Company: SIDU
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010989
Chunk: 58

Company: Sidus Space Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 58
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 individual contract level. Contract assets represent revenue recognized in excess of amounts paid or payable (contracts receivable)
to the company on uncompleted contracts. Contract liabilities represent the company’s obligation to perform on uncompleted contracts
with customers for which the company has received payment or for which contracts receivable are outstanding.

Inventory

Inventory
consists of work in progress and consists of estimated revenue calculated on a percentage of completion based on direct labor and materials
in relation to the total contract value. The Company does not maintain raw materials.

Property
and Equipment

Property
and equipment, consisting mostly of plant and machinery, software, satellites and related software, motor vehicles and computer equipment,
is recorded at cost reduced by accumulated depreciation and impairment, if any. Construction in progress generally involves short-term
capital projects and is not depreciated until the development has reached completion and the asset has been put into service. Depreciation
expense is recognized over the assets’ estimated useful lives of three3 to ten years using the straight-line method. Major additions
and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance and repairs that
do not improve or extend the life of the respective assets, are expensed as incurred. Estimated useful lives are periodically reviewed
and, when appropriate, changes are made prospectively. When certain events or changes in operating conditions occur, asset lives may
be adjusted and an impairment assessment may be performed on the recoverability of the carrying amounts.

    -9-

Stock
Based Compensation

The
Company accounts for stock-based compensation awards in accordance with ASC Topic 718, “Compensation – Stock Compensation.”
The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the consolidated
statements of operations and comprehensive income based on the estimated fair value of those awards on the grant date and amortized on
a straight-line basis over the requisite service period or vesting period. The Company records forfeitures as they occur.

Share-based
payments are valued using a Black-Scholes option pricing model. The grants are amortized on a straight-line basis over the requisite
service periods, which is generally the vesting period. If an award is granted, but vesting does not occur, any previously recognized
compensation cost is reversed in the period related to the termination of service.

The
expected option term is computed using the “simplified” method as permitted under the provisions of ASC 718-10-S99. The Company
uses the simplified method to calculate expected