Company: FLYE
Filing Date: 2025-12-18
Form Type: 10-Q
Source: 0001213900-25-123281
Chunk: 97

Company: Fly-E Group, Inc.
Filing Date: 2025-12-18
Form: 10-Q
Item: Item 1
Chunk 97
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Estimated Allowance for Inventory Obsolescence
Reserve

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 that impact pricing. As of September 30, 2025 and March 31, 2025, we
recorded inventory reserves balance of $959,087 and $1,107,569, respectively.

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Item 3. Quantitative and Qualitative Disclosures
About Market Risk.

Not applicable to smaller reporting companies.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls
and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer
(together, the “Certifying Officers”), to allow timely decisions regarding required disclosure.

Under the supervision and with the participation
of our management, including our Certifying Officers, we carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on the foregoing, our
Certifying Officers concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this
Report due to the material weakness identified below.

A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses that have been
identified in internal control over financial reporting included our lack of (i) sufficient financial reporting and accounting personnel
with appropriate knowledge of generally accepted accounting principles in the United States of America (the “U.S. GAAP”) and
SEC reporting requirements to properly address complex U.S. GAAP accounting issues and to prepare and review our una