Company: FLYE
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001213900-25-078571
Chunk: 155

Company: Fly-E Group, Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 8
Chunk 155
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 inclined to purchase E-Bikes. Consequently, sales have declined as customers opt for oil-powered vehicles
over electric vehicles. The decrease in volume also attributed in part to the closures and disposition of our retail stores during
the three months ended June 30, 2025. The decrease in average sales price was primarily attributable to changes in product mix and
promotional pricing strategies implemented during the three months ended June 30, 2025.

We currently have a streamlined product portfolio consisting of three
categories, with multiple models and specifications for each category. Our ability to increase the sales price and volume will depend
on our ability to continually enhance our brand to attract customers, as well as our ability to successfully operate our retail stores
and expand our sales network globally. However, our product sales price is influenced by various factors such as market demand and competitors’
pricing, and although we continue working on product improvements and retail expansion, there can be no guarantee of sustained sales
price increase or improved sales volume. If our prices remain stable, increasing sales volume would become important for continued revenue
growth, and failure to do so would significantly impact our ability to grow revenue or improve our financial results.

35

Employees

Our payroll expenses were $1.0 million for the three months ended
June 30, 2025, compared to $1.0 million for the three ended June 30, 2024. As eight stores were sold during the three months ended June
30, 2025, and an additional three stores were sold subsequently, we expect a decrease in payroll expenses in the next quarter due to
reduced demand for store sales staff. Each of our retail stores has a minimum of two employees, and additional office employees will
be hired to support retail stores in customer service and marketing. In addition, to maintain excellent customer service in our retail
stores, each store will have at least one trained repair professional. Effective management of payroll expenses remains crucial to our
ability to grow revenue and enhance our financial results, especially as we navigate a reduced workforce.

Vendor and Supply Management

During the three months ended June 30, 2025, we worked with two principal
vendors, Depcl Corp. and Xiamen Innolabs Technology Co., Ltd, each of which respectively supplied approximately 64.5% and 11.7% of the
accessories and components used in all our products for the three months ended June 30, 2025.

We have implemented a centralized vendor management system that