Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 174

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 8
Chunk 174
---
 
    $153,087  
    $94,983 

As of September 30, 2025 and March 31, 2025, the
Company had approximately $3.9 million and $6.8 million, respectively, in the DTAs, which respectively included approximately $1.2
million and $1.5 million related to net operating loss carryforwards that can be used to offset taxable income in future periods,
approximately $2.5 million and $4.8 million related to operating lease liabilities, and approximately $0.2 million and
$0.4 million related to inventory reserve.

28

As of September 30, 2025 and March 31, 2025, the
Company had approximately $2.5 million and $5.0 million, respectively, in the DTLs, which included approximately $0.2 million and
$0.5 million, respectively related to accumulated depreciation and approximately $2.2 million and $4.5 million related to ROU assets.

Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. As of September 30, 2025 and March 31,
2025, the Company recorded $152,212 and $94,983, respectively, in the net DTAs. The tax losses in Canada can be carried forward for twenty
years to offset future taxable profit. The tax losses of entities in Canada will begin to expire in 2044, if not utilized. As of September
30, 2025, management considered it more likely than not that the Company will have sufficient taxable income in the future that will
allow the Company to realize these net DTAs.

As a result of the Tax Cuts and Jobs Act (TCJA),
US NOLs arising after December 31, 2017, may be carried forward indefinitely and can offset only up to 80% of taxable income in any future
year. Based upon the Company’s recent taxable loss history, the Company performed an analysis and determined that it was necessary
to establish a valuation allowance of $1,242,000 with respect to its net deferred income tax assets as of September 30, 2025.

Uncertain Tax Positions

The Company evaluates each uncertain tax position
(including the potential application of interest and