Form 4: Terawulf CTO Enters Forward Sale Contract for 350K Shares

Terawulf Inc.'s Chief Technology Officer, Nazar M. Khan, through Lake Harriet Holdings, LLC, entered into a prepaid variable share forward contract involving up to 350,000 shares of common stock.

Summary

• Nazar M. Khan, Chief Technology Officer, Director, and 10% Owner of Terawulf Inc., reported a transaction through Lake Harriet Holdings, LLC, an entity he controls.
• On September 19, 2025, Lake Harriet Holdings, LLC entered into a prepaid variable share forward contract with an unaffiliated third-party buyer.
• Under the terms, Lake Harriet Holdings is obligated to deliver up to 350,000 shares of Terawulf common stock or an equivalent cash payment on the settlement date, which is based on a valuation date of September 21, 2026.
• In exchange for assuming this obligation, Lake Harriet Holdings received an upfront cash payment.
• 350,000 shares of Terawulf common stock were pledged to secure the obligations under the contract, with Lake Harriet Holdings retaining dividend and voting rights for these shares during the pledge term.
• The final number of shares or cash amount to be delivered will be determined by the volume-weighted average price of Terawulf common stock on the valuation date, relative to specified Forward Floor Price and Forward Cap Price.

Sentiment

Score: 4

Explanation: The transaction involves an insider hedging a significant portion of their holdings, which can be perceived negatively by the market as a signal of reduced confidence or a desire to lock in gains. While it provides liquidity to the insider, it represents a future obligation to sell shares.

Positives

• Lake Harriet Holdings, LLC received an upfront cash payment, providing immediate liquidity to the entity controlled by the insider.
• Lake Harriet Holdings retains dividend and voting rights for the 350,000 pledged shares during the term of the contract, maintaining influence over the company.
• The contract provides a mechanism for Lake Harriet Holdings to manage its exposure to future fluctuations in Terawulf Inc.'s share price.

Negatives

• The transaction represents a future obligation to sell or deliver cash equivalent to up to 350,000 shares, indicating a potential reduction in the insider's beneficial ownership.
• The variable nature of the settlement means the exact number of shares or cash amount to be delivered is uncertain until the valuation date, introducing an element of unpredictability.
• Pledging shares, while common, can carry risks if the share price declines significantly, potentially leading to increased collateral requirements or forced sales, though not explicitly detailed as a risk in this filing.

Risks

• **Market Price Volatility:** The final settlement amount (cash or shares) is directly dependent on the future market price of Terawulf common stock relative to the Forward Floor Price and Forward Cap Price, introducing uncertainty regarding the ultimate value and form of settlement.
• **Insider Selling Perception:** While a hedging strategy, such a transaction can be perceived by the market as an insider reducing their exposure to the company's stock, which may negatively influence investor sentiment or raise questions about management's long-term confidence.
• **Potential Dilution (Market Supply):** If Lake Harriet Holdings elects physical settlement, the delivery of up to 350,000 shares to the market could contribute to market supply, potentially impacting share price, although this is a personal transaction and not an issuance by the company.

Future Outlook

The contract establishes a future obligation for Lake Harriet Holdings, LLC to deliver shares or cash based on Terawulf Inc.'s stock performance by September 21, 2026. This indicates a strategic move by an insider to manage personal equity exposure over the next year.

Industry Context

Insider transactions, particularly hedging strategies like prepaid variable share forward contracts, are common among executives and large shareholders to manage personal wealth and diversify holdings while retaining some upside potential or mitigating downside risk. This type of transaction is a personal financial decision by an insider, not a corporate action by Terawulf Inc., but it can still influence market perception.

Related Party Transactions

• Nazar M. Khan, a Director, 10% Owner, and Chief Technology Officer of Terawulf Inc., is the sole trustee of The Nazar M. Khan Revocable Trust, which is the sole member of Lake Harriet Holdings, LLC. This establishes a related party relationship between the reporting person and the entity entering the contract.

Stakeholder Impact

• **Shareholders:** May perceive the transaction as an insider reducing exposure, potentially leading to negative sentiment or concerns about future share price performance. The future delivery of shares could add to market supply.
• **Management/Employees:** No direct impact on management or employees is mentioned, but general market sentiment influenced by insider transactions could indirectly affect morale or perception of company stability.

Next Steps

• Settlement of the prepaid variable share forward contract on or after the scheduled valuation date of September 21, 2026.

Key Dates

Recommendation

This Form 4 filing details a personal hedging transaction by an insider, not a direct corporate event. While the transaction itself (a forward sale contract) can be interpreted as an insider reducing future exposure, it does not provide sufficient information about the company's operational or financial performance to warrant a 'buy' or 'sell' recommendation. Investors should 'hold' and await further corporate disclosures or financial results to assess the company's fundamental value. The transaction is a personal financial management decision by the CTO, which, while notable, does not inherently change the investment thesis for Terawulf Inc. without additional context.

Keywords

Terawulf Inc., WULF, Nazar M. Khan, CTO, Director, Insider Transaction, Form 4, Prepaid Variable Share Forward, Equity Derivatives, Share Pledge, Lake Harriet Holdings