Company: SIDU
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001742
Chunk: 1313

Company: Sidus Space Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 1313
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 experience and forecast of economic conditions may also not be representative of the customer’s actual default in the
future. The company will utilize the Allowance Method based on the accounts receivable aging in order to accrue bad debt expense.

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Leases

In February 2016, the FASB issued ASU 2016-02, Leases
(Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases in the balance sheet. Additionally,
in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) – Targeted Improvements, which, among other things, provides an additional
transition method 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.

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