Company: FLYE
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001213900-25-078571
Chunk: 61

Company: Fly-E Group, Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 1
Chunk 61
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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 streamlines
purchasing, enhances our negotiating power and maintains strong vendor relationships. We believe this approach delivers cost savings,
improved risk management and increased negotiating power, ultimately benefiting our operating results. Changes in costs related to our
major vendors can significantly affect our financial condition and operating results.

Market Trends, Competition and Tariff

We operate in a rapidly growing EV market with a special focus on
E-motorcycles, E-bikes and E-scooters. However, increased competition may pressure prices and margins, reducing sales volume, revenues,
and sales margin for us. Additionally, marketing and advertising costs may rise as we differentiate ourselves and maintain our market
position. Moreover, competitors may impact customer acquisition and retention, satisfaction and loyalty. While we believe we maintain
competitive advantages in several areas, including brand, product design and quality, smart features, omnichannel retail model, customer
satisfaction and loyalty, we must continuously innovate, invest in research and development and marketing to maintain our competitive
edge and unique selling points. Recently, the U.S. government issued executive orders imposing tariffs on products from key international
suppliers, citing national security and public health concerns. These tariffs are expected to impact a wide range of imported goods,
including components used in e-bike and e-scooter manufacturing. While some agreements have temporarily delayed their implementation,
ongoing trade tensions could lead to supply chain disruptions, increased costs, and pricing pressures within the industry. Tariffs on
e-bikes