Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 268

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 2
Chunk 268
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 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.

43

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 decrease in the foreseeable future, as more retail stores are expected to be sold with reduced selling and marketing activities.

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 decrease in the foreseeable
future, as more retail stores are expected to be sold with reduced general and administrative activities.

Non-GAAP Financial Measures

To supplement our financial information presented
in accordance with the generally accepted accounting principles in the United States (the “U.S. GAAP”), management
periodically uses certain “non-GAAP financial measures,” as such term is defined under the rules of the SEC, to clarify and
enhance understanding of past performance and prospects for the future. Generally, a non-GAAP financial measure is a numerical measure
of a company’s operating performance, financial position or cash