Company: FLYE
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001213900-25-078571
Chunk: 157

Company: Fly-E Group, Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 8
Chunk 157
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ike retailers, and improving accident reporting and registration processes for e-bikes and mopeds.
Additionally, in January 2025, the New York City Department of Transportation launched a $2 million trade-in program, allowing eligible
food delivery workers to replace their unsafe e-bikes, e-mobility devices, and batteries with certified, high-quality versions. Our Fly-11
PRO was chosen for the official model of DOT and participates in this program. From January 2025 to June 2025, we participated in this
program and completed the delivery of Fly-11 Pro models to our retail partner participating in the program. While we expect relevant
regulations to provide a tailwind to our growth, it is possible for other regulations to result in margin pressures.

How to Assess Our Performance

In assessing performance, management considers a variety of performance
and financial measures, including principal growth in net sales, gross profit, gross margin, selling, general and administrative expenses
and EBITDA. The key measures that we use to evaluate the performance of our business are set forth below.

36

Net Sales

We generate revenue from sales of our EVs, their accessories and spare
parts, and provision of repair services at our retail stores. Our net sales comprise gross sales net of discounts and return allowances.
We do not record sales taxes as a component of retail revenues as we consider it a pass-through conduit for collecting and remitting
sales taxes. Return allowances, which reduce net revenues, are estimated based on historical experience.

E-bikes, E-motorcycles and E-scooters sales. We generate a
substantial majority of our revenues from sales of E-bikes, E-motorcycles and E-scooters directly to customers through our online store
and retail stores, and to our distributors.

Accessories and spare parts sales. We also sell accessories
and spare parts for our EVs, such as rear storage boxes and front baskets. In addition, we offer Fly E-Bike branded accessories and general
merchandise, such as decorative car plates, key chains and apparel.

Service revenues. We also provide repair services at our
retail stores for a fee. The Company operates rental business primarily from the Go Fly rental mobile app and selected Fly E-Bike stores
that provide users with a flexible and affordable e-bike rental option.

Cost of Sales

Cost of sales includes product costs, warehouse rent expenses, payroll
costs, depreciation costs, inventory reserves, warranty costs