Company: SIDU
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001742
Chunk: 853

Company: Sidus Space Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 7
Chunk 853
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 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 entity 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 will calibrate 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 will utilize the Allowance Method based on the accounts receivable aging in order to accrue bad debt expense.

 55 

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 201