Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 272

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 2
Chunk 272
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 three months ended September 30, 2025. The decrease in retail sales revenue is mainly due to recent lithium-battery
accidents involving E-Bikes and E-Scooters. With an increasing number of lithium-battery explosion incidents in New York, customers are
less inclined to purchase E-Bikes. Consequently, sales have declined as customers opt for oil-powered vehicles over electric vehicles.
The decrease in retail sales also attributed in part to the closures and disposition of our retail stores during the three months ended
September 30, 2025. The increase in wholesales revenue was driven primarily by revenue contribution from the dispositioned entities during
the three months ended September 30, 2025. Although certain retail stores were sold, these stores continued to purchase products from
the Company, which contributes an increase of wholesale revenue.

Cost of Revenues

Cost of revenues decreased by 25.2%, from $3.9 million
for the three months ended September 30, 2024, to $2.9 million for the three months ended September 30, 2025. The decrease in cost of
revenues was primarily attributable to a reduction in sales volume, as discussed above.

45

Gross Margin

The following table shows our gross profit and
gross margin for the three months ended September 30, 2025 and 2024:

    For the Three Months Ended September 30, 

    2025  
    2024  
    Change  
    Percentage  Change 
  
    Gross Profit 
    $976,521  
    $2,904,454  
    $(1,927,933) 
     (66.4)%
  
    Gross Margin 
     25.0% 
     42.6% 

Gross profit for the three months ended September
30, 2025 and 2024 was $1.0 million and $2.9 million, respectively. Gross margin was 25.0% and 42.6% for the three months ended September
30, 2025 and 2024, respectively. The decrease in gross margin was mainly due to a combined effect of decrease in average unit price of
EVs, which dropped by 61% for the three months ended September 30, 2025 and the increased revenues from rental business with higher margin
than our other businesses. The rental business was launched in the fourth quarter of 2024. Gross