Company: SIDU
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023543
Chunk: 59

Company: Sidus Space Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Item 8
Chunk 59
---
 to the estimated total costs for each contract. This method is used
because management considers total costs to be the best available measure of progress on these contracts. Revenue from fixed price contracts
and time-and-materials contracts that are completed in the month the work was started are recognized when the work is shipped.

Revenues
from fixed price contracts primarily related to the satellite side of the business that require milestone payments are recognized at
the time of the milestone being met. This method is used because management considers that the payments are nonrefundable unless the
Company fails to perform as promised. If the customer terminates the contract, we are entitled to retain any progress payments received
from the customer and we have no further rights to compensation from the customer. Even though the payments made by the customer are
nonrefundable, the cumulative amount of those payments is not expected, at all times throughout the contract, to at least correspond
to the amount that would be necessary to compensate us for performance completed to date. Accordingly, we account for the progress under
the contract as a performance obligation satisfied at a point in time.

The
Company accounts for the majority of its fixed price or time and materials contracts as performance obligations satisfied over times,
due to the Company’s enforceable right to collect based on services provided through any applicable date of termination. Amounts
recognized as revenue over time due to this, but in which the Company does not yet have the right to invoice for due to contractual arrangements
are reflected as contract assets until such time as they are invoiced, and the Company has the right to receive payment.

Inventory

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

Credit
Losses

The
provision for expected credit losses on trade receivables is estimated based on historical information, customer solvency and changes
in customer payment terms and practices. The Company calibrates its provision matrix to adjust the historical credit loss experience
with forward-looking information. The amount of expected credit losses is sensitive to changes in circumstances and of forecast economic
conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative
of the customer’s actual default in the future. The company utilizes the Allowance Method based on the accounts receivable aging
in order to accrue bad debt expense.

Leases

In
February 2016, the F