Company: SIDU
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001742
Chunk: 339

Company: Sidus Space Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 2
Chunk 339
---
 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 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