Company: FLYE
Filing Date: 2025-02-19
Form Type: 10-Q
Source: 0001213900-25-015334
Chunk: 246

Company: Fly-E Group, Inc.
Filing Date: 2025-02-19
Form: 10-Q
Item: Part I, Item 2
Chunk 246
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 into any transactions, agreements
or other contractual arrangements that would result in off-balance sheet liabilities.

Quantitative and Qualitative Disclosures about
Market Risk

Foreign Exchange Risk

A substantial majority of all of our revenues
and expenses are denominated in U.S. dollars. We do not believe that we currently have any significant direct foreign exchange risk
and have not used any derivative financial instruments to hedge exposure to such risk. In addition, as our business and operation expand
in European and other overseas markets in the future, we may be exposed to increased foreign exchange risks for other currencies.

Interest Rate Risk

Our exposure to interest rate risk primarily relates
to the interest expenses on our short-term and long-term bank borrowings. Our short-term and long-term bank borrowings bear interests
at fixed rates. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates.
However, our future interest expenses may exceed expectations due to changes in market interest rates. If we were to renew these short-term
and long-term bank borrowings, we might be subject to interest rate risk.

Critical Accounting Estimates

An accounting estimate is considered critical
if it requires to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different
accounting estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur periodically,
could materially impact the unaudited condensed consolidated financial statements.

We prepare our unaudited condensed consolidated
financial statements in conformity with U.S. GAAP, which requires us to make estimates and assumptions. We continually evaluate these
estimates and assumptions based on the most recently available information, our own historical experiences and various other assumptions
that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting
process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting policies require
a higher degree of judgment than others in their application and require us to make significant accounting estimates.

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Estimated Allowance for Inventories

Our estimated allowance for the inventory obsolescence
reserves is based on our assessment of realization of inventory. Adjustments are recorded to write down the cost of inventories to the
estimated net realizable value due to slow-moving merchandise and obsolescence, which is dependent upon factors such as inventory aging,
historical and forecasted consumer demand, and market conditions