TERAWULF INC.WULF
TERAWULF INC. Revenue Disclosure
Revenue recognition
. Revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, including noncash consideration, consideration paid or payable to customers and significant financing components. While most of the Company's revenue is contracted with customers through one
-time purchase orders and short-term contracts, the Company does have long-term arrangements with certain customers. Revenue from all customers is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer. Individually promised goods and services in a contract are considered a distinct performance obligation and accounted for separately if the customer can benefit from the individual good or service on its own or with other resources that are readily available to the customer and the good or service is separately identifiable from other promises in the arrangement. When an arrangement includes multiple performance obligations, the consideration is allocated between the performance obligations in proportion to their estimated standalone selling price. Costs related to products delivered are recognized in the period incurred, unless criteria for capitalization of costs are met. Costs of revenues consist primarily of direct labor, manufacturing overhead, materials and components. The Company does
not
incur significant upfront costs to obtain a contract. If costs to obtain a contract were to become material, the costs would be recorded as an asset and amortized to expense in a manner consistent with the related recognition of revenue.The Company excludes from revenue governmental assessed and imposed taxes on revenue transactions that are invoiced to customers. The Company includes freight billed to customers in revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold.
The timing of revenue recognition, billings and cash collections results in accounts receivable on the balance sheet.
Performance obligations
. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract's transaction price is allocated to each distinct performance obligation in proportion to its standalone selling price and recognized as revenue when, or as, the performance obligation is satisfied. The Company's various performance obligations and the timing or method of revenue recognition are discussed below: The Company sells its products to both distributors and end-users. Each unit of product delivered under a customer order represents a distinct and separate performance obligation as the customer can benefit from each unit on its own or with other resources that are readily available to the customer and each unit of product is separately identifiable from other products in the arrangement.
The transaction price for the Company's products is the invoiced amount. The Company does
not
have variable consideration in the form of refunds, credits, rebates, price concessions, pricing incentives or other items impacting transaction price. The purchase order pricing in arrangements with customers is deemed to approximate standalone selling price; therefore, the Company does not
need to allocate proceeds on a relative standalone selling price allocation between performance obligations. The Company does not
disclose information about remaining performance obligations that have original expected durations of one
year or less. There are no
material obligations that extend beyond one
year. Revenue is recognized when transfer of control occurs as defined by the terms in the customer agreement. The Company immediately recognizes incidental items that are immaterial in the context of the contract. The Company does
not
have any significant financing components in its customer arrangements as payment is received at or shortly after the point of sale, generally thirty
to ninety
days.The Company estimates returns based on an analysis of historical experience if the right to return products is granted to its customers. The Company does
not
record a return asset as non-conforming products are generally not
returned. The Company's return policy does not
vary by geography. The customer has no
rotation or price protection rights.Trade receivables.
Trade receivables include amounts invoiced and currently due from customers and are The amounts due are stated at their net estimated realizable value. The Company records an allowance for doubtful accounts to provide for the estimated amount of receivables that will
adequately provide for credit losses. Tnot
be collected and he allowance is based on a review of all outstanding amounts on an on-going basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considers a customer's financial condition, credit history, and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are recorded when received. Accounts are considered past due if payment is
A small percentage of the trade receivables balance is denominated in a foreign currency with not
received according to agreed-upon terms. no
concentration in any given country. At the end of each reporting period, the Company analyzes the receivable balance for customers paying in a foreign currency. These balances are adjusted to each quarter or year-end spot rate. Foreign currency transactions and translation adjustments did not
have a significant effect on the Balance Sheets, the Statements of Operations, Stockholders' Equity or Cash Flows for 2020
and 2019.
Sales commissions.
Sales commissions paid to sales representatives are eligible for capitalization as they are incremental costs that would not
have been incurred without entering into a specific sales arrangement and are recoverable through the expected margin on the transaction. The Company recognizes the incremental costs of obtaining contracts as an expense when incurred, as the amortization period of the assets that would have otherwise been recognized is one
year or less. The Company records these costs in selling, general, and administrative expense.Product warranties.
The Company offers warranties on various products and services. These warranties are assurance type warranties that are not
sold on a standalone basis; therefore, they are not
considered distinct performance obligations. The Company estimates the costs that may
be incurred under its warranties and records a liability in the amount of such costs at the time the revenue is recognized for the product sale. International revenue.
The Company markets its products to numerous countries in North America, Europe, Latin America, Asia and other parts of the world. Foreign sales were approximately 29.7%
and 29.4%
of total sales in 2020
and 2019,
respectively.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2020 | Mar 3, 2021 | Showing above |
| 2019 | Mar 3, 2020 | |
| 2018 | Mar 1, 2019 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.