

 

Weighted- average common shares outstanding,
   basic

 

 

102,707,509

 

 

 

42,614,197

 

Dilutive impact of stock options and other share-based awards

 

 

—

 

 

 

—

 

Dilutive impact of contingent shares issued for business acquisition

 

 

—

 

 

 

—

 

Weighted- average common shares outstanding,
   diluted

 

 

102,707,509

 

 

 

42,614,197

 

Loss on discontinued operations per common share attributable to common shareholders

 

 

 

 

 

 

Basic

 

$

(0.04

)

 

$

(0.40

)

Diluted

 

$

(0.04

)

 

$

(0.40

)
Schedule of Estimated Useful Life of Asset

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:

 

 

 

Useful life (years)

Land improvements

 

5 - 15

Building and building improvements

 

Shorter of lease term or 30 years

Leasehold improvements



Shorter of lease term or 15 years

Miners

 

3 - 5

Mining equipment

 

3 - 15

Infrastructure asset

 

Shorter of lease term or 15 years

Machinery and equipment

 

3 - 10

Furniture and fixtures

 

1 - 5
Schedule of Impairment Loss

During the years ended September 30, 2023 and 2022, the Company incurred the following impairment losses:

 

 ($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Impairment of bitcoin

 

$

7,163

 

 

$

12,210

 

Impairment of goodwill

 

 

—

 

 

 

12,048

 

Total impairment loss

 

$

7,163

 

 

$

24,258

 
Schedule of Segment Wise Goodwill Activity

The following table reflects goodwill activity for the years ended September 30, 2023 and 2022, respectively:

 

 ($ in thousands)

 

 

 

 

 

 

 

 

For the year ended September 30,

 

 

 

2023

 

 

2022

 

 Balance at beginning of Fiscal Year

 

$

—

 

 

$

12,048

 

 New Acquisitions

 

 

8,043

 

 

 

—

 

 Impairment

 

 

—

 

 

 

(12,048

)

 Balance at end of Fiscal Year

 

$

8,043

 

 

$

—

 
Schedule of Finite Lived Intangible Assets Useful Lives

The Company amortizes intangible assets with finite lives over their estimated useful lives, which range between two and twenty years as follows:

 

 

Useful life (years)

Websites

 

3

Software

 

4-7

Strategic contract

 

5
Schedule of Financial Instruments

The following table presents the Company’s financial instruments that are measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of September 30, 2023 and September 30, 2022:

September 30, 2023:

 

September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Derivative investment asset

 

$

2,697

 

 

$

—

 

 

$

—

 

 

$

2,697

 

Investment in debt security

 

 

726

 

 

 

—

 

 

 

—

 

 

 

726

 

Total

 

$

3,423

 

 

$

—

 

 

$

—

 

 

$

3,423

 

 

September 30, 2022:

 

September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Amount

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Derivative investment asset

 

$

2,956

 

 

$

—

 

 

$

—

 

 

$

2,956

 

Investment in debt security

 

 

610

 

 

 

—

 

 

 

—

 

 

 

610

 

Total

 

$

3,566

 

 

$

—

 

 

$

—

 

 

$

3,566

 
v3.23.3
3. DISCONTINUED OPERATIONS (Tables)
 12 Months Ended
Sep. 30, 2023
Discontinued Operations and Disposal Groups [Abstract]  
Schedule of discontinued operations . Provided below are the key areas of the financials that constitute the discontinued operations:

 

 

September 30,
2023

 

 

September 30,
2022

 

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Accounts receivable, net

 

$

126

 

 

$

2,813

 

Inventory

 

 

319

 

 

 

4,400

 

Prepaid expense and other current assets

 

 

—

 

 

 

213

 

Total current assets held for sale

 

$

445

 

 

$

7,426

 

 

 

 

 

 

 

Property and equipment, net

 

 

—

 

 

 

11

 

Operating lease right of use asset

 

 

—

 

 

 

665

 

Intangible assets, net

 

 

—

 

 

 

869

 

Long-term assets held for sale

 

$

—

 

 

$

1,545

 

 

 

 

 

 

 

 

Total assets held for sale

 

$

445

 

 

$

8,971

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

978

 

 

$

919

 

Contract liabilities

 

 

—

 

 

 

117

 

Operating lease liability

 

 

197

 

 

 

163

 

Total current liabilities held for sale

 

 

1,175

 

 

 

1,199

 

Long-term liabilities

 

 

 

 

 

 

Operating lease liability, net of current portion

 

 

—

 

 

 

512

 

Total liabilities held for sale

 

$

1,175

 

 

$

1,711

 

 

 

For the twelve months ended

 

 

September 30,
2023

 

 

September 30,
2022

 

Revenues, net

 

 

 

 

 

 

Energy hardware, software and services revenue

 

$

158

 

 

$

9,667

 

Total revenues, net

 

 

158

 

 

 

9,667

 

 

 

 

 

 

 

Costs and expenses

 

 

 

 

 

 

Cost of revenues (exclusive of depreciation and amortization shown below)

 

 

936

 

 

 

8,711

 

Professional fees

 

 

115

 

 

 

116

 

Payroll expenses

 

 

426

 

 

 

4,911

 

General and administrative expenses

 

 

413

 

 

 

1,641

 

Impairment expense - fixed assets

 

 

—

 

 

 

32

 

Impairment expense - intangibles

 

—

 

 

 

1,402

 

Impairment expense - other

 

 

4,181

 

 

 

872

 

Impairment expense - goodwill

 

—

 

 

 

7,001

 

Depreciation and amortization

 

 

—

 

 

 

2,215

 

Total costs and expenses

 

 

6,071

 

 

 

26,901

 

 

 

 

 

 

 

Loss from operations

 

$

(5,913

)

 

$

(17,234

)

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

Gain on disposal of assets

 

 

1,508

 

 

 

—

 

Interest expense

 

 

(24

)

 

 

(3

)

Total other income (expense)

 

 

1,484

 

 

 

(3

)

 

 

 

 

 

 

Loss before income tax (expense) benefit

 

 

(4,429

)

 

 

(17,237

)

Income tax benefit (expense)

 

 

—

 

 

 

—

 

Net loss attributable to common shareholders

 

$

(4,429

)

 

$

(17,237

)
v3.23.3
4. ACQUISITIONS (Tables)
 12 Months Ended
Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]  
Schedule of Coinmaker Purchase Price Allocation

The preliminary allocation of the purchase price of the assets acquired are summarized below:

 


($ in thousands)

 

Preliminary
Allocation at
Acquisition Date

 

Land lease - right of use asset

 

$

266

 

Operating lease liability

 

 

(266

)

Building

 

 

1,328

 

Infrastructure

 

 

8,061

 

Total purchase price

 

$

9,389

 
Schedule of MIG Consideration

The Company accounted for this transaction as an acquisition of a business. The fair value of the consideration given to Mawson and the other sellers in connection with the transaction and the allocation of the purchase price in accordance with ASC 820 were as follows:

 


($ in thousands)

 

Fair Value

 

Cash

 

$

22,518

 

Financing provided by seller

 

 

6,500

 

1,590,175 shares of CLSK common stock

 

 

4,803

 

Total purchase price

 

$

33,821

 

 

 

 

 

Contingent Consideration

 

 

 

Earn-out Shares of CLSK common stock

 

 

3,325

 

Megawatt earnout (up to $2,000 max)

 

 

2,000

 

Total contingent consideration

 

$

5,325

 

 

 

 

 

Total purchase sale agreement consideration-Combined

 

$

39,146

 
Schedule of MIG Purchase Price Allocation


($ in thousands)

 

Allocation at
Acquisition Date

 

Right of use lease asset

 

$

5,010

 

Lease liability assumed

 

 

(5,100

)

Building

 

 

13,654

 

Infrastructure asset

 

 

4,465

 

Miners

 

 

12,914

 

Machinery and equipment

 

 

160

 

Goodwill

 

 

8,043

 

Total

 

$

39,146

 
Schedule of WAHA and SPRE Consideration

The Company determined the fair value of the consideration given to the Sellers in connection with the transaction and the allocation of the purchase price in accordance with ASC 820 were as follows:

 

Consideration:
($ in thousands)

 

Fair Value

 

Cash

 

$

19,772

 

Financing provided by SPRE

 

 

1,962

 

Mortgage assumed

 

 

2,158

 

Total Consideration

 

$

23,892

 
Schedule of WAHA and SPRE Purchase Price Allocation

Purchase Price Allocation:
($ in thousands)

 

Allocation at
Acquisition
Date

 

Land

 

$

100

 

Building/Improvements

 

 

14,700

 

Miners

 

 

9,092

 

Total

 

$

23,892

 
Schedule Unaudited Pro Forma Information Assuming Acquisitions

 

For the Year Ended

 

 ($ in thousands, except share and per share)

 

September 30, 2022

 

Net sales from continuing operations

 

$

209,304

 

Loss from continuing operations attributable to common shareholders

 

$

(33,758

)

Loss from continuing operations per common share - basic

 

$

(0.75

)

Weighted average common shares outstanding – basic

 

 

45,305,262

 

Loss from continuing operations per common share - diluted

 

$

(0.75

)

Weighted average common shares outstanding – diluted

 

 

45,305,262

 
v3.23.3
5. BITCOIN (Tables)
 12 Months Ended
Sep. 30, 2023
Common Domain Members [Abstract]  
Schedule of activities Of The Bitcoin The following table presents the activities of the Company's bitcoin holdings for the years ended September 30, 2023 and 2022:

 

 ($ in thousands)

 

 

 

 

 

 

 

 

For the year ended September 30,

 

 

 

2023

 

 

2022

 

Balance at beginning of Fiscal Year

 

$

11,147

 

 

$

23,603

 

Addition of bitcoin

 

 

168,121

 

 

 

131,000

 

Carrying amount of bitcoin sold

 

 

(114,915

)

 

 

(130,635

)

Bitcoin issued for services

 

 

(720

)

 

 

(611

)

Bitcoin issued for software

 

 

(229

)

 

 

—

 

Impairment loss

 

 

(7,163

)

 

 

(12,210

)

Balance at end of Fiscal Year

 

$

56,241

 

 

$

11,147

 

 
v3.23.3
6. INVESTMENTS (Tables)
 12 Months Ended
Sep. 30, 2023
Schedule of Investments [Abstract]  
Summary of Reconciliation of carrying value of all investments

Refer the table below for a reconciliation of carrying value of all investments for the year ended September 30, 2023 and 2022:

 

 ($ in thousands)

 

ILAL
Debt
Securities

 

 

ILAL
Derivative
Asset

 

 

ILAL
Equity
Securities

 

 

Law
Clerk
Equity
Securities

 

Balance as of September 30, 2021

 

$

494

 

 

$

4,906

 

 

$

11

 

 

$

250

 

Shares sold during the year

 

 

—

 

 

 

—

 

 

 

(10

)

 

 

—

 

Realized gain on fair value recognized in other income (expense)

 

 

—

 

 

 

—

 

 

 

1

 

 

 

—

 

Unrealized loss recognized in other income (expense)

 

 

—

 

 

 

(1,950

)

 

 

(2

)

 

 

—

 

Impairment loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(250

)

Unrealized gain on fair value recognized in Other comprehensive income

 

 

116

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance as of September 30, 2022

 

$

610

 

 

$

2,956

 

 

$

—

 

 

$

—

 

Unrealized loss on derivative asset

 

 

—

 

 

 

(259

)

 

 

 

 

 

 

Unrealized gain on fair value recognized in other comprehensive income

 

 

116

 

 

 

—

 

 

 

—

 

 

 

—

 

Balance as of September 30, 2023

 

$

726

 

 

$

2,697

 

 

$

—

 

 

$

—

 
v3.23.3
7. PROPERTY AND EQUIPMENT (Tables)
 12 Months Ended
Sep. 30, 2023
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment

Property and equipment consist of the following as of September 30, 2023 and September 30, 2022:

 

 ($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Land

 

$

4,144

 

 

$

2,978

 

Land improvements

 

 

1,564

 

 

 

1,530

 

Building and improvements

 

 

52,198

 

 

 

32,332

 

Leasehold improvements

 

 

672

 

 

 

114

 

Miners

 

 

527,868

 

 

 

356,501

 

Mining equipment

 

 

18,706

 

 

 

17,587

 

Infrastructure

 

 

45,612

 

 

 

12,422

 

Machinery and equipment

 

 

1,907

 

 

 

1,269

 

Furniture and fixtures

 

 

386

 

 

 

331

 

Construction in progress

 

 

81,875

 

 

 

4,816

 

Total

 

$

734,932

 

 

$

429,880

 

Less: accumulated depreciation

 

 

(170,537

)

 

 

(53,099

)

Property and equipment, net

 

$

564,395

 

 

$

376,781

 
v3.23.3
8. INTANGIBLE ASSETS (Tables)
 12 Months Ended
Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Intangible Assets

Intangible assets consist of the following as of September 30, 2023 and 2022:

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 ($ in thousands)

 

Intangible assets

 

 

Accumulated amortization

 

 

Net intangible assets

 

 

Intangible assets

 

 

Accumulated amortization

 

 

Net intangible assets

 

Software

 

$

440

 

 

$

(90

)

 

$

350

 

 

$

210

 

 

$

—

 

 

$

210

 

Websites

 

 

15

 

 

 

(8

)

 

 

7

 

 

 

23

 

 

 

(11

)

 

 

12

 

Strategic Contract

 

 

9,800

 

 

 

(5,554

)

 

 

4,246

 

 

 

9,800

 

 

 

(3,537

)

 

 

6,263

 

Total

 

$

10,255

 

 

$

(5,652

)

 

$

4,603

 

 

$

10,033

 

 

$

(3,548

)

 

$

6,485

 
Schedule of Amortization Expense of Intangible Assets

The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows:

 

Fiscal Year

 

 

 

 ($ in thousands)

 

September 30, 2023

 

2024

 

 

2,053

 

2025

 

 

2,050

 

2026

 

 

415

 

2027

 

 

78

 

2028

 

 

7

 

Total

 

$

4,603

 
v3.23.3
9. LEASES (Tables)
 12 Months Ended
Sep. 30, 2023
Leases [Abstract]  
Lease costs

The Company's lease costs recognized in the Consolidated Statements of Operations and Comprehensive Loss consist of the following:

 

 

 

For the year ended

 

 ($ in thousands)

 

September 30,
2023

 

 

September 30,
2022

 

Operating lease cost (1)

 

$

267

 

 

$

113

 

Finance lease cost:

 

 

 

 

 

 

Depreciation expense of financed assets

 

$

197

 

 

$

379

 

Interest on lease obligations

 

$

33

 

 

$

38

 

 

(1)
Included in general and administrative expenses.
Other Lease Information

Other lease information is as follows:

 

 

 

For the year ended

 

 ($ in thousands)

 

September 30,
2023

 

 

September 30,
2022

 

Cash paid for amounts included in
   measurement of lease obligations:

 

 

 

 

 

 

Operating cash outflows from operating leases

 

$

274

 

 

$

131

 

Operating cash outflows from finance leases

 

$

33

 

 

$

38

 

Financing cash outflows from finance leases

 

$

301

 

 

$

519

 
Weighted-average Remaining Lease Terms

 

September 30,
2023

 

 

September 30,
2022

 

Weighted-average remaining lease term -
   operating leases

 

3.8 years

 

 

1.5 years

 

Weighted-average remaining lease term -
   finance leases

 

0.9 years

 

 

1.5 years

 

Weighted-average discount rate - operating leases

 

 

5.40

%

 

 

4.50

%

Weighted-average discount rate - finance leases

 

 

5.50

%

 

 

5.50

%
Contractual Maturity of Lease Liability

The following is a schedule of the Company's lease liabilities by contractual maturity as of September 30, 2023:

 

($ in thousands)

Fiscal Year

 

Operating
Leases

 

 

Finance
Leases

 

2024

 

$

214

 

 

$

134

 

2025

 

 

201

 

 

 

9

 

2026

 

 

203

 

 

 

—

 

2027

 

 

106

 

 

 

—

 

2028

 

41

 

 

 

—

 

Gross lease liabilities

 

 

765

 

 

 

143

 

Less: imputed interest

 

 

(65

)

 

 

(3

)

Present value of lease liabilities

 

$

700

 

 

$

140

 

Less: Current portion of lease liabilities

 

 

(181

)

 

 

(130

)

Total lease liabilities, net of current portion

 

$

519

 

 

$

10

 
v3.23.3
9. LOANS (Tables)
 12 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Schedule of Loans Outstanding The following table reflects our outstanding loans as of September 30, 2023 and September 30, 2022:

 

 

 

 

 

 

 

September 30, 2023

 

 

September 30, 2022

 

($ in thousands)

 

Maturity Date

 

Rate

 

Debt Balance, Net

 

 

Debt Balance, Net

 

Master Equipment Financing Arrangement

 

Apr-25

 

13.80%

 

$

11,603

 

 

$

17,073

 

Mortgage - Corporate Facility

 

Apr-25

 

10.00%

 

 

1,950

 

 

 

—

 

SPRE Commercial Group, Inc.

 

Aug-23

 

12.00%

 

 

—

 

 

 

1,807

 

Marquee Funding Partners

 

Jul-26 - Feb-27

 

13.00%

 

 

1,725

 

 

 

2,127

 

Auto & Equipment Loans

 

Oct-26 - Jun -29

 

0.99-9.60%

 

 

625

 

 

 

212

 

Total Loans Outstanding

 

 

 

 

 

$

15,903

 

 

$

21,219

 

Less: current portion of long-term loans

 

 

 

 

 

 

(6,992

)

 

 

(7,786

)

Long-term loans, excluding current portion

 

 

 

 

 

$

8,911

 

 

$

13,433

 
Schedule of Principal Amount of Loan Maturities Due Over the Years

The following table reflects the principal amount of loan maturities due over the next five years and beyond as of September 30, 2023:

 

($ in thousands)

 

5-Year Loan Maturities

 

Outstanding Loan

 

FY 2024

 

 

FY 2025

 

 

FY 2026

 

 

FY 2027

 

 

FY 2028

 

 

Thereafter

 

 

Total

 

Master Equipment Financing Arrangement

 

$

6,509

 

 

$

5,221

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

11,730

 

Mortgage - Corporate Facility

 

 

—

 

 

 

2,000

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2,000

 

Marquee Funding Partners

 

 

458

 

 

 

521

 

 

 

592

 

 

 

154

 

 

 

—

 

 

 

—

 

 

 

1,725

 

Auto & Equipment Loans

 

 

152

 

 

 

159

 

 

 

147

 

 

 

83

 

 

 

69

 

 

 

15

 

 

 

625

 

Total principal amount of loan payments by fiscal year

 

$

7,119

 

 

$

7,901

 

 

$

739

 

 

$

237

 

 

$

69

 

 

$

15

 

 

$

16,080

 

Unamortized deferred financing costs and discounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(177

)

Total loan book value as of September 30, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

15,903

 

 
v3.23.3
11. INCOME TAXES (Tables)
 12 Months Ended
Sep. 30, 2023
Income Tax Disclosure [Abstract]  
Components of Provision for Income Tax Expense

The components of the provision for income taxes in the years ended September 30, 2023 and 2022 were as follows:

 

($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Current:

 

 

 

 

 

 

     Federal

 

$

—

 

 

$

—

 

     State

 

 

—

 

 

 

—

 

Deferred:

 

 

 

 

 

 

     Federal

 

$

857

 

 

$

—

 

     State

 

 

—

 

 

 

—

 

Provision for income taxes

 

$

857

 

 

$

—

 
Schedule of Income (Loss) before Income Taxes

For the years ended September 30, 2023 and 2022 the Company's loss from continuing operations before provision for income taxes were as follows:

 

($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Domestic

 

$

(131,303

)

 

$

(40,089

)

Foreign

 

 

—

 

 

 

—

 

Loss before income taxes

 

$

(131,303

)

 

$

(40,089

)
Statutory U.S federal income tax rate

 

($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Tax benefit at federal statutory rate

 

$

(27,574

)

 

$

(8,417

)

State taxes (net of federal benefit)

 

 

5,820

 

 

 

(303

)

Meals and entertainment

 

 

18

 

 

 

30

 

Stock based compensation

 

 

356

 

 

 

2,061

 

162(m) Excess Executive Compensation

 

 

6,823

 

 

 

—

 

ISO - Disqualifying Dispositions

 

 

(127

)

 

 

(58

)

Deferred only adjustment

 

 

(13,794

)

 

 

4,408

 

R&D Credits

 

 

—

 

 

 

(200

)

Discontinued Operations

 

 

—

 

 

 

(3,750

)

Other

 

 

485

 

 

 

(3

)

Change in Valuation Allowance

 

 

28,850

 

 

 

6,232

 

 

 

$

857

 

 

$

—

 
Schedule of Deferred Tax Assets and Liabilities

The significant components of the Company's deferred tax assets and liabilities as of September 30, 2023 and 2022 were as follows:

 

($ in thousands)

 

September 30, 2023

 

 

September 30, 2022

 

Deferred Tax Assets:

 

 

 

 

 

 

     Right of Use - Lease Liability

 

$

183

 

 

$

269

 

     Charitable Contributions

 

 

64

 

 

 

7

 

     Section 1231 Loss Carryforwards

 

 

983

 

 

 

1,183

 

     Tax Credits

 

 

200

 

 

 

401

 

     Stock Based Compensation

 

 

4,512

 

 

 

3,740

 

     Interest Expense Carryforwards

 

 

653

 

 

 

194

 

     Intangible Assets

 

 

6,999

 

 

 

—

 

     Net Operating Loss carryforwards

 

 

66,333

 

 

 

93,052

 

     Other

 

 

2,078

 

 

 

—

 

     Gross Deferred Tax Assets

 

$

82,005

 

 

$

98,846

 

Valuation Allowance

 

 

(54,608

)

 

 

(28,756

)

Total deferred tax assets, net of valuation allowance

 

$

27,397

 

 

$

70,090

 

 

 

 

 

 

 

 

Deferred Tax Liabilities

 

 

 

 

 

 

     Right of Use - Lease Asset

 

$

(180

)

 

$

(265

)

     Prepaid Expenses

 

 

(636

)

 

 

(222

)

     Unrealized Gain on Derivative Asset

 

 

—

 

 

 

(85

)

     Unrealized Gain on Equity Security

 

 

—

 

 

 

(63

)

     Gain/Loss on Sale of Assets not on TR

 

 

—

 

 

 

(26

)

     Other

 

 

(898

)

 

 

—

 

     Fixed Assets & Intangible Assets

 

 

(26,540

)

 

 

(69,429

)

Net Deferred Tax Liability

 

$

(857

)

 

$

—

 
Schedule of non current deferred tax assets and liabilities table text block

For balance sheet presentation, the Company nets non-current deferred tax assets (net of valuation allowance) and liabilities. The following table summarizes the presentation:

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

 

 

 

 

 

 

Net Non-current Deferred Tax Liabilities

 

$

(857

)

 

$

—

 

In accordance with ASC 740, Accounting for Income Taxes, the Company evaluates its deferred income taxes to determine if valuation allowances are required. Pursuant to U.S. income tax accounting standards, companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a “more-likely-than-not” standard. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. The Company considers the scheduled reversal of deferred tax liabilities. To fully utilize the net operating loss (“NOL”) carryforward, the Company will need to generate sufficient future taxable income in each respective jurisdiction. Due primarily to the Company’s history of losses, it is more likely than not that all or a portion of its deferred tax assets as of September 30, 2023 will not be realized.

Schedule of Valuation Allowance

The Company recorded a valuation allowance to offset the DTA that is not considered realizable for the tax year ended September 30, 2023 and September 30, 2022.

 

 

 

As of September 30,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Valuation Allowance

 

$

(54,608

)

 

$

(28,756

)

 

 

 

 

 

 

 
v3.23.3
13. STOCK WARRANTS (Tables)
 12 Months Ended
Sep. 30, 2023
Stock Warrants  
Summary of stock warrant activity

The following is a summary of stock warrant activity during the years ended September 30, 2023 and 2022.

 

 

Number of
Warrant
Shares

 

 

Weighted
Average
Exercise
Price ($)

 

Balance, September 30, 2021

 

 

615,554

 

 

$

30.72

 

Warrants granted

 

 

—

 

 

 

—

 

Warrants expired

 

 

(413,334

)

 

 

39.38

 

Balance, September 30, 2022

 

 

202,220

 

 

$

13.03

 

Warrants granted

 

 

—

 

 

 

—

 

Warrants expired

 

 

(16,660

)

 

 

8.00

 

Balance, September 30, 2023

 

 

185,560

 

 

$

13.49

 

 
v3.23.3
14. STOCK-BASED COMPENSATION (Tables)
 12 Months Ended
Sep. 30, 2023
Equity [Abstract]  
Schedule of Share-Based Payment Arrangement, Option, Activity

The following is a summary of stock option activity during the year ended September 30, 2023 and 2022:

 

 

Number of
Option Shares

 

 

Weighted Average
Exercise Price ($)

 

Balance, September 30, 2021

 

 

1,547,029

 

 

$

18.35

 

Options granted

 

 

215,750

 

 

$

14.47

 

Options expired

 

 

—

 

 

$

-

 

Options canceled/forfeited

 

 

(238,418

)

 

$

15.40

 

Options exercised

 

 

(105,423

)

 

$

7.43

 

Balance, September 30, 2022

 

 

1,418,938

 

 

$

19.11

 

Options granted

 

 

789,750

 

 

$

5.72

 

Options expired

 

 

(44,600

)

 

$

6.05

 

Options canceled/forfeited

 

 

(193,630

)

 

$

10.77

 

Options exercised

 

 

—

 

 

$

-

 

Balance, September 30, 2023

 

 

1,970,458

 

 

$

14.86

 
Schedule of Share-Based Payment Arrangement, Restricted Stock Unit, Activity

The following table summarizes the performance-based restricted stock units at the maximum award amounts based upon the respective performance share agreements. Actual shares that will vest depend on the attainment of the performance-based criteria.

 

 

Number of
Shares

 

 

Weighted
Average
Fair Value
Per Share

 

 

Aggregate
Intrinsic Value

 

Outstanding at September 30, 2021

 

 

10,995

 

 

$

27.73

 

 

$

—

 

Granted

 

 

7,306,250

 

 

 

7.18

 

 

 

 

Vested

 

 

(1,757,938

)

 

 

13.37

 

 

 

 

Forfeited

 

 

(110,759

)

 

 

15.27

 

 

 

 

Outstanding at September 30, 2022

 

 

5,448,548

 

 

$

4.93

 

 

$

17,326

 

Granted

 

 

3,880,552

 

 

 

3.65

 

 

 

 

Vested

 

 

(3,813,617

)

 

 

4.58

 

 

 

 

Cancelled

 

 

(40,000

)

 

 

-

 

 

 

 

Forfeited

 

 

(4,048

)

 

 

29.34

 

 

 

 

Outstanding at September 30, 2023

 

 

5,471,435

 

 

$

4.18

 

 

$

20,846

 
Schedule of Fair Value Assumption Restricted Stock Unit

The Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2023:

 

Fair value assumptions Options:

 

September 30, 2023

 

Risk free interest rate

 

2.65% - 4.44%

 

Expected term (years)

 

5.06 - 5.85

 

Expected volatility

 

157.1% - 194.9%

 

Expected dividends

 

 

0

%

The Black-Scholes model utilized the following inputs to value the options granted during year ended September 30, 2022:

 

Fair value assumptions Options:

 

September 30, 2022

 

Risk free interest rate

 

1.04% - 3.65%

 

Expected term (years)

 

4.99 - 7.35

 

Expected volatility

 

187.2% - 533.0%

 

Expected dividends

 

 

0

%
The inputs of market-based RSUs for each of the fiscal years are as follows:

 

Fair value assumptions - Market-based RSUs granted:

 

September 30, 2023

 

 

September 30, 2022

Risk free interest rate

 

 

4.59

%

 

0.14% - 1.26%

Expected term (years)

 

 

10.00

 

 

1.00 - 5.00

Expected volatility

 

 

129.70

%

 

111.37% - 172.18%

Cost of equity

 

 

21.55

%

 

20.00% - 21.00%
v3.23.3
17. COMMITMENTS AND CONTINGENCIES (Tables)
 12 Months Ended
Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Guarantor Obligations [Table Text Block]

The following table sets forth certain information concerning our obligations to make contractual future payments towards our agreements as of September 30, 2023:

 

 ($ in thousands)

 

Fiscal Year 2024

 

 

Fiscal Year 2025

 

 

Fiscal Year 2026

 

 

Fiscal Year 2027

 

 

Fiscal Year 2028

 

 

Thereafter

 

 

Total

 

Recorded contractual obligations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease obligations

 

$

214

 

 

$

201

 

 

$

203

 

 

$

106

 

 

$

41

 

 

$

—

 

 

$

765

 

Finance lease obligations

 

 

134

 

 

 

9

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

143

 

Loans

 

 

8,766

 

 

 

8,463

 

 

 

821

 

 

 

94

 

 

 

74

 

 

 

15

 

 

 

18,233

 

Construction in progress

 

 

33,293

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

33,293

 

Total

 

$

42,407

 

 

$

8,673

 

 

$

1,024

 

 

$

200

 

 

$

115

 

 

$

15

 

 

$

52,434

 

Contingent consideration

Mawson Property Acquisition

In connection with the Mawson Transaction (as discussed in Note 4), the Company and seller agreed to up to $2,000 of seller financing if the Company received, by April 8, 2023, written confirmation reasonably acceptable to it that it will be able to utilize at least 150 MW of additional power at the site. Such written confirmation was not

received by April 8, 2023. See Note 4 for additional description of the resolution of this contingency. As of September 30, 2023, the Company has $0 recorded as contingent liability associated with the Mawson Transaction.

v3.23.3
16. MAJOR CUSTOMERS AND VENDORS (Tables)
 12 Months Ended
Sep. 30, 2023
Accounting Policies [Abstract]  
Purchase and Supply Commitment, Excluding Long-Term Commitment [Text Block]

The Company had the following significant suppliers of mining equipment, with the percentage based on purchase amounts.

 

 

Year Ended

 

 

September 30, 2023

 

 

September 30, 2022

 

Cryptech Solutions

 

 

25

%

 

 

88

%

Bitmain Technologies Ltd.

 

 

75

%

 

 

12

%
v3.23.3
1. ORGANIZATION AND LINE OF BUSINESS (Details Narrative)
 12 Months Ended
Sep. 30, 2023
Facility
Servers
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]  
Mining Capacity 230
GA  
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]  
Number of facility | Facility 5
Mining Capacity 150
NY  
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]  
Mining Capacity 50
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Accounting Policies [Abstract]    
Accounts Receivable, gross $ 353 $ 247
Provision for doubtful allowances (348) (220)
Total Accounts Receivable, net $ 5 $ 27
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Basic Earnings and Diluted Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Numerator    
Loss from continuing operations $ (132,160) $ (40,089)
Loss on discontinued operations (4,429) (17,237)
Preferred stock dividends $ 0 $ 336
Denominator    
Weighted average common shares outstanding- basic 102,707,509 42,614,197
Weighted average common shares outstanding - diluted 102,707,509 42,614,197
Loss from continuing operations per common share attributable to common shareholders    
Basic $ (1.29) $ (0.95)
Diluted (1.29) (0.95)
Loss on discontinued operations per common share attributable to common shareholders    
Basic (0.04) (0.4)
Diluted $ (0.04) $ (0.4)
Continuing Operations [Member]    
Numerator    
Loss from continuing operations $ (132,160) $ (40,089)
Preferred stock dividends 0 336
Loss from continuing operations attributable to common shareholders $ (132,160) $ (40,425)
Denominator    
Weighted average common shares outstanding- basic 102,707,509 42,614,197
Dilutive impact of stock options and other share-based awards 0 0
Dilutive impact of contingent shares issued for business acquisition 0 0
Weighted average common shares outstanding - diluted 102,707,509 42,614,197
Loss from continuing operations per common share attributable to common shareholders    
Basic $ (1.29) $ (0.95)
Diluted $ (1.29) $ (0.95)
Discontinued Operations [Member]    
Numerator    
Loss on discontinued operations $ (4,429) $ (17,237)
Denominator    
Weighted average common shares outstanding- basic 102,707,509 42,614,197
Dilutive impact of stock options and other share-based awards 0 0
Dilutive impact of contingent shares issued for business acquisition 0 0
Weighted average common shares outstanding - diluted 102,707,509 42,614,197
Loss on discontinued operations per common share attributable to common shareholders    
Basic $ (0.04) $ (0.4)
Diluted $ (0.04) $ (0.4)
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING ACCOUNTING POLICIES - Useful Life of Property and Equipment (Details)
Sep. 30, 2023
Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 5 years
Land Improvements [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 15 years
Building [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 30 years
Leasehold Improvements [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 15 years
Miners [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 3 years
Miners [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 3 years
Miners [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 5 years
Mining Equipment [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 3 years
Mining Equipment [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 15 years
Infrastructure Asset [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 15 years
Machinery and Equipment [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 3 years
Machinery and Equipment [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 10 years
Furniture and Fixtures [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 1 year
Furniture and Fixtures [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Property, Plant and Equipment, Useful Life 5 years
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Impairment Losses (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Accounting Policies [Abstract]    
Impairment of bitcoin $ 7,163 $ 12,210
Impairment of goodwill 0 12,048
Total impairment loss $ 7,163 $ 24,258
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Wise Goodwill Activity (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Goodwill, Balance at beginning of Fiscal Year $ 0  
Impairment of goodwill 0 $ 12,048
Goodwill, Balance at end of Fiscal Year 8,043 0
Total [Member]    
Goodwill, Balance at beginning of Fiscal Year 0 12,048
New Acquisitions 8,043 0
Impairment of goodwill 0 (12,048)
Goodwill, Balance at end of Fiscal Year $ 8,043 $ 0
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Estimated Useful Life (Details)
Sep. 30, 2023
Websites [Member]  
Property, Plant and Equipment [Line Items]  
Finite-Lived Intangible Asset, Useful Life 3 years
Software [Member] | Minimum [Member]  
Property, Plant and Equipment [Line Items]  
Finite-Lived Intangible Asset, Useful Life 4 years
Software [Member] | Maximum [Member]  
Property, Plant and Equipment [Line Items]  
Finite-Lived Intangible Asset, Useful Life 7 years
Strategic Contract [Member]  
Property, Plant and Equipment [Line Items]  
Finite-Lived Intangible Asset, Useful Life 5 years
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Net Investment Income [Line Items]    
Derivative Asset $ 2,697 $ 2,956
Amount [Member]    
Net Investment Income [Line Items]    
Derivative Asset 2,697 2,956
Investment in debt security 726 610
Total 3,423 3,566
Level 1    
Net Investment Income [Line Items]    
Derivative Asset 0 0
Investment in debt security 0 0
Total 0 0
Level 2    
Net Investment Income [Line Items]    
Derivative Asset 0 0
Investment in debt security 0 0
Total 0 0
Level 3    
Net Investment Income [Line Items]    
Derivative Asset 2,697 2,956
Investment in debt security 726 610
Total $ 3,423 $ 3,566
v3.23.3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2021
Product Information [Line Items]      
Loss from continuing operations $ (132,160) $ (40,089)  
Cash used from operations (31,720) 77,806  
Bitcoin 56,241 11,147  
Working capital 28,117 16,735  
Cash 29,215    
Bitcoin Value 56,241 11,147 $ 23,603
Revenues $ 168,408 $ 131,525  
Antidilutive securities excluded from computation of earnings per share 300,698 7,069,706  
Impairment expense - fixed assets $ 0 $ 32  
Income tax expense 0 0  
FDIC Indemnification Asset, Period Increase (Decrease) 28,965 20,213  
Impairment of goodwill 0 12,048  
Uncertain tax positions 0 0  
Income tax examination, penalties accrued $ 0 0  
Outstanding Options Warrants [Member]      
Product Information [Line Items]      
Preferred Stock, Convertible, Shares Issuable 5,250,000    
Bitcoin [Member]      
Product Information [Line Items]      
FDIC Indemnification Asset, Period Increase (Decrease) $ 56,241 11,147  
Revenue from Rights Concentration Risk [Member] | Sales Revenue Net [Member] | Major Customers and Vendors [Member]      
Product Information [Line Items]      
Concentration Risk, Percentage 10.00%    
Data Service Centers [Member]      
Product Information [Line Items]      
Revenues $ 287 $ 525  
v3.23.3
3.DISCONTINUED OPERATIONS - Summary of balance sheet disclosure (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Current assets    
Accounts receivable, net $ 126 $ 2,813
Inventory 319 4,400
Prepaid expense and other current assets 0 213
Total current assets held for sale 445 7,426
Property and equipment, net 0 11
Operating lease right of use asset 0 665
Intangible assets, net 0 869
Long Term Assets Held For Sale, Total 0 1,545
Total assets held for sale 445 8,971
Current liabilities    
Accounts payable and accrued liabilities 978 919
Contract liabilities 0 117
Operating lease liability 197 163
Current liabilities held for sale 1,175 1,199
Operating lease liability, net of current portion 0 512
Total liabilities held for sale $ 1,175 $ 1,711
v3.23.3
3.DISCONTINUED OPERATIONS - Summary of Income statement (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Revenues, net    
Energy hardware, software and services revenue $ 158 $ 9,667
Total revenues, net 158 9,667
Costs and expenses    
Cost of revenues (exclusive of depreciation and amortization shown below) 936 8,711
Professional fees 115 116
Payroll expenses 426 4,911
General and administrative expenses 413 1,641
Impairment expense - fixed assets 0 32
Impairment expense - intangibles 0 1,402
Impairment expense - other 4,181 872
Impairment expense - goodwill 0 7,001
Depreciation and amortization 0 2,215
Total costs and expenses 6,071 26,901
Loss from operations (5,913) (17,234)
Other income (expense)    
Gain on disposal of assets 1,508 0
Interest expense (24) (3)
Total other income (expense) 1,484 (3)
Loss before income tax (expense) or benefit (4,429) (17,237)
Income tax (expense) or benefit 0 0
Net loss $ (4,429) $ (17,237)
v3.23.3
4. ACQUISITIONS - Schedule of Coinmaker Purchase Price Allocation (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Jun. 21, 2023
Sep. 30, 2022
Business Acquisition [Line Items]      
Right of use lease asset $ 688   $ 551
Coinmaker LLC [Member]      
Business Acquisition [Line Items]      
Right of use lease asset   $ 266  
Lease liability assumed   (266)  
Building   1,328  
Infrastructure asset   8,061  
Total assets acquired   $ 9,389  
v3.23.3
4. ACQUISITIONS - Schedule of MIG Consideration (Details)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
USD ($)
Business Acquisition [Line Items]  
Shares of CLSK common stock $ 4,802
MIG [Member]  
Business Acquisition [Line Items]  
Cash 22,518
Financing provided by seller 6,500
Shares of CLSK common stock 4,803
Total purchase price 33,821
Contingent Consideration  
Earn-out Shares of CLSK common stock 3,325
Megawatt earnout (up to $2,000 max) 2,000
Total contingent consideration 5,325
Total purchase sale agreement consideration-Combined $ 39,146
v3.23.3
4. ACQUISITIONS - Schedule of MIG Consideration (Parenthetical) (Details) - MIG [Member]
$ in Thousands
 12 Months Ended
Sep. 30, 2023
USD ($)
shares
Business Acquisition [Line Items]  
Dilutive impact of contingent shares issued for business acquisition | shares 1,590,175
Maximum [Member]  
Business Acquisition [Line Items]  
Megawatt earnout Contingent Consideration | $ $ 2,000
v3.23.3
4. ACQUISITIONS - Schedule of MIG Purchase Price Allocation (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Oct. 08, 2022
Sep. 30, 2022
Business Acquisition [Line Items]      
Right of use lease asset $ 688   $ 551
Miners 527,868   356,501
Machinery and equipment 1,907   1,269
Goodwill $ 8,043   $ 0
MIG [Member] | Allocation [Member]      
Business Acquisition [Line Items]      
Right of use lease asset   $ 5,010  
Lease liability assumed   (5,100)  
Building   13,654  
Infrastructure asset   4,465  
Miners   12,914  
Machinery and equipment   160  
Goodwill   8,043  
Total assets acquired   $ 39,146  
v3.23.3
4. ACQUISITIONS - Schedule of WAHA and SPRE Consideration (Details) - WAHA and SPRE [Member]
Aug. 17, 2022
USD ($)
Business Acquisition [Line Items]  
Cash $ 19,772
Financing provided by SPRE 1,962
Mortgage assumed 2,158
Total Consideration $ 23,892
v3.23.3
4. ACQUISITIONS - Schedule of WAHA and SPRE Purchase Price Allocation (Details) - USD ($)
Sep. 30, 2023
Sep. 30, 2022
Aug. 17, 2022
Business Acquisition [Line Items]      
Miners $ 527,868,000 $ 356,501,000  
WAHA and SPRE [Member]      
Business Acquisition [Line Items]      
Total Consideration     $ 23,892
WAHA and SPRE [Member] | Allocation [Member]      
Business Acquisition [Line Items]      
Land     100
Building/Improvements     14,700
Miners     9,092
Total Consideration     $ 23,892
v3.23.3
4. ACQUISITIONS - Schedule of Unaudited Pro Forma Information Assuming Acquisitions (Details) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Business Acquisition [Line Items]    
Net sales from continuing operations $ 168,408 $ 131,525
Loss from continuing operations attributable to common shareholders $ (136,589) $ (57,662)
Loss from continuing operations per common share - basic $ (1.29) $ (0.95)
Weighted average common shares outstanding- basic 102,707,509 42,614,197
Loss from continuing operations per common share - diluted $ (1.29) $ (0.95)
Weighted average common shares outstanding - diluted 102,707,509 42,614,197
Pro Forma Acquisitions [Member]    
Business Acquisition [Line Items]    
Net sales from continuing operations   $ 209,304
Loss from continuing operations attributable to common shareholders   $ (33,758)
Loss from continuing operations per common share - basic   $ (0.75)
Weighted average common shares outstanding- basic   45,305,262
Loss from continuing operations per common share - diluted   $ (0.75)
Weighted average common shares outstanding - diluted   45,305,262
v3.23.3
4. ACQUISITIONS (Details Narrative)
$ in Thousands
 12 Months Ended
Jun. 21, 2023
USD ($)
a
Facility
Servers
Aug. 17, 2022
Sep. 30, 2023
USD ($)
Servers
shares
Jun. 30, 2023
USD ($)
Apr. 08, 2023
USD ($)
Apr. 07, 2023
ft²
Dec. 31, 2022
USD ($)
Oct. 08, 2022
a
Dec. 31, 2021
USD ($)
Business Acquisition [Line Items]                  
Area of Land | ft²           15,000      
Contingent liabilities     $ 484            
Miners [Member]                  
Business Acquisition [Line Items]                  
Property, Plant and Equipment, Useful Life     3 years            
Building And Improvements [Member]                  
Business Acquisition [Line Items]                  
Property, Plant and Equipment, Useful Life     30 years            
Coinmaker LLC [Member]                  
Business Acquisition [Line Items]                  
Number of mining facility | Facility 2                
Acquisition payment $ 9,389                
Area of Land | a 1                
Mining servers purchased | Servers 20                
Mawson Purchase Agreement [Member]                  
Business Acquisition [Line Items]                  
Contingent cash consideration     $ 13,500            
Dilutive impact of contingent shares issued for business acquisition | shares     1,590,175            
Business acquisition purchase value     $ 4,803            
Promissory notes     6,500            
Cash payment     $ 9,018            
Business acquisition, shares issued | shares     1,100,890            
Business acquisition, shares issued     $ 3,325            
Contingent liabilities     $ 0 $ 0     $ 2,840   $ 3,325
Mining servers purchased | Servers     150            
Earn-out payable     $ 2,000   $ 2,000        
Recognized gain in change in Fair Value of Contingent Consideration     $ 2,000            
Georgia Power Agreement [Member]                  
Business Acquisition [Line Items]                  
Area of real property | a               16.35  
Spre Commercial Group, Inc. & Waha Technologies, Inc. [Member]                  
Business Acquisition [Line Items]                  
Acquisition Of Land Purchase And Sale Agreement   Additionally, on August 17, 2022, in connection with the Land Purchase and Sale Agreement, the Company completed the purchase of a mix of S19 and S19 J Pro bitcoin miners with a total processing power equal to approximately 341,985 terahashes, pursuant to an equipment purchase and sale agreement (together with the Land Purchase and Sale Agreement, the “Acquisition”), from Waha Technologies, Inc., a Georgia corporation (“WAHA”, collectively with the Seller, "WAHA & SPRE" or the "Sellers"), an affiliate of the Seller. Pursuant to the Land Purchase and Sale Agreement and the Equipment Purchase and Sale Agreement the Company acquired substantially all of WAHA & SPRE's assets. The transaction was accounted for as an acquisition of a business.              
Closing of Acquisition   Total consideration for the Property and miners consisted of (i) $1,962 in financing provided by the Seller to the Company at an interest rate of 12% per annum, to be repaid in 12 monthly installments of $174, (ii) the Company’s assumption of a mortgage with a maximum principal amount of $2,158 and an interest rate of 13% and (iii) $19,772 of cash consideration paid by the Company to the Seller. Acquisition related costs of $118, consisting primarily of legal and recording fees, were expensed as incurred in accordance with ASC 805 and are reflected in professional fees on the Consolidated Statements of Operations and Comprehensive Loss.              
v3.23.3
5. BITCOIN (Details Narrative) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Common Domain Members [Abstract]    
Total Company Bitcoin $ 2,243 $ 595
Percentage of Bitcoin in Cold Storage 95.00%  
Percentage of Bitcoin in Hot Wallets 5.00%  
v3.23.3
5. BITCOIN - Schedule of activities Of The Bitcoin (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Common Domain Members [Abstract]    
Balance at beginning of Fiscal Year $ 11,147 $ 23,603
Addition of bitcoin 168,121 131,000
Carrying amount of bicoin sold (114,915) (130,635)
Bitcoin issued for services (720) (611)
Bitcoin issued for software (229) 0
Impairment Loss (7,163) (12,210)
Balance at end of Fiscal Year $ 56,241 $ 11,147
v3.23.3
6. INVESTMENTS - Reconciliation of carrying value of all investments (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Summary of Investment Holdings [Line Items]    
Balance $ 610  
Balance 726 $ 610
ILAL Debt Securities [Member]    
Summary of Investment Holdings [Line Items]    
Balance 610 494
Shares sold during the year   0
Realized gain on fair value recognized in other income (expense)   0
Unrealized loss recognized in other income (expense)   0
Unrealized loss on fair value recognized in Other comprehensive income 116 116
Unrealized loss on derivative asset 0  
Balance 726 610
ILAL Derivative Asset [Member]    
Summary of Investment Holdings [Line Items]    
Balance 2,956 4,906
Shares sold during the year   0
Realized gain on fair value recognized in other income (expense)   0
Unrealized loss recognized in other income (expense)   (1,950)
Unrealized loss on fair value recognized in Other comprehensive income 0  
Unrealized loss on derivative asset (259)  
Balance 2,697 2,956
ILAL Equity Asset [Member]    
Summary of Investment Holdings [Line Items]    
Balance 0 11
Shares sold during the year   (10)
Realized gain on fair value recognized in other income (expense)   1
Unrealized loss recognized in other income (expense)   (2)
Balance 0 0
Law Clerk Equity Securities [Member]    
Summary of Investment Holdings [Line Items]    
Balance 0 250
Shares sold during the year   0
Realized gain on fair value recognized in other income (expense)   0
Impairment loss   (250)
Balance $ 0 $ 0
v3.23.3
6. INVESTMENTS (Details Narrative) - USD ($)
$ in Thousands
 1 Months Ended 12 Months Ended
Feb. 29, 2020
Nov. 05, 2019
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2021
Summary of Investment Holdings [Line Items]          
Investments     $ 3,423 $ 3,566  
Gain (Loss) on Sale of Equity Investments     0 1  
Equity method investment, impairment       250  
Investment Owned, Fair Value     726 610  
Loss On Preferred Stocks Included In Other Comprehensive Income Loss     116 115  
Other comprehensive income     116 115  
Loss on fair value of preferred stock     (226) (110)  
Other than Temporary Impairment Losses, Investments     0 250  
Derivative investment asset     2,697 2,956  
Commitment Shares          
Summary of Investment Holdings [Line Items]          
Gain (Loss) on Sale of Equity Investments       $ 1  
Common stock, shares sold       15,389  
International Land Alliance          
Summary of Investment Holdings [Line Items]          
Investment owned, Balance, Shares   1,000      
Investment owned, Face amount   $ 500      
Debt instrument, Convertible, Terms of conversion feature   The Series B Preferred Stock accrue cumulative in-kind accruals at a rate of 12% per annum and were redeemable on August 6, 2020. The Series B Preferred Stock can be converted into common stock at a variable rate (refer the discussion on embedded derivative assets below). This variable conversion ratio will increase by 10% with the occurrence of certain events. Since the investments were not redeemed on August 6, 2020, they are now redeemable at the Company`s option in cash or into common stock, based on the conversion ratio. The Series B Preferred Stock is recorded as an AFS debt security and is reported at its estimated fair value as of September 30, 2023. Any change in the fair values of AFS debt securities are reported net of income tax as an element of Other Comprehensive income.      
International Land Alliance | Commitment Shares          
Summary of Investment Holdings [Line Items]          
Common stock, fair value of remaining shares at closing stock price         15,389
Common Stock, shares received   350,000      
Common stock, shares sold         334,611
Amount          
Summary of Investment Holdings [Line Items]          
Derivative assets investment fair value     2,697 $ 2,956  
Derivative investment asset     2,697 2,956  
Law Clerk Equity Securities          
Summary of Investment Holdings [Line Items]          
Series A Preferred shares, Strategic relationship investment, Shares 200,000        
Series A Preferred shares, Strategic relationship investment $ 250        
Investment Owned, Fair Value     $ 0 $ 0 $ 250
v3.23.3
7. PROPERTY AND EQUIPMENT, NET - Schedule of Property Pant and Equipment (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Property, Plant and Equipment [Abstract]    
Land $ 4,144 $ 2,978
Land Improvements 1,564 1,530
Building and improvements 52,198 32,332
Leasehold improvements 672 114
Miners 527,868 356,501
Mining equipment 18,706 17,587
Infrastructure 45,612 12,422
Machinery and equipment 1,907 1,269
Furniture and fixtures 386 331
Construction in progress 81,875 4,816
Total 734,932 429,880
Less: accumulated depreciation (170,537) (53,099)
Property and equipment, net $ 564,395 $ 376,781
v3.23.3
7. PROPERTY AND EQUIPMENT (Details Narrative)
$ in Thousands
 12 Months Ended
Apr. 07, 2023
USD ($)
ft²
Sep. 30, 2023
USD ($)
Sep. 30, 2022
USD ($)
May 01, 2023
USD ($)
a
Property, Plant and Equipment [Line Items]        
Depreciation expense   $ 118,615 $ 47,082  
Loss on disposal of assets   1,931 (643)  
Outstanding deposits   75,959 12,497  
Disposal of property and equipment   1,966    
Real property Additions $ 4,100      
Area of Land | ft² 15,000      
Additional building improvements.   560    
Land under Purchase Options, Recorded       $ 1,167
Sandersville Member        
Property, Plant and Equipment [Line Items]        
Area of Land | a       10
Purchase price   1,400    
Sandersville Member | Purchase and Sale Agreement [Member]        
Property, Plant and Equipment [Line Items]        
Purchase price   1,300    
WASHINGTON        
Property, Plant and Equipment [Line Items]        
Area of Land | a       16.35
Miners [Member]        
Property, Plant and Equipment [Line Items]        
Outstanding deposits   75,959 $ 12,497  
Placed-in Service [Member]        
Property, Plant and Equipment [Line Items]        
Payments to purchase mining equipment   231,135    
Miners and Mining Equipment [Member]        
Property, Plant and Equipment [Line Items]        
Payments to purchase mining equipment   $ 175,558    
v3.23.3
8. INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Intangible Assets    
Finite-Lived Intangible Assets [Line Items]    
Software $ 440 $ 210
Websites 15 23
Strategic Contract 9,800 9,800
Total 10,255 10,033
Accumulated Amortization    
Finite-Lived Intangible Assets [Line Items]    
Software (90) 0
Websites (8) (11)
Strategic Contract (5,554) (3,537)
Total (5,652) (3,548)
Total [Member]    
Finite-Lived Intangible Assets [Line Items]    
Software 350 210
Websites 7 12
Strategic Contract 4,246 6,263
Total $ 4,603 $ 6,485
v3.23.3
8. INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2028
Sep. 30, 2027
Sep. 30, 2026
Sep. 30, 2025
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]              
Amortization of intangible assets $ 7 $ 78 $ 415 $ 2,050 $ 2,053 $ 2,113 $ 1,963
Future amortization of intangible assets           $ 4,603  
v3.23.3
8. INTANGIBLE ASSETS (Details Narrative) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2028
Sep. 30, 2027
Sep. 30, 2026
Sep. 30, 2025
Sep. 30, 2024
Sep. 30, 2023
Sep. 30, 2022
Finite-Lived Intangible Assets [Line Items]              
Accumulated amortization $ 7 $ 78 $ 415 $ 2,050 $ 2,053 $ 2,113 $ 1,963
Impairment of software           $ 0 $ 0
v3.23.3
9. LEASES - Lease costs (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Leases [Abstract]    
Operating lease cost [1] $ 267 $ 113
Finance lease cost:    
Depreciation expense of financed assets 197 379
Interest on lease obligations $ 33 $ 38
[1] Included in general and administrative expenses.
v3.23.3
9. LEASES - Other Lease Information (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Leases [Abstract]    
Operating cash flows from operating leases $ 274 $ 131
Operating cash flows from finance leases 33 38
Financing cash flows from finance leases $ 301 $ 519
v3.23.3
9. LEASES - Weighted-average Remaining Lease Terms (Details)
Sep. 30, 2023
Sep. 30, 2022
Leases [Abstract]    
Weighted-average remaining lease term - operating leases 3 years 9 months 18 days 1 year 6 months
Weighted-average remaining lease term -finance leases 10 months 24 days 1 year 6 months
Weighted-average discount rate - operating leases 5.40% 4.50%
Weighted-average discount rate - finance leases 5.50% 5.50%
v3.23.3
9. LEASES - Contractual Maturity of Lease Liability (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Less: Current portion of lease liabilities $ (181) $ (113)
Less: Current portion of lease liabilities (130) $ (260)
Operating Lease [Member]    
2024 214  
2025 201  
2026 203  
2027 106  
Thereafter 41  
Gross lease liabilities 765  
Less: imputed interest (65)  
Present value of lease liabilities 700  
Less: Current portion of lease liabilities (181)  
Total lease liabilities, net of current portion 519  
Finance Lease [Member]    
2024 134  
2025 9  
2026 0  
2027 0  
Thereafter 0  
Gross lease liabilities 143  
Less: imputed interest (3)  
Present value of lease liabilities 140  
Less: Current portion of lease liabilities (130)  
Total lease liabilities, net of current portion $ 10  
v3.23.3
9. LOANS - Schedule Of The Outstanding Loans (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Debt Instrument [Line Items]    
Total Loans Outstanding $ 15,903 $ 21,219
Less: current portion of long-term loans (6,992) (7,786)
Long-term loans, excluding current portion $ 8,911 13,433
Master Equipment Financing Arrangment [Member]    
Debt Instrument [Line Items]    
Maturity Date Apr-25  
Rate 13.80%  
Total Loans Outstanding $ 11,603 17,073
Mortgage Corporate Facility [Member]    
Debt Instrument [Line Items]    
Maturity Date Apr-25  
Rate 10.00%  
Total Loans Outstanding $ 1,950 0
SPRE Commercial Group, Inc. [Member]    
Debt Instrument [Line Items]    
Maturity Date Aug-23  
Rate 12.00%  
Total Loans Outstanding $ 0 1,807
Marquee Funding Partners [Member]    
Debt Instrument [Line Items]    
Maturity Date Jul-26 - Feb-27  
Rate 13.00%  
Total Loans Outstanding $ 1,725 2,127
Auto & Equipment Loans [Member]    
Debt Instrument [Line Items]    
Maturity Date Oct-26 - Jun -29  
Total Loans Outstanding $ 625 $ 212
Auto & Equipment Loans [Member] | Minimum [Member]    
Debt Instrument [Line Items]    
Rate 0.99%  
Auto & Equipment Loans [Member] | Maximum [Member]    
Debt Instrument [Line Items]    
Rate 9.60%  
v3.23.3
9. LOANS - Schedule Of Principal Amount Of Loan Maturities Due Over The Years (Details)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
USD ($)
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year $ 16,080
Unamortized deferred financing costs and discounts (177)
Total loan book value as of September 30, 2023 15,903
FY 2024 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 7,119
FY 2025 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 7,901
FY 2026 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 739
FY 2027 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 237
FY 2028 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 69
Thereafter [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 15
Master Equipment Financing Arrangment [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 11,730
Master Equipment Financing Arrangment [Member] | FY 2024 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 6,509
Master Equipment Financing Arrangment [Member] | FY 2025 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 5,221
Master Equipment Financing Arrangment [Member] | FY 2026 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Master Equipment Financing Arrangment [Member] | FY 2027 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Master Equipment Financing Arrangment [Member] | FY 2028 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Master Equipment Financing Arrangment [Member] | Thereafter [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Mortgage Corporate Facility [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 2,000
Mortgage Corporate Facility [Member] | FY 2024 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Mortgage Corporate Facility [Member] | FY 2025 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 2,000
Mortgage Corporate Facility [Member] | FY 2026 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Mortgage Corporate Facility [Member] | FY 2027 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Mortgage Corporate Facility [Member] | FY 2028 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Mortgage Corporate Facility [Member] | Thereafter [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Marquee Funding Partners [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 1,725
Marquee Funding Partners [Member] | FY 2024 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 458
Marquee Funding Partners [Member] | FY 2025 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 521
Marquee Funding Partners [Member] | FY 2026 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 592
Marquee Funding Partners [Member] | FY 2027 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 154
Marquee Funding Partners [Member] | FY 2028 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Marquee Funding Partners [Member] | Thereafter [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 0
Auto & Equipment Loans [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 625
Auto & Equipment Loans [Member] | FY 2024 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 152
Auto & Equipment Loans [Member] | FY 2025 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 159
Auto & Equipment Loans [Member] | FY 2026 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 147
Auto & Equipment Loans [Member] | FY 2027 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 83
Auto & Equipment Loans [Member] | FY 2028 [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year 69
Auto & Equipment Loans [Member] | Thereafter [Member]  
Short-Term Debt [Line Items]  
Total principal amount of loan payments by fiscal year $ 15
v3.23.3
9. LOANS (Details Narrative) - USD ($)
$ in Thousands
 12 Months Ended
May 10, 2023
Apr. 22, 2022
Sep. 30, 2023
Sep. 30, 2022
Debt Instrument [Line Items]        
Loans payable, net of current portion     $ 16,080  
Amortization of debt discount     69 $ 46
Refund of loan commitment fee     150 0
Loan discount     69 46
Gross loan outstanding     177  
Principal payments on loans     14,466 2,779
Principal amount of loan payments     16,080  
Trinity Capital Inc [Member]        
Debt Instrument [Line Items]        
Borrowings to finance   $ 35,000    
Amortization of debt discount     56 46
Refund of loan commitment fee     150  
Loan discount     379  
Loan discount     $ 56 $ 46
Loan received   20,000    
Remaining fundable amount   $ 15,000    
Loan commitment fee   1.00%    
SPRE Commercial Group, Inc. [Member]        
Debt Instrument [Line Items]        
Stated interest rate     12.00%  
Payments of Loan Costs     $ 174  
Marquee Funding Partners [Member]        
Debt Instrument [Line Items]        
Mortgage assumed     $ 1,725  
Stated interest rate     13.00%  
Marquee Funding Partners [Member] | Minimum [Member]        
Debt Instrument [Line Items]        
Debt Instrument, Term     35 months  
Marquee Funding Partners [Member] | Maximum [Member]        
Debt Instrument [Line Items]        
Debt Instrument, Term     42 months  
Mortgage Corporate Facility [Member]        
Debt Instrument [Line Items]        
Stated interest rate 10.00%      
Principal amount of loan payments $ 1,937      
Debt Instrument, Term 2 years      
Auto Loans [Member]        
Debt Instrument [Line Items]        
Principal amount     $ 625  
Auto Loans [Member] | Minimum [Member]        
Debt Instrument [Line Items]        
Stated interest rate     0.99%  
Debt Instrument, Term     36 months  
Auto Loans [Member] | Maximum [Member]        
Debt Instrument [Line Items]        
Stated interest rate     9.60%  
Debt Instrument, Term     72 months  
Auto Loans [Member] | Separate Agreements [Member]        
Debt Instrument [Line Items]        
Principal amount     $ 493  
Auto Loans [Member] | Separate Agreements [Member] | Minimum [Member]        
Debt Instrument [Line Items]        
Stated interest rate     0.99%  
Debt Instrument, Term     36 months  
Auto Loans [Member] | Separate Agreements [Member] | Maximum [Member]        
Debt Instrument [Line Items]        
Stated interest rate     9.60%  
Debt Instrument, Term     72 months  
v3.23.3
11. INCOME TAXES - Schedule of Income before Income Tax, Domestic and Foreign (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Income Tax Disclosure [Abstract]    
Domestic $ (131,303) $ (40,089)
Foreign 0 0
Loss before income taxes $ (131,303) $ (40,089)
v3.23.3
11. INCOME TAXES - Component of the provision for income taxes (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Income Tax Disclosure [Abstract]    
Current, Federal $ 0 $ 0
Current, State 0 0
Deferred, Federal 857 0
Deferred, State 0 0
Provision for income taxes $ 857 $ 0
v3.23.3
11. INCOME TAXES - Schedule of pretax loss from continuing operations (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Income Tax Disclosure [Abstract]    
Tax Benefit at Federal statutory rate $ (27,574) $ (8,417)
Meals and Entertainment 18 30
Stock Based Compensation 356 2,061
162(m) Excess Executive Compensation 6,823 0
ISO - Disqualifying Dispositions (127) (58)
Deferred only adjustment (13,794) 4,408
State rate adjustment 5,820 0
R&D Credits 0 (200)
Discontinued Operations 0 (3,750)
Other 485 (3)
Change in Valuation Allowance 28,850 6,232
Net Deferred Tax Assets $ 857 $ 0
v3.23.3
11. INCOME TAXES - Schedule of Deferred Tax Assets (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Deferred Tax Assets:    
Right of Use - Lease Liability $ 183 $ 269
Charitable Contributions 64 7
Section 1231 Loss Carryforwards 983 1,183
Tax Credits 200 401
Stock Based Compensation 4,512 3,740
Interest Expense Carryforwards 653 194
Intangible Assets 6,999 0
Other 2,078 0
Net Operating Loss carryforwards 66,333 93,052
Gross Deferred Tax Assets 82,005 98,846
Valuation Allowance (54,608) (28,756)
Total deferred tax assets, net of valuation allowance 27,397 70,090
Deferred Tax Liabilities:    
Right of Use - Lease Asset (180) (265)
Prepaid Expenses (636) (222)
Unrealized Gain on Derivative Asset 0 (85)
Unrealized Gain on Equity Security 0 (63)
Gain/Loss on Sale of Assets not on TR 0 (26)
Other (898) 0
Fixed Assets & Intangible Assets (26,540) (69,429)
Net Deferred Tax Assets $ (857) $ 0
v3.23.3
11. INCOME TAXES - Schedule of other assets and other liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Income Tax Disclosure [Abstract]    
Net non-current deferred tax assets (liabilities) $ (857) $ 0
v3.23.3
11. INCOME TAXES - Schedule of Valuation Allowance (Details) - USD ($)
$ in Thousands
Sep. 30, 2023
Sep. 30, 2022
Income Tax Disclosure [Abstract]    
Valuation Allowance $ (54,608) $ (28,756)
v3.23.3
11. INCOME TAXES (Details Narrative) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Operating Loss Carryforwards [Line Items]    
Deferred Tax Assets, Operating Loss Carryforwards, Foreign $ 270,400  
Income Tax Rate 21.00%  
Effective Pre-tax income rate 0.65% 0.00%
Statutory U.S federal income tax rate 15.00%  
Deferred tax assets, operating loss carryforwards, state $ 96,400  
Net Operating Loss carryforwards $ 700  
Increased Recognized Rate of Income Tax 50.00%  
Net Operating Loss carryforwards $ 66,333 $ 93,052
v3.23.3
15. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
 12 Months Ended
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2021
Related Party Transaction [Line Items]      
Warrants issued to purchase shares of common stock, Exercise price $ 13.03 $ 13.49 $ 30.72
Zachary Bradford Ownership      
Related Party Transaction [Line Items]      
Related party transaction, Ownership percentage by parent 50.00%    
Blue Chip Accounting      
Related Party Transaction [Line Items]      
Payments for accounting, tax, administrative services and reimbursement for office supplies $ 47    
Payments for Rent $ 5,000    
v3.23.3
12. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Mar. 31, 2023
Class of Stock [Line Items]      
Common Stock, Shares Authorized 300,000,000 300,000,000  
Preferred Stock, Shares Authorized 10,000,000 10,000,000  
Preferred Stock, Par or Stated Value Per Share $ 0.001 $ 0.001  
Common stock, shares issued 160,184,921 55,661,337  
Common stock, shares outstanding 160,184,921 55,661,337 96,950,555
Preferred stock, shares outstanding 1,750,000 1,750,000  
Preferred Stock, Shares Issued 1,750,000 1,750,000  
Common Stock, Par or Stated Value Per Share $ 0.001 $ 0.001  
Proceeds from issuance of private placement $ 383,776,000 $ 125,048,000  
Stock Issued During Period Value Stock Options Exercised   817  
Common Stock, Value, Issued 160,000 $ 56,000  
Shares of CLSK common stock $ 4,802,000    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period 0 105,423  
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period   5 years  
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period 193,630 238,418  
Business acquisition [Member]      
Class of Stock [Line Items]      
Common stock, shares issued 1,590,175    
Business Combination, Consideration Transferred, Total $ 4,802,000    
Stock Issued During Period, Shares, Acquisitions   8,404  
Shares of CLSK common stock   $ 150,000  
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period 83,417 232,518  
At-the-Market offering facility [Member]      
Class of Stock [Line Items]      
Common stock, shares issued   17,740,081  
Proceeds From Net Offering Costs   $ 125,048,000  
Seller Agreements Related To Mawson Acquisition [Member]      
Class of Stock [Line Items]      
Common stock, shares issued 1,100,890    
Business Combination, Consideration Transferred, Total $ 2,840,000    
Maximum [Member]      
Class of Stock [Line Items]      
Common stock, shares outstanding     300,000,000
Minimum [Member]      
Class of Stock [Line Items]      
Common Stock, Shares Authorized     100,000,000
A T M Member      
Class of Stock [Line Items]      
Proceeds from issuance of private placement $ 383,776,000    
Stock Issued During Period, Shares, Issued for Services 98,829,525    
Director services [Member]      
Class of Stock [Line Items]      
Common stock shares issued, compensation   5,238  
Common stock shares issued, compensation amount   $ 60,000  
Common Stock [Member]      
Class of Stock [Line Items]      
Shares Withheld for Net Settlement of Restricted Stock Units Related to Tax Withholdings, Shares 1,397,258 358,681  
Stock Issued During Period, Shares, Acquisitions 1,590,175    
Shares of CLSK common stock $ 1,000    
Restricted Stock [Member]      
Class of Stock [Line Items]      
Common stock, shares issued 4,483,669 1,002,586  
Shares Withheld for Net Settlement of Restricted Stock Units Related to Tax Withholdings, Shares 1,397,258 358,681  
Common Stock Net Settlement Value $ 5,873,000 $ 1,638,000  
Series A Preferred      
Class of Stock [Line Items]      
Earnings before interest rate, dividends 2.00%    
Preferred stock dividends paid $ 0    
Preferred stock dividend, company paid   314,000  
Preferred stock dividend payable, amount $ 21,000 $ 335,000  
Liquidation preference per share $ 0.02    
Common stock voting rights forty-five (45) votes    
v3.23.3
13. STOCK WARRANTS - Schedule of Warrant Summary (Details) - $ / shares
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Stock Warrants    
Warrant Shares, Beginning Balance 202,220 615,554
Warrant Shares, Granted 0 0
Warrant Shares, Expired (16,660) (413,334)
Warrant Shares, Ending Balance 185,560 202,220
Weighted Average Outstanding at Beginning Balance $ 13.03 $ 30.72
Weighted Average Exercise, Granted 0 0
Weighted Average Exercise, Expired 8 39.38
Weighted Average Exercise Ending Balance $ 13.49 $ 13.03
v3.23.3
13. STOCK WARRANTS (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2021
Weighted average outstanding warrants term 2 years 1 month 24 days    
Weighted average outstanding warrants intrinsic value $ 2    
Warrant exercised to purchase shares 0 0  
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Number 185,560    
Unvested warrants outstanding 0    
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 13.49 $ 13.03 $ 30.72
v3.23.3
14. STOCK-BASED COMPENSATION - Schedule of Option Summary (Details) - $ / shares
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Equity [Abstract]    
Number of Option Shares, Beginning Balance 1,418,938 1,547,029
Options granted 789,750 215,750
Options expired (44,600) 0
Options Canceled/Forfeited (193,630) (238,418)
Options exercised 0 (105,423)
Number of Option Shares, Ending Balance 1,970,458 1,418,938
Weighted Average Exercise Price, Beginning Balance $ 19.11 $ 18.35
Weighted Average Exercise Price, Options granted 5.72 14.47
Weighted Average Exercise, Options expired 6.05 0
Weighted Average Exercise Price, Options canceled/forfeited 10.77 15.4
Weighted Average Exercise Price, Options exercised 0 7.43
Weighted Average Exercise Price Ending Balance $ 14.86 $ 19.11
v3.23.3
14. STOCK-BASED COMPENSATION - Fair Value Assumptions 2021 (Details) - USD ($)
$ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Expected dividends $ 0 $ 0
Restricted Stock Units (RSUs) [Member]    
Risk free interest rate 4.59%  
Expected term (years) 10 years  
Expected volatility 129.70%  
Cost of equity 21.55%  
Minimum [Member]    
Risk free interest rate 2.65% 1.04%
Expected term (years) 5 years 21 days 4 years 11 months 26 days
Expected volatility 157.10% 187.20%
Minimum [Member] | Restricted Stock Units (RSUs) [Member]    
Risk free interest rate   0.14%
Expected term (years)   1 year
Expected volatility   111.37%
Cost of equity   20.00%
Maximum [Member]    
Risk free interest rate 4.44% 3.65%
Expected term (years) 5 years 10 months 6 days 7 years 4 months 6 days
Expected volatility 194.90% 533.00%
Maximum [Member] | Restricted Stock Units (RSUs) [Member]    
Risk free interest rate   1.26%
Expected term (years)   5 years
Expected volatility   172.18%
Cost of equity   21.00%
v3.23.3
14.STOCK-BASED COMPENSATION - Schedule of Restricted Stock Summary (Details) - USD ($)
$ / shares in Units, $ in Thousands
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Class of Stock [Line Items]    
Number of Option Shares, Beginning Balance 1,418,938 1,547,029
Number of Option Shares, Ending Balance 1,970,458 1,418,938
Weighted Average Outstanding at Beginning Balance $ 13.03 $ 30.72
Weighted Average Exercise, Granted 0 0
Weighted Average Exercise, Expired 8 39.38
Weighted Average Exercise Ending Balance $ 13.49 $ 13.03
Restricted [Member]    
Class of Stock [Line Items]    
Number of Option Shares, Beginning Balance 5,448,548 10,995
Number of Shares, Granted 3,880,552 7,306,250
Number of Shares, Vested (3,813,617) (1,757,938)
Number of Shares, Cancelled (40,000)  
Number of Shares, Forfeited (4,048) (110,759)
Number of Option Shares, Ending Balance 5,471,435 5,448,548
Weighted Average Outstanding at Beginning Balance $ 4.93 $ 27.73
Weighted Average Exercise, Granted 3.65 7.18
Weighted Average Exercise, Vested 4.58 13.37
Weighted Average Exercise, Expired 29.34 15.27
Weighted Average Exercise Ending Balance $ 4.18 $ 4.93
Aggregate Intrinsic Value Outstanding at Beginning $ 17,326 $ 0
Aggregate Intrinsic Value Outstanding at Ending $ 20,846 $ 17,326
v3.23.3
14. STOCK-BASED COMPENSATION (Details Narrative) - USD ($)
 1 Months Ended 3 Months Ended 12 Months Ended
Nov. 29, 2023
Apr. 01, 2023
Sep. 12, 2022
Mar. 31, 2023
Dec. 31, 2022
Sep. 30, 2023
Sep. 30, 2022
Sep. 15, 2021
Oct. 07, 2020
Jun. 19, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Employee Stock Ownership Plan (ESOP), Number of Allocated Shares               3,500,000    
Stock based compensation           $ 24,142,000 $ 31,466,000      
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number           1,065,882        
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Nonvested, Number of Shares           904,576        
Share-Based Payment Arrangement, Option, Exercise Price Range, Outstanding, Weighted Average Remaining Contractual Term           5 years 5 months 19 days        
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Intrinsic Value           $ 50,000        
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period           0 105,423      
Stock Issued During Period, Value, Stock Options Exercised             $ 817      
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term           2 years 2 months 1 day        
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-Based Compensation Cost           $ 4,512,000 3,740,000      
Share-Based Payment Arrangement, Noncash Expense, Total           $ 24,142,000 $ 31,466,000      
Restricted Stock, Shares Issued Net of Shares for Tax Withholdings         60,000 360,552 120,000      
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period             5 years      
Common stock, shares outstanding       96,950,555   160,184,921 55,661,337      
Maximum [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Common stock, shares outstanding       300,000,000            
Two Thousand Seventeen Incentive Plan [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Increase Number Of Shares Authoirzed For Issuance       3,500,000            
Number of shares authorized to issue       11,512,000            
Percentage of increase in number of shares authorized to issue       (15.00%)            
Increase in number of shares available to issue   14,542,583                
Restricted Stock Units (RSUs) [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term           1 year 7 months 6 days        
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-Based Compensation Cost           $ 22,300,000        
Share-Based Payment Arrangement, Expense           $ 17,720 $ 23,661      
Stock Issued During Period, Shares, Restricted Stock Award, Gross 3,460,000         3,880,552 7,306,250      
Service period based grant, shares           60,000 146,250      
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period           1 year 1 year      
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Total           $ 13,160,000        
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term           1 year        
Restricted Stock Units (RSUs) [Member] | Minimum [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Shares Issued, Price Per Share             $ 11.03      
Restricted Stock Units (RSUs) [Member] | Maximum [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Shares Issued, Price Per Share             $ 17.89      
Option Stock Based Compensation [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Stock based compensation           $ 24,142 $ 31,466      
Share-Based Payment Arrangement, Noncash Expense, Total           $ 24,142 $ 31,466      
Options, Granted One | Restricted Stock Units (RSUs) [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Restricted Stock, Shares Issued Net of Shares for Tax Withholdings     2,565,000              
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period     3 years              
Options, Granted Two | Restricted Stock Units (RSUs) [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Service period based grant, shares     2,565,000              
Service Period Based Vested , Shares           2,381,781        
Options, Granted Three | Restricted Stock Units (RSUs) [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Service period based grant, shares     760,000              
Service Period Based Vested , Shares       760,000            
Options Granted Four | Restricted Stock Units (RSUs) [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Stock Issued During Period, Shares, Restricted Stock Award, Vested     810,000              
Options Granted Five | Restricted Stock Units (RSUs) [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Restricted Stock, Shares Issued Net of Shares for Tax Withholdings     60,000              
Unvested service condition     10,000              
Added Shares [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Employee Stock Ownership Plan (ESOP), Number of Allocated Shares               2,000,000    
Equity Incentive Plan 2017 [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Common Stock, Shares Subscribed but Unissued           715,896        
Amended Equity Incentive Plan 2017 [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Employee Stock Ownership Plan (ESOP), Number of Allocated Shares                 1,500,000 300,000
Options                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Stock based compensation           $ 6,923        
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period             105,423      
Stock Issued During Period, Value, Stock Options Exercised           $ 0 $ 817,000      
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross           24,482 89,445      
Share-Based Payment Arrangement, Noncash Expense, Total           $ 6,923        
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value           $ 4,513,000        
Options | Minimum [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Exercise Price             $ 4.65      
Options | Maximum [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Exercise Price             $ 15.1      
Employees                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Gross           789,750 215,750      
Other Comprehensive Income (Loss), Financial Liability, Fair Value Option, after Reclassification Adjustment, Tax             $ 3,121,000      
Employees | Restricted Stock Units (RSUs) [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period           1 year        
Restricted Stock Awards [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Stock Issued During Period, Shares, Restricted Stock Award, Gross         810,000 40,000 910,000      
Grants | Options Granted Five | Restricted Stock Units (RSUs) [Member]                    
Accumulated Other Comprehensive Income (Loss) [Line Items]                    
Restricted Stock, Shares Issued Net of Shares for Tax Withholdings     120,000              
Service period based grant, shares     120,000              
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Period     3 years              
Service Period Based Vested , Shares           111,429        
v3.23.3
17. COMMITMENTS AND CONTINGENCIES - Schedule of Contractual Future Payments Obligations (Details) (Details)
$ in Thousands
Sep. 30, 2023
USD ($)
Product Liability Contingency [Line Items]  
2024 $ 42,407
2025 8,673
2026 1,024
2027 200
2028 115
Thereafter 15
Contractual Obligation, Total 52,434
Operating Lease [Member]  
Product Liability Contingency [Line Items]  
2024 214
2025 201
2026 203
2027 106
2028 41
Contractual Obligation, Total 765
Finance Lease [Member]  
Product Liability Contingency [Line Items]  
2024 134
2025 9
Contractual Obligation, Total 143
Auto Loans [Member]  
Product Liability Contingency [Line Items]  
2024 8,766
2025 8,463
2026 821
2027 94
2028 74
Thereafter 15
Contractual Obligation, Total 18,233
Construction in progress [Member]  
Product Liability Contingency [Line Items]  
2024 33,293
Contractual Obligation, Total $ 33,293
v3.23.3
17. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)
$ in Thousands
 1 Months Ended 12 Months Ended
Apr. 30, 2023
Dec. 31, 2022
Jul. 25, 2022
Mar. 31, 2023
Sep. 30, 2023
Jun. 30, 2023
Apr. 08, 2023
Aug. 18, 2022
Dec. 31, 2021
Aug. 31, 2019
Long-Term Purchase Commitment [Line Items]                    
Contingent liabilities         $ 484          
Solar Watt Solutions, Inc., v. Pathion, Inc [Member]                    
Long-Term Purchase Commitment [Line Items]                    
Loss Contingency, Estimate of Possible Loss                   $ 419
Electricity cost per month         15          
Amount of claim in suit         $ 500          
Lawsuit filing date         January 6, 2022          
Awarded Sanction     $ 2              
Darfon America Corp [Member]                    
Long-Term Purchase Commitment [Line Items]                    
Damages and Additional Costs and Fees               $ 5,400    
Litigation settlement expense $ 3,800     $ 2,700            
Legal fees   $ 1,100                
Mawson Property Acquisition [Member]                    
Long-Term Purchase Commitment [Line Items]                    
Earn-out payable         $ 2,000   $ 2,000      
Contingent liabilities   $ 2,840     $ 0 $ 0     $ 3,325  
v3.23.3
16. MAJOR CUSTOMERS AND VENDORS - Digital currency mining segment major suppliers (Details) - Customer Concentration Risk [Member] - Accounts Receivable [Member]
 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Cryptech Solutions    
Concentration Risk, Percentage 25.00% 88.00%
Bitmain Technologies Ltd.    
Concentration Risk, Percentage 75.00% 12.00%
v3.23.3
18. SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($)
$ in Thousands
 2 Months Ended
Oct. 31, 2023
Oct. 06, 2023
Dec. 01, 2023
Subsequent Event [Line Items]      
Common stock shares issued     24,475,832
Proceeds from Issuance of Common Stock     $ 99,336
At The Market Equity Issuances [Member]      
Subsequent Event [Line Items]      
Subsequent event description     At-the-Market Equity IssuancesFrom October 1, 2023 through December 1, 2023, the Company issued 24,475,832 shares under its ATM offering facility resulting in net proceeds of $99,336.
Issuance of Shares under Restricted Stock Grants [Member]      
Subsequent Event [Line Items]      
Subsequent event description Issuance of Shares under Restricted Stock GrantsIn October 2023, the Company settled and issued 88,888 shares to members of its Board of Directors in connection with time-based RSUs that vested on September 30, 2023.    
Purchase Agreement      
Subsequent Event [Line Items]      
Purchase Commitment, Description   Purchase AgreementOn October 6, 2023, the Company executed an agreement to purchase 4.4 exahashes per second (EH/s) of the recently announced Antminer S21 bitcoin mining machines, which have an efficiency rating of 17.5 joules per terahash (J/TH). The delivery of the mining machines are set to begin in January 2024. The agreement allows for 20% of the purchase price to be paid to the seller 365 days after the date that machines are ready-to-ship. The purchase was made pursuant to the terms of a Future Sales and Purchase Agreement entered into by and between the Company and BITMAIN TECHNOLOGIES DELAWARE LIMITED on October 6, 2023. The Company plans to use the mining machines to expand its digital currency mining activities through its wholly-owned subsidiaries.  
Restricted Stock Units RSU      
Subsequent Event [Line Items]      
Common stock shares issued 88,888