Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 267

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 2
Chunk 267
---
 be long-term opportunities for domestic production, the immediate impact would likely be negative for
the growing e-bike and e-scooter market.

42

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. From
January 2025 to September 2025, we participated in this program and completed the delivery of Fly-11 Pro models to our retail partner
participating in the program. 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 as a component of retail revenues as we consider it a pass-through conduit for collecting
and remitting sales taxes. Return allowances, which reduce net revenues, are estimated based on historical experience.

E-bikes, E-motorcycles and E-scooters sales.
We generate a