Cover
Cover - shares | 6 Months Ended | |
Mar. 31, 2023 | May 10, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Document Fiscal Period Focus | Q2 | |
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 $0.001 per share | |
Trading Symbol | CLSK | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 112,687,174 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Current assets | ||
Cash and cash equivalents | $ 10,345 | $ 20,463 |
Accounts receivable, net | 47 | 27 |
Inventory | 746 | 216 |
Prepaid expense and other current assets | 8,702 | 7,931 |
Bitcoin | 5,267 | 11,147 |
Derivative investment asset | 1,741 | 2,956 |
Investment in debt security, AFS, at fair value | 668 | 610 |
Current assets held for sale | 5,390 | 7,426 |
Total current assets | 32,906 | 50,776 |
Property and equipment, net | 440,253 | 376,781 |
Operating lease right of use asset | 5,402 | 551 |
Intangible assets, net | 5,696 | 6,485 |
Deposits on mining equipment | 34,020 | 12,497 |
Other long-term asset | 4,640 | 3,990 |
Goodwill | 8,043 | 0 |
Long-term assets held for sale | 593 | 1,545 |
Total assets | 531,553 | 452,625 |
Current liabilities | ||
Accounts payable and accrued liabilities | 31,334 | 24,662 |
Operating lease liability | 119 | 113 |
Finance lease liability | 216 | 260 |
Contingent consideration | 2,000 | 0 |
Current portion of long-term loans payable | 7,248 | 7,786 |
Dividends payable | 21 | 21 |
Current liabilities held for sale | 344 | 1,199 |
Total current liabilities | 41,282 | 34,041 |
Long-term liabilities | ||
Operating lease liability, net of current portion | 5,522 | 447 |
Finance lease liability, net of current portion | 71 | 180 |
Loans payable, net of current portion | 10,371 | 13,433 |
Long-term liabilities held for sale | 426 | 512 |
Total liabilities | 57,672 | 48,613 |
Stockholders' equity | ||
Common stock; $0.001 par value; 300,000,000 shares authorized; 96,950,555 and 55,661,337 shares issued and outstanding, respectively | 97 | 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 | 717,159 | 599,898 |
Accumulated other comprehensive income | 168 | 110 |
Accumulated deficit | (243,545) | (196,054) |
Total stockholders' equity | 473,881 | 404,012 |
Total liabilities and stockholders' equity | $ 531,553 | $ 452,625 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2023 | Sep. 30, 2022 |
Common stock value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 96,950,555 | 55,661,337 |
Common stock, shares outstanding | 96,950,555 | 55,661,337 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 1,750,000 | 1,750,000 |
Preferred stock, shares outstanding | 1,750,000 | 1,750,000 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 1,750,000 | 1,750,000 |
Preferred stock, shares outstanding | 1,750,000 | 1,750,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues, net | ||||
Bitcoin mining revenue, net | $ 42,488 | $ 36,965 | $ 70,234 | $ 73,940 |
Other services revenue | 58 | 233 | 131 | 383 |
Total revenues, net | 42,546 | 37,198 | 70,365 | 74,323 |
Costs and expenses | ||||
Cost of revenues (exclusive of depreciation and amortization shown below) | 22,082 | 8,684 | 42,498 | 14,320 |
Professional fees | 3,750 | 1,059 | 6,581 | 4,161 |
Payroll expenses | 9,750 | 8,806 | 19,552 | 16,134 |
General and administrative expenses | 4,329 | 2,773 | 8,053 | 4,589 |
Loss (gain) on disposal of assets | 3 | (921) | 3 | (643) |
Other impairment expense (related to bitcoin) | 194 | 812 | 277 | 7,034 |
Realized (gain) loss on sale of bitcoin | (1,422) | 2,734 | (905) | (7,261) |
Depreciation and amortization | 21,346 | 10,452 | 40,675 | 17,879 |
Total costs and expenses | 60,032 | 34,399 | 116,734 | 56,213 |
(Loss) Income from operations | (17,486) | 2,799 | (46,369) | 18,110 |
Other income (expense) | ||||
Other Income | 11 | 308 | 11 | 308 |
Change in fair value of contingent consideration | 0 | 291 | 485 | 346 |
Realized gain on sale of equity security | 0 | 0 | 0 | 1 |
Unrealized loss on equity security | 0 | 0 | 0 | (2) |
Unrealized (loss) gain on derivative security | 56 | (1,410) | (1,215) | (1,111) |
Interest income | 52 | 52 | 122 | 85 |
Interest expense | (799) | (8) | (1,688) | (61) |
Total other (expense) income | (680) | (767) | (2,285) | (434) |
(Loss) Income before income tax (expense) or benefit | (18,166) | 2,032 | (48,654) | 17,676 |
Income tax expense | 0 | 0 | 0 | 0 |
(Loss) income from continuing operations | (18,166) | 2,032 | (48,654) | 17,676 |
Income (loss) from discontinued operations | (294) | (2,203) | 1,163 | (3,361) |
Income tax (expense) or benefit | 0 | 0 | 0 | 0 |
Income (loss) on discontinued operations | (294) | (2,203) | 1,163 | (3,361) |
Net (loss) income | (18,460) | (171) | (47,491) | 14,315 |
Preferred stock dividends | 0 | 20 | 0 | 335 |
Net (loss) income attributable to common shareholders | (18,460) | (191) | (47,491) | 13,980 |
Other Comprehensive Income | 29 | 28 | 58 | 46 |
Total comprehensive (loss) income attributable to common shareholders | $ (18,431) | $ (163) | $ (47,433) | $ 14,026 |
(Loss) income from continuing operations per common share - basic | $ (0.23) | $ 0.05 | $ (0.66) | $ 0.42 |
Weighted average common shares outstanding- basic | 80,469,471 | 41,336,342 | 73,450,877 | 40,802,319 |
(Loss) income from continuing operations per common share - diluted | $ (0.23) | $ 0.05 | $ (0.66) | $ 0.42 |
Weighted average common shares outstanding - diluted | 80,469,471 | 41,395,075 | 74,032,082 | 40,861,052 |
(Loss) income on discontinued operations per common share - basic | $ 0 | $ (0.05) | $ 0.02 | $ (0.08) |
Weighted average common shares outstanding - basic | 80,469,471 | 41,336,342 | 73,450,877 | 40,802,319 |
(Loss) income on discontinued operations per common share - diluted | $ 0 | $ (0.05) | $ 0.02 | $ (0.08) |
Weighted average common shares outstanding - diluted | 80,469,471 | 41,395,075 | 74,032,082 | 40,861,052 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive 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, value | 5,749 | 5,749 | ||||
Shares issued for settlement of contingent consideration related to business acquisition, value | 150 | 150 | ||||
Shares issued for settlement of contingent consideration related to business acquisition, shares | 8,404 | |||||
Exercise of options, value | 282 | 282 | ||||
Exercise of options, shares | 52,061 | |||||
Shares issued under equity offering, net of offering costs, value | 67,989 | $ 4 | 67,985 | |||
Shares issued under equity offering, net of offering costs, shares | 4,017,652 | |||||
Preferred stock dividends | (315) | 315 | ||||
Net (loss) income | 14,486 | 14,486 | ||||
Other comprehensive income | 18 | 18 | ||||
Ending balance, value at Dec. 31, 2021 | 394,075 | $ 2 | $ 41 | 518,240 | 13 | (124,221) |
Ending balance, shares at Dec. 31, 2021 | 1,750,000 | 41,474,062 | ||||
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 | ||||
Shares issued for settlement of contingent consideration related to business acquisition, value | 0 | |||||
Net (loss) income | 14,315 | |||||
Ending balance, value at Mar. 31, 2022 | 400,918 | $ 2 | $ 41 | 525,246 | 41 | (124,412) |
Ending balance, shares at Mar. 31, 2022 | 1,750,000 | 41,290,587 | ||||
Beginning balance, value at Dec. 31, 2021 | 394,075 | $ 2 | $ 41 | 518,240 | 13 | (124,221) |
Beginning balance, shares at Dec. 31, 2021 | 1,750,000 | 41,474,062 | ||||
Options and restricted stock units issued for services, value | 6,554 | 6,554 | ||||
Options and restricted stock units issued for services, shares | 1,874 | |||||
Shares returned for settlement of contingent consideration and holdbacks related to business acquisition, Shares | (232,518) | |||||
Exercise of options, value | 452 | 452 | ||||
Exercise of options, shares | 47,169 | |||||
Preferred stock dividends | (20) | 20 | ||||
Net (loss) income | (171) | (171) | ||||
Other comprehensive income | 28 | 28 | ||||
Ending balance, value at Mar. 31, 2022 | 400,918 | $ 2 | $ 41 | 525,246 | 41 | (124,412) |
Ending balance, shares at Mar. 31, 2022 | 1,750,000 | 41,290,587 | ||||
Beginning balance, value at Sep. 30, 2022 | 404,012 | $ 2 | $ 56 | 599,898 | 110 | (196,054) |
Beginning balance, shares at Sep. 30, 2022 | 1,750,000 | 55,661,337 | ||||
Options and restricted stock units issued for services, value | 5,878 | 5,878 | ||||
Options and restricted stock units issued for services, shares | 11,210 | |||||
Shares issued for business acquisition, value | 4,803 | $ 2 | 4,801 | |||
Shares issued for business acquisition, shares | 1,590,175 | |||||
Shares issued under equity offering, net of offering costs, value | 41,344 | $ 14 | 41,330 | |||
Shares issued under equity offering, net of offering costs, shares | 14,481,208 | |||||
Net (loss) income | (29,031) | (29,031) | ||||
Other comprehensive income | 29 | 29 | ||||
Ending balance, value at Dec. 31, 2022 | 427,035 | $ 2 | $ 72 | 651,907 | 139 | (225,085) |
Ending balance, shares at Dec. 31, 2022 | 1,750,000 | 71,743,930 | ||||
Beginning balance, value at Sep. 30, 2022 | 404,012 | $ 2 | $ 56 | 599,898 | 110 | (196,054) |
Beginning balance, shares at Sep. 30, 2022 | 1,750,000 | 55,661,337 | ||||
Shares issued for settlement of contingent consideration related to business acquisition, value | 2,840 | |||||
Net (loss) income | (47,491) | |||||
Ending balance, value at Mar. 31, 2023 | 473,881 | $ 2 | $ 97 | 717,159 | 168 | (243,545) |
Ending balance, shares at Mar. 31, 2023 | 1,750,000 | 96,950,555 | ||||
Beginning balance, value at Dec. 31, 2022 | 427,035 | $ 2 | $ 72 | 651,907 | 139 | (225,085) |
Beginning balance, shares at Dec. 31, 2022 | 1,750,000 | 71,743,930 | ||||
Options and restricted stock units issued for services, value | 5,743 | $ 2 | 5,741 | |||
Options and restricted stock units issued for services, shares | 2,149,087 | |||||
Shares Withheld for Net Settlement of Restricted Stock Units Related to Tax Withholdings, value | (1,468) | $ 0 | (1,468) | |||
Shares withheld for net settlement of restricted stock units related to tax withholdings, shares | (539,961) | |||||
Shares issued for settlement of contingent consideration related to business acquisition, value | 2,840 | $ 1 | 2,839 | |||
Shares issued for settlement of contingent consideration related to business acquisition, shares | 1,100,890 | |||||
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, value | 58,162 | $ 22 | 58,140 | |||
Shares issued under equity offering, net of offering costs, shares | 22,580,026 | |||||
Net (loss) income | (18,460) | 18,460 | ||||
Other comprehensive income | 29 | 29 | ||||
Ending balance, value at Mar. 31, 2023 | $ 473,881 | $ 2 | $ 97 | $ 717,159 | $ 168 | $ (243,545) |
Ending balance, shares at Mar. 31, 2023 | 1,750,000 | 96,950,555 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash Flows from Operating Activities | ||
Net (loss) income | $ (47,491) | $ 14,315 |
Less: (Income) loss from discontinued Operations | (1,163) | 3,361 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Unrealized loss on equity security | 0 | 2 |
Realized gain on sale of equity security | 0 | (1) |
Impairment of bitcoin | 277 | 7,034 |
Realized (gain) on sale of bitcoin | (905) | (7,261) |
Bitcoin issued for services | 310 | 295 |
Unrealized loss on derivative asset | 1,215 | 1,111 |
Gain on fair value of contingent consideration | (485) | (346) |
Non-cash lease expenses | 159 | 56 |
Stock based compensation | 11,621 | 12,303 |
Depreciation and amortization | 40,675 | 17,879 |
Provision for bad debts | 106 | 0 |
Amortization of debt discount | 19 | 0 |
Loss (gain) on write-off and disposal of assets | 3 | (643) |
Income from in-kind receipts of miners | 0 | (308) |
Changes in operating assets and liabilities | ||
Mining of bitcoin | (70,234) | (73,940) |
Proceeds from sale of bitcoin | 76,203 | 80,430 |
(Decrease) in operating lease liabilities | (20) | (51) |
Increase in accounts payable and accrued liabilities | 5,203 | 5,771 |
(Increase) in prepaid expenses and other current assets | (772) | (9,572) |
(Increase) in accounts receivable | (125) | (1,282) |
(Increase) decrease in Inventory | (529) | 47 |
Long -term deposits paid | (2,940) | 0 |
Net cash provided by operating activities from Continuing Operations | 11,127 | 49,200 |
Net cash provided by (used in) operating activities of Discontinued Operations | 749 | (2,318) |
Net cash provided by operating activities | 11,876 | 46,882 |
Cash Flows from Investing Activities | ||
Payments on miners (including deposits) | (69,238) | (105,077) |
Purchase of fixed assets | (21,769) | (28,915) |
Settlement of holdbacks related to contingent consideration | 0 | (625) |
Proceeds from sale of miners | 0 | 3,498 |
Proceeds from sale of equity securities | 0 | 9 |
Acquisition of Mawson | (22,518) | 0 |
Net Cash used in Investing Activities - Continuing Operations | (113,525) | (131,110) |
Net cash provided by investing activities - Discontinued Operations | 2,462 | 0 |
Net cash used in investing activities | (111,063) | (131,110) |
Cash Flows from Financing Activities | ||
Payments on loans | (10,433) | 0 |
Payments on finance leases | (154) | (368) |
Refund of loan commitment fee | 150 | 0 |
Proceeds from exercise of options and warrants | 0 | 480 |
Proceeds from equity offerings, net | 99,506 | 67,989 |
Net cash provided by financing activities - Continued Operations | 89,069 | 68,101 |
Net cash provided by financing activities - Discontinued Operations | 0 | 0 |
Net cash provided by financing activities | 89,069 | 68,101 |
Net decrease in cash and cash equivalents | (10,118) | (16,127) |
Cash and cash equivalents, beginning of period | 20,463 | 18,040 |
Cash and cash equivalents, end of period | 10,345 | 1,913 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 1,669 | 62 |
Cash paid for tax | 0 | 0 |
Non-cash investing and financing transactions | ||
Receivables from exercise of options | 0 | 253 |
Fixed assets purchased through finance transactions | 164 | 0 |
Software purchased with bitcoin | 229 | 0 |
Shares withheld for net settlement of restricted stock units related to tax withholdings | (1,468) | 0 |
Shares issued for settlement of seller agreements related to acquisition | 0 | 150 |
Preferred share dividends accrued | 0 | 335 |
Unrealized gain on investment in available-for-sale debt security | 58 | 46 |
Shares issued for settlement of contingent consideration related to business acquisition, value | 2,840 | 0 |
Shares withheld for net settlement of restricted stock units related to tax withholdings | $ 1,468 | $ 0 |
1. ORGANIZATION
1. ORGANIZATION | 6 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | 1. ORGANIZATION The Company – CleanSpark, Inc. (“CleanSpark,” “we,” “our,” "Company") was incorporated in the state of Nevada on October 15, 1987 as SmartData Corporation. In October 2016, the Company changed its name to CleanSpark, Inc. CleanSpark, Inc. is a sustainable bitcoin mining company. The Company, through itself and its wholly owned subsidiaries, has operated in the bitcoin mining sector since December 2020. 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 in College Park, GA., acquired a second data center in August 2021 in Norcross, GA. a third data center and mining equipment in Washington, GA, in August 2022, a fourth data center and mining equipment in October 2022 in Sandersville, GA and has 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 does not intend to mine any other cryptocurrency, other than bitcoin. As of March 31, 2023, the Company does not support or host miners for other companies at any of our owned facilities. 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, and CleanSpark HQ, LLC, the Company maintains real property holdings. Discontinued Operations As of June 30, 2022, 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 software and intellectual property assets related to the Energy Segment, and is in the process of selling additional remaining inventory and assets. In February 2023, the Company entered into an agreement to sell the remaining battery and solar inventory pertaining to the discontinued operations of Solar Watt Solutions Inc. See Note 4 – Discontinued Operations. Other business activities Through ATL, we also provide traditional data center services to a small number of remaining clients, such as providing customers with rack space, power and equipment, and offer several cloud services including virtual services, virtual storage, and data backup services. ATL is in the process of offloading these customers. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying unaudited interim 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 (the "SEC") and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Report on Form 10-K for the year ended September 30, 2022, filed with the SEC on December 15, 2022 (the “Form 10-K”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented in this Quarterly Report on Form 10-Q have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. The accompanying unaudited 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 and CSRE Properties Sandersville, LLC. All intercompany transactions have been eliminated upon consolidation of these entities. Liquidity As shown in the accompanying unaudited consolidated financial statements, the Company generated a net loss from continuing operations of $ 48,654 during the six months ended March 31, 2023. The Company has experienced negative cash flows from investing activities from continuing operations due to its investments in capital expenditures and acquisitions in support of its bitcoin mining operations, but it has generated positive cash flows from operating and financing activities for continuing operations. In the six months ended March 31, 2023, the Company generated cash flows from operating activities from its continuing operations of $ 11,127 . The Company generates sufficient cash flows from operating activities of continuing operations, which should continue to support its ongoing operations for the next twelve months. In addition, the Company has access to equity financing through its At-the-Market offering facility (see Note 9 and Note 15). 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 and bitcoin impairment, intangible assets acquired, impairments and estimations of long-lived assets, revenue recognition from b itcoin mining, valuation of derivative assets, available-for-sale investments, allowances for uncollectible accounts, valuation of bitcoin, valuation of contingent consideration, warranty, 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 under 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 including, but not limited to, the ultimate impact that the ongoing global supply chain issues may have on the Company’s operations. 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 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 also 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 and is the same at contract inception per Step 1. 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 Universal Time Coordinated (UTC), 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 provides 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. 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 include cash and amounts due from banks and restricted cash. The Company did not have any restricted cash as of March 31, 2023 or September 30, 2022 reported in the consolidated balance sheet. Accounts Receivable, net 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) March 31, September 30, Accounts Receivable, gross $ 260 $ 247 Provision for doubtful allowances ( 213 ) ( 220 ) Total Accounts Receivable, net $ 47 $ 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. Inventory was $ 746 and $ 216 as of March 31, 2023 and September 30, 2022 , respectively . 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. 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 $ 10,095 and $ 20,213 as of March 31, 2023 and September 30, 2022, respectively. The accounts offered by the custodian of the Company’s bitcoin, which accounts totaled $ 5,267 and $ 11,147 as of March 31, 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. Please refer to Note 13 - Major Customers and Vendors. 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 11 – Stock-Based Compensation. Earnings (loss) per share The Company reports earnings (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 March 31, 2023, all common stock equivalents that consist of options, warrants and restricted stock units were excluded from the calculation of the diluted (loss) per share calculation for the three and six months ended March 31, 2023 as their effect is anti-dilutive. Provided below is the income (loss) per share calculation for the three and six months ended March 31, 2023 and 2022: For the Three Months For the Six Months ($ in thousands, except share and per share) 2023 2022 2023 2022 Continuing Operations Numerator (Loss) income from continuing operations $ ( 18,166 ) $ 2,032 $ ( 48,654 ) $ 17,676 Preferred stock dividends — 20 — 335 (Loss) income from continuing operations attributable to common shareholders $ ( 18,166 ) $ 2,012 $ ( 48,654 ) $ 17,341 Denominator Weighted- average common shares outstanding, 80,469,471 41,336,342 73,450,877 40,802,319 Dilutive impact of stock options and other share-based awards — 58,733 516 58,733 Dilutive impact of contingent shares issued for business acquisition — — 580,689 — Weighted- average common shares outstanding, 80,469,471 41,395,075 74,032,082 40,861,052 (Loss) income from continuing operations per common share attributable to common shareholders Basic $ ( 0.23 ) $ 0.05 $ ( 0.66 ) $ 0.42 Diluted $ ( 0.23 ) $ 0.05 $ ( 0.66 ) $ 0.42 Discontinued Operations Numerator Income (loss) on discontinued operations $ ( 294 ) $ ( 2,203 ) $ 1,163 $ ( 3,361 ) Denominator Weighted- average common shares outstanding, 80,469,471 41,336,342 73,450,877 40,802,319 Dilutive impact of stock options and other share-based awards — 58,733 516 58,733 Dilutive impact of contingent shares issued for business acquisition — — 580,689 — Weighted- average common shares outstanding, 80,469,471 41,395,075 74,032,082 40,861,052 Income (loss) on discontinued operations per common share attributable to common shareholders Basic $ ( 0.00 ) $ ( 0.05 ) $ 0.02 $ ( 0.08 ) Diluted $ ( 0.00 ) $ ( 0.05 ) $ 0.02 $ ( 0.08 ) Property and equipment Property and equipment are stated at cost less accumulated depreciation. Construction in progress is the construction or development of assets that have not yet been placed in service for their intended use. Depreciation for machinery and equipment, mining equipment, buildings, furniture and fixtures and leasehold improvements commences once they are ready for their 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 15 Building 30 Leasehold improvements Shorter of lease term or 15 years Miners 3 - 5 Mining equipment 3 - 15 Infrastructure asset Shorter of lease term or 5 years Machinery and equipment 1 - 10 Furniture and fixtures 3 - 7 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 six months ended March 31, 2023 and 2022 , the Company did no t record an impairment expense. Bitcoin Bitcoin are included in current assets in the consolidated balance sheets due to the Company’s ability to sell bitcoin in a highly liquid marketplace and its intent to liquidate its bitcoin to support operations when needed. Bitcoin are 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 Note 2 – Summary of Significant Accounting Policies. An intangible asset with an indefinite useful life is not amortized but is 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, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. The Company has elected to perform the quantitative impairment test each period rather than first performing the qualitative assessment. Quantitative impairment is measured using the quoted 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 principal market. 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 also included within operating activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in total costs and expenses in the consolidated statements of operations and comprehensive income (loss). The Company accounts for its gains or losses in accordance with the first in first out (“FIFO”) method of accounting. The following table presents the activities of the bitcoin for the six months ended March 31, 2023: ($ in thousands) Amount Balance as on September 30, 2022 $ 11,147 Addition of bitcoin 70,234 Carrying amount of bitcoin sold ( 75,298 ) Bitcoin issued for services ( 310 ) Bitcoin issued for software ( 229 ) Impairment loss ( 277 ) Balance as on March 31, 2023 $ 5,267 The Company's bitcoin holdings are not subject to rehypothecation and do not serve as collateral for any existing loans or agreements. 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 input, 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 under 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 the 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 balance sheets on a recurring basis, and their level within the fair value hierarchy as of March 31, 2023 and September 30, 2022: March 31, 2023 ($ in thousands) Amount Level 1 Level 2 Level 3 Derivative investment asset $ 1,741 $ — $ — $ 1,741 Investment in debt security 668 — — 668 Contingent consideration 2,000 2,000 — — Total $ 4,409 $ 2,000 $ — $ 2,409 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 six months ended March 31, 2023. 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 the six months ended March 31, 2023 are described in Note 5 - Investments. The activity during the six months ended March 31, 2023 relating to the contingent consideration is described in Note 3 - Acquisitions. 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 March 31, 2023 and September 30, 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, 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. federal taxes, or the various state jurisdictions, may be materially different from management's 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 statements of operations in the provision for income taxes. As of March 31, 2023 and September 30, 2022 , the Company had no accrued interest or penalties related to uncertain tax positions. Income tax expense (benefit) from operations for the six months ended March 31, 2023 and 2022 was $ 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 ("CODM") views and evaluates operations, performance and allocates resources. As of June 30, 2022, the Company's only operating segment is the bitcoin mining business due to its determination to consider the energy business as discontinued operation based on its decision to make a strategic shift to focus on the bitcoin mining business and divest of its energy assets. Discontinued Operations The Company deems it appropriate to classify a business as a discontinued operation if the related disposal group meets all the following criteria: 1) the disposal group is a component of the Company; 2) the component meets the held-for-sale criteria; and 3) the disposal of the component represents a strategic shift that has a major effect on the Company's operations and financial results. A s of June 30, 2022, the Company deemed its energy operations to be discontinued operation due to its strategic shift to strictly focus on its bitcoin mining operations and divest of its energy assets. Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. In June 2022, the Company made a strategic shift to focus on the bitcoin mining business and divest of its energy assets. As a result, assets and liabilities related to the energy segment have been classified as held for sale for all periods presented. Additionally, amounts previously presented as part of continuing operations have been reclassified into discontinued operations for all periods presented. 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 the new standard's potential impact but does not expect it 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 expects to adopt the ASU effective October 1, 2023, including the interim periods within the fiscal year. Early application of the adoption is permitted. The Company is evaluating the new standard's potential impact but does not expect it to 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 reco |
3. ACQUISITIONS
3. ACQUISITIONS | 6 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | 3. ACQUISITIONS Acquisitions Relating to Continuing Operations 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 approximately $ 4,800 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 agreed to pay up to $ 9,018 in cash within 15 days of the closing for the ASICs. The following additional consideration may be payable to Mawson following the closing: • 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. The shares associated with the earn-out were issued to Mawson in January 2023 ; and • up to an additional $ 2,000 in a seller-financed earn-out payable at least 60 days post-closing if the Company is able to utilize at least an additional 150 megawatts ("MW") of power on the Mawson Property by the six month anniversary of the closing. 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: 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 Preliminary 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 The contingent purchase price pertaining to the 1,100,890 Earn-out Shares has been classified as a liability in the Consolidated Balance Sheets in accordance with ASC 480, and accordingly is 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 $ 485 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. 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 “SPRE Property”), from SPRE Commercial Group, Inc. f/k/a WAHA, Inc. (“SPRE”), 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 “WAHA Transaction”), from Waha Technologies, Inc., (“WAHA”, and collectively with SPRE, "WAHA & SPRE"), an affiliate of the SPRE. 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 SPRE Property and miners consisted of (i) $1,962 in financing provided by SPRE 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 SPRE. 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 WAHA & SPRE in connection with the transaction and the allocation of the purchase price in accordance with ASC 820 were as follows: Consideration: Fair Value Cash $ 19,772 Financing provided by SPRE 1,962 Mortgage assumed 2,158 Total Consideration $ 23,892 Purchase Price Allocation: Preliminary 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. 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 SPRE 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 Six Months Ended ($ in thousands, except share and per share) March 31, 2022 Net sales from continuing operations $ 101,831 Income from continuing operations $ 19,397 Income from continuing operations per common share - basic $ 0.47 Weighted average common shares outstanding – basic 40,802,319 Income from continuing operations per common share - diluted $ 0.47 Weighted average common shares outstanding – diluted 40,861,052 Pro forma results of operations for the Mawson Transaction for the six months ended March 31, 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 six months ended March 31, 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. |
4. DISCONTINUED OPERATIONS
4. DISCONTINUED OPERATIONS | 6 Months Ended |
Mar. 31, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | 4. DISCONTINUED OPERATIONS The Company determined to make available for sale the asset groups related to the 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 June 30, 2022 in the consolidated balance sheets. The Company has since sold the majority of its software and intellectual property assets related to the energy segment and is in the process of selling additional remaining inventory and assets. The results of operations of this segment, for all periods, are separately reported as “discontinued operations” in the consolidated statements of operations and comprehensive income (loss). In February 2023, the Company entered into an agreement to sell the remaining battery and solar inventory pertaining to the discontinued operations of Solar Watt Solutions Inc. The sale price was $ 4,600 and consists of a receivable from the buyer that will be paid to the Company as inventory is utilized and sold by the buyer, but such receivable will be required to be paid in full within the earlier of the sellout of the purchased inventory or 18 months. However, the criteria has not been met to recognize a gain or loss on the disposal of inventory held for sale. The Company will recognize a gain or loss in future periods when the inventory has been disposed of under the sales agreement. In November 2022, the Company sold certain software rights and assets that were classified as assets held for sale for a net sales price of $ 2,523 with a carrying amount of $ 813 resulting in a recognized gain of $ 1,710 . Provided below are the key areas of the financials that constitute the discontinued operations: March 31, September 30, ASSETS Current assets Accounts receivable, net $ 980 $ 2,813 Inventory 4,400 4,400 Prepaid expense and other current assets 10 213 Total current assets held for sale $ 5,390 $ 7,426 Property and equipment, net 11 11 Operating lease right of use asset 582 665 Intangible assets, net — 869 Long-term assets held for sale $ 593 $ 1,545 Total assets held for sale $ 5,983 $ 8,971 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 175 $ 919 Contract liabilities — 117 Operating lease liability 169 163 Total current liabilities held for sale 344 1,199 Long-term liabilities Operating lease liability, net of current portion 426 512 Total liabilities held for sale $ 770 $ 1,711 For the three months ended For the six months ended March 31, March 31, March 31, March 31, Revenues, net Energy hardware, software and services revenue $ 28 $ 4,439 $ 129 $ 8,557 Total revenues, net 28 4,439 129 8,557 Costs and expenses Cost of revenues (exclusive of depreciation and amortization shown below) 40 3,531 88 6,605 Professional fees 104 ( 10 ) 104 63 Payroll expenses 34 1,735 308 3,291 General and administrative expenses 53 172 84 476 Impairment expense - other 100 — 100 — Depreciation and amortization 1,211 — 1,481 Total costs and expenses 331 6,639 684 11,916 Loss from operations $ ( 303 ) $ ( 2,200 ) $ ( 555 ) $ ( 3,359 ) Other income (expense) Gain on disposal of assets 11 — 1,721 — Interest expense ( 2 ) ( 3 ) ( 3 ) ( 2 ) Total other income (expense) 9 ( 3 ) 1,718 ( 2 ) (Loss) Income before income tax (expense) or benefit ( 294 ) ( 2,203 ) 1,163 ( 3,361 ) Income tax benefit (expense) — — — — Net (loss) income attributable to common shareholders $ ( 294 ) $ ( 2,203 ) $ 1,163 $ ( 3,361 ) |
5. INVESTMENTS
5. INVESTMENTS | 6 Months Ended |
Mar. 31, 2023 | |
Schedule of Investments [Abstract] | |
INVESTMENTS | 5. INVESTMENTS As of March 31, 2023 and September 30, 2022, the Company had total investments of $ 2,409 and $ 3,566 , respectively, that comprised of the following: International Land Alliance, Inc. On November 5, 2019, the Company entered into a binding Memorandum of Understanding (the “MOU”) with International Land Alliance, Inc. (“ILAL”) to lay a foundational framework where the Company expects to deploy its energy solutions across the portfolio of ILAL, including 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 (the “SPA”), dated as of November 6, 2019, with ILAL. Pursuant to the terms of the SPA with ILAL, the Company purchased 1,000 shares of Series B Preferred Stock of ILAL (the “ILAL Preferred Stock”) for an aggregate purchase price of $ 500 , 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 ILAL Preferred Stock can be converted into common stock at a variable rate (refer to 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 ILAL Preferred Stock is recorded as an available-for-sale ("AFS") debt security and is reported at its estimated fair value as of March 31, 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 interest on our available-for-sale debt securities totaling $ — as of March 31, 2023 and September 30, 2022, respectively, presented as prepaid expense and other current assets on the Consolidated Balance Sheets. The fair value of investment in Debt Securities is $ 668 and $ 610 as of March 31, 2023 and September 30, 2022, respectively. The Company has included gain on change in fair value of preferred stock amounting to $ 58 for the six months ended March 31, 2023, and $ 46 for the six months ended March 31, 2022, as part of other comprehensive income in the Consolidated Statements of Operations and Comprehensive Income (Loss). The Company has deemed this variable conversion feature of the 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 income in the Consolidated Statements of Operations and Comprehensive Income (Loss). Total fair value of investment in derivative assets as of March 31, 2023 and September 30, 2022, respectively was $ 1,741 and $ 2,956 . 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. The Company recorded an unrealized loss on derivative assets for $ 1,215 for the six months ended March 31, 2023, compared to an unrealized loss on derivative assets for $ 1,111 for the six months ended March 31, 2022. The following table sets forth a reconciliation of carrying value of all investments as of March 31, 2023: ($ in thousands) ILAL ILAL Balance as of September 30, 2022 $ 610 $ 2,956 Unrealized loss on derivative asset — ( 1,215 ) Unrealized gain on fair value recognized in Other comprehensive income 58 — Balance as of March 31, 2023 $ 668 $ 1,741 |
6. INTANGIBLE ASSETS
6. INTANGIBLE ASSETS | 6 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | 6. INTANGIBLE ASSETS Intangible assets consist of the following as of March 31, 2023 and September 30, 2022: March 31, 2023 September 30, 2022 ($ in thousands) Intangible assets Accumulated amortization Net intangible assets Intangible assets Accumulated amortization Net intangible assets Software $ 440 $ ( 36 ) $ 404 $ 210 $ — $ 210 Websites 23 ( 14 ) 9 23 ( 11 ) 12 Strategic Contract 9,800 ( 4,517 ) 5,283 9,800 ( 3,537 ) 6,263 Total $ 10,263 $ ( 4,567 ) $ 5,696 $ 10,033 $ ( 3,548 ) $ 6,485 Amortization expense for the six months ended March 31, 2023 and 2022 was $ 1,019 and $ 981 , respectively. The Company expects to record amortization expense of intangible assets over the next 5 years and thereafter as follows: Fiscal Year ($ in thousands) March 31, 2023 Remainder of FY 2023 $ 1,027 2024 2,053 2025 2,050 2026 471 2027 78 Thereafter 17 Total $ 5,696 |
7. PROPERTY AND EQUIPMENT
7. PROPERTY AND EQUIPMENT | 6 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 7. PROPERTY AND EQUIPMENT Property and equipment consist of the following: ($ in thousands) March 31, 2023 September 30, 2022 Land $ 2,978 $ 2,978 Land improvements 1,564 1,530 Building and improvements 50,853 32,332 Leasehold improvements 672 114 Miners 418,417 356,501 Mining equipment 18,672 17,587 Infrastructure 18,695 12,422 Machinery and equipment 1,525 1,269 Furniture and fixtures 364 331 Construction in progress 19,265 4,816 Total $ 533,005 $ 429,880 Less: accumulated depreciation ( 92,752 ) ( 53,099 ) Property and equipment, net $ 440,253 $ 376,781 Depreciation expense for the six months ended March 31, 2023 and 2022 was $ 39,656 and $ 16,898 , respectively. There were no disposals during the six months ended March 31, 2023. For the three months ended March 31, 2022 , $ 3,979 of property and equipment was sold for a gain of $ 921 . For the six months ended March 31, 2022 , $ 4,390 of property and equipment was disposed of for a gain of $ 643 , which included $ 411 of property and equipment that was written-off resulting in a loss of $ 278 . The Company placed-in service property and equipment of $ 88,675 during the six months ended March 31, 2023 , which includes $ 31,192 in property and equipment acquired in the Mawson Transaction. This increase in fixed assets primarily consisted of miners and mining equipment of $ 63,002 , which includes $ 12,914 acquired in the Mawson Transaction. Construction in progress: The Company is expanding its facilities in the State of Georgia, including infrastructure, building, and land improvements to expand its mining operations. As of March 31, 2023 , the Company has outstanding deposits totaling $ 34,020 for mining equipment included in long-term assets on the consolidated balance sheets. The Company also has $ 3,500 in prepaid expense relating to payments made on the purchase of infrastructure assets. These prepayments will be applied to the purchase price when the vendor ships the miners and the infrastructure assets. |
8. LEASES
8. LEASES | 6 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
LEASES | 8. LEASES On October 1, 2019, the Company adopted the amendments to ASC 842, Leases, which requires 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 has operating leases which are for land and office space and finance leases which are primarily related to equipment used at its data center. In connection with the Mawson Transaction (see Note 3), the Company assumed a land lease in Sandersville, GA, with the original term expiring in July 2023 , but including eight separate three-year lease extension options. The operating lease liability recorded in connection with the acquisition assumes a full lease term of approximately 25 years with a discount rate of 6 %. The assumed land lease includes approximately $ 75 in quarterly lease payments with a 4 % increase in scheduled lease payments effective each successive lease option is exercised. The Company's lease costs recognized during the six months ended March 31, 2023 and 2022 in the unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) consist of the following: For the three months ended For the six months ended ($ in thousands) March 31, March 31, March 31, March 31, Operating lease cost (1) $ 79 $ 28 $ 159 $ 56 Finance lease cost: Depreciation expense of financed assets $ 39 $ 95 $ 119 $ 190 Interest on lease obligations $ 4 $ 10 $ 10 $ 21 (1) Included in general and administrative expenses Other lease information is as follows: For the six months ended ($ in thousands) March 31, March 31, Cash paid for amounts included in Operating cash outflows from operating leases $ 206 $ 66 Operating cash outflows from finance leases $ 6 $ 21 Financing cash outflows from finance leases $ 93 $ 206 March 31, September 30, Weighted-average remaining lease term - 22.5 years 3.2 years Weighted-average remaining lease term - 1.39 years 1.53 years Weighted-average discount rate - operating leases 6.90 % 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 March 31, 2023: ($ in thousands) Operating Finance Remainder of Fiscal 2023 $ 221 $ 120 2024 452 154 2025 456 22 2026 464 1 2027 376 — Thereafter 7,294 — Gross lease liabilities 9,263 297 Less: imputed interest ( 3,622 ) ( 10 ) Present value of lease liabilities $ 5,641 $ 287 Less: Current portion of lease liabilities ( 119 ) ( 216 ) Total lease liabilities, net of current portion $ 5,522 $ 71 |
9. STOCKHOLDERS' EQUITY
9. STOCKHOLDERS' EQUITY | 6 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | 9. 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. In the 2023 Annual Meeting of Stockholders held 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 for issuance from 100,000,000 to 300,000,000 . As of March 31, 2023, there were 96,950,555 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. On June 3, 2021, the Company entered into an At The Market Offering Agreement (the “Original ATM Agreement”) with H.C. Wainwright & Co., LLC (the “Agent”), to create an at-the-market equity program under which the Company may, from time to time, offer and sell shares of its common stock, having an aggregate gross offering price of up to $ 500,000 to or through the Agent. On December 14, 2022, the Company entered into Amendment No. 1 to the At the Market Offering Agreement with the Agent (the “ATM Agreement Amendment” and, together with the Original ATM Agreement, the “ATM Agreement”). Under the ATM Agreement, the Company may, but has no obligation to, issue and sell up to the lesser number of shares (the “Shares”) of the Company’s common stock that does not exceed (a) $ 500,000 of shares of common stock, exclusive of any amounts previously sold under the Original ATM Agreement, (b) the number of authorized but unissued shares of common stock (less the number of shares of common stock issuable upon exercise, conversion or exchange of any outstanding securities of the Company or otherwise reserved from the Company’s authorized capital stock), or (c) if applicable, the maximum number or dollar amount of shares of common stock that can be sold without causing the Company or the offering of the Shares to fail to satisfy the eligibility and transaction requirements for use of Form S-3, including General Instruction I.B.6 of Registration Statement on Form S-3, from time to time through the Agent, or to them, as sales agent and/or principal, on the terms set forth therein. Common stock issuances during the six months ended March 31, 2023: The Company issued 37,061,234 shares of common stock under its ATM Agreement resulting in ne t proceeds of $ 99,506 during the six months ended March 31, 2023. The Company issued 2,160,297 shares of common stock in relation to the settlement of restricted stock awards and withheld 539,961 shares of common stock for net settlement. The Company issued 1,590,175 shares of common stock valued at $ 4,803 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 six months ended March 31, 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 during the six months ended March 31, 2022: The Company issued 99,230 shares of common stock in relation to the exercise of options. The Company issued 8,404 shares of common stock valued at $ 150 for the settlement of contingent consideration related to a business acquisition. The Company issued 4,017,652 shares of common stock under its ATM Agreement, resulting in net proceeds of $ 67,989 . The Company issued 1,874 shares of common stock valued at $ 30 as compensation for Director services. Common stock returned during the six months ended March 31, 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. |
10. STOCK WARRANTS
10. STOCK WARRANTS | 6 Months Ended |
Mar. 31, 2023 | |
Stock Warrants | |
STOCK WARRANTS | 10. STOCK WARRANTS The following is a summary of stock warrant activity during the six months ended March 31, 2023. Number of Weighted Balance, September 30, 2022 202,220 $ 13.03 Warrants granted — — Warrants expired — — Warrants canceled — — Warrants exercised — — Balance, March 31, 2023 202,220 $ 13.03 As of March 31, 2023 , there were warrants exercisable to purchase 202,220 shares of common stock in the Company and there were no warrants that were unvested. These warrants have a weighted average exercise price of $ 13.03 . During the six months ended March 31, 2023 , there were no exercise of warrants. As of Sep tember 30, 2022, the outstanding warrants have a weighted average remaining term of 2.68 years and an intrinsic value of $ 0 . |
11. STOCK-BASED COMPENSATION
11. STOCK-BASED COMPENSATION | 6 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
STOCK-BASED COMPENSATION | 11. 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. As of September 2022, an aggregate of 3,500,000 shares of common stock were authorized for issuance under 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 shares available under the Plan increased to 14,542,583 . As of March 31, 2023 , there were 1,815,187 shares available for issuance under the Plan. Effective April 1, 2023 after giving effect to the evergreen provision and the effectiveness of grants of equity awards that were conditioned on stockholder approval of the amendment to the Plan, there were 4,845,770 shares available for issuance under the Plan. STOCK OPTIONS The following is a summary of stock option activity during the six months ended March 31, 2023: Number of Weighted Average Balance, September 30, 2022 1,418,938 19.11 Options granted 50,000 3.27 Options expired ( 44,600 ) 6.05 Options canceled/forfeited ( 134,656 ) 12.73 Options exercised — — Balance, March 31, 2023 1,289,682 $ 19.61 As of March 31, 2023 , there were options exercisable to purchase 813,553 shares of common stock in the Company and 476,129 unvested options outstanding that cannot be exercised until vesting conditions are met. As of March 31, 2023 , the outstanding options have a weighted average remaining term of 3.67 years and an intrinsic value of $ 2 . For the six months ended March 31, 2023 , the Company also granted 50,000 options to purchase shares of common stock to employees with a total fair value of $ 158 . The Black-Scholes model utilized the following inputs to value the options granted during the six months ended March 31, 2023: Fair value assumptions Options: March 31, 2023 Risk free interest rate 2.65 % - 4.23 % Expected term (years) 5.50 - 5.77 Expected volatility 180.09 % - 194.90 % Expected dividends 0 % The Company recognized stock based compensation expense relating to stock options of $ 1,487 and $ 2,503 for the three months ended March 31, 2023 and 2022 and $ 3,145 and $ 4,915 for the six months ended March 31, 2023 and 2022 . As of March 31, 2023 , the Company expects to recognize $ 9,504 of stock-based compensation for the non-vested outstanding options over a weighted-average period of approximately one-year. RESTRICTED STOCK UNITS 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 Weighted Aggregate Outstanding at September 30, 2022 5,448,548 $ 4.93 $ 17,326 Granted 390,552 2.55 Vested ( 1,539,776 ) 4.59 Forfeited ( 4,048 ) 29.34 Outstanding at March 31, 2023 4,295,276 $ 4.81 $ 11,941 During the six months ended March 31, 2023 , the Company granted 390,552 RSUs, of which 360,552 are service period based and 30,000 were based on performance conditions. Included in these grants were 355,552 RSUs granted to members of the Board of Directors, which were granted for fiscal 2023 and were effectively granted upon shareholder approval of an increase in the number of shares available under the Company’s equity incentive plan in March 2023. The RSU awards to the Board of Directors vest quarterly over fiscal year 2023 and have a combined grant date fair value of $ 800 . The Company recognized stock based compensation expense relating to restricted stock units of $ 4,256 and $ 4,051 for the three months ended March 31, 2023 and 2022 and $ 8,476 and $ 7,388 for the six months ended March 31, 2023 and 2022. As of March 31, 2023 , the Company had $ 18,466 in unrecognized compensation costs related to RSU awards that it expects to recognize over a weighted average period of 1.3 years. |
12. COMMITMENTS AND CONTINGENCI
12. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Purchase of bitcoin mining related equipment The Company had no open purchase commitments for miners or mining equipment as of March 31, 2023. See Note 15-Subsequent Events for information on an additional purchase transaction with Bitmain Technologies Delaware Limited signed in April 2023 for the purchase of 45,000 XP mining machines for a purchase price up to $ 144,900 (based on coupons). 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. As of the date of this filing, the Company has paid no consideration or deposits to Lancium and, accordingly, there is no direct financial risk with respect to the delays Lancium is currently experiencing. To the extent services are provided in the future, the Company has agreed to compensate Lancium based on a power and hosting fee based on kilowatt hours consumed by the Company’s equipment, subject to service level adjustments and credits, if any. The agreement has an initial term of five years from the operations commencement date (unless terminated earlier in accordance with the terms of the agreement), after which it will renew automatically for two-year periods unless either party provides notice of non-renewal at least ninety days prior to the expiration of the term or renewal term, as applicable. Contractual future payments The following table sets forth certain information concerning our obligations to make contractual future payments towards our agreements as of March 31, 2023: ($ in thousands) Remainder of Fiscal Year 2023 Fiscal 2024 Fiscal 2025 Fiscal 2026 Fiscal 2027 Thereafter Total Recorded contractual obligations: Operating lease obligations $ 221 $ 452 $ 456 $ 464 $ 376 $ 7,294 $ 9,263 Finance lease obligations 120 154 22 1 — — 297 Loans 5,079 8,101 5,882 374 205 50 19,691 Construction in progress 13,268 — — — — — 13,268 Total $ 18,688 $ 8,707 $ 6,360 $ 839 $ 581 $ 7,344 $ 42,519 Contingent consideration Mawson Property Acquisition In connection with the Mawson Transaction (as discussed in Note 3), the Company agreed to additional consideration for the seller based upon certain post-closing criteria being met. Specifically, this amounted to 1,100,890 earn-out shares of Company stock with a value on the date of acquisition of $ 3,325 . Additionally, the Company and seller agreed to up to $ 2,000 of seller financing if certain additional power can be delivered to the site. The Company believes both contingent agreements are probable and has recorded the total commitment as a current liability as of December 31, 2022. On January 13, 2023, the Company issued the 1,100,890 shares to the seller in full satisfaction of the first contingency at a value of $ 2,840 , determined based on the stock price at the date of issuance. Legal contingencies From time to time the Company may be subject to litigation arising in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. When a material loss contingency is reasonably possible but not probable, the Company does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Legal fees are expensed as incurred. Based on the opinion of legal counsel and other factors, management believes that the final disposition of these existing matters will not have a material adverse effect on the business, results of operations, financial condition, or cash flows of the Company. The Company has identified certain claims as a result of which a loss may be incurred, but in the aggregate the loss is expected to be insignificant. This assessment is based on our current understanding of relevant facts and circumstances. As such, our view of these matters is subject to inherent uncertainties and may change in the future. Significant judgment is required in both the determination of probability and the determination as to whether an exposure is reasonably estimable. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates. For other claims regarding proceedings that are in an initial phase, the Company is unable to estimate the range of possible loss, if any, but at this time believes that any loss related to such claims will not be material. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. We maintain liability insurance to reduce such risk exposure to the Company. Despite the measures taken, such policies may not cover future litigation, or the damages claimed may exceed our coverage which could result in contingent liabilities. 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”). The Class Complaint alleged that, between December 31, 2020 and January 14, 2021, the Company, Bradford, and Love “failed to disclose to investors: (1) that the Company had overstated its customer and contract figures; (2) that several of the Company’s recent acquisitions involved undisclosed related party transactions; and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.” The Class Complaint sought: (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. 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 Data Centers, Inc. (“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 its Motion to Dismiss on April 28, 2022. The Motion to Dismiss sought dismissal of all claims asserted in the Amended Class Complaint with prejudice and without leave to amend on the grounds that Plaintiffs failed to state a claim upon which relief can be granted under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 promulgated thereunder. Plaintiffs filed their opposition on June 27, 2022. Defendants’ reply in further support of their Motion to Dismiss was filed on August 11, 2022. The Motion to Dismiss was denied on January 5, 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. Although the ultimate outcome of the Class Action cannot be determined with certainty, the Company believes that the claims raised in the Amended Class Complaint and the Class Complaint are without merit. The Company intends to both defend itself vigorously against these claims and to vigorously prosecute any counterclaims. Notwithstanding Plaintiffs’ allegations’ lack of merit, however, 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 Company and its management have complied with all of their obligations under applicable securities regulations, 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. Ciceri, derivatively on behalf of CleanSpark, Inc., v. Bradford, Love, Schultz, Beynon, McNeill, and Wood (consolidated with Perna, derivatively on behalf of CleanSpark, Inc., v. Bradford, Love, Schultz, Beynon, McNeill, and Wood) 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 Chief Executive Officer, Zachary Bradford (“Bradford”), Chief Financial Officer at the time, Lori Love (“Love”) and Directors Matthew Schultz, Roger Beynon, Larry McNeill and Tom Wood (Bradford, Love and Directors collectively referred to as “Ciceri Derivative Defendants.”) 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 Derivative Action”). The Consolidated 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 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’ opposition is due on May 22, 2023 and Defendants’ reply in further support of their Motion to Dismiss is due on June 7, 2023. Although the ultimate outcome of the Consolidated Derivative Action cannot be determined with certainty, 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. Notwithstanding the Consolidated Derivative Action’s lack of merit, however, it 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 Company and its management have complied with all of their obligations under applicable securities regulations, 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. Smith, derivatively on behalf of CleanSpark, Inc., v. Bradford, Love, Schultz, Beynon, McNeill, and Wood On February 21, 2023, Brandon Smith (“Smith”), derivatively on behalf of CleanSpark, Inc., filed a verified shareholder derivative action (the “Smith Derivative Action”) in the Eighth Judicial District Court of the State of Nevada in and for Clark County against Chief Executive Officer Zachary Bradford (“Bradford”), former Chief Financial Officer, Lori Love (“Love”), and Directors Matthew Schultz, Roger Beynon, Larry McNeill, and Thomas Wood (Bradford, Love, and Directors collectively referred to as “Smith Derivative Defendants”). The Smith Derivative Action alleges that the Smith Derivative 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. The claims asserted against all Smith Derivative Defendants include breach of fiduciary duties and unjust enrichment. The Smith Derivative Action seeks monetary damages, restitution, litigation costs, and imposition of adequate corporate governance and internal controls. On March 23, 2023, the Smith Derivative Defendants removed the action to the United States District Court for the District of Nevada. On March 24, 2023, the Smith Derivative Defendants filed a Motion to Consolidate the Smith Derivative Action with the Consolidated Derivative Action. On April 6, 2023, Plaintiff filed a Motion to Remand the Smith Derivative Action to Nevada state court. On April 17, 2023, Plaintiff opposed the Smith Derivative Defendants’ Motion to Consolidate. On April 20, 2023, the Smith Derivative Defendants opposed Plaintiff’s Motion to Remand. On April 24, 2023, the Smith Derivative Defendants filed their reply in further support of their Motion to Consolidate. On April 27, 2023, Plaintiff filed his reply in further support of his Motion to Remand. Although the ultimate outcome of the Smith Derivative Action cannot be determined with certainty, 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. Notwithstanding the Smith Derivative Action’s lack of merit, however, it 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 Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the Smith 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. Iraci, derivatively on behalf of CleanSpark, Inc., 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 Chief Executive Officer Zachary Bradford (“Bradford”), former Chief Financial Officer, Lori Love (“Love”), and Directors Matthew Schultz, Roger Beynon, Larry McNeill, and Thomas Wood (Bradford, Love, and Directors collectively referred to as “Iraci Derivative Defendants”). The Iraci Derivative Action alleges that the Iraci Derivative 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, questionable uses of corporate assets, and excessive compensation. The claims asserted against all Iraci Derivative Defendants include breach of fiduciary duties, aiding and abetting breach of fiduciary duties, and unjust enrichment. The Iraci Derivative Action seeks monetary damages, restitution, litigation costs, and imposition of adequate corporate governance and internal controls. On February 28, 2023, Defendants removed the Iraci Derivative Action to the United States District Court for the District of Nevada. On March 24, 2023, the Iraci Derivative Defendants filed a Motion to Consolidate the Iraci Derivative Action with the Consolidated Derivative Action. On March 30, 2023, Plaintiff filed a Motion to Remand the Iraci Derivative Action to Nevada state court. On April 13, 2023, the Iraci Derivative Defendants filed their opposition to Plaintiff’s Motion to Remand. On April 17, 2023, Plaintiff filed his opposition to the Iraci Derivative Defendants’ Motion to Consolidate. On April 20, 2023, Plaintiff filed his reply in further support of his Motion to Remand. On April 24, 2020, the Iraci Derivative Defendants filed their reply in further support of their Motion to Consolidate, and the Iraci Derivative Defendants filed their Motion to Dismiss the Iraci Derivative Action. Plaintiff’s opposition to Defendants’ Motion to Dismiss is due May 24, 2023 and the Iraci Derivative Defendants’ reply in further support of their Motion to Dismiss is due June 14, 2023. Although the ultimate outcome of the Iraci Derivative Action cannot be determined with certainty, 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. Notwithstanding the Iraci Derivative Action’s lack of merit, however, it 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 Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the Iraci 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. Atanasoff, derivatively on behalf of CleanSpark, Inc., v. Bradford, 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 Chief Executive Officer Zachary Bradford (“Bradford”) and Directors Matthew Schultz, Roger Beynon, Larry McNeill, and Thomas Wood (Bradford and Directors collectively referred to as “Atanasoff Derivative Defendants”). The Atanasoff Derivative Action alleges that the Atanasoff Derivative 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; and (4) did not maintain adequate internal controls. The claims asserted against all Atanasoff Derivative Defendants include breach of fiduciary duties and unjust enrichment. The Atanasoff Derivative Action seeks monetary damages, restitution, litigation costs, and imposition of adequate corporate governance and internal controls. On March 7, 2023, the Atanasoff Derivative Defendants removed the Atanasoff Derivative Action to the United States District Court for the District of Nevada. On March 24, 2023, Defendants filed a Motion to Consolidate the Atanasoff Derivative Action with the Consolidated Derivative Action. On April 4, 2023, Plaintiff filed a Motion to Remand the Atanasoff Derivative Action to Nevada state court. On April 7, 2023, Plaintiff opposed the Atanasoff Derivative Defendants’ Motion to Consolidate. On April 18, 2023, the Atanasoff Derivative Defendants opposed Plaintiff’s Motion to Remand. On April 24, 2023, the Atanasoff Derivative Defendants filed their reply in further support of their Motion to Consolidate. On April 25, 2024, Plaintiff filed his reply in further support of his Motion to Remand. The Atanasoff Derivative Defendants filed a Motion to Dismiss on May 5, 2023. Plaintiff’s opposition to Defendants’ Motion to Dismiss is due June 5, 2023, and Defendants’ reply in further support is due June 26, 2023. Although the ultimate outcome of the Atanasoff Derivative Action cannot be determined with certainty, 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. Notwithstanding the Atanasoff Derivative Action’s lack of merit, however, it 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 Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the Atanasoff 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. France, derivatively on behalf of CleanSpark, Inc., v. Bradford, Love, Tadayon, 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 Chief Executive Officer Zachary Bradford (“Bradford”), former Chief Financial Officer, Lori Love (“Love”), former Chief Revenue Officer, Amer Tadayon, and Directors Matthew Schultz, Roger Beynon, Larry McNeill, and Thomas Wood (Bradford, Love, Tadayon, and Directors collectively referred to as “France Derivative Defendants”). The France Derivative Action alleges that the France Derivative 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, questionable uses of corporate assets, and excessive compensation. The claims asserted against all France Derivative Defendants include breach of fiduciary duties, unjust enrichment, and corporate waste. The France Derivative Action seeks declaratory relief, monetary damages, restitution, litigation costs, and imposition of adequate corporate governance and internal controls. On March 23, 2023, the France Derivative Defendants removed the France Derivative Action to the United States District Court for the District of Nevada. On March 24, 2023, the France Derivative Defendants filed a Motion to Consolidate the France Derivative Action with the Consolidated Derivative Action. On March 31, 2023, Plaintiff filed a Motion to Remand the France Derivative Action to Nevada state court. On April 7, 2023, Plaintiff filed a response opposing the France Derivative Defendants’ Motion to Consolidate. On April 11, 2023, the France Derivative Defendants filed Motions to Dismiss the France Derivative Action. On April 14, 2023, the France Derivative Defendants opposed Plaintiff’s Motion to Remand. On April 21, 2023, Plaintiff filed a reply in further support of his Motion to Remand. On April 24, 2023, the France Derivative Defendants filed a reply in further support of their Motion to Consolidate. The Court granted Plaintiff’s Motion to Remand on May 4, 2023 and the case will now proceed in Nevada state court. Unless the Nevada court revises deadlines, Plaintiff’s opposition to the France Derivative Defendants’ Motion to Dismiss is due May 11, 2023 and the France Derivative Defendants’ reply in further support of their Motion to Dismiss is due June 1, 2023. Although the ultimate outcome of the France Derivative Action cannot be determined with certainty, 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. Notwithstanding the France Derivative Action’s lack of merit, however, it 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 Company and its management have complied with all of their obligations under applicable securities regulations, no assurance can be given as to the outcome of the 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. 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. Darfon America Corp. vs. CleanSpark, Inc. On August 18, 2022, Darfon America Corp 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 income (loss). |
13. MAJOR CUSTOMERS AND VENDORS
13. MAJOR CUSTOMERS AND VENDORS | 6 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
MAJOR CUSTOMERS AND VENDORS | 13. MAJOR CUSTOMERS AND VENDORS The Company has one mining pool operator (Foundry Digital) that represented over 99 % of revenue for all periods ended for the three and six months ended March 31, 2023 and 2022. For the six months ended March 31, 2023 and 2022, the Company had the following significant suppliers of mining equipment. Six Months Ended March 31, 2023 March 31, 2022 Cyptech Solutions 71.79 % 71.70 % Sunnyside Digital Inc. 27.06 % — Bitmain Technologies Ltd. — 24.03 % |
14. LOAN
14. LOAN | 6 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
LOAN | 14. LOANS As of March 31, 2023, the Company had a gross balance outstanding of $ 17,783 , netted against discount on the loans payable of $ 164 . Total principal payments on loans during the six months ended March 31, 2023 was $ 10,433 . The following is a schedule of the Company's future loan payments and loan balance, net of debt discount, as of March 31, 2023: ($ in thousands) Maturity Date Rate Debt Balance, Net Master Equipment Financing Arrangement Apr-25 13.80 % $ 14,493 SPRE Commercial Group, Inc. Aug-23 12.00 % 844 Marquee Funding Partners Jul-26 - Feb-27 13.00 % 1,933 Auto & Equipment Loans Oct-26 - Oct-28 0.99 - 9.20 % 349 Total Loans Outstanding $ 17,619 Less: current portion of long-term loans ( 7,248 ) Long-term loans, excluding current portion $ 10,371 ($ in thousands) 5-Year Loan Maturities Outstanding Loan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Thereafter Total Master Equipment Financing Arrangement $ 2,928 $ 6,508 $ 5,221 $ — $ — $ — $ 14,657 SPRE Commercial Group, Inc. 844 — — — — — 844 Marquee Funding Partners 208 458 521 593 153 — 1,933 Auto & Equipment Loans 29 67 70 74 59 50 349 Total principal amount of loan payments by fiscal year $ 4,009 $ 7,033 $ 5,812 $ 667 $ 212 $ 50 $ 17,783 Unamortized deferred financing costs and discounts on Master Equipment Financing Arrangement ( 164 ) Total loan book value as of December 31, 2022 $ 17,619 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 million of borrowings to finance the Company’s acquisition of blockchain computing equipment. The Company received a loan of $ 20 million at closing, with the remaining $ 15 million 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 our Godby, GA and Norcross, GA sites. SPRE Commercial Group, Inc. In connection with the WAHA Transaction, the Company entered into a financing arrangement with the seller. The loan has a term of 12 months with monthly payments of $ 174 and a stated interest rate of 12 %. Marquee Funding Partners In connection with the WAHA Transaction, certain assets were encumbered with mortgages which the Company assumed. The mortgages assumed have a current unpaid principal balance of $ 2,031 and remaining payment terms ranging from 47 - 54 months and annual interest of 13 %. Auto Loans The Company has entered into various financing arrangements to purchase vehicles and non-miner equipment with combined principal amount of $ 364 . The loans vary in terms from 48 - 72 months with annual interest rates ranging from 0.99 % - 9.20 %. The loans are secured with the purchased vehicles and equipment. During the six months ended March 31, 2023 , the Company entered into two separate agreements for the purchase of equipment with a combined principal of $ 164 , with terms ranging from 48 - 60 months and interest rates ranging from 0.99 %- 2.90 %. |
15. SUBSEQUENT EVENTS
15. SUBSEQUENT EVENTS | 6 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 15. SUBSEQUENT EVENTS On April 6, 2023, the Company purchased 45,000 XP mining machines for a purchase price of $ 144,900 , subject to a price reduction after the use of coupons. The mining machines are scheduled for deliveries in August and September 2023. 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 April 6, 2023. The Company plans to use the mining machines to expand its bitcoin mining activities through its wholly owned subsidiaries. The Company anticipates funding the purchase price through a combination of cash from operations and proceeds from debt or equity offerings. 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. On May 10, 2023, HQLLC executed a refinancing transaction whereby it borrowed $ 2,000 against the equity of the Eastern Property. The loan agreement has a 2 year term, 10 % interest rate and monthly interest only payments until maturity. From April 1, 2023, through the date of filing, the Company issued 15,598,191 shares under its ATM Agreement resulting in net proceeds of $ 57,482 . The proceeds were utilized to fund capital expenditures associated with the expansion of mining facilities and the purchase of miners. On May 1, 2023, the Company entered into a Purchase and Sale agreement with the Development Authority of Washington County to purchase certain leased land and additional parcels in Sandersville, GA for a purchase price of $ 1,300 . The leased land was subject to an operating lease and such rights were acquired by the Company under the Mawson Transaction and includes 16.35 acres. The Purchase and Lease agreement is subject to several conditions prior to closing and the current lease has been amended to include an additional 10 acres until the transaction is closed and ownership transfers to the company, at which time the lease will terminate. The Company expects to close the purchase on or before July 1, 2023. Effective May 2, 2023, the Company's mining pool operator began charging fees for its services, at a rate of 0.19 % of bitcoin earned each day. Once the Company reaches 10 EH/s of computing power on average for a quarter, the fee will decrease to 0.15 % of total bitcoin earned each day. The Company will record such fees as a net reduction of bitcoin mining revenues in the Consolidated Statements of Operations and Comprehensive Income (Loss). |
2. SUMMARY OF SIGNIFICANT ACC_2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying unaudited interim 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 (the "SEC") and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Report on Form 10-K for the year ended September 30, 2022, filed with the SEC on December 15, 2022 (the “Form 10-K”). In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented in this Quarterly Report on Form 10-Q have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted. The accompanying unaudited 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 and CSRE Properties Sandersville, LLC. All intercompany transactions have been eliminated upon consolidation of these entities. |
Liquidity | Liquidity As shown in the accompanying unaudited consolidated financial statements, the Company generated a net loss from continuing operations of $ 48,654 during the six months ended March 31, 2023. The Company has experienced negative cash flows from investing activities from continuing operations due to its investments in capital expenditures and acquisitions in support of its bitcoin mining operations, but it has generated positive cash flows from operating and financing activities for continuing operations. In the six months ended March 31, 2023, the Company generated cash flows from operating activities from its continuing operations of $ 11,127 . The Company generates sufficient cash flows from operating activities of continuing operations, which should continue to support its ongoing operations for the next twelve months. In addition, the Company has access to equity financing through its At-the-Market offering facility (see Note 9 and Note 15). |
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 and bitcoin impairment, intangible assets acquired, impairments and estimations of long-lived assets, revenue recognition from b itcoin mining, valuation of derivative assets, available-for-sale investments, allowances for uncollectible accounts, valuation of bitcoin, valuation of contingent consideration, warranty, 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 under 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 including, but not limited to, the ultimate impact that the ongoing global supply chain issues may have on the Company’s operations. |
Revenue Recognition | 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 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 also 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 and is the same at contract inception per Step 1. 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 Universal Time Coordinated (UTC), 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 provides 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. |
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 include cash and amounts due from banks and restricted cash. The Company did not have any restricted cash as of March 31, 2023 or September 30, 2022 reported in the consolidated balance sheet. |
Accounts Receivable, net | Accounts Receivable, net 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) March 31, September 30, Accounts Receivable, gross $ 260 $ 247 Provision for doubtful allowances ( 213 ) ( 220 ) Total Accounts Receivable, net $ 47 $ 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. Inventory was $ 746 and $ 216 as of March 31, 2023 and September 30, 2022 , respectively |
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. |
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 $ 10,095 and $ 20,213 as of March 31, 2023 and September 30, 2022, respectively. The accounts offered by the custodian of the Company’s bitcoin, which accounts totaled $ 5,267 and $ 11,147 as of March 31, 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. Please refer to Note 13 - Major Customers and Vendors. |
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 11 – Stock-Based Compensation. |
Earnings (loss) per share | Earnings (loss) per share The Company reports earnings (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 March 31, 2023, all common stock equivalents that consist of options, warrants and restricted stock units were excluded from the calculation of the diluted (loss) per share calculation for the three and six months ended March 31, 2023 as their effect is anti-dilutive. Provided below is the income (loss) per share calculation for the three and six months ended March 31, 2023 and 2022: For the Three Months For the Six Months ($ in thousands, except share and per share) 2023 2022 2023 2022 Continuing Operations Numerator (Loss) income from continuing operations $ ( 18,166 ) $ 2,032 $ ( 48,654 ) $ 17,676 Preferred stock dividends — 20 — 335 (Loss) income from continuing operations attributable to common shareholders $ ( 18,166 ) $ 2,012 $ ( 48,654 ) $ 17,341 Denominator Weighted- average common shares outstanding, 80,469,471 41,336,342 73,450,877 40,802,319 Dilutive impact of stock options and other share-based awards — 58,733 516 58,733 Dilutive impact of contingent shares issued for business acquisition — — 580,689 — Weighted- average common shares outstanding, 80,469,471 41,395,075 74,032,082 40,861,052 (Loss) income from continuing operations per common share attributable to common shareholders Basic $ ( 0.23 ) $ 0.05 $ ( 0.66 ) $ 0.42 Diluted $ ( 0.23 ) $ 0.05 $ ( 0.66 ) $ 0.42 Discontinued Operations Numerator Income (loss) on discontinued operations $ ( 294 ) $ ( 2,203 ) $ 1,163 $ ( 3,361 ) Denominator Weighted- average common shares outstanding, 80,469,471 41,336,342 73,450,877 40,802,319 Dilutive impact of stock options and other share-based awards — 58,733 516 58,733 Dilutive impact of contingent shares issued for business acquisition — — 580,689 — Weighted- average common shares outstanding, 80,469,471 41,395,075 74,032,082 40,861,052 Income (loss) on discontinued operations per common share attributable to common shareholders Basic $ ( 0.00 ) $ ( 0.05 ) $ 0.02 $ ( 0.08 ) Diluted $ ( 0.00 ) $ ( 0.05 ) $ 0.02 $ ( 0.08 ) |
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 have not yet been placed in service for their intended use. Depreciation for machinery and equipment, mining equipment, buildings, furniture and fixtures and leasehold improvements commences once they are ready for their 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 15 Building 30 Leasehold improvements Shorter of lease term or 15 years Miners 3 - 5 Mining equipment 3 - 15 Infrastructure asset Shorter of lease term or 5 years Machinery and equipment 1 - 10 Furniture and fixtures 3 - 7 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 six months ended March 31, 2023 and 2022 , the Company did no t record an impairment expense. |
Bitcoin | Bitcoin are included in current assets in the consolidated balance sheets due to the Company’s ability to sell bitcoin in a highly liquid marketplace and its intent to liquidate its bitcoin to support operations when needed. Bitcoin are 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 Note 2 – Summary of Significant Accounting Policies. An intangible asset with an indefinite useful life is not amortized but is 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, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. The Company has elected to perform the quantitative impairment test each period rather than first performing the qualitative assessment. Quantitative impairment is measured using the quoted 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 principal market. 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 also included within operating activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in total costs and expenses in the consolidated statements of operations and comprehensive income (loss). The Company accounts for its gains or losses in accordance with the first in first out (“FIFO”) method of accounting. The following table presents the activities of the bitcoin for the six months ended March 31, 2023: ($ in thousands) Amount Balance as on September 30, 2022 $ 11,147 Addition of bitcoin 70,234 Carrying amount of bitcoin sold ( 75,298 ) Bitcoin issued for services ( 310 ) Bitcoin issued for software ( 229 ) Impairment loss ( 277 ) Balance as on March 31, 2023 $ 5,267 The Company's bitcoin holdings are not subject to rehypothecation and do not serve as collateral for any existing loans or agreements. |
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 input, 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 under 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 the 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 balance sheets on a recurring basis, and their level within the fair value hierarchy as of March 31, 2023 and September 30, 2022: March 31, 2023 ($ in thousands) Amount Level 1 Level 2 Level 3 Derivative investment asset $ 1,741 $ — $ — $ 1,741 Investment in debt security 668 — — 668 Contingent consideration 2,000 2,000 — — Total $ 4,409 $ 2,000 $ — $ 2,409 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 six months ended March 31, 2023. 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 the six months ended March 31, 2023 are described in Note 5 - Investments. The activity during the six months ended March 31, 2023 relating to the contingent consideration is described in Note 3 - Acquisitions. |
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 March 31, 2023 and September 30, 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, 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. federal taxes, or the various state jurisdictions, may be materially different from management's 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 statements of operations in the provision for income taxes. As of March 31, 2023 and September 30, 2022 , the Company had no accrued interest or penalties related to uncertain tax positions. Income tax expense (benefit) from operations for the six months ended March 31, 2023 and 2022 was $ 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 ("CODM") views and evaluates operations, performance and allocates resources. As of June 30, 2022, the Company's only operating segment is the bitcoin mining business due to its determination to consider the energy business as discontinued operation based on its decision to make a strategic shift to focus on the bitcoin mining business and divest of its energy assets. |
Discontinued Operations | Discontinued Operations The Company deems it appropriate to classify a business as a discontinued operation if the related disposal group meets all the following criteria: 1) the disposal group is a component of the Company; 2) the component meets the held-for-sale criteria; and 3) the disposal of the component represents a strategic shift that has a major effect on the Company's operations and financial results. A s of June 30, 2022, the Company deemed its energy operations to be discontinued operation due to its strategic shift to strictly focus on its bitcoin mining operations and divest of its energy assets. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified for consistency with the current year presentation. In June 2022, the Company made a strategic shift to focus on the bitcoin mining business and divest of its energy assets. As a result, assets and liabilities related to the energy segment have been classified as held for sale for all periods presented. Additionally, amounts previously presented as part of continuing operations have been reclassified into discontinued operations for all periods presented. |
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 the new standard's potential impact but does not expect it 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 expects to adopt the ASU effective October 1, 2023, including the interim periods within the fiscal year. Early application of the adoption is permitted. The Company is evaluating the new standard's potential impact but does not expect it to 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 is effective for the Company for this fiscal year, including interim periods. The adoption of ASU 2020-06 did not have a material impact on the Company’s financial statements or disclosures. |
2. SUMMARY OF SIGNIFICANT ACC_3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable, net consists of the following: ($ in thousands) March 31, September 30, Accounts Receivable, gross $ 260 $ 247 Provision for doubtful allowances ( 213 ) ( 220 ) Total Accounts Receivable, net $ 47 $ 27 |
Schedule of Earnings Per Share Basic and Diluted | Provided below is the income (loss) per share calculation for the three and six months ended March 31, 2023 and 2022: For the Three Months For the Six Months ($ in thousands, except share and per share) 2023 2022 2023 2022 Continuing Operations Numerator (Loss) income from continuing operations $ ( 18,166 ) $ 2,032 $ ( 48,654 ) $ 17,676 Preferred stock dividends — 20 — 335 (Loss) income from continuing operations attributable to common shareholders $ ( 18,166 ) $ 2,012 $ ( 48,654 ) $ 17,341 Denominator Weighted- average common shares outstanding, 80,469,471 41,336,342 73,450,877 40,802,319 Dilutive impact of stock options and other share-based awards — 58,733 516 58,733 Dilutive impact of contingent shares issued for business acquisition — — 580,689 — Weighted- average common shares outstanding, 80,469,471 41,395,075 74,032,082 40,861,052 (Loss) income from continuing operations per common share attributable to common shareholders Basic $ ( 0.23 ) $ 0.05 $ ( 0.66 ) $ 0.42 Diluted $ ( 0.23 ) $ 0.05 $ ( 0.66 ) $ 0.42 Discontinued Operations Numerator Income (loss) on discontinued operations $ ( 294 ) $ ( 2,203 ) $ 1,163 $ ( 3,361 ) Denominator Weighted- average common shares outstanding, 80,469,471 41,336,342 73,450,877 40,802,319 Dilutive impact of stock options and other share-based awards — 58,733 516 58,733 Dilutive impact of contingent shares issued for business acquisition — — 580,689 — Weighted- average common shares outstanding, 80,469,471 41,395,075 74,032,082 40,861,052 Income (loss) on discontinued operations per common share attributable to common shareholders Basic $ ( 0.00 ) $ ( 0.05 ) $ 0.02 $ ( 0.08 ) Diluted $ ( 0.00 ) $ ( 0.05 ) $ 0.02 $ ( 0.08 ) |
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 15 Building 30 Leasehold improvements Shorter of lease term or 15 years Miners 3 - 5 Mining equipment 3 - 15 Infrastructure asset Shorter of lease term or 5 years Machinery and equipment 1 - 10 Furniture and fixtures 3 - 7 |
Schedule of Activities of Digital Currencies | The following table presents the activities of the bitcoin for the six months ended March 31, 2023: ($ in thousands) Amount Balance as on September 30, 2022 $ 11,147 Addition of bitcoin 70,234 Carrying amount of bitcoin sold ( 75,298 ) Bitcoin issued for services ( 310 ) Bitcoin issued for software ( 229 ) Impairment loss ( 277 ) Balance as on March 31, 2023 $ 5,267 |
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 balance sheets on a recurring basis, and their level within the fair value hierarchy as of March 31, 2023 and September 30, 2022: March 31, 2023 ($ in thousands) Amount Level 1 Level 2 Level 3 Derivative investment asset $ 1,741 $ — $ — $ 1,741 Investment in debt security 668 — — 668 Contingent consideration 2,000 2,000 — — Total $ 4,409 $ 2,000 $ — $ 2,409 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 |
3. ACQUISITIONS (Tables)
3. ACQUISITIONS (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
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: 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 | Preliminary 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 WAHA & SPRE in connection with the transaction and the allocation of the purchase price in accordance with ASC 820 were as follows: Consideration: 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: Preliminary Land $ 100 Building/Improvements 14,700 Miners 9,092 Total $ 23,892 |
Schedule of Unaudited Pro Forma Information Assuming Acquisitions | 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 Six Months Ended ($ in thousands, except share and per share) March 31, 2022 Net sales from continuing operations $ 101,831 Income from continuing operations $ 19,397 Income from continuing operations per common share - basic $ 0.47 Weighted average common shares outstanding – basic 40,802,319 Income from continuing operations per common share - diluted $ 0.47 Weighted average common shares outstanding – diluted 40,861,052 |
4. DISCONTINUED OPERATIONS (Tab
4. DISCONTINUED OPERATIONS (Tables) | 6 Months Ended |
Mar. 31, 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: March 31, September 30, ASSETS Current assets Accounts receivable, net $ 980 $ 2,813 Inventory 4,400 4,400 Prepaid expense and other current assets 10 213 Total current assets held for sale $ 5,390 $ 7,426 Property and equipment, net 11 11 Operating lease right of use asset 582 665 Intangible assets, net — 869 Long-term assets held for sale $ 593 $ 1,545 Total assets held for sale $ 5,983 $ 8,971 LIABILITIES Current liabilities Accounts payable and accrued liabilities $ 175 $ 919 Contract liabilities — 117 Operating lease liability 169 163 Total current liabilities held for sale 344 1,199 Long-term liabilities Operating lease liability, net of current portion 426 512 Total liabilities held for sale $ 770 $ 1,711 For the three months ended For the six months ended March 31, March 31, March 31, March 31, Revenues, net Energy hardware, software and services revenue $ 28 $ 4,439 $ 129 $ 8,557 Total revenues, net 28 4,439 129 8,557 Costs and expenses Cost of revenues (exclusive of depreciation and amortization shown below) 40 3,531 88 6,605 Professional fees 104 ( 10 ) 104 63 Payroll expenses 34 1,735 308 3,291 General and administrative expenses 53 172 84 476 Impairment expense - other 100 — 100 — Depreciation and amortization 1,211 — 1,481 Total costs and expenses 331 6,639 684 11,916 Loss from operations $ ( 303 ) $ ( 2,200 ) $ ( 555 ) $ ( 3,359 ) Other income (expense) Gain on disposal of assets 11 — 1,721 — Interest expense ( 2 ) ( 3 ) ( 3 ) ( 2 ) Total other income (expense) 9 ( 3 ) 1,718 ( 2 ) (Loss) Income before income tax (expense) or benefit ( 294 ) ( 2,203 ) 1,163 ( 3,361 ) Income tax benefit (expense) — — — — Net (loss) income attributable to common shareholders $ ( 294 ) $ ( 2,203 ) $ 1,163 $ ( 3,361 ) |
5. INVESTMENTS (Tables)
5. INVESTMENTS (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Schedule of Investments [Abstract] | |
Summary of Reconciliation of carrying value of all investments | The following table sets forth a reconciliation of carrying value of all investments as of March 31, 2023: ($ in thousands) ILAL ILAL Balance as of September 30, 2022 $ 610 $ 2,956 Unrealized loss on derivative asset — ( 1,215 ) Unrealized gain on fair value recognized in Other comprehensive income 58 — Balance as of March 31, 2023 $ 668 $ 1,741 |
6. INTANGIBLE ASSETS (Tables)
6. INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets consist of the following as of March 31, 2023 and September 30, 2022: March 31, 2023 September 30, 2022 ($ in thousands) Intangible assets Accumulated amortization Net intangible assets Intangible assets Accumulated amortization Net intangible assets Software $ 440 $ ( 36 ) $ 404 $ 210 $ — $ 210 Websites 23 ( 14 ) 9 23 ( 11 ) 12 Strategic Contract 9,800 ( 4,517 ) 5,283 9,800 ( 3,537 ) 6,263 Total $ 10,263 $ ( 4,567 ) $ 5,696 $ 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) March 31, 2023 Remainder of FY 2023 $ 1,027 2024 2,053 2025 2,050 2026 471 2027 78 Thereafter 17 Total $ 5,696 |
7. PROPERTY AND EQUIPMENT (Tabl
7. PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consist of the following: ($ in thousands) March 31, 2023 September 30, 2022 Land $ 2,978 $ 2,978 Land improvements 1,564 1,530 Building and improvements 50,853 32,332 Leasehold improvements 672 114 Miners 418,417 356,501 Mining equipment 18,672 17,587 Infrastructure 18,695 12,422 Machinery and equipment 1,525 1,269 Furniture and fixtures 364 331 Construction in progress 19,265 4,816 Total $ 533,005 $ 429,880 Less: accumulated depreciation ( 92,752 ) ( 53,099 ) Property and equipment, net $ 440,253 $ 376,781 |
8. LEASES (Tables)
8. LEASES (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Lease costs | The Company's lease costs recognized during the six months ended March 31, 2023 and 2022 in the unaudited Consolidated Statements of Operations and Comprehensive Income (Loss) consist of the following: For the three months ended For the six months ended ($ in thousands) March 31, March 31, March 31, March 31, Operating lease cost (1) $ 79 $ 28 $ 159 $ 56 Finance lease cost: Depreciation expense of financed assets $ 39 $ 95 $ 119 $ 190 Interest on lease obligations $ 4 $ 10 $ 10 $ 21 (1) Included in general and administrative expenses |
Other Lease Information | Other lease information is as follows: For the six months ended ($ in thousands) March 31, March 31, Cash paid for amounts included in Operating cash outflows from operating leases $ 206 $ 66 Operating cash outflows from finance leases $ 6 $ 21 Financing cash outflows from finance leases $ 93 $ 206 |
Weighted-average Remaining Lease Terms | March 31, September 30, Weighted-average remaining lease term - 22.5 years 3.2 years Weighted-average remaining lease term - 1.39 years 1.53 years Weighted-average discount rate - operating leases 6.90 % 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 March 31, 2023: ($ in thousands) Operating Finance Remainder of Fiscal 2023 $ 221 $ 120 2024 452 154 2025 456 22 2026 464 1 2027 376 — Thereafter 7,294 — Gross lease liabilities 9,263 297 Less: imputed interest ( 3,622 ) ( 10 ) Present value of lease liabilities $ 5,641 $ 287 Less: Current portion of lease liabilities ( 119 ) ( 216 ) Total lease liabilities, net of current portion $ 5,522 $ 71 |
10. STOCK WARRANTS (Tables)
10. STOCK WARRANTS (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Stock Warrants | |
Summary of stock warrant activity | The following is a summary of stock warrant activity during the six months ended March 31, 2023. Number of Weighted Balance, September 30, 2022 202,220 $ 13.03 Warrants granted — — Warrants expired — — Warrants canceled — — Warrants exercised — — Balance, March 31, 2023 202,220 $ 13.03 |
11. STOCK-BASED COMPENSATION (T
11. STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Schedule of Option Summary | The following is a summary of stock option activity during the six months ended March 31, 2023: Number of Weighted Average Balance, September 30, 2022 1,418,938 19.11 Options granted 50,000 3.27 Options expired ( 44,600 ) 6.05 Options canceled/forfeited ( 134,656 ) 12.73 Options exercised — — Balance, March 31, 2023 1,289,682 $ 19.61 |
Fair Value Option, Disclosures | The Black-Scholes model utilized the following inputs to value the options granted during the six months ended March 31, 2023: Fair value assumptions Options: March 31, 2023 Risk free interest rate 2.65 % - 4.23 % Expected term (years) 5.50 - 5.77 Expected volatility 180.09 % - 194.90 % Expected dividends 0 % The Company recognized stock based compensation expense relating to stock options of $ 1,487 and $ 2,503 for the three months ended March 31, 2023 and 2022 and $ 3,145 and $ 4,915 for the six months ended March 31, 2023 and 2022 . |
Schedule of Restricted Stock Summary | 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 Weighted Aggregate Outstanding at September 30, 2022 5,448,548 $ 4.93 $ 17,326 Granted 390,552 2.55 Vested ( 1,539,776 ) 4.59 Forfeited ( 4,048 ) 29.34 Outstanding at March 31, 2023 4,295,276 $ 4.81 $ 11,941 |
12. COMMITMENTS AND CONTINGEN_2
12. COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Contractual Future Payments Obligations | The following table sets forth certain information concerning our obligations to make contractual future payments towards our agreements as of March 31, 2023: ($ in thousands) Remainder of Fiscal Year 2023 Fiscal 2024 Fiscal 2025 Fiscal 2026 Fiscal 2027 Thereafter Total Recorded contractual obligations: Operating lease obligations $ 221 $ 452 $ 456 $ 464 $ 376 $ 7,294 $ 9,263 Finance lease obligations 120 154 22 1 — — 297 Loans 5,079 8,101 5,882 374 205 50 19,691 Construction in progress 13,268 — — — — — 13,268 Total $ 18,688 $ 8,707 $ 6,360 $ 839 $ 581 $ 7,344 $ 42,519 |
13. MAJOR CUSTOMERS AND VENDO_2
13. MAJOR CUSTOMERS AND VENDORS (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Purchase and Supply Commitment, Excluding Long-Term Commitment [Text Block] | For the six months ended March 31, 2023 and 2022, the Company had the following significant suppliers of mining equipment. Six Months Ended March 31, 2023 March 31, 2022 Cyptech Solutions 71.79 % 71.70 % Sunnyside Digital Inc. 27.06 % — Bitmain Technologies Ltd. — 24.03 % |
14. LOAN (Tables)
14. LOAN (Tables) | 6 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of loans outstanding | The following is a schedule of the Company's future loan payments and loan balance, net of debt discount, as of March 31, 2023: ($ in thousands) Maturity Date Rate Debt Balance, Net Master Equipment Financing Arrangement Apr-25 13.80 % $ 14,493 SPRE Commercial Group, Inc. Aug-23 12.00 % 844 Marquee Funding Partners Jul-26 - Feb-27 13.00 % 1,933 Auto & Equipment Loans Oct-26 - Oct-28 0.99 - 9.20 % 349 Total Loans Outstanding $ 17,619 Less: current portion of long-term loans ( 7,248 ) Long-term loans, excluding current portion $ 10,371 |
Schedule of principal amount of loan maturities due over the years | ($ in thousands) 5-Year Loan Maturities Outstanding Loan FY 2023 FY 2024 FY 2025 FY 2026 FY 2027 Thereafter Total Master Equipment Financing Arrangement $ 2,928 $ 6,508 $ 5,221 $ — $ — $ — $ 14,657 SPRE Commercial Group, Inc. 844 — — — — — 844 Marquee Funding Partners 208 458 521 593 153 — 1,933 Auto & Equipment Loans 29 67 70 74 59 50 349 Total principal amount of loan payments by fiscal year $ 4,009 $ 7,033 $ 5,812 $ 667 $ 212 $ 50 $ 17,783 Unamortized deferred financing costs and discounts on Master Equipment Financing Arrangement ( 164 ) Total loan book value as of December 31, 2022 $ 17,619 |
1. ORGANIZATION (Details Narrat
1. ORGANIZATION (Details Narrative) | 6 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Entity Incorporation, Date of Incorporation | Oct. 15, 1987 |
2. SUMMARY OF SIGNIFICANT ACC_4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Accounting Policies [Abstract] | ||
Accounts Receivable, gross | $ 260 | $ 247 |
Provision for doubtful allowances | (213) | (220) |
Total Accounts Receivable, net | $ 47 | $ 27 |
2. SUMMARY OF SIGNIFICANT ACC_5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Basic Earnings and Diluted Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator | ||||
(Loss) income from continuing operations | $ (18,166) | $ 2,032 | $ (48,654) | $ 17,676 |
Income (loss) on discontinued operations | (294) | (2,203) | 1,163 | (3,361) |
Preferred stock dividends | $ 0 | $ 20 | $ 0 | $ 335 |
Denominator | ||||
Weighted- average common shares outstanding, basic | 80,469,471 | 41,336,342 | 73,450,877 | 40,802,319 |
Weighted- average common shares outstanding, diluted | 80,469,471 | 41,395,075 | 74,032,082 | 40,861,052 |
Income (loss) on discontinued operations per common share attributable to common shareholders | ||||
Basic | $ (0.23) | $ 0.05 | $ (0.66) | $ 0.42 |
Diluted | (0.23) | 0.05 | (0.66) | 0.42 |
Basic | 0 | (0.05) | 0.02 | (0.08) |
Diluted | $ 0 | $ (0.05) | $ 0.02 | $ (0.08) |
Continuing Operations [Member] | ||||
Numerator | ||||
(Loss) income from continuing operations | $ (18,166) | $ 2,032 | $ (48,654) | $ 17,676 |
Preferred stock dividends | 0 | 20 | 0 | 335 |
(Loss) income from continuing operations attributable to common shareholders | $ (18,166) | $ 2,012 | $ (48,654) | $ 17,341 |
Denominator | ||||
Weighted- average common shares outstanding, basic | 80,469,471 | 41,336,342 | 73,450,877 | 40,802,319 |
Dilutive impact of stock options and other share-based awards | 0 | 58,733 | 516 | 58,733 |
Weighted- average common shares outstanding, diluted | 80,469,471 | 41,395,075 | 74,032,082 | 40,861,052 |
Income (loss) on discontinued operations per common share attributable to common shareholders | ||||
Basic | $ (0.23) | $ 0.05 | $ (0.66) | $ 0.42 |
Diluted | $ (0.23) | $ 0.05 | $ (0.66) | $ 0.42 |
Discontinued Operations [Member] | ||||
Numerator | ||||
Income (loss) on discontinued operations | $ (294) | $ (2,203) | $ 1,163 | $ (3,361) |
Denominator | ||||
Weighted- average common shares outstanding, basic | 80,469,471 | 41,336,342 | 73,450,877 | 40,802,319 |
Dilutive impact of stock options and other share-based awards | 0 | 58,733 | 516 | 58,733 |
Dilutive impact of contingent shares issued for business acquisition | 0 | 0 | 580,689 | 0 |
Weighted- average common shares outstanding, diluted | 80,469,471 | 41,395,075 | 74,032,082 | 40,861,052 |
Income (loss) on discontinued operations per common share attributable to common shareholders | ||||
Basic | $ 0 | $ (0.05) | $ 0.02 | $ (0.08) |
Diluted | $ 0 | $ (0.05) | $ 0.02 | $ (0.08) |
2. SUMMARY OF SIGNIFICANT ACC_6
2. SUMMARY OF SIGNIFICANT ACCOUNTING ACCOUNTING POLICIES - Useful Life of Property and Equipment (Details) | 6 Months Ended |
Mar. 31, 2023 | |
Land Improvements (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] | 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 [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 5 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 1 year |
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 | 3 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, useful life | 7 years |
2. SUMMARY OF SIGNIFICANT ACC_7
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Activities of Digital Currencies (Details) $ in Thousands | 6 Months Ended |
Mar. 31, 2023 USD ($) | |
Accounting Policies [Abstract] | |
Beginning Balance | $ 11,147 |
Addition of bitcoin | 70,234 |
Sale of bitcoin | (75,298) |
Bitcoin issued for services | (310) |
Bitcoin issued for software | (229) |
Impairment loss | (277) |
Ending balance | $ 5,267 |
2. SUMMARY OF SIGNIFICANT ACC_8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Net Investment Income [Line Items] | ||
Derivative asset | $ 1,741 | $ 2,956 |
Amount | ||
Net Investment Income [Line Items] | ||
Derivative asset | 1,741 | 2,956 |
Investment in debt security | 668 | 610 |
Contingent cash consideration | 2,000 | |
Total | 4,409 | 3,566 |
Level 1 | ||
Net Investment Income [Line Items] | ||
Derivative asset | 0 | 0 |
Investment in debt security | 0 | 0 |
Contingent cash consideration | 2,000 | |
Total | 2,000 | 0 |
Level 2 | ||
Net Investment Income [Line Items] | ||
Derivative asset | 0 | 0 |
Investment in debt security | 0 | 0 |
Contingent cash consideration | 0 | |
Total | 0 | 0 |
Level 3 | ||
Net Investment Income [Line Items] | ||
Derivative asset | 1,741 | 2,956 |
Investment in debt security | 668 | 610 |
Contingent cash consideration | 0 | |
Total | $ 2,409 | $ 3,566 |
2. SUMMARY OF SIGNIFICANT ACC_9
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2022 | |
Product Information [Line Items] | |||||
Income (loss) from continuing operations | $ 18,166 | $ (2,032) | $ 48,654 | $ (17,676) | |
Net cash flows from operating activities from its continuing operations | 11,127 | 49,200 | |||
Inventory | 746 | 746 | $ 216 | ||
Income Tax Examination, Penalties Accrued | 0 | 0 | 0 | ||
Income Tax Expense Benefit | 0 | $ 0 | |||
FDIC Indemnification Asset, Period Increase (Decrease) | 10,095 | 20,213 | |||
Uncertain tax positions | $ 0 | $ 0 | 0 | ||
Common shares issued in relation to exercise of options | 0 | 99,230 | |||
Goodwill, Impairment Loss | $ 0 | $ 0 | |||
Bitcoin [Member] | |||||
Product Information [Line Items] | |||||
FDIC Indemnification Asset, Period Increase (Decrease) | $ 5,267 | $ 11,147 | |||
Revenue from Rights Concentration Risk [Member] | Major Customers and Vendors | Revenue | |||||
Product Information [Line Items] | |||||
Concentration Risk Percentage | 10% |
3. ACQUISITIONS - Schedule of M
3. ACQUISITIONS - Schedule of MIG Consideration (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Dec. 31, 2022 | Mar. 31, 2023 | |
Business Acquisition [Line Items] | ||
1,590,175 shares of CLSK common stock | $ 4,803 | |
MIG [Member] | ||
Business Acquisition [Line Items] | ||
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 | ||
Up to 1,100,890 shares of CLSK common stock | 3,325 | |
Megawatt earnout (up to $2,000 max) | 2,000 | |
Total contingent consideration | 5,325 | |
Total | $ 39,146 |
3. Acquisitions - Schedule of_2
3. Acquisitions - Schedule of MIG Consideration (Parenthetical) (Details) - MIG [Member] $ in Thousands | 6 Months Ended |
Mar. 31, 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 |
3. ACQUISITIONS - Schedule of_3
3. ACQUISITIONS - Schedule of MIG Purchase Price Allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Oct. 08, 2022 | Sep. 30, 2022 |
Business Acquisition [Line Items] | |||
Right of use lease asset | $ 5,402 | $ 551 | |
Miners | 418,417 | 356,501 | |
Machinery and equipment | 1,525 | 1,269 | |
Goodwill | $ 8,043 | $ 0 | |
MIG [Member] | Preliminary 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 |
3. ACQUISITIONS - Schedule of W
3. ACQUISITIONS - Schedule of WAHA and SPRE Consideration (Details) - WAHA and SPRE [Member] $ in Thousands | Aug. 17, 2022 USD ($) |
Business Acquisition [Line Items] | |
Cash | $ 19,772 |
Financing provided by SPRE | 1,962 |
Mortgage assumed | 2,158 |
Total | $ 23,892 |
3.ACQUISITIONS - Schedule of WA
3.ACQUISITIONS - Schedule of WAHA and SPRE Purchase Price Allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 | Aug. 17, 2022 |
Business Acquisition [Line Items] | |||
Miners | $ 418,417 | $ 356,501 | |
WAHA and SPRE [Member] | |||
Business Acquisition [Line Items] | |||
Total | $ 23,892 | ||
WAHA and SPRE [Member] | Preliminary Allocation [Member] | |||
Business Acquisition [Line Items] | |||
Land | 100 | ||
Building/Improvements | 14,700 | ||
Miners | 9,092 | ||
Total | $ 23,892 |
3. ACQUISITIONS - Schedule of U
3. ACQUISITIONS - Schedule of Unaudited Pro Forma Information Assuming Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Business Acquisition [Line Items] | ||||
Net sales from continuing operations | $ 42,546 | $ 37,198 | $ 70,365 | $ 74,323 |
Income from continuing operations | $ (18,460) | $ (191) | $ (47,491) | $ 13,980 |
Weighted average common shares outstanding - diluted | 80,469,471 | 41,395,075 | 74,032,082 | 40,861,052 |
Pro Forma Acquisitions [Member] | ||||
Business Acquisition [Line Items] | ||||
Net sales from continuing operations | $ 101,831 | |||
Income from continuing operations | $ 19,397 | |||
Income from continuing operations per common share - basic | $ 0.47 | |||
Weighted average common shares outstanding - basic | 40,802,319 | |||
Income from continuing operations per common share - diluted | $ 0.47 | |||
Weighted average common shares outstanding - diluted | 40,861,052 |
3. ACQUISITIONS (Details Narrat
3. ACQUISITIONS (Details Narrative) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Oct. 08, 2022 USD ($) a | Aug. 17, 2022 | Dec. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) Servers shares | |
ASC 480 [Member] | ||||
Business Acquisition [Line Items] | ||||
Acquisition of Contingent asset conversation of shares | shares | 1,100,890 | |||
Asset Acquisition, Consideration Transferred, Equity Interest Issued and Issuable | $ 3,325 | $ 2,840 | ||
Change in fair value of contingent consideration | $ 485 | |||
Building and Improvements [Member] | ||||
Business Acquisition [Line Items] | ||||
Property, plant and equipment, useful life | 30 years | |||
Miners [Member] | ||||
Business Acquisition [Line Items] | ||||
Property, plant and equipment, useful life | 3 years | |||
Georgia Power Agreement [Member] | ||||
Business Acquisition [Line Items] | ||||
Area of real property | a | 16.35 | |||
Mawson Infrastructure Group [Member] | ||||
Business Acquisition [Line Items] | ||||
Contingent cash consideration | $ 13,500 | |||
Business acquisition purchase common stocks shares | shares | 1,590,175 | |||
Business acquisition purchase value | $ 4,800 | |||
Promissory notes | 6,500 | |||
Cash payment | $ 9,018 | |||
Business acquisition, shares issued, shares | shares | 1,100,890 | |||
Business acquisition, shares issued, value | $ 3,325 | |||
Earn-out payable | $ 2,000 | |||
Mining servers purchased | Servers | 150 | |||
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 “WAHA Transaction”), from Waha Technologies, Inc., (“WAHA”, and collectively with SPRE, "WAHA & SPRE"), an affiliate of the SPRE. 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 SPRE Property and miners consisted of (i) $1,962 in financing provided by SPRE 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 SPRE. Acquisition related costs of $118, consisting primarily of legal and recording fees, were expensed as incurred in accordance with ASC 805 and are reflected in professional fees on the Consolidated Statements of Operations and Comprehensive Loss. |
4. DISCONTINUED OPERATIONS (Add
4. DISCONTINUED OPERATIONS (Additional Information) (Details) - USD ($) $ in Thousands | Nov. 30, 2022 | Mar. 31, 2023 | Feb. 28, 2023 | Sep. 30, 2022 |
Property, Plant and Equipment [Line Items] | ||||
Current assets held for sale | $ 5,390 | $ 7,426 | ||
Sale of discontinued operation, inventory | $ 4,600 | |||
Software Right | ||||
Property, Plant and Equipment [Line Items] | ||||
Current assets held for sale | $ 2,523 | |||
Net sales price | 813 | |||
Gain On Sales | $ 1,710 |
4. DISCONTINUED OPERATIONS - Su
4. DISCONTINUED OPERATIONS - Summary of balance sheet disclosure (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Current assets | ||
Accounts receivable, net | $ 980 | $ 2,813 |
Inventory | 4,400 | 4,400 |
Prepaid expense and other current assets | 10 | 213 |
Total current assets held for sale | 5,390 | 7,426 |
Property and equipment, net | 11 | 11 |
Operating lease right of use asset | 582 | 665 |
Intangible assets, net | 0 | 869 |
Long-term assets held for sale | 593 | 1,545 |
Total assets held for sale | 5,983 | 8,971 |
Current liabilities | ||
Accounts payable and accrued liabilities | 175 | 919 |
Contract liabilities | 0 | 117 |
Operating lease liability | 169 | 163 |
Total current liabilities held for sale | 344 | 1,199 |
Long-term liabilities | ||
Operating lease liability, net of current portion | 426 | 512 |
Total liabilities held for sale | $ 770 | $ 1,711 |
4. DISCONTINUED OPERATIONS - _2
4. DISCONTINUED OPERATIONS - Summary of Income statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Revenues, net | ||||
Energy hardware, software and services revenue | $ 28 | $ 4,439 | $ 129 | $ 8,557 |
Total revenues, net | 28 | 4,439 | 129 | 8,557 |
Costs and expenses | ||||
Cost of revenues (exclusive of depreciation and amortization shown below) | 40 | 3,531 | 88 | 6,605 |
Professional fees | 104 | (10) | 104 | 63 |
Payroll expenses | 34 | 1,735 | 308 | 3,291 |
General and administrative expenses | 53 | 172 | 84 | 476 |
Impairment expense - other | 100 | 0 | 100 | |
Depreciation and amortization | 1,211 | 0 | 1,481 | |
Total costs and expenses | 331 | 6,639 | 684 | 11,916 |
Loss from operations | (303) | (2,200) | (555) | (3,359) |
Other income (expense) | ||||
Gain on disposal of assets | 11 | 0 | 1,721 | 0 |
Interest expense | (2) | (3) | (3) | (2) |
Total other income (expense) | 9 | (3) | 1,718 | (2) |
(Loss) Income before income tax (expense) or benefit | (294) | (2,203) | 1,163 | (3,361) |
Income tax benefit (expense) | 0 | 0 | 0 | 0 |
Net income (loss) attributable to common shareholders | $ (294) | $ (2,203) | $ 1,163 | $ (3,361) |
5. INVESTMENTS - Reconciliation
5. INVESTMENTS - Reconciliation of carrying value of all investments (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Investment Holdings [Line Items] | ||
Balance | $ 610 | |
Unrealized loss on derivative asset | 1,215 | $ 1,111 |
Impairment loss | (277) | |
Balance | 668 | |
ILAL Debt Securities [Member] | ||
Investment Holdings [Line Items] | ||
Balance | 610 | |
Unrealized loss on derivative asset | 0 | |
Unrealized gain on fair value recognized in Other comprehensive income | 58 | |
Balance | 668 | |
ILAL Derivative Asset [Member] | ||
Investment Holdings [Line Items] | ||
Balance | 2,956 | |
Unrealized loss on derivative asset | (1,215) | |
Unrealized gain on fair value recognized in Other comprehensive income | 0 | |
Balance | $ 1,741 |
5. INVESTMENTS (Details Narrati
5. INVESTMENTS (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 6 Months Ended | ||
Nov. 05, 2019 | Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2022 | |
Investment Holdings [Line Items] | ||||
Investments | $ 2,409 | $ 3,566 | ||
Investment Owned, at Fair Value | 668 | 610 | ||
Loss on preferred stock other comprehensive income loss | 58 | $ 46 | ||
Unrealized loss on derivative asset | 1,215 | $ 1,111 | ||
Interest Receivable On Investment In Debt Securities [Member] | ||||
Investment Holdings [Line Items] | ||||
Prepaid Expense and Other Assets | 0 | 0 | ||
International Land Alliance | ||||
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 ILAL Preferred Stock can be converted into common stock at a variable rate (refer to 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 ILAL Preferred Stock is recorded as an available-for-sale ("AFS") debt security and is reported at its estimated fair value as of March 31, 2023. Any change in the fair values of AFS debt securities are reported net of income tax as an element of Other Comprehensive income. | |||
Amount | ||||
Investment Holdings [Line Items] | ||||
Derivative assets investment fair value | $ 1,741 | $ 2,956 |
6. INTANGIBLE ASSETS - Schedule
6. INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Software | $ 440 | $ 210 |
Websites | 23 | 23 |
Strategic Contract | 9,800 | 9,800 |
Total | 10,263 | 10,033 |
Accumulated Amortization [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Software | 36 | 0 |
Websites | (14) | (11) |
Strategic Contract | 4,517 | 3,537 |
Total | 4,567 | 3,548 |
Net Intangible Assets [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Software | 404 | 210 |
Websites | 9 | 12 |
Strategic Contract | 5,283 | 6,263 |
Total | $ 5,696 | $ 6,485 |
6. INTANGIBLE ASSETS - Amortiza
6. INTANGIBLE ASSETS - Amortization Expense (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2028 | Sep. 30, 2027 | Sep. 30, 2026 | Sep. 30, 2025 | Sep. 30, 2024 | Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||
Amortization Of Intangible Assets | $ 1,019 | $ 981 | $ 17 | $ 78 | $ 471 | $ 2,050 | $ 2,053 | $ 1,027 |
Future amortization of intangible assets | $ 5,696 |
6. INTANGIBLE ASSETS (Details N
6. INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2028 | Sep. 30, 2027 | Sep. 30, 2026 | Sep. 30, 2025 | Sep. 30, 2024 | Dec. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||
Amortization Of Intangible Assets | $ 1,019 | $ 981 | $ 17 | $ 78 | $ 471 | $ 2,050 | $ 2,053 | $ 1,027 |
7. PROPERTY AND EQUIPMENT, NET
7. PROPERTY AND EQUIPMENT, NET - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 2,978 | $ 2,978 |
Land Improvements | 1,564 | 1,530 |
Building and improvements | 50,853 | 32,332 |
Leasehold improvements | 672 | 114 |
Miners | 418,417 | 356,501 |
Mining equipment | 18,672 | 17,587 |
Infrastructure | 18,695 | 12,422 |
Machinery and equipment | 1,525 | 1,269 |
Furniture and fixtures | 364 | 331 |
Construction in progress | 19,265 | 4,816 |
Total | 533,005 | 429,880 |
Less: accumulated depreciation | (92,752) | (53,099) |
Property and equipment, net | $ 440,253 | $ 376,781 |
7. PROPERTY AND EQUIPMENT (Deta
7. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Depreciation expense | $ 39,656 | $ 16,898 | |||
Disposal of property and equipment | $ 3,979 | 0 | 4,390 | ||
Gain on disposal of assets | $ (3) | 921 | (3) | 643 | |
Property and equipment disposed value | $ 411 | 411 | |||
Loss on disposition of property and equipment | $ 278 | ||||
Outstanding deposits | 34,020 | 34,020 | $ 12,497 | ||
Prepaid expenses | 3,500 | 3,500 | |||
Mawson Acquisition | |||||
Property, Plant and Equipment [Line Items] | |||||
Purchased of mining equipment | 31,192 | ||||
Placed-in Service [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Purchased of mining equipment | 88,675 | ||||
Miners and Mining Equipment [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Purchased of mining equipment | 63,002 | ||||
Miners and Mining Equipment [Member] | Mawson Acquisition | |||||
Property, Plant and Equipment [Line Items] | |||||
Purchased of mining equipment | 12,914 | ||||
Miners [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Outstanding deposits | $ 34,020 | $ 34,020 |
8. LEASES (Additional Informati
8. LEASES (Additional Information) (Details) $ in Thousands | 6 Months Ended |
Mar. 31, 2023 USD ($) Term | |
Lessee, Lease, Description [Line Items] | |
Lease payments effective | 4% |
Mawson Infrastructure Group [Member] | Sandersville, GA [Member] | |
Lessee, Lease, Description [Line Items] | |
Lease Expiration Date | Jul. 31, 2023 |
Number of lease term | Term | 8 |
Lease extension | 3 years |
Lease term | 25 years |
Discount rate | 6% |
Quarterly lease payments | $ | $ 75 |
8. LEASES - Lease costs (Detail
8. LEASES - Lease costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | ||
Leases [Abstract] | |||||
Operating lease cost (1) | [1] | $ 79 | $ 28 | $ 159 | $ 56 |
Finance lease cost: | |||||
Depreciation expense financed assets | 95 | 39 | 119 | 190 | |
Interest on lease obligations | $ 4 | $ 10 | $ 10 | $ 21 | |
[1] (1) Included in general and administrative expenses |
8. LEASES - Other Lease Informa
8. LEASES - Other Lease Information (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Operating cash outflows from operating leases | $ 206 | $ 66 |
Operating cash outflows from finance leases | 6 | 21 |
Financing cash outflows from finance leases | $ 93 | $ 206 |
8. LEASES - Weighted-average Re
8. LEASES - Weighted-average Remaining Lease Terms (Details) | Mar. 31, 2023 | Sep. 30, 2022 |
Leases [Abstract] | ||
Weighted-average remaining lease term - operating leases | 22 years 6 months | 3 years 2 months 12 days |
Weighted-average remaining lease term - finance leases | 1 year 4 months 20 days | 1 year 6 months 10 days |
Weighted-average discount rate - operating leases | 6.90% | 4.50% |
Weighted-average discount rate - finance leases | 5.50% | 5.50% |
8. LEASES - Contractual Maturit
8. LEASES - Contractual Maturity of Lease Liability (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Sep. 30, 2022 |
Less: Current portion of lease liabilities | $ (119) | $ (113) |
Less: Current portion of lease liabilities | (216) | $ (260) |
Operating Lease [Member] | ||
Remainder of Fiscal 2023 | 221 | |
2024 | 452 | |
2025 | 456 | |
2026 | 464 | |
2027 | 376 | |
Thereafter | 7,294 | |
Gross lease liabilities | 9,263 | |
Less: imputed interest | (3,622) | |
Present value of lease liabilities | 5,641 | |
Less: Current portion of lease liabilities | (119) | |
Total lease liabilities, net of current portion | 5,522 | |
Finance Lease [Member] | ||
Remainder of Fiscal 2023 | 120 | |
2024 | 154 | |
2025 | 22 | |
2026 | 1 | |
2027 | 0 | |
Thereafter | 0 | |
Gross lease liabilities | 297 | |
Imputed interest | (10) | |
Present value of lease liabilities | 287 | |
Less: Current portion of lease liabilities | (216) | |
Total lease liabilities, net of current portion | $ 71 |
9. STOCKHOLDERS' EQUITY (Detail
9. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | ||||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 14, 2022 | Sep. 30, 2022 | Jun. 03, 2021 | |
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 | |||
Common stock, par value | $ 0.001 | $ 0.001 | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||
Common stock, shares issued | 96,950,555 | 55,661,337 | |||
Common stock, shares outstanding | 96,950,555 | 55,661,337 | |||
Preferred stock, shares outstanding | 1,750,000 | 1,750,000 | |||
Preferred stock, shares issued | 1,750,000 | 1,750,000 | |||
Proceeds from equity offerings, net | $ 99,506 | $ 67,989 | |||
Common shares issued in relation to exercise of options | 0 | 99,230 | |||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period | 134,656 | ||||
Proceeds from Issuance of Private Placement | $ 99,506 | $ 67,989 | |||
Common stock, value issued | $ 97 | $ 56 | |||
Seller Agreements Related to Business Acquisition [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock, shares issued | 1,590,175 | 8,404 | |||
Settlement of contingent consideration related to business acquisition | $ 4,803 | $ 150 | |||
Seller Agreements Related To Mawson Acquisition [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock, shares issued | 1,100,890 | ||||
Settlement of contingent consideration related to business acquisition | $ 2,840 | ||||
Business acquisition [Member] | |||||
Class of Stock [Line Items] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period | 232,518 | ||||
A T L Data Centers [Member] | |||||
Class of Stock [Line Items] | |||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Forfeitures in Period | 83,417 | ||||
Restricted Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock, shares issued | 2,160,297 | ||||
Common stock net settlement | 539,961 | ||||
A T M [Member] | |||||
Class of Stock [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 37,061,234 | 4,017,652 | |||
Proceeds from equity offerings, net | $ 99,506 | $ 67,989 | |||
Proceeds from Issuance of Private Placement | $ 99,506 | $ 67,989 | |||
Common stock, value issued | $ 500,000 | ||||
A T M [Member] | Minimum [Member] | |||||
Class of Stock [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 100,000,000 | ||||
A T M [Member] | Maximum [Member] | |||||
Class of Stock [Line Items] | |||||
Stock Issued During Period, Shares, New Issues | 300,000,000 | ||||
At-the-Market offering facility [Member] | |||||
Class of Stock [Line Items] | |||||
Aggregate gross offering prices | $ 500,000 | ||||
Director services [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock shares issued, compensation | 1,874 | ||||
Common stock shares issued, compensation amount | $ 30 |
10. STOCK WARRANTS - Summary of
10. STOCK WARRANTS - Summary of stock warrant activity (Details) | 6 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Stock Warrants | |
Warrant Shares, Beginning Balance | shares | 202,220 |
Warrant Shares, Granted | shares | 0 |
Warrant Shares, Expired | shares | 0 |
Warrant Shares, Canceled | shares | 0 |
Warrant Shares, Exercised | shares | 0 |
Warrant Shares, Ending Balance | shares | 202,220 |
Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 13.03 |
Weighted Average Exercise, Granted | $ / shares | 0 |
Weighted Average Exercise, Expired | $ / shares | 0 |
Weighted Average Exercise, Canceled | $ / shares | 0 |
Weighted Average Exercise, Exercised | $ / shares | 0 |
Weighted Average Exercise Price, Ending Balance | $ / shares | $ 13.03 |
10. STOCK WARRANTS (Details Nar
10. STOCK WARRANTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Sep. 30, 2022 | |
Weighted average outstanding warrants term | 2 years 8 months 4 days | |
Weighted average outstanding warrants intrinsic value | $ 0 | |
Exercise of warrants | 0 | |
Exercisable warrants | 202,220 | |
Warrants exercised during period | 0 | |
Weighted average exercise price | $ 13.03 | $ 13.03 |
11. STOCK-BASED COMPENSATION -
11. STOCK-BASED COMPENSATION - Schedule of Option Summary (Details) - $ / shares | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Equity [Abstract] | ||
Number of Option Shares, Beginning Balance | 1,418,938 | |
Options granted | 50,000 | |
Options expired | (44,600) | |
Options canceled/forfeited | (134,656) | |
Options exercised | 0 | (99,230) |
Number of Option Shares, Ending Balance | 1,289,682 | |
Weighted Average Exercise Price, Beginning Balance | $ 19.11 | |
Weighted Average Exercise Price, Options granted | 3.27 | |
Weighted Average Exercise Price, Options expired | 6.05 | |
Weighted Average Exercise Price, Options canceled/forfeited | 12.73 | |
Weighted Average Exercise Price, Options exercised | 0 | |
Weighted Average Exercise Price, Ending Balance | $ 19.61 |
11. STOCK-BASED COMPENSATION _2
11. STOCK-BASED COMPENSATION - Fair Value Assumptions 2021 (Details) | 6 Months Ended |
Mar. 31, 2023 | |
Expected dividends | 0% |
Minimum [Member] | |
Risk free interest rate | 2.65% |
Expected term (years) | 5 years 6 months |
Expected volatility | 180.09% |
Maximum [Member] | |
Risk free interest rate | 4.23% |
Expected term (years) | 5 years 9 months 7 days |
Expected volatility | 194.90% |
11. STOCK-BASED COMPENSATION _3
11. STOCK-BASED COMPENSATION - Schedule of Restricted Stock Summary (Details) $ / shares in Units, $ in Thousands | 6 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Class of Stock [Line Items] | |
Number of Option Shares, Beginning Balance | shares | 1,418,938 |
Number of Option Shares, Ending Balance | shares | 1,289,682 |
Weighted Average Exercise Price, Beginning Balance | $ 13.03 |
Weighted Average Exercise, Granted | 0 |
Weighted Average Exercise, Expired | 0 |
Weighted Average Exercise Price, Ending Balance | $ 13.03 |
Restricted [Member] | |
Class of Stock [Line Items] | |
Number of Option Shares, Beginning Balance | shares | 5,448,548 |
Number of Shares, Granted | shares | 390,552 |
Number of Shares, Vested | shares | 1,539,776 |
Number of Shares, Forfeited | shares | (4,048) |
Number of Option Shares, Ending Balance | shares | 4,295,276 |
Weighted Average Exercise Price, Beginning Balance | $ 4.93 |
Weighted Average Exercise, Granted | 2.55 |
Weighted Average Exercise, Vested | 4.59 |
Weighted Average Exercise, Expired | 29.34 |
Weighted Average Exercise Price, Ending Balance | $ 4.81 |
Aggregate Intrinsic Value Outstanding at Beginning | $ | $ 17,326 |
Aggregate Intrinsic Value Outstanding at Ending | $ | $ 11,941 |
11. STOCK-BASED COMPENSATION (D
11. STOCK-BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
Apr. 01, 2023 | Mar. 31, 2023 | Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Common stock, shares outstanding | 96,950,555 | 96,950,555 | 96,950,555 | 55,661,337 | |||
Shares of common stock in the Company there are options exercisable to purchase | 813,553 | 813,553 | 813,553 | ||||
Unvested options outstanding | 476,129 | 476,129 | 476,129 | ||||
Share-based Payment Arrangement, Noncash Expense | $ 11,621 | $ 12,303 | |||||
Weighted average remaining term of outstanding options | 3 years 8 months 1 day | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Intrinsic Value | $ 2 | $ 2 | $ 2 | ||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercises in Period | 0 | 99,230 | |||||
Proceeds from exercise of options and warrants | $ 0 | $ 480 | |||||
Restricted shares granted shares | 360,552 | ||||||
Cost of equity rate | 0% | ||||||
Minimum [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 5 years 6 months | ||||||
Maximum [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term | 5 years 9 months 7 days | ||||||
Amended Equity Incentive Plan 2017 [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Common stock, shares subscribed but unissued | 4,845,770 | 4,845,770 | 4,845,770 | ||||
Amended Equity Incentive Plan 2017 [Member] | Subsequent Event [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Common stock, shares subscribed but unissued | 1,815,187 | ||||||
Options [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Share-based Payment Arrangement, Noncash Expense | $ 9,504 | ||||||
Total fair value to purchase shares of common stock to employees | $ 158 | 158 | $ 158 | ||||
Share-Based Payment Arrangement, Expense | 1,487 | $ 2,503 | $ 3,145 | 4,915 | |||
Employees [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | 50,000 | ||||||
Restricted Stock Units RSU [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 390,552 | ||||||
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Vested, Weighted Average Grant Date Fair Value | $ 800 | ||||||
Deferred Tax Assets, Tax Deferred Expense, Compensation and Benefits, Share-Based Compensation Cost | $ 18,466 | 18,466 | $ 18,466 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Remaining Contractual Term | 1 year 3 months 18 days | ||||||
Share-Based Payment Arrangement, Expense | $ 4,256 | $ 4,051 | $ 8,476 | $ 7,388 | |||
Service Period Based Grant Shares | 30,000 | ||||||
Restricted Stock Units RSU [Member] | Board of Directors [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Stock Issued During Period, Shares, Restricted Stock Award, Gross | 355,552 | ||||||
2017 Incentive Plan [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Number of shares authorized to issue | 11,512,000 | 11,512,000 | 11,512,000 | ||||
Increase Number Of Shares Authoirzed For Issuance | 3,500,000 | 3,500,000 | 3,500,000 | 3,500,000 | |||
Percentage of increase in number of shares authorized to issue | 15% | ||||||
2017 Incentive Plan [Member] | Subsequent Event [Member] | |||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||||
Increase in number of shares available to issue | 14,542,583 |
12. COMMITMENTS AND CONTINGEN_3
12. COMMITMENTS AND CONTINGENCIES (Details Narrative) $ in Thousands | 6 Months Ended | ||||||||||
Apr. 30, 2023 USD ($) | Jan. 27, 2023 USD ($) | Jan. 13, 2023 USD ($) shares | Jul. 25, 2022 USD ($) | Mar. 31, 2023 USD ($) shares | Apr. 07, 2023 USD ($) | Apr. 06, 2023 USD ($) Machines | Apr. 01, 2023 USD ($) Machines | Aug. 18, 2022 USD ($) | Mar. 29, 2022 | Aug. 31, 2019 USD ($) | |
Long-term Purchase Commitment [Line Items] | |||||||||||
Mining machines purchased | Machines | 45,000 | ||||||||||
Subsequent Event [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Mining machines purchased | Machines | 45,000 | ||||||||||
Purchase price | $ 4,100 | $ 144,900 | $ 144,900 | ||||||||
Mining Equipment [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Long Term Purchase Commitment Amount | $ 0 | ||||||||||
Solar Watt Solutions, Inc., v. Pathion, Inc. [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Lawsuit filing date | January 6, 2022 | ||||||||||
Amount paid for solar batteries | $ 419 | ||||||||||
Electricity cost per month | $ 15 | ||||||||||
Amount of claim in suit | 500 | ||||||||||
Solar Watt Solutions, Inc. [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Awarded Sanction | $ 2 | ||||||||||
Darfon America Corp [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Damages and Additional Costs and Fees | $ 5,400,000 | ||||||||||
Legal Fees | $ 1,100 | ||||||||||
Litigation settlement expense | 2,700 | ||||||||||
Darfon America Corp [Member] | Subsequent Event [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Litigation settlement expense | $ 3,800 | ||||||||||
Lancium [Member] | Agreement [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Initial term | 5 years | ||||||||||
Renewal term | 2 years | ||||||||||
Notice period for agreement Non-renew | 90 days | ||||||||||
Mawson Infrastructure Group [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Damages and Additional Costs and Fees | $ 2,000 | ||||||||||
Business acquisition, shares issued, shares | shares | 1,100,890 | ||||||||||
Common stock released, shares | $ 3,325 | ||||||||||
Stock Issued During Period, Shares, New Issues | shares | 1,100,890 | ||||||||||
Business acquisition shares issued, value | $ 2,840 | ||||||||||
Contingent Consideration [Member] | Mawson Infrastructure Group [Member] | |||||||||||
Long-term Purchase Commitment [Line Items] | |||||||||||
Business acquisition, shares issued, shares | shares | 1,100,890 | ||||||||||
Common stock released, shares | $ 3,325 |
12. COMMITMENTS AND CONTINGEN_4
12. COMMITMENTS AND CONTINGENCIES - Schedule of Contractual Future Payments Obligations (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Product Liability Contingency [Line Items] | |
Remainder of Fiscal Year 2023 | $ 18,688 |
Fiscal 2024 | 8,707 |
Fiscal 2025 | 6,360 |
Fiscal 2026 | 839 |
Fiscal 2027 | 581 |
Thereafter | 7,344 |
Total | 42,519 |
Operating Lease [Member] | |
Product Liability Contingency [Line Items] | |
Remainder of Fiscal Year 2023 | 221 |
Fiscal 2024 | 452 |
Fiscal 2025 | 456 |
Fiscal 2026 | 464 |
Fiscal 2027 | 376 |
Thereafter | 7,294 |
Total | 9,263 |
Finance Lease [Member] | |
Product Liability Contingency [Line Items] | |
Remainder of Fiscal Year 2023 | 120 |
Fiscal 2024 | 154 |
Fiscal 2025 | 22 |
Fiscal 2026 | 1 |
Fiscal 2027 | 0 |
Thereafter | 0 |
Total | 297 |
Loans [Member] | |
Product Liability Contingency [Line Items] | |
Remainder of Fiscal Year 2023 | 5,079 |
Fiscal 2024 | 8,101 |
Fiscal 2025 | 5,882 |
Fiscal 2026 | 374 |
Fiscal 2027 | 205 |
Thereafter | 50 |
Total | 19,691 |
Construction in Progress [Member] | |
Product Liability Contingency [Line Items] | |
Remainder of Fiscal Year 2023 | 13,268 |
Total | $ 13,268 |
13. MAJOR CUSTOMERS AND VENDO_3
13. MAJOR CUSTOMERS AND VENDORS (Additional Information) (Details) - Operator | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | |
Bitcoin [Member] | ||||
Representation of company's revenue, percent | 99% | 99% | 99% | 99% |
Mining pool operator | ||||
Mining pool operator | 1 | 1 | 1 | 1 |
13. MAJOR CUSTOMERS AND VENDO_4
13. MAJOR CUSTOMERS AND VENDORS - Digital currency mining segment major suppliers (Details) - Customer Concentration Risk [Member] - Accounts receivable | 6 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cyptech Solutions | ||
Concentration Risk Percentage | 71.79% | 71.70% |
Sunnyside Digital Inc. | ||
Concentration Risk Percentage | 27.06% | 0% |
Bitmain Technologies Ltd. | ||
Concentration Risk Percentage | 0% | 24.03% |
14. LOAN (Additional Informatio
14. LOAN (Additional Information) (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Apr. 22, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | |||
Loans payable, net of current portion | $ 17,783 | ||
Gross loan outstanding | 164 | ||
Principal payments on loans | 10,433 | ||
Auto Loans [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Face Amount | 364 | ||
Auto Loans [Member] | Separate Agreements [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Face Amount | $ 164 | ||
Auto Loans [Member] | Maximum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 9.20% | ||
Debt Instrument, Term | 72 months | ||
Auto Loans [Member] | Maximum [Member] | Separate Agreements [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.90% | ||
Debt Instrument, Term | 60 months | ||
Auto Loans [Member] | Minimum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 0.99% | ||
Debt Instrument, Term | 48 months | ||
Auto Loans [Member] | Minimum [Member] | Separate Agreements [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 0.99% | ||
Debt Instrument, Term | 48 months | ||
Trinity Capital Inc [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Borrowings to finance | $ 35,000 | ||
Loan received | 20,000 | ||
Remaining fundable amount | $ 15,000 | ||
Loan commitment fee | 1% | ||
SPRE Commercial Group [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Closing cost | $ 174 | ||
Debt Instrument, Interest Rate, Stated Percentage | 12% | ||
Marquee Funding Partners [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Interest Rate, Stated Percentage | 13% | ||
Loans Assumed | $ 2,031 | ||
Marquee Funding Partners [Member] | Maximum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Term | 54 months | ||
Marquee Funding Partners [Member] | Minimum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Debt Instrument, Term | 47 months |
14. LOAN - Schedule of Loans Ou
14. LOAN - Schedule of Loans Outstanding (Details) $ in Thousands | 6 Months Ended |
Mar. 31, 2023 USD ($) | |
Debt Instrument [Line Items] | |
Total Loans Outstanding | $ 17,619 |
Less: current portion of long-term loans | (7,248) |
Long-Term Debt, Total | $ 10,371 |
Auto Loans [Member] | |
Debt Instrument [Line Items] | |
Maturity Date | Oct-26 - Oct-28 |
Total Loans Outstanding | $ 349 |
Auto Loans [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Rate | 0.99% |
Auto Loans [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Rate | 9.20% |
Master Equipment Financing Arrangment [Member] | |
Debt Instrument [Line Items] | |
Maturity Date | Apr-25 |
Rate | 13.80% |
Total Loans Outstanding | $ 14,493 |
SPRE Commercial Group [Member] | |
Debt Instrument [Line Items] | |
Maturity Date | Aug-23 |
Rate | 12% |
Total Loans Outstanding | $ 844 |
Marquee Funding Partners [Member] | |
Debt Instrument [Line Items] | |
Maturity Date | Jul-26 - Feb-27 |
Rate | 13% |
Total Loans Outstanding | $ 1,933 |
14. LOAN - Schedule of Principa
14. LOAN - Schedule of Principal Amount of Loan Maturities Due Over The Years (Details) $ in Thousands | 6 Months Ended |
Mar. 31, 2023 USD ($) | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | $ 17,783 |
Unamortized deferred financing costs and discounts on Master Equipment Financing Arrangement | (164) |
Total loan book value as of December 31, 2022 | 17,619 |
FY 2023 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 4,009 |
FY 2024 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 7,033 |
FY 2025 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 5,812 |
FY 2026 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 667 |
FY 2027 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 212 |
Thereafter [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 50 |
Master Equipment Financing Arrangment [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 14,657 |
Master Equipment Financing Arrangment [Member] | FY 2023 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 2,928 |
Master Equipment Financing Arrangment [Member] | FY 2024 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 6,508 |
Master Equipment Financing Arrangment [Member] | FY 2025 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 5,221 |
Master Equipment Financing Arrangment [Member] | FY 2026 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 0 |
Master Equipment Financing Arrangment [Member] | FY 2027 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 0 |
Master Equipment Financing Arrangment [Member] | Thereafter [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 0 |
SPRE Commercial Group, Inc. [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 844 |
SPRE Commercial Group, Inc. [Member] | FY 2023 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 844 |
Marquee Funding Partners [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 1,933 |
Marquee Funding Partners [Member] | FY 2023 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 208 |
Marquee Funding Partners [Member] | FY 2024 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 458 |
Marquee Funding Partners [Member] | FY 2025 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 521 |
Marquee Funding Partners [Member] | FY 2026 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 593 |
Marquee Funding Partners [Member] | FY 2027 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 153 |
Auto Loan Member | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 349 |
Auto Loan Member | FY 2023 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 29 |
Auto Loan Member | FY 2024 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 67 |
Auto Loan Member | FY 2025 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 70 |
Auto Loan Member | FY 2026 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 74 |
Auto Loan Member | FY 2027 [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | 59 |
Auto Loan Member | Thereafter [Member] | |
Debt Instrument [Line Items] | |
Total principal amount of loan payments by fiscal year | $ 50 |
15. SUBSEQUENT EVENTS (Addition
15. SUBSEQUENT EVENTS (Additional Information) (Details) $ in Thousands | May 09, 2023 USD ($) | May 02, 2023 QuintillionHash | May 01, 2023 USD ($) a | Apr. 01, 2023 USD ($) Machines shares | Apr. 07, 2023 USD ($) ft² | Apr. 06, 2023 USD ($) Machines |
Subsequent Event [Line Items] | ||||||
Mining machines purchased | Machines | 45,000 | |||||
Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Mining machines purchased | Machines | 45,000 | |||||
Purchase price | $ 144,900 | $ 4,100 | $ 144,900 | |||
Area Of Land | 16.35 | 15,000 | ||||
Additional area of land | a | 10 | |||||
Loan against equity | $ 2,000 | |||||
Loan agreement term | 2 years | |||||
Interest rate percentage | 10% | |||||
Share issued under at the market financing instruments | shares | 15,598,191 | |||||
Service Fee | 0.19% | |||||
Proceeds from at the market financing instruments | $ 57,482 | |||||
Land purchase price | $ 1,300 | |||||
Decrease In Service Fee | 0.15% | |||||
Exahash Minimum Limit | QuintillionHash | 10 |