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Leases

12 Months Ended

Dec. 31, 2022

NOTE 10:-

LEASES

Luna Squares LLC leased a 16.35-acre lot in Georgia from the Development Authority of Washington County until October 8, 2022, when the lease was transferred and assigned to CleanSpark.

The Company leases the headquarters of its business operations at Level 5, 97 Pacific Highway, North Sydney NSW 2060 Australia, being 1,076 square feet of office space held under a license agreement.

The Company leases 6-acres of land in Pennsylvania which began in October 2021 for thirty-six months with the option to exercise four additional three-year extensions.

On March 16, 2022, Luna Squares Property LLC entered into a lease with respect to a property in the City of Sharon, Mercer County, Pennsylvania with Vertua Property, Inc. (a related entity – refer to note 18 for details). The term of the lease is for 5 years, with 2 options to extend for 5 years each.

During May 2022, Luna Square Texas LLC entered into four lease agreements to lease 11 acres of land in Texas for a period of five years.

Other than the foregoing leases, the Company does not lease any material assets. The Company believes that these offices and facilities are suitable and adequate for its operations as currently conducted and as currently foreseen. In the event additional or substitute offices and facilities are required, the Company believes that it could obtain such offices and facilities at commercially reasonable rate.

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

	December 31,
	2022		2021

Operating lease charges ⁽¹⁾	$	1,608,095	$	452,479
Finance lease charges:
Amortization of right-of-use assets		28,662		792
Interest on lease obligations		8,507		317

⁽¹⁾	Included in Selling, General & Administrative Expenses.

The following is a schedule of the Company’s lease liabilities by contractual maturity as of December 31, 2022:

	Operating leases			Finance Leases

2022	$	1,532,470		$	38,176
2023		1,211,898			38,176
2024		267,372			38,176
2025		278,064			15,016
2026		70,190			-
Total undiscounted lease obligations		3,359,994			129,544
Less imputed interest		(331,957	)		(15,619	)
Total present value of lease liabilities		3,028,037			113,925
Less current portion of lease liabilities		1,300,062			30,702
Non-current lease liabilities	$	1,727,975		$	83,223

Other lease information as of December 31,2022:

	Operating leases			Finance Leases

Operating cash flows from operating and finance leases	$	1,742,408		$	33,736
Weighted-average remaining lease term – operating and finance leases (years)		2.53			3.39
Weighted-average discount rate – operating and leases (%)		8	%		7.5	%