Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 22

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 1
Chunk 22
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2025.

(n) Revenue Recognition

Product revenue

The Company follows the revenue accounting requirements
of Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. The core principle underlying
the revenue recognition of this ASC allows the Company to recognize revenue that represents the transfer of products and services to
customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require
the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or
over time, based on when control of products and services transfers to a customer.

To achieve that core principle, the Company applies
a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract
with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including
variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction
price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the
performance obligation.

13

The Company generates substantially all its revenues
from sales of products such as smart E-bikes, E-motorcycles, E-scooters and accessories to the retail and wholesale customers through
its wholly owned subsidiaries stores. In accordance with ASC 606, the Company’s performance obligations are satisfied upon
the control of products being passed to the customer, which is the point in time that the customers are able to direct the use of and
obtain substantially all of the economic benefit of the products or services. The transfer of control typically occurs at a point in time
based on consideration of when the customer has an obligation to pay for the products, and physical possession of, legal title to, and
the risks and rewards of ownership of the products have been transferred, and the customer has accepted the products. Revenue is recognized
net of estimates of variable consideration, including product returns, customer discounts and allowance. which occurs at the point of
sale, or the services have been rendered. Historically, the Company has not experienced any significant returns nor provided significant
customer discounts.

The Company offers an assurance-type warranty
to its customers. An assurance-type warranty guarantees that the product will perform as promised and is not a performance obligation.
This type of warranty promises to repair or replace a delivered good or service if