Company: FLYE
Filing Date: 2025-02-19
Form Type: 10-Q
Source: 0001213900-25-015334
Chunk: 247

Company: Fly-E Group, Inc.
Filing Date: 2025-02-19
Form: 10-Q
Item: Part I, Item 2
Chunk 247
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 that impact pricing. As of December 31, 2024 and March 31, 2024, we recorded
inventory allowance balance of $936,030 and $514,021, respectively.

Income Taxes

We provide current income tax expenses in accordance
with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, we are required to estimate
our income taxes in each of the tax jurisdictions in which we operate, including New York State, New York City, New Jersey,
Texas, Florida, California, Washington, D.C. and Canada.

We account for income taxes using the asset and
liability approach. Under this method, deferred income taxes are recognized for tax consequences in future years based on differences
between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry
forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable for the differences that are expected to
reverse.

A valuation allowance is recorded to reduce deferred
tax assets to the extent that we consider it is more likely than not that a deferred tax asset will not be realized in the foreseeable
future. As of December 31, 2024 and March 31, 2024, we did not record any valuation allowance deferred tax assets.

We record uncertain tax positions in accordance
with ASC 740 on the basis of a two-step process in which (1) we determines if the weight of available evidence indicates that
it is more likely than not that the tax position will be sustained on audit, including resolution of any related appeals or litigation
processes, and (2) measures the tax benefit as the largest amount that is more likely than not to be realized upon ultimate settlement.
An uncertain income tax provision will not be recognized if it has less than a 50 percent likelihood of being sustained.

We consider many factors when evaluating our tax
positions and estimating its tax benefits, which may require periodic adjustments, and which may not accurately forecast actual outcomes.
We will include interest and fines arising from the underpayment of income taxes as a component of the provision for income taxes (if
anticipated). Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period
incurred. For the nine months ended December 31, 2024, the Company accrued $52,122 income tax related penalty included in taxes payable
in the unaudited condensed consolidated balance sheets. For the nine