Company: KPEA
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001493152-25-006580
Chunk: 51

Company: Kun Peng International Ltd.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 1
Chunk 51
---
 payments
under the lease arrangements are fixed.

The
Company elected the package of practical expedients which allow the Company to carryforward its historical lease classification, its
assessment on whether a contract is or contains a lease, and its initial direct costs for any lease that exists prior to adoption of
the new standard.

The
Company also elected to apply the short-term lease exception for lease arrangements with a lease term of 12 months or less at commencement.
Lease terms used to compute the present value of lease payments do not include any option to extend, renew, or terminate the lease that
the Company is not reasonably certain to exercise upon the lease inception. Accordingly, operating lease right-of-use assets and liabilities
do not include leases with a lease term of 12 months or less.

Research
and Development Expenses

Research
and development (R&D) expenses are all costs associated with the original development and design of the product as well as any intellectual
property (IP) generated during the development phase, including patents and copyrights. Research and development expenses are included
in the overall operating expenses and reflected as a separate line item on the consolidated statement of operations.

    17

We
purchase the consumer preventive health food and health related household products sold on our platforms from our suppliers and we did
not develop, design or manufacture those products. Moreover, although we have built our online platform and mobile commerce in-house,
the compensation costs for our in-house technology team were not significant. Accordingly, instead of capitalizing the compensation costs
of our in-house technology team as Research and Development on the Balance Sheet or presenting it as Research and Development expenses,
we included these amounts in Employee Compensation and Benefit expenses within General and Administrative expenses for the quarters ended
December 31, 2024 and 2023.

Selling
Expenses

Selling
expenses consist primarily of marketing and promotional service fees to service agents and other costs incurred by our sales and marketing
department such as staff costs, office supplies, and other incidental expenses that are incurred directly to attract or retain customers.

Our
selling expenses for the quarters ended December 31, 2024 and 2023 were $346,489 and $431,988, respectively. We recognized marketing
and promotional service expenses when our service agents performed marketing activities, promotions, and exhibitions for our business
and products. For the quarters ended December 31, 2024 and 2023, we recorded marketing and promotional service fees to our service agents
in an amount of $ 161,