Sidus Space Inc (NASDAQ:SIDU) shares are trading higher Monday morning even after Fugazi Research published a new bearish follow-up report raising fresh concerns about the company's financial condition, customer concentration, dilution risk and internal controls. Benzinga reached out to Sidus Space for comment and will update if the company responds.

Revenue Decline, Rising Costs And Wider Losses Draw Fresh Scrutiny

The Monday report follows Sidus Space's recent fourth-quarter and full-year 2025 earnings disclosures and argues that several of the short seller's earlier concerns have worsened rather than improved.

Among the biggest issues flagged were a 28% year-over-year drop in full-year revenue to about $3.4 million, a 48% increase in cost of revenue and a net loss of roughly $29.5 million, which Fugazi said underscored a business still heavily reliant on external capital.

Related-Party Revenue And Internal Control Issues Raise New Concerns

Fugazi also pointed to Sidus Space's growing dependence on related-party revenue. The report said Craig Technologies, a company owned by CEO Carol Craig, accounted for 47% of 2025 revenue, while the share of accounts receivable tied to that relationship rose sharply. It further highlighted the company's March 31 Form 10-K disclosure that its disclosure controls and procedures were "not effective," a notable shift from the prior year.

The report also questioned the viability of key company narratives tied to satellite operations, the Lonestar relationship and government contract opportunities.

Earlier January Fugazi Report Warned Of A Dilution-Driven Model

Fugazi's January report framed Sidus Space as a company surviving more through stock issuance than through durable business execution. It argued that heavy reliance on CEO-linked counterparties, weak cash conversion and repeated capital raises pointed to a model built around funding losses rather than scaling profitable operations.

The short seller also highlighted rapid share-count expansion, rising receivables and continued cash burn as signs that Sidus had not yet established a self-sustaining business. In Fugazi's view, those governance and financing concerns left the company highly dependent on outside capital and vulnerable to further dilution.

SIDU Shares Surge Monday Morning

SIDU Price Action: Sidus Space shares were up 9.39% at $3.38 at the time of publication on Monday, according to Benzinga Pro data.

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