8. LEASES

9 Months Ended

Jun. 30, 2023

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, (see Note 7) 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 included approximately $75 in quarterly lease payments with a 4% increase in scheduled lease payments effective each successive lease option is exercised.

In connection with the acquisition of the Sandersville Land (see Note 7), the Company reassessed the operating lease on May 1, 2023 as a finance lease. Such new finance lease was for a period between May 1, 2023 and June 30, 2023. On June 30, 2023, the agreement was finalized and the purchase price was paid, accordingly, there is no lease obligation outstanding for the Sandersville Land.

The Company's lease costs recognized during the nine months ended June 30, 2023 and 2022 in the unaudited Consolidated Statements of Operations and Comprehensive Loss consist of the following:


	For the three months ended				For the nine months ended
($ in thousands)	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Operating lease cost (1)	$	62	$	194	$	221	$	250
Finance lease cost:
Depreciation expense of financed assets	$	37	$	94	$	156	$	284
Interest on lease obligations	$	20	$	9	$	30	$	30

(1) Included in general and administrative expenses

Other lease information is as follows:


	For the nine months ended
($ in thousands)	June 30, 2023		June 30, 2022
Cash paid for amounts included in measurement of lease obligations:
Operating cash outflows from operating leases	$	240	$	237
Operating cash outflows from finance leases	$	30	$	237
Financing cash outflows from finance leases	$	249	$	448


	June 30, 2023			September 30, 2022
Weighted-average remaining lease term - operating leases	4.0 years			3.2 years
Weighted-average remaining lease term - finance leases	2.1 years			1.5 years
Weighted-average discount rate - operating leases		5.40	%		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 June 30, 2023:


($ in thousands) Fiscal Year	Operating Leases			Finance Leases
Remainder of Fiscal 2023	$	67		$	54
2024		214			134
2025		201			9
2026		204			—
2027		106			—
Thereafter		32			—
Gross lease liabilities		824			197
Less: imputed interest		(72	)		(6	)
Present value of lease liabilities	$	752		$	191
Less: Current portion of lease liabilities		(194	)		(168	)
Total lease liabilities, net of current portion	$	558		$	23