RELATED PARTY TRANSACTIONS	3 Months Ended
Mar. 31, 2023
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	NOTE 16 – RELATED PARTY TRANSACTIONS On April 27, 2021, the Company entered into an Administrative and Infrastructure Services Agreement (the “Services Agreement”) with Beowulf Electricity & Data Inc. (“Beowulf E&D”), a related party due to control by a member of Company management. Under the Services Agreement, Beowulf E&D will provide, or cause its affiliates to provide, to TeraWulf certain services necessary to construct and operate certain bitcoin mining facilities developed or anticipated to be developed by the Company and support the Company’s ongoing business, including, among others, services related to construction, technical and engineering, operations and maintenance, procurement, information technology, finance and accounting, human resources, legal, risk management and external affairs consultation. The Services Agreement has an initial term of five years and provides for certain fixed, passthrough and incentive payments to Beowulf E&D, including issuing to certain designated employees of Beowulf E&D awards with respect to shares of TeraWulf Common Stock upon the consummation of an initial public offering of TeraWulf or the consummation of a merger following which TeraWulf is listed on a nationally recognized securities exchange and, thereafter, upon achievement of certain milestones regarding bitcoin mining capacity deployed at the bitcoin mining facilities. For the base fee, the Company originally agreed to pay Beowulf E&D in monthly installments an annual fee for the first year in the amount of $7.0 million and, thereafter, an annual fee equal to the greater of $10.0 million or $0.0037 per kilowatt hour of electric load utilized by the bitcoin mining facilities. On March 29, 2023, TeraWulf and Beowulf E&D entered into an Amendment No. 1 to the Services Agreement, pursuant to which TeraWulf agreed to pay Beowulf E&D, effective as of January 1, 2023, a reduced annual base fee equal to $8.46 million payable in monthly installments, until all obligations under the Company’s LGSA, as amended and restated from time to time, are either indefeasibly repaid in full or refinanced. The Services Agreement also provides for reimbursement of cost and expenses incurred in connection with providing the services. For the three months ended March 31, 2023 and 2022, the Company paid Beowulf E&D $3.2 million and $1.5 million, respectively, under the Services Agreement. For the three months ended March 31, 2023 and 2022, selling, general and administrative expenses– related party in the consolidated statement of operations includes $2.9 million and $1.1 million, respectively, and operating expenses – related party in the consolidated statement of operations includes $258,000 and $0, respectively, in each case related to the base fee and reimbursement of costs and expenses. As of March 31, 2023, $705,000 is included in prepaid expenses, $4.1 million, including $2.2 million related to the Payment Netting Agreement, is included in amounts due to related parties and $1.5 million is included in property, plant and equipment, net in the consolidated balance sheet. As of December 31, 2022, $833,000 is included in prepaid expenses, $3.0 million, including $2.2 million related to the Payment Netting Agreement, is included in amounts due from related parties and $5.9 million is included in property, plant and equipment, net in the consolidated balance sheet. The Services Agreement also provides for performance related milestones and related incentive compensation. In connection with the listing of its Common Stock on a nationally recognized stock exchange in December 2021, pursuant to the Services Agreement, the Company agreed to issue awards valued at $12.5 million with respect to shares of its Common Stock to certain designated employees of Beowulf E&D in accordance with TeraWulf’s then effective Plan. However, no awards have been issued as of the date these consolidated financial statements were available for issuance. Once the mining facilities have utilized 100MW of cryptocurrency mining load in the aggregate, and for every incremental 100 MW of cryptocurrency mining load deployed by the mining facilities in the aggregate thereafter, TeraWulf agreed to issue additional awards of shares of TeraWulf Common Stock each in the amount of $2.5 million to certain designated employees of Beowulf E&D in accordance with TeraWulf’s then effective Plan. As of December 31, 2022, the Company considered it probable that the performance milestone of 100MW of mining load deployed by the mining facilities would be met. As of March 31, 2023 and December 31, 2022, $14.9 million and $14.6 million, respectively, are included in share-based liabilities due to related party in the consolidated balance sheets. Performance milestone expense of $312,000 and $0 is included in selling, general and administrative expenses – related party in the consolidated statements of operation for the three months ended March 31, 2023 and 2022, respectively.

RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2023

NOTE 16 – RELATED PARTY TRANSACTIONS

On April 27, 2021, the Company entered into an Administrative and Infrastructure Services Agreement (the “Services Agreement”) with Beowulf Electricity & Data Inc. (“Beowulf E&D”), a related party due to control by a member of Company management. Under the Services Agreement, Beowulf E&D will provide, or cause its affiliates to provide, to TeraWulf certain services necessary to construct and operate certain bitcoin mining facilities developed or anticipated to be developed by the Company and support the Company’s ongoing business, including, among others, services related to construction, technical and engineering, operations and maintenance, procurement, information technology, finance and accounting, human resources, legal, risk management and external affairs consultation. The Services Agreement has an initial term of five years and provides for certain fixed, passthrough and incentive payments to Beowulf E&D, including issuing to certain designated employees of Beowulf E&D awards with respect to shares of TeraWulf Common Stock upon the consummation of an initial public offering of TeraWulf or the consummation of a merger following which TeraWulf is listed on a nationally recognized securities exchange and, thereafter, upon achievement of certain milestones regarding bitcoin mining capacity deployed at the bitcoin mining facilities. For the base fee, the Company originally agreed to pay Beowulf E&D in monthly installments an annual fee for the first year in the amount of $7.0 million and, thereafter, an annual fee equal to the greater of $10.0 million or $0.0037 per kilowatt hour of electric load utilized by the bitcoin mining facilities. On

March 29, 2023, TeraWulf and Beowulf E&D entered into an Amendment No. 1 to the Services Agreement, pursuant to which TeraWulf agreed to pay Beowulf E&D, effective as of January 1, 2023, a reduced annual base fee equal to $8.46 million payable in monthly installments, until all obligations under the Company’s LGSA, as amended and restated from time to time, are either indefeasibly repaid in full or refinanced. The Services Agreement also provides for reimbursement of cost and expenses incurred in connection with providing the services. For the three months ended March 31, 2023 and 2022, the Company paid Beowulf E&D $3.2 million and $1.5 million, respectively, under the Services Agreement. For the three months ended March 31, 2023 and 2022, selling, general and administrative expenses– related party in the consolidated statement of operations includes $2.9 million and $1.1 million, respectively, and operating expenses – related party in the consolidated statement of operations includes $258,000 and $0, respectively, in each case related to the base fee and reimbursement of costs and expenses. As of March 31, 2023, $705,000 is included in prepaid expenses, $4.1 million, including $2.2 million related to the Payment Netting Agreement, is included in amounts due to related parties and $1.5 million is included in property, plant and equipment, net in the consolidated balance sheet. As of December 31, 2022, $833,000 is included in prepaid expenses, $3.0 million, including $2.2 million related to the Payment Netting Agreement, is included in amounts due from related parties and $5.9 million is included in property, plant and equipment, net in the consolidated balance sheet.

The Services Agreement also provides for performance related milestones and related incentive compensation. In connection with the listing of its Common Stock on a nationally recognized stock exchange in December 2021, pursuant to the Services Agreement, the Company agreed to issue awards valued at $12.5 million with respect to shares of its Common Stock to certain designated employees of Beowulf E&D in accordance with TeraWulf’s then effective Plan. However, no awards have been issued as of the date these consolidated financial statements were available for issuance. Once the mining facilities have utilized 100MW of cryptocurrency mining load in the aggregate, and for every incremental 100 MW of cryptocurrency mining load deployed by the mining facilities in the aggregate thereafter, TeraWulf agreed to issue additional awards of shares of TeraWulf Common Stock each in the amount of $2.5 million to certain designated employees of Beowulf E&D in accordance with TeraWulf’s then effective Plan. As of December 31, 2022, the Company considered it probable that the performance milestone of 100MW of mining load deployed by the mining facilities would be met. As of March 31, 2023 and December 31, 2022, $14.9 million and $14.6 million, respectively, are included in share-based liabilities due to related party in the consolidated balance sheets. Performance milestone expense of $312,000 and $0 is included in selling, general and administrative expenses – related party in the consolidated statements of operation for the three months ended March 31, 2023 and 2022, respectively.