Company: CLSKW
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0000950170-25-015470
Chunk: 120

Company: CLEANSPARK, INC.
Filing Date: 2025-02-06
Form: 10-Q
Item: Item 8
Chunk 120
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 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 December 31, 2024. 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 of allowance) on its available-for-sale debt securities as of December 31, 2024 and September 30, 2024, respectively. The fair value of the Company’s investment in the Series B Preferred Stock was $950 and $918 as of December 31, 2024 and September 30, 2024, respectively. The Company has included gain on fair value of Series B Preferred Stock amounting to $32 and $29 for the three months ended December 31, 2024 and 2024 and 2023, respectively, as part of other comprehensive income in the condensed consolidated statements 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 statements of operations and comprehensive income.Total fair value of investment in ILAL Derivative Asset as of December 31, 2024 and September 30, 2024 was $4,496 and $1,832, respectively, and as included in “Derivative investments” on the condensed consolidated balance sheet. The Company fair values the debt security as a straight debt instrument based on liquidation value, accrued interest to date, and an estimated 60% recovery rate for first-lien debt, which is an unobservable input. 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.

7.   PROPERTY AND EQUIPMENTProperty and equipment consist of the following:

         ($ in thousands)