Company: FLYE
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001213900-25-078571
Chunk: 63

Company: Fly-E Group, Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 1
Chunk 63
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 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 after the completion of our initial public offering.

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.