Company: FLYE
Filing Date: 2025-07-15
Form Type: 10-K
Source: 0001213900-25-064293
Chunk: 488

Company: Fly-E Group, Inc.
Filing Date: 2025-07-15
Form: 10-K
Item: Item 1C
Chunk 488
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 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, and logistic costs. The logistic costs incurred
to receive products from our vendors are included in our inventory and recognized as cost of sales upon sale of products to our customers.

Gross Profit and Gross Margin

We calculate gross profit as net sales less cost
of revenue. Gross margin represents gross profit as a percentage of net sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses
primarily consist of retail operational expenses, salaries and benefits costs, marketing, advertising, and corporate overhead.

Marketing costs primarily consist of advertising
and payroll and related expenses for personnel engaged in marketing and selling activities.

We expect that our selling and marketing expenses
will continue to increase in the foreseeable future, as we plan to further expand our sales network and retail channels, and engage in
more selling and marketing activities to enhance our brand and attract more purchases from new and existing customers.

General and administrative expenses primarily
consist of costs for corporate functions, including payroll and related expenses, facilities and equipment expenses, such as depreciation
and amortization expense and rent, and professional fees. We expect that our general and administrative will increase in the foreseeable
future, as we hire additional personnel and incur additional expenses related to the anticipated growth of our business and our operation
as a public company