LEASES

6 Months Ended

Mar. 31, 2025

The Company’s leases consist primarily of real estate leases throughout the markets in which the Company operates. At contract inception, the Company determines whether an arrangement is or contains a lease, and for each identified lease, evaluates the classification as operating or financing. The Company had no finance leases as of March 31, 2025. Leased assets and obligations are recognized at the lease commencement date based on the present value of fixed lease payments to be made over the term of the lease. Renewal and termination options are factored into determination of the lease term only if the option is reasonably certain to be exercised. The weighted-average remaining lease term at March 31, 2025 and 2024 were both 2 years. The Company had no significant short-term leases during the three and six months ended March 31, 2025 and 2024.

The Company’s leases do not provide a readily determinable implicit interest rate and the Company uses its incremental borrowing rate to measure the lease liability and corresponding right-of-use asset. The incremental borrowing rates were determined based on a portfolio approach considering the Company’s current secured borrowing rate adjusted for market conditions and the length of the lease term. The weighted-average discount rate used in the measurement of our lease liabilities was 7.3% and 7.6% as of March 31, 2025 and 2024, respectively.

Operating lease cost is recognized on a straight-line basis over the lease term. Operating lease costs from continuing operations were $399 and $1,371 for the three and six months ended March 31, 2025 and $1,026 and $2,062 for the three and six months ended March 31, 2024, which are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

Total operating lease costs from continuing operations include variable lease costs of approximately $278 and $304 for the three and six months ended March 31, 2025, and $37 and $47 for the three and six months ended March 31, 2024, which are primarily comprised of costs of maintenance and utilities and changes in rates, and are determined based on the actual costs incurred during the period. Variable payments are expensed in the period incurred and not included in the measurement of lease assets and liabilities.

Short-term rent expense from continuing operations was $26 and $50 for the three and six months ended March 31, 2025, and $9 and $15 for the three and six months ended March 31, 2024, and are included in selling, general and administrative expenses in the condensed consolidated statements of operations.

As of March 31, 2025, maturities of lease liabilities for continuing operations are as follows:


Fiscal Years ending September 30:
2025 (six months remaining)	$	1,993
2026	3,366
2027	1,457
2028	680
2029	664
Thereafter	620
Total future minimum lease payments (undiscounted)(1)	8,780
Less: present value discount	(719)
Present value of lease liability	$	8,061

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1.Total future minimum lease payments excludes payments of $36 for leases designated as short-term leases, which are excluded from the Company's right-of-use assets. These payments will be made within the next twelve months.