SPRUCE POWER HOLDING CORP Revenue Disclosure

Note 6. Revenue

The following table represents the Company’s revenues for the years ended December 31, 2021, 2020 and 2019, respectively, disaggregated, by sales channel.

Disaggregation of revenue:

Remaining performance obligations: At December 31, 2021, 2020 and 2019, there was approximately $237, $305 and $133 in deferred revenue related to unsatisfied extended warranty performance obligations, respectively. During the year ended December 31, 2021, the Company recognized revenue of $128 from the December 31, 2020 deferred revenue balance. There was no deferred warranty revenue recognized for the years ended December 2020 and 2019, respectively.

Contract Balances: The timing of revenue recognition, billings and cash collections results in billed trade accounts receivable, and deferred revenue (contract liabilities) on the consolidated balance sheets. In addition, the Company defers certain costs incurred to obtain a contract (contract costs).

Costs to obtain a contract: Sales commissions paid to internal sales personnel, as well as associated payroll taxes and retirement plan contributions (together, sales commissions and associated costs) that are incremental to the acquisition of customer contracts, are capitalized as contract acquisition cost on the balance sheet when the period of benefit is determined to be greater than one year. In instances where an extended warranty is sold, the period of benefit would extend beyond 12 months and therefore, the practical expedient would not be met for those contracts and require capitalization of the related costs to obtain those contracts. The Company has elected to allocate the capitalized commissions to performance obligations on a relative basis (i.e., in proportion to the transaction price allocated to each performance obligation) to determine the period of amortization. As a result, substantially all of the commission is allocated to the combined equipment and installation performance obligation and is amortized upon transfer of control of this performance obligation, which typically occurs in the same period in which commission liability is incurred. Total commission expense recognized during the years ended December 31, 2021, 2020 and 2019 was $834, $105 and $226, respectively. There were no capitalized commissions during the periods ended December 31, 2021 and 2020.

Warranties: The Company accrues estimated warranty costs at the time of sale related to its assurance- type warranties. In general, for the sales of Power Drives, manufactured products are warranted for the shorter of three years or 75,000 miles against defects in material and workmanship when properly used for their intended purpose, installed correctly and appropriately maintained. For the XL Grid solutions, projects are warranted for one year. The amount of the accrued warranty liability is estimated based on historical claims rates and warranty fulfillments costs adjusted for any expected changes in fulfillment costs. Warranty charges in 2021 include a charge of $965 related to faults identified in certain Power Drive products based on the Company’s review of data gathered on the performance of its existing systems on the road.

The following is a roll-forward of the Company’s accrued warranty liability:

The warranty liability is included in accrued expenses and other current liabilities on the consolidated balance sheets.