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Revenue Disaggregation

9 Months Ended

Sep. 30, 2021

Revenue from Contract with Customer [Abstract]

4. Revenue Disaggregation

The following tables summarize disaggregated customer contract revenues and the source of the revenue for the three and nine months ended September 30, 2021 and 2020. Revenues from lending and trading activities included in consolidated revenues were primarily interest, dividend and other investment income, which are not considered to be revenues from contracts with customers under GAAP.

The Company’s disaggregated revenues consist of the following for the three months ended September 30, 2021:

	Three Months ended September 30, 2021
	GWW		TurnOnGreen			Ault Alliance			Total
Primary Geographical Markets
North America	$	1,415,000	$	1,103,000		$	608,000		$	3,126,000
Europe		1,848,000		(97,000	)		-			1,751,000
Middle East		2,949,000		-			-			2,949,000
Other		161,000		88,000			-			249,000
Revenue from contracts with customers		6,373,000		1,094,000			608,000			8,075,000
Revenue, lending and trading activities		-		-			(38,869,000	)		(38,869,000	)
Total revenue	$	6,373,000	$	1,094,000		$	(38,261,000	)	$	(30,794,000	)

Major Goods
RF/microwave filters	$	630,000	$	-		$	-		$	630,000
Detector logarithmic video amplifiers		905,000		-			-			905,000
Power supply units		1,256,000		1,094,000			-			2,350,000
Power supply systems		545,000		-			-			545,000
Healthcare diagnostic systems		97,000		-			-			97,000
Defense systems		2,940,000		-			-			2,940,000
Digital currency mining		-		-			272,000			272,000
Other		-		-			336,000			336,000
Revenue from contracts with customers		6,373,000		1,094,000			608,000			8,075,000
Revenue, lending and trading activities		-		-			(38,869,000	)		(38,869,000	)
Total revenue	$	6,373,000	$	1,094,000		$	(38,261,000	)	$	(30,794,000	)

Timing of Revenue Recognition
Goods transferred at a point in time	$	3,336,000	$	1,094,000		$	607,000		$	5,037,000
Services transferred over time		3,037,000		-			-			3,037,000
Revenue from contracts with customers	$	6,373,000	$	1,094,000		$	607,000		$	8,074,000

The Company’s disaggregated revenues consist of the following for the three months ended September 30, 2020:

	Three Months ended September 30, 2020
	GWW		TurnOnGreen		Ault Alliance			Total
Primary Geographical Markets
North America	$	1,740,000	$	1,136,000	$	-		$	2,876,000
Europe		246,000		1,000		-			247,000
Middle East		2,233,000		-		-			2,233,000
Other		110,000		239,000		-			349,000
Revenue from contracts with customers		4,329,000		1,376,000		-			5,705,000
Revenue, lending and trading activities		-		-		(29,000	)		(29,000	)
Total revenue	$	4,329,000	$	1,376,000	$	(29,000	)	$	5,676,000

Major Goods
RF/microwave filters	$	1,341,000	$	-	$	-		$	1,341,000
Detector logarithmic video amplifiers		441,000		-		-			441,000
Power supply units		-		1,376,000		-			1,376,000
Power supply systems		316,000		-		-			316,000
Healthcare diagnostic systems		262,000		-		-			262,000
Defense systems		1,969,000		-		-			1,969,000
Revenue from contracts with customers		4,329,000		1,376,000		-			5,705,000
Revenue, lending and trading activities		-		-		(29,000	)		(29,000	)
Total revenue	$	4,329,000	$	1,376,000	$	(29,000	)	$	5,676,000

Timing of Revenue Recognition
Goods transferred at a point in time	$	2,096,000	$	1,376,000	$	(29,000	)	$	3,443,000
Services transferred over time		2,233,000		-		-			2,233,000
Revenue from contracts with customers	$	4,329,000	$	1,376,000	$	(29,000	)	$	5,676,000

The Company’s disaggregated revenues consisted of the following for the nine months ended September 30, 2021:

	Nine Months Ended September 30, 2021
	GWW		TurnOnGreen		Ault Alliance		Total
Primary Geographical Markets
North America	$	5,444,000	$	3,600,000	$	1,459,000	$	10,503,000
Europe		5,600,000		318,000		—		5,918,000
Middle East		7,845,000		—		—		7,845,000
Other		309,000		390,000		—		699,000
Revenue from contracts with customers		19,198,000		4,308,000		1,459,000		24,965,000
Revenue, lending and trading activities						19,615,000		19,615,000
Total revenue	$	19,198,000	$	4,308,000	$	21,074,000	$	44,580,000

Major Goods
RF/microwave filters	$	2,921,000	$	—	$	—	$	2,921,000
Detector logarithmic video amplifiers		1,049,000		—		—		1,049,000
Power supply units		1,734,000		4,308,000		—		6,042,000
Power supply systems		5,253,000		—		—		5,253,000
Healthcare diagnostic systems		510,000		—		—		510,000
Defense systems		7,731,000		—		—		7,731,000
Digital currency mining						693,000		693,000
Other		—		—		766,000		766,000
Revenue from contracts with customers		19,198,000		4,308,000		1,459,000		24,965,000
Revenue, lending and trading activities						19,615,000		19,615,000
Total revenue	$	19,198,000	$	4,308,000	$	21,074,000	$	44,580,000

Timing of Revenue Recognition
Goods transferred at a point in time	$	10,957,000	$	4,308,000	$	1,459,000	$	16,724,000
Services transferred over time		8,241,000		—		—		8,241,000
Revenue from contracts with customers	$	19,198,000	$	4,308,000	$	1,459,000	$	24,965,000

The Company’s disaggregated revenues consisted of the following for the nine months ended September 30, 2020:

	Nine Months ended September 30, 2020
	GWW		TurnOnGreen		Ault Alliance			Total
Primary Geographical Markets
North America	$	5,110,000	$	3,102,000	$	-		$	8,212,000
Europe		694,000		288,000		-			982,000
Middle East		6,838,000		-		-			6,838,000
Other		264,000		413,000		-			677,000
Revenue from contracts with customers		12,906,000		3,803,000		-			16,709,000
Revenue, lending and trading activities		-		-		(27,000	)		(27,000	)
Total revenue	$	12,906,000	$	3,803,000	$	(27,000	)	$	16,682,000

Major Goods
RF/microwave filters	$	3,887,000	$	-	$	-		$	3,887,000
Detector logarithmic video amplifiers		1,319,000		-		-			1,319,000
Power supply units		-		3,803,000		-			3,803,000
Power supply systems		863,000		-		-			863,000
Healthcare diagnostic systems		785,000		-		-			785,000
Defense systems		6,052,000		-		-			6,052,000
Revenue from contracts with customers		12,906,000		3,803,000		-			16,709,000
Revenue, lending and trading activities		-		-		(27,000	)		(27,000	)
Total revenue	$	2,906,000	$	,803,000	$	(27,000	)	$	,682,000

Timing of Revenue Recognition
Goods transferred at a point in time	$	6,068,000	$	3,803,000	$	(27,000	)	$	9,844,000
Services transferred over time		6,838,000		-		-			6,838,000
Revenue from contracts with customers	$	12,906,000	$	3,803,000	$	(27,000	)	$	16,682,000

Sales of Products

The Company generates revenues from the sale of its products through a direct and indirect sales force. The Company’s performance obligations to deliver products are satisfied at the point in time when title transfers to the customer. Generally products are shipped FOB shipping point and title transfers to the customer at the time the products are placed on a common carrier. The Company provides standard assurance warranties, which are not separately priced, that the products function as intended. The Company primarily receives fixed consideration for sales of product. Some of the Company’s contracts with distributors include stock rotation rights after six months for slow moving inventory, which represents variable consideration. The Company uses an expected value method to estimate variable consideration and constrains revenue for estimated stock rotations until it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. To date, returns have been insignificant. The Company’s customers generally pay within 30 days from the receipt of an invoice.

Because the Company’s product sales agreements have an expected duration of one year or less, the Company has elected to adopt the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14(a) of not disclosing information about its remaining performance obligations.

Manufacturing Services

For manufacturing services, which include revenues generated by the Company’s subsidiary, Enertec Systems 2001 Ltd (“Enertec”), and in certain instances, revenues generated by the Company’s subsidiary, Gresham Power Electronics Ltd., the Company’s performance obligation for manufacturing services is satisfied over time as the Company creates or enhances an asset based on criteria that are unique to the customer and that the customer controls as the asset is created or enhanced. Generally, the Company recognizes revenue based upon proportional performance over time using a cost-to-cost method which measures progress based on the costs incurred to total expected costs in satisfying its performance obligation. This method provides a depiction of the progress in providing the manufacturing service because there is a direct relationship between the costs incurred by the Company and the transfer of the manufacturing service to the customer. Manufacturing services that are recognized based upon the proportional performance method are included in the above table as services transferred over time and to the extent the customer has not been invoiced for these revenues, as accrued revenue in the accompanying consolidated balance sheets. Revisions to the Company’s estimates may result in increases or decreases to revenues and income and are reflected in the consolidated financial statements in the periods in which they are first identified.

The Company has elected the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component to the extent that the period between when the Company transfers its promised good or service to the customer and when the customer pays in one year or less.

Lending and Trading Activities

Lending Activities

Ault Alliance, Inc. (“Ault Alliance”), through its wholly owned subsidiary Digital Power Lending, LLC (“DP Lending”), generates revenue from lending activities primarily through interest, origination fees and late/other fees. Interest income on these products is calculated based on the contractual interest rate and recorded as interest income as earned. The origination fees or original issue discounts are recognized over the life of the loan using the effective interest method.

Trading Activities

Ault Alliance, through DP Lending, generates revenue from trading activities primarily through sales of securities that have appreciated since their acquisition. Financial instruments utilized in trading activities are carried at fair value. Fair value is generally based on quoted market prices for the same or similar assets and liabilities. If these market prices are not available, fair values are estimated based on dealer quotes, pricing models, discounted cash flow methodologies, or similar techniques where the determination of fair value may require significant management judgment or estimation. Realized gains and losses are recorded on a trade-date basis. Realized and unrealized gains and losses are recognized in revenue from lending and trading activities.

Blockchain Mining

The Company has executed contracts with digital asset mining pools to provide computing power to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed digital currency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are recorded as a component of cost of revenues), for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm to add a block to the blockchain.

Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. All consideration is variable. The Company cannot determine, during the course of solving for a block, that a reversal of revenue is not probable and therefore revenue is recognized when the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive.

Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions.

Fair value of the digital currency award received is determined using the market rate of the related digital currency at the time of receipt.

There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital currencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is promulgated by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations.

Expenses associated with running the cryptocurrency mining business, such as equipment depreciation and electricity costs are recorded as a component of cost of revenues.