Company: FLYE
Filing Date: 2025-02-19
Form Type: 10-Q
Source: 0001213900-25-015334
Chunk: 61

Company: Fly-E Group, Inc.
Filing Date: 2025-02-19
Form: 10-Q
Item: Part I, Item 1
Chunk 61
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 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 or their components would likely increase prices for consumers, and create challenges for U.S. manufacturers and retailers.
While there could be long-term opportunities for domestic production, the immediate impact would likely be negative for the growing e-bike
market.

Regulatory Landscape

We
operate in an industry that is subject to extensive environmental, safety and other laws and regulations, which include products
safety and testing, as well as battery safety and disposal. These requirements create additional costs and possible production delay
in connection with the testing and manufacturing of our products. We also benefit from environmental regulations in our target
markets which include economic incentives to purchasers of EVs and tax credits for EV manufacturers. The Governor of New York State
signed a legislative package in July 2024 aimed at raising awareness about the safe use of e-bikes and lithium-ion battery products,
prohibiting the sale of non-compliant batteries, requiring safety protocols and training for first responders, mandating operating
manuals for e-bike retailers, and improving accident reporting and registration processes for e-bikes and mopeds. Additionally, in
January 2025, the New York City Department of Transportation launched a $2 million trade-in program, allowing eligible food delivery
workers to replace their unsafe e-bikes, e-mobility devices, and batteries with certified, high-quality versions.   Our
Fly-11 PRO was chosen for the official model of DOT and participates in this program. The first batch of delivery workers is
expected to complete enrollment on February 17, 2025. The company has also been actively cooperating with the government to provide
information and promote the model. While we expect relevant regulations to
provide a tailwind to our growth, it is possible for other regulations to result in margin pressures.

How to Assess Our Performance

In assessing performance, management considers
a variety of performance and financial measures, including principal growth in net sales, gross profit, gross margin, selling, general
and administrative expenses and EBITDA. The key measures that we use to evaluate the performance of our business are set forth below.

Net Sales

We generate revenue from sales of our EVs, their
accessories and spare parts, and provision of repair services at our retail stores. Our net sales comprise gross sales net of discounts
and return allowances. We do not record sales taxes