Company: FLYE
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001213900-25-078571
Chunk: 21

Company: Fly-E Group, Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 1
Chunk 21
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 by the Company. The Company leases products to customers, and as a
result, the Company considers itself to be the accounting lessor, as applicable, in these arrangements in accordance with ASC 842. Rental
business operating costs include refunded products repair fee and other operating costs, as applicable.

Due to the short-term nature of the rental business, the Company classifies these rentals
operating leases. Revenue generated from the rental services is recognized over the rental period, which is typically one day, one week
or more.

Disaggregated information of revenues by business lines are as follows:

    For the Three months Ended  June 30, 

    2025  
    2024 
  
    Product revenues - retail (ASC 606) 
    $3,762,829  
    $6,870,418 
  
    Product revenues - wholesale (ASC 606) 
     1,427,231  
     1,003,008 
  
    Revenues - rental services (ASC 842) 
     138,138  
     — 
  
    Net revenues 
    $5,328,198  
    $7,873,426 

(o) Selling Expenses

Selling expenses mainly consist of advertising costs, and payroll and related expenses
for personnel engaged in selling and marketing activities. Advertising expenses, which consist primarily of online and offline advertisements,
are expenses when the services are received. The advertising expenses were $17,413 and $68,519 for the three months ended June 30, 2025
and 2024, respectively.

13

(p) Research and Development Expenses

Research and development expenses include salaries for the Company’s research and
development personnel, as well as related development expenses paid to the third-party development team. The Company recognizes internal
use software acquired and internally developed in accordance with ASC 350-40 “Software—internal use software”. The
Company expenses all costs that are incurred in connection with the planning and implementation phases of development, and costs that
are associated with maintenance of the existing software for internal use. Certain costs associated with developing internal-use software
are capitalized when such costs are incurred within the application development stage of software development. As a result, the Company
expensed the development costs of the Fly E-Bike app as they incurred. For the three months ended June 30, 2025 and 2024, development
costs amounted to $169,299 and $145