Company: SIDU
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001493152-25-023543
Chunk: 99

Company: Sidus Space Inc.
Filing Date: 2025-11-14
Form: 10-Q
Item: Item 2
Chunk 99
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 that would allow entities to not apply the guidance
in ASU 2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment
to the opening balance of retained earnings in the period of adoption.

We
determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)
assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are
included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets.

ROU
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease
payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present
value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental
borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement
date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include
options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments
is recognized on a straight-line basis over the lease term.

46

Leases
with a lease term of 12 months or less at inception are not recorded on our balance sheet and are expensed on a straight-line basis over
the lease term in our statement of operations.

Stock
Option and Warrant Valuation

We
use the Black-Scholes option-pricing model to value all options and Class A common stock warrants. Estimating the fair value of stock
options using the Black-Scholes option-pricing model requires the application of significant assumptions, such as the fair value of our
Class A common stock, the estimated term of the options, risk-free interest rates, the expected volatility of the price of our Class
A common stock, and an expected dividend yield. Each of these assumptions is subjective, requires significant judgment, and is based
upon management’s best estimates. If any of these assumptions were to change significantly in the future, equity-based compensation
related to future awards may differ significantly, as compared with awards previously granted.

JOBS
Act

On
April 5, 2012, the JOBS Act was enacted. Section 107 of the JOBS