LEASES

12 Months Ended

Sep. 30, 2025

The Company’s right-of-use (“ROU”) assets and lease liabilities at September 30, 2025, primarily relate to non-cancelable operating leases for our Hawaii corporate and Canadian office spaces and our leasehold land interest for Lot 4C held by Kaupulehu Developments. Management determines if a contract is or contains a lease at inception of the contract or modification of the contract. A contract is or contains a lease if the contract conveys the right to control the use of the asset for a period in exchange for consideration.

Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. The Company’s leases do not provide a readily determinable implicit rate; therefore, management uses the Company’s incremental borrowing rate to discount lease payments based on information available at lease commencement. Our lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease terms. The Company has lease agreements with lease and non-lease components and the non-lease components are excluded in the calculation of the ROU asset and lease liability and expensed as incurred. None of the Company’s lease agreements contain material residual value guarantees or material restrictions or covenants. A ROU asset and corresponding lease liability is not recorded for leases with an initial term of 12 months or less (short-term leases) as the Company recognizes lease expense for these leases as incurred over the lease term.

Leases recorded on the consolidated balance sheet consist of the following:


		September 30,
		2025		2024
Assets:
	Operating lease right-of-use assets	$	145,000	$	39,000
	Total right-of-use assets	$	145,000	$	39,000
Liabilities:
	Current portion of operating lease liabilities (1)	$	78,000	$	68,000
	Operating lease liabilities	93,000		7,000
	Total lease liabilities	$	171,000	$	75,000

______________

(1) Amount included in “Other Current Liabilities” in the Consolidated Balance Sheets.

The components of lease expense are as follows:


	Year ended September 30,
	2025		2024
Operating lease cost	$	114,000	$	87,000

Variable lease cost	155,000		142,000
Total lease cost	$	269,000	$	229,000

Supplemental information related to leases is as follows:


		September 30,
		2025		2024
Cash paid related to operating lease liabilities		$	142,000	$	114,000
Operating leases:
	Weighted-average remaining lease term (in years)	2.2		0.9
	Weighted-average discount rate	8.20%		6.99%

The remaining lease payments for our operating leases as of September 30, 2025, are as follows:


Fiscal year ending:
2026	$	88,000
2027	59,000
2028	36,000
2029	—
2030	—
Thereafter	—
Total lease payments	183,000
Less: amounts representing interest	(12,000)
Present value of lease liabilities	$	171,000

The lease payments for the Lot 4C leasehold land zoned conservation were subject to renegotiation as of January 1, 2006. Per the lease agreement, the lease payments will remain unchanged pending an appraisal, whereupon the lease rent could be adjusted to fair market value. Barnwell does not know the amount of the new lease payments which could be effective upon performance of the appraisal; they may remain unchanged or increase, and Barnwell currently expects the adjustment, if any, to not be material.

The future lease payment disclosures above assume the minimum lease payments for leasehold land in effect at December 31, 2005 remain unchanged through December 2025, the end of the lease term.