As of December 31, 2023 and September 30, 2023, the Company had total investments of $2,209 and $3,423, respectively, that are comprised of the following:

Investment in Debt Securities (Preferred Stock) and related Embedded Derivative Asset

On November 5, 2019, the Company entered into a Securities Purchase Agreement (the "SPA"), dated as of November 6, with International Land Alliance, Inc. ("ILAL").

Pursuant to the terms of the SPA with ILAL, the Company purchased 1,000 shares of Series B Preferred Stock of ILAL (the “ILAL Preferred Stock”) for an aggregate purchase price of $500, less certain expenses and fees. The Series B Preferred Stock accrue cumulative in-kind accruals at a rate of 12% per annum and were redeemable on August 6, 2020. The ILAL 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 ILAL Preferred Stock is recorded as an available-for-sale ("AFS") debt security and is reported at its estimated fair value as of December 31, 2023. 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 on our available-for-sale debt securities as of December 31, 2023 and September 30, 2023, respectively. The fair value of investment in Debt Securities is $755 and $726 as of December 31, 2023 and September 30, 2023, respectively. The Company has included gain on change in fair value of preferred stock amounting to $29 for the three months ended December 31, 2023, and $29 for the three months ended December 31, 2022, as part of Other Comprehensive Income in the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company has deemed this variable conversion feature of the ILAL Preferred Stock as an embedded derivative instrument in accordance with ASC Topic No. 815. This topic requires the Company to account for the conversion

feature on its balance sheet at fair value and account for changes in fair value as a derivative gain or loss. Unrealized gain or loss on fair valuation of this embedded feature is recognized as income or loss in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Total fair value of investment in derivative assets as of December 31, 2023 and September 30, 2023, respectively was $1,454 and $2,697. The Company fair values the debt security as a straight debt instrument based on liquidation value and accrued interest to date. The fair value of the derivative asset is based on the difference in the fair value of the debt security determined as a straight debt instrument and the fair value of the debt security if converted as of the reporting date. The Company recorded an unrealized loss on derivative assets for $1,243 for the three months ended December 31, 2023, compared to an unrealized loss on derivative assets for $1,271 for the three months ended December 31, 2022.

The following table sets forth a reconciliation of carrying value of all investments as of December 31, 2023:


($ in thousands)	ILAL Debt Securities		ILAL Derivative Asset
Balance as of September 30, 2023	$	726	$	2,697
Unrealized loss on derivative asset		—		(1,243	)
Unrealized gain on fair value recognized in other comprehensive income		29		—
Balance as of December 31, 2023	$	755	$	1,454