Company: FLYE
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001213900-25-078571
Chunk: 204

Company: Fly-E Group, Inc.
Filing Date: 2025-08-19
Form: 10-Q
Item: Part I, Item 2
Chunk 204
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 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 and e-scooter 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. From January 2025 to June 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.

36

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-s