XML 21 R14.htm IDEA: XBRL DOCUMENT
v3.25.1

6. INVESTMENTS AND DERIVATIVES | 6 Months Ended
--- | ---
Mar. 31, 2025
Schedule of Investments [Abstract] |
INVESTMENTS AND DERIVATIVES | 6. INVESTMENTS AND DERIVATIVES As of March 31, 2025 and September 30, 2024, the Company had total investments of $3,968 and $2,750, respectively. The following table sets forth a reconciliation of carrying value of all investments as of March 31, 2025:
($ in thousands) |  | Interest Rate Swap Derivative (1) |  |  | ILAL Debt Securities |  |  | ILAL Derivative Asset |  |
Balance as of September 30, 2024 |  | $ | (100 | ) |  | $ | 918 |  |  | $ | 1,832 |  |
Unrealized loss on derivative asset |  |  | — |  |  |  | — |  |  |  | (1,760 | ) |
Unrealized gain on fair value recognized in other comprehensive income |  |  | 77 |  |  |  | 2,978 |  |  |  | — |  |
Balance as of March 31, 2025 |  | $ | (23 | ) |  | $ | 3,896 |  |  | $ | 72 |  |
(1) See Note 9 - Loans, Interest Rate Swap Derivative liability is included in Other Current Liabilities in the condensed consolidated balance sheets 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 9 - Loans) for which the interest rate swap is not a designated hedge. As of March 31, 2025, the Interest Rate Swap Derivative recorded at a fair value liability of $23, reflecting a gain of $77. As of September 30, 2024, the Interest Rate Swap Derivative was fair valued at a $100 unrealized loss. International Land Alliance, Inc. On November 6, 2019, the Company entered into a Securities Purchase Agreement (“SPA”) with International Land Alliance, Inc. (“ILAL”), a Wyoming corporation, to support the power and energy needs of ILAL's development and construction of certain projects. 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 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 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 Series B Preferred Stock is recorded as an available for sale (“AFS”) debt security and is reported at its estimated fair value as of March 31, 2025. Any change in the fair values of AFS debt securities are reported net of income tax as an element of Other Comprehensive income. During March 2025, the Company sent ILAL a notice to convert a portion of its Series B Preferred Stock into shares of common stock of ILAL. ILAL did not issue the shares in accordance with its obligations under the Series B Preferred Stock. On April 8, 2025, the Company filed a case in the U.S. District Court for the Southern District of California. Among other claims, the Company has alleged ILAL’s breach of contract and has demanded $9,561 in cash as the liquidation value. Given ILAL’s recent going concern disclosure, delinquency in filing its Form 10-K, and non-responsiveness to the Company's notice, the Company reassessed the investment’s collectability and reduced its estimated fair value. The updated valuation reflects increased credit risk and diminished confidence in recovery—whether through conversion or redemption—due to the issuer’s deteriorating financial condition. The Company accrued no interest (net of allowance) on its available-for-sale debt securities as of March 31, 2025 and September 30, 2024, respectively. The fair value of the Company’s investment in the Series B Preferred Stock was $3,896 and $918 as of March 31, 2025 and September 30, 2024, respectively. The Company has included gain on fair value of Series B Preferred Stock amounting to $2,978 and $58 for the six months ended March 31, 2025 and 2024, respectively, as part of other comprehensive income in the condensed consolidated statement of operations and comprehensive income. 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 condensed consolidated statement of operations and comprehensive income. Total fair value of investment in ILAL Derivative Asset as of March 31, 2025 and September 30, 2024 was $72 and $1,832, respectively, and as included in “Derivative investments” on the condensed consolidated balance sheets. The Company fair values the debt security as a straight debt instrument based on liquidation value, accrued interest to date, and an estimated 40% recovery rate for first-lien debt, which is an unobservable input. This recovery rate reflects a downward revision from prior estimates due to the recoverability risks discussed above. 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.

X
- Definition The entire disclosure for investment holdings. This includes the long positions of investments for the entity. It contains investments in affiliated and unaffiliated issuers. The investments include securities and non securities (i.e. commodities and futures contracts). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 210 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147478795/946-210-50-12 + Details
Name: | us-gaap_InvestmentHoldingsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_ScheduleOfInvestmentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration