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8. INVESTMENTS | 12 Months Ended
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Sep. 30, 2024
Schedule of Investments [Abstract] |
INVESTMENTS | 8. INVESTMENTS AND DERIVATIVES As of September 30, 2024 and September 30, 2023, the Company had total investments of $2,750 and $3,423, respectively, comprised of the following: Interest Rate Swap Derivative In relation to the Company’s Western Alliance Bank Credit Agreement entered into in August 2024, the Company has an interest rate swap agreement (see Note 12 - Loans) for which the interest rate swap is not a designated hedge. As of September 30, 2024, the Interest Rate Swap Derivative was fair valued at a $100 unrealized loss which is included in Other current liabilities on the Consolidated Balance Sheet. International Land Alliance, Inc. On November 5, 2019, the Company entered in a binding Memorandum of Understanding (the “MOU”) with International Land Alliance, Inc. (“ILAL”), a Wyoming corporation, to lay a foundational framework where the Company will deploy its energy solutions products and services to ILAL, its energy projects, and its customers. In connection with the MOU, and to support the power and energy needs of ILAL's development and construction of certain projects, the Company entered into a Securities Purchase Agreement (“SPA”), dated as of November 6, 2019, with ILAL. ILAL Series B Preferred Stock (Investment in Debt Securities) and Embedded ILAL Derivative Asset Pursuant to the terms of the SPA with ILAL, the Company purchased 1,000 shares of Series B Preferred Stock of ILAL (the “Series B Preferred Stock”) for an aggregate purchase price of $500 (the “Stock Transaction”), less certain expenses and fees. The Series B Preferred Stock accrues cumulative dividends in-kind at a rate of 12% per annum and was redeemable on August 6, 2020. The Series B Preferred Stock can be converted into common stock at a variable rate (refer the discussion on embedded derivative assets below). This variable conversion ratio will increase by 10% with the occurrence of certain events. Since the investments were not redeemed on August 6, 2020, they are now redeemable at the Company’s option in cash or into common stock, based on the conversion ratio. The Series B Preferred Stock is recorded as an AFS debt security and is reported at its estimated fair value as of September 30, 2024. Any change in the fair values of AFS debt securities are reported net of income tax as an element of Other Comprehensive income. The Company accrued no interest (net of allowance) on its available-for-sale debt securities, as of September 30, 2024 and 2023, respectively. The fair value of the Company’s investment in the Series B Preferred Stock was $918 and $726 as of September 30, 2024 and 2023, respectively. The Company has included gain on fair value of Series B Preferred Stock amounting to $192 and $116 for the years ended September 30, 2024 and 2023, respectively, as part of other comprehensive income in the Consolidated Statements of Operations and Comprehensive Loss. The Company has deemed the variable conversion feature (the “ILAL Derivative Asset”) of Series B Preferred Stock an embedded derivative instrument in accordance with ASC 815, Derivatives and Hedging. This topic requires the Company to account for the ILAL Derivative Asset on its balance sheet at fair value and account for changes in fair value as a derivative gain or loss. Changes in fair value of the ILAL Derivative Asset are presented as Other income (expense) in the Consolidated Statements of Operations and Comprehensive Loss. Total fair value of investment in ILAL Derivative Asset as of September 30, 2024 and 2023 was $1,832 and $2,697, respectively and as included in Derivative assets on the Consolidated Balance Sheet. The Company fair values the debt security as a straight debt instrument based on liquidation value, accrued interest to date, and an estimated 60% recovery rate for first-lien debt, which is an unobservable input. The fair value of the ILAL Derivative Asset is based on the difference in the fair value of the Series B Preferred Stock determined as a straight debt instrument and the fair value of the Series B Preferred Stock if converted as of the reporting date. Commitment shares - Common stock of ILAL Pursuant to the terms of the SPA with ILAL, the Company received 350,000 shares (commitment shares) of ILAL's common stock. The commitment shares were fully earned at the time of execution of the agreement. The Company sold 334,611 shares at various prices and fair valued the remaining 15,389 shares at the closing stock price of ILAL as of September 30, 2021. During the year ended September 30, 2022, the Company sold 15,389 commitment shares, and recorded realized gain on sale of shares for $1. Investment in Equity Securities - LawClerk In February 2020, the Company made a $250 strategic relationship investment in LawClerk for 200,000 Series A Preferred Shares of LawClerk. This investment is recorded on a cost basis and adjusted for observable transactions for same or similar investments of the issuer (referred to as the measurement alternative) or impairment. The Company annually performs impairment analysis on this investment and concluded that the investment was not recoverable and accordingly recorded an impairment of $250 for the year ended September 30, 2022. Refer to the table below for a roll forward of assets carried at fair value on a recurring basis that utilize level 3 inputs to determine fair value:
($ in thousands) |  | Interest Rate Swap Derivative (1)(3) |  |  | ILAL Debt Securities |  |  | ILAL Derivative Asset(2) |  |  | ILAL Equity Securities |  |  | LawClerk Equity Securities |  |
Balance as of September 30, 2021 |  | $ | — |  |  | $ | 494 |  |  | $ | 4,906 |  |  | $ | 11 |  |  | $ | 250 |  |
Shares sold during the year |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (10 | ) |  |  | — |  |
Realized gain on fair value recognized in other income (expense) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |
Unrealized loss recognized in other income (expense) |  |  | — |  |  |  | — |  |  |  | (1,950 | ) |  |  | (2 | ) |  |  | — |  |
Impairment loss |  |  | — |  |  |  | — |  |  |  | — |  |  |  |  |  |  | (250 | ) |
Unrealized gain on fair value recognized in Other comprehensive income |  |  | — |  |  |  | 116 |  |  |  | — |  |  |  | — |  |  |  | — |  |
Balance as of September 30, 2022 |  | $ | — |  |  | $ | 610 |  |  | $ | 2,956 |  |  | $ | — |  |  | $ | — |  |
Unrealized loss recognized in other income (expense) |  |  | — |  |  |  | — |  |  |  | (259 | ) |  |  | — |  |  |  | — |  |
Unrealized gain on fair value recognized in Other comprehensive income |  |  | — |  |  |  | 116 |  |  |  | — |  |  |  | — |  |  |  | — |  |
Balance as of September 30, 2023 |  | $ | — |  |  | $ | 726 |  |  | $ | 2,697 |  |  | $ | — |  |  | $ | — |  |
Unrealized loss on derivative asset |  |  | (100 | ) |  |  | — |  |  |  | (865 | ) |  |  | — |  |  |  | — |  |
Unrealized gain on fair value recognized in other comprehensive income |  |  | — |  |  |  | 192 |  |  |  | — |  |  |  | — |  |  |  | — |  |
Balance as of September 30, 2024 |  | $ | (100 | ) |  | $ | 918 |  |  | $ | 1,832 |  |  | $ | — |  |  | $ | — |  |
(1) The "Other current liabilities" caption in the Consolidated Balance Sheet includes the Interest Rate Swap Derivative.
(2) The "Derivative investments" caption in the Consolidated Balance Sheet consists of ILAL Derivative Asset.
(3) See Note 12 - Loans

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