Company: SIDU
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010989
Chunk: 49

Company: Sidus Space Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 2
Chunk 49
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 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.

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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